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, 1998

[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ 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 11, 1998 was 17,715,356.

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

March 31, December 31,
------------------------ -----------
Assets 1998 1997 1997
---------- ---------- ----------

Cash and due from banks.........................................................$ 67,095 $ 62,11 $ 73,326
Interest-bearing bank balances.................................................. 47,229 16,809 34,703
Federal funds sold and resale agreements........................................ 105,000 -- --
Securities
Trading...................................................................... 3,991 1,262 2,349
Available for sale........................................................... 353,083 230,536 262,329
Held for investment (market value $33,468, $29,643 and
$34,494, respectively)....................................................... 32,877 29,578 33,855
---------- ---------- ----------
Total securities........................................................... 389,951 261,376 298,533
---------- ---------- ----------
Loans held for sale............................................................. 139,033 20,056 235,151
Loans held for investment....................................................... 1,366,018 1,178,276 1,379,039
Less unearned income......................................................... (10,461) (14,889) (11,775)
Less allowance for loan losses............................................... (15,349) (12,039) (16,211)
---------- ---------- ----------
Net loans.................................................................. 1,479,241 1,171,404 1,586,204
---------- ---------- ----------
Premises and equipment.......................................................... 38,774 30,509 39,682
Accrued interest receivable..................................................... 15,657 11,195 15,484
Intangible assets............................................................... 56,885 16,204 58,228
Other assets.................................................................... 50,915 44,298 50,186
========== ========== ==========
$2,250,747 $1,613,906 $2,156,346
========== ========== ==========
Liabilities and Shareholders' Equity
Liabilities
Deposits
Noninterest-bearing.........................................................$ 228,866 $ 210,350 $ 206,938
Interest-bearing............................................................ 1,597,163 1,046,655 1,539,604
---------- ---------- ----------
Total deposits............................................................ 1,826,029 1,257,005 1,746,542
Borrowed funds................................................................ 124,263 172,462 153,369
Subordinated notes............................................................ 25,522 25,393 25,489
Accrued interest payable...................................................... 16,192 8,624 13,518
Other liabilities............................................................. 15,358 45,083 15,769
---------- ---------- ----------
Total liabilities.......................................................... 2,007,364 1,508,567 1,954,687
---------- ---------- ----------
Shareholders' Equity
Preferred stock-no par value; authorized 10,000,000 shares;
issued and outstanding none................................................. -- -- --
Common stock-par value $1 per share; authorized 100,000,000
shares; issued and outstanding 17,709,935, 11,355,443, and
15,659,338 shares, respectively............................................. 17,710 11,355 15,659
Surplus....................................................................... 201,967 84,721 164,517
Retained earnings............................................................. 23,337 10,337 20,059
Guarantee of employee stock ownership plan debt and
nonvested restricted stock................................................ (3,617) (697) (3,129)
Accumulated other comprehensive income, net of tax............................ 3,986 (377) 4,553
---------- ---------- ----------
Total shareholders' equity................................................. 243,383 105,339 201,659
---------- ---------- ----------
$2,250,747 $1,613,906 $2,156,346
========== ========== ==========

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

Three Months Ended March 31,
---------------------------
1998 1997
----------- -----------

Interest Income
Interest and fees on loans............................. $ 36,229 $ 26,918
Interest and dividends on securities................... 4,815 3,260
Interest on short-term investments..................... 1,083 214
----------- -----------
Total interest income................................ 42,127 30,392
----------- -----------
Interest Expense
Interest on deposits................................... 19,275 12,701
Interest on borrowed funds............................. 2,625 2,239
----------- -----------
Total interest expense............................... 21,900 14,940
----------- -----------
Net interest income.................................. 20,227 15,452

Provision for Loan Losses................................ 2,136 2,952
----------- -----------
Net interest income after provision for loan losses.. 18,091 12,500
----------- -----------
Noninterest Income
Service charges on deposit accounts.................... 1,876 1,629
Mortgage banking income................................ 1,493 528
Fees for trust services................................ 352 383
Loan securitization income............................. (81) (59)
Gain on sale of securities............................. 140 84
Sundry................................................. 833 527
----------- -----------
Total noninterest income............................. 4,613 3,092
----------- -----------
Noninterest Expenses
Personnel expense...................................... 7,493 6,253
Occupancy.............................................. 1,469 1,244
Furniture and equipment................................ 1,095 920
Sundry................................................. 5,202 4,449
----------- ----------
Total noninterest expenses........................... 15,259 12,866
----------- ----------
Income before income taxes........................... 7,445 2,726
Income taxes........................................... 2,751 1,009
----------- ----------
Net income .......................................... $ 4,694 $ 1,717
=========== ==========
Net Income per Common Share:
Basic................................................ $ 0.28 0.15
Diluted.............................................. 0.28 0.15

Average Common Shares Outstanding:
Basic................................................ 16,588,163 11,304,437
Diluted.............................................. 16,922,202 11,478,383

Cash Dividends Declared per Common Share................. $ 0.08 $ 0.07

Carolina First Corporation and Subsidiaries
CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
($ in thousands, except share data) (Unaudited)

Retained Accumulated
Shares of Earnings Other
Common Preferred Common and Comprehensive
Stock Stock Stock Surplus Other* Income Total
----------------------------------------------------------------------------

Balance, December 31, 1996................................. 11,225,568 $943 $11,226 $83,598 $8,714 $483 $104,964

Net income............................................... -- -- -- -- 1,717 -- 1,717

Other comprehensive income, net of tax:
Unrealized losses on securities:
Unrealized holding losses arising during
period, net of taxes of $506..................... -- -- -- -- -- (807) --
Less: reclassification adjustment for gains
included in net income, net of taxes of $31...... -- -- -- -- -- (53) --
-------------
Other comprehensive income........................... -- -- -- -- -- (860) (860)
------------- ---------
Comprehensive income................................... -- -- -- -- -- -- 857
---------

Common stock issued pursuant to:
Dividend reinvestment plan............................. 12,598 -- 12 198 -- -- 210
Employee stock purchase plan........................... 2,344 -- 2 37 -- -- 39
Exercise of stock options and stock warrants........... 6,592 -- 7 53 -- -- 60
Conversion and redemption of preferred stock........... 108,341 (943) 108 835 -- -- --
Cash dividends paid/accrued:
Common stock........................................... -- -- -- -- (926) -- (926)
Miscellaneous........................................... -- -- -- -- 135 -- 135

