SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D. C. 20549


                                    FORM 10-Q


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



For the quarterly period ended Sept. 30, 2002  Commission File number: 000-22054



                           COMMUNITY BANKSHARES, INC.
             (Exact Name of Registrant as Specified in its Charter)

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


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


                                 (803) 535-1060
              (Registrant's telephone number, including area code)



         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

         Indicate by check mark whether the registrant is an  accelerated  filer
(as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

         State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 4,304,384 shares of common
stock outstanding as of November 1, 2002.


<PAGE>





                             10-Q TABLE OF CONTENTS

                           Part I-Financial Statements                      Page
 Item 1    Financial Statements ............................................   3
 Item 2    Management's Discussion and Analysis
             of Financial Condition and Results of Operations ..............  12
 Item 3    Quantitative and Qualitative Disclosures About Market Risk ......  24
 Item 4    Controls and Procedures .........................................  25

                           Part II-Other Information
 Item 6    Exhibits and Reports on Form 8-K ................................  26


















                                       2
<PAGE>


Part I. Item 1. Financial Statements

            COMMUNITY BANKSHARES, INC. - CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
         (Dollars in thousands)                                                                       UNAUDITED
                                                                                                    September 30,       December 31,
         ASSETS                                                                                          2002               2001
                                                                                                         ----               ----
Cash and due from other financial institutions:
<S>                                                                                                   <C>                 <C>
     Non-interest bearing ..................................................................          $  12,653           $  14,586
     Federal funds sold ....................................................................             19,105              11,063
                                                                                                      ---------           ---------
         Total cash and cash equivalents ...................................................             31,758              25,649
Interest bearing deposits in other banks ...................................................                639               2,376
Investment securities:
     Securities held to maturity ...........................................................                500                 500
     Securities available for sale .........................................................             58,830              43,207
Loans held for resale ......................................................................             15,567              10,265

Loans ......................................................................................            300,051             229,905
     Less, allowance for loan losses .......................................................             (3,497)             (2,830)
                                                                                                      ---------           ---------
         Net loans .........................................................................            296,554             227,075

Premises and equipment .....................................................................              6,423               5,177
Other real estate owned ....................................................................                  -                 267
Accrued interest  receivable ...............................................................              2,284               1,762
Deferred income taxes ......................................................................                178                 870
Intangible assets ..........................................................................              7,958                 921
Other assets ...............................................................................                468                 548
                                                                                                      ---------           ---------

         Total assets ......................................................................          $ 421,159           $ 318,617
                                                                                                      =========           =========

         LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
     Non-interest bearing ..................................................................          $  46,069           $  35,882
     Interest bearing ......................................................................            288,056             219,551
                                                                                                      ---------           ---------
         Total deposits ....................................................................            334,125             255,433
Federal funds purchased and securities
     sold under agreements to repurchase ...................................................             10,009               4,171
Federal Home Loan Bank advances ............................................................             20,210              20,280
Lines of credit payable ....................................................................             11,500               9,028
Other liabilities ..........................................................................              2,574               2,158
                                                                                                      ---------           ---------
         Total liabilities .................................................................            378,418             291,070
                                                                                                      ---------           ---------

Shareholders' equity:
     Common stock
         No par, authorized shares 12,000,000, issued and
           outstanding 4,304,384 in 2002 and 3,299,674 in 2001 .............................             29,090              17,208
     Retained earnings .....................................................................             13,409              10,346
     Accumulated other comprehensive income (loss) .........................................                242                  (7)
                                                                                                      ---------           ---------
         Total shareholders' equity ........................................................             42,741              27,547
                                                                                                      ---------           ---------

         Total liabilities and shareholders' equity ........................................          $ 421,159           $ 318,617
                                                                                                      =========           =========
</TABLE>


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS


                                       3
<PAGE>

              COMMUNITY BANKSHARES, INC. - CONSOLIDATED STATEMENTS
                       OF CHANGES IN SHAREHOLDERS' EQUITY
        for the nine months ended September 30, 2002 and 2001 (Unaudited)
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                                                        Accumulated
                                                                                                           Other           Total
                                                            Number of                      Retained    Comprehensive   Shareholders'
                                                             Shares         Amount         Earnings    Income (Loss)      Equity
                                                             ------         ------         --------    ------------       ------


<S>                                                       <C>            <C>             <C>             <C>             <C>
Balances at Dec. 31, 2000 ..........................      3,199,180      $   15,928      $    7,342      $     (131)     $   23,139
Comprehensive income:
  Net income .......................................                                          2,793                           2,793
  Change in unrealized gain (loss) on
       securities available for sale, net
       of tax effect ...............................                                                            247             247
Shares issued under option agreement ...............          5,040              39                                              39
Dividends paid .....................................              -               -            (672)              -            (672)
                                                         ----------      ----------      ----------      ----------      ----------
Balances at September 30, 2001 .....................      3,204,220      $   15,967      $    9,463      $      116      $   25,546
                                                         ==========      ==========      ==========      ==========      ==========

Balances at Dec. 31, 2001 ..........................      3,299,674      $   17,208      $   10,346      $       (7)     $   27,547
Comprehensive income:
  Net income .......................................                                          3,936                           3,936
  Change in unrealized gain (loss) on
       securities available for sale, net
       of tax effect ...............................                                                            249             249
Shares issued under option agreement ...............          4,710              40                                              40
Shares issued under merger agreement ...............      1,000,000          12,020                                          12,020
Expense associated with merger .....................                           (178)                                           (178)
Dividends paid .....................................              -               -            (873)              -            (873)
                                                         ----------      ----------      ----------      ----------      ----------
Balances at September 30, 2002 .....................      4,304,384      $   29,090      $   13,409      $      242      $   42,741
                                                         ==========      ==========      ==========      ==========      ==========
</TABLE>



THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS














                                       4
<PAGE>



         COMMUNITY BANKSHARES, INC. - CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                                           Nine months ended Sept. 30,  Three months ended Sept. 30,
                                                                               2002           2001          2002          2001
               (Dollars in thousands, except per share data)                 UNAUDITED     UNAUDITED      UNAUDITED     UNAUDITED
                                                                             ---------     ---------      ---------     ---------
Interest and dividend income:
<S>                                                                          <C>            <C>            <C>            <C>
          Loans, including fees ........................................     $14,017        $13,694        $ 5,351        $ 4,578
          Deposits with other financial institutions ...................          18            144              8             38
          Debt securities ..............................................       1,526          1,602            668            408
          Dividends ....................................................          89            118             26             49
          Federal funds sold ...........................................         254            642             87            188
                                                                             -------        -------        -------        -------
               Total interest and dividend income ......................      15,904         16,200          6,140          5,261
                                                                             -------        -------        -------        -------

