<PAGE>
 
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM S-8

                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933

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

                          SOUTH STREET FINANCIAL CORP.
             (Exact name of Registrant as specified in its charter)

                      
       North Carolina                                        56-1973261
 (State or other jurisdiction                             (I.R.S. Employer  
of incorporation or organization)                         Identification No.)
                                                                             
                                                                             
                             155 West South Street
                        Albemarle, North Carolina 28001
                    (Address of Principal Executive Offices)

                 SOUTH STREET FINANCIAL CORP. STOCK OPTION PLAN
                           (Full title of the Plans)

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

                            CARL M. HILL, President
                          South Street Financial Corp.
                             155 West South Street
                        Albemarle, North Carolina 28001
                                 (704) 982-9184
  (Name and address, including zip code, and telephone number, including area
                          code, of agent for service)

                                  Copies to:
                             EDWARD C. WINSLOW III
                                JEAN C. BROOKS
                           Brooks, Pierce, McLendon,
                          Humphrey & Leonard, L.L.P.
                            2000 Renaissance Plaza
                             Post Office Box 26000
                       Greensboro, North Carolina 27420


                        CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================================ 
Title of Securities           Amount to be   Proposed Maximum   Proposed Maximum     Amount of
to be Registered              Registered/1/   Offering Price   Aggregate Offering   Registration
                                                 Per Unit           Price/4/            Fee
------------------------------------------------------------------------------------------------ 
<S>                           <C>            <C>               <C>                  <C>
Common Stock, no par           449,650/2/         $12.00/3/        $5,395,800.00     $1,591.76
value
================================================================================================
</TABLE>

                            (Footnotes on Next Page)

     This Registration Statement shall become effective upon filing in
accordance with Section 8(a) of the Securities Act of 1933, as amended, and 17
C.F.R. (S)230.462.
<PAGE>
 
     /1/Together with an indeterminate number of additional shares which may
be necessary to adjust the number of shares reserved for issuance pursuant to
the South Street Financial Corp. Stock Option Plan ("Stock Option Plan") as a
result of a reclassification, reorganization, recapitalization, stock split,
stock dividend or similar occurrence which makes an adjustment of shares just
and appropriate.

     /2/Represents the total number of shares which may be issued pursuant to
options granted under the Stock Option Plan.

     /3/Assumes a value per share underlying options granted under the Stock
Option Plan equal to $12.00, which was the price per share paid on January 16,
1998, which was the closing market price of South Street Financial Corp. common
stock on the Nasdaq National Market System on January 16, 1998.

     /4/Estimated total for the purposes of calculating the registration fee
in accordance with Rule 457(c) and (h).

================================================================================
<PAGE>
 
                                     Part I
              INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS

Item I.  Plan Information.

     This Registration Statement on Form S-8 relates to the registration of up
to 449,650 shares of common stock, no par value, of South Street Financial Corp.
(the "Registrant") which are reserved for issuance pursuant to options which
have been granted under the South Street Financial Corp. Stock Option Plan
("Stock Option Plan").  This Registration Statement also relates to an
indeterminent number of additional shares which may be necessary to adjust the
number of shares reserved for issuance pursuant to the Stock Option Plan as a
result of a reclassification, reorganization, recapitalization, stock split,
stock dividend or similar occurrence which makes an adjustment of shares just
and appropriate.  Documents containing the information specified in Part I of
Form S-8 will be sent or given to the participants in the Stock Option Plan as
specified by Rule 428(b)(1).  Such documents are not filed with the Securities
and Exchange Commission (the "Commission") either as part of this Registration
Statement or as prospectuses or prospectus supplements pursuant to Rule 424 in
reliance on Rule 428.

Item 2.  Registration Information and Employee Plan Annual Information.

     The required statement is contained in the prospectus to be delivered
pursuant to Part I of this Registration Statement as specified by Rule
428(b)(1).

                                    Part II
               INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3.  Incorporation of Documents by Reference.

