UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                            Washington, D. C. 20549
                                                        Exhibit Index Page 31
                                    FORM 10-Q

(Mark One)
[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                  For the quarterly period ended March 31, 1996
                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
        For the transition period from             Commission file number
                    to                                    0-5583



                     UNITED CAROLINA BANCSHARES CORPORATION
             (Exact name of Registrant as specified in its Charter)

          North Carolina                          56-0954530
      (State of Incorporation)        (I.R.S. Employer Identification No.)

         127 West Webster Street
       Whiteville, North Carolina                    28472
  (Address of principal executive offices)         (Zip Code)

                               (910) 642-5131
              (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

     As  of  May  10,  1996,  there  were  24,196,005   outstanding   shares  of
Registrant's  $4.00 par value  common  capital  stock which is the only class of
securities issued by the Registrant.
                                                              Page 1 of 53 pages



PART I - FINANCIAL INFORMATION
Item 1: Financial Statements

            United Carolina Bancshares Corporation and Subsidiaries
                           Consolidated Balance Sheets

                                                      March 31,     December 31,
                                                       1995             199
                                                   ------------   --------------
                                 (In thousands)
Assets:
   Cash and due from banks - noninterest-bearing    $   178,313    $   179,679
   Federal funds sold and other short-term
   investments                                          138,609         45,413
   Securities available for sale (amortized
     costs of $773,062,000 in 1996 and
     $764,923,000 in 1995)                              773,833        769,956
   Investment securities (approximate
     market values of $59,025,000 in 1996
     and $99,270,000 in 1995)                            57,437         97,354
   Loans, net of unearned income                      2,881,844      2,826,987
      Less reserve for credit losses                    (44,382)       (43,464)
                                                    -----------    -----------
              Net loans                               2,837,462      2,783,523
                                                    -----------    -----------
   Premises and equipment                                57,295         58,002
   Other assets                                         116,578        103,591
                                                    -----------    -----------
              Total assets                          $ 4,159,527    $ 4,037,518
                                                    ===========    ===========

Liabilities and stockholders' equity:
   Deposits:
      Noninterest-bearing demand deposits           $   613,707    $   578,864
      Interest-bearing deposits:
         NOW, savings, and money market deposits      1,340,586      1,354,193
         Certificates of deposit of
           $100,000 or more                             230,810        206,235
         Other time deposits                          1,526,382      1,498,359
                                                                   -----------
              Total deposits                          3,711,485      3,637,651
   Short-term borrowings                                 67,632         30,439
   Mortgages and other notes payable                      2,829          2,975
   Other liabilities                                     50,169         43,305
                                                    -----------    -----------
              Total liabilities                       3,832,115      3,714,370
                                                    -----------    -----------
   Stockholders' equity:
      Preferred stock, par value $10 per share:
         Authorized 2,000,000 shares; none issued
      Common stock, par value $4 per share:
         Authorized 40,000,000 shares; issued
           24,166,878 shares in 1996 and
           24,137,791 shares in 1995                     96,667         96,551
      Surplus                                            50,492         50,183
      Retained earnings                                 180,028        173,491
      Unrealized gains on securities
        available for sale, net of
        deferred income taxes                               225          2,923
                                                    -----------    -----------
               Total stockholders' equity               327,412        323,148
                                                    -----------    -----------
               Total liabilities and
                 stockholders' equity               $ 4,159,527    $ 4,037,518
                                                    ===========    ===========


See accompanying Notes to Consolidated Financial Statements

                                       2


                  United Carolina Bancshares Corporation and Subsidiaries
                            Consolidated Statements of Income

                                                         Three Months Ended
                                                              March 31,
                                                     ---------------------------
                                                         1996           1995
                                                     ------------   ------------
                                                        (Dollars in thousands
                                                      except per share amounts)
Interest income:
   Interest on loans                                 $     65,169    $    59,704
   Interest and dividends on:
      Taxable securities                                   11,227          7,388
      Tax-exempt securities                                   851          1,034
   Interest on federal funds sold and
       other short-term investments                         1,269            574
                                                     ------------    -----------
           Total interest income                           78,516         68,700
                                                     ------------    -----------
Interest expense:
   Interest on deposits                                    35,270         26,884
   Interest on short-term borrowings                          408            940
   Interest on long-term borrowings                            44             39
                                                     ------------    -----------
           Total interest expense                          35,722         27,863
                                                     ------------    -----------
Net interest income                                        42,794         40,837
Provision for credit losses                                 2,200          2,279
                                                     ------------    -----------
Net interest income after provision
  for credit losses                                        40,594         38,558

Noninterest income:
   Service charges on deposit accounts                      6,154          5,696
   Trust income                                             1,594          1,237
   Insurance commissions                                    1,533          1,224
   Mortgage banking fees                                    1,133            848
   Brokerage and annuity commissions                          566            601
   Other service charges, commissions, and fees             1,436          1,087
   Gains on mortgages originated for resale                   217             41
   Gains on trading account securities                       --                1
   Gains (losses) on dispositions of securities              (193)             3
   Gains (losses) on dispositions of
     fixed assets                                            (539)             9
   Other operating income                                     266            245
                                                     ------------    -----------
           Total noninterest income                        12,167         10,992
                                                     ------------    -----------

Noninterest expenses:
   Personnel expense                                       21,751         19,340
   Occupancy expense                                        2,536          2,424
   Equipment expense                                        1,805          1,785
   Other operating expenses                                10,113          9,628
                                                     ------------    -----------
           Total noninterest expenses                      36,205         33,177
                                                     ------------    -----------
Income before income taxes                                 16,556         16,373
   Income tax provision                                     6,003          5,848
                                                     ------------    -----------
Net income                                           $     10,553    $    10,525
                                                     ============    ===========

Per share data:
   Net income                                        $        .44    $       .44
                                                     ============    ===========
   Cash dividends declared                           $        .18    $      .147
                                                     ============    ===========
   Book value at end of period                       $      13.55    $     12.20
                                                     ============    ===========
Average number of shares outstanding                   24,140,761     24,038,698
                                                     ============    ===========


See accompanying Notes to Consolidated Financial Statements

                                       3


                         United Carolina Bancshares Corporation and Subsidiaries
                           Consolidated Statements of Stockholders' Equity
                             Three Months Ended March 31, 1996 and 1995




                                                                                                         Unrealized
                                                  Common Stock                                              Gains
                                             --------------------------                                  (Losses) on
                                              Number of       Aggregate                                  Securities        Total
                                               Shares           Par                         Retained       Available   Stockholders'
                                             Outstanding        Value        Surplus        Earnings    For Sale, Net     Equity
                                             -----------    -----------    -----------    -----------   -------------  -------------
                                                                           (Dollars in thousands)
                                                                                                      

