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 June 30, 2008       Commission File No. 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 No.)
  incorporation or organization)


                               102 Founders Court
                        Orangeburg, South Carolina 29118
--------------------------------------------------------------------------------
               (Address of principal executive offices, 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 a large  accelerated
filer, an accelerated  filer, a  non-accelerated  filer, or a smaller  reporting
company.  See definitions of "large accelerated filer,"  "accelerated filer" and
"smaller reporting company" in Rule 12b-2 of the Exchange Act.
(Check one):

         Large accelerated filer   [ ]          Accelerated filer          [ ]

         Non-accelerated filer     [ ]          Smaller reporting company  [X]
         (Do not check if a smaller reporting company)

         Indicate by check mark whether the  registrant  is a shell  company (as
defined in Rule 12b-2 of the Exchange Act).

         Yes [ ] No [X]

         Indicate  the  number of  shares  outstanding  of each of the  issuer's
classes of common stock, as of the latest practicable date: Common Stock, no par
or stated value, 4,450,556 shares outstanding on July 15, 2008.



<PAGE>


                           COMMUNITY BANKSHARES, INC.

                                    FORM 10-Q

                                      Index
<TABLE>
<CAPTION>

                                                                                                                     Page
PART I -          FINANCIAL INFORMATION

Item 1.           Financial Statements

<S>               <C>                                                                                                  <C>
                  Consolidated Balance Sheets                                                                           3
                  Consolidated Statements of Income                                                                     4
                  Consolidated Statements of Changes in Shareholders' Equity                                            5
                  Consolidated Statements of Cash Flows                                                                 6
                  Notes to Unaudited Consolidated Financial Statements                                                  7

Item 2.           Management's Discussion and Analysis of Financial Condition and Results of Operations                13
Item 3.           Quantitative and Qualitative Disclosures About Market Risk                                           26
Item 4T.          Controls and Procedures                                                                              26

PART II -         OTHER INFORMATION

Item 2.           Unregistered Sales of Equity Securities and Use of Proceeds                                          27
Item 4.           Submission of Matters to a Vote of Security Holders                                                  27
Item 6.           Exhibits                                                                                             28

SIGNATURES                                                                                                             29
</TABLE>




                                       2
<PAGE>


                         PART I - FINANCIAL INFORMATION

Item 1. - Financial Statements

COMMUNITY BANKSHARES, INC.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
                                                                                                      (Unaudited)
                                                                                                        June 30,        December 31,
                                                                                                          2008              2007
                                                                                                          ----              ----
                                                                                                          (Dollars in thousands)
Assets
<S>                                                                                                    <C>                <C>
     Cash and due from banks .................................................................         $  23,860          $  18,701
     Federal funds sold ......................................................................             7,631              6,985
                                                                                                       ---------          ---------
            Total cash and cash equivalents ..................................................            31,491             25,686
     Interest-bearing deposits with other banks ..............................................               364                911
     Securities available-for-sale ...........................................................            78,463             57,868
     Securities held-to-maturity (estimated fair value $1,650 for 2008
          and $1,650 for 2007) ...............................................................             1,650              1,650
     Other investments .......................................................................             3,768              3,209
     Loans held for sale .....................................................................             5,392              3,509
     Loans receivable ........................................................................           446,268            464,039
         Less, allowance for loan losses .....................................................            (5,939)            (5,343)
                                                                                                       ---------          ---------
            Net loans ........................................................................           440,329            458,696
     Premises and equipment - net ............................................................            10,904             10,820
     Accrued interest receivable .............................................................             3,212              3,547
     Net deferred income tax assets ..........................................................             2,079              1,357
     Goodwill ................................................................................             4,321              4,321
     Core deposit intangible assets ..........................................................             2,222              2,345
     Prepaid expenses and other assets .......................................................             2,690              2,648
                                                                                                       ---------          ---------
            Total assets .....................................................................         $ 586,885          $ 576,567
                                                                                                       =========          =========
Liabilities
     Deposits
         Noninterest bearing .................................................................         $  59,342          $  57,738
         Interest-bearing ....................................................................           422,998            423,969
                                                                                                       ---------          ---------
            Total deposits ...................................................................           482,340            481,707
     Short-term borrowings ...................................................................             6,333              9,893
     Long-term debt ..........................................................................            42,174             29,679
     Accrued interest payable ................................................................             1,193              1,501
     Accrued expenses and other liabilities ..................................................             1,747                142
                                                                                                       ---------          ---------
            Total liabilities
                                                                                                         533,787            522,922
                                                                                                       ---------          ---------
Shareholders' equity
     Common stock - no par value; 12,000,000 shares authorized; issued and
         outstanding - 4,450,556 for 2008 and 4,446,456 for 2007 .............................            30,399             30,505
     Retained earnings .......................................................................            23,773             22,812
     Accumulated other comprehensive income ..................................................            (1,074)               328
                                                                                                       ---------          ---------
            Total shareholders' equity .......................................................            53,098             53,645
                                                                                                       ---------          ---------
            Total liabilities and shareholders' equity .......................................         $ 586,885          $ 576,567
                                                                                                       =========          =========
</TABLE>

See accompanying notes to unaudited consolidated financial statements.

                                       3
<PAGE>


COMMUNITY BANKSHARES, INC.
Consolidated Statements of Income
<TABLE>
<CAPTION>
                                                                                                (Unaudited)
                                                                                            Period Ended June 30,
                                                                                Three Months                      Six Months
                                                                                ------------                      ----------
                                                                           2008              2007            2008             2007
                                                                           ----              ----            ----             ----
                                                                                (Dollars in thousands, except per share)

Interest and dividend income
<S>                                                                       <C>              <C>              <C>              <C>
     Loans, including fees .....................................          $ 7,728          $ 8,628          $16,169          $16,785
     Interest bearing deposits with other banks ................                1               13               12               46
     Debt securities ...........................................              929              984            1,675            2,000
     Dividends .................................................               63               46              122               93
     Federal funds sold ........................................               89               80              270              260
                                                                          -------          -------          -------          -------
            Total interest and dividend income .................            8,810            9,751           18,248           19,184
                                                                          -------          -------          -------          -------

Interest expense
     Deposits
         Time deposits $100M and over ..........................            1,055            1,080            2,298            2,073
         Other deposits ........................................            1,823            2,692            4,056            5,337
                                                                          -------          -------          -------          -------
            Total interest expense on deposits .................            2,878            3,772            6,354            7,410
     Short-term borrowings .....................................               29              187               88              303
     Long-term debt ............................................              461              475              952              912
                                                                          -------          -------          -------          -------
            Total interest expense .............................            3,368            4,434            7,394            8,625
                                                                          -------          -------          -------          -------

Net interest income ............................................            5,442            5,317           10,854           10,559
Provision for loan losses ......................................              540              175            1,010              550
                                                                          -------          -------          -------          -------
Net interest income after provision ............................            4,902            5,142            9,844           10,009
                                                                          -------          -------          -------          -------

Noninterest income
     Service charges on deposit accounts .......................              892              939            1,819            1,830
     Mortgage loan brokerage income ............................              473              744              995            1,399
     Net securities gains ......................................                -                -               34                2
     Gains on sales of other investments .......................                -              712                -              712
     Other .....................................................              332              372              616              649
                                                                          -------          -------          -------          -------
            Total noninterest income ...........................            1,697            2,767            3,464            4,592
                                                                          -------          -------          -------          -------

Noninterest expenses
     Salaries and employee benefits ............................            2,918            3,084            5,765            6,018
     Premises and equipment ....................................              578              619            1,201            1,181
     Advertising ...............................................              188              138              349              281
     Supplies ..................................................               97              110              194              235
     Other .....................................................            1,320            1,650            2,578            3,000
                                                                          -------          -------          -------          -------
            Total noninterest expenses .........................            5,101            5,601           10,087           10,715
                                                                          -------          -------          -------          -------

Income before income taxes .....................................            1,498            2,308            3,221            3,886
Income tax expense .............................................              571              838            1,193            1,411
                                                                          -------          -------          -------          -------
Net income .....................................................          $   927          $ 1,470          $ 2,028          $ 2,475
                                                                          =======          =======          =======          =======

Per share
     Net income ................................................          $  0.21          $  0.33          $  0.46          $  0.56
     Net income - diluted ......................................             0.20             0.32             0.45             0.55
     Cash dividends declared ...................................             0.12             0.12             0.24             0.24
</TABLE>

See accompanying notes to unaudited consolidated financial statements.