     The following documents filed with the Commission are incorporated herein
by reference:

     (a)  The Registrant's Annual Report on Form 10-K for the fiscal year ended
          September 30, 1997.

     (b)  All reports filed by the Registrant pursuant to Sections 13(c) or
          15(d) of the Securities Exchange Act of 1934, as amended, (the
          "Exchange Act") since the end of the fiscal year covered by the
          Registrant's Annual Report on Form 10-K referred to in clause (a)
          above.

     (c) The description of the Registrant's Common Stock contained in the
         Registrant's S-1 Registration Statement, Registration 
<PAGE>
 
         No. 333-04509, incorporated by reference in the Registration Statement
         on Form 8-A filed with the Commission under Section 12(b) of the
         Exchange Act on July 25, 1996 (File No. 0-21083), including any
         amendment or report filed for the purpose of updating such description.

     All documents subsequently filed by the Registrant and the Stock Option
Plan pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior
to the filing of a post-effective amendment which indicates that all securities
registered hereby have been sold or which deregisters all securities then
remaining unsold, shall be deemed incorporated by reference herein and to be a
part hereof from the date of the filing of such documents.  Any statement
contained in this Registration Statement, or in a document incorporated or
deemed to be incorporated by reference herein, shall be deemed to be modified or
superseded for purposes of this Registration Statement to the extent that a
statement contained herein, or in any other subsequently filed document which is
also incorporated or deemed to be incorporated by reference herein, modifies or
supersedes such statement.  Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.

Item 4.  Description of Securities.

     Not applicable.

Item 5.  Interests of Named Experts and Counsel.

     Not applicable.

Item 6.  Indemnification of Directors and Officers.

     The Registrant's Articles of Incorporation provide that to the fullest
extent permitted by the North Carolina Business Corporation Act (the "NCBCA"),
no person who serves as a director shall be personally liable to the Registrant
or any of its stockholders or otherwise for monetary damages for breach of any
duty as director.  The Registrant's Bylaws state that any person who at any time
serves or has served as a director or officer of the Registrant, or who, while
serving as a director or officer of the Registrant, serves or has served at the
request of the Registrant as a director, officer, partner, trustee, employer or
agent of another corporation, partnership, joint venture, trust or other
enterprise, or as a trustee or administrator under an employee benefit plan,
shall have a right to be indemnified by the Registrant to the fullest extent
permitted by law against liability and litigation expense arising out of such
status or activities in such capacity.  "Liability and litigation expense" is
defined in the Bylaws as including costs and expenses of 
<PAGE>
 
litigation (including reasonable attorneys' fees), judgments, fines and amounts
paid in settlement which are actually and reasonably incurred in connection with
or as a consequence of any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, including
appeals.

     Litigation expense, as described above, may be paid by the Registrant in
advance of the final disposition or termination of the litigation matter, if the
Registrant receives an undertaking, dated, in writing and signed by the person
to be indemnified, to repay all such sums unless such person is ultimately
determined to be entitled to be indemnified by the Registrant as provided in the
Registrant's Bylaws.

     Sections 55-8-50 through 55-8-58 of the NCBCA contain provisions
prescribing the extent to which directors and officers shall or may be
indemnified.  Section 55-8-51 of the NCBCA permits a corporation, with certain
exceptions, to indemnify a present or former director against liability if (i)
the director conducted himself in good faith, (ii) the director reasonably
believed (x) that the director's conduct in the director's official capacity
with the corporation was in its best interests and (y) in all other cases the
director's conduct was at least not opposed to the corporation's best interests,
and (iii) in the case of any criminal proceeding, the director had no reasonable
cause to believe the director's conduct was unlawful.  A corporation may not
indemnify a director in connection with a proceeding by or in the right of the
corporation in which the director was adjudged liable to the corporation or in
connection with a proceeding charging improper personal benefit to the director.
The above standard of conduct is determined by the board of directors, or a
committee or special legal counsel or the shareholders as prescribed in Section
55-8-55.

