# UNITED STATES SECURITIES AND
EXCHANGE COMMISSION Washington, D.C. 20549

# FORM 10-KSB

(Mark One)

|X | Annual Report under Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ------------------------------------------------------------------------------

| | For the fiscal year ended December 31, 2005
| | -------------------------------------------

| | Or
| | --

| | Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934
| | ----------------------------------------------------------------------------------
| | For the transition period from __________ to ________                             

Commission File Number
333-117053

| | CommunitySouth Bancshsares, Inc. | 
| | -------------------------------- | 

| | (Name of Small Business Issuer in Its Charter) | 
| | ---------------------------------------------- | 

|South Carolina                    |  | 20-0934786         
|--------------------------------- |  | -------------------
|(State or Other Jurisdiction      |  | (I.R.S. Employer   
|of Incorporation or Organization) |  | Identification No.)

|6650 Calhoun Memorial Highway            |  |           
|---------------------------------------- |  | ----------
|Easley, South Carolina                   |  | 29640     
|(Address of Principal Executive Offices) |  | (Zip Code)

Issuers telephone number:  (864) 306-2540

Securities registered pursuant to Section 12(b) of the Act:  NoneSecurities registered pursuant to Section 12(g) of the
Act:  None

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

Check if there is no disclosure of
delinquent filers in response to Item 405 of Regulation S-B in this form, and no
disclosure will be contained, to the best of registrants knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.[ X ]

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

The issuers revenue for the
year ended December 31, 2005 was $5,305,945.

The aggregate market value of the common equity stock held by non-affiliates (shareholders holding less than 5% of an
outstanding class of stock, excluding directors and executive officers), as of March 23, 2006, was approximately $24.3
million.  Because there is not an active trading market for the common stock, we have used our book value of $7.55 as of
December 31, 2005 to calculate our public float.

The number of shares outstanding of
the issuers common stock was 3,744,855 at March 23, 2006.

DOCUMENTS INCORPORATED
BY REFERENCE

|                                                       | 
|------------------------------------------------------ | 
|Annual Report to Shareholders for the                  | 
|Year Ended December 31, 2005                           | 
|Proxy Statement for the Annual Meeting of Shareholders | 
|to be held on May 16, 2006                             | 

Transitional Small Business Disclosure Format.
(Check one):  Yes   NoX

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# Part I

# Item 1. Description of
Business.

This
report contains statements which constitute forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. These statements are based on many assumptions and estimates and are not
guarantees of future performance. Our actual results may differ materially from those
projected in any forward-looking statements, as they will depend on many factors about
which we are unsure, including many factors which are beyond our control. The words
may, would, could, will,
expect, anticipate, believe, intend,
plan, and estimate, as well as similar expressions, are meant to
identify such forward-looking statements. Potential risks and uncertainties include, but
are not limited to those described below under Risk Factors and the following:

| | o | significant increases in competitive pressure in the banking and financial services
industries;
| | - | -----------------------------------------------------------------------------------------------

| | o | changes in the interest rate environment which could reduce anticipated or
actual margins;
| | - | ------------------------------------------------------------------------------------------

| | o | changes in political conditions or the legislative or regulatory
environment;
| | - | -----------------------------------------------------------------------------

| | o | general economic conditions, either nationally or regionally and especially
in our primary service area, becoming less favorable
than expected resulting in, among other things, a deterioration in credit quality;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | changes occurring in business conditions and inflation;
| | - | -------------------------------------------------------

| | o | changes in technology;
| | - | ----------------------

| | o | changes
in monetary and tax policies; o the level of allowance for loan loss;
| | - | -----------------------------------------------------------------------------

| | o | the rate of
delinquencies and amounts of charge-offs; o the rates of loan growth;
| | - | ---------------------------------------------------------------------------------

| | o | adverse changes in
asset quality and resulting credit risk-related losses and expenses;
| | - | ---------------------------------------------------------------------------------------

| | o | loss of consumer
confidence and economic disruptions resulting from terrorist activities;
| | - | -----------------------------------------------------------------------------------------

| | o | changes in the
securities markets; and
| | - | --------------------------------------

| | o | other risks and uncertainties detailed from time to time in our
filings with the Securities and Exchange Commission.
| | - | --------------------------------------------------------------------------------------------------------------------

# General

CommunitySouth
Bancshares, Inc. was incorporated in South Carolina in March 2004 for purposes of
operating as a bank holding company. Our wholly-owned subsidiary, CommunitySouth Bank
& Trust, commenced business on January 18, 2005, and is primarily engaged in the
business of accepting savings, demand, and time deposits and providing mortgage, consumer
and commercial loans to the general public.

