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 March 31, 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,4,455,056 shares outstanding on May 2, 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                                           23

Item 4T.          Controls and Procedures                                                                              24

PART II -         OTHER INFORMATION

Item 2.           Unregistered Sales of Equity Securities and Use of Proceeds
                                                                                                                       24

Item 6.           Exhibits
                                                                                                                       25

SIGNATURES                                                                                                             26
</TABLE>



                                       2
<PAGE>


                         PART I - FINANCIAL INFORMATION

Item 1. - Financial Statements

COMMUNITY BANKSHARES, INC.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
                                                                                                      (Unaudited)
                                                                                                       March 31,        December 31,
                                                                                                          2008               2007
                                                                                                          -----              ----
                                                                                                          (Dollars in thousands)
Assets
<S>                                                                                                    <C>                <C>
     Cash and due from banks .................................................................         $  18,887          $  18,701
     Federal funds sold ......................................................................            23,405              6,985
                                                                                                       ---------          ---------
            Total cash and cash equivalents ..................................................            42,292             25,686
     Interest-bearing deposits with other banks ..............................................               641                911
     Securities available-for-sale ...........................................................            59,333             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 .....................................................................             4,655              3,509
     Loans receivable ........................................................................           452,467            464,039
         Less, allowance for loan losses .....................................................            (5,735)            (5,343)
                                                                                                       ---------          ---------
            Net loans ........................................................................           446,732            458,696
     Premises and equipment - net ............................................................            10,708             10,820
     Accrued interest receivable .............................................................             3,323              3,547
     Net deferred income tax assets ..........................................................             1,290              1,357
     Goodwill ................................................................................             4,321              4,321
     Core deposit intangible assets ..........................................................             2,284              2,345
     Prepaid expenses and other assets .......................................................             3,616              2,648
                                                                                                       ---------          ---------

            Total assets .....................................................................         $ 584,613          $ 576,567
                                                                                                       =========          =========

Liabilities
     Deposits
         Noninterest bearing .................................................................         $  58,591          $  57,738
         Interest-bearing ....................................................................           417,474            423,969
                                                                                                       ---------          ---------
            Total deposits ...................................................................           476,065            481,707
     Short-term borrowings ...................................................................             9,124              9,893
     Long-term debt ..........................................................................            42,177             29,679
     Accrued interest payable ................................................................             1,430              1,501
     Accrued expenses and other liabilities ..................................................             1,505                142
                                                                                                       ---------          ---------
            Total liabilities ................................................................           530,301            522,922
                                                                                                       ---------          ---------

Shareholders' equity
     Common stock - no par value; 12,000,000 shares authorized; issued and
         outstanding - 4,457,556 for 2008 and 4,446,456 for 2007 .............................            30,476             30,505
     Retained earnings .......................................................................            23,379             22,812
     Accumulated other comprehensive income ..................................................               457                328
                                                                                                       ---------          ---------
            Total shareholders' equity .......................................................            54,312             53,645
                                                                                                       ---------          ---------

            Total liabilities and shareholders' equity .......................................         $ 584,613          $ 576,567
                                                                                                       =========          =========
</TABLE>

See accompanying notes to unaudited consolidated financial statements.

                                       3
<PAGE>

COMMUNITY BANKSHARES, INC.
Consolidated Statements of Income
<TABLE>
<CAPTION>
                                                                                                                 (Unaudited)
                                                                                                             Three Months Ended
                                                                                                                  March 31,
                                                                                                            2008               2007
                                                                                                            -----              ----
                                                                                                           (Dollars in thousands,
                                                                                                              except per share)
Interest and dividend income
<S>                                                                                                    <C>                    <C>
     Loans, including fees ...........................................................                 $8,441                 $8,157
     Interest-bearing deposits with other banks ......................................                     11                     33
     Debt securities .................................................................                    746                  1,016
     Dividends .......................................................................                     59                     47
     Federal funds sold ..............................................................                    181                    180
                                                                                                       ------                 ------
         Total interest and dividend income ..........................................                  9,438                  9,433
                                                                                                       ------                 ------

Interest expense
     Deposits
     Time deposits $100M and over ....................................................                  1,243                    993
     Other deposits ..................................................................                  2,233                  2,645
                                                                                                       ------                 ------
         Total interest expense on deposits ..........................................                  3,476                  3,638
     Short-term borrowings ...........................................................                     59                    116
     Long-term debt ..................................................................                    491                    437
                                                                                                       ------                 ------
         Total interest expense ......................................................                  4,026                  4,191
                                                                                                       ------                 ------

Net interest income ..................................................................                  5,412                  5,242
Provision for loan losses ............................................................                    470                    375
                                                                                                       ------                 ------
Net interest income after provision ..................................................                  4,942                  4,867
                                                                                                       ------                 ------