Interest expense:
          Deposits:
            Certificates of deposit of $100,000 or more ................       1,410          1,912            496            602
            Other ......................................................       3,460          5,089          1,254          1,561
                                                                             -------        -------        -------        -------
               Total deposits ..........................................       4,870          7,001          1,750          2,163
          Federal funds purchased and securities
            sold under agreements to repurchase ........................          75            212             31             63
          Other borrowed funds .........................................       1,090            861            384            265
                                                                             -------        -------        -------        -------
               Total interest expense ..................................       6,035          8,074          2,165          2,491
                                                                             -------        -------        -------        -------
Net interest income ....................................................       9,869          8,126          3,975          2,770
Provision for loan losses ..............................................         597            457            239            180
                                                                             -------        -------        -------        -------
Net interest income after provision for loan losses ....................       9,272          7,669          3,736          2,590
                                                                             -------        -------        -------        -------

Non-interest income:
          Service charges on deposit accounts ..........................       1,843          1,490            761            562
          Gains on sales of securities .................................         119             14             15             14
          Mortgage banking income ......................................       3,112              -          1,164              -
          Other ........................................................         492            483            189            168
                                                                             -------        -------        -------        -------
               Total non-interest income ...............................       5,566          1,987          2,129            744
                                                                             -------        -------        -------        -------

Non-interest expense:
          Salaries and employee benefits ...............................       5,546          3,172          2,163          1,070
          Premises and equipment .......................................         998            703            393            232
          Other ........................................................       2,219          1,447            884            531
                                                                             -------        -------        -------        -------
               Total non-interest expense ..............................       8,763          5,322          3,440          1,833
                                                                             -------        -------        -------        -------

Income before income taxes .............................................       6,075          4,334          2,425          1,501
Income tax expense .....................................................       2,139          1,541            825            539
                                                                             -------        -------        -------        -------
Net income .............................................................     $ 3,936        $ 2,793        $ 1,600        $   962
                                                                             =======        =======        =======        =======
</TABLE>



                                       5
<PAGE>

<TABLE>
<CAPTION>
                                                                 Nine months ended Sept. 30,           Three months ended Sept. 30,
                                                                    2002              2001                2002              2001
                                                                 UNAUDITED         UNAUDITED           UNAUDITED         UNAUDITED
                                                                 ---------         ---------           ---------         ---------


Basic earnings per common share:
<S>                                                             <C>                 <C>                <C>                <C>
          Weighted average shares outstanding ..........          3,487,790          3,201,500          4,309,094          3,200,867
          Net income per common share ..................        $      1.13         $     0.87         $     0.37         $     0.30
Diluted earnings per common share:
          Weighted average shares outstanding ..........          3,599,383          3,222,456          4,420,687          3,220,138
          Net income per common share ..................        $      1.09         $     0.87         $     0.36         $     0.30
Cash dividends per common share ........................        $       .24         $      .21         $      .08         $      .07
</TABLE>


























THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS



                                       6
<PAGE>









       COMMUNITY BANKSHARES, INC. - CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                                     Nine months ended Sept. 30,
                                                                                                    2002                     2001
                                                                                                  UNAUDITED               UNAUDITED
                                                                                                  ---------               ---------
                                                                                                        (Dollars in thousands)
Cash flows from operating activities:
<S>                                                                                                 <C>                   <C>
Net income .............................................................................            $   3,936             $   2,793
Adjustments to reconcile net income
  to net cash used in operating
  activities:
       Depreciation and amortization ...................................................                  489                   329
       Provision for loan losses .......................................................                  597                   457
       Accretion of discounts and amortization of premiums-
         investment securities - net ...................................................                    -                   (18)
       Net realized (gains) on sale of securities ......................................                 (119)                  (14)
       Proceeds of sale of loans held for sale .........................................              125,639                 9,807
       Origination of loans held for sale ..............................................             (130,941)               (9,807)
Changes in assets and liabilities:
       (Increase) decrease in interest receivable ......................................                 (522)                  550
       Decrease in other assets ........................................................                1,039                    79
        Increase in other liabilities ..................................................                  416                    17
                                                                                                    ---------             ---------
         Net cash provided by operating activities .....................................                  534                 4,193
                                                                                                    ---------             ---------

Cash flows from investing activities:
       Proceeds from maturities of held to maturity securities .........................                    -                11,375
       Purchases of investment securities - held to maturity ...........................                    -                (1,153)
       Proceeds from maturities of available for sale
         securities ....................................................................               35,350                69,672
       Proceeds from sales of available for sale securities ............................               20,543                     -
       Purchases of investment securities - available for sale .........................              (71,148)              (61,200)
       Net (increase) decrease in interest bearing deposits ............................                1,737                (3,535)
       Net (increase) in loans to customers ............................................              (70,076)              (23,979)
       Net cash acquired in transaction accounted under the
           purchase method .............................................................                8,922                     -
       Cash paid in connection with merger .............................................               (4,000)                    -
       Purchase of premises and equipment ..............................................               (1,674)                 (341)
       Net (increase) in other real estate .............................................                    -                  (267)
                                                                                                    ---------             ---------
           Net cash (used) in investing activities .....................................              (80,346)               (9,428)
                                                                                                    ---------             ---------

Cash flows from financing activities:
       Net increase in demand, savings, and time deposits ..............................               78,692                14,980
       Net increase in federal funds purchased and
           securities sold under agreements to repurchase ..............................                5,838                 1,624
       Net increase under line of credit agreement .....................................                2,472                     -
       Repayment of  Federal Home Loan Bank advances ...................................                  (70)                  (70)
       Sale of common stock ............................................................                   40                    39
       Merger expenses .................................................................                 (178)                    -
       Dividends .......................................................................                 (873)                 (672)
                                                                                                    ---------             ---------
           Net cash provided by financing activities ...................................               85,921                15,901
                                                                                                    ---------             ---------
</TABLE>


                                       7
<PAGE>

<TABLE>
<CAPTION>
                                                                                                      Nine months ended Sept. 30,
                                                                                                     2002                     2001
                                                                                                   UNAUDITED               UNAUDITED
                                                                                                   ---------               ---------
                                                                                                     (Dollar amounts in thousands)
<S>                                                                                                  <C>                     <C>
Net increase in cash and due from other
       Financial institutions ......................................................                   6,109                  10,666

Cash and due from other financial institutions -
       Beginning of period .........................................................                  25,649                  18,339
                                                                                                     -------                 -------

Cash and due from other financial institutions -
       End of period ...............................................................                 $31,758                 $29,005
                                                                                                     =======                 =======
</TABLE>

























THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS



                                       8
<PAGE>

Notes to Unaudited Consolidated Financial Statements

Summary of Significant Accounting Principles

         A summary of significant  accounting policies and the audited financial
statements for 2001 are included in Company's Annual Report on Form 10-K for the
year ended December 31, 2001.

Principles of Consolidation

         The consolidated financial statements include the accounts of Community
Bankshares,  Inc. (CBI or the Corporation),  the parent company,  and Orangeburg
National Bank, Sumter National Bank, Florence National Bank,  Community Resource
Mortgage  Inc.,  and the Bank of Ridgeway,  its wholly owned  subsidiaries.  All
significant   intercompany  items  have  been  eliminated  in  the  consolidated
statements.

