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 March 31, 1998  Commission 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                    (IRS Employer Identification
  Incorporation or 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:  2,805,799 shares of common
stock outstanding as of May 1, 1998.

<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           10
                 Condition and Results of Operations


                                   Part II-Other Information
--------------------------------------------------------------------------------
     Item 6      Exhibits and Reports on Form 8-K                            19






























                                       2

<PAGE>


            COMMUNITY BANKSHARES, INC. - CONSOLIDATED BALANCE SHEETS
                     (Dollar amounts in thousands) UNAUDITED
<TABLE>
<CAPTION>
                                                                                                   March 31,            December 31,
          ASSETS                                                                                     1998                  1997
                                                                                                     ----                  ----
Cash and due from banks:
<S>                                                                                                <C>                    <C>      
    Non-interest bearing .............................................................             $   7,429              $   4,062
    Federal funds sold ...............................................................                 5,190                  1,060
                                                                                                   ---------              ---------
          Total cash and cash equivalents ............................................                12,619                  5,122
Interest bearing deposits in other banks .............................................                 1,858                  1,238
Investment securities:
    Securities held-to-maturity ......................................................                13,691                 17,311
    Securities available-for-sale ....................................................                16,759                 15,141
Loans held for resale ................................................................                   352                    358
Loans ................................................................................                96,055                 91,951
    Less, allowance for loan losses ..................................................                (1,220)                (1,140)
                                                                                                   ---------              ---------
          Net loans ..................................................................                94,835                 90,811
                                                                                                   ---------              ---------

Premises and equipment ...............................................................                 2,926                  2,733
Accrued interest  receivable .........................................................                 1,100                  1,168
Deferred income taxes ................................................................                   299                    351
Other assets .........................................................................                   307                    341
                                                                                                   ---------              ---------

          Total assets ...............................................................             $ 144,746              $ 134,574
                                                                                                   =========              =========

          LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
    Non-interest bearing .............................................................             $  19,325              $  17,003
    Interest bearing .................................................................               102,935                100,164
                                                                                                   ---------              ---------
          Total deposits .............................................................               122,260                117,167
Federal funds purchased and securities
    sold under agreements to repurchase ..............................................                 2,331                  2,551
Federal Home Loan Bank advances ......................................................                 4,560                  1,060
Other liabilities ....................................................................                   966                    759
                                                                                                   ---------              ---------
          Total liabilities ..........................................................               130,117                121,537
                                                                                                   ---------              ---------

Shareholders' equity:
    Common stock
          No par, authorized shares 12,000,000, issued ...............................                10,560                  9,156
          and outstanding 2,634,676 in 1997 and
          2,727,777 in 1998
    Retained earnings ................................................................                 4,045                  3,861
    Accumulated other comprehensive income ...........................................                    24                     20
                                                                                                   ---------              ---------
          Total shareholders' equity .................................................                14,629                 13,037
                                                                                                   ---------              ---------
          Total liabilities and shareholders' equity .................................             $ 144,746              $ 134,574
                                                                                                   =========              =========
</TABLE>
    THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS

                                       3
<PAGE>

 COMMUNITY BANKSHARES, INC. - CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS'
                               EQUITY (UNAUDITED)
               for the three months ended March 31, 1998 and 1997
<TABLE>
<CAPTION>

                                                  Common Shares     Common Stock      Retained          Accumulated        Total 
                                                                                      Earnings             Other       Stockholders'
                                                                                                        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 ..................................                                              233                                233
  Other comprehensive income                                                                                           
   (loss) net of tax:                                                                                                  
    Unrealized (loss) on ......................                                                            (36)                 (36)
        securities                                                                                                     
Cost of dividend ..............................             -                (3)                                                 (3)
    reinvestment plan                                                                                                  
Dividends paid ................................                                             (197)                              (197)
                                                    ---------         ---------         --------          ----             --------
Balances at Mar. 31, 1997 .....................     2,626,476         $   9,061         $  3,076          $(36)            $ 12,101
                                                    =========         =========         ========          ====             ========
                                                                                                                       