Noninterest income
     Service charges on deposit accounts .............................................                    927                    891
     Mortgage brokerage income .......................................................                    522                    655
     Net securities gains ............................................................                     34                      2
     Other ...........................................................................                    284                    277
                                                                                                       ------                 ------
         Total noninterest income ....................................................                  1,767                  1,825
                                                                                                       ------                 ------

Noninterest expenses
     Salaries and employee benefits ..................................................                  2,847                  2,934
     Premises and equipment ..........................................................                    623                    562
     Advertising .....................................................................                    161                    143
     Supplies ........................................................................                     97                    125
     Other ...........................................................................                  1,258                  1,350
                                                                                                       ------                 ------
         Total noninterest expenses ..................................................                  4,986                  5,114
                                                                                                       ------                 ------

Income before income taxes ...........................................................                  1,723                  1,578
Income tax expense ...................................................................                    622                    573
                                                                                                       ------                 ------
Net income ...........................................................................                 $1,101                 $1,005
                                                                                                       ======                 ======

Per share
     Net income ......................................................................                 $ 0.25                 $ 0.23
     Net income - diluted ............................................................                   0.25                   0.22
     Cash dividends declared .........................................................                   0.12                   0.12
</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 ..........................................             -              -          1,005              -          1,005
                                                                                                                         ----------
    Unrealized holding gains and losses
      on available-for-sale securities arising
      during the period, net of income
      taxes of $48 ......................................             -              -              -             99             99
    Reclassification adjustment for losses (gains)
      realized in income, net of
      income taxes of $1 ................................             -              -              -             (1)            (1)
                                                                                                                         ----------
        Total other comprehensive income (loss) .........             -              -              -              -             98
                                                                                                                         ----------
          Total comprehensive income ....................             -              -              -              -          1,103
                                                                                                                         ----------
Share-based compensation ................................             -             27              -              -             27
Proceeds of sale of common stock ........................           500              8              -              -              8
Exercise of employee stock options ......................        26,782            232              -              -            232
Cash dividends declared, $.12 per share .................             -              -           (536)             -           (536)
                                                             ----------     ----------     ----------     ----------     ----------
Balance, March 31, 2007 .................................     4,468,502     $   30,870     $   22,851     $     (263)    $   53,458
                                                             ==========     ==========     ==========     ==========     ==========


Balance, January 1, 2008 ................................     4,446,456     $   30,505     $   22,812     $      328     $   53,645
                                                                                                                         ----------
Comprehensive income
    Net income ..........................................             -              -          1,101              -          1,101
                                                                                                                         ----------
    Unrealized holding gains and losses
      on available-for-sale securities arising
      during the period, net of income
      taxes of $79 ......................................             -              -              -            151            151
    Reclassification adjustment for losses (gains)
      realized in income, net of
      income taxes of $12 ...............................             -              -              -            (22)           (22)
                                                                                                                         ----------
        Total other comprehensive income (loss) .........             -              -              -              -            129
                                                                                                                         ----------
          Total comprehensive income ....................             -              -              -              -          1,230
                                                                                                                         ----------
Share-based compensation ................................             -              7              -              -              7
Proceeds of sale of common stock ........................        10,600            119              -              -            119
Exercise of employee stock options ......................         1,000             11              -              -             11
Common stock repurchased and cancelled ..................       (13,700)          (166)             -              -           (166)
Restricted stock grants to employees ....................        13,200              -              -              -              -
Cash dividends declared, $.12 per share .................             -              -           (534)             -           (534)
                                                             ----------     ----------     ----------     ----------     ----------
Balance, March 31, 2008 .................................     4,457,556     $   30,476     $   23,379     $      457     $   54,312
                                                             ==========     ==========     ==========     ==========     ==========
</TABLE>






See accompanying notes to unaudited consolidated financial statements.


                                       5
<PAGE>

COMMUNITY BANKSHARES, INC.
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
                                                                                                                (Unaudited)
                                                                                                            Three Months Ended
                                                                                                                 March 31,
                                                                                                          2008                2007
                                                                                                          -----               ----
                                                                                                          (Dollars in thousands)
Operating activities
<S>                                                                                                     <C>                <C>
     Net income ..............................................................................          $  1,101           $  1,005
     Adjustments to reconcile net income to net
         cash provided by operating activities
            Depreciation and amortization ....................................................               300                289
            Net accretion of securities ......................................................               (51)                (8)
            Provision for loan losses ........................................................               470                375
            Net securities gains .............................................................               (34)                (2)
            Proceeds of sales of loans held for sale .........................................            26,473             36,283
            Originations of loans held for sale ..............................................           (27,097)           (35,415)
            Gains on sales of loans held for sale ............................................              (522)              (656)
            Losses on sales of foreclosed assets .............................................                 -                  5
            Decrease (increase) in accrued interest receivable ...............................               224                 (1)
            (Increase) decrease in prepaid expenses and other assets .........................              (975)               828
            Decrease in accrued interest payable .............................................               (71)                (5)
            Increase (decrease) in accrued expenses and other liabilities ....................             1,281               (709)
            Provision for off balance sheet credit exposure ..................................               115                 72
            Share-based compensation .........................................................                 7                 27
                                                                                                        --------           --------
                Net cash provided by operating activities ....................................             1,221              2,088
                                                                                                        --------           --------