========================================================================
Balance, March 31, 1997.................................... 11,355,443 -- $11,355 $84,721 $9,640 ($377) $105,339
========================================================================

Balance, December 31, 1997................................. 15,659,338 -- $15,659 $164,517 $16,930 $4,553 $201,659

Net income............................................... -- -- -- -- 4,694 -- 4,694

Other comprehensive income, net of tax:
Unrealized losses on securities:
Unrealized holding losses arising during
period, net of taxes of $345..................... -- -- -- -- -- (479) --
Less: reclassification adjustment for gains
included in net income, net of taxes of $52 .... -- -- -- -- -- (88) --
-------------
Other comprehensive income........................... -- -- -- -- -- (567) (567)
------------- ---------
Comprehensive income................................... -- -- -- -- -- -- 4,127
---------

Common stock issued pursuant to:
Regulation S offering.................................. 2,000,000 -- 2,000 36,381 -- -- 38,381
Dividend reinvestment plan............................. 18,216 -- 19 374 -- -- 393
Restricted stock plan.................................. 28,945 -- 29 593 622
Employee stock purchase plan........................... 2,244 -- 2 44 -- -- 46
Exercise of stock options and stock warrants........... 1,192 -- 1 24 -- -- 25
Cash dividends paid/accrued:
Common stock........................................... -- -- -- -- (1,417) -- (1,417)
Miscellaneous........................................... -- -- -- 34 (487) -- (453)

------------------------------------------------------------------------
Balance, March 31, 1998.................................... 17,709,935 -- $17,710 $201,967 $19,720 $3,986 $243,383
========================================================================

* Other includes guarantee of employee stock ownership plan debt and nonvested
restricted stock.

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

Three Months Ended March 31,
----------------------------
1998 1997
-----------------------

Cash Flows From Operating Activities
Net income ...................................................................... $ 4,694 $ 1,717
Adjustments to reconcile net income to net cash provided by
(used for) operations
Depreciation................................................................. 936 703
Amortization of intangibles.................................................. 874 30
Provision for loan losses.................................................... 2,136 2,952
Gain on sale of securities................................................... (140) (84)
Unrealized loss on trading securities........................................ 16 8
Originations of mortgage loans held for sale................................. (118,867) (37,710)
Sale of mortgage loans held for sale......................................... 248,298 24,224
Proceeds from sale of trading securities..................................... 288,254 244,731
Proceeds from maturity of trading securities................................. 6,671 1,337
Purchase of trading securities............................................... (296,480) (245,250)
(Increase) decrease in accrued interest receivable........................... (173) 718
Increase (decrease) in accrued interest payable.............................. 2,674 (1,048)
Increase in other assets..................................................... (137) (1,480)
(Decrease) increase in other liabilities..................................... (15) 549
-----------------------
Net cash provided by (used for) operating activities........................... 138,741 (8,603)
-----------------------

Cash Flows From Investing Activities
Net (increase) decrease in interest-earning deposits with banks.................. (12,526) 9,228
Net increase in federal funds sold and resale agreements......................... (105,000) --
Proceeds from sale of securities available for sale.............................. 1,180 --
Proceeds from maturity of securities available for sale.......................... 122,379 51,459
Proceeds from maturity of securities held for investment......................... 3,030 714
Purchase of securities available for sale........................................ (215,089) (69,364)
Purchase of securities held for investment....................................... (2,052) (827)
Purchase of loans................................................................ -- (10,510)
Net increase in loans............................................................ (24,709) (52,137)
Capital expenditures............................................................. (28) (475)
-----------------------
Net cash used for investing activities ........................................ (232,815) (71,912)
-----------------------

Cash Flows From Financing Activities
Net increase in deposits......................................................... 79,487 30,563
(Decrease) increase in borrowed funds............................................ (29,106) 26,192
Cash dividends paid.............................................................. (1,567) (786)
Issuance of common stock to foreign investors.................................... 38,381 --
Other common stock activity...................................................... 648 335
-----------------------
Net cash provided by financing activities...................................... 87,843 56,304
-----------------------
Net change in cash and due from banks.............................................. (6,231) (24,211)
Cash and due from banks at beginning of period..................................... 73,326 86,322
-----------------------
Cash and due from banks at end of period........................................... $ 67,095 $ 62,111
=======================

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 1997 Annual Report to
Shareholders.

Effective January 1, 1998, the Company adopted the provisions of
Statement of Financial Accounting Standards ("SFAS") No. 130,
"Reporting Comprehensive Income." SFAS 130 establishes standards for
reporting comprehensive income and its components in a full set of
general purpose financial statements. The objective of SFAS 130 is to
report a measure of all changes in equity of an enterprise that result
from transactions and other economic events during the period other
than transactions with owners. Comprehensive income is divided into net
income and other comprehensive income. Adoption of SFAS 130 will not
change total shareholders' equity as previously reported. In accordance
with the provisions of SFAS 130, comparative financial statements
presented for earlier periods have been reclassified to reflect the
provisions of this Statement.

(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 $19,226,000
for the three months ended March 31, 1998. Income tax payments of $1.1
million and $509,000 were made for the three months ended March 31,
1998 and March 31, 1997, respectively.

(3) BUSINESS COMBINATIONS

In February 1998, Carolina First Bank signed a definitive agreement to
sell three branches located in Belton, Calhoun Falls and Honea Path,
South Carolina with approximately $45 million in deposits. The branches
are being sold to two bank subsidiaries of Community Capital
Corporation. This transaction is expected to be completed in the second
quarter and is subject to regulatory approval, among other conditions.

In March 1998, the Company signed a definitive merger agreement with
Resource Processing Group, Inc. ("RPG"), a privately-held credit card
services company located in Columbia, South Carolina. Under the terms
of the agreement, the Company will issue shares of the Company's common
stock valued at approximately $11.3 million. Additional shares may
become issuable if certain credit quality criteria are met. At December
31, 1997, RPG had approximately $19.3 million in assets and total
equity of approximately $10.6 million. RPG will become a wholly-owned
subsidiary of the Company. The transaction is expected to occur in the
second quarter and will be accounted for under the purchase method of
accounting.

(4) SECURITIES

The net unrealized gain on securities available for sale decreased
$567,000 for the three months ended March 31, 1998.

(5) COMMON STOCK

Basic earnings per share is based on the weighted average number of
common shares outstanding during each period. Basic earnings per share
also reflects provisions for dividend requirements on all outstanding
shares of preferred stock.