Balance, January 1, 1996,
   as previously reported                     22,153,110    $    88,612    $    42,441    $   167,826    $     2,898    $   301,777
   Merger with of Seaboard Savings
     Bank and Triad Bank                       1,984,681          7,939          7,742          5,665             25         21,371
                                             -----------    -----------    -----------    -----------    -----------    -----------
Balance, January 1, 1996,
   as restated                                24,137,791         96,551         50,183        173,491          2,923        323,148
   Net income                                       --             --             --           10,553           --           10,553
   Cash dividends declared,
      $.18 per share                                --             --             --           (4,063)          --           (4,063)
   Issuance of common stock
      by pooled institution prior
      to merger                                   29,949            120            327             45           --              492
   Retirement of common stock                       (862)            (4)           (18)             2           --              (20)
   Unrealized losses on securities
      available for sale, net of
      applicable deferred income
      taxes                                        --             --             --             --           (2,698)        (2,698)
                                             -----------    -----------    -----------    -----------    -----------    -----------
Balance, March 31, 1996                       24,166,878    $    96,667    $    50,492    $   180,028    $       225    $   327,412
                                             ===========    ===========    ===========    ===========    ===========    ===========

Balance, January 1, 1995,
   as previously reported                     22,050,099    $    88,200    $    42,505    $   138,077    $    (5,293)   $   263,489
   Merger with Seaboard Savings
   Bank and Triad Bank                         1,967,626          7,871          7,629          3,876           (267)        19,109
                                             -----------    -----------    -----------    -----------    -----------    -----------
 Balance, January 1, 1995,
   as restated                                24,017,725         96,071         50,134        141,953         (5,560)       282,598
   Net income                                     --             --             --             10,525           --           10,525
   Cash dividends declared:
      $.147 per share                             --             --             --             (3,238)          --           (3,238)
      By pooled institution prior
      to merger                                   --             --             --                (31)          --              (31)
   Issuance of common stock:
      Under stock option plan                     24,855             99            102            (32)          --              169
      By pooled institution prior
      to merger                                    1,818              7              8              8           --               23
   Unrealized gains on securities
      available for sale, net of
      applicable deferred income
      taxes                                         --             --             --             --            3,385          3,385
                                             -----------    -----------    -----------    -----------    -----------    -----------
Balance, March 31, 1995                       24,044,398    $    96,177    $    50,244    $   149,185    $    (2,175)   $   293,431
                                             ===========    ===========    ===========    ===========    ===========    ===========


See acompanying Notes to Consolidated Financial Statements

                                       4



              United Carolina Bancshares Corporation and Subsidiaries
                       Consolidated Statements of Cash Flows

                                                            Three Months Ended
                                                                  March 31,
                                                           ---------------------
                                                             1996         1995
                                                           ---------   ---------
                                                               (In thousands)

Increase  (decrease)  in cash and cash  equivalents:  
Cash flows from  operating activities:
   Net income                                            $  10,553    $  10,525
   Adjustments to reconcile net income to net cash
     provided by operating activities:
      Depreciation and amortization,
        net of accretion                                     2,476        2,146
      Provision for credit losses                            2,200        2,279
      Net increase in loans originated for resale           (1,842)      (6,988)
      Provision for deferred taxes and
        increase in taxes payable                            5,059        5,773
      Increase in accrued interest receivable                  343          418
      Increase in prepaid expenses                          (1,728)        (732)
      Decrease in other accounts receivable                  3,256        2,459
      Increase (decrease) in accrued
        interest payable                                      (371)         421
      Increase (decrease) in accrued expenses                1,451       (1,218)
      Increase (decrease)  in deferred loan
        fees, net of deferred costs                           (189)         222
      Other, net                                               838          116
                                                         ---------    ---------
           Total adjustments                                11,493        4,896
                                                         ---------    ---------
           Net cash provided by operating
             activities                                     22,046       15,421
                                                         ---------    ---------
Cash flows from investing activities:
   Proceeds from maturities and issuer calls
     of securities available for sale                      236,585       54,049
   Proceeds from maturities and issuer calls
     of investment securities                                3,523        7,444
   Proceeds from sales of investment securities               --          3,810
   Purchases of securities available for sale             (208,487)     (45,974)
   Purchases of investment securities                         --         (1,009)
   Net increase in loans outstanding                       (54,717)     (81,580)
   Purchases of premises and equipment                      (1,377)      (1,476)
   Proceeds from sales of premises and equipment               100          259
   Purchases of mortgage loan servicing rights                (624)        (319)
   Sales of foreclosed assets                                  189        1,354
   Other, net                                              (12,697)       1,730
                                                         ---------    ---------
           Net cash used by investing activities           (37,505)     (61,712)
                                                         ---------    ---------
Cash flows from financing activities:
   Net increase in deposit accounts                         73,833       82,191
   Net increase in federal funds
     purchased                                               3,375        2,385
   Net increase (decrease) in securities
     sold under agreement to repurchase                     33,104      (28,190)
   Net increase (decrease) in other
     short-term borrowings                                     714         (368)
   Repayments of mortgages and other
     notes payable                                            (146)         (17)
   Issuance of common stock, net                               472          192
   Dividends paid                                           (4,063)      (3,269)
                                                         ---------    ---------
           Net cash provided by financing
             activities                                    107,289       52,924
                                                         ---------    ---------
Net increase in cash and cash equivalents                   91,830        6,633
Cash and cash equivalents at beginning of period           225,092      244,660
                                                         ---------    ---------
Cash and cash equivalents at end of period               $ 316,922    $ 251,293
                                                         =========    =========



                            Statement Continued on Next Page

                                       5



Supplemental  disclosures of cash flow information:  
Cash paid during the period for:
      Interest                                             $ 36,093     $ 28,284
                                                           ========     ========
      Income taxes                                         $    944     $     90
                                                           ========     ========
Significant noncash transactions:
   Loans transferred to real estate acquired
     in settlement of debt                                 $    602     $  1,237
                                                           ========     ========
   Loans originated to facilitate the sale
     of foreclosed assets                                  $     45     $    251
                                                           ========     ========
   Unrealized gains (losses) on securities
     available for sale                                    $ (4,256)    $  7,185
                                                           ========     ========
   Investment securities transferred
     to available for sale portfolio
     in connection with business combination               $ 36,646     $   --
                                                           ========     ========
   Available for sale securities transferred
     to investment portfolio in connection
     with business combination                             $    240     $   --
                                                           ========     ========

 See accompanying Notes to Consolidated Financial Statements














                                        6






United Carolina Bancshares Corporation and Subsidiaries
Notes to Consolidated Financial Statements

Note 1.
      Basis of Presentation:

     The accompanying  consolidated  financial statements,  which are unaudited,
reflect all adjustments which are, in the opinion of management, necessary for a
fair presentation of the financial  position at March 31, 1996, and December 31,
1995, and operating  results of United Carolina  Bancshares  Corporation and its
subsidiaries  for the  three-month  periods  ended March 31, 1996 and 1995.  All
adjustments  made  to  the  unaudited  financial  statements  were  of a  normal
recurring  nature.  The results of operations for the first three months of 1996
are not necessarily indicative of the results of operations for the entire year.
As  discussed in Note 13,  during the three  months  ended March 31,  1996,  the
corporation  consummated mergers with Triad Bank and Seaboard Savings Bank, both
of  which  were  accounted  for  as  poolings-of-interests.   Accordingly,   the
accompanying consolidated financial statements have been restated to include the
accounts of Triad Bank and Seaboard Savings Bank for all periods presented.