Investing activities
     Net decrease in interest-bearing deposits with other banks ..............................               270                231
     Purchases of available-for-sale securities ..............................................           (27,043)            (1,966)
     Maturities, calls and paydowns of available-for-sale securities .........................            25,859              5,635
     Proceeds of sales of other investments ..................................................               116                238
     Purchases of other investments ..........................................................              (675)              (337)
     Net decrease (increase) in loans made to customers ......................................            11,444            (15,016)
     Purchases of premises and equipment .....................................................              (127)              (276)
     Proceeds from sales of foreclosed assets ................................................                24                379
                                                                                                        --------           --------
                Net cash provided (used) by investing activities .............................             9,868            (11,112)
                                                                                                        --------           --------

Financing activities
     Net decrease in deposits ................................................................            (5,642)           (13,851)
     Net decrease in short-term borrowings ...................................................              (769)              (823)
     Proceeds from issuing long-term debt ....................................................            15,000              7,500
     Repayment of long-term debt .............................................................            (2,502)            (4,003)
     Proceeds from sale of stock .............................................................               119                  8
     Exercise of employee stock options ......................................................                11                232
     Common stock repurchased and cancelled ..................................................              (166)                 -
     Cash dividends paid .....................................................................              (534)              (536)
                                                                                                        --------           --------
                Net cash provided (used) by financing activities .............................             5,517            (11,473)
                                                                                                        --------           --------
Increase (decrease) in cash and cash equivalents .............................................            16,606            (20,497)
Cash and cash equivalents, beginning of period ...............................................            25,686             46,724
                                                                                                        --------           --------
Cash and cash equivalents, end of period .....................................................          $ 42,292           $ 26,227
                                                                                                        ========           ========
</TABLE>




See accompanying notes to unaudited consolidated financial statements.


                                       6
<PAGE>

COMMUNITY BANKSHARES, INC.
Consolidated Statements of Cash Flows (continued)
<TABLE>
<CAPTION>
                                                                                                               (Unaudited)
                                                                                                            Three Months Ended
                                                                                                                March 31,
                                                                                                         2008                 2007
                                                                                                         ----                 ----
                                                                                                         (Dollars in thousands)
Supplemental disclosures of cash flow information
<S>                                                                                                      <C>                  <C>
     Cash payments for interest ..........................................................               $4,097               $4,196
                                                                                                         ======               ======
     Cash payments for income taxes ......................................................               $    1               $   48
                                                                                                         ======               ======

Supplemental disclosures of non-cash investing activities
     Transfers of loans receivable to foreclosed assets ..................................               $   50               $  276
                                                                                                         ======               ======
</TABLE>

See accompanying notes to unaudited consolidated financial statements.


                                       7
<PAGE>

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.

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 March 31, 2008, there were $6,929,000 in nonaccrual
loans  and  $192,000  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:

<TABLE>
<CAPTION>
                                                                                                             (Unaudited)
                                                                                                          Three Months Ended
                                                                                                               March 31,
                                                                                                       2008                 2007
                                                                                                       ----                 ----
                                                                                                         (Dollars in thousands,
                                                                                                      except per share amounts)

<S>                                                                                               <C>                     <C>
Net income per share, basic
  Numerator - net income ...........................................................              $    1,101              $    1,005
                                                                                                  ==========              ==========
  Denominator
    Weighted average common shares issued and outstanding ..........................               4,449,501               4,448,546
                                                                                                  ==========              ==========

               Net income per share, basic .........................................              $      .25              $      .23
                                                                                                  ==========              ==========

Net income per share, assuming dilution
  Numerator - net income ...........................................................              $    1,101              $    1,005
                                                                                                  ==========              ==========
  Denominator
    Weighted average common shares issued and outstanding ..........................               4,449,501               4,448,546
    Effect of dilutive stock options ...............................................                   9,748                  62,091
                                                                                                  ----------              ----------
               Total shares ........................................................               4,459,249               4,510,637
                                                                                                  ==========              ==========
               Net income per share, assuming dilution .............................              $      .25              $      .22
                                                                                                  ==========              ==========
</TABLE>


                                       8
<PAGE>

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.

At March 31, 2008,  the Company  awarded  13,200 shares of restricted  stock and
45,650  stock  appreciation  rights 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.  Compensation  expense  for the  awards  will be
recognized beginning in April 2008.


Variable  Interest  Entities - On March 8, 2004, CBI sponsored the creation of a
Delaware trust, 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  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  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  the  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.