Balances at Dec. 31, 1997 .....................     2,634,676         $   9,156         $  3,861          $ 20             $ 13,037
Comprehensive income:                                                                                                  
  Net income ..................................                                              399                                399
  Other comprehensive income                                                                                           
   (loss) net of tax:                                                                                                  
    Unrealized gain on ........................                                                              4                    4
        securities                                                                                                     
Issuance of common stock ......................        93,101             1,404                                               1,404
Dividends paid ................................                                             (215)                              (215)
                                                    ---------         ---------         --------          ----             --------
Balances at Mar. 31, 1998 .....................     2,727,777         $  10,560         $  4,045          $ 24             $ 14,629
                                                    =========         =========         ========          ====             ========
</TABLE>

    THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS


                                       4
<PAGE>


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

                                                                                                      Three months ended March 31,
                                                                                                     1998                    1997   
        (Dollar amounts in thousands, except per share data)                                       UNAUDITED               UNAUDITED
                                                                                                   ---------               ---------
                                                         

Interest and dividend income:
<S>                                                                                                    <C>                    <C>   
    Interest and fees on loans .......................................................                 $2,203                 $1,663
    Deposits with other financial institutions .......................................                     38                     11
    Investment securities:
      Interest - U. S. Treasury and U. S. Government .................................                    450                    377
    Agencies
      Dividends ......................................................................                     15                     12
                                                                                                       ------                 ------
        Total investment securities ..................................................                    465                    389
                                                                                                       ------                 ------
    Federal funds sold and securities
      purchased under agreements to resell ...........................................                     58                     35
                                                                                                       ------                 ------
        Total interest and dividend income ...........................................                  2,764                  2,098
                                                                                                       ------                 ------

Interest expense:
    Deposits:
      Certificates of deposit of $100,000 or more ....................................                    287                    178
      Other ..........................................................................                    889                    699
                                                                                                       ------                 ------
        Total deposits ...............................................................                  1,176                    877
    Federal funds purchased and securities
      sold under agreements to repurchase ............................................                     25                     19
    Federal Home Loan Bank advances ..................................................                     52                     18
                                                                                                       ------                 ------
        Total interest expense .......................................................                  1,253                    914
                                                                                                       ------                 ------
Net interest income ..................................................................                  1,511                  1,184
Provision for loan losses ............................................................                     91                     84
                                                                                                       ------                 ------
Net interest income after provision for loan losses ..................................                  1,420                  1,100
                                                                                                       ------                 ------

Non-interest income:
    Service charges on deposit accounts ..............................................                    177                    123
    Other ............................................................................                     53                     50
                                                                                                       ------                 ------
        Total non-interest income ....................................................                    230                    173
                                                                                                       ------                 ------
Non-interest expense:
    Salaries and employee benefits ...................................................                    634                    557
    Premises and equipment ...........................................................                    139                    122
    Other ............................................................................                    286                    241
                                                                                                       ------                 ------
        Total non-interest expense ...................................................                  1,059                    920
                                                                                                       ------                 ------
Net income before taxes ..............................................................                    591                    353
 Provision for income taxes ..........................................................                    192                    120
                                                                                                       ------                 ------
Net income after taxes ...............................................................                 $  399                 $  233
                                                                                                       ======                 ======


                                       5
<PAGE>




<CAPTION>

                                                                                                       1998                 1997
                                                                                                       ----                 ----
Basic earnings per common share:
    Weighted average shares outstanding ...................................................          2,680,714             2,626,476
                                                                                                    ==========         =============
    Net income per common share ...........................................................         $     0.15         $        0.09
                                                                                                    ==========         =============
Diluted earnings per common share:
    Weighted average shares outstanding ...................................................          2,738,194             2,659,358
                                                                                                    ==========         =============
    Net income per common share ...........................................................         $     0.15         $        0.09
                                                                                                    ==========         =============
</TABLE>

    THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS





























                                       6
<PAGE>

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

                                                                                                     Three months ended March 31,  
      (Dollar amounts in                                                                             1998                   1997
      thousands)                                 
                                                                                                   UNAUDITED               UNAUDITED
                                                                                                   ---------               ---------
Cash flows from operating activities:
<S>                                                                                                 <C>                    <C>     
Net income ...........................................................................              $    399               $    233
Adjustments to reconcile net income
  to net cash (provided) used by operating activities
      Depreciation and amortization ..................................................                    74                     63
      Provision for loan losses ......................................................                    91                     84
      Accretion of discounts and amortization of premiums -
        investment securities - net ..................................................                   (31)                     5
      Deferred income ................................................................                    52                     (4)
      taxes
      Proceeds from sale of real estate loans held for ...............................                 2,244                  1,328
      sale
      Origination of real estate loans held for sale .................................                (2,238)                (1,215)
Changes in operating assets and liabilities:
      (Increase) decrease in interest receivable .....................................                    68                     (6)
      (Increase) decrease in other assets ............................................                   (49)                   141
      Increase (decrease) in other liabilities .......................................                   207                     (4)
                                                                                                    --------               --------
         Net cash provided (used) by operating .......................................                   817                    625
                                                                                                    --------               --------
      activities

Cash flows from investing activities:
      Net (increase) in interest bearing deposits
           with other banks ..........................................................                  (620)                  (799)
      Purchases of held-to-maturity securities .......................................                (5,257)                (1,750)
      Proceeds from maturities of held-to-maturity ...................................                 8,908                  2,765
      securities
      Purchases of available-for-sale securities .....................................                (6,536)                (1,529)
      Proceeds from maturities of available-for-sale .................................                 4,922                  1,606
      securities
      Net (increase) in loans to customers ...........................................                (4,163)                (6,590)
      Purchases of premises and equipment ............................................                  (136)                   (33)
                                                                                                    --------               --------
         Net cash (used) in investing activities .....................................                (2,882)                (6,330)
                                                                                                    --------               --------

Cash flows from financing activities:
      Net increase in demand, savings, & time deposits ...............................                 5,093                  7,541
      Net (decrease) in federal funds purchased
       and securities sold under agreements to repurchase ............................                  (220)                  (404)
      Borrowings from Federal Home Loan Bank advances ................................                 3,500                      -
      Sale of common stock ...........................................................                 1,404                      -
      Stock issuance & dividend reinvestment costs ...................................                     -                     (3)
      Dividend payments ..............................................................                  (215)                  (197)
                                                                                                    --------               --------
         Net cash provided by financing activities ...................................                 9,562                  6,937
                                                                                                    --------               --------

Net increase in cash and cash equivalents ............................................                 7,497                  1,232
Cash and cash equivalents - beginning of period ......................................                 5,122                  6,649
                                                                                                    --------               --------
Cash and cash equivalents - end of period ............................................              $ 12,619               $  7,881
                                                                                                    ========               ========
</TABLE>
    THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS

                                       7
<PAGE>

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       Net-of-
                                                                                            Tax       (Expense)       Tax
                                                                                          Amount     or Benefit      Amount
Unrealized gains (losses) on securities:
<S>                                                                                      <C>          <C>          <C>     
  Unrealized holding gains (losses) arising during period ............................   $(55,000)    $ 19,000     $(36,000)
  Less: reclassification adjustment
    for gains (losses) realized in net income
                                                                                         --------     --------     -------- 
  Net unrealized gains (losses) ......................................................    (55,000)      19,000      (36,000)
                                                                                         --------     --------     --------
Other comprehensive income (loss), March 31, 1997 ....................................   $(55,000)    $ 19,000     $(36,000)
                                                                                         ========     ========     ========