     Sections 55-8-52 and 55-8-56 of the NCBCA require a corporation to
indemnify a director or officer in the defense of any proceeding to which the
director or officer was a party against reasonable expenses when the director or
officer is wholly successful in the director's or officer's defense, unless the
articles of incorporation provide otherwise.  Upon application, the court may
order indemnification of the director or officer if the director or officer is
adjudged fairly and reasonably so entitled under Section 55-8-54.

     In addition, Section 55-8-57 permits a corporation to provide for
indemnification of directors, officers, employees or agents, in its articles of
incorporation or bylaws or by contract or resolution, against liability in
various proceedings and to purchase and maintain insurance policies on behalf of
these individuals.

                                       3
<PAGE>
 
     The foregoing is only a general summary of certain aspects of North
Carolina law dealing with indemnification of directors and officers and does not
purport to be complete.  It is qualified in its entirety by reference to the
relevant statutes, which contain detailed specific provisions regarding the
circumstances under which and the person for whose benefit indemnifications
shall or may be made.

Item 7.  Exemption from Registration Claimed.
 
     Not applicable.

Item 8.  Exhibits

     The following exhibits are filed with or incorporated by reference into
this Registration Statement on Form S-8 (numbering corresponds to Exhibit Table
in Item 601 of Regulation S-K):

          Exhibit No.                    Description of Document
          -----------                    -----------------------

             (3)(i)      The Registrant's Articles of Incorporation        
                         (incorporated by reference to Exhibit (3)(i) of the
                         Registrant's S-1 Registration Statement,          
                         Registration No. 333-04509, dated May 24, 1996    
                         and amended on July 25, 1996)                      

             (3)(ii)     The Registrant's Bylaws (incorporated by            
                         reference to Exhibit (3)(ii) of the Registrant's S-1
                         Registration Statement, Registration No. 
                         333-04509, dated May 24, 1996 and amended on July      
                         25, 1996)                                           

             (4)         Specimen Stock Certificate for the Registrant 
                         (incorporated by reference to Exhibit 4 of the
                         Registrant's S-1 Registration Statement,      
                         Registration No. 333-04509, dated May 24, 1996
                         and amended on July 25, 1996)                  

             (5)         Opinion of Brooks, Pierce, McLendon, Humphrey  
                         & Leonard, L.L.P. as to legality of securities
                         being registered                               
 

                                       4
<PAGE>
 
             (10)        South Street Financial Corp. Stock Option Plan

             (23)(i)     Consent of Brooks, Pierce, McLendon, Humphrey
                         & Leonard, L.L.P. (included in Exhibit 5)     

             (23)(ii)    Consent of McGladrey & Pullen, LLP



Item 9.  Undertakings.

     The undersigned Registrant hereby undertakes:

     (1) To file, during any period in which offers or sales are being made, a
post-effective amendment to the Registration Statement:

        (i)   To include any prospectus required by Section 10(a)(3) of the
              Securities Act of 1933, as amended (the "Securities Act");

        (ii)  To reflect in the prospectus any facts or events arising after the
              effective date of the Registration Statement (or the most recent
              post-effective amendment thereof) which, individually or in the
              aggregate, represent a fundamental change in the information set
              forth in the Registration Statement. Notwith standing the
              foregoing, any increase or decrease in volume of securities
              offered (if the total dollar value of securities offered would not
              exceed that which was registered) and any deviation from the low
              or high end of the estimated maximum offering range may be
              reflected in the form of prospectus filed with the Commission
              pursuant to Rule 424(b) if, in the aggregate, the changes in
              volume and price represent no more than a 20% change in the
              maximum aggregate offering price set forth in the "Calculation of
              Registration Fee" table in the Registration Statement;

        (iii) To include any material information with respect to the plan of
              distribution not previously disclosed in the Registration
              Statement or any material change to such information in the
              Registration Statement;

     Provided, however, that paragraphs (1)(i) and (1)(ii) above do not apply if
     --------  -------                                                          
the Registration Statement is on Form S-3 or Form S-8 and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
Registrant pursuant to Section 13 

                                       5
<PAGE>
 
or Section 15(d) of the Exchange Act that are incorporated by reference in the
Registration Statement.