Note 2.
      Securities:

      The  following  is  a  summary  of  the  securities  portfolios  by  major
classification:



                                                                             March 31, 1996
                                                        --------------------------------------------------------
                                                                                                     Approximate
                                                        Amortized     Unrealized     Unrealized        Market
                                                          Cost          Gains          Losses           Value
                                                        ---------     ----------     ----------      -----------
                                                                              (In thousands)
                                                                                         

     Securities available for sale:
     United States government securities                $667,036      $    3,244     $    1,686      $   668,594
     Obligations of United States government
        agencies and corporations (1)                     59,185              19             99           59,105
     Mortgage-backed securities (2)                       32,966              60            770           32,256
     Obligations of states and political subdivisions      1,100               3           --               1103
     Federal Home Loan Bank stock                         12,200            --             --             12,200
     Other securities                                        575            --             --                575
                                                        --------      ----------     ----------      -----------
         Total securities available for sale            $773,062      $    3,326     $    2,555      $   773,833
                                                        ========      ==========     ==========      ===========
     Investment securities:
     Obligations of states and political subdivisions   $ 57,437      $    1,643     $       55           59,025
                                                        --------      ----------     ----------      -----------
         Total investment securities                    $ 57,437      $    1,643     $       55      $    59,025
                                                        ========      ==========     ==========      ===========
<FN>

     (1) At March 31,  1996,  UCB  owned  securities  issued  by  United  States
     government agencies with an amortized cost of $7,646,000 and a market value
     of $7,667,000 that were considered  structured  notes and therefore met the
     regulatory definition of high-risk securities.

     (2) At March 31, 1996, UCB owned collateralized mortgage obligations issued
     by  the  Federal  Home  Loan  Mortgage  Corporation  (FHLMC)  which  had an
     amortized  cost of  $11,749,000  and a  market  value of  $11,534,000;  and
     collateralized mortgage obligations issued by the Federal National Mortgage
     Association  (FNMA) which had an amortized cost of $13,767,000 and a market
     value of $13,366,000.  In addition, UCB owned mortgage-backed  pass-through
     securities  guaranteed  by the  Government  National  Mortgage  Association
     (GNMA)  which had an  amortized  cost of  $1,145,000  and a market value of
     $1,165,000; mortgage-backed pass-through securities guaranteed by FNMA with
     an  amortized  cost of  $2,326,000  and a market value of  $2,275,000;  and
     mortgage-backed   pass-through  securities  guaranteed  by  FHLMC  with  an
     amortized  cost of $3,595,000  and a market value of  $3,511,000.  UCB also
     owned  collateralized  mortgage  obligations issued by a private issuer and
     guaranteed by the Government National Mortgage Association (GNMA) which had
     an amortized cost of $384,000 and a market value of $405,000.
</FN>

                                       7

Notes to Consolidated Financial Statements (Continued)

Note 2.  Securities - Continued


                                                                            December 31, 1995
                                                        --------------------------------------------------------
                                                                                                     Approximate
                                                        Amortized     Unrealized      Unrealized       Market
                                                          Cost          Gains           Losses          Value
                                                        ---------     ----------      ----------     -----------
                                                                                         
                                                                             (In thousands)
 Securities available for sale:
 United States government securities                    $585,795      $    5,521       $     127      $  591,189
 Obligations of United States government
    agencies and corporations                            136,590               4              74         136,520
 Mortgage-backed securities                               29,628              53             346          29,335
 Obligations of states and political subdivisions          1,340               2            --             1,342
 Federal Home Loan Bank stock                             10,941            --              --            10,941
   Other securities                                          629            --              --               629
                                                        --------      ----------        --------      ----------
     Total securities available for sale                $764,923        $  5,580        $    547      $  769,956
                                                        ========        ========        ========      ==========
 Investment securities:
 United States government securities                    $ 10,396        $    141        $    168      $   10,369
 Obligations of United States government
    agencies and corporations                             21,713            --              --            21,713
 Mortgage-backed securities                                4,508              16              44           4,480
 Obligations of states and political subdivisions         60,660           2,011              40          62,631
 Other securities                                             77            --              --                77
                                                        --------        --------        --------      ----------
     Total investment securities                        $ 97,354        $  2,168        $    252      $   99,270
                                                        ========        ========        ========      ==========



Note 3.
      Loans:
      The consolidated  loan portfolio is summarized by major  classification as
follows:

                                                      March 31,     December 31,
                                                        1996            1995
                                                     -----------    ------------
                                                           (In thousands)
Loans secured by real estate:
   Construction and land acquisition and
     development                                     $   231,187    $   226,326
   Secured by nonfarm, nonresidential properties         623,054        620,367
   Secured by farmland                                    93,686         90,658
   Secured by multifamily residences                      71,936         65,097
                                                     -----------    -----------
     Total loans secured by real estate, excluding
       loans secured by 1-4 family residences          1,019,863      1,002,448
                                                     -----------    -----------
   Revolving credit secured by 1-4 family
     residences                                          142,452        140,032
   Other loans secured by 1-4 family residences          625,036        613,846
                                                     -----------    -----------
     Total loans secured by 1-4 family residences        767,488        753,878
                                                     -----------    -----------
     Total loans secured by real estate                1,787,351      1,756,326
Commercial, financial, and agricultural loans,
  excluding loans secured by real estate                 311,992        296,778
Loans to individuals for household, family, and
  other personal expenditures, excluding loans
  secured by real estate                                 691,882        691,193
All other loans                                           91,247         83,507
                                                     -----------    -----------
     Total loans                                       2,882,472      2,827,804
Unearned income                                             (628)          (817)
                                                     -----------    -----------
     Loans, net of unearned income                   $ 2,881,844    $ 2,826,987
                                                     ===========    ===========

                                       8




Notes to Consolidated Financial Statements (Continued)

Note 4.
      Nonperforming and Problem Assets:

      The following is a summary of nonperforming and problem assets:

                                       March 31,   December 31,
                                         1996          1995
                                       ---------   ------------
                                            (In thousands)

Foreclosed assets                      $   5,500   $      5,234
Nonaccrual loans                           6,800          6,403
                                       ---------   ------------
   Total nonperforming assets             12,300         11,637
Loans 90 days or more past due,
  excluding nonaccrual loans               6,884          5,554
                                       ---------   ------------
   Total problem assets                $  19,184   $     17,191
                                       =========   ============



Note 5.
      Reserve for Credit Losses:

      The following  table sets forth the analysis of the  consolidated  reserve
for credit losses:

                                                       Three Months Ended
                                                            March 31,
                                                      ---------------------
                                                        1996        1995
                                                      ---------   ---------
                                                          (In thousands)