Management Opinion

         The interim 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 2001 Annual Report on Form 10-K.

Changes in Comprehensive Income Components

         The Financial  Accounting Standards Board 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  disclosure  of  comprehensive   income  and  its
components in a full set of general-purpose financial statements.  Disclosure as
required by the Statement is as follows:

                                                     Nine months ended Sept. 30,
                                                        2002              2001
                                                        ----              ----
                                                          (In thousands)
Unrealized holding gains (losses)
     on available for sale securities ................  $ 496             $ 388
Less: Reclassification adjustment for gains
     (losses) realized in income .....................    119                14
                                                        -----             -----
Net unrealized gains (losses) ........................    377               374
Tax effect ...........................................   (128)             (127)
                                                        -----             -----

Net-of-tax amount ....................................  $ 249             $ 247
                                                        =====             =====



                                       9
<PAGE>




Earnings Per Share

         Basic  earnings per share is  calculated  by dividing net income by the
weighted-average  shares of common stock outstanding during each period. Diluted
earnings  per share is based on the  weighted-average  shares  of  common  stock
outstanding  during each period plus the maximum dilutive effect of common stock
issuable upon exercise of stock options.  The weighted  average number of shares
and  equivalents  are  determined  after  giving  retroactive  effect  to  stock
dividends  and  stock  splits.   Weighted-average  shares  outstanding  used  in
calculating earnings per share for the three and nine months ended September 30,
2002 and 2001 are as follows:

                         Three months ended                Nine months ended
                      9/30/2002       9/30/2001        9/30/2002       9/30/2001
                      ---------       ---------        ---------       ---------

Basic ..........       4,309,094       3,200,867       3,487,790       3,201,500


Diluted ........       4,420,687       3,220,138       3,599,383       3,222,456


         Dividends  per share are  calculated  using the current  equivalent  of
number of common  shares  outstanding  at the time of the dividend  based on the
Corporation's shares outstanding.

























                                       10
<PAGE>

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

<TABLE>
<CAPTION>
Nine months ended Sept. 30,                                                2002                                   2001
In thousands                                                             Interest                               Interest
                                                              Average     Income/    Yields/          Average     Income/    Yields/
                   Assets                                     Balance    Expense      Rates           Balance    Expense     Rates
                                                              -------    -------      -----           -------    -------     -----

<S>                                                         <C>         <C>            <C>          <C>          <C>           <C>
Interest bearing deposits ...............................   $  1,388    $    18        1.73%        $  4,441     $   144       4.32%
Investment securities taxable ...........................     43,507      1,504        4.61%          36,490       1,699       6.21%
Investment securities--tax exempt* ......................      3,290        111        6.82%             746          21       5.69%
Federal funds sold ......................................     19,672        254        1.72%          19,514         642       4.39%
Loans receivable ........................................    268,216     14,017        6.97%         206,419      13,694       8.85%
                                                            --------    -------                     --------     -------
  Total interest earning assets .........................    336,073     15,904        6.31%         267,610      16,200       8.07%
Cash and due from banks .................................     13,569                                   9,166
Allowance for loan losses ...............................     (3,085)                                 (2,605)
Premises and equipment ..................................      5,830                                   4,475
Intangible assets .......................................      3,172                                       -
Other assets ............................................      3,374                                   3,058
                                                            --------                                --------
  Total assets ..........................................   $358,933                                $281,704
                                                            ========                                ========

    Liabilities and Shareholders' Equity
Interest bearing deposits
Savings .................................................   $ 52,748    $   668        1.69%         $37,290     $   927       3.31%
Interest bearing transaction accounts ...................     41,270        230        0.74%          23,389         165        .94%
Time deposits ...........................................    155,153      3,972        3.41%         136,836       5,909       5.76%
                                                            --------    -------                     --------     -------
  Total interest bearing deposits .......................    249,171      4,870        2.61%         197,515       7,001       4.73%
Short term borrowing ....................................      4,753         75        2.10%           7,414         212       3.81%
Other borrowings ........................................     30,537      1,090        4.76%          19,773         861       5.81%
                                                            --------    -------                     --------     -------
  Total interest bearing liabilities ....................    284,461      6,035        2.83%         224,702       8,074       4.79%
Noninterest bearing demand deposits .....................     38,640                                  30,779
Other liabilities .......................................      2,680                                   1,735
Shareholders' equity ....................................     33,152                                  24,488
                                                            --------                                --------
  Total liabilities and shareholders' equity ............   $358,933                                $281,704
                                                            ========                                ========

Interest rate spread                                                                   3.48%                                   3.28%
Net interest income and net yield on
     earning assets                                                     $ 9,869        3.92%                     $ 8,126       4.05%
                                                                        =======        =====                     =======       =====
</TABLE>

* Yields are quoted as fully taxable equivalents




                                       11
<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 words "estimate,"  "project,"  "intend,",
"expect,"  "believe,"  "anticipate,"  "plan," and similar  expressions  identify
forward-looking  statements.  The  Corporation  cautions  readers  that  forward
looking  statements,   including  without  limitation,  those  relating  to  the
Corporation's  future  business  prospects,  ability to  successfully  integrate
recent  acquisitions,  revenues,  working  capital,  liquidity,  capital  needs,
interest costs, and income,  are subject to 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.


RESULTS OF OPERATIONS  FOR THE NINE MONTHS ENDED  SEPTEMBER 30, 2002 COMPARED TO
THE NINE MONTHS ENDED SEPTEMBER 30, 2001

Net Income

         For the first  nine  months of 2002  Community  Bankshares  Inc.  (CBI)
earned a consolidated  profit of $3,936,000  compared to $2,793,000 for the same
period of 2001,  an increase of 40.9% or  $1,143,000.  Basic  earnings per share
were $1.13 in the 2002  period  compared  to $.87 for the 2001  period.  Diluted
earnings  per share were $1.09 in the 2002 period  compared to $.87 for the 2001
period.

         For the first nine months of 2002  Orangeburg  National Bank reported a
profit of $2,135,000  compared to $1,869,000  for the first nine months of 2001,
an increase of 14.2% or $266,000.

         For the first  nine  months of 2002  Sumter  National  Bank  reported a
profit of $979,000  compared to $849,000  for the first nine months of 2001,  an
increase of 15.3% or $130,000.

         For the first nine months of 2002  Florence  National  Bank  reported a
profit of $277,000  compared to $125,000  for the first nine months of 2001,  an
increase of 122% or $152,000. The Florence bank began operation in July 1998.

         For the first nine  months of 2002  Community  Resource  Mortgage  Inc.
reported a profit of $333,000.  CBI  acquired  the mortgage  company in November
2001 so there are no comparative numbers available.

         For the  three  month  period  ended  September  30,  2002  the Bank of
Ridgeway  reported a profit of $291,000.  CBI acquired the Ridgeway Bank July 1,
2002 so there are no comparative numbers available.