                                       4
<PAGE>

COMMUNITY BANKSHARES, INC.
Consolidated Statements of Changes in Shareholders' Equity

<TABLE>
<CAPTION>
                                                                   (Unaudited)

                                                                   Common Stock
                                                                   ------------                          Accumulated
                                                             Number of                     Retained  Other Comprehensive
                                                              Shares         Amount        Earnings      Income (Loss)       Total
                                                              ------         ------        --------      -------------       -----
                                                                           (Dollars in thousands, except per share)

<S>                                                           <C>           <C>            <C>            <C>            <C>
Balance, January 1, 2007 ................................     4,441,220     $   30,603     $   22,382     $     (361)    $   52,624
                                                                                                                         ----------
Comprehensive income
    Net income ..........................................             -              -          2,475              -          2,475
                                                                                                                         ----------
    Unrealized holding gains and (losses)
       on available-for-sale securities arising
       during the period, net of income taxes of $174 ...             -              -              -           (351)          (351)
    Reclassification adjustment for losses (gains)
       realized in income, net of income taxes of $1 ....             -              -              -             (1)            (1)
                                                                                                                         ----------
        Total other comprehensive income (loss) ... .....             -              -              -              -           (352)
                                                                                                                         ----------
          Total comprehensive income ....................             -              -              -              -          2,123
                                                                                                                         ----------
Share-based compensation ................................             -             27              -              -             27
Proceeds of sale of common stock ........................           500              8              -              -              8
Exercise of employee stock options ......................        41,836            406              -              -            406
Cash dividends declared, $.24 per share .................             -              -         (1,075)             -         (1,075)
                                                             ----------     ----------     ----------     ----------     ----------
Balance, June 30, 2007 ..................................     4,483,556     $   31,044     $   23,782     $     (713)    $   54,113
                                                             ==========     ==========     ==========     ==========     ==========


Balance, January 1, 2008 ................................     4,446,456     $   30,505     $   22,812     $      328     $   53,645
                                                                                                                         ----------
Comprehensive income
    Net income ..........................................             -              -          2,028              -          2,028
                                                                                                                         ----------
    Unrealized holding gains and (losses)
       on available-for-sale securities arising
       during the period, net of income taxes of $711 ...             -              -              -         (1,380)        (1,380)
    Reclassification adjustment for losses (gains)
       realized in income, net of income taxes of $12 ...             -              -              -            (22)           (22)
                                                                                                                         ----------
        Total other comprehensive income (loss) .........             -              -              -              -         (1,402)
                                                                                                                         ----------
          Total comprehensive income ....................             -              -              -              -            626
                                                                                                                         ----------
Share-based compensation ................................             -             18              -              -             18
Proceeds of sale of common stock ........................        10,600            119              -              -            119
Exercise of employee stock options ......................         1,000             11              -              -             11
Common stock repurchased and cancelled ..................       (20,700)          (254)             -              -           (254)
Restricted stock grants to employees ....................        13,200              -              -              -              -
Cash dividends declared, $.24 per share .................             -              -         (1,067)             -         (1,067)
                                                             ----------     ----------     ----------     ----------     ----------
Balance, June 30, 2008 ..................................     4,450,556     $   30,399     $   23,773     $   (1,074)    $   53,098
                                                             ==========     ==========     ==========     ==========     ==========
</TABLE>



See accompanying notes to unaudited consolidated financial statements.

                                       5
<PAGE>

COMMUNITY BANKSHARES, INC.
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
                                                                                                               (Unaudited)
                                                                                                            Six Months Ended
                                                                                                                June 30,
                                                                                                                --------
                                                                                                         2008                 2007
                                                                                                         -----                ----
                                                                                                          (Dollars in thousands)
Operating activities
<S>                                                                                                    <C>                 <C>
     Net income ............................................................................           $  2,028            $  2,475
     Adjustments to reconcile net income to net
         cash provided by operating activities
            Provision for loan losses ......................................................              1,010                 550
            Depreciation and amortization ..................................................                571                 537
            Net accretion of securities ....................................................                (86)                (15)
            Net securities gains ...........................................................                (34)                 (2)
            Gains on sales of other investments ............................................                  -                (712)
            Proceeds of sales of loans held for sale .......................................             48,533              77,439
            Originations of loans held for sale ............................................            (49,421)            (75,926)
            Gains on sales of loans held for sale ..........................................               (995)             (1,399)
            Decrease in accrued interest receivable ........................................                335                 284
            (Increase) decrease in other assets ............................................                (94)                868
            Gains on sales of foreclosed assets ............................................               (101)                (48)
            Decrease in accrued interest payable ...........................................               (308)                (53)
            Increase (decrease) in other liabilities .......................................              1,458                (647)
            Provision for off balance sheet credit exposure ................................                160                 144
            Share-based compensation .......................................................                 18                  27
                                                                                                       --------            --------
                Net cash provided by operating activities ..................................              3,074               3,522
                                                                                                       --------            --------

Investing activities
     Net decrease in interest-bearing deposits with other banks ............................                547               1,477
     Purchases of available-for-sale securities ............................................            (60,371)             (1,966)
     Maturities, calls and paydowns of available-for-sale securities .......................             37,772               7,546
     Proceeds of sales of other investments ................................................                116               1,182
     Purchases of other investments ........................................................               (675)               (338)
     Net decrease (increase) in loans made to customers ....................................             17,280             (38,831)
     Purchases of premises and equipment ...................................................               (532)               (530)
     Proceeds from sales and other disposals of premises and equipment .....................                  -                  44
     Proceeds from sales of foreclosed assets ..............................................                217                 578
                                                                                                       --------            --------
                Net cash used by investing activities ......................................             (5,646)            (30,838)
                                                                                                       --------            --------

Financing activities
     Net increase (decrease) in deposits ...................................................                633              (3,376)
     Net (decrease) increase in short-term borrowings ......................................             (3,560)              6,000
     Proceeds from issuing long-term debt ..................................................             15,000               7,500
     Repayment of long-term debt ...........................................................             (2,505)             (4,005)
     Exercise of employee stock options ....................................................                 11                 406
     Sale of common stock ..................................................................                119                   8
     Common stock repurchased and cancelled ................................................               (254)                  -
     Cash dividends paid ...................................................................             (1,067)             (1,075)
                                                                                                       --------            --------
                Net cash provided by financing activities ..................................              8,377               5,458
                                                                                                       --------            --------
Increase (decrease) in cash and cash equivalents ...........................................              5,805             (21,858)
Cash and cash equivalents, beginning of period .............................................             25,686              46,724
                                                                                                       --------            --------
Cash and cash equivalents, end of period ...................................................           $ 31,491            $ 24,866
                                                                                                       ========            ========
</TABLE>


See accompanying notes to unaudited consolidated financial statements.


                                       6
<PAGE>

COMMUNITY BANKSHARES, INC.
Consolidated Statements of Cash Flows (continued)
<TABLE>
<CAPTION>
                                                                                                               (Unaudited)
                                                                                                            Six Months Ended
                                                                                                                 June 30,
                                                                                                         2008                 2007
                                                                                                         -----                ----
                                                                                                           (Dollars in thousands)
Supplemental disclosures of cash flow information
<S>                                                                                                      <C>                  <C>
     Cash payments for interest ..........................................................               $7,702               $8,678
                                                                                                         ======               ======
     Cash payments for income taxes ......................................................               $  897               $1,625
                                                                                                         ======               ======

Supplemental disclosures of non-cash investing activities
     Transfers of loans receivable to foreclosed assets ..................................               $   77               $1,127
                                                                                                         ======               ======
</TABLE>

See accompanying notes to unaudited consolidated financial statements.


COMMUNITY BANKSHARES, INC.

Notes to Unaudited Consolidated Financial Statements

Accounting  Principles - A summary of  significant  accounting  policies and the
audited  financial  statements  for 2007 are included in  Community  Bankshares,
Inc.'s (the  "Company" or "CBI")  Annual  Report on Form 10-K for the year ended
December 31, 2007 filed with the  Securities  and Exchange  Commission.  Certain
amounts in the 2007 financial  statements  have been  reclassified to conform to
the current presentation.

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 2007 Annual Report on Form 10-K.

Nonperforming  Loans - As of June 30, 2008,  there were $8,976,000 in nonaccrual
loans and $7,000 in loans 90 or more days past due and still accruing interest.

Earnings Per Share - Basic earnings per share is computed by dividing net income
applicable  to common  shares by the weighted  average  number of common  shares
outstanding.  Diluted earnings per share is computed by dividing  applicable net
income by the weighted  average  number of shares  outstanding  and any dilutive
potential  common  shares and  dilutive  stock  options.  It is assumed that all
dilutive  stock  options are  exercised at the beginning of each period and that
the proceeds are used to purchase  shares of the  Company's  common stock at the
average  market  price  during the  period.  Net income per share  basic and net
income per share, assuming dilution, were computed as follows:


                                       7
<PAGE>

<TABLE>
<CAPTION>
                                                                                            (Unaudited)
                                                                                        Period Ended June 30,
                                                                                        ---------------------
                                                                         Three Months                           Six Months
                                                                         ------------                           ----------
                                                                    2008               2007                2008              2007
                                                                    ----               ----                ----              ----
                                                                             (Dollars in thousands, except per share amounts)

Net income per share, basic
<S>                                                              <C>                <C>                <C>                <C>
  Numerator - net income ...............................         $      927         $    1,470         $    2,028         $    2,475
                                                                 ==========         ==========         ==========         ==========
  Denominator
     Weighted average common shares
       issued and outstanding ..........................          4,453,360          4,476,229          4,451,408          4,462,464
                                                                 ==========         ==========         ==========         ==========

       Net income per share, basic .....................         $      .21         $      .33         $      .46         $      .56
                                                                 ==========         ==========         ==========         ==========

Net income per share, assuming dilution
  Numerator - net income ...............................         $      927         $    1,470         $    2,028         $    2,475
                                                                 ==========         ==========         ==========         ==========
  Denominator
     Weighted average common shares
       issued and outstanding ..........................          4,453,360          4,476,229          4,451,408          4,462,464
     Effect of dilutive stock options ..................             96,660             49,123             80,049             52,981
                                                                 ----------         ----------         ----------         ----------
               Total shares ............................          4,550,020          4,525,352          4,531,457          4,515,445
                                                                 ==========         ==========         ==========         ==========

       Net income per share, assuming dilution .........         $      .20         $      .32         $      .45         $      .55
                                                                 ==========         ==========         ==========         ==========
</TABLE>

Stock  Based  Compensation  -  Effective  January 1,  2006,  the  Company  began
accounting  for  compensation  expenses  related  to stock  options  granted  to
employees and directors  under the  recognition  and  measurement  principles of
Statement of  Accounting  Standards  No.  123(R)  "Share-Based  Payment"  ("SFAS
123(R)")  using the modified  prospective  application  method.  The Company had
previously  elected to continue using the  methodology of Accounting  Principles
Board Opinion No. 25 ("APB No. 25"), "Accounting for Stock Issued to Employees,"
to account for compensation  expenses related to stock-based  compensation until
the mandatory effective date for SFAS 123(R).