Balance, beginning of period                          $ 43,464    $ 41,341
     Provision for credit losses                         2,200       2,279
     Recovery of losses previously charged off             788         963
     Losses charged to reserve                          (2,070)     (1,307)
                                                      --------    --------
Balance, end of period                                $ 44,382    $ 43,276
                                                      ========    ========


                                       9



Notes to Consolidated Financial Statements (Continued)

Note 6.
      Short-Term Borrowings:

      The  following  table  sets  forth  certain  data  with  respect  to UCB's
short-term borrowings:



                                              March 31, 1996                                 December 31, 1995
                               --------------------------------------------     --------------------------------------------
                                           Securities              Federal                  Securities              Federal
                                           Sold Under   Treasury     Home                   Sold Under   Treasury     Home
                                Federal    Agreement    Tax and      Loan        Federal    Agreement    Tax and      Loan
                                 Funds         to         Loan       Bank         Funds         to         Loan       Bank
                               Purchased   Repurchase     Notes    Advances     Purchased   Repurchase     Notes    Advances
                               ---------   ----------   --------   --------     ---------   ----------   --------   --------
                                                                   (Dollars in thousands)
                                                                                            
Balance outstanding at end
  of period                    $  20,195   $   44,040   $  3,397   $   --       $  16,820   $   10,936   $  2,683   $    --
Maximum amount outstanding
  at any month-end during
  the period                      20,315       44,040      3,894       --          22,610       28,216      4,250     25,000
Average balance outstanding
  during the period               20,524        9,354      2,812       --          17,227       11,636      3,098     13,412
Average interest rate paid
  during the period                 5.22%        4.81%      4.41%      -- %          5.79%        5.25%      5.62%      6.48%
Average interest rate payable
  at end of period                  5.44%        4.92%      5.10%      -- %          5.50%        4.70%      5.15%       -- %



      Federal  funds  purchased  represent   unsecured   borrowings  from  other
financial institutions by UCB's subsidiary banks for their own temporary funding
requirements.

      Securities  sold  under  agreement  to  repurchase   represent  short-term
borrowings by UCB's subsidiary  banks with maturities  ranging from 1 to 89 days
collateralized by securities of the United States Government or its agencies.

      Treasury Tax and Loan Notes consist of the balances  outstanding  in UCB's
subsidiary  banks'  treasury  tax and loan  depository  note  accounts  that are
payable on demand to the United States Treasury and  collateralized by qualified
debt  securities.  Interest on borrowings  under these  arrangements  is payable
monthly at 1/4% below the  average  federal  fund rate as quoted by the  Federal
Reserve Board.

      Federal Home Loan Bank advances represent borrowings from the Federal Home
Loan Bank of Atlanta by UCB's North Carolina  subsidiary  bank pursuant to lines
of credit  collateralized by a blanket lien on qualifying loans secured by first
mortgages on 1-4 family  residences.  These advances have an initial maturity of
less than one year with interest payable monthly.


                                       10




Notes to Consolidated Financial Statements (Continued)

Note 7.
      Mortgages and Other Notes Payable:

      Mortgages  payable  totaled  $105,000 at March 31,  1996,  and $121,000 at
December 31, 1995.  The  mortgages  bear  interest at annual rates  ranging from
8.75%  to  10%  and  are   collateralized   by  premises  with  book  values  of
approximately $468,000 at March 31, 1996, and $470,000 at December 31, 1995. The
mortgages are payable primarily in monthly installments  totaling  approximately
$3,000, including interest.

      Other notes payable  totaled  $125,000 at December 31, 1995, and consisted
of an  unsecured  note  payable  which bore  interest  at an annual rate of 12%,
payable monthly, with the principal paid on March 1, 1996.

      Advances  from  the  Federal  Home  Loan  Bank  of  Atlanta  with  initial
maturities  of more than one year  totaled  $2,724,000  at March 31,  1996,  and
$2,729,000 at December 31, 1995.  The advances are  collateralized  by a blanket
lien on qualifying loans secured by first mortgages on 1-4 family residences and
bear  interest  at rates  ranging  from 3.50% to 8.30%,  payable  monthly,  with
principal due in various maturities beginning November 24, 1996.


Note 8.
      Income Taxes:

      The  effective  tax rate on income  before  income taxes is lower than the
combined  statutory federal and state rates primarily because interest earned on
investments in debt instruments of state,  county,  and municipalities is exempt
from  federal   income  tax  and   partially   exempt  from  state  income  tax.
Substantially all income earned on securities of the United States government or
its agencies is exempt from state income taxes.


                                       11



Notes to Consolidated Financial Statements (Continued)

Note 9.
      Supplementary Income Statement Information:

      The  following  is a  breakdown  of items  included  in  "Other  operating
expenses" on the consolidated statements of income:

                                                          Three Months Ended
                                                               March 31,
                                                          ------------------
                                                           1996       1995
                                                          -------    -------
                                                            (In thousands)
Other operating expenses:
  Data processing fees and software expense               $ 1,472    $ 1,159
  Marketing and business development                        1,140      1,077
  Postage and delivery                                      1,038        953
  Professional services                                     1,013        768
  Printing, stationery, and supplies                          926        782
  Telephone expense                                           888        664
  Travel expense                                              451        427
  Insurance and taxes, other than taxes on income             385        397
  Noncredit losses                                            231        228
  Amortization of goodwill and other intangible assets        639        233
  Amortization of capitalized mortgage servicing rights       218        137
  Donations                                                   105         76
  FDIC deposit insurance premiums                              67      1,732
  Other expenses                                            1,540        995
                                                          -------    -------
      Total other operating expenses                      $10,113    $ 9,628
                                                          =======    =======



Note 10.
      Per Share Data:

      Earnings per share are computed  based on the weighted  average  number of
shares   outstanding  during  each  period,   adjusted   retroactively  for  the
pooling-of-interests  mergers with Seaboard Savings Bank and Triad Bank, and the
3-for-2 stock split  effected in the form of a stock dividend  declared  January
17, 1996.  Cash dividends per share are computed based on the historical  number
of shares  outstanding at date of  declaration  adjusted  retroactively  for the
3-for-2 stock split.  Book values per share are computed  based on the number of
shares  outstanding at the end of each period,  adjusted  retroactively  for the
mergers with  Seaboard  Savings Bank and Triad Bank and the 3-for-2 stock split.
Dilution  of  earnings  per share that would  result  from the  exercise  of all
outstanding stock options was immaterial.

                                       12



Notes to Consolidated Financial Statements (Continued)

Note 11.
      Statements of Cash Flows:

      For purposes of the statements of cash flows,  UCB considers cash and cash
equivalents  to include cash and due from banks,  federal funds sold,  and other
short-term investments.

Note 12.
      Legal Proceedings:

      Various legal  proceedings  are pending or threatened  against UCB and its
subsidiaries. All the foregoing are routine proceedings,  pending or threatened,
which are  incidental  to the  ordinary  course  of UCB's and its  subsidiaries'
business. In the judgment of management and its counsel, none of such pending or
threatened  legal  proceedings  will  have  a  material  adverse  effect  on the
consolidated financial position of UCB and its subsidiaries.