                                       12
<PAGE>

         As noted  above,  consolidated  net  income for the nine  months  ended
September 30, 2002,  increased from the prior year by 40.9% or  $1,143,000.  The
major  components  of this  increase are discussed  below.  Net interest  income
before  provision  for loan losses for the nine months ended  September 30, 2002
increased to $9,869,000  compared to $8,126,000  for the same period in 2001, an
increase  of 21.4% or  $1,743,000.  For the same period the  provision  for loan
losses was $597,000  compared to $457,000  for the 2001  period,  an increase of
30.6%  or  $140,000.  Non-interest  income  for the  2002  period  increased  to
$5,566,000 from $1,987,000 for the 2001 period,  a 180% or $3,579,000  increase.
Non-interest  expense  increased  to  $8,763,000  from  $5,322,000,  a 64.7%  or
$3,441,000 increase.

         The large percentage increases are primarily the result of the addition
of Community  Resource  Mortgage and the Bank of Ridgeway.  The mortgage company
was acquired  November 1, 2001 and the Ridgeway  bank was acquired July 1, 2002.
Accordingly, throughout this discussion there will be significant percentage and
dollar  changes on a year to date and  quarter to date basis.  Consoldiated  net
income includes  $333,000 which was  contributed by fee income from  residential
mortgage  lending  activities  of the  mortgage  company.  This  income  is very
sensitive to home purchase and  refinancing  demand which, in turn, is sensitive
to interest rates.  Accordingly,  this component of net income is  significantly
more volatile than other  components of net income.  This volatility is somewhat
mitigated by the fact that personnel  compensation  is directly  related to loan
production volumes.


Profitability

         Profitability may be measured 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. Operating results for the nine months ended September 30,
2002 and 2001 are shown below.

                                                    Period ended September 30,
                                                    2002                  2001
                                                    ----                  ----
                                                      (dollars in thousands)

Average assets .......................            $358,933             $281,704
ROA ..................................                1.46%                1.32%
Average equity .......................            $ 33,152             $ 24,488
ROE ..................................               15.83%               15.21%
Net income ...........................            $  3,936             $  2,793


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
nine  months  of 2002 net  interest  income  after  provision  for  loan  losses
increased to $9,272,000 from $7,669,000, a 20.9% or $1,603,000 increase over the
2001 period. This improvement was mostly the result of a $69 million increase in
the  average  volume of  earning  assets,  of which $40  million  resulted  from
acquistions. The average yield on earning assets decreased to 6.31% for the 2002
period from 8.07% for the 2001 period.  This decline in yield was  primarily the
result of market interest rate declines. When 2001 began, the prime lending rate


                                       13
<PAGE>

was 9.5%;  by year-end  2001 it was at 4.75% where it has  remained  through the
first nine months of 2002.

         For the first  nine  months of 2002 the cost of funds  averaged  2.83%,
decreased  from  4.79% for the first  nine  months of 2001.  The effect of these
changes was a net interest spread (yield on earning assets less cost of interest
bearing  liabilities) of 3.48% for the first nine months of 2002, increased from
3.28% for the first nine months of 2001. CBI's net interest margin (net interest
income  divided by total earning  assets) was 3.92% for the first nine months of
2002 compared to 4.05% for the first nine months of 2001.

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 nine  months  ended  September  30,  2002 and  2001.  A
discussion of that table follows.

         Total interest income for the first nine months of 2002 was $15,904,000
compared  to  $16,200,000  for the  same  period  in  2001,  a 1.8% or  $296,000
decrease.  The yield on average  earning  assets for the 2002  period was 6.31%,
decreased from 8.07% for the 2001 period.  Total average interest earning assets
for the 2002 period were  $336,073,000  compared  to  $267,610,000  for the 2001
period, an increase of 25.6% or $68,463,000.

         The loan portfolio earned $14,017,000 for the first nine months of 2002
compared  to  $13,694,000  for the  same  period  of  2001,  a 2.4% or  $323,000
increase.  The yield  decreased  to 6.97% for the 2002 period from 8.85% for the
2001 period.  The average size of the loan  portfolio was  $268,216,000  for the
2002 period compared to $206,419,000  for the 2001 period,  an increase of 29.9%
or $61,797,000.

         The taxable  investment  portfolio earned $1,504,000 for the first nine
months in 2002 compared to  $1,699,000  for the same period in 2001, an 11.5% or
$195,000 decrease. The yield decreased to 4.61% in the 2002 period from 6.21% in
the 2001 period.  The average size of the portfolio was  $43,507,000 in the 2002
period  compared  to  $36,490,000  in the 2001  period,  an increase of 19.2% or
$7,017,000.

         The tax-exempt  investment portfolio earned $111,000 for the first nine
months in 2002  compared  to  $21,000  for the same  period  in 2001,  a 429% or
$90,000 increase. The yield (on a taxable equivalent basis) on the portfolio was
6.82%, an increase from 5.69%.  The average size of the portfolio was $3,290,000
for the 2002 period compared to $746,000 in the 2001 period, an increase of 341%
or $2,544,000.  The unusual  magnitude of the percentage change in this category
is due to the  acquisition  of the Bank of  Ridgeway on July 1, 2002 and its tax
exempt investment portfolio, which at September 30, 2002 totaled $9,515,000.

         Interest  bearing deposits in other banks  contributed  $18,000 for the
first nine months of 2002 compared to $144,000 during the prior year, a decrease
of 87.5% or  $126,000.  The yield on these  deposits  decreased to 1.73% for the
2002 period from 4.32% in the 2001 period.  CBI averaged  $1,388,000 in interest
bearing  balances in the first nine months of 2002  compared to  $4,441,000  the
first nine months of the prior year, a decrease of 68.7% or $3,053,000.

         Federal  funds  sold  earned  $254,000  the first  nine  months of 2002
compared to $642,000  the prior year,  a decrease of 60.4% or  $388,000.  Yields


                                       14
<PAGE>

decreased  to 1.72% for the first  nine  months in 2002 from 4.39% for the first
nine months in 2001. For the first nine months of 2002 CBI increased its average
volume in federal  funds sold to  $19,672,000  compared to  $19,514,000  for the
first nine months of 2001, a .8% or $158,000 increase.



Interest Expense

         Interest  expense  for the first  nine  months  of 2002 was  $6,035,000
compared to the prior year's  $8,074,000,  a 25.3% or $2,039,000  decrease.  The
volume of  interest  bearing  liabilities  was  $284,461,000  for the first nine
months in 2002  compared to  $224,702,000  for the first nine months of 2001,  a
26.6% or  $59,759,000  increase.  The  average  rate  paid for  interest-bearing
liabilities during the 2002 period was 2.83%,  decreased from 4.79% for the 2001
period.

         The cost of savings  accounts  was $668,000 in the first nine months in
2002  compared to $927,000 in the first nine months of 2001, a 27.9% or $259,000
decrease.  Average savings deposit  balances were $52,748,000 for the first nine
months in 2002  compared to  $37,290,000  for the first nine months of 2001,  an
increase of 41.5% or $15,458,000. The average rate paid on these funds decreased
to 1.69% from 3.31%.

