Securities and Exchange Commission
Washington, D C 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, 1997

|_| TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM to ________ to ________

Commission file number 0-15083

CAROLINA FIRST CORPORATION
--------------------------
(Exact name of registrant as specified in its charter)

South Carolina 57-0824914
-------------- ----------
(State or other jurisdiction of (I.R.S Employer
incorporation or organization) Identification No )

102 South Main Street, Greenville, South Carolina 29601
- ------------------------------------------------- -----
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (864) 255-7900
--------------

- --------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report )

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 |_|

The number of outstanding shares of the issuer's $1 00 par value common stock as
of May 10, 1997 was 11,372,228

CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
Carolina First Corporation and Subsidiaries
- --------------------------------------------------------------------------------
(Unaudited)
($ In thousands, except share data)

March 31, December 31,
-------------------------------------- ------------------
Assets 1997 1996 1996
-------------------------------------- ------------------

Cash and due from banks .......................................... $ 62,111 $ 87,912 $ 86,322
Interest-earning deposits with banks ............................. 16,809 16,591 26,037
Securities
Trading ....................................................... 1,262 2,355 2,005
Available for sale ............................................ 230,536 149,073 213,889
Held for investment (market value $29,643, $26,802, and
$29,861, respectively) ........................................ 29,578 26,681 29,465
-------------------------------------- ------------------
Total securities ............................................ 261,376 178,109 245,359
-------------------------------------- ------------------
Loans held for sale .............................................. 20,056 9,865 10,449
Loans ............................................................ 1,178,276 1,025,660 1,128,537
Less unearned income .......................................... (14,889) (5,923) (14,211)
Less allowance for loan losses ................................ (12,039) (9,093) (11,290)
-------------------------------------- ------------------
Net loans ................................................... 1,171,404 1,020,509 1,113,485
-------------------------------------- ------------------
Premises and equipment ........................................... 30,509 40,323 32,418
Accrued interest receivable ...................................... 11,195 12,347 11,913
Other assets ..................................................... 60,502 45,948 58,670
-------------------------------------- ------------------
$ 1,613,906 $ 1,401,739 $ 1,574,204
====================================== ==================
Liabilities and Shareholders' Equity
Liabilities
Deposits
Noninterest-bearing .......................................... $ 210,350 $ 163,492 $ 194,067
Interest-bearing ............................................. 1,046,655 993,429 1,086,983
-------------------------------------- ------------------
Total deposits ............................................. 1,257,005 1,156,921 1,281,050
Borrowed funds ................................................. 172,462 109,611 146,270
Subordinated notes ............................................. 25,393 25,269 25,361
Accrued interest payable ....................................... 8,624 8,218 9,672
Other liabilities .............................................. 45,083 5,156 6,887
-------------------------------------- ------------------
Total liabilities ........................................... 1,508,567 1,305,175 1,469,240
-------------------------------------- ------------------
Commitments and Contingent Liabilities
Shareholders' Equity
Preferred stock-no par value; authorized 10,000,000 shares;
issued and outstanding Series 1993B (liquidation preference
$20 per share) none, 52,097, and 49,141 shares, respectively .. -- 1,002 943
Common stock-par value $1 per share; authorized 20,000,000
shares; issued and outstanding 11,355,443, 9,224,149, and
11,225,568 shares, respectively .............................. 11,355 9,224 11,226
Surplus ........................................................ 84,721 84,359 83,598
Retained earnings .............................................. 10,337 3,321 9,546
Guarantee of Employee Stock Ownership Plan debt and
nonvested restricted stock ................................. (697) (1,209) (832)
Unrealized (loss) gain on securities available for sale, ....... (377) (133) 483
net of tax -------------------------------------- ------------------
Total shareholders' equity .................................. 105,339 96,564 104,964
-------------------------------------- ------------------
$ 1,613,906 $ 1,401,739 $ 1,574,204
====================================== ==================

CONSOLIDATED STATEMENTS OF INCOME
- --------------------------------------------------------------------------------
Carolina First Corporation and Subsidiaries
- --------------------------------------------------------------------------------
(Unaudited)
($ In thousands, except share data)

Three Months Ended March 31,
---------------------------
1997 1996
---------------------------
Interest Income

Interest and fees on loans ........................ $ 26,918 $ 25,359
Interest and dividends on securities .............. 3,260 2,534
Interest on short-term investments ................ 214 204
------------ -----------
Total interest income ........................... 30,392 28,097
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Interest Expense
Interest on deposits .............................. 12,701 11,356
Interest on borrowed funds ........................ 2,239 3,314
------------ -----------
Total interest expense .......................... 14,940 14,670
------------ -----------
Net interest income ............................. 15,452 13,427
Provision for Loan Losses ........................... 2,952 1,500
------------ -----------
Net interest income after provision for loan losses 12,500 11,927
------------ -----------
Noninterest Income
Service charges on deposit accounts ............... 1,629 1,476
Mortgage banking income ........................... 528 576
Fees for trust services ........................... 383 336
Loan securitization income ........................ (59) 616
Gain on sale of securities ........................ 84 83
Sundry ............................................ 527 1,203
------------ -----------
Total noninterest income ........................ 3,092 4,290
------------ -----------
Noninterest Expenses
Personnel expense ................................. 6,253 6,867
Occupancy ......................................... 1,244 1,108
Furniture and equipment ........................... 920 833
Sundry ............................................ 4,449 3,871
------------ -----------
Total noninterest expenses ...................... 12,866 12,679
------------ -----------
Income before income taxes ...................... 2,726 3,538
Income taxes ........................................ 1,009 1,310
------------ -----------
Net income ...................................... 1,717 2,228
Dividends on preferred stock -- 16
------------ -----------
Net income applicable to common shareholders .... $ 1,717 $ 2,212
============ ===========
Net Income per Common Share:*
Primary ......................................... $ 0.15 $ 0.23
Fully diluted ................................... 0.15 0.20
Average Common Shares Outstanding:*
Primary ......................................... 11,443,468 9,540,718
Fully diluted ................................... 11,478,383 11,323,128
Cash Dividends Declared per Common Share* ........... $ 0.07 $ 0.06

*Share data have been restated to reflect the six-for-five stock split declared
12/18/96

CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
Carolina First Corporation and Subsidiaries
- --------------------------------------------------------------------------------
(Unaudited)
($ In thousands)

Three Months Ended March 31,
----------------------------
1997 1996
----------------------------

Cash Flows From Operating Activities
Net income .................................................. $ 1,717 $ 2,228
Adjustments to reconcile net income to net cash
provided by operations
Depreciation ............................................ 703 882
Amortization of intangibles ............................. 30 459
Provision for loan losses ............................... 2,952 1,500
Gain on sale of securities .............................. (84) (83)
Unrealized loss on trading securities ................... 8 47
Originations of mortgage loans held for sale ............ (37,710) (43,486)
Sale of mortgage loans held for sale .................... 24,224 40,202
Proceeds from sale of trading securities ................ 244,731 130,248
Proceeds from maturity of trading securities ............ 1,337 7,142
Purchase of trading securities .......................... (245,250) (133,907)
Decrease (increase) in accrued interest receivable ...... 718 (1,518)
(Decrease) increase in accrued interest payable ......... (1,048) 1,481
(Increase) decrease in other assets ..................... (1,480) 669
Increase in other liabilities ........................... 549 1,122
----------------------------
Net cash provided by operating activities ................. (8,603) 6,986
----------------------------

