SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D. C. 20549


                                   FORM 10-QSB


               QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934



For the quarterly period ended June 30, 1998              File number: 000-22054



                           COMMUNITY BANKSHARES, INC.
              (Exact Name of Small Business Issuer in its Charter)

                 South Carolina                               57-0966962
(State or Other Jurisdiction of Incorporation or    (IRS Employer Identification
                  Organization)                              Number)


               791 Broughton St., Orangeburg, South Carolina 29115
                (Address of Principal Executive Office, Zip Code)


                                 (803) 535-1060
                           (Issuer's telephone number)



          Check whether the issuer (1) has filed all the reports  required to be
filed by Section 13 or 15(d) of the  Securities  Exchange Act of 1934 during the
past 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 _.

          State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date:  2,994,668 shares of common
stock outstanding as of July 27, 1998.

          Transitional Small Business Disclosure Format. Yes __ No X


<PAGE>


                            10-QSB TABLE OF CONTENTS

                           Part I-Financial Statements
                                                                            Page
--------------------------------------------------------------------------------
Item 1     Financial Statements                                                3
Item 2     Management's Discussion and Analysis of Financial Condition        10
           and Results of Operations


                          Part II-Other Information

--------------------------------------------------------------------------------
Item 4     Submission of Matters to a Vote of Securities Holders              18
Item 6     Exhibits and Reports on Form 8-K                                   18





                                       2
<PAGE>



            COMMUNITY BANKSHARES, INC. - CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                                                 UNAUDITED
        ASSETS                                                                                  June 30, 1998          Dec. 31, 1997
                                                                                                -------------         --------------
                                                                                                   (dollar amounts in thousands)
Cash and due from other financial institutions:
<S>                                                                                               <C>                     <C>      
    Non-interest bearing ...........................................................              $   7,319               $   4,062
    Federal funds sold .............................................................                  8,270                   1,060
                                                                                                  ---------               ---------
        Total cash and cash equivalents ............................................                 15,589                   5,122
Interest bearing deposits in other banks ...........................................                  2,316                   1,238
Investment securities:
    Securities held to maturity ....................................................                 13,098                  17,311
    Securities available for sale ..................................................                 19,439                  15,141
Loans held for resale ..............................................................                     78                     358

Loans ..............................................................................                102,474                  91,951
    Less, allowance for loan losses ................................................                 (1,270)                 (1,140)
                                                                                                  ---------               ---------
        Net loans ..................................................................                101,204                  90,811
                                                                                                  ---------               ---------

Premises and equipment .............................................................                  3,475                   2,733
Accrued interest  receivable .......................................................                  1,290                   1,168
Deferred income taxes ..............................................................                    394                     351
Other assets .......................................................................                    284                     341
                                                                                                  ---------               ---------
        Total assets ...............................................................              $ 157,167               $ 134,574
                                                                                                  =========               =========

        LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
    Non-interest bearing ...........................................................              $  21,275               $  17,003
    Interest bearing ...............................................................                105,059                 100,164
                                                                                                  ---------               ---------
        Total deposits .............................................................                126,334                 117,167
Federal funds purchased and securities
    sold under agreements to repurchase ............................................                  2,459                   2,551
Federal Home Loan Bank advances ....................................................                  9,560                   1,060
Other liabilities ..................................................................                    682                     759
                                                                                                  ---------               ---------
        Total liabilities ..........................................................                139,035                 121,537
                                                                                                  ---------               ---------
Shareholders' equity:
    Common stock
        No par, authorized shares 12,000,000, issued and ...........................                 13,618                   9,156
        outstanding 2,934,916 in 1998 and 2,634,676 in 1997
    Retained earnings ..............................................................                  4,493                   3,861
    Unrealized gain on securities available for sale ...............................                     21                      20
                                                                                                  ---------               ---------
        Total shareholders' equity .................................................                 18,132                  13,037
                                                                                                  ---------               ---------
        Total liabilities and shareholders' equity .................................              $ 157,167               $ 134,574
                                                                                                  =========               =========
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL
STATEMENTS

                                       3
<PAGE>

 COMMUNITY BANKSHARES, INC. - CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS'
                                     EQUITY
                 for the six months ended June 30, 1997 and 1998


<TABLE>
<CAPTION>

                                      Common        Common Stock       Retained          Accumulated             Total
                                      Shares                           Earnings             Other            Shareholders'
                                                                                        Comprehensive            Equity
                                                                                        Income (Loss)
                                                    (dollar amounts in thousands)
<S>                                   <C>                 <C>            <C>               <C>                   <C>    
Balances at Dec. 31, 1996             2,626,476           $9,064         $3,040            $  -                  $12,104
Comprehensive income:                                                                                      
Net income                                                                  547                                      547
Other comprehensive income (loss) net of tax:                                                              
Unrealized gain (loss) on                                                                   (40)                     (40)
securities                                                                                                 
Cost of dividend reinvestment                 -               (9)                                                     (9)
plan                                                                                                       
Dividends paid                                                             (197)                                    (197)
                                      ---------          -------         ------             ---                  -------
Balances at June 30, 1997             2,626,476           $9,055         $3,390            $(40)                 $12,405
                                      =========          =======         ======             ===                  =======
                                                                                                           
Balances at Dec. 31, 1997             2,634,676           $9,156         $3,861             $20                  $13,037
Comprehensive income:                                                                                      
Net income                                                                  847                                      847
Other comprehensive income (loss) net of tax:                                                              
Unrealized gain (loss) on                                                                     1                        1
securities                                                                                                 
Issuance of common stock                300,240            4,462                                                   4,462
Dividends paid                                                             (215)                                    (215)
                                      ---------          -------         ------             ---                  -------
Balances at June 30, 1998             2,934,916          $13,618         $4,493             $21                  $18,132
                                      =========          =======         ======             ===                  =======
                                                                                                           