         Interest bearing transaction  accounts cost $230,000 for the first nine
months in 2002  compared to the prior year's  $165,000,  an increase of 39.4% or
$65,000.  The volume of these deposits was $41,270,000 for the first nine months
in 2002  compared to  $23,389,000  for the first nine months of 2001, a 76.5% or
$17,881,000  increase.  The average  rate paid on these funds for the first nine
months in 2002 decreased to .74% from .94% for the first nine months of 2001.

         Time  deposits  cost  $3,972,000  for the  first  nine  months  of 2002
compared to  $5,909,000  for the first nine months of the prior year, a decrease
of 32.8% or $1,937,000. The volume was $155,153,000 for the first nine months in
2002  compared to  $136,836,000  for the first nine  months of 2001,  a 13.4% or
$18,317,000  increase.  The average rate paid on these funds  decreased to 3.41%
for the first nine months in 2002 from 5.76% for the first nine months in 2001.

         Short-term borrowings consist 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  $75,000 for the first nine months in 2002
compared to $212,000  for the first nine months of 2001,  a decrease of 64.6% or
$137,000.  The volume of these funds was  $4,753,000 in the first nine months of
2002  compared to  $7,414,000  in the first nine  months of 2001,  a decrease of
35.9% or  $2,661,000.  The average  rate paid on these funds  decreased to 2.10%
from 3.81%.

         Other  borrowings  consist of advances  from the Federal Home Loan Bank
and warehouse lines of credit for the mortgage company. They cost $1,090,000 for
the first nine months in 2002  compared to $861,000 for the first nine months in
2001,  an increase of 26.7% or $229,000.  The  borrowings  averaged  $30,537,000
during the 2002 period  compared to  $19,773,000  for the prior year  period,  a
54.4% or $10,764,000 increase. The average rate paid on these funds decreased to
4.76% from  5.81%.  The  primary  reason for the  substantial  increase in these
borrowings  is the  addition  of the lines of credit for the  mortgage  company,
which are not reflected in 2001 period.


                                       15
<PAGE>


Non-Interest Income

         Non-interest  income  for  the  first  nine  months  of  2002  grew  to
$5,566,000  from  $1,987,000  for the  first  nine  months  of  2001,  a 180% or
$3,579,000  increase.  Approximately  $3 million of this increase was related to
the mortgage company.

Non-Interest Expense

         For the first nine months of 2002  non-interest  expenses  increased to
$8,763,000  from  $5,322,000  for the  first  nine  months  of 2001,  a 64.7% or
$3,441,000 increase.  Approximately $2.1 million of this increase was related to
the  mortgage  company and  approximately  $650,000  was related to the Ridgeway
bank. These two acquisitions account for most of the increases noted below.

         For the  2002  period  personnel  costs  were  $5,546,000  compared  to
$3,172,000 for the 2001 period, an increase of 74.8% or $2,374,000;

         For the 2002 period  premises  and  equipment  expenses  were  $998,000
compared to $703,000 for the 2001 period, an increase of 42% or $295,000; and

         For the 2002 period other costs were $2,219,000  compared to $1,447,000
for the 2001 period, an increase of 53.4% or $772,000.

Income Taxes

         CBI provided  $2,139,000  for federal and state income taxes during the
first nine months of 2002 compared to $1,541,000  for the same period in 2001, a
38.8% or $598,000  increase.  The average tax rate for the 2002 period was 35.2%
and for the 2001 period it was 35.6%.


RESULTS OF OPERATIONS FOR THE QUARTERS ENDED SEPTEMBER 30, 2002 AND 2001

Net Income

         For the quarter  ended  September  30,  2002 CBI earned a  consolidated
profit of $1,600,000, compared to $962,000 for the comparable period of 2001, an
increase of 66.3% or  $638,000.  Basic  earnings per share were $.37 in the 2002
period,  compared to $.30 for the 2001 period.  Diluted  earnings per share were
$.36 in the 2002 period,  compared to $.30 for the 2001  period.  The changes in
the items  comprising net interest income,  which are discussed below,  resulted
from  essentially  the same factors  discussed  above  regarding  the results of
operation  for the nine  months  ended  September  30,  2002,  most  notably the
acquisitions of Community Resource Mortgage and the Bank of Ridgeway.

Net interest income

         Net interest  income  before  provision for loan losses for the quarter
ended September 30, 2002 increased to $3,975,000  compared to $2,770,000 for the
same period in 2001, an increase of 43.5% or $1,205,000. For the same period the
provision for loan losses was $239,000 compared to $180,000 for the 2001 period,
an increase of 32.8% or $59,000.


                                       16
<PAGE>


Interest Income

         Total  interest  income  for the  third  quarter  2002  was  $6,140,000
compared  with  $5,261,000  for the same  period  in 2001,  a 16.7% or  $879,000
increase.

         The  loan  portfolio  earned  $5,351,000  for the  third  quarter  2002
compared  to  $4,578,000  for the  same  period  of 2001,  a 16.9%  or  $773,000
increase.

         The  investment  portfolio  earned  $694,000 for the third quarter 2002
compared to $457,000 for the 2001 period, a 51.9% or $237,000 increase.

         Interest  bearing  deposits in other banks  contributed  $8,000 for the
third  quarter  2002  compared to $38,000  during the prior year,  a decrease of
78.9% or $30,000.

         Federal funds sold earned $87,000 the third quarter of 2002 compared to
$188,000 the prior year, a decrease of 53.7% or $101,000.


Interest expense

         Interest expense for the third quarter of 2002 was $2,165,000  compared
to the prior year's $2,491,000, a 13.1% or $326,000 decrease.

Non-interest income and expense

         Non-interest  income for the 2002  period was  $2,129,000  compared  to
$744,000 for the 2001 period, a 186% or $1,385,000 increase. Most of this change
is due to the mortgage company.  Non-interest expense was $3,440,000 compared to
$1,833,000, an 87.7% or $1,607,000 increase.


CHANGES IN FINANCIAL POSITION

Investment portfolio

         The  investment  portfolio is comprised of held to maturity  securities
and available for sale securities. CBI and its banks usually purchase short-term
issues  (ten  years  or  less)  of U. S  Treasury  and U. S.  Government  agency
securities for investment purposes.  At September 30, 2002, the held to maturity
portfolio totaled  $500,000,  unchanged from December 31, 2001. At September 30,
2002,  the  available  for  sale  portfolio  totaled  $58,830,000   compared  to
$43,207,000  at December  31,  2001,  an increase of 36.2% or  $15,623,000.  The
following chart summarizes the investment  portfolios at September 30, 2002, and
December 31, 2001.


