UNITED STATES 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 September 30, 2003  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)


                              791 Broughton Street
                        Orangeburg, South Carolina 29115
--------------------------------------------------------------------------------
               (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 an  accelerated  filer
(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, 4,321,941 shares outstanding on November 1, 2003.



<PAGE>


                           COMMUNITY BANKSHARES, INC.

                                    FORM 10-Q

                                      Index

<TABLE>
<CAPTION>
                                                                                                                     Page
PART I -          FINANCIAL INFORMATION

Item 1.           Financial Statements

<S>               <C>                                                                                                   <C>
                  Consolidated Balance Sheet .......................................................................     3
                  Consolidated Statement of Income .................................................................     4
                  Consolidated Statement of Changes in Shareholders' Equity ........................................     5
                  Consolidated Statement 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 ............     9
Item 3.           Quantitative and Qualitative Disclosures About Market Risk .......................................    17
Item 4.           Controls and Procedures ..........................................................................    18

PART II -         OTHER INFORMATION

Item 6.           Exhibits and Reports on Form 8-K .................................................................    18

SIGNATURES .........................................................................................................    19
</TABLE>



                                       2
<PAGE>


                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

COMMUNITY BANKSHARES, INC.
Consolidated Balance Sheet
<TABLE>
<CAPTION>
                                                                                                      (Unaudited)
                                                                                                      September 30,     December 31,
                                                                                                          2003               2002
                                                                                                          ----               ----
                                                                                                           (Dollars in thousands)
Assets
<S>                                                                                                    <C>                <C>
     Cash and due from banks .................................................................         $  16,381          $  14,738
     Federal funds sold ......................................................................            27,714             23,831
                                                                                                       ---------          ---------
            Total cash and cash equivalents ..................................................            44,095             38,569
     Interest bearing deposits in other banks ................................................             1,371                511
     Securities available-for-sale ...........................................................            54,329             53,066
     Loans held for sale .....................................................................            21,983             24,664
     Loans ...................................................................................           323,992            306,484
         Less, allowance for loan losses .....................................................            (4,030)            (3,573)
                                                                                                       ---------          ---------
            Net loans ........................................................................           319,962            302,911
     Premises and equipment - net ............................................................             7,109              6,376
     Accrued interest receivable .............................................................             2,057              2,131
     Intangible assets .......................................................................             7,712              7,896
     Other assets ............................................................................             1,868              1,196
                                                                                                       ---------          ---------

            Total assets .....................................................................         $ 460,486          $ 437,320
                                                                                                       =========          =========

Liabilities
     Deposits
         Non-interest bearing ................................................................         $  54,462          $  47,128
         Interest bearing ....................................................................           301,071            289,934
                                                                                                       ---------          ---------
            Total deposits ...................................................................           355,533            337,062
     Federal funds purchased and securities
         sold under agreements to repurchase .................................................            16,161             16,302
     Federal Home Loan Bank advances .........................................................            20,140             20,210
     Lines of credit payable .................................................................            19,026             18,249
     Accrued interest payable ................................................................               766                759
     Other liabilities .......................................................................             1,888              1,021
                                                                                                       ---------          ---------
            Total liabilities ................................................................           413,514            393,603
                                                                                                       ---------          ---------

Shareholders' equity
     Common stock - no par value; 12,000,000 shares authorized; issued and
         outstanding - 4,318,393 for 2003 and
         4,304,384 for 2002 ..................................................................            29,250             29,090
     Retained earnings .......................................................................            17,704             14,529
     Accumulated other comprehensive income ..................................................                18                 98
                                                                                                       ---------          ---------
            Total shareholders' equity .......................................................            46,972             43,717
                                                                                                       ---------          ---------

            Total liabilities and shareholders' equity .......................................         $ 460,486          $ 437,320
                                                                                                       =========          =========
</TABLE>


See accompanying notes to unaudited consolidated financial statements.


                                       3
<PAGE>

COMMUNITY BANKSHARES, INC.
Consolidated Statement of Income
<TABLE>
<CAPTION>
                                                                                               (Unaudited)
                                                                                        Period Ended September 30,
                                                                                        --------------------------
                                                                              Three Months                      Nine Months
                                                                              ------------                      -----------
                                                                         2003             2002              2003             2002
                                                                         ----             ----              ----             ----
                                                                                   (Dollars in thousands, except per share)
Interest and dividend income
<S>                                                                     <C>              <C>              <C>               <C>
     Loans, including fees ....................................         $  5,698         $  5,563         $ 16,789          $ 14,505
     Interest bearing deposits in other banks .................                5                8               14                18
     Debt securities ..........................................              365              668            1,210             1,526
     Dividends ................................................               18               26               58                89
     Federal funds sold .......................................               69               87              218               254
                                                                        --------         --------         --------          --------
         Total interest and dividend income ...................            6,155            6,352           18,289            16,392
                                                                        --------         --------         --------          --------

Interest expense
     Time deposits $100M and over .............................              382              496            1,221             1,410
     Other deposits ...........................................              993            1,254            3,191             3,460
                                                                        --------         --------         --------          --------
         Total deposits .......................................            1,375            1,750            4,412             4,870
     Federal funds purchased and securities
       sold under agreements to repurchase ....................               28               31              103                75
     Other borrowed funds .....................................              491              384            1,340             1,090
                                                                        --------         --------         --------          --------
         Total interest expense ...............................            1,894            2,165            5,855             6,035
                                                                        --------         --------         --------          --------

Net interest income ...........................................            4,261            4,187           12,434            10,357
Provision for loan losses .....................................              232              239              775               597
                                                                        --------         --------         --------          --------
Net interest income after provision ...........................            4,029            3,948           11,659             9,760
                                                                        --------         --------         --------          --------

Noninterest income
     Service charges on deposit accounts ......................              893              761            2,514             1,843
     Securities gains (losses) ................................                -               15             (252)              119
     Mortgage brokerage income ................................            1,428              952            4,253             2,624
     Other ....................................................              202              189              639               492
                                                                        --------         --------         --------          --------
         Total noninterest income .............................            2,523            1,917            7,154             5,078
                                                                        --------         --------         --------          --------