Cash Flows From Investing Activities
Net decrease (increase) in interest-earning deposits with banks 9,228 (7,928)
Proceeds from sale of securities available for sale ......... -- 10,231
Proceeds from maturity of securities available for sale ..... 51,459 11,276
Proceeds from maturity of securities held for investment .... 714 118
Purchase of securities available for sale ................... (69,364) (24,810)
Purchase of securities held for investment .................. (827) (510)
Purchase of loans ........................................... (10,510) --
Net increase in loans ....................................... (52,137) (60,308)
Securitization and sale of commercial loans ................. -- 95,582
Capital expenditures ........................................ (475) (885)
----------------------------
Net cash (used for) provided by investing activities ...... (71,912) 22,766
----------------------------

Cash Flows From Financing Activities
Net increase in deposits .................................... 30,563 61,430
Increase (decrease) in borrowed funds ....................... 26,192 (78,256)
Redemption of preferred stock ............................... -- (204)
Cash dividends paid ......................................... (786) (1,021)
Other common stock activity ................................. 335 441
----------------------------
Net cash provided by (used for) financing activities ...... 56,304 (17,610)
----------------------------

Net change in cash and due from banks ......................... (24,211) 12,142
Cash and due from banks at beginning of period ................ 86,322 75,770
----------------------------
Cash and due from banks at end of period ...................... $ 62,111 $ 87,912
============================

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CAROLINA FIRST CORPORATION AND SUBSIDIARIES

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of these policies is included in the 1996 Annual Report to
Shareholders.

(2) STATEMENTS OF CASH FLOWS

Cash includes currency and coin, cash items in process of collection and
due from banks. Interest paid, net of interest capitalized as a part of
the cost of construction, amounted to approximately $15,988,000 for the
three months ended March 31, 1997. Income tax payments of $509,000 and
$83,000 were made for the three months ended March 31, 1997 and March 31,
1996, respectively.

(3) BUSINESS COMBINATIONS

On April 6, 1997, the Company completed the sale of five branches located
in Barnwell, Blackville, Salley, Springfield and Williston to The Bank
of Barnwell County, a wholly-owned subsidiary of Community Capital
Corporation, headquartered in Greenwood, South Carolina. The terms of
the settlement were finalized prior to March 31, 1997, but the
consummation of the transaction was postponed for a few days due to
scheduling difficulties with the purchaser's outside service provider.
As a result, the gain of $2,292,000 related to the sale which was
expected to be recorded in the first quarter of 1997 was delayed until
the first week of the second quarter of 1997. In connection with this
transaction, Carolina First Bank sold loans of approximately $15
million and deposits of approximately $55 million.

In March 1997, the Company signed a definitive agreement to acquire
Lowcountry Savings Bank, Inc. ("Lowcountry"). The Company plans to merge
Lowcountry into Carolina First Bank, a wholly-owned subsidiary of the
Company. The Company has agreed to acquire all the outstanding common
shares of Lowcountry for approximately $13.3 million, with 60% payable
with the Company's $1 par value common stock and 40% payable in cash.
Lowcountry has five offices in the greater Charleston area, and at March
31, 1997, had approximately $78 million in assets and $64 million in
deposits. The Company will record the acquisition using the purchase
method of accounting.

(4) SECURITIES

The net unrealized gain on securities available for sale decreased
$860,000 to a net unrealized loss for the three months ended March 31,
1997.

(5) COMMON STOCK

Primary earnings per share is based on the weighted average number of
common shares outstanding during each period, including the assumed
exercise of dilutive stock options, using the treasury stock method.
Primary earnings per share also reflects provisions for dividend
requirements on all outstanding shares of preferred stock.

Fully diluted earnings per share is based on the weighted average number
of common shares outstanding during each period, including the assumed
conversion of convertible preferred stock into common stock and the
assumed exercise of dilutive stock options using the treasury stock
method

(6) COMMITMENTS AND CONTINGENT LIABILITIES

In March 1997, the federal court dismissed counterclaims filed by the
Bowers, who contended that the Company has misstated earnings and made
fraudulent representations in documents involved in the merger of Midlands
National Bank ("Midlands") into Carolina First Bank (the"Merger") in June
1995. In April 1997, the Company announced the settlement of two lawsuits
involving David Bowers and Monte Bowers, former officers and shareholders
of Midlands. One of the lawsuits had been brought by the Bowers against
Carolina First Bank in state court, alleging breach of employment
contracts as officers of Carolina First Bank following the Merger. The
other lawsuit was brought in federal court by Carolina First Bank against
the Bowers, alleging that the Bowers had committed bank fraud and
securities fraud in connection with the Merger. The Company is prohibited
from disclosing the terms of the settlement agreement which were favorable
to the Company. Both suits have been dismissed in connection with the
settlement.

(7) MANAGEMENT'S OPINION

The financial statements in this report are unaudited. In the opinion of
management, all adjustments necessary to present a fair statement of the
results for the interim periods have been made. All such adjustments are
of a normal, recurring nature.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with
the consolidated financial statements and related notes and with the statistical
information and financial data appearing in this report as well as the 1996
Annual Report of Carolina First Corporation (the "Company") on Form 10-K.
Results of operations for the three month period ended March 31, 1997 are not
necessarily indicative of results to be attained for any other period.

OVERVIEW

The Company, a South Carolina corporation headquartered in Greenville,
South Carolina, is a financial institution, which commenced banking operations
in December 1986, and currently conducts business through 50 locations in South
Carolina. The Company operates through three principle subsidiaries: Carolina
First Bank, a state-chartered commercial bank, Carolina First Mortgage Company
("CF Mortgage"), a mortgage banking operation, and Blue Ridge Finance Company,
Inc. ("Blue Ridge"), an automobile finance company. Through its subsidiaries,
the Company provides a full range of banking services, including mortgage, trust
and investment services, designed to meet substantially all of the financial
needs of its customers. At March 31, 1997, the Company had approximately $1.6
billion in assets, $1.2 billion in loans, $1.3 billion in deposits and $106.8
million in shareholders' equity.

On April 6, 1997, the Company completed the sale of five branches
located in Barnwell, Blackville, Salley, Springfield and Williston to
The Bank of Barnwell County, a wholly-owned subsidiary of Community Capital
Corporation, headquartered in Greenwood, South Carolina. The terms of the
settlement were finalized prior to March 31, 1997, but the consummation of
the transaction was postponed for a few days due to scheduling difficulties
with the purchaser's outside service provider. As a result, the gain of
$2,292,000 related to the sale which was expected to be recorded in the
first quarter of 1997 was delayed until the first week of the second
quarter of 1997. The gain on the sale of the branches will increase second
quarter 1997 earnings per share by approximately $0.13. In connection with this
transaction, Carolina First Bank sold loans of approximately $15 million and
deposits of approximately $55 million.