                                       17
<PAGE>

<TABLE>
<CAPTION>
                                                                                          September 30, 2002
                                                                         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 agencies ..........................            $   500            $   502            $46,583             47,008
Tax exempt securities ..................................                  -                  -              9,115              9,724
Mortgage backed securities .............................                  -                  -                 49                 53
Other equity securities ................................                  -                  -              2,045              2,045
                                                                    -------            -------            -------            -------
Total ..................................................            $   500            $   502            $57,792            $58,830
                                                                    =======            =======            =======            =======

Unrealized gain (loss) .................................            $     2                               $ 1,038
                                                                    =======                               =======
</TABLE>

<TABLE>
<CAPTION>
                                                                                          December 31, 2001
                                                                          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 agencies ...........................            $ 500            $   500             $40,437            $40,415
Tax exempt securities ...................................                -                  -                 802                811
Other equity securities .................................                -                  -               1,981              1,981
                                                                     -----            -------             -------            -------
Total ...................................................            $ 500            $   500             $43,220            $43,207
                                                                     =====            =======             =======            =======

Unrealized (loss) .......................................            $   -                                $   (13)
                                                                     =====                                =======
</TABLE>


Loan portfolio

         The loan portfolio is primarily  consumer and small business  oriented.
At  September  30,  2002  the  loan  portfolio  was  $300,051,000   compared  to
$229,905,000  at  December  31,  2001,  a 30.5%  or  $70,146,000  increase.  The
following chart summarizes the loan portfolio at September 30, 2002 and December
31, 2001.

                                         Sept. 30, 2002    Dec. 31, 2001
                                         --------------    -------------
                                             (dollars in thousands)
Real estate .........................       $187,361          $146,559
Commercial ..........................         76,561            56,515
Loans to individuals ................         36,129            26,831
                                            --------          --------
Total ...............................       $300,051          $229,905
                                            ========          ========



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 September 30, 2002 and December 31, 2001.


                                       18
<PAGE>

                                            Sept. 30, 2002         Dec. 31, 2001
                                            --------------         -------------
                                                   (dollars in thousands)
Past due 90 days + accruing loans ........         $296                    $17
Non-accrual loans ........................         $954                   $281
Impaired loans (included in nonaccrual) ..         $954                   $281
Other real estate owned ..................         $  -                   $267

         Management  considers the past due and non-accrual amounts at September
30,  2002  to be  reasonable  in  relation  to the  size  of the  portfolio  and
manageable in the normal course of business.

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

Allowance for Loan Losses

         The Corporation  operates four  independent  community banks in central
South Carolina.  Under the provisions of various state and national banking laws
each board of  directors  is  responsible  for  determining  the adequacy of its
Bank's loan loss  allowance.  In addition,  each national Bank is supervised and
regularly examined by the Office of the Comptroller of the Currency of the U. S.
Treasury  Department.  Our state  chartered  bank is  supervised  and  regularly
examined by the Federal Deposit Insurance  Corporation and state bank examiners.
As a normal part of a safety and soundness examination examiners will assess and
comment on the adequacy of a bank's  allowance  for loan losses and may, in some
cases,  require  changes  in the  allowance.  The  allowance  presented  in this
discussion is on an aggregated basis.

         The nature of community  banking is such that the loan  portfolios will
be predominantly comprised of small and medium size business and consumer loans.
As community banks, there is a natural geographic  concentration of loans within
the Banks' respective  cities or counties.  Management at each Bank monitors the
loan  concentrations  and loan portfolio  quality on an ongoing basis including,
but not limited to: quarterly analysis of loan concentrations, monthly reporting
of past dues,  non-accruals,  and watch loans,  and quarterly  reporting of loan
charge-offs and recoveries. These efforts focus on historical experience and are
bolstered by quarterly analysis of local and state economic conditions, which is
part of the Banks'  assessment  of the  adequacy  of their  allowances  for loan
losses.

         Management  of each of the banks  reviews its allowance for loan losses
in three  broad  categories:  commercial,  real  estate and  installment  loans.
However,  management of each of the banks does not believe it would be useful to
maintain a separate  allowance for each category.  Instead management of each of
the banks assigns an estimated  risk  percentage  factor to each category in the
computation of the overall  allowance.  In general  terms,  the real estate loan
portfolio  is  subject  to the least  risk,  followed  by the  installment  loan
portfolio,  which in turn is followed by the  commercial  portfolio.  The Banks'
internal and external loan review programs will from time to time identify loans
that are subject to specific  weaknesses  and such loans will be reviewed  for a
specific loan loss allowance.

         Based on the current levels of non-performing  and other problem loans,
management  of each of the banks  believes  that loan  charge-offs  in 2002 will
exceed the 2001 levels as such loans progress  through the  collection  process.
Management believes that the allowance for loan losses, as of September 30, 2002
is sufficient to absorb the expected  charge-offs and provide adequately for the
inherent losses that remain in the loan  portfolio.  Management will continue to
closely  monitor the levels of  non-performing  and potential  problem loans and
address  the  weaknesses  in these  credits  to enhance  the amount of  ultimate
collection  or recovery of these  assets.  Management  considers  the levels and
trends in  non-performing  and past due loans in determining how historical loan
loss rates are adjusted.



                                       19
<PAGE>

         The aggregate  allowance for loan losses of the Banks and the aggregate
activity with respect to those allowances are summarized in the following table.

<TABLE>
<CAPTION>
                                                                     Nine months ended                            Nine months ended
                                                                    September 30, 2002        Dec. 31, 2001       September 30, 2001
                                                                    ------------------        -------------       ------------------
<S>                                                                        <C>                     <C>                     <C>
Allowance at beginning of period ...........................               $ 3,248                 $ 2,424                 $ 2,424
Provision expense ..........................................                   597                     678                     457
Net charge offs ............................................                  (348)                   (272)                   (120)
                                                                           -------                 -------                 -------
Allowance at end of period .................................               $ 3,497                 $ 2,830                 $ 2,761
                                                                           =======                 =======                 =======
Allowance / outstanding loans ..............................                  1.17%                   1.23%                   1.26%
</TABLE>

         In reviewing  the adequacy of the  allowance for loan losses at the end
of  each  period,  management  of  each  bank  considers  historical  loan  loss
experience,   current  economic   conditions,   loans  outstanding,   trends  in
non-performing  and  delinquent  loans,  and the quality of collateral  securing
problem loans. Based on these  considerations  management makes estimates on the
amount of loss inherent in the loan portfolio so that an adequate  allowance can
be  maintained.  After  charging off all known  losses,  management of each bank
considers the allowance adequate to provide for estimated losses inherent in the
loan portfolio at September 30, 2002.


Intangible assets

         CBI has adopted FASB No. 142, Goodwill and Other Intangible  Assets, as
of January 1, 2002. As of September  30, 2002 the balance in  intangible  assets
totaled  $7,958,000,  compared to $921,000 at December 31, 2001. Of the balance,
approximately  $7 million  represents  goodwill and the core deposit  intangible
associated with the acquisition of the Ridgeway bank (more fully discussed later
in this  document)  and the $921,000  represents  goodwill  associated  with the
acquisition of Community Resource Mortgage.