         On March 31, 2008,  the Company  awarded  13,200  shares of  restricted
stock and 45,650 stock  appreciation  rights ("SARS") to certain employees under
the 2007 Equity Plan.  The restricted  shares will vest in five years.  The SARs
will vest 20% per year over the next five  years.  Recognition  of  compensation
expense  for these  awards  began in the second  quarter  of 2008.  Accordingly,
$18,000 of such  expenses are included in salaries and employee  benefits in the
statements of income. The Company's 2007 Equity  Compensation Plan provides that
in the event of a change in control,  such as the pending merger plan with First
Citizens discussed below, outstanding and unvested options, SARs, or other types
of equity compensation become immediately vested.

Variable  Interest  Entity - On March 8, 2004,  CBI  sponsored the creation of a
Variable Interest Entity ("VIE"), SCB Capital Trust I (the "Trust"),  and is the
sole owner of the common  securities issued by the Trust. On March 10, 2004, the
Trust issued  $10,000,000 in floating rate capital  securities.  The proceeds of
this issuance, and the amount of CBI's capital investment,  were used to acquire
$10,310,000   principal  amount  of  CBI's  floating  rate  junior  subordinated
deferrable  interest debt  securities  ("Debentures")  due April 7, 2034,  which
securities,  and the accrued interest  thereon,  now constitute the Trust's sole
assets.  The  interest  rate  associated  with  the  debt  securities,  and  the
distribution  rate  on the  common  securities  of the  Trust,  was  established
initially at 3.91% and is  adjustable  quarterly at 3 month LIBOR plus 280 basis
points.  The index  rate  (LIBOR)  may not be lower  than  1.11%.  CBI may defer


                                       8
<PAGE>

interest payments on the Debentures for up to twenty consecutive  quarters,  but
not beyond the stated  maturity date of the  Debentures.  In the event that such
interest payments are deferred by CBI, the Trust may defer  distributions on the
common  securities.  In such an event, CBI would be restricted in its ability to
pay  dividends on its common stock and to perform under other  obligations  that
are not senior to the junior subordinated Debentures.

         The  Debentures are redeemable at par at the option of CBI, in whole or
in part, on any interest  payment date on or after April 7, 2009.  Prior to that
date,  the  Debentures  are  redeemable  at 105% of par upon the  occurrence  of
certain  events  that would  have a  negative  effect on the Trust or that would
cause it to be required to be  registered  as an  investment  company  under the
Investment  Company Act of 1940 or that would cause trust  preferred  securities
not to be eligible to be treated as Tier 1 capital by the Federal Reserve Board.
Upon repayment or redemption of the Debentures,  the Trust will use the proceeds
of the transaction to redeem an equivalent amount of trust preferred  securities
and trust common securities.  The Trust's  obligations under the trust preferred
securities are  unconditionally  guaranteed by CBI. In accordance with Financial
Accounting Standards Board  Interpretation  46(R), the Trust is not consolidated
in the Company's financial statements.

         The  Company's  investment  in the  Trust is  carried  at cost in other
assets and the  debentures  are included in long-term  debt in the  consolidated
balance sheet.

Fair Value Measurements

         The Company implemented Statement of Financial Accounting Standards No.
157, "Fair Value Measurements," ("SFAS No. 157") as required on January 1, 2008.
SFAS No. 157  defines  fair value as the price that would be received to sell an
asset or paid to  transfer a  liability  in an orderly  fashion  between  market
participants at the measurement  date, and establishes a framework for measuring
fair  value.  It  also  establishes  a  three-level  hierarchy  for  fair  value
measurements  based upon the transparency of inputs to the valuation of an asset
or liability as of the measurement  date,  eliminates the consideration of large
position discounts for financial instruments quoted in active markets,  requires
consideration  of the Company's  creditworthiness  when valuing its liabilities,
and expands disclosures about instruments  measured at fair value. The following
is a summary of the measurement  attributes  applicable to financial  assets and
liabilities that are measured at fair value on a recurring basis:

<TABLE>
<CAPTION>
                                                                     Fair Value Measurement at Reporting Date Using
                                                                     ----------------------------------------------
                                                                  Quoted Prices
                                                                     in Active         Significant
                                                                    Markets for           Other            Significant
                                                                     Identical         Observable         Unobservable
                                                                      Assets             Inputs              Inputs
Description                                     June 30, 2008       (Level 1)          (Level 2)           (Level 3)
-----------                                     -------------       ---------          ---------           ---------
Assets                                                                   (Dollars in thousands)
<S>                                             <C>                 <C>                <C>                <C>
      Securities available-for-sale .......                         $       -          $78,463            $        -
      Derivatives .........................                                 -                7                     -
Liabilities
      Derivatives .........................                                 -                7                     -
</TABLE>

         Pricing for the  Company's  securities  available-for-sale  is obtained
from an independent third-party that uses a process that may incorporate current
market prices, benchmark yields, broker/dealer quotes, issuer spreads, two-sided


                                       9
<PAGE>

markets,  benchmark securities,  bids, offers, other reference data and industry
and  economic  events  that a market  participant  would be  expected  to use in
valuing the  securities.  Not all of the inputs listed apply to each  individual
security at each measurement  date. The independent third party assigns specific
securities  into an "asset  class" for the purpose of assigning  the  applicable
level of the fair value hierarchy used to value the  securities.  The techniques
used  after  adoption  of SFAS No.  157 are  consistent  with the  methods  used
previously.

         No cumulative effect adjustments were required upon initial application
of SFAS No. 157.  Available-for-sale  securities continue to be measured at fair
value with unrealized gains or losses recorded in other comprehensive income.

         The following is a summary of the measurement  attributes applicable to
assets and liabilities that are measured at fair value on a non-recurring basis:

<TABLE>
<CAPTION>
                                                                   Fair Value Measurement at Reporting Date Using
                                                                   ----------------------------------------------
                                                                 Quoted Prices
                                                                   in Active          Significant
                                                                  Markets for            Other           Significant
                                                                   Identical          Observable        Unobservable
                                                                    Assets              Inputs             Inputs
Description                                   June 30, 2008       (Level 1)           (Level 2)          (Level 3)
-----------                                   -------------       ---------           ---------          ---------
                                                                      (Dollars in thousands)
<S>                                                               <C>                 <C>                  <C>
Collateral dependent impaired loans                               $       -           $       -            $ 8,976
Foreclosed Assets                                                         -                 813                  -
Goodwill                                                                  -                   -              4,321
Core deposit intangibles                                                  -                   -              2,222
</TABLE>

         Collateral  dependent  impaired  loans consist of nonaccrual  loans for
which the underlying  collateral provides the sole repayment source. The Company
measures  the  amount  of the  impairment  for  such  loans by  determining  the
difference between the fair value of the underlying  collateral and the recorded
amount of the loan.  The fair value of the  underlying  collateral  generally is
based on appraisals  performed in accordance with applicable appraisal standards
by  independent  appraisers  engaged by the Company.  In many cases,  management
updates  values  reflected  in  older  appraisals  obtained  at the time of loan
origination  and already in the Company's  possession  using its own  knowledge,
judgments and assumptions  about current market and other  conditions in lieu of
obtaining a new  independent  appraisal.  If the fair value of the collateral is
less than the recorded amount of the loan, a valuation  allowance is established
for the  difference;  otherwise,  no  valuation  allowance is  established.  The
valuation  allowance for impaired loans is a component of the allowance for loan
losses.  Periodically,  management  reevaluates the fair value of the collateral
and makes adjustments to the valuation allowance as appropriate. However, if the
fair value of the collateral subsequently recovers in value such that it exceeds
the recorded  loan  amount,  no  adjustment  is made in the loan's value for the
excess.  The amount of the  valuation  allowance  for the  Company's  collateral
dependent impaired loans was $1,168,000 as of June 30, 2008.

         Foreclosed  assets consist of assets acquired  through,  or in lieu of,
loan  foreclosure,  and are held for sale and  initially  were  recorded at fair
value,  less  estimated  costs  to  sell  at  the  date  of  acquisition,   thus
establishing a new cost basis. Loan losses arising from the acquisitions of such
property  are  charged  against  the  allowance  for loan losses at the date the
property is  acquired.  Subsequent  to  acquisition,  valuations  are  performed
periodically  and the assets  are  carried at the lower of the new cost basis or


                                       10
<PAGE>

fair value.  Revenues and expenses from operations and changes in any subsequent
valuation allowance are included in net foreclosed assets costs and expenses.

         Goodwill was initially  recorded as the difference between the purchase
price and the fair values of tangible assets, separately identifiable intangible
assets,  and liabilities  acquired in prior business  combination  transactions.
Goodwill is tested for impairment no less than annually.  The Company previously
has not recognized any impairment of goodwill.