# Marketing Focus

Most
of the banks in Pickens and Spartanburg Counties are now local branches of large regional
banks. Although size gives the larger banks certain advantages in competing for business
from large corporations, including higher lending limits and the ability to offer services
in other areas of South Carolina and in Pickens and Spartanburg Counties, we believe we
have a niche in the community banking market in our market area. As a result, we generally
do not attempt to compete for the banking relationships of large corporations, but
concentrate our efforts on small- to medium-sized businesses and professional concerns.
The bank advertises to emphasize the companys local ownership, community bank
nature, and ability to provide more personalized service than its competition.

# Location and Service Area

Our
main office is located at 6650 Calhoun Memorial Highway, Easley, South Carolina 29640. Our
telephone number is (864) 306-2540. We are constructing a new main office to be located at
6602 Calhoun Memorial Highway, Easley, South Carolina 29640. The

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site is approximately 1.2 acres in
size, and the building will be approximately 10,000 square feet. We expect to complete
construction in the second quarter of 2006. In the interim period, we are leasing the
adjoining site and operating out of a temporary facility. We opened a loan production
office in Spartanburg and Greenwood, South Carolina. We converted the Spartanburg office
to a full service branch in January 2006. We also have a full service branch at 787 E
Butler Road, Mauldin, South Carolina 29662. Our full service branches service the entire
upstate of South Carolina, but primarily the counties of Pickens, Greenville, and
Spartanburg.

Pickens
County is located in the northwest portion of South Carolina along the I-85 corridor
between Atlanta, Georgia and Charlotte, North Carolina. Manufacturing is the countys
primary source of economic growth with approximately 150 facilities located in the
surrounding area. With its access to applied automobile materials research and technology
at Clemson University and location in the automobile hub of the southeast, the area is
also developing a reputation among leaders in the automobile industry. Major employers in
the area include Clemson University, Pickens County Schools, Aramark Campus, Inc., Alice
Manufacturing Company, and Palmetto Health Alliance. The Pickens County Commerce Park, a
new 310 acre industrial park with 6,000 feet of prime frontage on US Highway 123, should
also generate additional jobs, housing, and continued growth in the area.

Greenville
County is located in the northwest portion of South Carolina, also along the I-85 corrider
between Atlanta and Charlotte, east of Pickens county. It is South Carolinas most
populous county with over 390,000 residents. Greenville is also one of the states
wealthiest counties, with average household income of $61,023 in 2004. In the past decade,
Greenville County has attracted more than $6 billion in new business investments and
43,000 new jobs and is now considered the economic engine of South Carolina.
During the same period, Greenville County was rated first in the United States by Site
Selection Magazine for both new and expanding international firms and, in 2002, was ranked
fifth out of Americas top 50 cities for European business expansion. Greenville was
also recognized by Expansion Management Magazine in December 2000 for having the best
worker training program in the United States.

Spartanburg
County is also located in the northwest portion of South Carolina along the I-85
boom belt of the Upstate. Spartanburgs economic history is rooted in
agriculture and textiles. Today, the county is an internationally recognized business and
cultural center. More than 90 international firms representing 15 nations have joined the
business community. BMW Manufacturing Corporation, Milliken & Company, Extended Stay
America, and Dennys are just a few of the companies that call Spartanburg home. The
most well known of these companies is BMW, which began its assembly operation in
Spartanburg in 1994 and today is the sole producer of the Z4 and X5 vehicles for worldwide
distribution. Currently, BMW employs approximately 2,000 workers. The amenities and
opportunities Spartanburg County offers are wide-ranging from housing, education,
healthcare, shopping, recreation, and culture. We believe these factors make the quality
of life in the area attractive. Additionally, Spartanburgs mild climate and location
and access to the mountains, the coast, and larger cities such as Atlanta and Charlotte
add to the attractiveness of the area. The growth in the manufacturing base is
complemented by the countys population growth, which is expected to increase from
its current level of 254,000 to 282,000 in 2010.

# Lending Activities

General.
          We emphasize a range of lending services, including real estate, commercial, and
          equity-line and consumer loans to individuals, small- to medium-sized
          businesses, and professional concerns that are located in or conduct a
          substantial portion of their business in our banks market area.

Real
Estate Loans. These loans generally fall into one of two categories: construction real
estate loans or mortgage loans. Each of these categories is discussed in more detail
below, including their specific risks. Interest rates for all categories may be fixed or
adjustable. We generally charge an origination fee for each loan.