Note 13.
      Mergers and Acquisitions:

      On April 28, 1995,  UCB issued 66,320 shares of common stock to consummate
the merger with United  Agencies,  Inc., a general  insurance  agency located in
Wilmington,  North  Carolina.  Total  assets of  $252,000  were  acquired in the
transaction.  The merger was accounted for as a  pooling-of-interests;  however,
due to the  immateriality  of the transaction in relation to UCB's  consolidated
financial position and operating results, prior period financial statements have
not been restated.

      On May 19,  1995,  UCB's  North  Carolina  subsidiary  bank  acquired  the
deposits and certain  other assets of twelve North  Carolina  bank branches from
another financial institution. At the date of acquisition, the acquired branches
had $26.8  million in loans and $178.7  million in deposits.  Subsequent  to the
acquisition,  two of the  branches not located in existing UCB markets were sold
to two  commercial  banks.  These  branches  had $4.8 million in loans and $32.6
million in  deposits  when sold.  A premium  of $10.1  million  was paid for the
assumed deposit base of the branches retained.

      Effective January 25, 1996, UCB consummated a merger with Seaboard Savings
Bank,  Inc.,  Plymouth,  North  Carolina.  Under  terms  of the  agreement,  UCB
exchanged  418,641 shares of common stock for all of the  outstanding  shares of
Seaboard common stock.  The merger was accounted for as a  pooling-of-interests,
and accordingly,  the accompanying  consolidated  financial statements have been
restated  to include  the  accounts  of  Seaboard  Savings  Bank for all periods
presented.

      Effective  March 29,  1996,  UCB  consummated  a merger  with  Triad  Bank
headquartered in Greensboro,  North Carolina.  Under terms of the agreement, UCB
exchanged  1,551,874 shares of common stock for all of the outstanding shares of
Triad common stock. The merger was accounted for as a pooling-of-interests,  and
accordingly,  the  accompanying  consolidated  financial  statements  have  been
restated to include the accounts of Triad Bank for all periods presented.

                                       13


Notes to Consolidated Financial Statements (Continued)

      The consolidated  statement of income for the three months ended March 31,
1996,  includes  $3,969,000 of total income,  $2,345,000 of net interest income,
and  $1,748,000  of net  losses  related  to the  operations  of the two  pooled
financial  institutions  prior to their  respective  merger dates. The following
presents on a pro forma basis the  contributions  of Seaboard  Savings  Bank and
Triad Bank to the  restated  results of UCB for the three months ended March 31,
1995, as previously reported.

                                       UCB as     Seaboard
                                     Previously   Savings    Triad    UCB as
                                      Reported      Bank     Bank    Restated
                                     ----------   --------   -----   --------
Three Months Ended March 31, 1995:
   Total income                          74,916      1,006   3,770     79,692
   Net interest income                   38,213        389   2,235     40,837
   Net income                            10,120         96     309     10,525


      On March 26,  1996,  UCB reached an agreement in principal to enter into a
merger  transaction  with  Tomlinson  Insurors,  Inc.  ("Tomlinson"),  a general
insurance agency in Fayetteville,  North Carolina which will result in Tomlinson
becoming a part of UCB's  North  Carolina  subsidiary  bank.  Under terms of the
agreement,  UCB will exchange a maximum of 44,290 shares of common stock for the
net  business  assets of Tomlinson  Insurors,  Inc. It is  anticipated  that the
transaction  will  be  completed  in the  third  quarter  of  1996,  subject  to
regulatory approvals.

                                       14
 

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

Results of Operations - Three Months Ended March 31, 1996, Compared to 1995

Summary
         Net income totaled $10,553,000, or $.44 per share, for the three months
ended March 31, 1996. For the comparable quarter of 1995, net income amounted to
$10,525,000,  or $.44 per share. All per share data has been restated to reflect
the  3-for-2  stock  split  effected  in the form of a stock  dividend  declared
January 17, 1996.
         The 1996  results  included  the  effect of  nonrecurring  charges  and
expenses totaling $1,554,000, net of applicable income tax benefits, incurred in
connection  with the  completion of the mergers with  Seaboard  Savings Bank and
Triad Bank during the quarter. Excluding the effects of the items related to the
mergers,  on a pro forma basis,  earnings for the first quarter of 1996 amounted
to  $12,107,000,  or $.50 per share.  Both the  mergers  were  accounted  for as
poolings-of-interests, and, accordingly, all financial data has been restated to
include the  accounts of  Seaboard  Savings  Bank and Triad Bank for all periods
presented.

Net Interest Income
         Net interest income increased $1,957,000, or 4.8%, for the three months
ended March 31, 1996, compared to the first quarter of 1995. This was the result
of an increase of $495,863,000, or 15.1%, in the level of average earning assets
with a decrease of .16% in the overall  tax-equivalent  yield,  combined with an
increase of $442,194,000,  or 16.5%, in the average balance of  interest-bearing
liabilities  with an increase of .38% in the average rate paid. In May 1995, UCB
purchased twelve branch offices from another  financial  institution,  including
the

                                       15



  purchase  of  certain  loans  and  the  assumption  of  applicable  deposit
liabilities.  Two of the branch offices acquired in the transaction were sold to
third-party banks during the fourth quarter of 1995. These transactions resulted
in a net increase of $131,215,000 in average earning assets and  $129,007,000 in
average interest-bearing  liabilities for the three months ended March 31, 1996,
compared to the first quarter of 1995.
         The net  tax-equivalent  yield on earning assets  decreased to 4.62% in
the first  quarter of 1996 from 5.13% in the same period of 1995.  The continued
competition  for  core  deposits  and  changes  in the  mix of  interest-bearing
deposits to a higher percentage of consumer  certificates of deposit and a lower
percentage  of NOW,  savings,  and money market  deposits  have  resulted in the
average rate paid on  interest-bearing  deposits increasing by .42% in the first
three months of 1996 compared to 1995 while the yield on average  earning assets
decreased by .16% in the same measurement  period.  In addition,  an increase in
the percentage of average earning assets funded by interest-bearing  liabilities
from the prior year and a change in the mix of average  earning  assets both had
adverse  effects on the net  tax-equivalent  yield on earning  assets in 1996 as
compared  to  1995.  The   percentage  of  average   earning  assets  funded  by
interest-bearing  liabilities  increased to 82.75% in the first  quarter of 1996
from 81.78% in the  comparable  period of 1995 while the  percentage  of average
earning assets  comprised of loans declined to 75.61% for the three months ended
March 31, 1996, compared to 79.63% the prior year.
         Interest  income from loans  increased  $5,465,000,  or 9.2%,  over the
first  three  months of 1995 due to an  increase of  $243,009,000,  or 9.3%,  in
average  loans  outstanding  as  the  tax-equivalent   yield  on  average  loans
outstanding  declined to 9.20% from 9.29% in 1995.  The decrease in the yield on
the loan portfolio for 1996 was primarily the result of a lower prevailing