Noninterest expenses
     Salaries and employee benefits ...........................            2,461            2,163            7,492             5,546
     Premises and equipment ...................................              464              393            1,270               998
     Other ....................................................            1,184              884            3,300             2,219
                                                                        --------         --------         --------          --------
         Total noninterest expenses ...........................            4,109            3,440           12,062             8,763
                                                                        --------         --------         --------          --------

Income before income taxes ....................................            2,443            2,425            6,751             6,075
Income tax expense ............................................              871              825            2,413             2,139
                                                                        --------         --------         --------          --------
Net income ....................................................         $  1,572         $  1,600         $  4,338          $  3,936
                                                                        ========         ========         ========          ========

Per share
     Net income ...............................................         $   0.36         $   0.37         $   1.00          $   1.13
     Net income, assuming dilution ............................             0.35             0.36             0.98              1.09
     Cash dividends declared ..................................             0.09             0.08             0.27              0.24
</TABLE>



See accompanying notes to unaudited consolidated financial statements.

                                       4
<PAGE>

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

<TABLE>
<CAPTION>
                                                                       (Unaudited)

                                                                       Common Stock
                                                                       ------------                                 Accumulated
                                                                 Number of                  Retained    Other Comprehensive
                                                                 Shares          Amount     Earnings         Income         Total
                                                                 ------          ------     --------         ------         -----
                                                                                      (Dollars in thousands)

<S>                                                             <C>           <C>           <C>            <C>            <C>
Balance, January 1, 2002 ..................................     3,299,674     $  17,208     $  10,346      $      (7)     $  27,547
                                                                                                                          ---------
Comprehensive income:
    Net income ............................................             -             -         3,936              -          3,936
    Unrealized holding gains and losses
      on available-for-sale securities arising
      during the period, net of income
      taxes of $168 .......................................             -             -             -            328            328
    Reclassification adjustment for losses (gains)
      realized in income, net of
      income taxes of $40 .................................             -             -             -            (79)           (79)
                                                                                                                          ---------
      Total other comprehensive income ....................             -             -             -              -            249
                                                                                                                          ---------
        Total comprehensive income ........................             -             -             -              -          4,185
                                                                                                                          ---------
Exercise of stock options .................................         4,710            40             -              -             40
Common stock issued in purchase of
      Ridgeway Bankshares, Inc., net of
        related expenses of $178 ..........................     1,000,000        11,842             -              -         11,842
Cash dividends declared - $.24 per share ..................             -             -          (873)             -           (873)
                                                                ---------     ---------     ---------      ---------      ---------
Balance, September 30, 2002 ...............................     4,304,384     $  29,090     $  13,409      $     242      $  42,741
                                                                =========     =========     =========      =========      =========


Balance, January 1, 2003 ..................................     4,304,384     $  29,090     $  14,529      $      98      $  43,717
                                                                                                                          ---------
Comprehensive income:
    Net income ............................................             -             -         4,338              -          4,338
    Unrealized holding gains and losses
      on available-for-sale securities arising
      during the period, net of income
      taxes of $136 .......................................             -             -             -           (242)          (242)
    Reclassification adjustment for losses (gains)
      realized in income, net of
      income taxes of $90 .................................             -             -             -            162            162
                                                                                                                          ---------
      Total other comprehensive income ....................             -             -             -              -            (80)
                                                                                                                          ---------
        Total comprehensive income ........................             -             -             -              -          4,258
                                                                                                                          ---------
Exercise of stock options .................................        14,009           160             -              -            160
Cash dividends declared - $.27 per share ..................             -             -        (1,163)             -         (1,163)
                                                                ---------     ---------     ---------      ---------      ---------
Balance, September 30, 2003 ...............................     4,318,393     $  29,250     $  17,704      $      18      $  46,972
                                                                =========     =========     =========      =========      =========
</TABLE>










See accompanying notes to unaudited consolidated financial statements.


                                       5
<PAGE>

COMMUNITY BANKSHARES, INC.
Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
                                                                                                                (Unaudited)
                                                                                                     Nine Months Ended September 30,
                                                                                                     -------------------------------
                                                                                                         2003                 2002
                                                                                                         ----                 ----
                                                                                                          (Dollars in thousands)
Cash flows from operating activities
<S>                                                                                                  <C>                  <C>
     Net income ..................................................................................   $   4,338            $   3,936
     Adjustments to reconcile net income to net cash provided by operating activities
            Depreciation and amortization ........................................................         550                  427
            Amortization of intangibles ..........................................................         184                   62
            Net amortization (accretion) of securities ...........................................         620                    -
            Provision for loan losses ............................................................         775                  597
            Net realized gains on sales of securities available-for-sale .........................         (73)                (119)
            Net realized losses on other dispositions of securities available-for-sale ...........         325                    -
            Net loss realized on disposition of equipment ........................................           5                    -
            Net gain realized on sale of other real estate .......................................          (9)                   -
            Proceeds from sales of loans held for sale ...........................................     250,564              125,639
            Originations of loans held for sale ..................................................    (247,883)            (130,941)
            (Increase) decrease in interest receivable ...........................................          74                 (522)
            Net (increase) decrease in other assets ..............................................        (387)               1,039
            Increase (decrease) in interest payable ..............................................           7                  (12)
            Net increase in other liabilities ....................................................         867                  428
                                                                                                     ---------            ---------
                Net cash provided by operating activities ........................................       9,957                  534
                                                                                                     ---------            ---------
Cash flows from investing activities
     Net (increase) decrease in interest bearing deposits in other banks .........................        (860)               1,737
     Purchases of available-for-sale securities ..................................................     (54,973)             (71,148)
     Maturities, calls and paydowns of available-for-sale securities .............................      49,817               35,350
     Proceeds from sales of available-for-sale securities ........................................       2,895               20,543
     Net increase in loans made to customers .....................................................     (18,179)             (70,076)
     Net cash acquired in purchase method acquisition ............................................           -                4,922
     Proceeds from sales of other real estate owned ..............................................         123                    -
     Purchases of premises and equipment .........................................................      (1,288)              (1,674)
                                                                                                     ---------            ---------
                Net cash used by investing activities ............................................     (22,465)             (80,346)
                                                                                                     ---------            ---------
Cash flows from financing activities
     Net increase in demand, savings and time deposits ...........................................      18,471               78,692
     Net (decrease) increase in short-term borrowings ............................................        (141)               5,838
     Net increase under lines of credit ..........................................................         777                2,472
     Repayment of Federal Home Loan Bank advances ................................................         (70)                 (70)
     Exercise of stock options ...................................................................         160                   40
     Expenses related to issuance of common stock ................................................           -                 (178)
     Cash dividends paid .........................................................................      (1,163)                (873)
                                                                                                     ---------            ---------
                Net cash provided by financing activities ........................................      18,034               85,921
                                                                                                     ---------            ---------
Increase in cash and cash equivalents ............................................................       5,526                6,109
Cash and cash equivalents, beginning of period ...................................................      38,569               25,649
                                                                                                     ---------            ---------
Cash and cash equivalents, end of period .........................................................   $  44,095            $  31,758
                                                                                                     =========            =========