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,


                                       9
<PAGE>

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                               March 31, 2008       (Level 1)           (Level 2)          (Level 3)
-----------                               --------------       ---------           ---------          ---------
                                                                              (Dollars in thousands)
<S>                                                            <C>                 <C>                 <C>
Assets
   Securities available-for-sale .......                       $      -            $ 59,333            $      -
   Deriviatives ........................                              -                  20                   -
Liabilities
   Derivatives .........................                              -                  20                   -
</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
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                               March 31, 2008       (Level 1)           (Level 2)          (Level 3)
-----------                               --------------       ---------           ---------          ---------
                                                                              (Dollars in thousands)
<S>                                                            <C>                   <C>               <C>
Collateral dependent impaired loans ....                       $      -              $    -            $  4,982
Foreclosed Assets ......................                              -                 879                   -
Goodwill ...............................                              -                   -               4,321
Core deposit intangibles ...............                              -                   -               2,284
</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 engated 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 $1,947,000 as of March 31, 2008.



                                       10
<PAGE>

Foreclosed  assets  consist  of assets  acquired  through,  or in lieu of,  loan
foreclosure,  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 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
quarter of 2008, $61,000 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.


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.


          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.

                                       11
<PAGE>

         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    the failure of assumptions  underlying the  establishment  of the
               allowance  for loan  losses and other  estimates,  including  the
               value of collateral securing loans;
          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;
          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.


                                       12
<PAGE>

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" in the
Annual  Report  on Form  10-K  for  2007  for a  detailed  description  of CBI's
estimation process and methodology related to the allowance for loan losses.

RESULTS OF OPERATIONS

Changes in Financial Condition

         During the three  months ended March 31,  2008,  deposits  decreased by
$5,642,000, or 1.2%, primarily due to a net seasonal outflow of deposits related
to local  government tax receipts.  Long-term debt increased by $12,498,000,  or
42.1%.  Federal  funds sold  increased  by  $16,420,000,  or  235.1%,  and loans
decreased by $11,572,000,  or 2.5%. during the period.  Real estate construction
loans  decreased  by  $4,660,000  or  9.34%,   and  commercial,   financial  and
agricultural loans decreased by $3,382,000, or 4.75% during the first quarter of
2008.

         The   seasonal   outflows   of  local   governmental   deposits   is  a
well-understood,  recurring  event as local  governments  accumulate  annual tax


                                       13
<PAGE>

receipts  near  year  end  and  then  begin  withdrawing  the  funds  for use or
allocation.  Early in the  quarter,  $15  million  in  long-term  financing  was
obtained from the Federal Home Loan Bank of Atlanta to provide  management  with
the  flexibility to reduce some higher cost time deposits and provide  liquidity
for anticipated demand for new loans. However, demand over the first quarter for
loans declined related to the overall slowdown in business activity. Temporarily
the surplus  liquidity was maintained in federal funds,  but early in the second
quarter  management  decided  to  purchase  a  combination  of U.S.  Agency  and
Government  Sponsored  Enterprise mortgage backed pass-through bonds in order to
lock a positive spread on the new debt.


Earnings Performance

         For the  quarter  ended March 31,  2008,  CBI earned  consolidated  net
income of $1,101,000,  compared with  $1,005,000  for the  comparable  period of
2007, an increase of $96,000 or 9.6%. Basic earnings per share were $.25 for the
2008 period, compared with $.23 for the 2007 quarter. Diluted earnings per share
were $.25 for the 2008 period and $.22 for the 2007 period.

         Net interest  income for the first  quarter of 2008 was  $170,000  more
than the amount reported for the first quarter of 2007. The positive  effects of
higher  average  amounts of loans and higher rates earned on  securities in 2008
were  substantially  offset  by lower  yields on loans.  However,  primarily  by
reducing the rates paid for savings and interest  bearing  transaction  deposits
aggressively,  interest expense for the first quarter of 2008 was $165,000 lower
than for the 2007  period.  The Federal  Reserve's  Open Market  Committee  (the
"Committee") lowered interest rates 100 basis points during the last four months
of 2007 and 200 basis points  through the first  quarter of 2008.  The Company's
funding sources  primarily are short-term  deposits,  and rates  associated with
those sources, as well as any short-term  borrowings and long-term debt incurred
during  the 2008  period,  have also been  affected  by those  actions.  The net
interest  margin for the first quarter of 2008 at 3.97% was 4 basis points lower
than for the prior year period.

         The  results  for the 2008  period  were  affected  unfavorably  by the
regular evaluation of the Company's allowance for loan losses, which resulted in
an increase of $95,000 in the provision  for loan losses  compared with the same
period of 2007.