                                       16



 prime
lending rate which  averaged  8.34% during the first quarter of 1996 compared to
8.83% in the  first  three  months  of 1995.  Approximately  40% of UCB's  loans
outstanding at March 31, 1996, had floating interest rates, most of which varied
with the prime rate.
         Interest income from investment securities and securities available for
sale for the first three months of 1996 increased $3,656,000, or 43.4%, from the
first three  months of 1995.  This was due to an increase in the  tax-equivalent
yield on the aggregate  portfolio to 6.09% from 5.79% a year earlier,  primarily
due to higher rates earned on U.S. government securities, and an increase in the
aggregate average balance of investment  securities and securities available for
sale of $198,215,000, or 31.5%, from the corresponding period of 1995.
         Interest   income  from  federal   funds  sold  and  other   short-term
investments  totaled  $1,269,000  in the first  quarter of 1996,  an increase of
$695,000  over the same  period of 1995.  This was the result of an  increase of
$54,639,000  in the average  balances  invested as the average yield declined to
5.48% for the first three months of 1996 from 6.04% in 1995.
         Interest  expense on  deposits  increased  $8,386,000,  or 31.2% in the
three  months  ended March 31, 1996,  compared to 1995.  The average  balance of
total interest-bearing  deposits increased $474,951,000,  or 18.2%, in the first
quarter of 1996 compared to 1995 (as noted earlier, $129,007,000 of the increase
was the result of the branch offices purchased during 1995). This was the result
of  an  increase  of  $302,241,000,   or  28.2%,  in  the  average  balances  of
certificates of deposit less than $100,000 and an increase of  $172,595,000,  or
13.1%, in the average balances of NOW, savings, money market accounts, and other
time  deposits.  Certificates  of deposit of  $100,000  or more were  relatively
unchanged, increasing $115,000, or .1%, compared to the prior year. Certificates
of deposit less than $100,000 as a percentage of total

                                       17




interest-bearing deposits
increased  to 44.5%  during  the first  quarter  of 1996 from 41.0% in the first
three  months of 1995.  The change in the mix of  deposits  coupled  with active
competition  for deposits  combined to increase the average rate paid on average
interest-bearing  deposits to 4.59% for the first  quarter of 1996 from 4.17% in
the same period of 1995.
         The  average  interest  rate paid on short-  and  long-term  borrowings
during the first  three  months of 1996  decreased  to 5.11% from 5.81% in 1995,
principally due to a decrease in rates on Federal Funds purchased and securities
sold under  agreement  to  repurchase.  The average  balances of borrowed  funds
decreased by  $32,756,000  in the first  quarter of 1996 from the  corresponding
period of 1995.

 Provision and Reserve for Credit Losses
         The provision for credit  losses  amounted to $2,200,000  for the three
months ended March 31, 1996,  compared to $2,279,000 in 1995.  Net credit losses
amounted to $1,279,000,  or .18% of average loans outstanding,  on an annualized
basis,  during the first three months of 1996  compared to $344,000,  or .05% of
average loans outstanding,  on an annualized basis, for the comparable period of
1995. The increase in net credit losses  resulted  primarily from an increase in
losses on consumer loans.
         Nonperforming   assets  (foreclosed   assets,   nonaccrual  loans,  and
restructured loans) totaled $12,300,000, or .43% of loans and foreclosed assets,
at March 31,  1996,  compared to  $11,637,000,  or .41% of loans and  foreclosed
assets,  at December 31, 1995.  Loans 90 days or more past due that  continue to
accrue interest totaled $6,884,000 at March 31, 1996,  compared to $5,554,000 at
December 31, 1995.

                                       18



         At March 31, 1996, the recorded investment in loans that are considered
impaired under FAS 114 was $6,294,000,  all of which were on a nonaccrual basis.
Included in this amount was  $1,474,000 of impaired  loans for which $350,000 of
the reserve for credit  losses was  assigned.  The average  recorded  investment
during the first three months of 1996 in loans  classified  as impaired at March
31, 1996,  was  approximately  $6,983,000.  For the three months ended March 31,
1996, UCB recognized interest income on these impaired loans of $8,000 using the
cash basis of accounting.
         In addition to the  nonperforming  and problem assets  described above,
which included loans considered impaired under FAS 114, UCB had loans to various
borrowers  totaling  approximately  $9,876,000  at March  31,  1996,  for  which
management  has  serious  concerns  regarding  the ability of the  borrowers  to
continue to comply with present loan repayment  terms which could result in some
or all of these loans  becoming  classified as problem  assets.  These  concerns
resulted from various credit  considerations,  including the financial position,
operating results and cash flow of the borrowers, and the current estimated fair
value of the underlying collateral.
         The reserve for credit  losses  amounted  to  $44,382,000,  or 1.54% of
loans outstanding, at March 31, 1996, compared to $43,464,000, or 1.54% of loans
outstanding,  at December 31, 1995. In determining  the level of the reserve for
credit   losses,   management   takes  into   consideration   loan  volumes  and
outstandings, loan loss experience, delinquency trends, risk ratings assigned to
nonconsumer  loans,  identified problem loans, the present and expected economic
conditions in general, and, in particular, how such conditions relate to UCB. In
management's  opinion,  UCB's  reserve for credit  losses was adequate to absorb
losses from the

                                       19


loan portfolio at March 31, 1996;  however,  adverse  changes in
the  economic  conditions  in UCB's  market  area could lead to a decline in the
overall  quality of the loan portfolio and necessitate  future  additions to the
reserve  for  credit  losses.  Also,  examiners  from bank  regulatory  agencies
periodically  review UCB's loan  portfolio  and may require the  corporation  to
charge off loans and/or  increase the reserve for credit losses to reflect their
assessment of the  collectibility of loans in the portfolio based on information
available to them at the time of their examination.

Noninterest Income and Expense
         Total noninterest income increased  $1,175,000,  or 10.7%, in the first
three  months of 1996 over the same period of 1995.  Service  charges on deposit
accounts  increased  $458,000,  or 8.0%,  principally due to increased  business
volume  and  price  increases  for  certain  services.  Other  service  charges,
commissions,  and fees  increased  $1,265,000  to  $6,262,000  during  the first
quarter  of  1996  primarily  due to  increases  in  trust  revenues,  insurance
commissions, fees for the use of automated teller machines, and mortgage banking
fees. Trust revenues increased  $357,000,  or 28.9%,  primarily due to growth in
the number of managed trust  accounts as well as increases in pricing on certain
trust  services.  Commissions  from  the  general  insurance  agency  operations
increased  $384,000,  or 49.0%,  primarily  as the result of the merger  with an
insurance  agency in Wilmington,  North Carolina,  in April 1995. Fees collected
for  the  use  of  UCB's  automated  teller  machines  by  depositors  of  other
institutions  increased $54,000, or 19.2%, due to increased  transaction volume.
The  implementation  of a consumer  debit card program in November 1995 produced
$128,000  in  merchant  fee income  during the first  quarter of 1996.  Mortgage
banking  fees  increased  $285,000,  or  33.6%,  due  to  an  increase  in  loan
originations.