Net income for the first quarter of 1997 was $1.7 million, or $0.15 per
fully diluted share. For the first quarter of 1996, net income was $2.2
million, or $0.20 per fully diluted share. Net interest income increased
approximately $2.0 million for the first quarter of 1997, compared to the
year earlier period. This increase was offset by an increase in the provision
for loan losses and lower loan securitization income, primarily from higher
credit card charge-offs than those historically experienced.

On January 30, 1997, the Company issued a six-for-five stock split
effected in the form of a 20% common stock dividend to shareholders of record as
of January 15, 1997. Share and per share data for all periods presented have
been retroactively restated to reflect the additional shares outstanding
resulting from the stock dividend. On February 1, 1997, all outstanding shares
of the Series 1993B Cumulative Convertible Preferred Stock ("Series 1993B
Preferred Stock") were converted into the Company's $1.00 par value common stock
("Common Stock").

On February 15, 1997, the Company paid a cash dividend of $0.07 per share,
which represented an effective increase of 20% after adjusting for the stock
split. The Company has increased its cash dividend every year since the
initiation of cash dividends, or each year for four consecutive years for an
annual compound increase in excess of 22%.

On March 14, 1997, the Company signed a definitive agreement to acquire
Lowcountry Savings Bank, Inc. ("Lowcountry"). The Company plans to merge
Lowcountry into Carolina First Bank. The Company has agreed to acquire all the
outstanding common shares of Lowcountry for approximately $13.3 million, with
60% payable with the Company's Common Stock and 40% payable in cash. Lowcountry
has

five offices in the greater Charleston area, and at March 31, 1997, had
approximately $78 million in assets and $64 million in deposits. The Company
will record the acquisition using the purchase method of accounting. The Company
currently owns 39,600 shares, or approximately 4.4%, of Lowcountry's outstanding
common stock.

EQUITY INVESTMENTS

Investment in Affinity Technology Group, Inc.

At March 31, 1997, the Company (through its subsidiary Blue Ridge) owned
128,366 shares of common stock of Affinity Technology Group, Inc. ("Affinity")
and a warrant to purchase an additional 5,871,340 shares for approximately
$0.0001 per share ("Affinity Warrant"), or approximately 17% of Affinity's
outstanding common stock. At March 31, 1997, the investment in Affinity's common
stock, included in securities available for sale, was recorded at its book value
of $12. The Affinity Warrant was not reported on the Company's balance sheet as
of March 31, 1997.

The Company's shares in Affinity are, and the shares issuable upon the
exercise of the Affinity Warrant will be, "restricted" securities as that term
is defined in federal securities laws.

The Affinity Warrant may be exercised in whole or in part at any time
prior to December 31, 2015, subject to certain restrictions. Unless prior
written approval of the Board of Governors of the Federal Reserve Board (the
"Federal Reserve Board") is received, the Affinity Warrant may not be exercised
in whole or in part if, after such exercise, the holder of the Affinity Warrant
will beneficially own 5% or more of Affinity's common stock. The Affinity
Warrant may not be transferred without the approval of the Federal Reserve
Board. The Affinity Warrant has been filed as an exhibit in the Company's
periodic filings with the Securities and Exchange Commission. The Company has an
application pending with the Federal Reserve Board which, if approved, would
permit the Company to exercise the Affinity Warrant for up to 15% of Affinity's
total common stock outstanding and own the resulting shares outright.

The Company has reviewed its options with respect to its investment in
Affinity and currently has no plans to distribute or sell at the current price.
The Company's Board of Directors will continue to periodically review the
investment in Affinity and may decide to change the policy with respect to its
Affinity ownership position in the future.

Investment in Net.B@nk, Inc.

On April 25, 1997, Net.B@nk, Inc. ("Net.B@nk") filed a registration
statement on Form S-1 with the Securities and Exchange Commission for 3,450,000
shares of common stock (including the underwriters' over-allotment option). Upon
consummation of the offering, Net.B@nk will own and

operate the Atlanta Internet Bank, F.S.B., a FDIC-insured federal savings bank
that provides banking services to consumers utilizing the Internet for their
commercial and financial services. Currently, Atlanta Internet Bank services are
being offered as a product of Carolina First Bank. Upon completion of the
offering, assuming exercise of over-allotment options, Carolina First Bank is
expected to be the largest shareholder owning approximately 19% of the
Net.B@nk's common stock. At the time of this filing, full regulatory approval
has not yet been received by Net.B@nk. The initial public offering of Net.B@nk
may or may not be completed as outlined in the registration statement.

EARNINGS REVIEW

Net Interest Income

The largest component of the Company's net income is Carolina First Bank's
net interest income. Net interest income is the difference between the interest
earned on assets and the interest paid for the liabilities used to support such
assets. Fully tax-equivalent net interest income adjusts the yield for assets
earning tax-exempt income to a comparable yield on a taxable basis. Fully tax
equivalent net interest income increased $2.1 million, or 16%, to $15.6 million
for the first three months of 1997 from $13.5 million for the first three months
of 1996. The increase resulted principally from a higher level of average
earning assets and a higher net interest margin. The growth in average earning
assets, which increased $130.0 million, or 10%, to approximately $1.4 billion in
the first three months of 1997 from $1.3 billion in the first three months of
1996, resulted from an increase in both loans and investment securities. Average
loans and average investment securities increased $70.9 million and $40.0
million, respectively, in the first quarter of 1997 compared with the first
quarter of 1996.

The net interest margin for the three months ended March 31, 1997 of 4.52%
was higher than the margin of 4.26% for the same period of 1996. The higher net
interest margin in the first quarter of 1997 resulted primarily from lower
funding costs. During March 1996, Carolina First securitized approximately $116
million in commercial real estate loans. The completion of this transaction took
longer than expected, resulting in higher funding costs from short-term
borrowings at incrementally higher rates in 1996. The cost of funds was also
lower in 1997 as a result of some higher priced certificates of deposit
repricing at lower rates. Higher demand deposits, primarily associated with the
Atlanta Internet Bank, also contributed to the lower cost of funds. Another
positive influence on the net interest margin in 1997 was the increase in the
prime interest rate from 8.25% to 8.50% during the last week of the quarter.
Approximately half of the Company's loan portfolio has variable rates and
immediately repriced upward. Since this increase occurred so late in the
quarter, the impact on the net interest margin for the first quarter was minor.

Provision for Loan Losses

The provision for loan losses was $3.0 million for the first three months
of 1997 and $1.5 million for the first three months of 1996. The 1997 provision
for loan losses was increased principally as a result of Carolina First Bank's
credit card activities and consumer credit concerns. During the first quarter of
1997, credit card charge-offs totaled $1.9 million which is considerably higher
than the level of charge-offs historically experienced.