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

The Company is subject to various legal proceedings and claims which
arise in the ordinary course of its business. In the opinion of
management based on consultation with legal counsel, any outcome of
such pending litigation would not materially affect the Company's
consolidated financial position or results of operations.

On November 4, 1996, a derivative shareholder action was filed in
Greenville County Court of Common Pleas against the Company, the
majority of the Company's and Carolina First Bank's directors and
certain executive and other officers. The named plaintiffs are the
Company by and through certain minority shareholders. The Company filed
a motion to dismiss with respect to all claims in this complaint, which
was granted in December 1997. Plaintiffs have filed a motion for
reconsideration and have the right to appeal the grant of the motion to
dismiss. Plaintiffs allege as causes of action the following:
conversion of corporate opportunity; fraud and constructive fraud; and
negligent management. The factual basis upon which these claims are
made generally involves the payment to Company officers and other
individuals of a bonus in stock held by the Company in Affinity (as
reward for their efforts in connection with the Company's procurement
of stock in Affinity), statements to former shareholders in connection
with the Company's acquisition of Midlands National Bank ("MNB"),
alleged mismanagement by certain executive officers involving financial
matters and employee matters. The complaint seeks damages for the
benefit of the Company aggregating $41 million and recision of the
Affinity bonus.

In an action brought by the same attorneys who brought the
above-mentioned derivative action, on December 31, 1996, certain
individuals filed a class action lawsuit against the Company, Carolina
First Bank, and a number of officers and directors of the Company and
Carolina First Bank. In connection with the judge's granting the motion
to dismiss in the above-referenced derivative action, the plaintiffs'
attorneys withdrew this lawsuit, without prejudice.

(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 Annual Report of Carolina First Corporation (the "Company") on Form 10-K for
the year ended December 31, 1997. Results of operations for the three month
period ended March 31, 1998 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 64 locations in South
Carolina. The Company operates through three principal 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"), a consumer 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, 1998, the Company had approximately $2.3 billion
in assets, $1.5 billion in loans, $1.8 billion in deposits, $243.4 million in
shareholders' equity and $449.4 million in market capitalization.

The Company reported the highest net income in its history with first
quarter 1998 net income of $4.7 million, a substantial increase over 1997's
first quarter net income of $1.7 million. The Company increased first quarter
1998 net income per diluted share by 87% to $0.28 compared with $0.15 for the
first quarter of 1997 although the number of shares used in the calculation
increased dramatically. Cash earnings (which exclude intangible amortization)
for the first quarter of 1998 were $0.32, compared with $0.15 for the same
period one year ago. The increase in net income during the first quarter of 1998
was primarily attributable to increases in net interest income and noninterest
income. The increase in net interest income was a result of a 42% increase in
average earning assets which was partially offset by a decline in the net
interest margin. The increase in noninterest income was attributable to higher
mortgage banking income and service charges on deposit accounts partially offset
by lower loan securitization income. In addition, the provision for loan losses
declined during the first quarter of 1998, due primarily to lower credit card
charge-offs.

On February 13, 1998, the Company completed the sale of 2.0 million
shares of its Common Stock to certain overseas investors (the "Regulation S
Offering"). The shares were offered and sold only to non-U.S. persons under an
exemption from registration provided by Regulation S under the Securities Act of
1933. In connection with this offering, the Company received net proceeds of
approximately $39 million which will be used to support internal growth,
acquisitions, the expansion of its finance subsidiary and for general corporate
purposes. Subsequent to the consummation of the Regulation S Offering, the
Company filed a registration statement with the Securities and Exchange
Commission registering the further sale of such shares by the institutional
investors which purchased the shares in the Regulation S Offering. This
registration statement became effective on March 11, 1998.

In February 1998, Carolina First Bank signed a definitive agreement to
sell three branches located in Belton, Calhoun Falls and Honea Path, South
Carolina with approximately $45 million in

deposits. The branches are being sold to two bank subsidiaries of Community
Capital Corporation. This transaction is expected to be completed in the second
quarter and is subject to regulatory approval, among other conditions.

In March 1998, the Company signed a definitive merger agreement with
RPG, a privately-held credit card services company located in Columbia, South
Carolina. Under the terms of the agreement, the Company will issue shares of the
Company's common stock valued at approximately $11.3 million. Substantially all
of RPG's activities are related to the origination and servicing of credit cards
on behalf of third parties, one of which is Carolina First Bank. Additional
shares may become issuable if certain credit quality criteria are met. At
December 31, 1997, RPG had approximately $19.3 million in assets and total
equity of approximately $10.6 million. RPG will become a wholly-owned subsidiary
of the Company. The transaction is expected to occur in the second quarter and
will receive purchase accounting treatment.

EQUITY INVESTMENTS

Investment in Net.B@nk, Inc.

At March 31, 1998, the Company owned 1,175,000 shares of Net.B@nk
common stock, or approximately 18% of the outstanding shares. These shares are
carried on the Company's books (as securities available for sale) at a basis of
approximately $979,000. Net.B@nk owns and operates the Atlanta Internet Bank,
FSB ("Atlanta Internet Bank"), a FDIC-insured federal savings bank that provides
banking services to consumers utilizing the Internet for their commercial and
financial services. Under the terms of the Office of Thrift Supervision's
approval of Atlanta Internet Bank, certain affiliates of Net.B@nk, including the
Company, may not sell their shares in Net.B@nk until July 31, 2000.

Investment in Affinity Technology Group, Inc.

At March 31, 1998, the Company (through its subsidiary CF Investment
Company) owned 2,528,366 shares of common stock of Affinity Technology Group,
Inc. ("Affinity") and a warrant to purchase an additional 3,471,340 shares for
approximately $0.0001 per share ("Affinity Warrant"). These Affinity shares and
the shares represented by the Affinity Warrant constitute approximately 17% of
Affinity's outstanding common stock. The investment in Affinity's common stock,
included in securities available for sale, was recorded at its market value of
approximately $5.7 million. The Affinity Warrant was not reported on the
Company's balance sheet as of March 31, 1998.

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

Investments in Community Banks

The Company has also made equity investments in six community banks in
South Carolina and North Carolina. In each case, the Company owns less than 5%
of the community bank's outstanding common stock. The Company has made these
investments to develop correspondent banking relationships and to promote
community banking in the Carolinas.