         Core deposit intangibles  represent the excess of the purchase price of
core  deposits  over their  fair  values at the date of their  acquisition  in a
purchase transaction. The core deposit intangible is amortized as a component of
other  expense over the  estimated  lives of the deposits  acquired.  During the
first two quarters of 2008,  $123,000 of such  amortization  was included in net
income.

         The Financial  Accounting Standards Board issued Statement of Financial
Accounting  Standards  No. 159 "The Fair Value Option for  Financial  Assets and
Financial  Liabilities," ("SFAS No. 159" or the "Statement") which was effective
for the  Company as of January 1, 2008.  Under the  provisions  of SFAS No. 159,
entities may choose, but are not required, to measure many financial instruments
and certain other items at their fair values, with changes in the fair values of
those instruments  reported in earnings.  The Company has not elected to measure
at fair value any financial  instruments  under the  provisions of SFAS No. 159.
The  adoption  of  the  Statement  had no  effect  on  the  Company's  financial
statements.

Proposed Merger Transaction

         On June 25, 2008,  the Company,  Community  Resource Bank, N. A., (CRB)
and First Citizens Bank and Trust Company, Inc., (FCB) a wholly-owned subsidiary
of First Citizens Bancorporation, Inc. executed a definitive agreement to merge,
subject to approvals by regulatory agencies and the Company's shareholders.  The
transaction,  which is expected to close in the fourth quarter of 2008, requires
FCB to pay the Company's  shareholders $21.00 in cash for each outstanding share
of the Company's  common stock.  FCB will be the  surviving  corporation  of the
merger, and the Company and CRB will cease to exist.

New Accounting Pronouncements

         In December  2007,  the FASB issued  Statement of Financial  Accounting
Standards  No.  160   "Noncontrolling   Interests  in   Consolidated   Financial
Statements,  an  amendment  of ARB No.  51" ("SFAS  No.  160").  SFAS No. 160 is
effective  for years  beginning  after  December  31,  2008 and is to be applied
prospectively  with retrospective  presentation and disclosure  requirements for
comparative  financial  statements.  Early adoption is prohibited.  SFAS No. 160
seeks to improve the  relevance,  comparability  and  transparency  of financial
information  that a  reporting  entity  provides in its  consolidated  financial
statements by separately  identifying and reporting several financial  statement
components into amounts that are  attributable  to the reporting  entity or that
are attributable to  noncontrolling  interests.  SFAS No. 160 also specifies the
conditions under which an entity is required to deconsolidate  its interest in a
subsidiary.  The Company currently has no consolidated subsidiaries that are not
wholly owned nor are any transactions  contemplated  that would result in such a
condition.  Therefore,  it is  expected  that the  adoption  of SFAS No.  160 in
January  2009  will  have no  effect  on the  Company's  consolidated  financial
statements.


                                       11
<PAGE>


          CAUTIONARY NOTICE WITH RESPECT TO FORWARD-LOOKING STATEMENTS

         This report contains "forward-looking statements" within the meaning of
the  securities  laws.  The  Private  Securities  Litigation  Reform Act of 1995
provides a safe harbor for forward-looking  statements.  In order to comply with
the terms of the safe harbor,  the Company notes that a variety of factors could
cause the Company's actual results and experience to differ  materially from the
anticipated   results  or  other   expectations   expressed  in  the   Company's
forwarding-looking statements.

         All statements that are not historical  facts are statements that could
be  "forward-looking   statements."  You  can  identify  these   forward-looking
statements  through the use of words such as "may," "will,"  "should,"  "could,"
"would," "expect,"  "anticipate,"  "assume," "indicate,"  "contemplate," "seek,"
"plan,"  "predict,"  "target,"  "potential,"  "believe,"  "intend,"  "estimate,"
"project,"  "continue,"  or  other  similar  words.  Forward-looking  statements
include,  but are not limited to,  statements  regarding  the  Company's  future
business  prospects,   revenues,  working  capital,  liquidity,  capital  needs,
interest costs, income, business operations and proposed services.

         These  forward-looking  statements  are based on current  expectations,
estimates and projections about the banking industry,  management's beliefs, and
assumptions made by management.  Such information includes,  without limitation,
discussions  as to estimates,  expectations,  beliefs,  plans,  strategies,  and
objectives  concerning  future  financial  and  operating   performance.   These
statements  are not guarantees of future  performance  and are subject to risks,
uncertainties and assumptions that are difficult to predict.  Therefore,  actual
results  may  differ  materially  from those  expressed  or  forecasted  in such
forward-looking  statements.  The risks and uncertainties  include,  but are not
limited to:

     o    future economic and business conditions;
     o    lack of  sustained  growth in the  economies of the  Company's  market
          areas;
     o    government monetary and fiscal policies;
     o    the  effects of changes in interest  rates on the levels,  composition
          and costs of deposits, loan demand, and the values of loan collateral,
          securities, and interest sensitive assets and liabilities;
     o    the effects of  competition  from a wide  variety of local,  regional,
          national and other providers of financial,  investment,  and insurance
          services,  as well as  competitors  that offer  banking  products  and
          services by mail, telephone, computer and/or the Internet;
     o    credit risks;
     o    higher than anticipated levels of defaults on loans;
     o    misperceptions by depositors about the safety of their deposits;
     o    capital adequacy;
     o    the  failure  of  assumptions  underlying  the  establishment  of  the
          allowance for loan losses and other estimates,  including the value of
          collateral securing loans;
     o    availability of liquidity sources;
     o    the risks of opening new offices,  including,  without limitation, the
          related  costs  and  time  of  building  customer   relationships  and
          integrating  operations as part of these  endeavors and the failure to
          achieve  expected  gains,  revenue growth and/or expense  savings from
          such endeavors;
     o    changes in laws and regulations, including tax, banking and securities
          laws and  regulations;
     o    changes in accounting policies, rules and practices;


                                       12
<PAGE>

     o    changes in technology or products may be more difficult or costly,  or
          less effective, than anticipated;
     o    the  effects of war or other  conflicts,  acts of  terrorism  or other
          catastrophic  events that may affect general  economic  conditions and
          economic confidence; and
     o    other factors and  information  described in this report and in any of
          the  other  reports  that we file  with the  Securities  and  Exchange
          Commission under the Securities Exchange Act of 1934.

         All  forward-looking   statements  are  expressly  qualified  in  their
entirety by this cautionary notice. The Company has no obligation,  and does not
undertake,  to update,  revise or correct any of the forward-looking  statements
after the date of this  report.  The Company  has  expressed  its  expectations,
beliefs and projections in good faith and believes they have a reasonable basis.
However,  there is no assurance that these expectations,  beliefs or projections
will result or be achieved or accomplished.


References to our Website Address

         References to our website address  throughout this Quarterly  Report on
Form 10-Q and in any documents incorporated into this Form 10-Q by reference are
for informational purposes only, or to fulfill specific disclosure  requirements
of the Securities and Exchange Commission's rules or the American Stock Exchange
listing standards. These references are not intended to, and do not, incorporate
the contents of our website by reference into this Form 10-Q or the accompanying
materials.


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

Critical Accounting Policies

         CBI  has  adopted  various  accounting   policies,   which  govern  the
application of accounting  principles generally accepted in the United States of
America  in the  preparation  of CBI's  financial  statements.  The  significant
accounting policies of CBI are described in detail in the notes to CBI's audited
consolidated  financial  statements included in CBI's 2007 Annual Report on Form
10-K filed with the Securities and Exchange Commission.

         Certain accounting policies involve significant judgments and estimates
by  management,  which have a material  impact on the carrying  value of certain
assets and  liabilities.  Management  considers such  accounting  policies to be
critical accounting policies. The judgments and estimates used by management are
based on  historical  experience  and other  factors,  which are  believed to be
reasonable under the  circumstances.  Because of the nature of the judgments and
assumptions made by management, actual results could differ from these judgments
and  estimates,  which could have a material  impact on the  carrying  values of
assets and liabilities and the results of operations of CBI.

         CBI is a holding  company for a community  bank and a mortgage  company
and, as a financial  institution,  believes the  allowance  for loan losses is a
critical  accounting  policy that  requires the most  significant  judgments and
estimates used in preparation of its consolidated financial statements. Refer to
the sections  "Allowance  for Loan Losses" and "Provision for Loan Losses" under
Item 7 -  Management's  Discussion  and  Analysis of  Financial  Conditions  and
Results  of  Operations  in  CBI's  Annual  Report  on Form  10-K for 2007 for a


                                       13
<PAGE>

detailed  description of CBI's estimation process and methodology related to the
allowance for loan losses.


CHANGES IN FINANCIAL CONDITION

         The first six  months of 2008 were very  difficult  for most  financial
institutions.   The  real  estate-related   credit  crisis,   coupled  with  the
significant  actions by the Federal Reserve Board to lower  short-term  interest
rates,  made this period  challenging.  Higher levels of uncertainty have become
the normal state of affairs. In such an environment, opportunities to lend money
prudently  decreased  significantly.  Yields on securities  issued by government
agencies  and  government-sponsored   enterprises,  which  would  ordinarily  be
considered safe investments, continue to be depressed and offer yields that are,
for  short-term  instruments,  too low to generate  improvement  in net interest
margins.