</TABLE>







See accompanying notes to unaudited consolidated financial statements.


                                       6
<PAGE>

COMMUNITY BANKSHARES, INC.

Notes to Unaudited Consolidated Financial Statements

Accounting Principles - A summary of significant accounting policies is included
in Community  Bankshares,  Inc.'s (the "Company" or "CBI") Annual Report for the
year ended December 31, 2002 on Form 10-K filed with the Securities and Exchange
Commission.   Certain  amounts  in  the  2002  financial  statements  have  been
reclassified   to   conform   to   the   current   period   presentation.   Such
reclassifications  had no effect on previously reported  shareholders' equity or
net income.

Management  Opinion - In the opinion of management,  the accompanying  unaudited
consolidated  financial  statements of Community  Bankshares,  Inc.  reflect all
adjustments  necessary  for a fair  presentation  of the  results of the periods
presented.  Such adjustments were of a normal,  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 Annual Report for the year ended December 31, 2002 on Form 10-K
filed with the Securities and Exchange Commission.

Supplemental Statement of Cash Flows Information - Supplemental  information for
the consolidated statement of cash flows is as follows:

<TABLE>
<CAPTION>
                                                                                                              (Unaudited)
                                                                                                     Nine Months Ended September 30,
                                                                                                          2003                 2002
                                                                                                          ----                 ----
                                                                                                          (Dollars in thousands)
Supplemental Disclosures of Cash Flow Information
<S>                                                                                                      <C>                 <C>
     Cash payments for interest ............................................................             $ 5,849             $ 6,047
                                                                                                         =======             =======
     Cash payments for income taxes ........................................................             $ 2,120             $ 2,260
                                                                                                         =======             =======
Non-Cash Investing Activities
     Transfers of loans receivable to other real estate ....................................             $   353             $     -
                                                                                                         =======             =======
     Common stock issued in purchase of Ridgeway Bankshares, Inc. ..........................             $     -             $12,020
                                                                                                         =======             =======
</TABLE>

Nonperforming  Loans - As of  September  30,  2003,  there  were  $2,214,000  in
nonaccrual  loans  and  $770,000  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 and net income per
share, assuming dilution, were computed as follows:


                                       7
<PAGE>

<TABLE>
<CAPTION>
                                                                                                 (Unaudited)
                                                                                        Period Ended September 30,
                                                                                        --------------------------
                                                                          Three Months                            Nine Months
                                                                          ------------                            -----------
                                                                     2003               2002               2003              2002
                                                                     ----               ----               ----              ----
                                                                           (Dollars in thousands, except per share amounts)
Net income per share, basic
<S>                                                              <C>                <C>                <C>                <C>
  Numerator - net income ...............................         $    1,572         $    1,600         $    4,338         $    3,936
                                                                 ==========         ==========         ==========         ==========
  Denominator
    Weighted average common shares
      issued and outstanding ...........................          4,315,482          4,309,094          4,309,673          3,487,790
                                                                 ==========         ==========         ==========         ==========

      Net income per share, basic ......................         $      .36         $      .37         $     1.00         $     1.13
                                                                 ==========         ==========         ==========         ==========

Net income per share, assuming dilution
  Numerator - net income ...............................         $    1,572         $    1,600         $    4,338         $    3,936
                                                                 ==========         ==========         ==========         ==========
  Denominator
    Weighted average common shares
      issued and outstanding ...........................          4,315,482          4,309,094          4,309,673          3,487,790
    Effect of dilutive stock options ...................            113,966            111,593            113,966            111,593
                                                                 ----------         ----------         ----------         ----------
               Total shares ............................          4,429,448          4,420,687          4,423,639          3,599,383
                                                                 ==========         ==========         ==========         ==========

      Net income per share, assuming dilution ..........         $      .35         $      .36         $      .98         $     1.09
                                                                 ==========         ==========         ==========         ==========
</TABLE>

Stock-Based  Compensation  - The  Company  has  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.  Options issued under the Company's  plans
have no intrinsic value at the grant date and no compensation cost is recognized
for them in  accordance  with APB No.  25.  Statement  of  Financial  Accounting
Standards ("SFAS") No. 123, "Accounting for Stock-Based  Compensation," requires
entities to provide proforma  disclosures of net income, and earnings per share,
as if the fair value based method  accounting  promulgated  by that standard had
been applied.  While the Company has adopted the  disclosure  provisions of SFAS
No.  123, as amended,  there are no current  intentions  to adopt the fair value
recognition provisions of that Statement.

Options issued by the Company  generally vest  immediately,  but no options were
issued during the 2003 or 2002 nine-month periods. Consequently, no compensation
costs as computed  under the SFAS No. 123  fair-value  method  were  incurred in
either  2003 or 2002,  and no such costs have been  carried  forward  from prior
years.  Therefore,  the proforma disclosures  otherwise required by SFAS No. 123
are not applicable in the 2003 and 2002 periods.