CF Investment Company

In September 1997, the Company's subsidiary, CF Investment Company,
became licensed through the Small Business Administration to operate as a Small
Business Investment Company. CF Investment Company is a wholly-owned subsidiary
of Blue Ridge. CF Investment Company's principal focus is on companies that
offer bank-related products, technology or services. In 1997, the Company
capitalized CF Investment Company with a contribution of $3.0 million. CF
Investment Company made its first investment in December 1997 investing in ITS,
Inc. ("ITS"), a privately-held company specializing in electronic document
management. CF Investment Company has agreed to lend up to $1.2 million to ITS
and has received a 49% equity ownership position.

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 $4.8 million, or 31%, to
$20.4 million for the first three months of 1998 from $15.6 million for the
first three months of 1997. The increase resulted principally from a higher
level of average earning assets. The growth in average earning assets, which
increased $583.6 million, or 42%, to approximately $2.0 billion in the first
three months of 1998 from $1.4 billion in the first three months of 1997,
resulted from an increase in both loans and investment securities. Average loans
and average investment securities increased $424.9 million and $87.5 million,
respectively, in the first quarter of 1998 compared with the first quarter of
1997.

The net interest margin for the three months ended March 31, 1998 of
4.17% was lower than the margin of 4.52% for the same period of 1997. The lower
net interest margin in the first quarter of 1998 resulted primarily from lower
loan yields and higher funding costs. The yield on loans was lower in the first
quarter of 1998 as a result of a change in the mix of loans. Approximately 89%
of the loans acquired in the First Southeast Financial Corporation ("First
Southeast") acquisition were mortgage loans which typically have a lower yield
than commercial or consumer loans. During the first quarter of 1998, the Company
made significant progress in restructuring the balance sheet through mortgage
loan sales. Mortgage loans totaling approximately $248 million were sold during
the first quarter of 1998. Going forward, the Company plans to redeploy the
proceeds from these mortgage loan sales into higher yielding assets. The cost of
funds was higher in 1998 as a result of the large number of certificates of
deposit acquired from First Southeast. Approximately 73% of First Southeast's
total deposits were certificates of deposit or individual retirement accounts.
Certificates of deposit typically have higher rates than transaction accounts.
The Company is currently focusing on shifting the deposit mix to more closely
resemble a commercial bank by increasing deposit transaction accounts.

Provision for Loan Losses

The provision for loan losses was $2.1 million for the first three
months of 1998 and $3.0 million

for the first three months of 1997. The higher 1997 provision for loan losses
reflected higher levels of net credit card charge-offs than previously
experienced. During the first quarter of 1998, credit card charge-offs totaled
$1.1 million compared with $1.9 million in the first quarter of 1997. During the
first quarter of 1998, past due trends in the credit card portfolio improved.

Management currently anticipates that loan growth will continue in
1998. New market areas are expected to contribute to 1998 portfolio growth.
Management intends to closely monitor economic trends and the potential effect
on Carolina First Bank's loan portfolio.

Noninterest Income

Noninterest income increased $1.5 million, or 49%, to $4.6 million in
the first quarter of 1998 from $3.1 million in the first quarter of 1997. The
increase was attributable to increases in service charges on deposit accounts
and mortgage banking income partially offset by lower loan securitization
income.

Service charges on deposit accounts, the largest contributor to
noninterest income, rose 15% to $1.9 million in the first three months of 1998
from $1.6 million in the first three months of 1997. Average deposits for the
same period increased 38.4%. 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.

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 1998 increased $965,000 to $1.5 million compared with
$528,000 in the first three months of 1997. The increase is attributable to
higher origination and servicing volumes and higher gains on the sale of loans
originated by CF Mortgage.

Income from originations and sales of mortgage loans, including sales
of loans originated by Carolina First Bank, totaled $1.3 million in the first
three months of 1998, up from $449,000 for the first three months of 1997. The
increase in the first quarter of 1998 resulted from higher gains on mortgage
loans sold as well as increased origination volumes resulting from the positive
mortgage rate environment. Mortgage originations totaled approximately $140
million in the first quarter of 1998 compared with $39 million in the first
quarter of 1997. Mortgage loans totaling approximately $248 million and $24
million were sold in the first three months of 1998 and 1997, respectively.
Approximately $153 million of the loans sold in 1998 were First Southeast loans.
The gain on the sale of these loans was not included in the gain on sale of
mortgage loans but instead reduced the goodwill associated with the First
Southeast acquisition.

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, 1998, CF Mortgage was servicing or
subservicing 20,504 loans having an aggregate principal balance of approximately
$1.8 billion.

Servicing income from non-affiliated companies, net of the related
amortization for the mortgage servicing rights and subservicing payments, was
$174,000, compared with $79,000 for the first three months of 1997. The volume
of loans serviced increased to $1.8 billion at March 31, 1998 from $1.3

billion at March 31, 1997 which contributed to an increase 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 1998 of $352,000
were 8% below the $383,000 earned in the same period of 1997. At March 31, 1998,
Carolina First Bank's trust department had assets under management of
approximately $310 million. The trust department is continuing to concentrate on
improving the profitability of its accounts and has elected to terminate some
relationships and certain trust products.

During the first quarter of 1998, the Company had a loss of $81,000
from its interests in the credit card and commercial real estate loan trusts,
compared with a loss of $59,000 for the same period in 1997. Loan securitization
income is net of charge-offs associated with the loans in the trusts. Loan
securitization income related to credit cards improved to a loss of $35,000 for
the first quarter of 1998, compared to a loss of $206,000 for the first quarter
of 1997. The loan securitization income was negatively impacted by charge-offs
in the credit card securitization, however, credit card charge-offs during the
first quarter of 1998 showed improvement over previous quarters. The commercial
real estate loan trust showed a loss of $46,000 for the first quarter of 1998
compared with income of $147,000 in the first quarter of 1997. Total balances in
the commercial real estate loan trust decline as loans are paid off, resulting
in lower income. At March 31, 1998, the off-balance sheet balance in the
commercial real estate loan trust was approximately $35 million. In addition,
expenses related to the formation of this trust are being amortized over the
life of the loans. As a result, the Company expects the loss associated with the
commercial real estate loan trust to continue.

Sundry noninterest income was $306,000 higher for the first three
months of 1998 than for the same period of 1997. This increase was due to higher
insurance commissions and appraisal fee income as well as additional servicing
fee income received from NetB@nk for loans purchased from Carolina First Bank
during 1997 which continue to be serviced by Carolina First Bank.