Unrealized gains (losses) on securities:
  Unrealized holding gains (losses) arising during period ............................   $  6,000     $ (2,000)    $  4,000
  Less: reclassification adjustment
       for gains (losses) realized in net income
                                                                                         --------     --------     -------- 
  Net unrealized gains (losses) ......................................................      6,000       (2,000)       4,000
                                                                                         --------     --------     --------
Other comprehensive income (loss), March 31, 1998 ....................................   $  6,000     $ (2,000)    $  4,000
                                                                                         ========     ========     ========
</TABLE>


                                       8
<PAGE>

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

<TABLE>
<CAPTION>

    Quarter ended March 31,                                             1998                                   1997   
    (unaudited)                                                       Interest     Annualized                Interest  Annualized
                                                            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 ........................    $   2,807   $      38       5.42%    $     748     $      11     5.88%
    Investment securities taxable ....................       29,231         461       6.31%       24,954           384     6.16%
    Investment securities--tax exempt ................          374           4       6.48%          413             4     5.87%
    Federal funds sold ...............................        4,008          58       5.79%        2,786            35     5.03%
    Loans receivable .................................       94,417       2,203       9.33%       72,216         1,664     9.22%
    Total interest earning assets ....................      130,837       2,764       8.45%      101,117         2,098     8.30%
                                                          ---------   ---------       ----     ---------     ---------     ---- 
                                                                                              
    Cash and due from banks ..........................        5,862                                4,478                   
    Allowance for loan losses ........................       (1,151)                                (903)                  
    Premises and equipment ...........................        2,910                                2,847                   
    Other assets .....................................        1,610                                1,301                   
                                                          ---------                            ---------
Total assets .........................................    $ 140,068                            $ 108,840                   
                                                          =========                            =========
                                                                                              
Liabilities and Shareholders' Equity                                                          
                                                                                              
    Interest bearing deposits                                                                 
    Savings ..........................................    $  18,318   $     157       3.43%    $  17,417     $     142       3.26%
    Interest bearing transaction accounts ............       13,438          64       1.91%       10,722            50       1.87%
    Time deposits ....................................       70,045         955       5.45%       51,817           685       5.29%
                                                          ---------   ---------       ----     ---------     ---------     ---- 
                                                                                              
    Total interest bearing deposits ..................      101,801       1,176       4.62%       79,956           877       4.39%
    Short-term borrowings ............................        2,539          25       3.94%        2,028            19       3.75%
    FHLB advances ....................................        3,543          52       5.87%        1,116            18       6.45%
                                                          ---------   ---------       ----     ---------     ---------       ---- 
    Total interest bearing liabilities ...............      107,883       1,253       4.65%       83,100           914       4.40%
                                                                                              
    Noninterest bearing demand deposits ..............       17,128                               12,938                   
    Other liabilities ................................          900                                  773                   
    Shareholders' equity .............................       14,157                               12,029                   
                                                          ---------                            ---------                          
                                                                                              
Total liabilities and shareholders' equity ...........    $ 140,068                            $ 108,840                   
                                                          =========                             ========
                                                                                              
    Interest rate spread .............................                                3.80%                                  3.90%
                                                                                              
    Net interest income and net yield on earning assets               $   1,511       4.62%                  $   1,184       4.68%
                                                                      =========       ====                   =========       ==== 
                                                                                                 
</TABLE>



                                       9
<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 (in organization)

         Community Bankshares, Inc. has 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.  There are various  other  regulatory  approvals  that must be obtained
before the bank can begin operation. Management estimates that Florence National
Bank will commence operation in mid-1998.

         CBI has filed a registration statement with the Securities and Exchange
Commission  in order to offer to the public up to  300,000  shares of its common
stock.  The majority of the proceeds of this sale  together with the proceeds of
an earlier sale of  restricted  stock to the  organizers  of the new bank in the
amount of  approximately  $615,000,  will be used to  purchase  $4.5  million in
common stock of the new bank. Should the sale not generate sufficient amounts to
purchase the bank stock, CBI has arranged for a line-of-credit with an unrelated
financial  institution to provide any additional  funds needed to capitalize the
bank. This stock sale began in mid-March.