     (2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.

     (3) To remove from registration by means of a post-effective amendment any
of the securities being registered that remain unsold at the termination of the
offering.

     The undersigned Registrant hereby undertakes, that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

     Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the provisions discussed in Item 6 thereof, or otherwise,
the Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.  In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit, or proceeding) is asserted by
such director, officer, or controlling person in connection with the securities
being registered hereby, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.

                                       6
<PAGE>
 
                                  SIGNATURES


     The Registrant.  Pursuant to the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Albemarle, State of North Carolina, on the 10th
day of February, 1998.


                              SOUTH STREET FINANCIAL CORP.
                              Registrant


                              By:   /s/ Carl M. Hill
                                    -------------------------------------
                                        Carl M. Hill, President


     Each person whose individual signature appears below hereby makes,
constitutes and appoints Carl M. Hill to sign for such person and in such
person's name and capacity indicated below, any and all amendments to this
Registration Statement, including any and all post-effective amendments.
<PAGE>
 
     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.


Date: February 10, 1998             By:  /s/ Carl M. Hill
                                         -----------------------------------
                                         Carl M. Hill, President, Chief 
                                         Executive Officer and Director
                                         (Principal Executive Officer)


Date: February 10, 1998             By:  /s/ Christopher F. Cranford
                                         -----------------------------------
                                         Christopher F. Cranford, Controller 
                                         and Treasurer (Principal Financial 
                                         Officer and Principal Accounting 
                                         Officer)


Date: February 10, 1998             By:  /s/ R. Ronald Swanner
                                         -----------------------------------
                                         R. Ronald Swanner, Executive Vice 
                                         President, Secretary and Director


Date: February 10, 1998             By:  /s/ Caldwell A. Holbrook, Jr.
                                         -----------------------------------
                                         Caldwell A. Holbrook, Jr., Director


Date: February 10, 1998             By:  /s/ Joel A. Huneycutt
                                         -----------------------------------
                                         Joel A. Huneycutt, Director


Date: February 10, 1998             By:  /s/ Douglas Dwight Stokes
                                         -----------------------------------
                                         Douglas Dwight Stokes, Director


Date: February 10, 1998             By:  /s/ Greg E. Underwood
                                         -----------------------------------
                                         Greg E. Underwood, Director
<PAGE>
 
                                 EXHIBIT INDEX

 
                                                                   Method of
Exhibit No.                     Description                         Filing
-----------                     -----------                     ---------------
  (3)(i)              The Registrant's Articles of              Incorporated by
                      Incorporation                             Reference

  (3)(ii)             The Registrant's Bylaws                   Incorporated by
                                                                Reference

   (4)                Specimen Stock Certificate for the        Incorporated by
                      Registrant                                Reference

   (5)                Opinion of Brooks, Pierce,                Filed Herewith
                      McLendon, Humphrey & Leonard, 
                      L.L.P. as to legality of
                      securities being registered

   (10)               South Street Financial Corp. Stock        Filed Herewith
                      Option Plan

  (23)(i)             Consent of Brooks, Pierce,                Filed Herewith
                      McLendon, Humphrey & Leonard, 
                      L.L.P. (included in Exhibit 5)