         In  response  to  these  conditions,  the  Company  tightened  its loan
underwriting standards.  These measures,  combined with lower levels of economic
activity, led to a decrease of $17,771,000,  or 3.8%, in loans receivable during
the six months ended June 30,  2008.  Loans  receivable  were 82.1% and 86.2% of
earning  assets as of June 30, 2008 and  December  31,  2007,  respectively.  To
offset the reduction in loan interest income the Company increased its portfolio
of  available-for-sale  securities  by  $20,595,000  during  the 2008  six-month
period.  Available-for-sale securities were 14.4% and 10.8% of earning assets as
of  June  30,  2008  and  December  31,  2007,   respectively.   Investments  in
mortgage-backed securities issued by government-sponsored  enterprises (FNMA and
FHLMC)  increased  by  approximately   $30,000,000  and  securities   issued  by
government agencies decreased by approximately  $9,500,000.  Despite an increase
in the  weighted-average  maturity  of  the  available-for-sale  portion  of the
investment  portfolio from 1.39 years at December 31, 2007 to 5.32 years at June
30, 2008, that  portfolio's  weighted average yield decreased by 27 basis points
during  the  period.   Federal  funds  sold  increased  by  $559,000  and  other
investments increased by $1,883,000 during the six months.

         Deposits  increased by only  $633,000,  or .13%,  from the December 31,
2007 amount,  short-term  borrowings  decreased  by  $3,560,000,  or 36.0%,  and
long-term debt increased by  $12,495,000,  or 42.1%.  Management  believes it is
likely  that  market  interest  rates  will  begin  to  increase  later in 2008.
Consequently,  the Company chose to secure relatively  longer-term  financing by
borrowing  $15,000,000  in two  convertible  advances from the Federal Home Loan
Bank of Atlanta  "FHLB") in February  2008.  One advance of $7.5  million has an
initial  fixed rate until  February  2009,  after which it may be  converted  to
variable at the option of the FHLB on a quarterly  basis.  The other  advance of
$7.5 million has an initial fixed rate until February 2010, at which time it may
be converted  to variable at the option of the FHLB on a one time basis.  If the
FHLB  exercises its options to convert the  instruments to variable  rates,  the
Company  has the right to prepay the  advances  without  penalty on the  initial
reset date or any  subsequent  reset date.  The  weighted  average rate paid for
these funds was 2.35%, or about 149 basis points less than the average rate paid
for  time  deposits   during  the  second  quarter  of  2008.  The  Company  has
pre-existing  advances from the FHLB totaling  $16,700,000 which have a weighted
average rate of 5.16%. Of those  advances,  $14,700,000  remains  convertible to
variable rates at the option of the FHLB.


                                       14
<PAGE>

RESULTS OF OPERATIONS

Earnings Performance

Three Months Ended June 30, 2008 and 2007

         For the  quarter  ended  June 30,  2008,  CBI  recorded  net  income of
$927,000  compared  with  $1,470,000  for the  comparable  period  of 2007.  The
$543,000 decrease is attributable  primarily to $712,000 of non-recurring  gains
on the sale of other  investments  in the 2007  period,  a $271,000  decrease in
mortgage loan brokerage income and a $365,000 increase in the provision for loan
losses.   Partially  offsetting  these  items  were  decreases  of  $500,000  in
noninterest expenses and $267,000 in income tax expense.

<TABLE>
<CAPTION>
                                                                               Summary Income Statement
                                                                               ------------------------
                                                                                (Dollars in thousands)
For the Three Months Ended June 30,                          2008              2007          Dollar Change   Percentage Change
-----------------------------------                          ----              ----          -------------   -----------------
<S>                                                        <C>               <C>               <C>                 <C>
Interest income ....................................       $ 8,810           $ 9,751           $  (941)             -9.7%
Interest expense ...................................         3,368             4,434            (1,066)            -24.0%
                                                           -------           -------            ------
Net interest income ................................         5,442             5,317               125               2.4%
Provision for loan losses ..........................           540               175               365             208.6%
Noninterest income .................................         1,697             2,767            (1,070)            -38.7%
Noninterest expenses ...............................         5,101             5,601              (500)             -8.9%
Income tax expense .................................           571               838              (267)            -31.9%
                                                           -------           -------            ------
Net income .........................................       $   927           $ 1,470           $  (543)            -36.9%
                                                           =======           =======            ======
</TABLE>

Six Months Ended June 30, 2008 and 2007

         CBI's  consolidated  net income for the six months  ended June 30, 2008
was $2,028,000, a decrease of $447,000 from the $2,475,000 recorded for the same
period of 2007. Primarily  responsible for this decline were a $460,000 increase
in the  provision for loan losses in the 2008 period and  nonrecurring  gains of
$712,000 realized on the sale of other investments in the 2007 period. Partially
offsetting  those  effects were a $295,000  increase in net interest  income and
reductions  in the 2008 amounts of  noninterest  expenses and income tax expense
totaling $628,000 and $218,000, respectively.

<TABLE>
<CAPTION>
                                                                                Summary Income Statement
                                                                                ------------------------
                                                                                (Dollars in thousands)
For the Six Months Months Ended June 30,                     2008               2007          Dollar Change    Percentage Change
----------------------------------------                     ----               ----          -------------    -----------------
<S>                                                        <C>                <C>               <C>                <C>
Interest income ....................................       $18,248            $19,184           $  (936)             -4.9%
Interest expense ...................................         7,394              8,625            (1,231)            -14.3%
                                                           -------            -------            ------
Net interest income ................................        10,854             10,559               295               2.8%
Provision for loan losses ..........................         1,010                550               460              83.6%
Noninterest income .................................         3,464              4,592            (1,128)            -24.6%
Noninterest expenses ...............................        10,087             10,715              (628)             -5.9%
Income tax expense .................................         1,193              1,411              (218)            -15.5%
                                                           -------            -------            ------
Net income .........................................       $ 2,028            $ 2,475           $  (447)            -18.1%
                                                           =======            =======            ======
</TABLE>

                                       15
<PAGE>

Net Interest Income

         Net interest income is the amount of interest income earned on interest
earning assets  (primarily  loans,  securities,  interest  bearing deposits with
other banks,  and federal  funds sold),  less the interest  expense  incurred on
interest bearing  liabilities  (interest bearing deposits and other borrowings),
and is the principal  source of the Company's  earnings.  Net interest income is
affected by the level of  interest  rates,  volume and mix of  interest  earning
assets  and  interest  bearing  liabilities  and the  relative  funding of those
assets.

         The Federal  Reserve Board  lowered the federal funds  interest rate by
100 basis  points  during the last four  months of 2007 and by 200 basis  points
during the first quarter of 2008.  Because most of the Company's  earning assets
and interest-bearing  liabilities are relatively short-term instruments,  yields
on the  various  categories  of  interest-earning  assets  and  rates  paid  for
interest-bearing liabilities fell during those periods.

Three Months Ended June 30, 2008 and 2007

         Net  interest  income  for the three  months  ended  June 30,  2008 was
$5,442,000,  an increase of $125,000,  or 2.4%, over the amount reported for the
second  quarter of 2007.  Interest  income  and  interest  expense  for the 2008
quarter  were both  significantly  lower than  during  the same  period of 2007,
primarily due to lower interest rates earned on, or paid for, related assets and
liabilities.

         The average yield on earning assets was 6.44% for the second quarter of
2008,  compared with 7.30% for the second  quarter of 2007.  The average cost of
time deposits fell to 3.84% for the second quarter of 2008,  compared with 4.68%
for the  same  period  of  2007  and the  average  cost of all  interest-bearing
liabilities  was 2.88%  for the 2008  quarter  and 3.89% for the same  period of
2007. Accordingly, the interest rate spread (interest earning assets yield minus
the rate paid for  interest-bearing  liabilities)  for the 2008  second  quarter
widened to 3.56%,  or 15 basis points more than for the same period of 2007. Net
yield on earning assets (net interest income divided by average interest earning
assets) for the 2008 quarter was 3.98%, unchanged from the same period of 2007.

         The  mix  of  average  earning  assets  and  average   interest-bearing
liabilities  changed  slightly  since the second quarter of 2007 as shown in the
table "Average  Balances,  Yields and Rates Three Months Ended June 30, 2008 and
2007." Average amounts of interest earning assets were $14,328,000 higher in the
2008 period than in the 2007 period and the average amounts of  interest-bearing
liabilities were $13,011,000 higher in the 2008 three month period.

                                       16
<PAGE>

<TABLE>
<CAPTION>
                                                                          Average Balances, Yields and Rates
                                                                              Three Months Ended June 30,
                                                                              ---------------------------

                                                                   2008                                        2007
                                                   ------------------------------------         ------------------------------------
                                                                 Interest                                    Interest
                                                   Average        Income /     Yields /          Average      Income /     Yields /
                                                  Balances        Expense      Rates (1)        Balances      Expense      Rates (1)
                                                  --------        -------      ---------        --------      -------      ---------
                                                                              (Dollars in thousands)
Assets
<S>                                                 <C>           <C>             <C>            <C>          <C>             <C>
Interest bearing deposits with other banks ......   $ 1,314       $     1         0.31%          $  1,008     $    13         5.17%
Investment securities - taxable .................    74,900           954         5.12%            80,597         988         4.92%
Investment securities - tax exempt (2) ..........     4,139            38         3.69%             4,645          42         3.63%
Federal funds sold ..............................    17,216            89         2.08%             6,452          80         4.97%
Loans, including loans held for sale (2) (3) ....   452,786         7,728         6.86%           443,325       8,628         7.81%
                                                   --------       -------                        --------     -------
          Total interest earning assets .........   550,355         8,810         6.44%           536,027       9,751         7.30%
Cash and due from banks .........................    18,378                                        16,984
Allowance for loan losses .......................    (5,935)                                       (6,045)
Premises and equipment, net .....................    10,823                                         8,004
Intangible assets ...............................     6,572                                         5,907
Other assets ....................................     7,041                                        11,967
                                                   --------                                      --------
          Total assets ..........................  $587,234                                      $572,844
                                                   ========                                      ========