                                       8
<PAGE>

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

FORWARD LOOKING STATEMENTS

         Statements   included  in  Management's   Discussion  and  Analysis  of
Financial Condition and Results of Operations which are not historical in nature
are intended to be, and are hereby  identified as "forward  looking  statements"
for  purposes  of the safe  harbor  provided  by Section  21E of the  Securities
Exchange Act of 1934, as amended.  Forward-looking statements include statements
concerning plans, objectives,  goals,  strategies,  future events or performance
and underlying  assumptions and other statements which are other than statements
of historical facts. Such forward-looking statements may be identified,  without
limitation,  by the  use of the  words  "anticipates,"  "estimates,"  "expects,"
"intends," "plans," "predicts,"  "projects," and similar expressions.  Community
Bankshares,   Inc.'s  ("CBI"  or  "the  Company")   expectations,   beliefs  and
projections  are  expressed  in good  faith  and are  believed  by CBI to have a
reasonable basis,  including  without  limitation,  management's  examination of
historical  operating  trends,  data  contained in CBI's  records and other data
available  from third parties,  but there can be no assurance that  management's
beliefs, expectations or projections will result or be achieved or accomplished.
CBI  cautions  readers  that  forward  looking  statements,   including  without
limitation,  those relating to CBI's recent and continuing expansion, its future
business  prospects,   revenues,  working  capital,  liquidity,  capital  needs,
interest  costs,  income,  and  allowance for loan losses are subject to certain
risks and  uncertainties  that could cause actual  results to differ  materially
from those indicated in the forward looking statements, due to several important
factors herein identified,  among others, and other risks and factors identified
from  time to time in CBI's  reports  filed  with the  Securities  and  Exchange
Commission.

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 Annual Report on Form 10-K.

         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 four  community  banks  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" in the
Annual  Report  on Form  10-K  for  2002  for a  detailed  description  of CBI's
estimation process and methodology related to the allowance for loan losses.

RESULTS OF OPERATIONS

Earnings Performance

Three Months Ended September 30, 2003 and 2002

         For the quarter ended September 30, 2003, CBI earned  consolidated  net
income of $1,572,000,  compared with  $1,600,000  for the  comparable  period of
2002, a decrease of $28,000,  or 1.8%.  Basic earnings per share was $.36 in the
2003 quarter compared with $.37 for the 2002 quarter. Diluted earnings per share
was $.35 for the 2003 quarter compared with $.36 for the 2002 quarter.  With the
exception  that the  results  of  operations  for  both the 2003 and 2002  third
quarters include the effects of the acquisition of Ridgeway Bankshares,  Inc. on
July 1,  2002,  the  changes  in the  items  comprising  net  income,  which are
discussed  below,  resulted from  essentially  the same factors  discussed below
regarding  the results of  operations  for the nine months ended  September  30,
2003.


                                       9
<PAGE>

<TABLE>
<CAPTION>
                                                                        Summary Income Statement (Dollars in thousands)
                                                                        -----------------------------------------------
                                                                                                         Dollar           Percentage
For the Three Months Ended September 30,                            2003               2002              Change             Change
                                                                    ----               ----              ------             ------
<S>                                                               <C>                 <C>                 <C>              <C>
Interest income ....................................              $6,155              $6,352              $ (197)            -3.1%
Interest expense ...................................               1,894               2,165                (271)           -12.5%
                                                                  ------              ------              ------
Net interest income ................................               4,261               4,187                  74              1.8%
Provision for loan losses ..........................                 232                 239                  (7)            -2.9%
Noninterest income .................................               2,523               1,917                 606             31.6%
Noninterest expense ................................               4,109               3,440                 669             19.4%
Income tax expense .................................                 871                 825                  46              5.6%
                                                                  ------              ------              ------
                Net income .........................              $1,572              $1,600              $  (28)            -1.8%
                                                                  ======              ======              ======
</TABLE>

Nine Months Ended September 30, 2003 and 2002

         CBI's  consolidated  net income for the nine months ended September 30,
2003 was $4,388,000 in 2003, up 10.2% from  $3,936,000  for the comparable  2002
period.  However,  basic earnings per share for the 2003 period was $1.00,  down
from $1.13 per basic share in 2002.  Diluted  earnings per share was $.98,  down
from the $1.09  amount  for  2002.  The  decreases  in both  earnings  per share
measures were attributable  primarily to the dilutive effects of the issuance of
1,000,000  additional  shares of CBI common stock on July 1, 2002, in connection
with the acquisition of Ridgeway  Bancshares,  Inc.  ("Ridgeway").  For the nine
months ended  September 30, 2003, the annualized  return on average total assets
(ROA) was 1.29%  compared  with  1.46% for the  comparable  period in 2002.  The
annualized return on average  shareholders' equity (ROE) for the 2003 nine month
period was 12.63%  compared  with  15.83%  for the 2002 nine month  period.  The
declines in both ROA and ROE are also  primarily  attributable  to the  Ridgeway
acquisition  because earnings have not yet increased in proportion to the volume
of acquired  assets and equity due to  amortization  of the related core deposit
intangible asset, systems conversion, training and other related factors.

<TABLE>
<CAPTION>
                                                                             Summary Income Statement (Dollars in thousands)
                                                                             -----------------------------------------------
                                                                                                           Dollar         Percentage
For the Nine Months Ended September 30,                             2003                2002               Change           Change
---------------------------------------                             ----                ----               ------           ------
<S>                                                               <C>                 <C>                 <C>               <C>
Interest income .....................................             $18,289             $16,392             $ 1,897           11.6%
Interest expense ....................................               5,855               6,035                (180)          -3.0%
                                                                  -------             -------             -------
Net interest income .................................              12,434              10,357               2,077           20.1%
Provision for loan losses ...........................                 775                 597                 178           29.8%
Noninterest income ..................................               7,154               5,078               2,076           40.9%
Noninterest expense .................................              12,062               8,763               3,299           37.6%
Income tax expense ..................................               2,413               2,139                 274           12.8%
                                                                  -------             -------             -------
                Net income ..........................             $ 4,338             $ 3,936             $   402           10.2%
                                                                  =======             =======             =======
</TABLE>