                                       20



  These  increases  in fees were  partially  offset by decreases in
brokerage and annuity  commissions which declined $35,000, or 5.8%, due to lower
trading volume.
         Gains on sales of mortgage loans into the secondary  market amounted to
$217,000 in the  three-month  period of 1996 compared to gains of $41,000 a year
ago.  The gains in 1996  include  $232,000  recorded  pursuant to the April 1995
adoption of the provisions of Financial Accounting Standards No. 122 (FAS 122).
         Losses on the sale of  investment  securities  totaled  $193,000 in the
three  months  ended  March 31,  1996,  compared  to gains of $3,000 in the same
period  of 1995.  The 1996  amount  includes  $257,000  in  losses  recorded  to
write-down the value of certain securities obtained in the previously  mentioned
merger  with  Triad  Bank  to  their  current  estimated   realizable  value  of
$10,676,000.  These  securities,  which consisted of structured  notes and other
investments  with  derivative  features,  did not comply  with UCB's  investment
policy  and were  therefore  reclassified  at the  merger  date from  investment
securities to available for sale  securities.  They were then disposed of during
the second  quarter of 1996.  Losses on the  disposition of fixed assets totaled
$539,000  during the first  quarter of 1996  compared  to gains of $9,000 in the
similar period of 1995. The 1996 loss included  $568,000 in write-downs on fixed
assets related to the mergers completed during the first quarter.
         Total noninterest expenses increased $3,028,000,  or 9.1%, in the three
months  ended  March  31,  1996,  compared  to the same  period  of 1995.  Total
personnel  expense  increased  $2,411,000  in the  three-month  period  of  1996
compared to 1995. Regular and part-time salaries increased by $676,000, or 4.8%,
in the first three months of 1996 due to increases in base  compensation  and an
increase  of 76,  or  4.2%,  in  the  average  number  of  full-time  equivalent

                                       21



employees.  The increase in the average number of full-time equivalent employees
was  principally due to the previously  mentioned  branch  acquisitions  and the
acquisition of the Wilmington insurance agency in April 1995. Other compensation
expense increased  $1,348,000,  or 142.0%,  primarily due to nonrecurring merger
charges totaling $945,000.
         Occupancy expense increased  $112,000,  or 4.6%, during the first three
months of 1996 as compared to 1995.  Depreciation  expense increased $12,000, or
2.5%, while rental expense increased $102,000,  or 13.2%, due to the increase in
branch locations and insurance agency offices from the prior year.
          Equipment expense increased $20,000, or 1.1%, for the first quarter of
1996 as  compared to the same period of 1995.  Repairs and  maintenance  expense
increased  $59,000,  or 9.4%  and  purchases  of  noncapitalized  furniture  and
equipment  increased  $18,000,  or  28.2%,  primarily  due  to  increased  costs
associated with the branches  acquired  during 1995 and the expenses  associated
with modifications made to the branches acquired in the 1996 mergers.
         Other operating expenses increased $485,000,  or 5.0%, during the first
three months of 1996 as compared to 1995. The most significant  factor affecting
other  operating  expenses was a reduction in deposit  insurance  premiums which
decreased  $1,665,000,  or 96.1%, from the three-month  period of 1995. This was
due to a reduction in the  assessment  rate from $.23 to $.04  effective June 1,
1995,  and a  subsequent  reduction  to  virtually  zero on  nonthrift  deposits
effective January 1, 1996. Marketing and business development expenses increased
$63,000,  or 5.8%,  primarily due to increased  advertising related to campaigns
designed to increase installment loan volume and deposit balances.  Professional
services expense for the first quarter of 1996 increased $246,000, or 32.0%. The
current  year's  professional  services  included  expenses  applicable to

                                       22



UCB's
acquisitions by merger of Seaboard and Triad totaling  $146,000,  while the 1995
expenses  were  reduced  by  legal  fees  refunded  in a  bankruptcy  proceeding
involving a current customer.
         Outside data processing fees increased $313,000,  or 27.0%, compared to
1995 primarily due to increased software amortization expense ($62,000, or 22.2%
increase) and increased  software  maintenance costs ($123,000,  or 71.0 %), and
expenses for the consumer debit card transaction  program  previously  mentioned
($73,000  increase).   The  increases  in  software  amortization  and  software
maintenance  costs  reflect the  purchase of  computer  software  related to the
automation  of certain  labor-intensive  tasks and the  replacement  of existing
applications software.
         The   amortization  of  capitalized   mortgage  loan  servicing  rights
increased  $80,000,  or 59.1%, from the prior year due to the  capitalization of
originated  servicing rights  beginning April 1, 1995, as previously  discussed.
Telephone expense increased $224,000,  or 33.7%, as a result of increased use of
an automated response telephone system and the introduction in 1995 of a staffed
bank-by-phone  customer  service  department,  both of which are  accessible  by
toll-free numbers. Amortization of deposit base premiums increased $440,000 from
$24,000  in 1995 as the  result of the May 1995  branch  purchases  referred  to
previously. Increases in other categories of noninterest expenses were generally
the result of increases in the costs related to purchased services.

Income Tax Provision
         The  provision  for income tax  increased  $155,000 in the three months
ended March 31, 1996, compared to the corresponding period of 1995. The increase
in the income tax  provision

                                       23



was  principally  the net result of an increase of
$183,000 in pre-tax income and an increase of $157,000 in  nondeductible  merger
related expenses.
         The effective  income tax rate on income before taxes is lower than the
combined  statutory federal and state rates primarily because interest earned on
investments  in debt  instruments of states,  counties,  and  municipalities  is
exempt  from  federal  income  tax and may be  exempt  from  state  income  tax.
Substantially all income earned on securities of the United States government or
its agencies is exempt from state income taxes.

Financial Condition
         The financial  condition of the Corporation,  with respect to liquidity
and dividends at March 31, 1996,  has not changed  significantly  since December
31, 1995.  At March 31, 1996,  stockholders'  equity  amounted to 7.87% of total
assets  compared to 8.00% at December  31, 1995.  At March 31,  1996,  UCB had a
ratio of core  capital to  weighted  risk assets of  approximately  11.28% and a
ratio of total capital to weighted risk assets of approximately 12.53%, computed
using the Federal Reserve guidelines for risk-based capital requirements,  and a
ratio of  quarter-end  core capital to average total assets for the three months
ended March 31, 1996, of 7.79%.
         On  an  annualized  basis,  net  income  as  a  percentage  of  average
stockholders'  equity  amounted  to 13.04%  for the first  three  months of 1996
compared  to  14.91%  for the same  period  of  1995.  Cash  dividends  declared
represented 38.50% of net income in the first quarter of 1996 compared to 31.05%
for the three months ended March 31, 1995.
         At March 31,  1996,  UCB  owned  securities  which  met the  regulatory
definition  of  structured  notes which were  acquired in the mergers  completed
during the quarter.  These

                                       24



securities were written down to their market value of
$7,646,000,  and as previously mentioned, were disposed of subsequent to the end
of the first quarter.
         At March 31, 1996, UCB owned debt securities that had not been rated by
a rating agency with a book value of $1,752,000.  In addition,  debt  securities
with a book value of $166,000  were owned at March 31, 1996,  that had less than
investment grade ratings.  Included in the unrated  securities were bonds with a
book value of $1,170,000 that are collateralized by U.S. government  securities.
Substantially  all of these investments were securities issued by municipalities
located within UCB's market area. It is management's opinion that no more than a
normal risk of loss exists on these securities.