                                                                                                       
</TABLE>


                                       4
<PAGE>

         COMMUNITY BANKSHARES, INC. - CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>

                                                                          Six months ended June 30,         Quarter ended June 30,
                                                                          -------------------------         ----------------------
                                                                        1998            1997               1998              1997
                                                                      UNAUDITED      UNAUDITED          UNAUDITED         UNAUDITED
                                                                      ---------      ---------          ---------         ---------
Interest and dividend income:                                           (dollar amounts in thousands)
<S>                                                                 <C>               <C>               <C>               <C>       
    Interest and fees on loans .............................        $    4,539        $    3,546        $    2,336        $    1,883
    Deposits with other financial institutions .............                68                34                30                23
    Investment securities:
      Interest - U. S. Treasury and
        U. S. Government Agencies ..........................               927               791               477               414
      Dividends ............................................                30                22                15                10
                                                                    ----------        ----------        ----------        ----------
         Total investment securities .......................               957               813               492               424
                                                                    ----------        ----------        ----------        ----------
    Federal funds sold and securities
      purchased under agreements to resell .................               144                94                86                59
                                                                    ----------        ----------        ----------        ----------
         Total interest and dividend income ................             5,708             4,487             2,944             2,389
                                                                    ----------        ----------        ----------        ----------
Interest expense:
    Deposits:
      Certificates of deposit of $100,000 or more ..........               608               373               321               195
      Other ................................................             1,763             1,480               874               781
                                                                    ----------        ----------        ----------        ----------
         Total deposits.....................................             2,371             1,853             1,195               976

    Federal funds purchased and securities
      sold under agreements to repurchase ..................                49                61                24                42
    Federal Home Loan Bank advances ........................               128                37                76                19
                                                                    ----------        ----------        ----------        ----------
         Total interest expense ............................             2,548             1,951             1,295             1,037
                                                                    ----------        ----------        ----------        ----------
Net interest income ........................................             3,160             2,536             1,649             1,352
Provision for loan losses ..................................               188               177                97                93
                                                                    ----------        ----------        ----------        ----------
Net interest income after provision for loan losses.........             2,972             2,359             1,552             1,259
                                                                    ----------        ----------        ----------        ----------
Non-interest income:
    Service charges on deposit accounts ....................               376               253               199               130
    Other ..................................................               115               110                62                60
                                                                    ----------        ----------        ----------        ----------
         Total non-interest income .........................               491               363               261               190
                                                                    ----------        ----------        ----------        ----------
Non-interest expense:
    Salaries and employee benefits .........................             1,311             1,133               677               576
    Premises and equipment .................................               276               249               137               127
    Other ..................................................               615               543               329               302
                                                                    ----------        ----------        ----------        ----------
         Total non-interest expense ........................             2,202             1,925             1,143             1,005
                                                                    ----------        ----------        ----------        ----------
Net income before taxes ....................................             1,261               797               670               444
Provision for income taxes .................................               414               250               222               130
                                                                    ----------        ----------        ----------        ----------
Net income after taxes......................................        $      847        $      547        $      448        $      314
                                                                    ==========        ==========        ==========        ==========

Basic earnings per common share:
    Weighted average shares outstanding ....................         2,763,076         2,626,476         2,721,895         2,626,476
                                                                     =========         =========         =========         =========
    Net income per common share ............................        $     0.31        $     0.21        $     0.16        $     0.12
                                                                    ==========        ==========        ==========        ==========
Diluted earnings per common share:
    Weighted average shares outstanding ....................         2,862,856         2,670,299         2,800,525         2,664,829
                                                                     =========         =========         =========         =========
    Net income per common share ............................        $     0.30        $     0.20        $     0.16        $     0.12
                                                                    ==========        ==========        ==========        ==========
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS


                                       5
<PAGE>

        COMMUNITY BANKSHARES, INC. - CONSOLIDATED STATEMENTS OF CASH FLOW
                                  (unaudited)
<TABLE>
<CAPTION>

                                                                                                          Six months ended June 30,
                                                                                                         1998                   1997
                                                                                                         ----                   ----
                                                                                                       (dollar amounts in thousands)
Cash flows from operating activities:
<S>                                                                                                  <C>                   <C>     
Net income .............................................................................             $    847              $    547
Adjustments to reconcile net income
  to net cash used in operating activities:
       Depreciation ....................................................................                  156                   151
       Provision for loan losses .......................................................                  188                   177
       Accretion of discounts and
         amortization of premiums -
         investment securities - net ...................................................                  (26)                  (51)
       Proceeds from sale of real estate loans held for sale ...........................               (5,244)               (2,111)
       Origination of real estate loans held for sale ..................................                5,417                 1,864
Changes in assets and liabilities:
       (Increase) in interest receivable ...............................................                 (122)                 (189)
       Decrease in other assets ........................................................                   96                    29
       (Decrease) in other liabilities .................................................                  (77)                  (20)
                                                                                                     --------              --------
Net cash provided (used) by operating activities .......................................                1,235                   397
                                                                                                     --------              --------