During the second quarter of 1998, the Company expanded its brokerage
service offerings through Carolina First Securities, Inc. ("CF Securities"), a
subsidiary of Carolina First Bank. CF Securities offers a complete line of
investment products and services, including mutual funds, stocks, bonds and
annuities. Income from these investment activities is not expected to be
significant in 1998.

Noninterest Expenses

Noninterest expenses increased $2.4 million, or 19%, to $15.3 million
in the first three months of 1998 from $12.9 million in the first three months
of 1997. With the acquisitions of Lowcountry Savings Bank, Inc. ("Lowcountry")
and First Southeast, intangible amortization for the first quarter of 1998
increased significantly over first quarter of 1997. Excluding intangible
amortization, noninterest expenses on a cash basis increased $1.5 million, or
12%, to $14.4 million for the first quarter of 1998 from $12.9 million for the
first quarter of 1997. The increase in expenditures reflects operation costs
associated with acquired branches, new markets and additional automated teller
machines ("ATMs").

Salaries and wages and employee benefits increased $1.2 million to $7.5
million in the first three months of 1998 compared with $6.3 million in the
first three months of 1997. Full-time equivalent employees increased to 697 as
of March 31, 1998 from 593 at March 31, 1997. The staffing cost increases were
primarily due to the costs of expanding in existing and new markets (including
the

Lowcountry and First Southeast acquisitions) and back office support functions
to support growth.

Occupancy and furniture and equipment expenses increased $400,000, or
18%, to $2.6 million for the three months ended March 31, 1998 from $2.2 million
for the three months ended March 31, 1997. This increase resulted principally
from additional costs associated with the Lowcountry and First Southeast
branches and the addition of nine new ATMs since the beginning of 1997 setting
the total number of ATMs at 39.

Sundry noninterest expenses increased $753,000, or 17%, to $5.2 million
in the first three months of 1998 from $4.4 million in the first three months of
1997. Excluding intangible amortization (a non-cash item), sundry noninterest
expenses decreased $121,000 to $4.3 million for the first quarter of 1998. The
decrease in sundry noninterest expense was principally attributable to lower
professional and legal fees and advertising. The largest items of sundry
noninterest expense were stationery, supplies, printing, telephone and
advertising.

Year 2000

The Company recognizes that there is a business risk in computerized
systems as the calendar rolls over into the next century. If the computer
systems misinterpret the date, items such as interest calculations on loans and
deposits will be incorrect. This problem is commonly called the "Year 2000
Problem." A number of computer systems used by the Company in its day-to-day
operations will be affected by this problem. Management has established a
committee (the "Y2K Project Team") which has identified all affected systems and
is currently working to ensure that this event will not disrupt operations. The
Y2K Project Team reports regularly to the Audit Committee of the Company's Board
of Directors. The Company is also working closely with outside computer vendors
to ensure that all software corrections and warranty commitments are obtained
and to arrange mock conversion testing. The estimated cost to the Company for
these corrective actions is $250,000, all of which is included in the Company's
1998 budget. Incomplete or untimely compliance, however, would have a material
adverse effect on the Company, the dollar amount of which cannot be accurately
quantified at this time because of the inherent variables and uncertainties
involved.

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, 1998, the Company had total loans outstanding of $1.5
billion which equaled approximately 82% of the Company's total deposits and
approximately 66% of the Company's total assets. The composition of the
Company's loan portfolio at March 31, 1998 follows: commercial and commercial
mortgage 63%, residential mortgage 16%, consumer 10%, lease receivables 4%,
credit card 4% and construction 3%.

The Company's loans increased $311.1 million, or 26%, to approximately
$1.5 billion at March 31, 1998 from $1.2 billion at March 31, 1997 and decreased
$107.8 million from approximately $1.6

billion at December 31, 1997. This decrease was net of mortgage loan sales of
$248 million. Adjusting for the 1998 mortgage loan sales, internal loan growth
was approximately $140.5 million, or an annualized rate of 35%, during the
quarter.

The Company had loans to 65 borrowers having principal amounts ranging
from $2 million to $5 million, which loans accounted for $201.2 million, or 13%,
of the Company's loan portfolio in the first quarter of 1998. The Company had
loans to 18 borrowers having principal amounts in excess of $5 million, which
loans accounted for $116.7 million, or 8%, of the Company's loan portfolio in
the first quarter of 1998. During the first quarter of 1997, the Company had
loans to 92 borrowers with principal amounts ranging from $2 million to $5
million, which accounted for $281.0 million, or 24%, of the Company's loan
portfolio. 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 these larger loans could have a significant
impact on the Company's earnings.

For the first three months of 1998, the Company's loans averaged $1.6
billion with a yield of 9.28%, compared with $1.2 billion and a yield of 9.42%
for the same period of 1997. The decline in loan yield was primarily
attributable to a shift in the composition of the loan portfolio to a higher
concentration of mortgage loans, related to the 1997 acquisition of First
Southeast. Mortgage loans made up approximately 22% of the average loan
portfolio in the first quarter of 1998 compared with 7% during the first quarter
of 1997. During the first quarter of 1998, the Company sold approximately $248
million in mortgage loans. The proceeds from these sales are being deployed into
higher yielding assets. 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.

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 $15.3 million, or 1.03% of loans
net of unearned income, at the end of March 1998, compared with $12.0 million,
or 1.01% of loans net of unearned income, at the end of March 1997. At December
31, 1997, the allowance for loan losses was $16.2 million, or 1.01% of loans net
of unearned income. The allowance for loan losses as a percentage of
nonperforming loans was 694% and 567% as of March 31, 1998 and 1997,
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,
--------------------------- ------------
1998 1997 1997
- --------------------------------------------------------------------------------------------------

Balance at beginning of period $ 16,211 $ 11,290 $ 11,290
Purchase accounting acquisitions 0 0 3,550
Valuation allowance for loans purchased 0 203 658
Provision for loan losses 2,136 2,952 11,646
Charge-offs:
Credit cards 1,109 1,854 5,325
Bank loans, leases & Blue Ridge 2,290 1,255 6,794
Recoveries 401 703 1,186
- --------------------------------------------------------------------------------------------------
Net charge-offs 2,998 2,406 10,933
- --------------------------------------------------------------------------------------------------
Allowance at end of period $ 15,349 $ 12,039 $ 16,211
- --------------------------------------------------------------------------------------------------

At March 31, 1998, 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 $930,000. The related
allowance for these impaired loans was $652,000. The average recorded investment
and foregone interest on impaired loans during the three months ended March 31,
1998 was approximately $968,000 and $27,000, respectively. For the three months
ended March 31, 1998, the Company recognized interest income on impaired loans
of $30,000.