Real
estate loans are subject to the same general risks as other loans. Real estate loans are
also sensitive to fluctuations in the value of the real estate securing the loan. On first
and second mortgage loans, we generally do not advance more

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than regulatory limits. We require a
valid mortgage lien on all real property loans along with a title lien policy which
insures the validity and priority of the lien. We also require borrowers to obtain hazard
insurance policies and flood insurance, if applicable. Additionally, certain types of real
estate loans have specific risk characteristics that vary according to the collateral type
securing the loan and the terms and repayment sources for the loan.

We
have the ability to originate some real estate loans for sale into the secondary market.
We can limit our interest rate and credit risk on these loans by locking the interest rate
for each loan with the secondary investor and receiving the investors underwriting
approval prior to originating the loan.

| |  | Real Estate Loans  Mortgage. Mortgage real estate loans generally have terms
of five years or less, although payments may be structured on a longer amortization basis.
Inherent in mortgage real estate loans credit risk is the risk that the primary
source of repayment, the operating commercial real estate company or residential borrower,
will be insufficient to service the debt. If a real estate loan is in default, we also run
the risk that the value of the real estate securing the loan will decrease, and thereby be
insufficient to satisfy the loan. To mitigate these risks, we evaluate each borrower on an
individual basis and attempt to determine its business risks and credit profile. We
attempt to reduce credit risk in the real estate portfolio by emphasizing loans on
owner-occupied office/residential and retail buildings where the loan-to-value ratio is
established by independent appraisals. We typically review the personal financial
statements of the principal owners/borrower and require their personal guarantees. These
reviews often reveal secondary sources of payment and liquidity to support a loan request.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Real Estate Loans  Construction.We offer adjustable and fixed rate
residential and commercial construction loans to builders and developers and to consumers
who wish to build their own home. The term of construction and development loans generally
is limited to 18 months, although payments may be structured on a longer amortization
basis. Most loans mature and require payment in full upon the sale of the property.
Construction loans generally carry a higher degree of risk than long term financing of
existing properties. Repayment usually depends on the ultimate completion of the project
within cost estimates and on the sale of the property. Specific risks include: | 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

| | o | cost overruns;
| | - | --------------

| | o | mismanaged construction;
| | - | ------------------------

| | o | inferior or improper construction techniques;
| | - | ---------------------------------------------

| | o | economic changes or downturns during
construction;
| | - | --------------------------------------------------

| | o | a downturn in the real estate market;
| | - | -------------------------------------

| | o | rising interest rates which may
prevent sale of the property; and
| | - | -----------------------------------------------------------------

| | o | failure to sell completed projects in a timely manner.
| | - | ------------------------------------------------------

| |  | We
attempt to reduce risk by obtaining personal guarantees where possible, and by keeping the
loan-to-value ratio of the completed project below specified percentages. We also reduce
risk by selling participations in larger loans to other institutions when possible.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Commercial
Loans. We make loans for commercial purposes in various lines of businesses. Equipment
loans typically are made for a term of five years or less at fixed or variable rates, with
the loan fully amortized over the term and secured by the financed equipment. Working
capital loans typically have terms not exceeding one year and are usually secured by
accounts receivable, inventory, or personal guarantees of the principals of the business.
For loans secured by accounts receivable or inventory, principal is typically repaid as
the assets securing the loan are converted into cash, and in other cases principal is due
at maturity. Trade letters of credit, standby letters of credit, and foreign exchange are
handled through a correspondent bank as agent for the bank. Commercial loans primarily
have risk that the primary source of repayment, the borrowing business, will be
insufficient to service the debt. Often this occurs as the result of changes in local
economic conditions or in the industry in which the borrower operates which impact cash
flow or collateral value.

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Consumer
Loans. We make a variety of loans to individuals for personal and household purposes,
including secured and unsecured installment loans and revolving lines of credit such as
credit cards. Installment loans typically carry balances of less than $50,000 and are
amortized over periods up to 60 or more months. Consumer loans are offered on a single
maturity basis where a specific source of repayment is available. Revolving loan products
typically require monthly payments of interest and a portion of the principal.

Consumer
loans are generally considered to have greater risk than first or second mortgages on real
estate because the value of the secured property may depreciate rapidly, they are often
dependent on the borrowers employment status as the sole source of repayment, and
some of them are unsecured. To mitigate these risks, we analyze selective underwriting
criteria for each prospective borrower, which may include the borrowers employment
history, income history, credit bureau reports, or debt to income ratios. If the consumer
loan is secured by property, such as an automobile loan, we also attempt to offset the
risk of rapid depreciation of the collateral with a shorter loan amortization period.
Despite these efforts to mitigate our risks, consumer loans have a higher rate of default
that real estate loans. For this reason, we attempt to reduce our loss exposure to these
types of loans by limiting their sizes relative to other types of loans.