Cash flows from investing activities:
       Proceeds from maturities and sales of
         investment securities - hold to maturity ......................................               11,990                 3,267
       Purchases of investment securities - hold to maturity ...........................               (7,766)               (4,446)
       Proceeds from maturities and sales of
         investment securities - available for sale ....................................                7,202                 2,165
       Purchases of investment securities - available for sale .........................              (10,970)               (4,758)
       (Increase) in interest bearing deposits .........................................               (1,592)               (1,176)
       Net increase in loans to customers ..............................................              (10,581)              (11,721)
       Purchase of premises and equipment ..............................................                 (873)                 (105)
                                                                                                     --------              --------
          Net cash (used) in investing activities ......................................              (12,590)              (16,774)
                                                                                                     --------              --------

Cash flows from financing activities:
       Net increase in demand, savings, & time deposits ................................                9,167                17,731
       Net increase  (decrease) in federal funds purchased 
          and securities sold under agreement to repurchase.............................                  (92)                4,394

       Sale of common stock ............................................................                4,462                     -
       Cost of stock sale & dividend reinvestment program ..............................                    -                    (9)
       Proceeds of FHLB advances .......................................................                8,500                     -
       Dividends .......................................................................                 (215)                 (197)
                                                                                                     --------              --------
         Net cash provided by financing activities .....................................               21,822                21,919
                                                                                                     --------              --------

Net increase in cash and due from other
       financial institutions ..........................................................               10,467                 5,542
Cash and due from other financial institutions -
       beginning of period .............................................................                5,122                 6,649
                                                                                                     --------              --------
Cash and due from other financial institutions -
       end of period ...................................................................             $ 15,589              $ 12,191
                                                                                                     ========              ========
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS

                                       6
<PAGE>

Notes to Unaudited Financial Statements

Summary of Significant Accounting Principles

          A summary of significant  accounting  policies is included in the 1997
Annual  Report of Community  Bankshares,  Inc. to the  Shareholders,  which also
contains the Company's audited financial statements for 1997.

Principles of Consolidation

          The  consolidated   financial   statements  include  the  accounts  of
Community  Bankshares,  Inc. (CBI), the parent company,  and Orangeburg National
Bank and Sumter National Bank, its wholly-owned  subsidiaries.  The consolidated
financial  statements  also  include the  pre-opening  activities  for  Florence
National Bank (in  organization).  All significant  intercompany items have been
eliminated in the consolidated statements.

Management Opinion

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

          The results of operations for any interim  period are not  necessarily
indicative  of the  results to be expected  for an entire  year.  These  interim
financial  statements  should be read in conjunction  with the annual  financial
statements and notes thereto contained in the 1997 Annual Report.

Changes in Comprehensive Income Components

          The Financial  Accounting Standards Board recently issued Statement of
Financial  Accounting  Standards  No.  130,  "Reporting  Comprehensive  Income,"
effective for fiscal years  beginning  after  December 15, 1997.  This Statement
establishes  standards for reporting and display of comprehensive income and its
components in a full set of general-purpose financial statements.  Disclosure as
required by the Statement is as follows:
<TABLE>
<CAPTION>

                                                                                      Before-Tax            Tax           Net-of-Tax
                                                                                        Amount           (Expense)          Amount
                                                                                                        or Benefit
Unrealized gains (losses) on securities:
<S>                                                                                    <C>                <C>              <C>      
  Unrealized holding gains (losses) arising during period ...................          $(40,000)          $14,000          $(26,000)
  Less: reclassification adjustment
      for gains (losses) realized in net income..............................                 -                 -                 -
                                                                                       --------           -------          -------- 
  Net unrealized gains (losses) .............................................           (40,000)           14,000           (26,000)
                                                                                       --------           -------          -------- 
 Other comprehensive income (loss), June 30, 1997 ...........................          $(40,000)          $14,000          $(26,000)
                                                                                       ========           =======          ======== 

Unrealized gains (losses) on securities:
  Unrealized holding gains (losses) arising during period ...................          $  1,000           $     0          $  1,000
  Less: reclassification adjustment
      for gains (losses) realized in net income..............................                 -                 -                 -
                                                                                       --------           -------          -------- 

   Net unrealized gains (losses) ............................................             1,000                 0             1,000
                                                                                       --------           -------          -------- 
Other comprehensive income (loss), June 30, 1998 ............................          $  1,000           $     0          $  1,000
                                                                                       ========           =======          ======== 
</TABLE>





                                       7
<PAGE>



      COMMUNITY BANKSHARES, INC. - AVERAGE BALANCE SHEETS, YIELDS AND RATES

<TABLE>
<CAPTION>

    Six months ended June 30,                                     1998                                       1997
    (unaudited)                                                 Interest                                   Interest
                                                  Average        Income/       Yields/       Average       Income/      Yields/
Assets                                            Balance        Expense        Rates        Balance       Expense       Rates
                                                  -------        -------        -----        -------       -------       -----
                                                                         (Dollar amounts in thousands)
<S>                                                <C>           <C>             <C>        <C>             <C>          <C>  
    Interest bearing deposits ............         $  2,396      $    68         5.68%      $  1,171        $    34      5.81%
    Investment securities taxable ........           29,849          951         6.37%        25,989            804      6.19%
    Investment securities--tax exempt ....              314            6         5.79%           412              9      6.62%
    Federal funds sold ...................            5,294          144         5.44%         3,578             94      5.25%
    Loans receivable .....................           96,812        4,539         9.38%        75,329          3,546      9.41%
                                                   --------      -------         ----       --------        -------      ----

    Total interest earning assets ........          134,665        5,708         8.48%       106,479          4,487      8.43%

    Cash and due from banks ..............            5,868                                    4,810
    Allowance for loan losses ............           (1,201)                                    (942)
    Premises and equipment ...............            3,151                                    2,837
    Other assets .........................            1,619                                    1,447
                                                   --------                                 --------