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  $100,000  and  $150,000,  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.


                                       10
<PAGE>


RESULTS OF OPERATIONS

Net Income

         For the first  quarter  of 1998,  CBI earned a  consolidated  profit of
$399,000,  compared to $233,000  for the first  quarter of 1997,  an increase of
71.2% or  $166,000.  Basic  earnings  per share  were  $.15 in the 1998  period,
compared to $.09 for the 1997  period,  an increase  of 66.7%.  The  increase in
earnings per share was related to the  increase in earnings  for the  Orangeburg
bank and the beginning of profitable operations at the Sumter bank, which opened
for business in June 1996.

         For the first  quarter of 1998,  Orangeburg  National  Bank  reported a
profit of  $373,000,  compared to  $316,000  for the first  quarter of 1997,  an
increase of 18% or $57,000.

         For the first quarter of 1998,  Sumter  National Bank reported a profit
of $12,000 compared to a net after tax loss of $102,000 for the first quarter of
1997, an improvement of $114,000.

         As noted above,  consolidated net income for the period ended March 31,
1998,  increased from the prior year by 71.2% or $166,000.  The major components
of this increase are discussed  below.  Net interest income before provision for
loan losses for the three months ended March 31, 1998,  increased to $1,511,000,
compared  to  $1,184,000  for the same  period in 1997,  an increase of 27.6% or
$327,000.  For the same  period,  the  provision  for loan  losses was  $91,000,
compared  to  $84,000  for the  1997  period,  an  increase  of 8.3% or  $7,000.
Non-interest  income for the 1998 period increased to $230,000 from $173,000 for
the 1997 period, a 32.9% or $57,000 increase.  Non-interest expense increased to
$1,059,000  from  $920,000,  a 15.1% or $139,000  increase.  First  quarter 1998
results  include  results of  operation  for  Sumter  National  Bank.  which was
profitable for the 1998 period.  However,  for the comparable period in 1997 the
Sumter bank reported a substantial  loss, as noted above.  Accordingly,  many of
the dollar and percentage  comparisons and changes between periods  discussed in
this report are unusually large.


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 quarters ended March
31, 1998 and 1997, the following table is presented.



                                       11
<PAGE>



Period ended March 31,                1998              1997
                                      ----              ----
                                    (dollars in thousands)
Average assets                     $140,068          $108,840
ROA                                   1.14%             0.86%
Average equity                      $14,157           $12,029
ROE                                  11.27%             7.75%
Net income                             $399              $233


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 first
quarter of 1998, net interest income after  provision for loan losses  increased
to  $1,420,000  from  $1,100,000,  a 29.1% or $320,000  increase  over the first
quarter of 1997. This  improvement  was the result of a $31 million  increase in
the volume of earning assets.  The average yield on earning assets  increased to
8.45% for the 1998  period from 8.30% for the 1997  period.  This  increase  was
mostly the result of improved  yields in the loan  portfolio.  Also, the cost of
funds increased for the period.  For the first quarter of 1998 the cost of funds
averaged 4.65%, compared to 4.40% for the first quarter of 1997.

         The  increase  in the  yield on  earning  assets  was  exceeded  by the
increase in the cost of funds, which resulted in a decline in the spread and net
interest margin. The effect of these changes was a net interest spread (yield on
earning assets less cost of interest bearing liabilities) of 3.80% for the first
quarter of 1998,  decreased  from 3.90% during the first quarter of 1997.  CBI's
net interest  margin (net interest  income divided by total earning  assets) was
4.62% for the first quarter of 1998,  compared to 4.68% for the first quarter of
1997.


Interest Income

         Elsewhere  in this report is a table  comparing  the average  balances,
yields,  and rates for the interest rate sensitive segments of the Corporation's
balance  sheets for the quarters  ended March 31, 1998 and 1997. A discussion of
that table follows.