Securities

At March 31, 1998, the Company's total investment portfolio had a book
value of $382.2 million and a market value of $390.5 million for an unrealized
net gain of $8.3 million. The investment portfolio has a weighted average
maturity of approximately 5.0 years. Securities (i.e., securities held for
investment, securities available for sale and trading securities) averaged
$316.0 million in the first three months of 1998, 38% above the first three
month 1997 average of $228.5 million. This increase was primarily attributable
to proceeds from the sale of First Southeast mortgage loans. The average
portfolio yield increased to 6.44% for the first three months of 1998 from 6.10%
for the first three months of 1997. The portfolio yield increased as a result of
changing the mix of securities. As securities matured, they were reinvested in
higher yielding agencies and mortgage-backed securities. At March 31, 1998,
securities totaled $390.0 million, up $128.6 million from the $261.4 million
invested as of the first quarter end 1997 and up $91.5 million from the December
31, 1997 balance of $298.5 million.

At March 31, 1998, the Company owned 2,528,366 shares of common stock
of Affinity and the Affinity Warrant entitling the Company to purchase an
additional 3,471,340 shares for approximately $0.0001 per share, or
approximately 17% of Affinity's outstanding common stock. The investment in
Affinity's common stock, included in securities available for sale, was recorded
at its market value of approximately $5.7 million. The Affinity Warrant was not
reported on the Company's balance sheet as of March 31, 1998.

The Company currently owns 1,175,000 shares of Net.B@nk's common stock,
or approximately 18% of the outstanding shares. These shares are carried on the
Company's books (as securities available for sale) at a basis of approximately
$979,000. The Net.B@nk investment is not marked to market value since certain
regulators have precluded certain affiliates of Net.B@nk, including the Company,
from selling their shares until July 31, 2000.

Intangible Assets and Other Assets

The intangible assets balance at March 31, 1998 of $56.9 million was
attributable to goodwill of $48.0 million, core deposit balance premiums of $8.8
million and purchased credit card premiums of $121,000. The intangible assets
balance at March 31, 1997 of $16.2 million was attributable to goodwill of $7.5
million, core deposit balance premiums of $8.5 million and purchased credit card
premiums of $190,000. In connection with the acquisition of Lowcountry in 1997,
the Company recorded approximately $7.8 million in intangible assets ($7.2
million in goodwill and $0.6 million in core deposit intangibles). Approximately
$34.4 million in intangible assets ($33.7 million in goodwill and $0.7 million
in core deposit intangibles) were recorded in connection with the First
Southeast acquisition in 1997. This figure is net of the amount recorded
relative to the First Southeast mortgage loan sales. At March 31, 1998, other
assets included other real estate owned of $951,000 and mortgage servicing
rights of $22.7 million. At March 31, 1997, other assets included other real
estate owned of $3.0 million and mortgage servicing rights of $18.1 million.

Interest-bearing Liabilities

During the first three months of 1998, interest-bearing liabilities
averaged $1.7 billion, compared with $1.2 billion for the comparable period of
1997. This increase resulted principally from internal deposit growth related to
account promotions and sales efforts and acquisitions. The average interest
rates were 5.10% and 4.88% for the first three months of 1998 and 1997,
respectively. At March 31, 1998, interest-bearing deposits comprised
approximately 87% of total deposits and 91% of interest-bearing liabilities. For
the first three months of 1998, average borrowed funds, which include Federal
Home Loan Bank ("FHLB") advances and other short-term borrowings, totaled $140.1
million, compared with $123.5 million for the first three months of 1997. This
increase was primarily attributable to an increase in average repurchase
agreements which are provided to achieve a higher interest rate for our
customers. Advances from the FHLB declined to $10.0 million as of March 31, 1998
from $60.0 million as of March 31, 1997. The Company's FHLB advances were $10.0
million at December 31, 1997. FHLB advances are a source of funding which the
Company uses depending on the current level of deposits and management's
willingness to raise deposits through market promotions given the
competitiveness of the deposit market and the Company's cost of funds.

Carolina First Bank's primary source of funds for loans and investments
is its deposits which are gathered through Carolina First Bank's branch network.
Deposits grew 45% to $1.8 billion at March 31, 1998 from $1.3 billion at March
31, 1997. At December 31, 1997, deposits totaled $1.7 billion. The Company
acquired approximately $64 million in deposits from the Lowcountry acquisition
and approximately $285 million in deposits from the First Southeast acquisition.
Internal growth, particularly from account promotions, generated the remainder
of the new deposits. During the first three months of 1998, total
interest-bearing deposits averaged $1.6 billion with a rate of 4.97%, compared
with $1.1 billion with a rate of 4.72% in 1997. The increased rate paid on
deposits during the first quarter of 1998

reflects the large number of CDs and IRAs acquired from First Southeast. The
Company focused on increasing deposit transaction accounts during the first
quarter of 1998 and will continue this effort going forward. During the first
three months of 1998, deposit pricing continued to be 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 does not believe that it has any brokered deposits.

The Company has filed an application with the Federal Deposit Insurance
Corporation ("FDIC") to open a branch in the Cayman Islands. The branch is to be
a "shell" branch of Carolina First Bank, and accordingly, will involve minimal
start-up costs. The primary function of the branch will be to obtain deposits
from the Eurocurrency interbank market, which will be utilized in funding
Carolina First Bank's domestic loan portfolio. The bank views this branch
primarily as a vehicle for entrance into a funds market in which it is not
currently active.

Average noninterest-bearing deposits, which increased 6% during the
year, decreased to 11.5% of average total deposits in the first three months of
1997 from 15.0% in the first three months of 1997. This decrease reflects the
change in the mix of deposits related to the Lowcountry and First Southeast
acquisitions. It also reflects the fact that in the first quarter of 1997 the
deposits now associated with the Atlanta Internet Bank were carried on Carolina
First Bank's balance sheet.