Management currently anticipates that loan growth will continue in 1997.
New market areas are expected to contribute to 1997 portfolio growth. Management
intends to closely monitor economic trends

and the potential effect on Carolina First Bank's loan portfolio.

Noninterest Income

Noninterest income was $3.1 million in the first quarter of 1997 and $4.3
million in the first quarter of 1996. Noninterest income in the first quarter
of 1996 included $587,000 recorded as a gain on the disposition of equity
investments (offset by $587,000 recorded as compensation expense). This gain
relates to the award of Affinity stock to certain officers of the Company
deemed most responsible for the Company's investment in Affinity. The
Company recognized gains on the sale of securities of $84,000 and $83,000
in the first quarters of 1997 and 1996, respectively. Excluding the
nonrecurring items discussed above, noninterest income decreased 17% to
$3.0 million for the three months ended March 31, 1997 from $3.6 million
for the same period of 1996. This decrease resulted principally from lower
loan securitization income resulting from higher credit card charge-offs
associated with the securitized credit cards.

Service charges on deposit accounts, the largest contributor to
noninterest income, rose 7% to $1.6 million in the first three months of 1997
from $1.5 million in the first three months of 1996. Average deposits for the
same period increased 15.8%. The increase in service charges was attributable to
attracting new transaction accounts and improved collection results. In
addition, effective March 1, 1997, Carolina First Bank implemented increases in
some of its existing service charges.

During the first quarter of 1997, the Company had a loss of $59,000 from
its interests in the credit card and commercial real estate loan trusts,
compared to income of $616,000 for the same period in 1996. Loan securitization
income is net of charge-offs associated with the loans in the trusts. Loan
securitization income related to credit cards declined significantly to a loss
of $206,000 for the first quarter of 1997, compared to income of $436,000 for
the first quarter of 1996. The loan securitization income was negatively
impacted by greater than expected charge-offs in the credit card securitization.
The Company completed the securitization of approximately $116 million in
commercial real estate loans on March 14, 1996. Securitization income for the
commercial real estate loan trust totaled $147,000 for the first quarter of 1997
with no loan charge-offs during the quarter.

Mortgage banking income includes origination fees, gains from the sale of
loans and servicing fees (which are net of the related amortization for the
mortgage servicing rights and subservicing payments). Mortgage banking income in
the first three months of 1997 decreased 8% to $528,000, compared with $576,000
in the first three months of 1996. The decrease is attributable to decreased
gains on the sale of loans and lower origination volumes.

Income from originations and sales of mortgage loans, including sales of
loans originated by Carolina First Bank, totaled $449,000 in the first three
months of 1997, down from $494,000 for the first three months of 1996. The
decrease in origination fees was attributable to lower internally originated
loan volume due to higher mortgage loan rates. Mortgage loans totaling
approximately $24 million and $40 million were sold in the first three months of
1997 and 1996, respectively.

CF Mortgage's mortgage servicing operations consist of servicing loans
that are owned by Carolina First Bank and subservicing loans, to which the
rights to service are owned by Carolina First Bank or other non-affiliated
financial institutions. At March 31, 1997, CF Mortgage was servicing or

subservicing 14,976 loans having an aggregate principal balance of approximately
$1.3 billion.

Servicing income from non-affiliated companies, net of the related
amortization for the mortgage servicing rights and subservicing payments, was
$79,000, compared with $82,000 for the first three months of 1996. Although the
volume of loans serviced increased to $1.3 billion at March 31, 1997 from $1.2
billion at March 31, 1996, the related amortization increased due to accelerated
prepayments leading to a decline in servicing income. The servicing income does
not include the benefit of interest-free escrow balances related to mortgage
loan servicing activities.

Fees for trust services in the first three months of 1997 of $383,000 were
14% above the $336,000 earned in the same period of 1996. At March 31, 1997,
Carolina First Bank's trust department had assets under management of
approximately $419 million. Fees for trust services increased as a result of the
generation of new trust business and additional assets under management.

Sundry income was $676,000 lower for the first three months of 1997 than
for the same period of 1996. Sundry income in 1996 included approximately
$587,000 which was the gain on the disposition of equity investments relating to
the transfer of Affinity stock to certain officers of the Company. See "OVERVIEW
- - Investment in Affinity Technology Group."

Noninterest Expenses

Noninterest expenses increased $187,000, or 1%, to $12.9 million in the
first three months of 1997 from $12.7 million in the first three months of 1996.
In the first quarter of 1996, approximately $587,000 was recorded as
compensation expense related to a non-recurring award of Affinity stock to
certain officers of the Company. The increase in expenditures reflects the cost
of operating in new markets as well as the purchase of additional automated
teller machines ("ATMs") to better service existing customers. Excluding the
nonrecurring compensation expense, noninterest expenses increased $774,000, or
6%, to $12.9 million for the first three months of 1997 compared with $12.1
million for the first three months of 1996.

Salaries and wages and employee benefits, excluding the $587,000 in
non-recurring compensation expense in 1996, decreased $27,000 to $6.3 million in
the first three months of 1997. Full-time equivalent employees remained the same
at 593 for both first quarter 1997 and first quarter 1996.

Occupancy and furniture and equipment expenses increased $223,000, or 12%,
to $2.2 million for the three months ended March 31, 1997 from $1.9 million for
the three months ended March 31, 1996. This increase resulted principally from
the opening of a new Hilton Head office and the addition of twelve new ATMs
since the beginning of 1996 setting the total number of ATMs at 30.

Sundry noninterest expenses increased $578,000, or 15%, to $4.4 million in
the first three months of 1997 from $3.9 million in the first three months of
1996. The overall increase in sundry noninterest expense was principally
attributable to the overhead and operating expenses associated with higher
lending and deposit activities. The largest items of sundry noninterest expense
were stationery, supplies, printing, legal fees and advertising.

BALANCE SHEET REVIEW

Loans

The Company's loan portfolio consists of commercial mortgage loans,
commercial loans, consumer loans and one-to-four family residential mortgage
loans. A substantial majority of these borrowers are located in South Carolina
and are concentrated in the Company's market areas. The Company has no foreign
loans or loans for highly leveraged transactions. The loan portfolio does not
contain any industry concentrations of credit risk exceeding 10% of the
portfolio. At March 31, 1997, the Company had total loans outstanding of $1.2
billion which equaled approximately 94% of the Company's total deposits and
approximately 73% of the Company's total assets. The composition of the
Company's loan portfolio at March 31, 1997 follows: commercial and commercial
mortgage 68%, consumer 10%, residential mortgage 8%, lease receivables 7%,
credit card 4% and construction 3%.

The Company's loans increased $153.8 million, or 15%, to approximately
$1.2 billion at March 31, 1997 from $1.0 billion at March 31, 1996 and increased
$58.7 million from approximately $1.1 billion at December 31, 1996. This
increase was net of loan sales of approximately $15 million from the branch sale
with The Bank of Barnwell County and $24 million from mortgage loans sold. The
increase also included $10 million of leases purchased. Adjusting for the 1997
loan sales and purchases, internal loan growth was approximately $87.4 million,
or an annualized rate of 31%, during the quarter.