  (23)(ii)            Consent of McGladrey & Pullen, LLP        Filed Herewith
 
                                       2
[{"type": "S-8", "sequence": "1", "description": "FORM S-8", "secsgml_size_bytes": 23690}]
{"company-data": {"conformed-name": "SOUTH STREET FINANCIAL CORP", "cik": "0001014964", "assigned-sic": "6036", "irs-number": "561973261", "state-of-incorporation": "NC", "fiscal-year-end": "0930"}, "filing-values": {"form-type": "S-8", "act": "33", "file-number": "333-46061", "film-number": "98531832"}, "business-address": {"street1": "155 WEST SOUTH STREET", "street2": "POST OFFICE BOX 489", "city": "ALBEMARLE", "state": "NC", "zip": "28001-5712", "phone": "7049829184"}, "mail-address": {"street1": "2000 RENAISSANCE PLAZA", "city": "GREENSBORO", "state": "NC", "zip": "27401"}}
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM S-8

                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933

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

                          SOUTH STREET FINANCIAL CORP.
             (Exact name of Registrant as specified in its charter)

                      
       North Carolina                                        56-1973261
 (State or other jurisdiction                             (I.R.S. Employer  
of incorporation or organization)                         Identification No.)
                                                                             
                                                                             
                             155 West South Street
                        Albemarle, North Carolina 28001
                    (Address of Principal Executive Offices)

                 SOUTH STREET FINANCIAL CORP. STOCK OPTION PLAN
                           (Full title of the Plans)

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

                            CARL M. HILL, President
                          South Street Financial Corp.
                             155 West South Street
                        Albemarle, North Carolina 28001
                                 (704) 982-9184
  (Name and address, including zip code, and telephone number, including area
                          code, of agent for service)

                                  Copies to:
                             EDWARD C. WINSLOW III
                                JEAN C. BROOKS
                           Brooks, Pierce, McLendon,
                          Humphrey & Leonard, L.L.P.
                            2000 Renaissance Plaza
                             Post Office Box 26000
                       Greensboro, North Carolina 27420

                        CALCULATION OF REGISTRATION FEE
================================================================================================ 
Title of Securities           Amount to be   Proposed Maximum   Proposed Maximum     Amount of
to be Registered              Registered/1/   Offering Price   Aggregate Offering   Registration
                                                 Per Unit           Price/4/            Fee
------------------------------------------------------------------------------------------------
Common Stock, no par           449,650/2/         $12.00/3/        $5,395,800.00     $1,591.76
value
================================================================================================
(Footnotes on Next Page)

     This Registration Statement shall become effective upon filing in
accordance with Section 8(a) of the Securities Act of 1933, as amended, and 17
C.F.R. (S)230.462.
/1/Together with an indeterminate number of additional shares which may
be necessary to adjust the number of shares reserved for issuance pursuant to
the South Street Financial Corp. Stock Option Plan ("Stock Option Plan") as a
result of a reclassification, reorganization, recapitalization, stock split,
stock dividend or similar occurrence which makes an adjustment of shares just
and appropriate.

     /2/Represents the total number of shares which may be issued pursuant to
options granted under the Stock Option Plan.

     /3/Assumes a value per share underlying options granted under the Stock
Option Plan equal to $12.00, which was the price per share paid on January 16,
1998, which was the closing market price of South Street Financial Corp. common
stock on the Nasdaq National Market System on January 16, 1998.

     /4/Estimated total for the purposes of calculating the registration fee
in accordance with Rule 457(c) and (h).

================================================================================
Part I
              INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS

Item I.  Plan Information.

     This Registration Statement on Form S-8 relates to the registration of up
to 449,650 shares of common stock, no par value, of South Street Financial Corp.
(the "Registrant") which are reserved for issuance pursuant to options which
have been granted under the South Street Financial Corp. Stock Option Plan
("Stock Option Plan").  This Registration Statement also relates to an
indeterminent number of additional shares which may be necessary to adjust the
number of shares reserved for issuance pursuant to the Stock Option Plan as a
result of a reclassification, reorganization, recapitalization, stock split,
stock dividend or similar occurrence which makes an adjustment of shares just
and appropriate.  Documents containing the information specified in Part I of
Form S-8 will be sent or given to the participants in the Stock Option Plan as
specified by Rule 428(b)(1).  Such documents are not filed with the Securities
and Exchange Commission (the "Commission") either as part of this Registration
Statement or as prospectuses or prospectus supplements pursuant to Rule 424 in
reliance on Rule 428.