         CBI's net  interest  margin for the nine month 2003  period as compared
with the 2002 period was negatively  influenced by the decline in interest rates
to historically low levels.  During the twelve-month  period ended September 30,
2003,  the  Federal  Reserve  Bank's Open  Market  Committee  lowered key target
interest  rates on two  occasions,  resulting  in total  reductions  of 75 basis
points. Consequently,  the prime rate, a key determinant of rates charged to the
banking  subsidiaries'  most  credit-worthy  customers,  as  well  as  a  factor
considered in all loan-pricing decisions, was similarly reduced. As of September
30, 2003,  approximately  $133,527,000,  or 41.2%,  of the loan  portfolio  were
variable rate loans directly indexed to movements in the prime rate.  Similarly,
in response to the Federal  Reserve's  rate  reductions,  other  market rates of
interest  have  declined.  Securities  issuers  have  taken  advantage  of these
circumstances by redeeming securities that were issued with call provisions, and
reissuing  new  securities  at lower  rates.  CBI's  banking  subsidiaries  have
responded to the lower  interest  rates earned by reducing the rates offered for
deposits.  The  reductions in rates paid on deposits have been generally in line
with the lower  interest  rates being offered by CBI's  competitors  for deposit
products in CBI's market  areas.  However,  CBI's  ability to influence  its net
interest  margin by continuing to reduce the interest rates offered for deposits
is  expected  to be limited  since the average  rate paid for  interest  bearing
deposits during the 2003 nine-month period was just 1.97%.


                                       10
<PAGE>

         Throughout  both  the  2003  and 2002  periods,  the  historically  low
interest rate environment produced some significant positive effects on earnings
because of the robust demand for both purchase-money  residential mortgage loans
and  refinancing  of  existing  residential  mortgage  loans.  Such  lending  is
conducted by CBI's banking  subsidiaries and the mortgage brokerage  subsidiary.
The banks more often lend for their own portfolios and realize  interest  income
over the lives of the loans, while the mortgage brokerage  subsidiary  generally
originates  loans for sale in the secondary  market to realize  origination fees
and gains on such sales. The amount of income realized in the mortgage brokerage
subsidiary  is  therefore  influenced  primarily by the number of loans that the
company originates and sells. Changes in the market rates of interest affect the
demand for home mortgage originations; therefore, the resulting amount of income
from this  activity  can  increase  or  decrease  materially.  If home  mortgage
interest rates rise  significantly from recent  historically low levels,  income
from mortgage originations will likely be reduced.

Net Interest Income

         Net interest income is the amount of interest income earned on interest
earning assets (loans, securities, interest bearing deposits in 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 CBI'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 these assets.

         Interest  income  decreased  by  $197,000,  or 3.1%,  in the 2003 third
quarter compared with the same 2002 quarter. This occurred primarily as a result
of lower  amounts of interest  income  derived from  investment  securities  and
federal funds sold. As redemptions of securities  occurred,  as discussed above,
the banks reinvested those proceeds generally into similar,  but lower yielding,
securities.  However,  those  negative  factors  were  partially  offset  by the
positive  effects of increasing the average amount of the  higher-yielding  loan
portfolio in the 2003 period.  Interest  expense  declined  significantly in the
2003 quarter compared with the 2002 quarter.  Decreases in market interest rates
for deposit  products and other  borrowings  have allowed CBI's  subsidiaries to
decrease  significantly  the rates  offered for  deposits and accepted for other
borrowed funds.

         During  the  2003  nine  month  period,   interest   income   increased
$1,897,000, or 11.6%. Total average interest earning assets for 2003 nine months
period increased  $85,518,000 or 25.4% over the same 2002 period. The July, 2002
Ridgeway  acquisition  accounted for about $54,697,000 or 64.0% of the increase.
The  Ridgeway  acquisition  accounts  for the  majority of the  increases in the
volumes of the individual earning assets categories.  While the average yield on
interest  earning  assets  declined by 72 basis  points (a basis point is .01%),
interest income  nevertheless  increased because the effect of the higher volume
of interest earning assets more than offset the effect of the reduced yields.

         Interest expense  decreased  $180,000,  or 3.0% for the 2003 nine month
period.   Total  average  interest   bearing   liabilities  for  2003  increased
$67,115,000 or 23.6% over 2002. The Ridgeway acquisition contributed $44,730,000
or 66.6% of the increase. That acquisition also accounts for the majority of the
increases  in  the  volumes  of  individual   categories  of  interest   bearing
liabilities.  The decrease in interest expense occurred because the savings from
the 61 basis point decrease in rates paid slightly  exceeded the additional cost
associated with the increased volume of interest bearing liabilities.

         For the nine month period of 2003, net interest income was $12,434,000,
an increase of  $2,077,000  or 20.1% over the 2002 period.  Volume  increases in
interest  earning  assets,  primarily  resulting from the Ridgeway  acquisition,
account for 91% of this increase.  The average interest rate spread  (annualized
average yield on interest  earning assets less the average rate paid on interest
bearing liabilities)  declined only 11 basis points because the reduction in the
average  yield on interest  earning  assets was largely  compensated  for by the
lower  rates  paid for  interest  bearing  sources  of  funds.  The net yield on
interest  earning  assets  (annualized  net interest  income  divided by average
interest  earning assets) was 3.92%, a decrease of 19 basis points from the 2002
figure.  The net yield was positively  influenced by an $18,403,000  increase in
the average  amount of interest  free funds  supporting  earning  assets  (total
average interest earning assets less total average interest bearing liabilities)
derived  primarily from the Ridgeway  acquisition.  Such interest free funds are
comprised primarily of non-interest bearing deposits and equity capital.