Total assets .............................         $144,102                                 $114,631
                                                   ========                                 ========


Liabilities and Shareholders' Equity

    Interest bearing deposits
    Savings ..............................         $ 18,964       $  327         3.45%      $ 18,651         $  313      3.36%
    Interest bearing transaction accounts            13,491          128         1.90%        11,244            105      1.87%
    Time deposits ........................           70,300        1,916         5.45%        53,675          1,435      5.35%
                                                   --------       ------         ----       --------         ------      ----  

    Total interest bearing deposits ......          102,755        2,371         4.61%        83,570          1,853      4.43%
    Short term borrowing .................            2,447           49         4.00%         3,142             61      3.88%
    FHLB advances ........................            4,302          128         5.95%         1,123             37      6.59%
                                                   --------       ------         ----       --------         ------      ----  
    Total interest bearing liabilities ...          109,504        2,548         4.65%        87,835          1,951      4.44%

    Noninterest bearing demand deposits ..           18,126                                   13,913
    Other liabilities ....................              899                                      757
    Shareholders' equity .................           15,573                                   12,126
                                                   --------                                 --------  

Total liabilities and shareholders' equity         $144,102                                 $114,631
                                                   ========                                 ========  


    Interest rate spread .................                                       3.83%                                   3.99%

    Net interest income and net yield on earning assets           $3,160         4.69%                       $2,536      4.76%
                                                                  ======         ====                        ======      ====
</TABLE>


                                       8
<PAGE>

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

Forward Looking Statements

          Statements  included  in  Management's   Discussion  and  Analysis  of
Financial Condition and Results of Operations which are not historical in nature
are intended to be, and are hereby  identified as "forward  looking  statements"
for  purposes  of the safe  harbor  provided  by Section  21E of the  Securities
Exchange Act of 1934, as amended.  The Corporation cautions readers that forward
looking  statements,   including  without  limitation,  those  relating  to  the
Corporation's future business prospects,  revenues, working capital,  liquidity,
capital  needs,  interest  costs,  and income,  are subject to certain risks and
uncertainties  that could cause actual results to differ  materially  from those
indicated in the forward looking  statements,  due to several  important factors
herein  identified,  among others,  and other risks and factors  identified from
time to time in the Corporation's reports filed with the Securities and Exchange
Commission.

Florence National Bank

          Community  Bankshares,  Inc.  entered into an agreement with six local
business  people in the  Florence,  South  Carolina  community  to  sponsor  the
formation of a new national  bank. CBI has assisted in the process of submitting
an  application  for a bank  charter  to the  Comptroller  of the  Currency  and
preliminary  approval  was obtained in November  1997 to begin the  organization
process.  Final  approval  to open was  obtained  in later  June  1998  from the
Comptroller.  Various other regulatory  agencies,  including the Federal Reserve
and the  Federal  Deposit  Insurance  Corporation,  were  required to review and
approve plans for the new bank and  acquisition of the new bank by CBI. The bank
opened for business on Monday, July 6, 1998.

          From March to July 1998 CBI sold to the public  300,000  shares of its
common  stock.  This public sale raised $4.6  million.  The company  also raised
additional  capital  through the sale of restricted  shares to the organizers of
the Florence  bank. In total,  the company  raised $5.4  million,  of which $4.5
million was used to capitalize the new bank.

Year 2000

          The change in date from 1999 to 2000 poses potential problems for many
computer systems around the world.  Certain of the Corporation's  systems may be
affected by this so-called  millennium bug. CBI is  investigating  the extent to
which its  systems  are  affected  and  communicating  with all of its  computer
vendors  concerning timely completion of remedies for those systems that require
modification.  The Corporation is also communicating with third parties on which
it relies to assess their progress in evaluating  their systems and implementing
any  corrective  measures and has formed a committee to coordinate its Year 2000
activities.  Management  estimates that the costs of Year 2000  compliance  will
range  between  $200,000  and  $250,000,  and  will be  funded  with  internally
generated resources. The Corporation has been taking and will continue to pursue
reasonably necessary steps to protect its operations and assets.









                                       9
<PAGE>




RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997

Net Income

          For the six months  ended  June 30,  1998,  CBI earned a  consolidated
profit of $847,000,  compared to $547,000 for the comparable  period of 1997, an
increase of 54.8% or  $300,000.  Basic  earnings per share were $.31 in the 1998
period, compared to $.21 for the 1997 period, an increase of 47.6%.

          For the six  months  ended June 30,  1998,  Orangeburg  National  Bank
reported a profit of $805,000, compared to $673,000 for the comparable period of
1997, an increase of 19.6% or $132,000.

          For the six months ended June 30, 1997,  Sumter National Bank reported
a  profit  of  $53,000,  compared  to an  after  tax  loss of  $144,000  for the
comparable period of 1997, an improvement of $197,000.

          As noted above,  consolidated net income for the six months ended June
30,  1998,  increased  from  the  prior  year by 54.8% or  $300,000.  The  major
components  of this  increase are discussed  below.  Net interest  income before
provision  for loan losses for the six months ended June 30, 1998,  increased to
$3,160,000,  compared to $2,536,000  for the same period in 1997, an increase of
24.6% or  $624,000.  For the 1998  period,  the  provision  for loan  losses was
$188,000,  compared  to  $177,000  for the 1997  period,  an increase of 6.2% or
$11,000.  Non-interest  income for the 1998 period  increased  to $491,000  from
$363,000 for the 1997 period, a 35.2% or $128,000 increase. Non-interest expense
increased to $2,202,000 from $1,925,000, a 14.4% or $277,000 increase.