Item 2.  Registration Information and Employee Plan Annual Information.

     The required statement is contained in the prospectus to be delivered
pursuant to Part I of this Registration Statement as specified by Rule
428(b)(1).

                                    Part II
               INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3.  Incorporation of Documents by Reference.

     The following documents filed with the Commission are incorporated herein
by reference:

     (a)  The Registrant's Annual Report on Form 10-K for the fiscal year ended
          September 30, 1997.

     (b)  All reports filed by the Registrant pursuant to Sections 13(c) or
          15(d) of the Securities Exchange Act of 1934, as amended, (the
          "Exchange Act") since the end of the fiscal year covered by the
          Registrant's Annual Report on Form 10-K referred to in clause (a)
          above.

     (c) The description of the Registrant's Common Stock contained in the
         Registrant's S-1 Registration Statement, Registration
No. 333-04509, incorporated by reference in the Registration Statement
         on Form 8-A filed with the Commission under Section 12(b) of the
         Exchange Act on July 25, 1996 (File No. 0-21083), including any
         amendment or report filed for the purpose of updating such description.

     All documents subsequently filed by the Registrant and the Stock Option
Plan pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior
to the filing of a post-effective amendment which indicates that all securities
registered hereby have been sold or which deregisters all securities then
remaining unsold, shall be deemed incorporated by reference herein and to be a
part hereof from the date of the filing of such documents.  Any statement
contained in this Registration Statement, or in a document incorporated or
deemed to be incorporated by reference herein, shall be deemed to be modified or
superseded for purposes of this Registration Statement to the extent that a
statement contained herein, or in any other subsequently filed document which is
also incorporated or deemed to be incorporated by reference herein, modifies or
supersedes such statement.  Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.

Item 4.  Description of Securities.

     Not applicable.

Item 5.  Interests of Named Experts and Counsel.

     Not applicable.

Item 6.  Indemnification of Directors and Officers.

     The Registrant's Articles of Incorporation provide that to the fullest
extent permitted by the North Carolina Business Corporation Act (the "NCBCA"),
no person who serves as a director shall be personally liable to the Registrant
or any of its stockholders or otherwise for monetary damages for breach of any
duty as director.  The Registrant's Bylaws state that any person who at any time
serves or has served as a director or officer of the Registrant, or who, while
serving as a director or officer of the Registrant, serves or has served at the
request of the Registrant as a director, officer, partner, trustee, employer or
agent of another corporation, partnership, joint venture, trust or other
enterprise, or as a trustee or administrator under an employee benefit plan,
shall have a right to be indemnified by the Registrant to the fullest extent
permitted by law against liability and litigation expense arising out of such
status or activities in such capacity.  "Liability and litigation expense" is
defined in the Bylaws as including costs and expenses of
litigation (including reasonable attorneys' fees), judgments, fines and amounts
paid in settlement which are actually and reasonably incurred in connection with
or as a consequence of any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, including
appeals.

     Litigation expense, as described above, may be paid by the Registrant in
advance of the final disposition or termination of the litigation matter, if the
Registrant receives an undertaking, dated, in writing and signed by the person
to be indemnified, to repay all such sums unless such person is ultimately
determined to be entitled to be indemnified by the Registrant as provided in the
Registrant's Bylaws.