The Company had loans to 92 borrowers having principal amounts ranging
from $2 million to $5 million, which loans accounted for $281.0 million, or 24%,
of the Company's loan portfolio in the first quarter of 1997. The Company had
loans to 13 borrowers having principal amounts in excess of $5 million, which
loans accounted for $87.0 million, or 7%, of the Company's loan portfolio in the
first quarter of 1997. Any material deterioration in the quality of any of these
larger loans could have a significant impact on the Company's earnings.

For the first three months of 1997, the Company's loans averaged $1.2
billion with a yield of 9.42%, compared with $1.1 billion and a yield of 9.33%
for the same period of 1996. The interest rates charged on loans vary with the
degree of risk and the maturity and amount of the loan. Competitive pressures,
money market rates, availability of funds and government regulations also
influence interest rates.

Securitization and packaging and selling loans are part of the Company's
funding strategy. The Company engages in these transactions because they fund
loan growth by moving loans off-balance-sheet while allowing the Company to
retain the related income stream and servicing relationships.

Allowance for Loan Losses

Management maintains an allowance for loan losses which it believes is
adequate to cover possible losses in the loan portfolio. However, management's
judgment is based upon a number of assumptions about future events which are
believed to be reasonable, but which may or may not prove valid. Thus, there can
be no assurance that charge-offs in future periods will not exceed the allowance
for loan losses or that additional increases in the allowance for loan losses
will not be required.

The allowance for loan losses is established through charges in the form
of a provision for loan losses. Loan losses and recoveries are charged or
credited directly to the allowance. The amount charged

to the provision for loan losses by the Company is based on management's
judgment as to the amount required to maintain an allowance adequate to provide
for potential losses in the Company's loan portfolio. The level of this
allowance is dependent upon the total amount of past due loans, general economic
conditions and management's assessment of potential losses.

The allowance for loan losses totaled $12.0 million, or 1.03% of loans
less unearned income, at the end of March 1997, compared with $9.1 million, or
0.89% of total loans, at the end of March 1996. At December 31, 1996, the
allowance for loan losses was $11.3 million, or 1.01% of loans less unearned
income. Annualized net charge-offs as a percentage of average loans during the
first three months of 1997 were 0.83%, compared with 0.39% for the first three
months of 1996. Excluding credit cards, annualized net charge-offs as a
percentage of average loans were 0.20% during the first quarter of 1997 compared
with 0.19% in the first quarter of 1996. During the first quarter of 1997, net
charge-offs for credit cards totaled $1.9 million, a higher level than those
historically experienced. The past due ratios for credit cards have shown a
declining trend toward the end of the quarter. The Company is exploring various
options relating to its credit card portfolio, including selling a portion of
the portfolio, which may or may not occur. The allowance for loan losses as a
percentage of nonperforming loans was 567% and 330% as of March 31, 1997 and
1996, respectively. Table 1 presents changes in the allowance for loan losses.

TABLE 1
ANALYSIS OF ALLOWANCE FOR LOAN LOSSES
(dollars in thousands)
At and for
At and for the three months the year ended
ended March 31, December 31,
--------------------------- --------------
1997 1996 1996
- --------------------------------------------------------------------------------
Balance at beginning of period $11,290 $8,661 $ 8,661
Valuation allowance for loans purchased 203 0 1,261
Provision for loan losses 2,952 1,500 10,263
Charge-offs:
Credit cards 1,854 552 4,072
Bank loans, leases & Blue Ridge 1,255 567 4,085
Fraudulent acquired loans 0 0 1,303
Recoveries 703 51 565
- --------------------------------------------------------------------------------
Net charge-offs 2,406 1,068 8,895
- --------------------------------------------------------------------------------
Allowance at end of period $12,039 $9,093 $11,290
================================================================================

The increase in recoveries during the first quarter of 1997 was largely
attributable to the settlement of the lawsuit with the Bowers.

At March 31, 1997, the recorded investment in loans that were considered
to be impaired under Statement of Financial Accounting Standards 114,
"Accounting by Creditors for Impairment of a Loan", was $840,000. The related
allowance for these impaired loans was $609,000. The average recorded investment
and foregone interest on impaired loans during the three months ended March 31,
1997 was approximately $773,000 and $23,000, respectively. For the three months
ended March 31, 1997, the Company recognized interest income on impaired loans
of $27,000.

Securities

At March 31, 1997, the Company's total investment portfolio had a book
value of $263.7 million and a market value of $261.4 million for an unrealized
net loss of $2.3 million. The investment portfolio has a weighted average
maturity of approximately 1.8 years. Securities (i.e., securities held for
investment, securities available for sale and trading securities) averaged
$228.5 million in the first three months of 1997, 27% above the first three
month 1996 average of $179.5 million. The securities balance increased due to
the investment of a portion of the funds from the securitization of commercial
real estate loans (completed in March 1996) in the securities portfolio to
increase liquidity. The average portfolio yield increased to 6.10% for the first
three months of 1997 from 6.04% for the first three months of 1996. The
portfolio yield increased due to maturities of lower yielding government
securities which were reinvested at higher rates. At March 31, 1997, securities
totaled $261.4 million, up $83.3 million from the $178.1 million invested as of
the first quarter end 1996 and up $16.0 million from the December 31, 1996
balance of $245.4 million.

At March 31, 1997, the Company owned 128,366 shares of common stock of
Affinity and a warrant to purchase an additional 5,871,340 shares of Affinity's
common stock at a purchase price of $0.0001 per share. As of March 31, 1997, the
investment in Affinity's common stock, included in securities available for
sale, was recorded at its book value of $12. The Affinity Warrant was not
included in securities at March 31, 1997.

Other Assets

At March 31, 1997, other assets included other real estate owned of $3.0
million, intangible assets (excluding mortgage servicing rights) of $16.2
million and mortgage servicing rights of $18.1 million. At March 31, 1996, other
assets included other real estate owned of $2.1 million, intangible assets
(excluding mortgage servicing rights) of $17.9 million and mortgage servicing
rights of $9.6 million. The intangible assets balance at March 31, 1997 was
attributable to goodwill of $7.5 million, core deposit balance premiums of $8.5
million and purchased credit card premiums of $190,000.

The Company has funded approximately $1.1 million in start-up costs of the
Atlanta Internet Bank, which were included in other assets and are expected to
be reimbursed following the completion of the initial public offering for
Atlanta Internet Bank. See "EQUITY INVESTMENTS - Investment in Net.B@nk, Inc."