         Total  interest  income  for the  first  quarter  1998  was  $2,764,000
compared  with  $2,098,000  for the same  period  in 1997,  a 31.7% or  $666,000
increase.  The yield on earning  assets for the 1998  period was 8.45%,  up from
8.30% for the 1997 period. Total average interest earning assets for the quarter
ended March 31, 1998, were  $130,837,000,  up from  $101,117,000 for the quarter
ended March 31, 1997, an increase of 29.4% or $29,720,000.

         The loan portfolio earned  $2,203,000 for the first quarter in 1998, up
from $1,664,000 for the same period of 1997, a 32.4% or $539,000  increase.  The
first quarter 1998 yield  increased to 9.33% from 9.22% for the first quarter in
1997.  The  average  size of the loan  portfolio  was  $94,417,000  for the 1998
quarter,  up from  $72,216,000 for the same period of 1997, an increase of 30.7%
or $22,201,000.

         The taxable investment  portfolio earned $461,000 for the first quarter
in 1998, up from $384,000 for the 1997 period,  a 20% or $77,000  increase.  The


                                       12
<PAGE>

yield increased to 6.31% in the 1998 quarter from 6.16% in the 1997 quarter. The
average size of the portfolio  increased to $29,231,000 in the 1998 quarter from
$24,954,000 in the 1997 quarter, an increase of 17.1% or $4,277,000.

         The tax exempt investment portfolio earned $4,000 for the first quarter
in 1998,  unchanged  from the prior year.  The yield on the portfolio was 6.48%,
increased  from 5.87%.  The average size of the portfolio  decreased to $374,000
for the 1998 period  from  $413,000  in the 1997  period,  a decrease of 9.4% or
$39,000.

         Interest  bearing deposits in other banks  contributed  $38,000 for the
first  quarter 1998,  compared to $11,000  during the prior year, an increase of
245% or $27,000.  The yield on these  deposits  decreased  to 5.42% for the 1998
period  from 5.88% in the 1997  period.  CBI  averaged  $2,807,000  in  interest
bearing  balances in the first  quarter  1998  compared  to  $748,000  the first
quarter of the prior year, an increase of 275% or $2,059,000.

         Federal funds sold earned $58,000 the first quarter of 1998 compared to
$35,000 the prior year,  an increase of 65.7% or $23,000.  Yields  increased  to
5.79% for the first  quarter in 1998 from  5.03% for the first  quarter in 1997.
For the first quarter of 1998, CBI increased its average volume in federal funds
sold to  $4,008,000  from  $2,786,000  for the first quarter of 1997, a 43.9% or
$1,222,000 increase.


Interest Expense

         Interest  expense  increased  for the first  quarter 1998 to $1,253,000
from the prior  year's  $914,000,  a 37.1% or $339,000  increase.  The volume of
interest sensitive  liabilities  increased to $107,883,000 for the first quarter
in 1998 from  $83,100,000  for the first quarter of 1997, a 29.8% or $24,783,000
increase.  The average rate CBI paid for interest bearing liabilities during the
1998  quarter  was 4.65% up from  4.40% for the 1997  period.  This  change  was
primarily due to the increased cost of time deposits.

         The cost of savings accounts increased to $157,000 in the first quarter
in 1998 from $142,000 in the first quarter of 1997, a 10.6% or $15,000 increase.
Average savings deposit balances  increased to $18,318,000 for the first quarter
in 1998 from  $17,417.000  for the first quarter of 1997, an increase of 5.2% or
$901,000. The average rate paid on these funds increased to 3.47% from 3.26%.

         Interest  bearing  transaction  accounts  cost  $64,000  for the  first
quarter in 1998,  up from the first  quarter  of the prior  year's  $50,000,  an
increase  of  28%  or  $14,000.  The  volume  of  these  deposits  increased  to
$13,438,000 for the first quarter in 1998 from $10,722,000 for the first quarter
of 1997, a 25.3% or  $2,716,000  increase.  The average rate paid on these funds
for the  first  quarter  in 1998  increased  to 1.91%  from  1.87% for the first
quarter of 1997.