Profitability

          One of the best ways to review  earnings is through the ROA (return on
average assets) and the ROE (return on average equity).  Return on assets is the
income for the period divided by the average assets for the period,  annualized.
Return on equity is the income for the period  divided by the average equity for
the period, annualized. Based on operating results for the six months ended June
30, 1998 and 1997, the following table is presented.

                                      Period ended June 30,
                                        1998         1997
                                     (dollars in thousands)
Average assets                       $144,102     $114,631
ROA                                     1.18%        0.95%
Average equity                        $15,573      $12,126
ROE                                    10.88%        9.02%
Net income                               $847         $547

          Average equity and average assets were  substantially  greater for the
1998 period than they were for the 1997  period  primarily  as the result of the
sale of stock to capitalize  the new bank in Florence and the deposit taking and
borrowing activities of the Sumter and Orangeburg banks, respectively.

Net interest income

          Net  interest  income,  the major  component of CBI's  income,  is the
amount by which interest and fees on interest earning assets exceed the interest
paid on interest bearing  deposits and other interest bearing funds.  During the
first six months of 1998,  net interest  income after  provision for loan losses
increased to $2,972,000  from  $2,359,000,  a 26% or $613,000  increase over the
comparable period of 1997. This improvement was the result of an increase in the
volume of earning assets at both banks.


                                       10
<PAGE>

Interest Income

          Elsewhere in this report is a table  comparing  the average  balances,
yields,  and rates for the interest  rate  sensitive  segments of the  company's
balance  sheet  for the six  month  periods  ended  June 30,  1998 and  1997.  A
discussion of that table follows.

          Total  interest  income for the six months  ended June 30,  1998,  was
$5,708,000  compared  with  $4,487,000  for the same period in 1997,  a 27.2% or
$1,221,000 increase.  The yield on earning assets for the 1998 period was 8.48%,
up from 8.43.% for the 1997 period.  Total average  interest  earning assets for
the six months ended June 30, 1998, were $134,665,000,  up from $106,479,000 for
the same period in 1997, an increase of 26.5% or $28,186,000.

          The loan portfolio earned $4,539,000 for the six months ended June 30,
1998,  up from  $3,546,000  for the  same  period  of  1997,  a 28% or  $993,000
increase.  The 1998 yield  decreased  slightly  to 9.38% from 9.41% for the 1997
period.  Market rates have been stable  during the periods.  The average size of
the loan portfolio was $96,812,000 for the 1998 period,  up from $75,329,000 for
the same period of 1997, an increase of 28.5% or $21,483,000.

          The taxable  investment  portfolio  earned $951,000 for the six months
ended June 30, 1998, up from $804,000 for the 1997 period,  an 18.3% or $147,000
increase. The yield increased to 6.37% in the 1998 period from 6.19% in the 1997
period.  The average size of the portfolio  increased to $29,849,000 in the 1998
period from $25,989,000 in the 1997 period, an increase of 14.8% or $3,860,000.

          The tax exempt investment portfolio continues to be a relatively small
part of the portfolio,  it earned $6,000 for the six months ended June 30, 1998,
compared to $9,000 for the 1997 period, a decline of 33.3% or $3,000.  The yield
on the portfolio was 5.79% (on a fully taxable equivalent basis),  down from the
prior year's 6.62%. The average size of the portfolio  decreased to $314,000 for
the 1998  period  from  $412,000  in the 1997  period,  a  decrease  of 23.8% or
$98,000.

          Interest bearing deposits in other banks  contributed  $68,000 for the
six months ended June 30, 1998,  compared to $34,000  during the prior year,  an
increase of 100% or $34,000.  The yield on these deposits decreased to 5.68% for
the 1998  period  from 5.81% in the 1997  period.  CBI  averaged  $2,396,000  in
interest  bearing balances in the 1998 period compared to $1,171,000 in the 1997
period, an increase of 104% or $1,225,000.

          Federal  funds sold earned  $144,000 for the six months ended June 30,
1998,  compared  to $94,000  the prior  year,  an  increase of 53.2% or $50,000.
Yields increased to 5.44% for the period ended June 30, 1998, from 5.25% for the
1997 period.  For the 1998 period,  CBI increased its average  volume in federal
funds  sold  to  $5,294,000  from  $3,578,000  for  the  1997  period,  a 48% or
$1,716,000 increase.


Interest expense

          Interest expense  increased for the six months ended June 30, 1998, to
$2,548,000 from the prior year's $1,951,000,  a 30.6% or $597,000 increase.  The
volume of interest bearing liabilities  increased to $109,504,000 for the period
ended  June  30,  1998,  from  $87,835,000  for the  1997  period,  a  24.7%  or
$21,669,000 increase. The average rate CBI paid for interest bearing liabilities
during the 1998 period was 4.65%, up from 4.44% for the 1997 period.

          The cost of savings accounts  increased to $327,000 for the six months
ended  June 30,  1998  from  $313,000  in the  1997  period,  a 4.4% or  $14,000


                                       11
<PAGE>

increase.  Average  savings  deposit  balances  increased to $18,964,000 for the
period ended June 30, 1998, from $18,651,000 for the 1997 period, an increase of
1% or  $313,000.  The average  rate paid on these funds  increased to 3.45% from
3.36%.