Interest-bearing Liabilities

During the first three months of 1997, interest-bearing liabilities
averaged $1.241 billion, compared with $1.178 billion for the comparable period
of 1996. This increase resulted principally from internal deposit growth related
to account promotions, sales efforts and entrance into new markets. The average
interest rates were 4.88% and 5.01% for the first three months of 1997 and 1996,
respectively. At March 31, 1997, interest-bearing deposits comprised
approximately 83% of total deposits and 84% of interest-bearing liabilities. For
the first three months of 1997, average borrowed funds, which include Federal
Home Loan Bank ("FHLB") advances and other short-term borrowings, totaled $123.5
million, compared with $189.3 million for the first three months of 1996. This
decrease was attributable to average advances from the FHLB which declined to
$10.6 million for the first quarter of 1997 from $94.1 million for the
comparable period a year earlier. While FHLB advances remain a source of
funding, Carolina First Bank has increased its emphasis on retail banking and
raised deposits through market

promotions and sales efforts, thereby decreasing average FHLB advances. The
Company believes that potential benefits of cross-selling these customers other
products and services would offset any increase in the cost of funds. The
Company increased its FHLB advances to $60.0 million at March 31, 1997 from
$40.0 million at December 31, 1996.

Carolina First Banks' primary source of funds for loans and investments is
its deposits which are gathered through Carolina First Bank's branch network.
Deposits grew 9% to $1.3 billion at March 31, 1997 from $1.2 billion at March
31, 1996. At December 31, 1996, deposits totaled $1.3 billion. During the first
quarter of 1997, approximately $55 million in deposits were sold as part of the
sale of five branch offices. Internal growth, particularly from account
promotions and new markets, generated the new deposits. During the first three
months of 1997, total interest-bearing deposits averaged $1.1 billion with a
rate of 4.72%, compared with $962.2 million with a rate of 4.75% in 1996. During
the first three months of 1997, deposit pricing was very competitive in Carolina
First Bank's market areas, resulting in upward pressure on deposit interest
rates. The Company expects this competitive deposit environment to continue. The
Company did benefit from a large volume of certificates of deposit maturing
during the first quarter and repricing at a lower rate. The Company does not
believe that it has any brokered deposits.

Average noninterest-bearing deposits, which increased 31% during the year,
increased to 15.0% of average total deposits in the first three months of 1997
from 13.2% in the first three months of 1996. This increase was primarily
attributable to new accounts from offering the Atlanta Internet Bank service,
commercial loan customers and escrow balances related to mortgage servicing
operations.

The Company's core deposit base consists of consumer time deposits,
savings, NOW accounts, money market accounts and checking accounts. Although
such core deposits are becoming increasingly interest sensitive for both the
Company and the industry as a whole, such core deposits continue to provide the
Company with a large and stable source of funds. Core deposits as a percentage
of average total deposits averaged approximately 86% for the first three months
of 1997. The Company closely monitors its reliance on certificates of deposit
greater than $100,000, which are generally considered less stable and less
reliable than core deposits.

Capital Resources and Dividends

Total shareholders' equity amounted to $105.3 million, or 6.52% of total
assets, at March 31, 1997, compared with $96.6 million, or 6.89% of total
assets, at March 31, 1996. At December 31, 1996, shareholders' equity totaled
$105.0 million, or 6.67% of total assets. The $300,000 increase in total
shareholders' equity since December 31, 1996 resulted principally from retention
of earnings less cash dividends paid and an unrealized loss on securities
available for sale.

The Company's capital needs have been met principally through public
offerings of common stock, preferred stock and subordinated notes and through
the retention of earnings. In addition, the Company issued capital stock in
connection with the acquisitions of Carolina First Savings Bank, CF Mortgage,
Aiken County National Bank, Midlands National Bank and Blue Ridge.

In February 1996, the Company redeemed its Series 1993 Preferred Stock and
Series 1994 Preferred Stock. In connection with the redemptions, substantially
all of the outstanding shares of Series 1993 Preferred Stock and Series 1994
Preferred Stock were converted into approximately 2.6 million shares of Common
Stock.

On February 1, 1997, all outstanding shares of the Series 1993B Cumulative
Convertible Preferred Stock ("Series 1993B Preferred Stock") were converted into
the Company's Common Stock. In connection with such conversion, the Company
issued 108,341 shares of its Common Stock.

Book value per share at March 31, 1997 and 1996 was $9.28 and $8.63,
respectively. Tangible book value per share at March 31, 1997 and 1996 was $7.87
and $7.03, respectively. At December 31, 1996, book value and tangible book
value were $9.26 and $7.80, respectively. Tangible book value was below book
value as a result of the purchase premiums associated with branch acquisitions
and the purchase of CF Mortgage.

At March 31, 1997, the Company and Carolina First Bank were in compliance
with each of the applicable regulatory capital requirements. Table 2 sets forth
various capital ratios for the Company and Carolina First Bank.

TABLE 2
CAPITAL RATIOS

- --------------------------------------------------------------------------------
As of Well Capitalized Adequately Capitalized
3/31/97 Requirement Requirement
- --------------------------------------------------------------------------------

Company:
Total Risk-based Capital 10.04% 10.0% 8.0%
Tier 1 Risk-based Capital 7.07 6.0 4.0
Leverage Ratio 5.58 5.0 4.0

Carolina First Bank:
Total Risk-based Capital 9.74 10.0 8.0
Tier 1 Risk-based Capital 8.85 6.0 4.0
Leverage Ratio 6.96 5.0 4.0

- --------------------------------------------------------------------------------

The Company and its subsidiaries are subject to certain regulatory
restrictions on the amount of dividends they are permitted to pay. In November
1993, the Board of Directors initiated a regular quarterly cash dividend payable
on the Common Stock, the first of which was paid on February 1, 1994. Cash
dividends have been paid on a quarterly basis since the initiation of the cash
dividend. The Company presently intends to continue to pay this quarterly cash
dividend on the Common Stock; however, future dividends will depend upon the
Company's financial performance and capital requirements. In each year from 1989
through 1995, the Company issued 5% common stock dividends to common
shareholders.

At the December 18, 1996 meeting, the Board of Directors declared a
six-for-five stock split effected in the form of a 20% common stock dividend
which was issued on January 30, 1997 to shareholders of record as of January 15,
1997. Share and per share data for all periods presented have been retroactively
restated to reflect the additional shares outstanding resulting from the stock
dividend. At the December 1996 meeting, the Board of Directors also approved a
$0.07 per share cash dividend on the common stock, which represents an effective
increase of 20%.

INTEREST RATE SENSITIVITY

Achieving consistent growth in net interest income is the primary goal of
the Company's asset/liability function. The Company attempts to control the mix
and maturities of assets and liabilities to achieve consistent growth in net
interest income despite changes in market interest rates. The Company seeks to
accomplish this goal while maintaining adequate liquidity and capital. The
Company's asset/liability mix is sufficiently balanced so that the effect of
interest rates moving in either direction is not expected to be significant over
time.

The Company's Asset/Liability Committee uses a simulation model to assist
in achieving consistent growth in net interest income while managing interest
rate risk. The model takes into account interest rate changes as well as changes
in the mix and volume of assets and liabilities. The model simulates the
Company's balance sheet and income statement under several different rate
scenarios. The model's inputs (such as interest rates and levels of loans and
deposits) are updated on a monthly basis in order to obtain the most accurate
forecast possible. The forecast presents information over a twelve month period.
It reports a base case in which interest rates remain flat and reports
variations that occur when rates increase and decrease 200 basis points.
According to the model, the Company is presently positioned so that net interest
income will increase slightly if interest rates rise in the near term and will
decrease slightly if interest rates decline in the near term.