Accounting and Regulatory Issues
         In March 1995, the FASB issued Financial  Accounting  Standards No. 121
(FAS 121),  "Accounting  for Impairment of Long-Lived  Assets and for Long-Lived
Assets to Be  Disposed  Of,"  which  establishes  accounting  standards  for the
impairment of long-lived assets, certain identifiable intangibles,  and goodwill
related  to those  assets to be held and used and for those to be  disposed  of.
This  statement  requires  that  long-lived  assets and certain  intangibles  be
reviewed for impairment  whenever  events or changes in  circumstances  indicate
that the carrying  value may not be  recoverable.  An impairment  loss should be
recognized  if the sum of the  undiscounted  future  cash flows is less than the
carrying amount of the asset.  Those assets to be disposed of are to be reported
at the  lower of the  carrying  amount or fair  value  less  costs to sell.  UCB
adopted FAS 121 on January 1, 1996, with no material effect on the  consolidated
financial statements.

                                       25




         In October 1995, the FASB issued Financial Accounting Standards No. 123
(FAS 123), "Accounting for Stock-Based Compensation," which encourages companies
to account for stock  compensation  awards based on their fair value at the date
the awards are granted.  The  resulting  compensation  cost would be shown as an
expense on the income  statement.  Companies  may choose to  continue to measure
compensation  for  stock-based   plans  using  the  intrinsic  value  method  of
accounting  prescribed  by APB  Opinion No. 25 (APB 25),  "Accounting  for Stock
Issued to Employees." Entities electing to continue the accounting prescribed in
APB 25 will be required to  disclose  in the notes to the  financial  statements
what net income and  earnings  per share would have been if the fair value based
method of accounting defined in FAS 123 had been applied. UCB adopted FAS 123 on
January 1, 1996, and elected to continue to measure  compensation cost using APB
25. UCB will make any  appropriate  disclosures  in the  consolidated  financial
statements for the year ending December 31, 1996, of net income and earnings per
share as if the fair  value-based  method of  accounting  defined in FAS 123 had
been applied. Management has not yet quantified these pro forma disclosures.
         Various  proposals are currently being  considered by committees of the
United  States  Congress  concerning  a possible  merger of the Federal  Deposit
Insurance  Corporation's Savings Association Insurance Fund (SAIF) with the Bank
Insurance Fund (BIF). One of the principal issues under discussion is the amount
of additional funds needed to recapitalize the SAIF prior to such a merger. Many
of the proposals under consideration  contemplate obtaining the additional funds
deemed  necessary  for the SAIF  through  a special  assessment  to be levied on
SAIF-insured  deposits.  The proposed merger of SAIF and BIF was not included in
the 1996 Federal  Budget  legislation,  and  therefore,  the timing and ultimate
outcome of any legislation continues to be 

                                       26



uncertain. At March 31, 1996, UCB had
approximately  $179 million of SAIF insured  deposits  which may be subject to a
special  assessment if a proposal  similar to those that have been publicized is
adopted.
         UCB and its  subsidiaries  are subject to regulation and examination by
state and federal bank regulatory agencies and are subject to the accounting and
disclosure requirements of the Securities and Exchange Commission.  There are no
pending material regulatory recommendations or actions concerning UCB with which
management has not complied.


                                       27

PART II - OTHER INFORMATION

Item 4.  Submission of Matters to a Vote of Security Holders.

         (a) The Annual Meeting of Shareholders of Registrant was held April 17,
         1996.

         (c) The following matters were submitted to a  vote of the Registrant's
         shareholders at the Annual Meeting:

             (1) Election of thirteen  (13) directors (constituting  the  entire
             Board of Directors) for the ensuing year 1996-1997.

             The number of share  votes cast "For" and  "Withheld"  with respect
             to the election of each director nominee was as follows:

                                              For       Withheld
                                           ----------   --------

             J. W. Adams                   16,904,589     77,325
             John V. Andrews               16,903,907     78,007
             Russell M. Carter             16,901,403     80,511
             W. E. Carter                  16,904,846     77,068
             Alfred E. Cleveland           16,906,293     75,621
             James L. Cresimore            16,850,425    131,489
             Thomas P. Dillon              16,898,036     83,878
             C. Frank Griffin              16,903,308     78,606
             James C. High                 16,900,173     81,742
             E. Rhone Sasser               16,876,807    105,107
             Jack E. Shaw                  16,905,329     76,585
             Harold B. Wells               16,904,990     76,924
             Charles M. Winston            16,905,640     76,274

             (2) Approval of the  Registrant's  1995 Stock  Option and Incentive
             Award Plan  under which stock  options, stock appreciation  rights,
             stock awards and/or performance units may be made from time to time
             to  selected  key employees  of  Registrant  and  its  subsidiaries
             as approved by the Personnel Committee of the Board of Directors as
             Plan Administrator.

                 For          Against     Abstain
             ----------      ---------    --------

             15,602,581      1,070,860     344,832




                                       28



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

         (a) The following  exhibit is furnished  as  a part  of this report  as
         required  by Item  601 of  Regulation  S-K:  Exhibit  Number  (10) (g):
         Registrant's 1995 Stock Option and Incentive Award Plan, dated July 21,
         1995, as approved by Registrant's shareholders at its Annual Meeting on
         April 17, 1996.

         (b) The  following report on Form 8-K  was  filed  by  Registrant  with
         the  Commission during  the  first quarter of 1996:  Report on Form 8-K
         (Item 5.  Other Events), dated  February 9, 1996, for  event  occurring
         on January 25,  1996, relating  to  the  consummation  of  Registrant's
         acquisition by merger of Seaboard Savings Bank, Inc. SSB.






                                       29





                                    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.


                                      UNITED CAROLINA BANCSHARES CORPORATION



May 13, 1996                          By /s/ John F. Watson
                                             --------------------------
                                             Controller



May 13, 1996                          By /s/ Ronald C. Monger
                                             --------------------------
                                             Executive Vice President &
                                             Chief Financial Officer







                                       30



EXHIBIT INDEX


Exhibit Number
per Item  601 of
Regulation S-K          Description of Exhibit        Sequential Page Number
- ----------------        ----------------------        ----------------------

(10)(g)                 UCB's 1995 Stock Option       Pages 32-52
                        and Incentive Award Plan

(27)                    Financial Data Schedule       Page 53







                                       31