         Noninterest income for the 2008 first quarter was $58,000 less than for
the same  period of 2007,  primarily  due to a decrease  of $133,000 in mortgage
brokerage  income.  However,  noninterest  expense  reductions  in the  mortgage
division  substantially  offset the  reduction  in fee income.  Service  charges
assessed on deposit accounts and for other services  increased by $36,000 in the
2008 period over the prior year amount.

         Noninterest  expense for the first  quarter of 2008 was  $128,000  less
than for the same  period of 2007,  primarily  due to a  decrease  of $87,000 in
salaries and employee benefits that resulted largely from the elimination of the
mortgage division's wholesale operations in the first quarter of 2008.


                                       14
<PAGE>

<TABLE>
<CAPTION>
                                                                                   Summary Income Statement
                                                                                   ------------------------
                                                                                    (Dollars in thousands)
For the Three Months Ended March 31,                             2008              2007          Dollar Change    Percentage Change
                                                                 ----              ----          -------------    -----------------
<S>                                                             <C>               <C>               <C>                <C>
Interest income ............................................    $9,438            $9,433            $    5              0.1%
Interest expense ...........................................     4,026             4,191              (165)            -3.9%
                                                                ------            ------            ------
Net interest income ........................................     5,412             5,242               170              3.2%
Provision for loan losses ..................................       470               375                95             25.3%
Noninterest income .........................................     1,767             1,825               (58)            -3.2%
Noninterest expenses .......................................     4,986             5,114              (128)            -2.5%
Income tax expense .........................................       622               573                49              8.6%
                                                                ------            ------            ------
Net income .................................................    $1,101            $1,005            $   96              9.6%
                                                                ======            ======            ======
</TABLE>

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,  short-term  borrowings,  and long-term
debt),  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.

         Interest  income  for  the  first  quarter  of 2008  was  substantially
unchanged from the first quarter of 2007. However, the individual  components of
interest income changed significantly,  reflecting  management's decisions about
the Company's investments in the various categories of earning assets.  Interest
income from loans  increased to $8,441,000 in the 2008 period from $8,157,000 in
the 2007 period due to a higher average volume of loans  outstanding in the 2008
period.  The amount of interest  earned on  investment  securities  in the first
quarter of 2008 decreased by $258,000,  or 24.3%,  from the amount earned in the
2007 period due to lower  average  volumes in the  current  year.  Although  the
average amount of federal funds sold in the 2008 quarter increased by 58.8% over
the prior year period, the interest income from those assets was just $1,000, or
..6%,  more than in the prior year period due to a reduction  of 192 basis points
in the yield associated with those assets.

         Interest  expense for deposits  decreased to $3,476,000 from $3,638,000
for the 2007 period.  The decrease primarily was caused by lower average amounts
of savings  deposits  and lower  rates  paid for  interest  bearing  transaction
accounts and savings  deposits.  Higher average  amounts of time deposits in the
2008 period  resulted  in an increase of $226,000 in interest  expense for those
deposits. The rate paid for those deposits was substantially  unchanged from the
prior year rate.

         The  average  rate paid for all  interest  bearing  deposits  was 3.28%
during the 2008 period,  compared with 3.56% during the 2007 period. The Company
has lowered the rates offered for its various  deposit  products in  conjunction
with the overall decline in market interest rates paid for deposits.

         In the first  quarter of 2008,  interest  expense for  long-term  debt,
which includes  junior  subordinated  debentures and advances  obtained from the
Federal Home Loan Bank of Atlanta,  totaled $491,000, an increase of $54,000, or
12.4%, from the amount for the same period of 2007. Average amounts of long-term
debt outstanding  increased by $11,069,000,  or 42.1%, and the average rate paid
for  those  funds  decreased  by 145  basis  points.  During  the  2008  period,


                                       15
<PAGE>

$15,000,000  of long-term  fixed-rate  debt was  acquired at a weighted  average
interest rate of 2.35%. The debt had a weighted average life of 7.5 years at the
time it was acquired.

         Interest expense for short-term borrowings in the first quarter of 2008
was  $59,000,  a decrease  of  $57,000,  or 49.1%,  from the amount for the same
period of 2007, as a result of a slight  decrease in the average amount of those
borrowings and a 193 basis point reduction in the rate paid.

<TABLE>
<CAPTION>
                                                                            Average Balances, Yields and Rates
                                                                               Three Months Ended March 31,
                                                                               ----------------------------

                                                                     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 .......     $   1,358    $    11        3.26%        $  2,547       $    33       5.25%
Investment securities - taxable ..................        56,342        766        5.47%          84,722         1,020       4.88%
Investment securities - tax exempt (2) ...........         4,261         39        3.68%           4,750            43       3.67%
Federal funds sold ...............................        22,474        181        3.24%          14,155           180       5.16%
Loans, including loans held for sale (2)(3) ......       464,498      8,441        7.31%         423,632         8,157       7.81%
                                                       ---------    -------                     --------       -------
          Total interest earning assets ..........       548,933      9,438        6.92%         529,806         9,433       7.22%
Cash and due from banks ..........................        20,432                                  17,330
Allowance for loan losses ........................        (5,625)                                 (4,864)
Premises and equipment ...........................        10,771                                  10,313
Intangible assets ................................         6,634                                   6,880
Other assets .....................................         7,189                                   7,497
                                                       ---------                               ---------
          Total assets ...........................     $ 588,334                               $ 566,962
                                                       =========                               =========