          Interest bearing transaction accounts cost $128,000 for the six months
ended June 30, 1998,  increased from the prior year's  $105,000,  an increase of
21.9% or $23,000.  The volume of these deposits increased to $13,491,000 for the
period  ended June 30, 1998,  from  $11,244,000  for the 1997  period,  a 20% or
$2,247,000  increase.  The average rate paid on these funds for the period ended
June 30, 1998, increased to 1.90% from 1.87% for the 1997 period.

          Time deposits cost  $1,916,000 for the six months ended June 30, 1998,
up from  $1,435,000  in the 1997 period,  an increase of 33.5% or $481,000.  The
volume  increased  to  $70,300,000  for the  period  ended June 30,  1998,  from
$53,675,000 for the 1997 period, a 31% or $16,625,000 increase. The average rate
paid on these funds  increased to 5.45% for the period ended June 30, 1998, from
5.35% for the 1997 period.

          Short  term  borrowing   consists  of  federal  funds   purchased  and
securities sold under  agreements to repurchase.  This is a relatively small and
volatile  part of the balance  sheet.  It cost  $49,000 for the six months ended
June 30,  1998,  down  from  $61,000  for the 1997  period,  a 19.7% or  $12,000
decrease.  The volume of these funds  decreased to $2,447,000 in the 1998 period
from $3,142,000 in the 1997 period, a decrease of 22.1% or $695,000. The average
rate paid on these funds increased to 4% from 3.88%.

          Borrowings  from the Federal Home Loan Bank cost  $128,000 for the six
months ended June 30, 1998,  compared to $37,000 for the 1997 period,  a 246% or
$91,000  increase.  The  advances  averaged  $4,302,000  during the 1998 period,
compared to $1,123,000 for the prior year period, a 283% or $3,179,000 increase.
The average rate paid on these funds decreased to 5.95% from 6.59%.


Non-Interest Income

          Non-interest  income  for the six months  ended June 30,  1997 grew to
$491,000 from $363,000 in the 1997 period, a 35.3% or $128,0000  increase.  This
increase was generated by  substantial  increases in service charge and returned
check fee income at both banks.



Non-Interest Expense

          For the six months ended June 30, 1998 non-interest expenses increased
to $2,202,000 from $1,925,000 for the 1997 period, a 14.4% or $277,000 increase.

          For the six months ended June 30, 1998 personnel costs were $1,311,000
compared to $1,133,000 for the 1997 period, a 15.7% or $178,000 increase.

          Premises  and  equipment  expense for the 1998  period  were  $276,000
compared to $249,000 for the 1997 period, an increase of 10.8% or $27,000.

          Other costs for the 1998 period were $615,000 compared to $543,000 for
the 1997 period, an increase of
12.8% or $72,000.


Income Taxes

          CBI  provided  $414,000  for federal and state income taxes during the
six months  ended June 30,  1998,  compared to  $250,000  for the same period in
1997, a 65.6% or $164,000 increase.



                                       12
<PAGE>


RESULTS OF OPERATIONS FOR THE QUARTERS ENDED JUNE 30, 1998 AND 1997

Net Income

          For the quarter ended June 30, 1998, CBI earned a consolidated  profit
of $448,000, compared to $314,000 for the comparable period of 1997, an increase
of 42.7% or  $134,000.  Basic  earnings  per share were $.16 in the 1998 period,
compared to $.12 for the 1997 period, an increase of 33.3%.

          As noted above, consolidated net income for the quarter ended June 30,
1998,  increased from the prior year by 42.7% or $134,000.  The major components
of this increase are discussed  below.  Net interest income before provision for
loan  losses for the  quarter  ended June 30,  1998,  increased  to  $1,649,000,
compared  to  $1,352,000  for the same  period in 1997,  an  increase  of 22% or
$297,000.  For the same  period,  the  provision  for loan  losses was  $97,000,
compared  to  $93,000  for the  1997  period,  an  increase  of 4.3% or  $4,000.
Non-interest  income for the 1998 period increased to $261,000 from $190,000 for
the 1997 period, a 37.4% or $71,000 increase.  Non-interest expense increased to
$1,143,000 from $1,005,000, a 13.7% or $138,000 increase.


Net interest income

          Net  interest  income,  the major  component of CBI's  income,  is the
amount  by which  interest  and fees on  interest  earning  assets  exceeds  the
interest paid on interest  bearing  deposits and other  interest  bearing funds.
During the quarter ended June 30, 1998, net interest  income after provision for
loan  losses  increased  to  $1,552,000  from  $1,259,000,  a 23.2% or  $293,000
increase over the comparable period of 1997.

Interest Income

          Total  interest  income for the second  quarter of 1998 was $2,944,000
compared  with  $2,389,000  for the same  period  in 1997,  a 23.2% or  $555,000
increase.

          The loan portfolio  earned  $2,336,000 for the second quarter in 1998,
up from $1,883,000 for the same period of 1997, a 24% or $453,000 increase.

          The  investment  portfolio  earned  $492,000 for the second quarter in
1998, up from $424,000 for the 1997 period, a 16% or $68,000 increase.

          Interest bearing deposits in other banks  contributed  $30,000 for the
second  quarter of 1998,  compared to $23,000 during the prior year, an increase
of 30.4% or $7,000.

          Federal  funds sold  earned  $86,000  for the  second  quarter of 1998
compared to $59,000 the prior year, an increase of 45.7% or $27,000.

Interest expense

          Interest  expense   increased  for  the  second  quarter  of  1998  to
$1,295,000 from the prior year's $1,037,000, a 24.9% or $258,000 increase.