Liabilities and shareholders' equity
Interest bearing deposits
      Interest bearing transaction accounts .....  $ 78,110       $   162         0.83%          $ 72,862     $   273         1.50%
      Savings ...................................    84,939           283         1.34%            89,660         627         2.80%
      Time deposits .............................   254,889         2,433         3.84%           246,329       2,872         4.68%
                                                   --------       -------                        --------     -------
          Total interest bearing deposits .......   417,938         2,878         2.77%           408,851       3,772         3.70%
Short-term borrowings ...........................     9,506            29         1.23%            18,056         187         4.15%
Long-term debt ..................................    42,175           461         4.40%            29,701         475         6.41%
                                                   --------       -------                        --------     -------
          Total interest bearing liabilities ....   469,619         3,368         2.88%           456,608       4,434         3.89%
Noninterest bearing demand deposits .............    61,013                                        59,693
Other liabilities ...............................     2,119                                         2,307
Shareholders' equity ............................    54,483                                        54,236
                                                   --------                                      --------
          Total liabilities and
              shareholders' equity ..............  $587,234                                      $572,844
                                                   ========                                      ========

Interest rate spread ............................                                 3.56%                                       3.41%
Net interest income and net yield
      on earning assets .........................                 $ 5,442         3.98%                       $ 5,317         3.98%
</TABLE>

(1)  Yields and rates are annualized.
(2)  Yields  on  tax-exempt  securities  and  loans  have not been  stated  on a
     tax-equivalent basis.
(3)  Nonaccruing loans are included in the average balances and income from such
     loans is recognized on a cash basis.


                                       17
<PAGE>

Six Months Ended June 30, 2008 and 2007

         Net interest income for the six months ended June 30, 2008 increased by
$295,000,  or 2.8% over the amount for the same  period of 2007.  Both  interest
income and interest expense decreased significantly in the 2008 period. However,
interest  expense  decreased  further  during the  period  due to the  Company's
aggressive  asset and liability  management  strategy of lowering rates paid for
interest bearing  liabilities.  For the 2008 year-to-date  period,  the interest
rate  spread  increased  by 9 basis  points and the net yield on earning  assets
decreased by 3 basis points as compared with the same period of 2007.



                                       18
<PAGE>

<TABLE>
<CAPTION>
                                                                          Average Balances, Yields and Rates
                                                                               Six Months Ended June 30,
                                                                               -------------------------
                                                                   2008                                        2007
                                                  -------------------------------------         ------------------------------------
                                                                 Interest                                    Interest
                                                   Average        Income /     Yields /          Average      Income /     Yields /
                                                  Balances        Expense      Rates (1)        Balances      Expense      Rates (1)
                                                  --------        -------      ---------        --------      -------      ---------
                                                                              (Dollars in thousands)
Assets
<S>                                              <C>            <C>             <C>            <C>            <C>            <C>
Interest bearing deposits with other banks ....  $   1,336      $     12        1.81%          $   1,773      $     46       5.23%
Investment securities - taxable ...............     65,621         1,720        5.27%             82,648         2,008       4.90%
Investment securities - tax exempt (2) ........      4,200            77        3.69%              4,697            85       3.65%
Federal funds sold ............................     19,845           270        2.74%             10,282           260       5.10%
Loans, including loans held for sale (2) (3) ..    458,642        16,169        7.09%            433,533        16,785       7.81%
                                                 ---------      --------                       ---------      --------
          Total interest earning assets .......    549,644        18,248        6.68%            532,933        19,184       7.26%
Cash and due from banks .......................     19,405                                        17,156
Allowance for loan losses .....................     (5,780)                                       (5,458)
Premises and equipment ........................     10,797                                         8,694
Intangible assets .............................      6,603                                         6,849
Other assets ..................................      7,115                                         9,745
                                                 ---------                                     ---------
          Total assets ........................  $ 587,784                                     $ 569,919
                                                 =========                                     =========

Liabilities and shareholders' equity
Interest bearing deposits
      Interest bearing transaction accounts ...  $  78,923      $    330        0.84%          $  74,945      $    532       1.43%
      Savings .................................     85,618           658        1.55%             92,886         1,299       2.82%
      Time deposits ...........................    257,319         5,366        4.19%            243,963         5,579       4.61%
                                                 ---------      --------                       ---------      --------
          Total interest bearing deposits .....    421,860         6,354        3.03%            411,794         7,410       3.63%
Short-term borrowings .........................     10,548            88        1.68%             14,958           303       4.08%
Long-term debt ................................     39,760           952        4.82%             27,998           912       6.57%
                                                 ---------      --------                       ---------      --------
          Total interest bearing liabilities ..    472,168         7,394        3.15%            454,750         8,625       3.82%
Noninterest bearing demand deposits ...........     59,182                                        59,382
Other liabilities .............................      2,000                                         2,065
Shareholders' equity ..........................     54,434                                        53,722
                                                 ---------                                     ---------
          Total liabilities and
            shareholders' equity ..............  $ 587,784                                     $ 569,919
                                                 =========                                     =========

Interest rate spread ..........................                                 3.53%                                        3.44%
Net interest income and net yield
      on earning assets .......................                 $ 10,854        3.97%                         $ 10,559       4.00%
</TABLE>

(1)  Yields and rates are annualized.
(2)  Yields  on  tax-exempt  securities  and  loans  have not been  stated  on a
     tax-equivalent basis.
(3)  Nonaccruing loans are included in the average balances and income from such
     loans is recognized on a cash basis.

Provision and Allowance for Loan Losses

         The  provision  for loan  losses  for the 2008 three  month  period was
$540,000, an increase of $365,000, or 208.6%, over the $175,000 recorded for the
same period of 2007.  The provision for loan losses  increased to $1,010,000 for
the 2008 six  month  period  from  $550,000  for the 2007 six month  period,  an
increase of $460,000 or 83.6%.



                                       19
<PAGE>

         The  activity in the  allowance  for loan losses is  summarized  in the
following table:

<TABLE>
<CAPTION>
                                                                             Six Months            Year Ended          Six Months
                                                                                Ended             December 31,           Ended
                                                                            June 30, 2008             2007           June 30, 2007
                                                                            -------------             ----           -------------
                                                                                             (Dollars in thousands)
<S>                                                                           <C>                   <C>                   <C>
Allowance at beginning of period ..................................           $   5,343             $   4,662             $   4,662
Provision for loan losses .........................................               1,010                 3,155                   550
Net charge-offs ...................................................                (414)               (2,474)                  521
                                                                              ---------             ---------             ---------
Allowance at end of period ........................................           $   5,939             $   5,343             $   5,733
                                                                              =========             =========             =========
Allowance as a percentage of loans outstanding ....................                1.33%                 1.15%                 1.28%

Loans at end of period ............................................           $ 446,268             $ 464,039             $ 447,945
                                                                              =========             =========             =========
</TABLE>

         Following is a summary of non-performing  loans as of June 30, 2008 and
December 31, 2007:

                                                        June 30,    December 31,
                                                          2008          2007
                                                          ----          ----
                                                          (Dollars in thousands)
Non-performing loans
  Nonaccrual loans ..................................     $8,976      $   6,542
  Past due 90 days or more and still accruing .......          7              -
                                                          ------      ---------
                Total ...............................     $8,983      $   6,542
                                                          ======      =========
Non-performing loans as a percentage of:
  Loans outstanding .................................       2.01%          1.41%
  Allowance for loan losses .........................     151.25%        122.44%

         The  following  table  shows  quarterly  changes in  nonperforming  and
potential  problem loans since  December 31, 2005.  Potential  problem loans are
loans as to which  information  about the borrowers'  possible  credit  problems
causes  management to have serious doubts about the their ability to comply with
current  repayment  terms and which may result in subsequent  classification  of
such loans as non-performing loans.



                                       20
<PAGE>

<TABLE>
<CAPTION>
                                                     90 Days or
                                                   More Past Due        Total        Percentage                      Percentage
                                    Nonaccrual       and Still      Nonperforming     of Total        Potential       of Total
                                      Loans           Accruing          Loans          Loans        Problem Loans       Loans
                                      -----           --------          -----          -----        -------------       -----
                                                                        (Dollars in thousands)
<S>                                 <C>              <C>              <C>              <C>           <C>                <C>
December 31, 2005 ............      $ 11,651         $    729         $ 12,380         2.99%         $ 29,313           7.08%
Net change ...................         3,128              949            4,077                         (2,767)
                                    --------         --------         --------                       --------
March 31, 2006 ...............        14,779            1,678           16,457         3.94%           26,546           6.36%
Net change ...................        (3,628)          (1,476)          (5,104)                        (3,461)
                                    --------         --------         --------                       --------
June 30, 2006 ................        11,151              202           11,353         2.71%           23,085           5.51%
Net change ...................        (2,483)             175           (2,308)                          (219)
                                    --------         --------         --------                       --------
September 30, 2006 ...........         8,668              377            9,045         2.19%           22,866           5.55%
Net change ...................        (3,954)            (145)          (4,099)                        (7,475)
                                    --------         --------         --------                       --------
December 31, 2006 ............         4,714              232            4,946         1.21%           15,391           3.76%
Net change ...................         1,612              (65)           1,547                         (1,143)
                                    --------         --------         --------                       --------
March 31, 2007 ...............         6,326              167            6,493         1.53%           14,248           3.36%
Net change ...................        (1,169)            (167)          (1,336)                           385
                                    --------         --------         --------                       --------
June 30, 2007 ................         5,157                -            5,157         1.15%           14,633           3.27%
Net change ...................         2,323                -            2,323                          1,332
                                    --------         --------         --------                       --------
September 30, 2007 ...........         7,480                -            7,480         1.64%           15,965           3.50%
Net change ...................          (938)               -             (938)                          (810)
                                    --------         --------         --------                       --------
December 31, 2007 ............         6,542                -            6,542         1.41%           15,155           3.27%
Net change ...................           387              192              579                          6,880
                                    --------         --------         --------                      --------
March 31, 2008 ...............         6,929              192            7,121         1.57%           22,035           4.87%
Net change ...................         2,047             (185)           1,862                          2,566
                                    --------         --------         --------                       --------
June 30, 2008 ................      $  8,976         $      7         $  8,983         2.01%         $ 24,601           5.51%
                                    ========         ========         ========                       ========
</TABLE>