Liabilities and shareholders' equity
Interest bearing deposits
      Interest bearing transaction accounts ......     $  79,736    $   168        0.85%       $  77,051       $   259       1.36%
      Savings ....................................        86,297        375        1.75%          96,148           672       2.83%
      Time deposits ..............................       259,749      2,933        4.54%         241,571         2,707       4.54%
                                                       ---------    -------                    ---------       -------
          Total interest bearing deposits ........       425,782      3,476        3.28%         414,770         3,638       3.56%
Short-term borrowings ............................        11,590         59        2.05%          11,826           116       3.98%
Long-term debt ...................................        37,345        491        5.29%          26,276           437       6.74%
                                                       ---------    -------                    ---------       -------
          Total interest bearing liabilities .....       474,717      4,026        3.41%         452,872         4,191       3.75%
Noninterest bearing demand deposits ..............        57,351                                  59,068
Other liabilities ................................         1,881                                   1,820
Shareholders' equity .............................        54,385                                  53,202
                                                       ---------                               ---------
          Total liabilities and
            shareholders' equity .................     $ 588,334                               $ 566,962
                                                       =========                               =========

Interest rate spread .............................                                 3.51%                                     3.47%
Net interest income and net yield
      on earning assets ..........................                  $ 5,412        3.97%                       $ 5,242       4.01%
</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 loan  balance and income from such
      loans is recognized on a cash basis.  The amounts of such loans and income
      are not material.

                                       16
<PAGE>


Provision and Allowance for Loan Losses

         The  provision for loan losses for the 2008 first quarter was $470,000,
an increase of $95,000, or 25.3%, from the $375,000 provided for the same period
of 2007.  This  increase  was caused by increases in  nonaccrual  and  potential
problem loans during the 2008 first quarter, as discussed later in this section.
Also contributing to the increase in provision was slowing of the economy in our
market areas.

         Net  charge-offs  during the three  months  ended  March 31,  2008 were
$78,000,  compared  with $76,000 for the same period of 2007.  The allowance for
loan losses as of March 31, 2008 was 1.27% of loans  outstanding,  compared with
1.15% as of December 31, 2007 and 1.17% as of March 31, 2007.

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

<TABLE>
<CAPTION>
                                                                              Three Months                             Three Months
                                                                                  Ended            Year Ended              Ended
                                                                                March 31,         December 31,            March 31,
                                                                                  2008                2007                  2007
                                                                                  ----                ----                  ----
                                                                                              (Dollars in thousands)
<S>                                                                           <C>                  <C>                   <C>
Allowance at beginning of period ..................................           $   5,343            $   4,662             $   4,662
Provision for loan losses .........................................                 470                3,155                   375
Net charge-offs ...................................................                 (78)              (2,474)                  (76)
                                                                              ---------            ---------             ---------
Allowance at end of period ........................................           $   5,735            $   5,343             $   4,961
                                                                              =========            =========             =========
Allowance as a percentage of loans outstanding ....................                1.27%                1.15%                 1.17%

Loans at end of period ............................................           $ 452,467            $ 464,039             $ 424,328
                                                                              =========            =========             =========
</TABLE>

         Non-performing  loans,  consisting of nonaccrual  loans and loans 90 or
more days past due which are still accruing  interest,  totaled $6,929,000 as of
March 31, 2008,  compared with  $6,542,000 as of December 31, 2007. The majority
of non-performing  loans as of March 31, 2008 and December 31, 2007 were secured
by commercial and residential real estate and other collateral. Accordingly, the
amount of such non-performing loans does not reflect the amount of probable loss
that  management  estimates  will be incurred  with respect to those loans.  The
amount of such estimated loss is included in the allowance for loan losses.

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


                                       17
<PAGE>

                                                        March 31,   December 31,
                                                          2008            2007
                                                          ----            ----
                                                         (Dollars in thousands)
Non-performing loans
  Nonaccrual loans ..................................     $6,929      $   6,542
  Past due 90 days or more and still accruing .......        192              -
                                                          ------      ---------
                Total ...............................     $7,121      $   6,542
                                                          ======      =========
Non-performing loans as a percentage of:
  Loans outstanding .................................       1.57%          1.41%
  Allowance for loan losses .........................     124.17%        122.44%


         The  following  table shows  quarterly  changes in  non-performing  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 their  ability to comply with
current repayment terms,  which may result in subsequent  classification of such
loans as non-performing loans.