Deposits

         Deposits   were   $334,125,000   at  September  30,  2002  compared  to
$255,433,000 at December 31, 2001, an increase of 30.8% or $78,692,000.

         Time deposits  greater than $100,000 were  $70,082,000 at September 30,
2002  compared to  $51,374,000  at December  31,  2001,  an increase of 36.4% or
$18,708,000. This category of deposits is generally more sensitive to changes in
interest rates than other categories and consequently may be a somewhat volatile
funding  source.  Slightly  less than half the increase in balances is accounted
for by the  addition  of the  Ridgeway  bank,  most of the  remainder  is due to
increases at the Sumter bank.



                                       20
<PAGE>

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,  Sumter National Bank,  Florence  National
Bank and the Bank of Ridgeway 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 and a held to maturity
investment  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 through its banking subsidiaries also maintains federal funds lines
of credit with correspondent  banks, and is able to borrow from the Federal Home
Loan Bank and from the Federal Reserve's discount window.

         CBI through  its banking  subsidiaries  has a  demonstrated  ability to
attract deposits from its markets.  Deposits have grown from $30 million in 1989
to over $334  million  in 2002.  This 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 September 30, 2002 CBI
had  approximately  $29.9 million and $20 million in certificates of deposit and
other interest bearing  liabilities  maturing in one to five years and over five
years, respectively. CBI's assets maturing or repricing in the same periods were
$162 million and $46 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.



                                       21
<PAGE>



Capital resources

         As  summarized  in the table below,  CBI  maintains a well  capitalized
position.

<TABLE>
<CAPTION>
                                                                                                                  Minimum required
                                                                                                                    for capital
                                                                              Sept. 30, 2002       Dec. 31, 2001      adequacy
                                                                              --------------       -------------      --------
<S>                                                                               <C>               <C>                  <C>
Tier 1 capital to average total assets ...............................             8.41%             8.20%               4.00%
Tier 1 capital to risk weighted assets ...............................            11.20%            11.10%               4.00%
Total capital to risk weighted assets ................................            12.34%            12.30%               6.00%
</TABLE>

         In the opinion of management,  the Corporation's  current and projected
capital positions meet all applicable requirements and are adequate.

Dividends

         CBI  declared  and paid a  quarterly  cash  dividend of eight cents per
share for each of the first  three  quarters  of 2002.  The total  cost of these
dividends was $873,000.


Business Combination

     On July  1,  2002  CBI  acquired  100%  of the  common  stock  of  Ridgeway
Bancshares Inc., the parent of the Bank of Ridgeway. The contract purchase price
was one million  shares of CBI common stock,  with a market value at the time of
the announcement of $12,020,000, and $4 million in cash. CBI incurred additional
costs  associated  with the  acquisition of $621,000.  The results of Ridgeway's
operations have been included in the  consolidated  financial  statements  since
that date. The Bank of Ridgeway is the oldest state chartered  community bank in
the state of South  Carolina  and is  operating  as one of four  community  bank
subsidiaries of CBI. As a result of the acquisition,  CBI expects to improve its
position in the South Carolina community banking market.

         The following  table  summarizes the estimated fair market value of the
assets acquired and the liabilities assumed at the date of the acquisition, July
1, 2002. CBI obtained the services of an  independent  firm to assist in valuing
the loans and deposits.  Local real estate appraisers were used to determine the
fair value of the bank's real property.











                                       22
<PAGE>



                 $ in thousands                                       Fair value
                                                                      ----------
ASSETS
  Cash  and federal funds .................................              $ 9,774
  Investments .............................................               24,727
  Loans, net of allowance .................................               44,078
  Premises and equipment ..................................                1,021
  Goodwill ................................................                3,400
  Core deposit intangible .................................                3,698
  Other assets ............................................                  599
                                                                         -------
Total assets acquired .....................................              $87,297
                                                                         -------

LIABILITIES
  Deposits ................................................              $66,697
  Short-term borrowings ...................................                3,600
  Other liabilities .......................................                4,359
                                                                         -------
Total liabilities assumed .................................               74,656
                                                                         -------

Net assets acquired .......................................              $12,641
                                                                         =======

         The core deposit  intangible of $3.7 million will be amortized over its
estimated  useful life of 15 years.  The goodwill amount of $3.4 million will be
periodically evaluated for impairment.










                                       23
<PAGE>

         Presented below are the pro forma results of operations for the year to
date and quarter ended September 30, 2002 and the corresponding periods for 2001
as though  the  business  combination  had been  completed  on the first day the
reported period.

<TABLE>
<CAPTION>
                                                                        2002                                    2001
For the nine months ended
     September 30,                                        CBI            RW         Total*         CBI           RW           Total
                                                          ---            --         ------         ---           --           -----
<S>                                                     <C>            <C>          <C>           <C>            <C>          <C>
Total interest and noninterest income ..........        21,470         2,693        24,163        18,187         4,524        22,711
Net interest income ............................         9,869         1,674        11,543         8,126         2,299        10,425
Net income .....................................         3,936           410         4,346         2,793           791         3,584
EPS ............................................                                      1.09                                      0.91
</TABLE>

<TABLE>
<CAPTION>
                                                                        2002                                    2001
For the three months ended
     September 30,                                        CBI            RW         Total*         CBI           RW           Total
                                                          ---            --         ------         ---           --           -----
<S>                                                                                  <C>           <C>           <C>           <C>
Total interest and noninterest income ..........         6,902         1,367         8,269         6,005         1,477         7,482
Net interest income ............................         3,097           878         3,975         2,770           785         3,555
Net income .....................................         1,309           291         1,600           962           270         1,232
EPS ............................................                                      0.37                                      0.36
</TABLE>
* CBI total includes Ridgeway results for three months ended Sept. 30, 2002
** Total is from the statements of income



Item 3. Quantitative and Qualitative Disclosures about Market Risk

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

         Achieving  consistent growth in net interest income is the primary goal
of the  Corporation's  asset/liability  function.  The  Corporation  attempts to
control the mix and maturities of assets and  liabilities to achieve  consistent
growth in net interest  income despite  changes in market  interest  rates.  The
Corporation seeks to accomplish this goal while maintaining  adequate  liquidity
and capital.  Management believes that the Corporation's  asset/liability mix is
sufficiently  balanced  so that the effect of  interest  rates  moving in either
direction is not expected to be significant over time.