         Time  deposits  cost  $955,000 for the first  quarter of 1998,  up from
$685,000 the first  quarter of the prior year, an increase of 39.4% or $270,000.
The  volume  increased  to  $70,045,000  for the  first  quarter  in  1998  from
$51,817,000 for the first quarter of 1997, a 35.2% or $18,228,000 increase.  The
average  rate paid on these funds  increased  to 5.45% for the first  quarter in
1998 from 5.29% for the first quarter in 1997.



                                       13
<PAGE>

         Short-term  borrowings  consists of federal  funds sold and  securities
sold under  agreements to  repurchase.  This is a relatively  small and volatile
part of the  balance  sheet.  It cost  $25,000  for the first  quarter  in 1998,
increased  from  $19,000  for the  first  quarter  of 1997,  a 47.4%  or  $6,000
increase. The volume of these funds increased to $2,539,000 in the first quarter
in 1998 from  $2,028,000  in the first  quarter of 1997, an increase of 25.2% or
$511,000. The average rate paid on these funds increased to 3.94% from 3.75%.

         Borrowings  from the Federal  Home Loan Bank cost $52,000 for the first
quarter in 1998,  increased  from  $18,000  for the first  quarter  in 1997,  an
increase of 189% or $34,000.  The advances  averaged  $3,543,000 during the 1998
quarter,  compared to $1,116,000 for the prior year period, a 217% or $2,427,000
increase.  During the first  quarter of 1998 the  Orangeburg  bank  borrowed  an
additional  $3.5 million in advances from the Federal Home Loan Bank, as part of
its ongoing asset liability  management program.  The average rate paid on these
funds decreased to 5.87% from 6.45%.


Non-Interest Income

         Non-interest  income for the first  quarter 1998 grew to $230,000  from
$173,000 in the first quarter of 1997, a 32.9% or $57,0000  increase..  This was
mostly the result of increases in service  charge  volume at the Sumter bank and
increases in returned check fees for the Orangeburg bank.


Non-Interest Expense

         For the  first  quarter  of 1998  non-interest  expenses  increased  to
$1,059,000  from  $920,000  for the first  quarter of 1997,  a 15.1% or $139,000
increase.

         For the 1998 period, personnel costs were $634,000 compared to $557,000
for the 1997 period , an increase of 13.8% or $77,000 increase.

         For the 1998  period  premises  and  equipment  expense  were  $139,000
compared to $122,000 for the 1997 period, an increase of 13.9% or $17,000.

         For the 1998 period other costs were $286,000  compared to $241,000 for
the 1997 period, an increase of 18.7% or $45,000.


Income Taxes

         CBI  provided  $192,000  for federal and state  income taxes during the
first  quarter of 1998,  compared to $120,000 for the same period in 1997, a 60%
or $72,000 increase resulting primarily from the increase in earnings..



                                       14
<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 March 31, 1998, the held-to-maturity  portfolio totaled $13,691,000
compared to $17,311,000 at December 31, 1997, a decrease of 20.9% or $3,620,000.
At March 31, 1998, the available-for-sale portfolio totaled $16,759,000 compared
to  $15,141,000  at December 31, 1997, an increase of 10.7% or  $1,618,000.  The
following  chart  summarizes  the  investment  portfolios at March 31, 1998, and
December 31, 1997.
<TABLE>
<CAPTION>

                                                                                        March 31, 1998
                                                            ------------------------------------------------------------------------
                                                                   Held-to-maturity                     Available-for-sale
                                                           ----------------------------------  -------------------------------------
                                                             Amortized cost     Fair value          Amortized cost        Fair value
                                                                                 (Dollar amounts in thousands)
<S>                                                           <C>                  <C>                  <C>                  <C>    
U. S. Government and federal agencies ..........              $13,437              $13,462              $15,796              $15,832
Tax exempt securities ..........................                  254                  256                    -                    -
Other equity securities ........................                    -                    -                  927                  927
                                                              -------              -------              -------              -------
Total ..........................................              $13,691              $13,718              $16,723              $16,759
                                                              =======              =======              =======              =======