                                       11
<PAGE>

                           Community Bankshares, Inc.
                       Average Balances, Yields and Rates
                         Nine Months Ended September 30,

<TABLE>
<CAPTION>
                                                                              2003                                2002
                                                               --------------------------------    ---------------------------------
                                                                            Interest                            Interest
                                                               Average      Income/     Yields/    Average       Income/     Yields/
                                                               Balances     Expense      Rates     Balances      Expense      Rates
                                                               --------     -------      -----     --------      -------      -----
                                                                                      (Dollars in thousands)
Assets
<S>                                                          <C>          <C>             <C>     <C>          <C>             <C>
Interest earning deposits ...............................    $     903    $      14       2.07%   $   1,388    $      18       1.73%
Investment securities - taxable .........................       43,105        1,023       3.16%      43,507        1,504       4.61%
Investment securities - tax exempt ......................        9,068          245       3.60%       3,290          111       4.50%
Federal funds sold ......................................       26,754          218       1.09%      19,672          254       1.72%
Loans, including loans held for sale ....................      341,761       16,789       6.55%     268,216       14,505       7.21%
                                                             ---------    ---------               ---------    ---------
          Total interest earning assets .................      421,591       18,289       5.78%     336,073       16,392       6.50%
Cash and due from banks .................................       13,621                               13,569
Allowance for loan losses ...............................       (3,800)                              (3,085)
Premises and equipment ..................................        6,863                                5,830
Intangible assets .......................................        7,803                                3,172
Other assets ............................................        3,165                                3,374
                                                             ---------                            ---------
          Total assets ..................................    $ 449,243                            $ 358,933
                                                             =========                            =========

Liabilities and shareholders' equity
Interest bearing deposits
      Interest bearing transaction accounts .............    $  68,791    $     586       1.14%   $  52,748    $     668       1.69%
      Savings ...........................................       43,194          147       0.45%      41,270          230       0.74%
      Time deposits .....................................      186,540        3,679       2.63%     155,153        3,972       3.41%
                                                             ---------    ---------               ---------    ---------
          Total interest bearing deposits ...............      298,525        4,412       1.97%     249,171        4,870       2.61%
Federal funds purchased and securities
      sold under agreements to repurchase ...............       15,990          103       0.86%       6,127           75       1.63%
Lines of credit payable .................................       16,712          500       3.99%       8,895          249       3.73%
Federal Home Loan Bank advances .........................       20,349          840       5.50%      20,268          841       5.53%
                                                             ---------    ---------               ---------    ---------
          Total interest bearing liabilities ............      351,576        5,855       2.22%     284,461        6,035       2.83%
Noninterest bearing demand deposits .....................       49,930                               38,640
Other liabilities .......................................        1,955                                2,680
Shareholders' equity ....................................       45,782                               33,152
                                                             ---------                            ---------
Total liabilities and shareholders' equity ..............    $ 449,243                            $ 358,933
                                                             =========                            =========

Interest rate spread ....................................                                 3.56%                                3.67%
Net interest income and net yield
      on earning assets .................................                 $  12,434       3.92%                $  10,357       4.11%
</TABLE>


Yields and rates are annualized.
Rate/volume  amount  has been  allocated  to "Rate"  and  "Volume"  amounts on a
prorata basis.



                                       12
<PAGE>


Provision and Allowance for Loan Losses

         The  provision  for  loan  losses  for the  third  quarter  of 2003 was
relatively  static at $232,000 as compared  with  $239,000 for the 2002 quarter.
Since the Ridgeway acquisition occurred at the beginning of the third quarter of
2002, the quarters are more  comparable than the  pre-acquisition  first half of
2002. During the 2003 third quarter,  net loan charge-offs were $125,000 and the
allowance for loan losses as a percentage of loans outstanding  (excluding loans
held for sale) grew  slightly to 1.24% as compared  with 1.23% at the end of the
second quarter of 2003.  Total  non-performing  loans  (non-accrual and accruing
past due 90 days and over) increased $136,000 during the third quarter of 2003.

         The  provision  for loan  losses  for the nine  month  2003  period was
$775,000,  an increase of $178,000 or 29.8% over the comparable  period of 2002.
Net charge-offs in the 2003 period were $318,000,  compared with $374,000 in the
2002 period.  The allowance for loan losses stood at 1.24% of loans  outstanding
(excluding  loans  held  for  sale)  compared  with  1.17%  at the end of  2002.
Non-performing  loans  totaled  $2,984,000  as of the  end of  the  2003  period
compared  with  $2,536,000  as of the end of 2002,  an  increase  of $448,000 or
17.7%.  Of the amount of non-accrual  loans,  $1,463,000 or 66.1% was secured by
commercial  real estate,  and $343,000 or 15.5% was secured by residential  real
estate.  The coverage ratio (allowance for loan losses divided by non-performing
loans) was 1.35 as of the end of the 2003 third  quarter and was 1.41 at the end
of 2002.

         Based on current levels of  non-performing  and other potential problem
loans identified through the loan review process, including an evaluation of any
available collateral,  management believes that loan charge-offs in 2003 will be
somewhat less than the amount experienced in 2002 as such loans progress through
the collection,  foreclosure, and repossession process. Management believes that
the allowance  for loan losses,  as of September 30, 2003, is adequate to absorb
the inherent losses that remain in the loan portfolio.  Management will continue
to closely monitor the levels of non-performing  and potential problem loans and
address  the  weaknesses  in these  credits  to enhance  the amount of  ultimate
collection  or recovery of these  assets.  Management  considers  the levels and
trends in non-performing and past due loans in determining how the provision and
allowance for loan losses is estimated and adjusted.

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

<TABLE>
<CAPTION>
                                                                   September 30, 2003        December 31, 2002    September 30, 2002
                                                                   ------------------        -----------------    ------------------
                                                                                           (Dollars in thousands)
<S>                                                                      <C>                     <C>                     <C>
Allowance at beginning of period ...........................             $   3,573               $   2,830               $   2,830
Provision for loan losses ..................................                   775                   1,033                     597
Allowance of purchased company .............................                     -                     444                     444
Net charge-offs ............................................                  (318)                   (734)                   (374)
                                                                         ---------               ---------               ---------
Allowance at end of period .................................             $   4,030               $   3,573               $   3,497
                                                                         =========               =========               =========
Allowance as a percentage
  of loans outstanding .....................................                  1.24%                   1.17%                   1.17%


Loans at end of period .....................................             $ 323,992               $ 306,484               $ 300,051
                                                                         =========               =========               =========
</TABLE>


         Following is a summary of non-performing loans as of September 30, 2003
and  December  31,  2002.  There were no  restructured  loans  during any of the
periods listed below.