     Sections 55-8-50 through 55-8-58 of the NCBCA contain provisions
prescribing the extent to which directors and officers shall or may be
indemnified.  Section 55-8-51 of the NCBCA permits a corporation, with certain
exceptions, to indemnify a present or former director against liability if (i)
the director conducted himself in good faith, (ii) the director reasonably
believed (x) that the director's conduct in the director's official capacity
with the corporation was in its best interests and (y) in all other cases the
director's conduct was at least not opposed to the corporation's best interests,
and (iii) in the case of any criminal proceeding, the director had no reasonable
cause to believe the director's conduct was unlawful.  A corporation may not
indemnify a director in connection with a proceeding by or in the right of the
corporation in which the director was adjudged liable to the corporation or in
connection with a proceeding charging improper personal benefit to the director.
The above standard of conduct is determined by the board of directors, or a
committee or special legal counsel or the shareholders as prescribed in Section
55-8-55.

     Sections 55-8-52 and 55-8-56 of the NCBCA require a corporation to
indemnify a director or officer in the defense of any proceeding to which the
director or officer was a party against reasonable expenses when the director or
officer is wholly successful in the director's or officer's defense, unless the
articles of incorporation provide otherwise.  Upon application, the court may
order indemnification of the director or officer if the director or officer is
adjudged fairly and reasonably so entitled under Section 55-8-54.

     In addition, Section 55-8-57 permits a corporation to provide for
indemnification of directors, officers, employees or agents, in its articles of
incorporation or bylaws or by contract or resolution, against liability in
various proceedings and to purchase and maintain insurance policies on behalf of
these individuals.

                                       3
The foregoing is only a general summary of certain aspects of North
Carolina law dealing with indemnification of directors and officers and does not
purport to be complete.  It is qualified in its entirety by reference to the
relevant statutes, which contain detailed specific provisions regarding the
circumstances under which and the person for whose benefit indemnifications
shall or may be made.

Item 7.  Exemption from Registration Claimed.
 
     Not applicable.

Item 8.  Exhibits

     The following exhibits are filed with or incorporated by reference into
this Registration Statement on Form S-8 (numbering corresponds to Exhibit Table
in Item 601 of Regulation S-K):

          Exhibit No.                    Description of Document
          -----------                    -----------------------

             (3)(i)      The Registrant's Articles of Incorporation        
                         (incorporated by reference to Exhibit (3)(i) of the
                         Registrant's S-1 Registration Statement,          
                         Registration No. 333-04509, dated May 24, 1996    
                         and amended on July 25, 1996)                      

             (3)(ii)     The Registrant's Bylaws (incorporated by            
                         reference to Exhibit (3)(ii) of the Registrant's S-1
                         Registration Statement, Registration No. 
                         333-04509, dated May 24, 1996 and amended on July      
                         25, 1996)                                           

             (4)         Specimen Stock Certificate for the Registrant 
                         (incorporated by reference to Exhibit 4 of the
                         Registrant's S-1 Registration Statement,      
                         Registration No. 333-04509, dated May 24, 1996
                         and amended on July 25, 1996)                  

             (5)         Opinion of Brooks, Pierce, McLendon, Humphrey  
                         & Leonard, L.L.P. as to legality of securities
                         being registered                               
 

                                       4
(10)        South Street Financial Corp. Stock Option Plan

             (23)(i)     Consent of Brooks, Pierce, McLendon, Humphrey
                         & Leonard, L.L.P. (included in Exhibit 5)     

             (23)(ii)    Consent of McGladrey & Pullen, LLP

Item 9.  Undertakings.

     The undersigned Registrant hereby undertakes:

     (1) To file, during any period in which offers or sales are being made, a
post-effective amendment to the Registration Statement:

        (i)   To include any prospectus required by Section 10(a)(3) of the
              Securities Act of 1933, as amended (the "Securities Act");

        (ii)  To reflect in the prospectus any facts or events arising after the
              effective date of the Registration Statement (or the most recent
              post-effective amendment thereof) which, individually or in the
              aggregate, represent a fundamental change in the information set
              forth in the Registration Statement. Notwith standing the
              foregoing, any increase or decrease in volume of securities
              offered (if the total dollar value of securities offered would not
              exceed that which was registered) and any deviation from the low
              or high end of the estimated maximum offering range may be
              reflected in the form of prospectus filed with the Commission
              pursuant to Rule 424(b) if, in the aggregate, the changes in
              volume and price represent no more than a 20% change in the
              maximum aggregate offering price set forth in the "Calculation of
              Registration Fee" table in the Registration Statement;