Unrealized gain ................................              $    27                                   $    36                     
                                                              =======                                   =======
<CAPTION>

                                                                                        March 31, 1997
                                                            ------------------------------------------------------------------------
                                                                   Held-to-maturity                     Available-for-sale
                                                           ----------------------------------  -------------------------------------
                                                             Amortized cost     Fair value          Amortized cost        Fair value
                                                                                 (Dollar amounts 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 March 31, 1998, the loan portfolio was  $96,055,000,  compared to $91,951,000
at December  31,  1997,  a 4.5% or  $4,104,000  increase.  The  following  chart
summarizes the loan portfolio at March 31, 1998, and December 31, 1997.


                                       15
<PAGE>



                                     Mar. 31, 1998      Dec. 31, 1997
                                     -------------      -------------
                                     (Dollar amounts in thousands)
Real estate .....................         $56,321            $53,297
Commercial ......................          23,436             22,306
Loans to individuals ............          16,298             16,348
                                          -------            -------
Total ...........................         $96,055            $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 March 31, 1998, and December 31, 1997.

                                               Mar.31, 1998         Dec.31, 1997
                                               ------------         ------------
                                               (Dollar amounts in thousands)
Past due 90 days + accruing loans .........        $ 62                 $  -
Non-accrual loans .........................        $173                 $ 81
Impaired loans (included in non-accrual) ..        $173                 $ 81
Other real estate owned ...................        $132                 $132

         Management  considers the past due and non-accrual amounts at March 31,
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.

                                             Mar. 31, 1998          Dec.31, 1997
                                             -------------          ------------
                          (Dollar amounts in thousands)

Allowance at beginning of period .........        $1,140                 $876
Provision expense ........................            91                  359
Net charge offs ..........................           (11)                 (95)
                                                  ------               ------
Allowance at end of period ...............        $1,220               $1,140
                                                  ======               ======
Allowance as a percent of outstanding loans         1.27%                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 March 31, 1998.

Deposits

         Deposits were $122,260,000 at March 31, 1998,  compared to $117,167,000
at December 31, 1997, an increase of 4.3% or $5,093,000.

                                       16
<PAGE>

         Time deposits greater than $100,000 were $23,556,000 at March 31, 1998,
compared to $21,428,000 at December 31, 1997, an increase of 9.9% or $2,128,000.

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 $122 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 March 31, 1998, CBI had
approximately  $12,035,000 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 $50,628,000 and $20,051,000,  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.


                                       17
<PAGE>

Capital resources

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

                                              Mar. 31, 1998      Dec. 31, 1997
                                              -------------      -------------
Tier 1 capital to average total assets ....          10.40%              9.60%
Tier 1 capital to risk weighted assets ....          14.70%             14.10%
Total capital to risk weighted assets .....          16.00%             15.30%

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

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

Shareholders' Equity

         At March 31,  1998,  the  common  stock  account  totaled  $10,560,000,
compared to $9,156,000 at December 31, 1997.  This  $1,404,000  increase was the
result  of stock  sales  conducted  during  the  quarter.  The  stock  sales are
primarily to raise capital for the new Florence National Bank (in organization).

Dividends

         CBI declared and paid a semi-annual  cash dividend of 8 cents per share
during the first quarter of 1998. The total cost of this dividend was $215,000.


                                       18
<PAGE>


Part II--Other Information

Item 2. Changes in Securities and Use of Proceeds

         The  Corporation  sold 53,950  restricted  common shares pursuant to an
agreement  between CBI and the  organizers  of the  Florence  National  Bank (in
organization)  during  the first  quarter of 1998.  There  were no  underwriters
involved in this  transaction.  The restricted shares generated a total offering
price of  $665,956.  Issuance of these  shares was exempt from the  registration
requirements of the Securities Act of 1933 pursuant to Section 4(2) thereof.

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)  Reports on Form 8-K.  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: May 11, 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)