Anchor Financial Corporation and M&M Financial Corporation Announce Intent to Merge.

MYRTLE BEACH, S.C.--(BUSINESS WIRE)--May 1, 1998--Anchor Financial Corporation (NASDAQ:AFSC) and M&M Financial Corporation, parent company of First National South and headquartered in Marion, South Carolina, today announced the signing of a letter of intent to merge.

The proposed merger is subject to due diligence, execution of a definitive agreement by May 15, 1998, and approval of such agreement by the boards of directors and shareholders of both companies and approval by appropriate regulatory agencies. The transaction is expected to be completed in the third quarter of 1998.

Upon completion, M&M Financial's First National South banking offices, with locations in Florence, Marion, Mullins, Nichols, and Myrtle Beach, South Carolina, will become part of Anchor's banking network. The result of this combination will bring Anchor Financial Corporation's asset size to more than $1 billion and expand its banking network to 28 offices in South Carolina and North Carolina.

The proposed transaction is expected to be accounted for as a pooling of interests and provides for a tax-free exchange of 0.87 shares of Anchor Financial Corporation common stock for each outstanding share of M&M Financial common stock. Based on Anchor Financial Corporation's April 28th closing stock price of $40.50 and M&M Financial's approximately 1.0 million outstanding shares of common stock, the transaction would have a value of approximately $35.24 per share, or a total purchase price of $35.5 million. The merger is expected to have a positive impact on Anchor's earnings beginning in 1999.

Stephen L. Chryst, president and chief executive officer of Anchor Financial Corporation, stated, "The partnership with M&M Financial adds strength to our growing franchise. Their offices in the Pee Dee area complement our upcoming move into the Columbia market, and their style of community banking blends well with ours. They bring a shared commitment to superior customer service and technologically advanced products."

Chester A. Duke, chairman, president, and chief executive officer of M&M Financial, said, "The affiliation with Anchor Financial Corporation is the right move for us. It will allow us to provide our customers with a wider variety of products and services, and we look forward to the partnership that is being created."

Customers of both banks will continue to be served by the same employees who have helped them in the past and will not need to make any changes in their banking routine. After the merger is completed, customers of both institutions will be able to do their banking at any of The Anchor Bank offices in North Carolina and South Carolina. Customers will also have access to investment and trust services, as well as an array of electronic products.

Anchor Financial Corporation recently announced a merger agreement with ComSouth Bankshares, Inc., parent of the Bank of Charleston and the Bank of Columbia, and expects that merger to be completed during the third quarter of 1998. Arthur M. Swanson, president and chief executive officer of ComSouth and chairman of the board of the Bank of Charleston, said, "I am pleased with the merger announcement of Anchor Financial and M&M Financial. It will be a prosperous relationship and one that I am glad to be associated with. The banking franchise being created will have tremendous value for customers and shareholders."

Anchor Financial Corporation, with assets of $624.7 million, is the parent of The Anchor Bank, which operates nineteen banking offices in South Carolina and North Carolina. The Anchor Bank offers a full line of banking products and services.

Anchor Financial Corporation's common stock trades on the Nasdaq Stock MarketSM under the symbol AFSC.

M&M Financial Corporation has assets of $170 million and is the parent of First National South which offers a full line of banking products and services.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Statements in this news release looking forward in time involve risks and uncertainties, including regulatory approvals, completion of the due diligence process, success of acquiring new locations and integrating newly-acquired branches, additional expansion opportunities, the effect of changing economic conditions, product demand, changes in the regulatory environment, and other risk factors detailed in Anchor's Securities and Exchange Commission filings.

CONTACT: Anchor Financial Corporation

TOMMY E. LOOPER, 843/946-3164