         During the second  quarter of 2008,  nonperforming  loans  increased by
$1,862,000  while potential  problem loans increased by $2,566,000.  The largest
component  of the  increase  in  nonaccrual  loans  was a  $900,000  residential
construction loan. The remaining increase was composed of a variety of different
real estate and commercial loans from which management does not anticipate major
additional  losses.  The increase in potential  problem  loans is related to the
bank's  ongoing  internal  loan  review  program and the  anticipated  impact of
general economic conditions.

         Management will continue to monitor the levels of non-performing  loans
and address the  weaknesses in these credits to enhance the ultimate  collection
or  recovery  of these  assets.  Management  considers  the levels and trends in
non-performing  assets  and  potential  problem  loans  in  determining  how the
provision  and  allowance  for loan losses is  estimated  and  adjusted.  In the
opinion of management,  the Company's allowance for loan losses at June 30, 2008
is adequate to provide for losses that may be inherent in the loan portfolio.


                                       21
<PAGE>

Noninterest Income

         Noninterest  income  for the 2008  second  quarter  was  $1,697,000,  a
decrease of $1,070,000  from the  $2,767,000  reported for the same 2007 period.
The Company realized a one-time  $712,000 gain on the sale of other  investments
during  the  2007  period,  primarily  from  the  sale  of  surplus  stock  of a
correspondent  bank which  resulted from the merger of the  Company's  four bank
subsidiaries  into one bank late in 2006.  Mortgage  loan  brokerage  income was
$271,000 lower during the 2008 period.

         For the six months ended June 30, 2008,  noninterest  income  decreased
$1,128,000,  or 24.6%,  from noninterest  income of $4,592,000 for the first six
months of 2007. Again,  this decrease resulted  primarily from the one-time gain
from  the  sale of other  investments  that  occurred  in  2007.  Mortgage  loan
brokerage  income for the first six months of 2008 decreased  $404,000  compared
with the same  period  of 2007,  as  originations  of such  loans  decreased  by
approximately  34.9%,  consistent  with the  overall  slowing of the real estate
market in the Company's  market area and due to the Company's  decision in early
2008 to discontinue its wholesale mortgage operation.


Noninterest Expenses

         Noninterest  expenses  for the  second  quarter  of 2008  decreased  by
$500,000,  or 8.9%,  from the  amounts  reported  for the same  period  of 2007.
Salaries and employee benefits expenses  decreased by $166,000,  or 5.4%, in the
2008 period,  primarily due to the  discontinuation  of the mortgage  division's
wholesale lending operation in early first quarter of 2008.

         Noninterest expenses for the first six months of 2008 were $628,000, or
5.9%, less than for the same period of 2007.  Salaries and employee benefits for
the 2008 six month period were $253,000,  or 4.2%, less than for the same period
of 2007,  primarily due to the elimination of the mortgage division's  wholesale
lending  operations.  In addition,  expenses were reduced by the  elimination of
loan production  costs associated with wholesale  lending,  notably yield spread
payments  to  brokers.  Other  factors  contributing  to the  lower  noninterest
expenses  were  various  non-recurring   expenses  recorded  in  2007  including
consulting  costs  related  to  preparation  of a  strategic  plan and a deposit
related fraud loss. These same factors also impacted the quarterly periods.


Income Taxes

         Income tax expense was $267,000  lower in the 2008 second  quarter than
for the 2007 period,  as a result of lower taxable  income before taxes.  Income
tax expense for the 2008 six month  period was  $218,000  less than for the same
period of 2007 due to lower net income before taxes.


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 CBI's market areas.  Individual and  commercial  deposits are the primary
source of funds for credit activities,  along with long-term borrowings from the


                                       22
<PAGE>

Federal  Home Loan Bank of Atlanta.  Cash and amounts due from banks and federal
funds sold are CBI's primary sources of asset  liquidity.  These funds provide a
cushion  against  short-term  fluctuation  in cash  flow  from  both  loans  and
deposits.  Securities available-for-sale are CBI's principal source of secondary
asset liquidity. However, the availability of this source is limited by pledging
commitments  for  public  deposits  and  securities  sold  under  agreements  to
repurchase, and is influenced by market conditions.

         Total  deposits as of June 30, 2008 were  $482,340,000,  an increase of
$633,000 over the amount as of December 31, 2007. During the first six months of
2008,  funds moved from  noninterest  bearing demand  deposit,  interest-bearing
transaction and savings accounts into time deposit accounts. As of June 30, 2008
the loan to deposit ratio,  excluding  loans held for sale, was 92.5%,  compared
with 96.3% at December 31, 2007 and 93.3% at June 30, 2007.

         Management  believes CBI's  liquidity  sources are adequate to meet its
current and projected operating needs.


CAPITAL RESOURCES

         CBI and its  bank  subsidiary  are  subject  to  regulatory  risk-based
capital adequacy  standards.  Under these standards,  bank holding companies and
banks  are  required  to  maintain   certain   minimum   ratios  of  capital  to
risk-weighted  assets and average  total  assets.  Under the  provisions  of the
Federal Deposit  Insurance  Corporation  Improvement  Act of 1991,  federal bank
regulatory  authorities are required to implement  prescribed "prompt corrective
actions"  upon the  deterioration  of the  capital  position  of a bank.  If the
capital position of an affected  institution were to fall below a certain level,
increasingly stringent regulatory corrective actions would be mandated.

         The June 30, 2008  risk-based  capital  ratios for CBI and the bank are
presented  in  the  following  table,   compared  with  the  "well  capitalized"
requirement for the bank and minimum ratios under the regulatory definitions and
guidelines:

                                                     June 30, 2008
                                                     -------------
                                          Tier 1     Total Capital      Leverage
                                          ------     -------------      --------

Community Bankshares, Inc.                 13.42%        14.67%          10.08%
Community Resource Bank                    11.85%        13.10%           8.87%
Minimum "well capitalized" requirement      6.00%        10.00%           6.00%
Minimum requirement                         4.00%         8.00%           5.00%


         As shown in the table  above,  each of the capital  ratios  exceeds the
minimum  regulatory  requirement  and the bank  exceeds  the  requirement  to be
considered  "well  capitalized."  In the opinion of management,  the current and
projected capital positions of CBI and the bank are adequate.


OFF-BALANCE-SHEET ARRANGEMENTS

         In the normal course of business,  CBI engages in transactions that, in
accordance with generally accepted  accounting  principles,  are not recorded in
the  financial  statements  (generally  commitments  to  extend  credit)  or are
recorded  in  amounts  that  differ  from  their  notional  amounts   (generally


                                       23
<PAGE>

derivatives).  These transactions involve elements of credit,  interest rate and
liquidity risk of varying degrees.

Variable Interest Entity

         As discussed  under  "Capital  Resources" and in the notes to unaudited
consolidated  financial  statements under "Variable Interest Entity," as of June
30, 2008, CBI held an equity  interest in, and guarantees the  liabilities of, a
non-consolidated variable interest entity, SCB Capital Trust I.

Commitments

         CBI  is  party   to   credit   related   financial   instruments   with
off-balance-sheet  risk in the normal  course of business to meet the  financing
needs of its  customers.  These  financial  instruments  include  commitments to
extend credit and standby letters of credit.  Such  commitments  involve varying
degrees of credit and interest  rate risk in excess of the amount  recognized in
the consolidated  balance sheets.  Exposure to credit loss is represented by the
contractual, or notional, amounts of these commitments. The same credit policies
are used in making commitments as are used for on-balance-sheet instruments.

         The following table sets forth the  contractual  amounts of commitments
which represent credit risk:

                                                   June 30, 2008
                                                   -------------
                                                   (Dollars in
                                                    thousands)
Loan commitments ..............................     $ 62,826
Standby letters of credit .....................        1,150

         Commitments  to extend  credit are  agreements to lend to a customer as
long as there is no  violation of any  condition  established  in the  contract.
Commitments  generally have fixed expiration dates or other termination  clauses
and may require  payment of a fee. Since many of the commitments are expected to
expire  without  being  fully drawn upon,  the total  commitment  amounts do not
necessarily  represent  future  cash  requirements.  The  amount  of  collateral
obtained,  if deemed necessary by management upon extension of credit,  is based
on management's  credit evaluation of the counter-party.  Collateral held varies
but may include personal residences,  accounts receivable,  inventory, property,
plant and equipment, and income-producing commercial properties.