The static interest sensitivity gap position, while not a complete measure
of interest sensitivity, is also reviewed periodically to provide insights
related to the static repricing structure of assets and liabilities. At March
31, 1997, on a cumulative basis through twelve months, rate-sensitive
liabilities exceeded rate-sensitive assets, resulting in a liability sensitive
position of $211.7 million.

LIQUIDITY

Liquidity management involves meeting the cash flow requirements of the
Company both at the holding company level as well as at the subsidiary level.
The holding company and non-banking subsidiaries of the Company require cash for
various operating needs including general operating expenses, payment of
dividends to shareholders, interest on borrowing, extensions of credit at Blue
Ridge, business combinations and capital infusions into subsidiaries. Sources of
liquidity for the Company's holding company and non-banking subsidiaries include
dividends from Carolina First Bank and non-banking subsidiaries to the holding
company, sale of the Company's commercial paper, existing cash reserves and
earnings.

Carolina First Bank's cash flow requirements involve withdrawals of
deposits, extensions of credit and payment of operating expenses. Carolina First
Bank's principal sources of funds for liquidity purposes are customers'
deposits, principal and interest payments on loans, loan sales or
securitizations, securities available for sale, maturities of securities,
temporary investments and earnings. Carolina First Bank's liquidity is also
enhanced by the ability to acquire new deposits through its established branch
network of 50 branches in South Carolina. Carolina First Bank's liquidity needs
are a factor in developing its deposit pricing structure; deposit pricing may be
altered to retain or grow deposits if deemed necessary. Carolina First Bank has
access to borrowing from FHLB and maintains unused short-term lines of credit
from unrelated banks.

The liquidity ratio is an indication of a company's ability to meet its
short-term funding

obligations. FDIC examiners suggest that a commercial bank maintain a liquidity
ratio of between 20% and 25%. At March 31, 1997, Carolina First Bank's liquidity
ratio was approximately 13%. At March 31, 1997, Carolina First Bank had unused
short-term lines of credit totaling approximately $13 million (which are
withdrawable at the lender's option). In addition, Carolina First Bank has
access to borrowing from the FHLB. At March 31, 1997, unused borrowing capacity
from the FHLB totaled approximately $56 million with an outstanding balance of
$60 million. Management believes that these sources are adequate to meet its
liquidity needs.

These purchases of mortgage servicing rights are expected to close during
the second quarter of 1997. In connection with the proposed acquisition of
Lowcountry, 40% of the purchase price, or approximately $5 million, is payable
in cash. The acquisition of Lowcountry, which is subject to receipt of
shareholder and regulatory approval, is expected to close at the end of the
second quarter of 1997. The Company has an application pending with the Small
Business Administration to form a Small Business Investment Company, which would
require $3 million in funding.

Blue Ridge is currently being funded principally using the proceeds from
the sale of the Company's commercial paper in the retail market. The Company is
actively exploring alternative methods to fund Blue Ridge as the Federal Reserve
Board considers the funding of Blue Ridge to be an inappropriate use of
commercial paper proceeds. The Company expects alternate funding for Blue Ridge
would be at a higher cost.

ASSET QUALITY

Prudent risk management involves assessing risk and managing it
effectively. Certain credit risks are inherent in making loans, particularly
commercial, real estate and consumer loans. The Company attempts to manage
credit risks by adhering to internal credit policies and procedures. These
policies and procedures include a multi-layered loan approval process, officer
and customer limits, periodic documentation examination and follow-up procedures
for any exceptions to credit policies. Loans are assigned a grade and those that
are determined to involve more than normal credit risk are placed in a special
review status. Loans that are placed in special review status are required to
have a plan under which they will be either repaid or restructured in a way that
reduces credit risk. Loans in this special review status are reviewed monthly by
the loan committee of the Board of Directors.

As demonstrated by the following analytical measures of asset quality,
management believes the Company has effectively managed its credit risk.
Annualized net loan charge-offs, including credit card receivables, totaled
$2.4 million and $1.1 million in the first three months of 1997 and 1996,
respectively, or 0.83% and 0.39%, respectively, as a percentage of average
loans. Excluding credit card receivables, annualized net loan charge-offs as
a percentage of average loans were 0.20% and 0.19% during the first quarter
1997 and 1996, respectively.

TABLE 4
NONPERFORMING ASSETS AND PAST DUE LOANS
($ in thousands)

March 31, December 31,
----------------- ------------
1997 1996 1996
- --------------------------------------------------------------------------------
Nonaccrual loans $ 841 $2,452 $ 960
Restructured loans 1,283 300 1,909
- --------------------------------------------------------------------------------
Total nonperforming loans 2,124 2,752 2,869
Other real estate 2,986 2,067 3,011
- --------------------------------------------------------------------------------
Total nonperforming assets 5,110 4,819 5,880
================================================================================
Nonperforming assets as a % of loans
and foreclosed property 0.43% 0.47% 0.52%

Accruing loans past due 90 days $2,361 $3,193 $2,371
================================================================================

INDUSTRY DEVELOPMENTS

Certain recently-enacted and proposed legislation could have an effect on
both the costs of doing business and the competitive factors facing the
financial institutions industry. The Company is unable at this time to assess
the impact of this legislation on its financial condition or operations.

FORWARD-LOOKING STATEMENTS

From time to time, the Company may publish forward-looking statements
relating to such matters as anticipated financial performance, business
prospects, technological developments, new products and similar matters. The
Private Securities Litigation Reform Act of 1995 provides a safe harbor for
forward- looking statements. In order to comply with the terms of the safe
harbor, the Company notes that a variety of factors could cause the Company's
actual results and experience to differ materially from the anticipated results
or other expectations expressed in the Company's forward-looking statements. The
risks and uncertainties that may affect the operations, performance, development
and results of the Company's business include, but are not limited to, the
following: risks from changes in economic and industry conditions; changes in
interest rates; risks inherent in making loans including repayment risks and
value of collateral; dependence on senior management; and recently-enacted or
proposed legislation. Statements contained in this filing regarding expected
levels of past due credit cards may be forward-looking statements and are
subject to uncertainties and risks, including, but not limited to, the demand
for Carolina First's products and services, changing economic conditions,
interest rates, consumer spending and numerous other factors.

PART II

ITEM 1 LEGAL PROCEEDINGS

The Company and its subsidiaries are from time to time parties to various
legal actions arising in the normal course of business. Such items are not
expected to have any material adverse effect on the business or financial
position of the Company or any of its subsidiaries.