        (iii) To include any material information with respect to the plan of
              distribution not previously disclosed in the Registration
              Statement or any material change to such information in the
              Registration Statement;

     Provided, however, that paragraphs (1)(i) and (1)(ii) above do not apply if
     --------  -------                                                          
the Registration Statement is on Form S-3 or Form S-8 and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
Registrant pursuant to Section 13 

                                       5
or Section 15(d) of the Exchange Act that are incorporated by reference in the
Registration Statement.

     (2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.

     (3) To remove from registration by means of a post-effective amendment any
of the securities being registered that remain unsold at the termination of the
offering.

     The undersigned Registrant hereby undertakes, that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

     Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the provisions discussed in Item 6 thereof, or otherwise,
the Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.  In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit, or proceeding) is asserted by
such director, officer, or controlling person in connection with the securities
being registered hereby, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.

                                       6
SIGNATURES

     The Registrant.  Pursuant to the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Albemarle, State of North Carolina, on the 10th
day of February, 1998.

                              SOUTH STREET FINANCIAL CORP.
                              Registrant

                              By:   /s/ Carl M. Hill
                                    -------------------------------------
                                        Carl M. Hill, President

     Each person whose individual signature appears below hereby makes,
constitutes and appoints Carl M. Hill to sign for such person and in such
person's name and capacity indicated below, any and all amendments to this
Registration Statement, including any and all post-effective amendments.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

Date: February 10, 1998             By:  /s/ Carl M. Hill
                                         -----------------------------------
                                         Carl M. Hill, President, Chief 
                                         Executive Officer and Director
                                         (Principal Executive Officer)

Date: February 10, 1998             By:  /s/ Christopher F. Cranford
                                         -----------------------------------
                                         Christopher F. Cranford, Controller 
                                         and Treasurer (Principal Financial 
                                         Officer and Principal Accounting 
                                         Officer)

Date: February 10, 1998             By:  /s/ R. Ronald Swanner
                                         -----------------------------------
                                         R. Ronald Swanner, Executive Vice 
                                         President, Secretary and Director

Date: February 10, 1998             By:  /s/ Caldwell A. Holbrook, Jr.
                                         -----------------------------------
                                         Caldwell A. Holbrook, Jr., Director

Date: February 10, 1998             By:  /s/ Joel A. Huneycutt
                                         -----------------------------------
                                         Joel A. Huneycutt, Director

Date: February 10, 1998             By:  /s/ Douglas Dwight Stokes
                                         -----------------------------------
                                         Douglas Dwight Stokes, Director

Date: February 10, 1998             By:  /s/ Greg E. Underwood
                                         -----------------------------------
                                         Greg E. Underwood, Director
EXHIBIT INDEX

 
                                                                   Method of
Exhibit No.                     Description                         Filing
-----------                     -----------                     ---------------
  (3)(i)              The Registrant's Articles of              Incorporated by
                      Incorporation                             Reference

  (3)(ii)             The Registrant's Bylaws                   Incorporated by
                                                                Reference

   (4)                Specimen Stock Certificate for the        Incorporated by
                      Registrant                                Reference

   (5)                Opinion of Brooks, Pierce,                Filed Herewith
                      McLendon, Humphrey & Leonard, 
                      L.L.P. as to legality of
                      securities being registered

   (10)               South Street Financial Corp. Stock        Filed Herewith
                      Option Plan

  (23)(i)             Consent of Brooks, Pierce,                Filed Herewith
                      McLendon, Humphrey & Leonard, 
                      L.L.P. (included in Exhibit 5)

  (23)(ii)            Consent of McGladrey & Pullen, LLP        Filed Herewith
 
                                       2