                                       24
<PAGE>

         The Corporation's  Asset/Liability Committee uses a simulation model to
assist in  achieving  consistent  growth in net interest  income while  managing
interest rate risk.  The model takes into account  interest rate changes as well
as changes in the mix and volume of assets and liabilities.  The model simulates
the  Corporation's  balance sheet and income  statement under several  different
rate  scenarios.  The model's inputs (such as interest rates and levels of loans
and  deposits)  are  updated  on a  quarterly  basis in order to obtain the most
accurate  projection  possible.  The  projection  presents  information  over  a
twelve-month  period. It reports a base case in which interest rates remain flat
and reports  variations  that occur when rates increase and decrease 100 and 200
basis points. According to the model as of September 30, 2002 the Corporation is
positioned  so that net interest  income would be expected to increase  $363,000
and net income would be expected to increase  $224,000 in the next twelve months
if interest rates rise 100 basis points.  Conversely,  net interest income would
be  expected  to decline  $363,000  and net income  would be expected to decline
$224,000 in the next twelve  months if interest  rates decline 100 basis points.
Computation of  prospective  effects of  hypothetical  interest rate changes are
based on numerous  assumptions,  including  relative  levels of market  interest
rates and loan prepayment, and should not be relied upon as indicative of actual
results.   Further,   the  computations  do  not  contemplate  any  actions  the
Corporation could undertake in response to changes in interest rates.

         As of  September  30,  2002 there was no  significant  change  from the
interest rate  sensitivity  analysis for the various  changes in interest  rates
calculated  as of December 31, 2001.  The foregoing  disclosures  related to the
market risk of the Corporation  should be read in connection  with  Management's
Discussion and Analysis of Financial Position and Results of Operations included
in the 2001 Annual Report on Form 10-K.

Item 4. Controls and Procedures

(a) Based on their evaluation of the issuer's disclosure controls and procedures
(as defined in 17 C.F.R. Sections  240.13a-14(c) and 240.15d-14(c)) as of a date
within 90 days prior to the filing of this quarterly report,  the issuer's chief
executive  officer and chief financial  officer concluded that the effectiveness
of such controls and procedures was adequate.

(b) There were no significant  changes in the issuer's  internal  controls or in
other factors that could  significantly  affect these controls subsequent to the
date of their  evaluation,  including  any  corrective  actions  with  regard to
significant deficiencies and material weaknesses, other than the following item.
In September the CBI audit  committee and board of directors  conducted a review
of the company's risk management systems. They elected to increase the financial
resources devoted to loan review,  compliance and internal  auditing.  The Board
and management consider this to be an enhancement of internal controls.


                                       25
<PAGE>


Part II--Other Information

Item 6.  Exhibits and Reports on Form 8-K

(a) Exhibit Index

Exhibit No.(from          Description
item 601 of S-K)
       10                 Amended and Restated Guaranty Agreement, dated
                          October 7, 2002


b) Reports on Form 8-K.

     1.   A Form  8-K was  filed  July 15,  2002 to  report  pursuant  to item 2
          thereof the Corporation's acquisition of Ridgeway Bancshares, Inc.

     2.   Amendment No. 1 to the above  referenced  8-K was filed  September 16,
          2002 to provide financial statements required by Items 2 and 7 of Form
          8-K in  conncection  with the  Corporation's  acquisition  of Ridgeway
          Bancshares, Inc.


Signatures

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                                       DATED: November 12,  2002
COMMUNITY BANKSHARES, INC.

By:  s/  E. J. Ayers, Jr.
    ----------------------
         E. J. Ayers, Jr.,
         Chief Executive Officer

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




                                       26
<PAGE>


                                 CERTIFICATIONS

         I, E. J. Ayers, Jr., certify that:

         1. I have  reviewed  this  quarterly  report on Form 10-Q of  Community
Bankshares Inc.;

         2. Based on my knowledge,  this  quarterly  report does not contain any
untrue  statement of a material fact or omit to state a material fact  necessary
to make the  statements  made,  in light of the  circumstances  under which such
statements  were made, not misleading with respect to the period covered by this
quarterly report;

         3. Based on my knowledge, the financial statements, and other financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

         4. The registrant's other certifying officers and I are responsible for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

         a) designed  such  disclosure  controls and  procedures  to ensure that
material  information  relating to the  registrant,  including its  consolidated
subsidiaries, is made known to us by others within those entities,  particularly
during the period in which this quarterly report is being prepared;

         b) evaluated the effectiveness of the registrant's  disclosure controls
and  procedures  as of a date  within 90 days prior to the  filing  date of this
quarterly report (the "Evaluation Date"); and

         c)  presented  in this  quarterly  report  our  conclusions  about  the
effectiveness of the disclosure  controls and procedures based on our evaluation
as of the Evaluation Date;

         5. The  registrant's  other  certifying  officers and I have disclosed,
based on our most recent evaluation,  to the registrant's auditors and the audit
committee  of  registrant's  board  of  directors  (or  persons  performing  the
equivalent functions):

         a) all significant  deficiencies in the design or operation of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and have  identified  for the
registrant's auditors any material weaknesses in internal controls; and

         b) any fraud,  whether or not  material,  that  involves  management or
other  employees  who  have a  significant  role  in the  registrant's  internal
controls; and

         6. The registrant's  other certifying  officers and I have indicated in
this quarterly report whether or not there were significant  changes in internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.



Date: November 12, 2002                    s/E. J. Ayers, Jr.
                                           -----------------------------------
                                           E. J. Ayers, Jr.

                                           Chairman and CEO


                                       27
<PAGE>


                                 CERTIFICATIONS

         I, William W. Traynham, certify that:

         1. I have  reviewed  this  quarterly  report on Form 10-Q of  Community
Bankshares Inc.;

         2. Based on my knowledge,  this  quarterly  report does not contain any
untrue  statement of a material fact or omit to state a material fact  necessary
to make the  statements  made,  in light of the  circumstances  under which such
statements  were made, not misleading with respect to the period covered by this
quarterly report;

         3. Based on my knowledge, the financial statements, and other financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

         4. The registrant's other certifying officers and I are responsible for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

         a) designed  such  disclosure  controls and  procedures  to ensure that
material  information  relating to the  registrant,  including its  consolidated
subsidiaries, is made known to us by others within those entities,  particularly
during the period in which this quarterly report is being prepared;

         b) evaluated the effectiveness of the registrant's  disclosure controls
and  procedures  as of a date  within 90 days prior to the  filing  date of this
quarterly report (the "Evaluation Date"); and

         c)  presented  in this  quarterly  report  our  conclusions  about  the
effectiveness of the disclosure  controls and procedures based on our evaluation
as of the Evaluation Date;

         5. The  registrant's  other  certifying  officers and I have disclosed,
based on our most recent evaluation,  to the registrant's auditors and the audit
committee  of  registrant's  board  of  directors  (or  persons  performing  the
equivalent functions):

         a) all significant  deficiencies in the design or operation of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and have  identified  for the
registrant's auditors any material weaknesses in internal controls; and

         b) any fraud,  whether or not  material,  that  involves  management or
other  employees  who  have a  significant  role  in the  registrant's  internal
controls; and

         6. The registrant's  other certifying  officers and I have indicated in
this quarterly report whether or not there were significant  changes in internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.



Date: November 12, 2002                s/William W. Traynham
                                       -----------------------------------
                                       William W. Traynham

                                       President and CFO



                                       28
<PAGE>

                                  EXHIBIT INDEX

Exhibit No. (from               Description
Item 601 of S-K)

     10                         Amended and Restated Guaranty Agreement, Dated
                                October 7, 2002











                                       29