<TABLE>
<CAPTION>
                                                                                      September 30, 2003           December 31, 2002
                                                                                      ------------------           -----------------
                                                                                                   (Dollars in thousands)
Nonperforming loans
<S>                                                                                           <C>                      <C>
  Past due 90 days or more and still accruing ....................................            $  770                   $1,740
  Nonaccrual loans ...............................................................             2,214                      796
                                                                                              ------                   ------
                Total ............................................................            $2,984                   $2,536
                                                                                              ======                   ======
Nonperforming loans as a percentage
  of loans outstanding ...........................................................              0.92%                    0.83%
</TABLE>


                                       13
<PAGE>

Noninterest Income

         Non-interest income for the 2003 quarter increased $606,000,  or 31.6%,
over the 2002 quarter. The majority of the increase was attributable to mortgage
brokerage income which increased $476,000,  or 50.0%. Service charges on deposit
accounts  were up  $132,000.  There  were no  sales  of  securities  in the 2003
quarter;  however,  sales of available-for-sale  securities resulted in realized
net gains of $15,000 in 2002.

         Non-interest   income  for  the  2003  nine  month   period   increased
$2,076,000,  or 40.9%,  over 2002. Most of the increase was  attributable to the
$1,629,000 or 62.1% increase in mortgage brokerage income. Most of this increase
was generated by  origination  fees and gains on sales  realized in the mortgage
brokerage subsidiary. The historically low interest rate environment resulted in
a frenetic pace of home mortgage loan activity during the 2003 period.  However,
management does not expect this pace to continue  indefinitely.  Service charges
on deposit  accounts  were up $671,000 or 36.4% due to the July,  2002  Ridgeway
acquisition and to increased  numbers of accounts and chargeable  activity.  Net
losses on the sales and  dispositions  of  securities  were $252,000 in the 2003
period,  compared with net gains of $119,000 in the 2003 period. Included in the
2003 net securities losses is a $322,000 second quarter write-off of unamortized
premiums recorded on securities purchased in the Ridgeway  acquisition.  Many of
those  securities  were called for early  redemption by the issuers.  Management
believes that future amortization of the remaining Ridgeway acquisition premiums
will not have a significant effect on earnings because very few of the remaining
securities are subject to early redemption.  Other noninterest  income increased
$147,000, or 29.9%, primarily due to the Ridgeway acquisition.

Noninterest Expenses

         Noninterest  expenses  increased  $669,000,  or  19.4%,  for the  third
quarter of 2003 compared with the 2002 quarter.  Salaries and employee  benefits
were  up  $298,000,   or  13.8%,  with   approximately  half  of  this  increase
attributable to the mortgage brokerage subsidiary's  primarily  commission-based
compensation system.  Commissions paid increased because of the higher volume of
home  mortgage loan  originations  and sales.  Premises and  equipment  expenses
increased  $71,000,  or  18.1%,  primarily  due to higher  technology  costs and
relocation  and expansion of the mortgage  brokerage  subsidiary's  headquarters
office in Columbia, South Carolina. Other noninterest expenses were up $300,000,
or 33.9%,  mainly due to increased costs of computer  software and  maintenance,
implementation and promotion of imaging  technology for customer  statements and
other uses, and higher costs of professional services and other expenses related
to corporate  governance and other required  compliance with the  Sarbanes-Oxley
Act and its related regulations.

         During the first nine months of 2003,  noninterest  expenses  increased
$3,299,000,  or 37.6%,  as  compared  with the same 2002  period.  Salaries  and
employee benefits were up $1,946,000,  or 35.1%, with approximately  $667,000 of
this increase due to the July,  2002 Ridgeway  acquisition,  and $726,000 due to
the mortgage brokerage subsidiary's largely commission-based compensation system
and the higher  volume of home  mortgage  originations  and sales.  Premises and
equipment expenses were up $272,000,  or 27.3%, due to the Ridgeway acquisition,
higher  technology  costs,  and  the new  headquarters  office  of the  mortgage
brokerage  subsidiary.  Other expenses were up $1,081,000,  or 48.7%, due to the
Ridgeway  acquisition,  increased  costs of computer  software and  maintenance,
implementation and promotion of imaging  technology,  and professional  services
and corporate governance.

Income Tax Expense

         Income tax expense increased $46,000 and $274,000 due to higher taxable
income  for the  third  quarter  and  nine  months  ended  September  30,  2003,
respectively.  For the third quarter of 2003,  the  approximately  36% estimated
effective tax rate was higher than the 34% rate estimated for the same period of
2002.  The lower rate  applied  in 2002 was due to  previously  anticipated  tax
attributes of the Ridgeway acquisition.  The average income tax rates applied to
income before income taxes during 2003 and 2002 were  approximately 36% and 35%,
respectively.

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


                                       14
<PAGE>

source of funds for credit activities,  along with long-term borrowings from the
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  fluctuations  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 at September 30, 2003 were $355,533,000,  an increase of
$18,471,000  or 5.5% over the amount at December 31, 2002.  As of September  30,
2003,  the loan to deposit ratio was 91.1%,  compared with 90.9% at December 31,
2002.

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

CAPITAL RESOURCES

         CBI and its banking  subsidiaries 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 (FDICIA),  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  certain
levels, increasingly stringent regulatory corrective actions are mandated.