<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%
                                         ========          =======         ========                      ========
</TABLE>


                                       18
<PAGE>

         During  the  first  quarter  of 2008,  nonaccrual  loans  increased  by
$387,000.  The primary  drivers of this  increase  included  approximately  $2.6
million  of loans  that were  moved  into  nonaccrual  status.  Of this  amount,
approximately $1.7 million represents two relationships,  both of which are real
estate  secured  coastal  properties.   Other  elements  of  the  increase  were
attributable  to a large number of smaller  dollar  volume loans that were moved
into  nonaccrual  status as a result of normal risk  management  processes.  One
major relationship of approximately $1.6 million, a commercial  business loan in
our Florence region that had been in nonaccrual  status, was paid off during the
quarter  without  loss to the bank.  Other loans were  removed  from  nonaccrual
status by chargeoffs or payoffs.

         The $6.9 million increase in potential problem loans during the quarter
resulted  from  management  concerns  about  changes  to  the  overall  economic
conditions  in our  various  markets  and  improvements  in our risk  management
processes  for loan  review.  The Bank's  primary  loan  review  function is now
in-house  rather than  outsourced  and this  provides for a more timely and more
broadly based assessment of risk in the loan portfolio.  Although these loans do
have a higher than normal  credit  concern  for  management,  the amounts do not
represent management's expectations of potential losses.


         Management  will continue to monitor the levels of  non-performing  and
potential  problem loans and dedicate the resources it believes are necessary to
address the  weaknesses in these credits in order to enhance the  probability of
collection  or recovery of these  assets.  Management  considers  the levels and
trends  in  non-performing  loans  and past due  loans  in  determining  how the
provision and allowance for loan losses is estimated and adjusted.


Noninterest Income

         Noninterest  income for the first quarter of 2008 decreased by $58,000,
or 3.2%, from the $1,825,000  reported for the 2007 period.  Mortgage  brokerage
income decreased by $133,000 or 20.3%, from $655,000 for the 2007 period, due to
continuing  weakness in the  residential  real estate market,  a decrease in the
number of loans  originated and sold during the quarter,  and the elimination of
the mortgage  banking  subsidiary's  wholesale  lending division during the 2008
first quarter. The Company in mid-2006 refocused its mortgage-lending efforts to
emphasize production for sale of conventional  one-to-four family mortgages, and
limited  wholesale  mortgage  production  to  a  select  group  of  high-quality
originators.  However,  due  to  recent  conditions  in  the  wholesale  market,
management  decided  early in the first  quarter  of 2008 to exit the  wholesale
lending business entirely.

         Service charges on deposit accounts increased by $36,000 over the first
quarter of 2007,  primarily  as a result of increased  volumes of overdraft  fee
income.   Net  securities  gains  increased  in  the  2008  period  due  to  the
issuer-initiated  early  redemptions  of  securities  that were  purchased  at a
discount.  Because  interest rates have  decreased  quickly in a short period of
time,  many issuers of debt  securities have seized the opportunity to refinance
and, accordingly, have initiated such redemptions.


Noninterest Expenses

         Salaries  and  employee  benefits  for the first  quarter  of 2008 were
$87,000,  or 3.0%,  less than in the same 2007 period.  This  decrease  resulted


                                       19
<PAGE>

primarily from the elimination of the mortgage brokerage  subsidiary's wholesale
dvision  in  the  first  quarter  of  2008.   Partially  offsetting  those  cost
reductions,  the Bank opened a new branch  office in northeast  Richland  County
during the first quarter of 2008.


Income Taxes

         Income tax expense for the first quarter of 2008 increased $49,000,  or
8.6%,  over the amount for the first  quarter of 2007.  The average tax rate for
2008 was 36.1% compared with 36.3% for the 2007 period.


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
Federal Home Loan Bank of Atlanta and the net proceeds of issuing $10,000,000 of
trust  preferred  securities.  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.

         The Bank has further  sources of liquidity  which include several large
federal funds borrowing lines with  correspondent  banks and significant  unused
additional borrowing capacity for short and long-term debt with the Federal Home
Loan Bank of Atlanta.

         Total  deposits as of March 31, 2008 were  $476,065,000,  a decrease of
$5,642,000,  or 1.2%,  from the amount as of December 31, 2007.  As of March 31,
2008 the loan to deposit  ratio was 95.0%,  compared  with 96.3% at December 31,
2007 and 90.3% at March 31, 2007. Loans  held-for-sale have not been included in
the numerator of the calculation of the loan to deposit ratio.

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


CAPITAL RESOURCES

         CBI and the Bank 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.