                                       13
<PAGE>




CHANGES IN FINANCIAL POSITION

Investment portfolio

          The  investment  portfolio is comprised of a  held-to-maturity  and an
available-for-sale  portion.  CBI and its two banks usually  purchase short term
issues of U. S Treasury and U. S.  Government  agency  securities for investment
purposes.  At June 30, 1998, the held-to-maturity  portfolio totaled $13,098,000
compared to $17,311,000 at December 31, 1997, a decrease of 24.3% or $4,213,000.
At June 30, 1998, the available-for-sale  portfolio totaled $19,402,000 compared
to  $15,141,000  at December 31, 1997, an increase of 28.1% or  $4,261,000.  The
following  chart  summarizes  the  investment  portfolios at June 30, 1998,  and
December 31, 1997.

<TABLE>
<CAPTION>
                                                                 June 30, 1998
                                                                 -------------
                                                                        Held to maturity                   Available for sale
                                                                        ----------------                   ------------------
                                                                  Amortized cost      Fair value       Amortized cost     Fair value
                                                                  --------------      ----------       --------------     ----------
                                                                                          (dollars in thousands)
<S>                                                                 <C>                <C>                <C>                <C>    
U. S. Government and federal agencies ..................            $12,845            $12,867            $17,961            $17,997
Tax exempt securities ..................................                253                254                  -                  -
Other equity securities ................................                  -                  -              1,441              1,442
                                                                    -------            -------            -------            -------
Total ..................................................            $13,098            $13,121            $19,402            $19,439
                                                                    =======            =======            =======            =======

Unrealized gain ........................................            $    23                               $    37                   
                                                                    =======                               =======                   
<CAPTION>

                                                                 December 31, 1997
                                                                 -----------------
                                                                        Held to maturity                   Available for sale
                                                                        ----------------                   ------------------
                                                                  Amortized cost      Fair value       Amortized cost     Fair value
                                                                  --------------      ----------       --------------     ----------
                                                                                             (dollars in thousands)
<S>                                                                 <C>                <C>                <C>                <C>    
U. S. Government and federal agencies ..................            $16,906            $16,923            $14,413            $14,444
Tax exempt securities ..................................                405                408                  -                  -
Other equity securities ................................                  -                  -                697                697
                                                                    -------            -------            -------            -------
Total ..................................................            $17,311            $17,331            $15,110            $15,141
                                                                    =======            =======            =======            =======

Unrealized gain ........................................            $    20                               $    31                   
                                                                    =======                               =======                   
</TABLE>



Loan portfolio

          The loan portfolio is primarily  consumer and small business oriented.
At June 30, 1998, the loan portfolio was  $102,474,000,  compared to $91,951,000
at December 31, 1997, an 11.4% or  $10,523,000  increase.  The  following  chart
summarizes the loan portfolio at June 30, 1998, and December 31, 1997.





                                       14
<PAGE>




                                                Jun. 30, 1998   Dec. 31, 1997
                                                -------------   -------------
                                                   (dollars in thousands)
Real estate ................................        $58,951         $53,297
Commercial .................................         26,791          22,306
Loans to individuals .......................         16,732          16,348
                                                   --------         -------
Total ......................................       $102,474         $91,951
                                                   ========         =======



Past Due and Non-Performing Assets and the Allowance for Loan Losses

          CBI closely  monitors past due loans and loans that are in non-accrual
status  and  other  real  estate  owned.  Below  is a  summary  of past  due and
non-performing assets at June 30, 1998, and December 31, 1997.

                                                    June 30,      Dec. 31,
                                                      1998          1997
                                                      ----          ----
                                                    (dollars in thousands)
Past due 90 days and accruing loans .............      $99          $  -
Non-accrual loans ...............................      $75          $ 81
Impaired loans (included in nonaccrual) .........      $75          $ 81
Other real estate owned .........................      $84          $132

          Management  considers the past due and non-accrual amounts at June 30,
1998 to be reasonable and manageable in the normal course of business.

          CBI had no restructured loans during any of the above listed periods.

          CBI's   activity  with  its  allowance  for  loan  losses  reserve  is
summarized below.


                                                 June 30, 1998     Dec. 31, 1997
                                                 -------------     -------------
                                                       (dollars in thousands

Allowance at beginning of period                   $1,140              $876
Provision expense                                     188               359
Net charge offs                                       (58)              (95)
                                                   ------            ------
Allowance at end of period                         $1,270            $1,140
                                                   ======            ======
Allowance as a percent of
 outstanding loans                                   1.24%             1.24%

          In reviewing  the adequacy of the allowance for loan losses at the end
of each period,  management considers  historical loan loss experience,  current
economic condition,  loans outstanding,  trends in non-performing and delinquent
loans, and the quality of collateral  securing problem loans. After charging off
all known losses,  management  considers  the allowance  adequate to provide for
estimated future losses inherent in the loan portfolio at June 30, 1998.

Deposits

          Deposits were $126,334,000 at June 30, 1998,  compared to $117,167,000
at December 31, 1997, an increase of 7.8% or $9,167,000.

                                       15
<PAGE>

          Time deposits greater than $100,000 were $21,770,000 at June 30, 1998,
compared to $21,428,000 at December 31, 1997, an increase of 1.6% or $342,000.

Liquidity

          Liquidity  is the  ability  to meet  current  and  future  obligations
through  liquidation  or  maturity  of  existing  assets or the  acquisition  of
additional liabilities. Adequate liquidity is necessary to meet the requirements
of  customers  for loans and  deposit  withdrawals  in a timely  and  economical
manner.  The most  manageable  sources of liquidity are composed of liabilities,
with the  primary  focus of  liquidity  management  being the ability to attract
deposits  within the Orangeburg  National Bank and Sumter  National Bank service
areas. Core deposits (total deposits less certificates of deposit of $100,000 or
more)  provide a relatively  stable  funding  base.  Certificates  of deposit of
$100,000 or more are generally more sensitive to changes in rates,  so they must
be  monitored  carefully.  Asset  liquidity  is  provided  by  several  sources,
including   amounts  due  from  banks,   federal  funds  sold,  and  investments
available-for-sale.