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 88% for the first three months
of 1998. 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 $243.4 million, or 10.81% of
total assets, at March 31, 1998, compared with $105.3 million, or 6.53% of total
assets, at March 31, 1997. At December 31, 1997, shareholders' equity totaled
$201.7 million, or 9.35% of total assets. The $41.7 million increase in total
shareholders' equity since December 31, 1997 resulted principally from the
overseas offering of the Company's common stock and retention of earnings less
cash dividends paid.

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 acquisitions. During the first quarter of 1998, the Company
raised approximately $39 million in new capital through the sale of 2.0 million
shares of its Common Stock to certain overseas investors in an offering meeting
the requirements of Regulation S of the Securities Act of 1933.

Book value per share at March 31, 1998 and 1997 was $13.74 and $9.28,
respectively. Tangible book value per share at March 31, 1998 and 1997 was
$10.53 and $7.85, respectively. At December 31, 1997, book value and tangible
book value were $12.88 and $9.17, respectively. Tangible book value was below
book value as a result of the purchase premiums associated with branch
acquisitions and the acquisitions of CF Mortgage, Lowcountry Savings Bank, Inc.
and First Southeast (all of which were accounted for as purchases).

At March 31, 1998, 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
3/31/98 Requirement Requirement
- -----------------------------------------------------------------------------------------------

Company:
Total Risk-based Capital 13.86% 10.0% 8.0%
Tier 1 Risk-based Capital 11.31 6.0 4.0
Leverage Ratio 8.27 5.0 4.0

Carolina First Bank:
Total Risk-based Capital 11.10 10.0 8.0
Tier 1 Risk-based Capital 10.20 6.0 4.0
Leverage Ratio 7.45 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. The Company
has paid a cash dividend each quarter since the initiation of cash dividends on
February 1, 1994. At the December 17, 1997 meeting, the Board of Directors
approved an $0.08 per share cash dividend on the common stock, which represents
an effective annual increase of approximately 14%. The Company presently intends
to continue to pay a quarterly cash dividend on the Common Stock; however,
future dividends will depend upon the Company's financial performance and
capital requirements.

MARKET RISK

Market risk is the risk of loss from adverse changes in market prices
and rates. The Company's market risk arises principally from interest rate risk
inherent in its lending, deposit and borrowing activities. Management actively
monitors and manages its interest rate risk exposure. Although the Company
manages other risks, as in credit quality and liquidity risk, in the normal
course of business, management considers interest rate risk to be its most
significant market risk and could potentially have the largest material effect
on the Company's financial condition and results of operations. Other types of
market risks, such as foreign currency exchange risk and commodity price risk,
do not arise in the normal course of the Company's business activities.

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 as of March 31,
1998, the Company is positioned so that net interest income will increase $11.1
million if interest rates rise in the near term and will decrease $7.8 million
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, 1998, on a cumulative basis through twelve months, rate-sensitive
liabilities exceeded rate-sensitive assets, resulting in a liability sensitive
position of $232.8 million.

Computation of prospective effects of hypothetical interest rate
changes are based on numerous assumptions, including relative levels of market
interest rates, loan prepayments and deposit decay rates, and should not be
relied upon as indicative of actual results. Further, the computations do not
contemplate any actions the Company could undertake in response to changes in
interest rates.

The table on the following page shows the Company's ending balance
sheet as of March 31, 1998 and the associated average yield/cost for the quarter
ended March 31, 1998 and reflects the impact that an increase and decrease of
200 basis points would have on net interest income within a one year time frame.

TABLE 3
INTEREST RATE RISK
($ in thousands)

PROJECTED FOR THE
YEAR ENDED 3/31/99
---------------------------
No Rate Changes
---------------------------
Average
Ending Yield/Rate
Balance For the Quarter Income/ Average
3/31/98 Ended 3/31/98 Expense Yield/Rate
------- ------------- ------- ----------
ASSETS
Earning assets

Loans (net of unearned income)(1)............$ 1,479,241 9.28% $ 165,837 9.53%
Investment securities (taxable).............. 357,427 6.36 20,727 6.44
Investment securities (nontaxable)........... 32,524 7.09(1) 2,386 7.18(1)
Federal funds sold and resale agreements..... 105,000 4.55 357 5.55
Interest bearing deposits with other banks... 47,229 5.63 1,396 5.52
----------- -----------
Total earning assets..................... 2,021,421 8.64 190,703 8.90
-----------
Non-earning assets........................... 229,326
===========
Total assets.............................$ 2,250,747
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Interest-bearing liabilities
Interest-bearing deposits
Interest checking..........................$ 364,659 3.53% $ 13,899 3.73$
Savings..................................... 73,040 2.67 1,922 2.41
Money market................................ 182,170 4.13 8,014 4.13
Certificates of deposit..................... 977,294 5.80 56,800 5.61
----------- ------------
Total interest-bearing deposits........... 1,597,163 4.97 80,635 4.86
Short-term borrowings........................ 110,390 5.64 6,922 5.51
Long-term borrowings......................... 39,395 9.35 3,311 9.36
----------- ------------
Total interest-bearing liabilities.......... 1,746,948 5.10 90,868 4.98
------------
Non-interest bearing liabilities
Non-interest bearing deposits............... 228,866
Other non-interest liabilities.............. 31,550
----------
Total liabilities........................... 2,007,364
----------
Shareholders' equity............................ 243,383
Total liabilities and shareholders' equity...$ 2,250,747
===========
Net interest margin............................ 4.17% $ 99,835 4.69%
============= ============ ===========

PROJECTED FOR THE YEAR ENDED 3/31/99
-------------------------------------------------------
Increase Rates 200 BP Decrease Rates 200 BP
-------------------------- --------------------------
Income/ Average Income/ Average
Expense Yield/Rate Expense Yield/Rate
------- ---------- ------- ----------
ASSETS
Earning assets
Loans (net of unearned income)(1)............$ 188,185 10.81% $ 142,952 8.22%
Investment securities (taxable).............. 22,021 6.84 19,433 6.34
Investment securities (nontaxable)........... 2,467 7.43(1) 2,305 6.94(1)
Federal funds sold and resale agreements..... 398 7.50 315 3.50
Interest bearing deposits with other banks... 1,417 5.60 1,376 5.44
----------- -------------
Total earning assets..................... 214,488 10.01 166,381 7.76
----------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Interest-bearing liabilities
Interest-bearing deposits
Interest checking..........................$ 15,687 4.21% $ 12,611 3.38%
Savings.................................... 2,689 3.37 1,154 1.45
Money market............................... 10,255 5.28 5,773 2.97
Certificates of deposit.................... 62,265 6.15 47,208 4.66
----------- -------------
Total interest-bearing deposits.......... 90,896 5.48 66,746 4.02
Short-term borrowings....................... 9,090 7.43 4,598 3.76
Long-term borrowings........................ 3,554 9.88 3,067 8.84
----------- -------------
Total interest-bearing liabilities......... 103,540 5.68 74,411 4.07
----------- -------------
Net interest margin............................$ 110,948 5.22% $ 91,970 4.32%
============ ============= ============ ===========

(1) Fully tax-equivalent basis at a 35% tax rate.