         Standby  letters  of  credit  are  conditional  commitments  issued  to
guarantee  the  performance  of a customer to a third  party.  Those  letters of
credit are  primarily  issued to support  private  borrowing  arrangements.  All
letters of credit are short-term guarantees. The credit risk involved in issuing
letters of credit is  essentially  the same as that  involved in extending  loan
facilities to customers.  Generally,  collateral supporting those commitments is
held if deemed  necessary.  Since  many of the  standby  letters  of credit  are
expected to expire  without being drawn upon, the total letter of credit amounts
do not necessarily represent future cash requirements.


                                       24
<PAGE>

Derivative Financial Instruments

         In  April,  2003,  the  Financial  Accounting  Standards  Board  issued
Statement No. 149,  "Amendment of Statement  133 on Derivative  Instruments  and
Hedging Activities." Among other requirements, this Statement provides that loan
commitment contracts entered into or modified after June 30, 2003 that relate to
the  origination of mortgage loans that will be held for sale shall be accounted
for as derivative  instruments by the issuer of the loan  commitment.  In March,
2004,  the SEC issued  its Staff  Accounting  Bulletin  No 105  "Application  of
Accounting  Principles  to Loan  Commitments,"  which  resulted in no changes in
CBI's  accounting  for such  commitments.  CBI  issues  mortgage  loan rate lock
commitments  to  potential  borrowers  to  facilitate  its  origination  of home
mortgage  loans that are  intended to be sold.  Between the time that CBI issues
its  commitments  and the time that the loans close and are sold, CBI is subject
to variability in the selling prices related to those commitments due to changes
in market rates of interest.  However,  CBI offsets this variability through the
use of so-called "forward sales contracts" to investors in the secondary market.
Under these  arrangements,  an investor agrees to purchase the closed loans at a
predetermined  price.  CBI generally enters into such forward sales contracts at
the same  time  that  rate  lock  commitments  are  issued.  These  arrangements
effectively  insulate  CBI from the effects of changes in interest  rates during
the time the commitments are outstanding, but the arrangements do not qualify as
fair value hedges.  These  derivative  financial  instruments are carried in the
balance sheet at estimated  fair value and changes in the estimated  fair values
of these  derivatives  are  recorded in the  statement of income in net gains or
losses on loans held for sale.

         Derivative financial  instruments are written in amounts referred to as
notional  amounts.  Notional  amounts  only  provide  the basis for  calculating
payments  between  counterparties  and do not represent  amounts to be exchanged
between parties or a measure of financial risk. The following table includes the
notional  principal amounts of rate lock commitments and forward sales contracts
as of  June  30,  2008,  and  the  estimated  fair  values  of  those  financial
instruments  included in other assets and liabilities in the balance sheet as of
that date.

                                                          June 30, 2008
                                                          -------------
                                                                   Estimated
                                                                   Fair Value
                                                     Notional        Asset
                                                      Amount      (Liability)
                                                      ------      -----------
                                                       (Dollars in thousands)
Rate lock commitments to potential borrowers
  to originate mortgage loans to be
  held for sale ...................................   $ 4,266              $ (7)
Forward sales contracts with investors
  of mortgage loans to be held for sale ...........   $ 4,266               $ 7




                                       25
<PAGE>


Item 3. Quantitative and Qualitative Disclosures about Market Risk

         Market risk is the risk of loss from adverse  changes in market  prices
and rates. CBI'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 CBI 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 this  risk  could  potentially  have the  largest  material  effect on CBI'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.

         CBI's  Asset/Liability  Committee uses a simulation  model to assist in
achieving  consistent growth in net interest income while managing interest rate
risk. According to the model, as of June 30, 2008, CBI is positioned so that net
interest income would increase  $21,000 and net income would increase $11,000 in
the next twelve months if interest rates rose 100 basis points.  Conversely, net
interest income would decrease  $21,000 and net income would decrease $11,000 in
the next twelve months if interest rates declined 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 CBI and its customers
could undertake in response to changes in interest rates.

         As of June 30, 2008 there was no  significant  change from the interest
rate  sensitivity  analysis for the various changes in interest rates calculated
as of December 31, 2007. The foregoing disclosures related to the market risk of
CBI  should be read in  connection  with Item 7 -  Management's  Discussion  and
Analysis of Financial  Position and Results of  Operations  included in the 2007
Annual Report on Form 10-K.


Item 4T.  Controls and Procedures

         Based on the evaluation required by 17 C.F.R. Section  240.13a-15(b) or
240.15d-15(b) of the Company's disclosure controls and procedures (as defined in
17  C.F.R.  Sections  240.13a-15(e)  or  240.15d-15(e)),   the  Company's  chief
executive  officer and chief financial  officer concluded that such controls and
procedures,  as of the end of the period covered by this quarterly report,  were
effective.

         In  connection  with  management's  evaluation  required  by 17  C.F.R.
240.13a-15(d) or 240.15d-15(d) of the Company's  internal control over financial
reporting,  management  has  determined  that  there  has been no  change in the
Company's  internal  control  over  financial  reporting  during the most recent
fiscal  quarter  that  has  materially  affected,  or is  reasonably  likely  to
materially affect, the Company's internal control over financial reporting.




                                       26
<PAGE>


                           PART II--OTHER INFORMATION

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

(c) Purchases of securities

<TABLE>
<CAPTION>
                                                                       (c) Total       (d) Maximum
                                                                       Number of        Number of
                                                                   Shares Purchased       Shares
                                                                      as Part of       That May Yet
                                    (a) Total                         Publicly         Be Purchased
                                     Number of     (b) Average        Announced          Under the
                                      Shares         Price per         Plans or          Plans or
             Period                 Purchased          Share           Programs          Programs
             ------                 ---------          -----           --------          --------
<C>                                  <C>             <C>                 <C>            <C>
4/1/08 - 4/30/08                     2,500           $ 12.85             2,500          437,700
5/1/08 - 5/31/08                     4,500           $ 12.28             4,500          433,200
6/1/08 - 6/30/08                         -           $     -                 -          433,200
                                     -----                               -----
Total                                7,000           $ 12.49             7,000
                                     =====                               =====
</TABLE>

(1) On July 30, 2007, the Board of Directors  authorized the repurchase of up to
500,000 shares of the Company's  common stock. The program was originally set to
expire on July 30, 2008.  However,  the program was  terminated  early under the
terms of the Agreement and Plan of Merger  entered into with First Citizens Bank
and Trust Company, Inc. on June 25, 2008.

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

         On Tuesday,  May 20, 2008, the  shareholders  of Community  Bankshares,
Inc. held their regular annual meeting. At the meeting, one matter was submitted
to a vote with results as follows:

1.  Election  of four  directors  to hold  office  for three  year terms and one
director to hold office for a one-year term:

<TABLE>
<CAPTION>
                                                                           SHARES VOTED
                                                                            AGAINST OR                       BROKER
         DIRECTORS                                       FOR           AUTHORITY WITHHELD                   NON-VOTES
                                                         ---           ------------------                   ---------
         Three year term:
<S>        <C>                                       <C>                     <C>                            <C>
           Thomas B. Edmunds                         3,341,862                14,888                        1,087,282
           Henrietta C. Guthrie                      3,341,900                14,850                        1,087,282
           Wm. Reynolds Williams                     3,226,450               130,300                        1,087,282
           Charles E. Fienning                       3,341,651                15,099                        1,087,282

         One year term:
         James Richard Williamson                    3,341,860                14,890                        1,087,282
</TABLE>

         The following directors continue to serve until the expiration of their
terms at the  annual  meetings  to be held in the years  indicated  and were not
voted on at the 2008 annual meeting:  E. J. Ayers,  Jr. - 2009; Alvis J. Bynum -
2009; J. V. Nicholson,  Jr. - 2009;  Charles P. Thompson,  Jr. - 2009; Samuel L.


                                       27
<PAGE>

Erwin - 2010; Anna O. Dantzler - 2010; Richard L. Havekost - 2010; and Samuel F.
Reid, Jr. - 2010.


Item 6.  Exhibits

Exhibits       2    Agreement  and Plan of Merger,  dated June 25, 2008,  by and
                    among Community  Bankshares,  Inc., Community Resource Bank,
                    N. A.,  and  First  Citizens  Bank and Trust  Company,  Inc.
                    (Incorporated  by reference to  Registrant's  Form 8-K filed
                    July 1, 2008)

               31-1 Rule   13a-14(a)/15d-14(a)    Certification   of   principal
                    executive officer

               31-2 Rule   13a-14(a)/15d-14(a)    Certification   of   principal
                    financial officer

               32   Certifications Pursuant to 18 U.S.C. Section 1350



                                       28
<PAGE>


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: August 7, 2008

COMMUNITY BANKSHARES, INC.

By:  s/  Samuel L. Erwin
     -------------------------------------------
        Samuel L. Erwin
         Chief Executive Officer

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




                                       29
<PAGE>

                                  EXHIBIT INDEX



Exhibits       2    Agreement  and Plan of Merger,  dated June 25, 2008,  by and
                    among Community  Bankshares,  Inc., Community Resource Bank,
                    N. A.,  and  First  Citizens  Bank and Trust  Company,  Inc.
                    (Incorporated  by reference to  Registrant's  Form 8-K filed
                    July 1, 2008)

               31-1 Rule   13a-14(a)/15d-14(a)    Certification   of   principal
                    executive officer

               31-2 Rule   13a-14(a)/15d-14(a)    Certification   of   principal
                    financial officer

               32   Certifications Pursuant to 18 U.S.C. Section 1350



                                       30