In April 1997, the Company announced the settlement of two lawsuits
involving David Bowers and Monte Bowers, former officers and shareholders
of Midlands National Bank, a Newberry, South Carolina bank which merged
with Carolina First Bank in 1995. One of the lawsuits had been brought by
the Bowers against Carolina First Bank in state court, alleging breach of
employment contracts as officers of Carolina First Bank following the
merger. The other lawsuit was brought in federal court by Carolina First
Bank against the Bowers, alleging that the Bowers had committed bank fraud
and securities fraud in connection with the merger. The Company is
prohibited from disclosing the terms of the settlement agreement which
were favorable to the Company. Both suits have been dismissed in
connection with the settlement. In March 1997, the federal court dismissed
counterclaims filed in that action by the Bowers, who contended that the
Company had misstated earnings and made fraudulent representations in
documents involved in the merger. The federal court found no wrongdoing by
the Company and no material inaccuracy in the financial statements and
merger documents.

On November 4, 1996, a derivative shareholder action was filed in
Greenville County Court of Common Pleas against the Company, Mack I.
Whittle, Jr., William S. Hummers III, Steve Powell and Edward J.
Sebastian. The complaint was subsequently amended several times, most
recently on February 25, 1997. The recent amended complaint names as
additional defendants the majority of the directors of the Company and
Carolina First Bank. The named plaintiffs in the amended complaints are
Carolina First Corporation, pursuant to Section 33-7-400 of the South
Carolina Code of Laws, by and through its minority shareholders, Emory
Lester, Beatrice Hutchinson and John Wesley Purdie, Jr. Plaintiffs allege
as causes of action the following: conversion of corporate opportunity;
breach of fiduciary duty and "constructive fiduciary fraud"; civil
conspiracy; and mutual mistake. The factual basis upon which these claims
are made generally involves the payment to Messrs. Whittle, Hummers and
Powell of a bonus in stock held by the Company in Affinity Technology
Group, Inc. ("Affinity") (as reward for their efforts in connection
with the Affinity investment), allegedly excessive compensation to the
Company's executive officers, transactions between the Company and
entities affiliated with Mr. Sebastian, alleged concealment of financial
problems, alleged mismanagement by Messrs. Whittle and Hummers involving
financial matters and employee matters. The complaint seeks damages for
the benefit of the Company as follows: for the first cause of action,
an amount that the Defendants have realized from the sale of Affinity
stock, director's fees from Mr. Sebastian, certain undetermined amounts
arising from conflicts of interest and excessive compensation (summarized
as $32 million and the costs of this action). With respect to the second
cause of action: damages as much as $9.0 million actual and punitive
damages. With respect to the third cause of action: damages as much as
$9.0 million actual and punitive damages. With respect to the fourth
cause of action: unspecified. With respect to the fourth cause of
action: recision of the Affinity bonuses. The Company believes that this
lawsuit is without merit and expects to defend it vigorously. A motion
to dismiss this action has already been filed but has not yet been
heard by the court.

PART II
(Continued)

In an action instituted by the same attorneys bringing the foregoing
derivative action, on December 31, 1996, Dan Beckman, Onida Beckman and
Dale Epting filed a class action lawsuit against the Company, Carolina
First Bank, a number of their officers and the majority of the directors
of the Company and Carolina First Bank. In this action, plaintiffs
allege that they are former shareholders of Midlands National Bank and
seek to represent a class of all Midlands shareholders involved in the
merger of Midlands into Carolina First Bank, asserting that the
defendants committed fraud, constructive fraud and breach of fiduciary
duty against the defendants by overstating earnings and thereby
adversely affecting the consideration received by the Midlands
shareholders in connection with the merger of Midlands National Bank
into Carolina First Bank. The complaint seeks compensatory damages of
approximately $1.8 million and punitive damages in an amount to be
determined by a jury, attorneys' fees and other costs. The Company and
other named defendants have filed a motion to dismiss all claims asserted
in the lawsuit and believe that there are a number of valid defenses
available to them. The court has not yet heard the motion to dismiss. Both
this case and the case discussed in the preceding paragraph have been
designated as complex litigation and have been assigned to a single judge
for handling.

ITEM 2 CHANGE IN SECURITIES

On February 1, 1997, all outstanding shares of the Series 1993B Cumulative
Convertible Preferred Stock ("Series 1993B Preferred Stock") were
converted into the Company's Common Stock. In connection with such
conversion, the Company issued 108,341 shares of its Common Stock.

ITEM 3 DEFAULTS UPON SENIOR SECURITIES

None.

PART II
(Continued)

ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

On May 8, 1997, the Company held its 1997 Annual Meeting of Shareholders.
The results of the 1997 Annual Meeting of Shareholders follow.

Proposal #1 - Election of Directors

The following persons were elected as Directors with the votes indicated.

% of Voting
Shares Withheld
In Favor In Favor Authority
-------- ----------- ---------
M. Dexter Hagy 9,156,116 94.20% 564,030
H. Earle Russell, Jr. 9,188,551 94.53% 531,595
William R. Timmons, Jr. 9,157,384 94.21% 562,762

Judd B. Farr, C. Claymon Grimes, Jr., William S. Hummers III, Charles B.
Schooler, Elizabeth P. Stall, Eugene E. Stone IV and Mack I. Whittle, Jr.
continued in their present terms as directors.

Proposal #2 - Increase in Authorized Common Stock

The shareholders approved an amendment to the Company's Articles of
Incorporation to increase the authorized Common Stock of the Company from
20,000,000 shares to 100,000,000 shares with the votes indicated.

% of
Outstanding
# of Shares Shares
----------- -----------
For 8,480,123 74.67%
Against 1,153,398
Abstain 67,507
Broker Non-Votes 19,117

Proposal #3 - Increase in Authorized Preferred Stock

The Shareholders approved a motion to adjourn the Annual Meeting of
Shareholders until May 22, 1997 for the purpose of continuing to receive
votes on this proposal to amend the Company's Articles of Incorporation to
increase the authorized preferred stock of the Company from 10,000,000
shares to 25,000,000 shares.

PART II
(Continued)

ITEM 5 OTHER INFORMATION

Pending Acquisition
On March 14,1997, the Company signed a definitive agreement to acquire
Lowcountry Savings Bank, Inc. ("Lowcountry"). The Company plans to merge
Lowcountry into Carolina First Bank, a wholly-owned subsidiary of the
Company. The Company has agreed to acquire all the outstanding common
shares of Lowcountry for approximately $13.3 million, with 60% payable
with the Company's $1 par value common stock and 40% payable in cash.
Lowcountry has five offices in the greater Charleston area, and at March
31, 1997, had approximately $78 million in assets and $64 million in
deposits. The Company will record the acquisition using the purchase
method of accounting.

ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

11.1 Computation of Primary and Fully Diluted Earnings Per Share.

12.1 Computation of Earnings to Fixed Charges Ratio.

27.1 Financial Data Schedules.

(b) Reports on Form 8-K

None.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.

Carolina First Corporation

/s/ William S. Hummers, III
---------------------------
William S. Hummers, III
Executive Vice President

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.

Carolina First Corporation

William S. Hummers, III
-----------------------
Executive Vice President,
Secretary
(Principal Financial and
Accounting Officer)