         The  September  30,  2003 risk  based  capital  ratios  for CBI and its
banking  subsidiaries  are presented in the following  table,  compared with the
"well  capitalized"  and minimum  ratios under the  regulatory  definitions  and
guidelines:

<TABLE>
<CAPTION>
                                                                                             September 30, 2003
                                                                                             ------------------
                                                                               Tier 1           Total Capital          Leverage
                                                                               ------           -------------          --------

<S>                                                                            <C>                  <C>                  <C>
Community Bankshares, Inc. ...........................................         11.83%               12.99%               8.63%
Orangeburg National Bank .............................................         12.53%               13.79%               9.27%
Sumter National Bank .................................................          8.99%               10.21%               7.35%
Florence National Bank ...............................................          9.74%               10.90%               8.78%
Bank of Ridgeway .....................................................         14.18%               15.13%               7.92%
Minimum "well capitalized" requirement ...............................          6.00%               10.00%               5.00%
Minimum requirement ..................................................          4.00%                8.00%               4.00%
</TABLE>


         As shown in the table  above,  each of the  capital  ratios  exceed the
regulatory  requirement for being considered "well  capitalized." In the opinion
of  management,  the CBI and the banking  subsidiaries'  current  and  projected
capital positions are adequate.

OFF-BALANCE-SHEET ACTIVITIES

         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
derivatives).  These transactions involve elements of credit,  interest rate and
liquidity risk of varying degrees. Such transactions are used by CBI for general
corporate  purposes.  As  of  September  30,  2003,  CBI  had  no  interests  in
non-consolidated special purpose entities (SPE's).

Commitments

         CBI's banking and mortgage brokerage subsidiaries are parties to credit
related financial instruments with  off-balance-sheet  risk in the normal course
of business to meet the  financing  needs of their  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 for
on-balance-sheet instruments.




                                       15
<PAGE>


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

                                                            September 30, 2003
                                                            ------------------
                                                                (Dollars in
                                                                 thousands)
Loan commitments ..........................................         $37,174
Standby letters of credit .................................           4,093


         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 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.

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.  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 are designated 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.  Because
CBI has  effectively  matched its forward sales  contracts to investors and rate
lock commitments to potential  borrowers,  no net gains or losses due to changes
in market interest rates have been recorded in the statement of income.

         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  September  30, 2003,  and the  estimated  fair values of those  financial
instruments  included in other assets and liabilities in the balance sheet as of
that date.




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<PAGE>

                                                          September 30, 2003
                                                          ------------------
                                                                      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 .....................................    $26,031      $   195
Forward sales contracts with investors
  of mortgage loans to be held for sale .............     26,031         (195)



ACCOUNTING AND REPORTING CHANGES

         In April 2003, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial  Accounting  Standards  ("SFAS") No. 149,  "Amendment  of
Statement 133 on Derivative  Instruments and Hedging  Activities."  SFAS No. 149
amends and clarifies  accounting for derivative  instruments,  including certain
derivative  contracts  embedded in other  contracts  and loan  commitments  that
relate to the  origination  of  mortgage  loans held for sale,  and for  hedging
activities under SFAS No. 133. SFAS No. 149 is generally effective for contracts
entered into or modified  after June 30, 2003.  The adoption of SFAS No. 149 did
not have a material  effect on the financial  condition or operating  results of
CBI.

         In May 2003,  the FASB  issued SFAS No.  150,  "Accounting  for Certain
Financial Instruments with Characteristics of both Liabilities and Equity." SFAS
No. 150 establishes  standards for how an issuer classifies and measures certain
financial  instruments with  characteristics  of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability (or as an asset in some circumstances). Many of those instruments
were previously  classified as equity.  SFAS No. 150 is generally  effective for
financial instruments entered into or modified after May 31, 2003, and otherwise
is effective at the beginning of the first interim period  beginning  after June
15,  2003.  The  adoption of SFAS No. 150 did not have a material  effect on the
financial condition or operating results of CBI.

         In January,  2003, the FASB issued its  Interpretation No. 46 ("FIN No.
46"), "Consolidation of Variable Interest Entities, an interpretation of ARB No.
51," to address  consolidation  by business  enterprises  of  variable  interest
entities ("VIEs") to which the usual consolidation criteria described in ARB No.
51,  "Consolidated  Financial  Statements" do not apply because the VIEs have no
ownership  interest or otherwise  are not subject to control  through  ownership
voting interests.  FIN No. 46 applies to VIEs created after January 1, 2003, and
to VIEs in which an enterprise  acquires an interest after that date. It applies
to the Company as of the beginning of the first interim period  beginning  after
June 15, 2003,  and to VIEs in which the Company holds a variable  interest that
it acquired prior to February 1, 2003. CBI currently holds no interests in VIEs.
The  adoption of FIN No. 46 as of July 1, 2003 had no effect on CBI's  financial
position or results of operations.


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 September  30, 2003,  CBI is positioned so
that net interest  income would increase  $375,000 and net income would increase
$273,000 in the next  twelve  months if  interest  rates rose 100 basis  points.
Conversely,  net  interest  income would  decline  $375,000 and net income would
decline  $273,000 in the next twelve months if interest rates declined 100 basis
points. In the current interest rate environment, it is unlikely that there will


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<PAGE>

be any large rate decreases in the immediate future.  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, its customers and the issuers
of its investment  securities could undertake in response to changes in interest
rates.

         As of September  30,  2003,  there was no  significant  change from the
interest rate  sensitivity  analysis for the various  changes in interest  rates
calculated  as of December 31, 2002.  The foregoing  disclosures  related to the
market risk of CBI should be read in connection with Management's Discussion and
Analysis of Financial  Position and Results of  Operations  included in the 2002
Annual Report on Form 10-K.


Item 4.  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)  and  240.15d-15(e)),  the  Company's  chief
executive  officer and chief financial  officer concluded that the effectiveness
of such  controls and  procedures,  as of the end of the period  covered by this
quarterly report, was adequate.

         No disclosure is required under 17 C.F.R. Section 229.308(c).


                           PART II--OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K

a)  Exhibits              31.     Rule 13a-14(a)/15d-14(a) Certifications

                          32.     Section 1350 Certifications


b)   Reports on Form 8-K. Form 8-K filed August 7, 2003,  pursuant to Item 12 of
                          that Form.

                          Form 8-K filed August 21, 2003,  pursuant to
                          Item 9 of that Form.







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<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: November 11, 2003

COMMUNITY BANKSHARES, INC.

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

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



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