          CBI and its banks maintain an available-for-sale  investment portfolio
and a  held-to-maturity  portfolio.  While all these  investment  securities are
purchased with the intent to be held-to-maturity, such securities are marketable
and  occasional  sales may occur  prior to  maturity  as part of the  process of
asset/liability and liquidity management.  Such sales will generally be from the
available-for-sale  portfolio.  Management  deliberately  maintains a short-term
maturity  schedule for its  investments so that there is a continuing  stream of
maturing investments.  CBI intends to maintain a short-term investment portfolio
in order to continue to be able to supply  liquidity to its loan  portfolio  and
for customer withdrawals.

          CBI has substantially more liabilities (mostly deposits,  which may be
withdrawn) which mature in the next 12 months than it has assets maturing in the
same period.  However, based on its historical  experience,  and that of similar
financial  institutions,  CBI believes that it is unlikely that so many deposits
would be withdrawn,  without being replaced by other deposits, that CBI would be
unable to meet its liquidity needs with the proceeds of maturing assets.

          CBI also maintains federal funds  lines-of-credit  with  correspondent
banks,  is able to borrow from the Federal  Home Loan Bank,  and is also able to
borrow from the Federal Reserve's discount window.

          CBI has a demonstrated  ability to attract  deposits from its markets.
Deposits have grown from $30 million in 1989 to over $126 million in 1998.  This
stable, growing base of deposits is the major source of operating liquidity.

          CBI's long term liquidity needs are expected to be primarily  affected
by the maturing of long-term  certificates of deposit. At June 30, 1998, CBI had
approximately  $14 million and $0 in certificates of deposit  maturing in one to
five years and over five years, respectively. CBI's assets maturing or repricing
in the same periods were $56 million and $26 million,  respectively. CBI expects
to be able to manage its current  balance sheet structure  without  experiencing
any material liquidity problems.

          In the opinion of  management,  CBI's current and projected  liquidity
position is adequate.


Capital resources

          As  summarized  in the table  below,  CBI  maintains a strong  capital
position.

                                               June 30, 1998       Dec. 31, 1997
                                               -------------       -------------
Tier 1 capital to average total assets             12.54%               9.60%
Tier 1 capital to risk weighted assets             17.18%              14.10%
Total capital to risk weighted assets              18.39%              15.30%



                                       16
<PAGE>

          Banks are required to maintain a minimum risk  weighted  capital ratio
of at least 8%.

          The  improvement  in the capital ratios for the company are the result
of  improvement  in earnings and the sale of common stock  conducted  during the
first half of 1998.

          In the opinion of  management,  the  Company's  current and  projected
capital positions are adequate.


Shareholders' equity

          At June  30,  1998  the  common  stock  account  totaled  $13,618,000,
compared to $9,156,000 at December 31, 1997.  This  $4,462,000  increase was the
result of stock sales  conducted  during the first and second  quarters of 1998.
The primary purpose of the stock sale was to generate funds needed to capitalize
Florence National Bank.


Part II--Other Information

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

CBI had an Annual Meeting of Shareholders on June 29, 1998.

The following persons were elected to the Board:

Three year term: Anna O.  Dantzler,  William H. Nock,  Samuel F. Reid,  Jr., and
                 William W. Traynham.

The other item approved was the  ratification  of J. W. Hunt and Co.,  Certified
Public Accountants,  as outside auditors for CBI for the year ended December 31,
1998.

The vote tally was as follows:
<TABLE>
<CAPTION>

                                                       Total number      Voting for     Voting against     Abstaining     Not voting
                                                        of shares                       or to withhold
                                                    eligible to vote                      authority
 Election of directors
<S>                                                    <C>                <C>                <C>                             <C>    
     Anna O. Dantlzer                                  2,854,326          2,077,044          28,685                          748,597
      William H. Nock                                  2,854,326          2,104,244           1,485                          748,597
    Samuel F. Reid, Jr                                 2,854,326          2,104,244           1,485                          748,597
    William W. Traynham                                2,854,326          2,104,141           1,588                          748,597
Ratification of J. W. Hunt                             2,854,326          2,083,389             300          21,740          748,597
       (accountants)
</TABLE>


          The following persons continued their terms as directors: E. J. Ayers,
Jr., Martha Rose Carson, J. M. Guthrie,  Hugo S. Sims, Jr., J. Otto Warren, Jr.,
Russell S. Wolfe, II, Michael A. Wolfe, Phil P. Leventis and Alvis J. Bynum.


                                       17
<PAGE>

Item 6.  Exhibits and Reports on Form 8-K

(a)  Exhibit Index

Exhibit No.(from         Description
item 601 of S-B)

(27)                     Financial Data Schedule

b)  None.


Signatures

          In  accordance  with  the   requirements  of  the  Exchange  Act,  the
registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized.

                                                         DATED: August 7, 1998

COMMUNITY BANKSHARES, INC.

By:  s/  Hugo S. Sims, Jr.,
     ------------------------------
          Hugo S. Sims, Jr.,
          Chief Executive Officer

By:  s/  William W. Traynham
     ------------------------------
          William W. Traynham
          President and Chief Financial Officer
          (Principal Accounting Officer)