                                       20
<PAGE>

         The March 31, 2008  risk-based  capital ratios for CBI and the Bank are
presented in the following  table,  compared with the "well  capitalized"  (Bank
only) and minimum ratios under the regulatory definitions and guidelines:

<TABLE>
<CAPTION>
                                                                                             March 31, 2008
                                                                                             --------------
                                                                            Tier 1           Total Capital          Leverage
                                                                            ------           -------------          --------

<S>                                                                         <C>                  <C>                  <C>
Community Bankshares, Inc. ...........................................      12.77%               14.02%               9.84%
Community Resource Bank ..............................................      11.44%               12.69%               8.77%
Minimum "well capitalized" requirement ...............................       6.00%               10.00%               6.00%
Minimum requirement ..................................................       4.00%                8.00%               5.00%
</TABLE>


         As shown in the table  above,  the  Bank's  capital  ratios  exceed the
regulatory  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
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.

Variable Interest Entity

         As discussd under "Results of Operations - Net Interest  Income" and in
the  notes  to  unaudited  consolidated  financial  statements  under  "Variable
Interest  Entities," as of March 31, 2008,  CBI held an equity  interest in, and
guarantees the liabilities of, a non-consolidated  variable interest entity, SCB
Capital Trust I.

Commitments

         The  Bank  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 for on-balance-sheet instruments.

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

                                       21
<PAGE>
                                            March 31, 2008
                                            --------------
                                            (Dollars in
                                             thousands)
Loan commitments .......................      $61,536
Standby letters of credit ..............        1,591


         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.  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  March  31,  2008,  and the  estimated  fair  values  of  those  financial

                                       22
<PAGE>
instruments  included in other assets and liabilities in the balance sheet as of
that date.


                                                         March 31, 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 ..................................     $12,087      $   (20)
Forward sales contracts with investors
  of mortgage loans to be held for sale ..........     $12,087      $    20

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 March 31, 2008,  CBI is positioned so that
net interest income would decrease $14,000 and net income would decrease $11,000
in the next twelve months if interest  rates rose 100 basis points.  Conversely,
net interest income would increase $14,000 and net income would increase $11,000
in the next twelve months if interest  rates  declined 100 basis points.  In the
current  interest  rate  environment,  it is not expected that there will be any
large decreases in market interest rates 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 and its
customers could undertake in response to changes in interest rates.

         As of March 31, 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  Management's  Discussion and Analysis of
Financial Position and Results of Operations  included in the 2007 Annual Report
on Form 10-K.


                                       23
<PAGE>

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 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.


                           PART II--OTHER INFORMATION

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

(a)  Sales of Unregistered Securities

         On  February 1 and  February 4, 2008,  the Company  sold 600 and 10,000
shares, respectively, of its common stock to an executive officer and a director
for aggregate sales prices of $6,720 and $112,000, respectively. Issuance of the
securities  was not  registered  under the Securities Act of 1933 in reliance on
the exemption  provided by Section 4(2) thereof  because no public  offering was
involved.

(c)  Purchases of Securities

<TABLE>
<CAPTION>
                                     ISSUER PURCHASES OF EQUITY SECURITIES (1)
                                     -----------------------------------------
                                                                                                      (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>
2/1/08 - 2/28/08 ............................                 5,200               $   12.18              5,200            448,700
3/1/08 - 3/31/08 ............................                 8,500               $   12.11              8,500            440,200
                                                             ------                                     ------            -------
Total .......................................                13,700               $   12.14             13,700            440,200
                                                             ======                                     ======            =======
</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  expires on July 30,
2008.


                                       24
<PAGE>

Item 6.  Exhibits

Exhibits            10-1 Employment  Agreement between the Company and Samuel L.
                    Erwin,  as  amended  December  6,  2007 in  accordance  with
                    Internal   Revenue  Code   Section   409A  and   regulations
                    thereunder.

                    10-2 Employment Agreement between the Company and William W.
                    Traynham,  as amended  December 7, 2007 in  accordance  with
                    Internal   Revenue  Code   Section   409A  and   regulations
                    thereunder.

                    10-3 Employment Agreement between the Company and Michael A.
                    Wolfe,  as  amended  December  7,  2007 in  accordance  with
                    Internal   Revenue  Code   Section   409A  and   regulations
                    thereunder.

                    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




                                       25
<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: May 12, 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)



                                       26
<PAGE>


                                  EXHIBIT INDEX

                    10-1 Employment  Agreement between the Company and Samuel L.
                    Erwin,  as  amended  December  6,  2007 in  accordance  with
                    Internal   Revenue  Code   Section   409A  and   regulations
                    thereunder.

                    10-2 Employment Agreement between the Company and William W.
                    Traynham,  as amended  December 7, 2007 in  accordance  with
                    Internal   Revenue  Code   Section   409A  and   regulations
                    thereunder.

                    10-3 Employment Agreement between the Company and Michael A.
                    Wolfe,  as  amended  December  7,  2007 in  accordance  with
                    Internal   Revenue  Code   Section   409A  and   regulations
                    thereunder.

                    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



                                       27