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, 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 branch network.
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. At March 31, 1998, Carolina First Bank's
liquidity ratio was approximately 24%. At March 31, 1998, Carolina First Bank
had unused short-term lines of credit totaling approximately $48 million (which
are withdrawable at the lender's option). In addition, Carolina First Bank has
access to borrowing from the FHLB. At March 31, 1998, unused borrowing capacity
from the FHLB totaled approximately $171 million with an outstanding balance of
$10 million. Management believes that these sources are adequate to meet its
liquidity needs.

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. Net
loan charge-offs, including credit card receivables, totaled $3.0 million and
$2.4 million in the first three months of 1998 and 1997, respectively, or 0.76%
and 0.83%, respectively, as an annualized percentage of average loans. Excluding
credit card receivables, annualized net loan charge-offs as a percentage of
average loans were 0.50% and 0.20% during the first quarter 1998 and 1997,
respectively. In the first quarter of 1998, net charge-offs for credit cards
totaled $1.1 million compared with $1.9 million in the first quarter of 1997.
The past due ratios for credit cards improved during the first quarter and the
Company hopes to achieve greater control over credit card

collections through the acquisition of RPG. The majority of the increase in
accruing loans past due 90 days is attributable to one-to-four family
residential loans acquired from First Southeast.

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

March 31, December 31,
---------------------- ------------
1998 1997 1997
- ------------------------------------------------------------------------------------

Nonaccrual loans $ 930 $ 840 $ 1,165
Restructured loans 1,283 1,283 1,283
- ------------------------------------------------------------------------------------
Total nonperforming loans 2,213 2,123 2,448
Other real estate 951 2,986 1,319
- ------------------------------------------------------------------------------------
Total nonperforming assets 3,164 5,109 3,767
====================================================================================

Nonperforming assets as a % of loans
and foreclosed property 0.21% 0.43% 0.23%

Accruing loans past due 90 days $ 4,608 $ 2,361 $ 4,125
====================================================================================

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 the Company'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.

ITEM 2 CHANGE IN SECURITIES

On February 12, 1998, the Company completed the sale of 2.0 million
shares of its Common Stock to certain overseas investors. The shares
were offered and sold only to non-U.S. persons under an exemption from
registration provided by Regulation S under the Securities Act of 1933.
In connection with this offering, the Company received net proceeds of
approximately $39 million which will be used to support internal
growth, acquisitions, the expansion of its finance subsidiary and for
general corporate purposes.

ITEM 3 DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

On April 30, 1998, the Company held its 1998 Annual Meeting of
Shareholders. The results of the 1998 Annual Meeting of Shareholders
follow.

Proposal #1 - Election of Directors

The following persons were elected as Directors with the votes
indicated.
Voting Shares in Favor
---------------------- Withheld
# % Authority
---------- ----- ---------
Judd B. Farr 12,640,920 99.72% 34,876
C. Claymon Grimes, Jr. 12,637,794 99.73% 34,392
Elizabeth P. Stall 12,637,637 99.73% 34,489
David C. Wakefield III 12,644,963 99.79% 27,157
Mack I. Whittle, Jr. 12,639,816 99.74% 32,487

M. Dexter Hagy, William S. Hummers III, Vernon E. Merchant, Jr.,
William R. Phillips, H. Earle Russell, Jr., Charles B. Schooler, Eugene
E. Stone IV and William R. Timmons, Jr. continued in their present
terms as directors.

Proposal #2 - Amendments to the Company's Directors' Stock Option Plan

The shareholders approved an amendment to the Company's Directors'
Stock Option Plan (the "Directors' Plan" and, as amended, the "Amended
Directors' Plan") to increase the number of shares which may be subject
to options thereunder from 250,000 shares to 500,000 shares, and to
amend the compensation payable thereunder to Company directors
("Company Directors") to be consistent with the director compensation
program adopted by the Company for 1998. Under the Directors' Plan's
existing provisions, all non-employee directors of the Company and its
principal subsidiaries receive options to purchase 1,000 shares of
Common Stock on an annual basis. The Directors' Plan is being amended
to differentiate between Company Directors and directors of
subsidiaries who do not also serve as Company Directors ("Subsidiary
Directors"). Subsidiary Directors will continue to receive the annual
1,000 share grant. However, the Company has approved a program whereby
Company Directors will receive 60% of their total director compensation
(calculated assuming 100% attendance at all scheduled Board and
committee meetings) in the form of options to purchase Common Stock.
The options will be valued based on the Black-Scholes valuation method.
The Amended Directors' Plan also contains provisions for the immediate
vesting of options upon a Change of Control. These items were approved
with the votes indicated.
% of
Outstanding
# of Shares Shares
----------- ------
For 11,953,670 93.52%
Against 622,730 4.87
Abstain 205,477 1.61
Broker Non-Votes 1 ----

ITEM 5 OTHER INFORMATION

Pending Acquisition
In February 1998, the Company signed a definitive merger agreement with
RPG, a privately-held credit card services company located in Columbia,
South Carolina. Under the terms of the agreement, the Company will
issue shares of the Company's common stock valued at approximately
$11.3 million. Substantially all of RPG's activities are related to the
origination and servicing of credit cards on behalf of third parties,
one of which is Carolina First Bank. At December 31, 1997, RPG had
approximately $10.3 million in assets and total equity of approximately
$10.6 million. RPG will become a wholly-owned subsidiary of the
Company. The transaction is expected to occur in the second quarter and
will be accounted for under the purchase method of accounting.

ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

10.1 Lease Agreement by and between Poinsett Plaza, LLC and Carolina First
Bank

10.2 Amendment No. 1 to Carolina First Corporation Amended and Restated
Stock Option Plan

10.3 Carolina First Corporation Amended and Restated Directors' Stock Option
Plan

11.1 Computation of Basic and 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