We
also offer home equity loans. Our underwriting criteria for and the risks associated with
home equity loans and lines of credit are generally the same as those for first mortgage
loans. Home equity lines of credit typically have terms of 15 years or less, carry
balances less than $125,000, and may extend up to 90% of the available equity of each
property.

We
also have the ability to offer small business loans utilizing government enhancements such
as the Small Business Administrations 7(a) program and SBAs 504 and
LowDoc programs. These loans will typically be partially guaranteed by the
government which may help to reduce the banks risk. Government guarantees of SBA
loans will not exceed 80% of the loan value, and will generally be less.

Relative
Risks of Loans. Each category of loan has a different level of credit risk. Real
estate loans are generally safer than loans secured by other assets because the value of
the underlying security, real estate, is generally ascertainable and does not fluctuate as
much as some other assets. Certain real estate loans are less risky than others.
Residential real estate loans are generally the least risky type of real estate loan,
followed by commercial real estate loans and construction and development loans.
Commercial loans, which can be secured by real estate or other assets, or which can be
unsecured, are generally more risky than real estate loans, but less risky than consumer
loans. Finally, consumer loans, which can also be secured by real estate or other assets,
or which can also be unsecured, are generally considered to be the most risky of these
categories of loans. Any type of loan which is unsecured is generally more risky than
secured loans. These levels of risk are general in nature, and many factors including the
creditworthiness of the borrower or the particular nature of the secured asset may cause
any type of loan to be more or less risky than another. Additionally, these levels of risk
are limited to an analysis of credit risk, and they do not take into account other risk
factors associated with making loans such as the interest rate risk inherent in long-term,
fixed-rate loans.

Loan
Approval and Review. Our loan approval policies provide for various levels of officer
lending authority. When the amount of aggregate loans to a single borrower exceeds that
individual officers lending authority, the loan request is considered and approved
by an officer with a higher lending limit, the management loan committee or the board of
directors loan committee. We do not make any loans to any director of the bank
unless the loan is approved by the board of directors of the bank and is made on terms not
more favorable to the person than would be available to a person not affiliated with the
bank. We adhere to Federal National Mortgage Association and Federal Home Loan Mortgage
Corporation guidelines in its mortgage loan review process, but we may choose to alter
this policy in the future.

Lending
Limits. Our lending activities are subject to a variety of lending limits imposed by
federal law. In general, we are subject to a legal limit on loans to a single borrower
equal to 15% of the banks capital and unimpaired surplus. Different limits may apply
based on the type of loan or the nature of the borrower, including the borrowers
relationship to the bank. These

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limits will increase or decrease as
the banks capital increases or decreases.

# Banking Services

We
offer a full range of deposit services that are typically available in most banks and
savings and loan associations, including checking accounts, NOW accounts, commercial
accounts, savings accounts, and other time deposits of various types, ranging from daily
money market accounts to longer-term certificates of deposit. The transaction accounts and
time certificates are tailored to our principal market area at rates competitive to those
offered in the upstate South Carolina region. In addition, we offer certain retirement
account services, including IRAs.

# Other Banking Services

We
also offer safe deposit boxes, cashiers checks, banking by mail, direct deposit of
payroll and social security checks, U.S. Savings Bonds, and travelers checks. Our bank is
associated with the Star and Plus ATM networks that may be used by our customers
throughout the country. We believe that by being associated with a shared network of ATMs,
we will be better able to serve our customers and will be able to attract customers who
are accustomed to the convenience of using ATMs. We also offer a debit card and credit
card services through a correspondent bank as an agent for the bank.

# Competition

The
banking business is highly competitive. We compete as a financial intermediary with
other commercial banks, savings banks, credit unions, finance companies, and money market
mutual funds operating in Pickens, Greenville and Spartanburg Counties. The competition among the
various financial institutions is based upon a variety of factors, including interest
rates offered on deposit accounts, interest rates charged on loans, credit and service
charges, the quality of services rendered, the convenience of banking facilities and, in
the case of loans to large commercial borrowers, relative lending limits. In addition to
banks and savings associations, we compete with other financial institutions including
securities firms, insurance companies, credit unions, leasing companies and finance
companies. Size gives larger banks certain advantages in competing for business from large
corporations. These advantages include higher lending limits and the ability to offers
services in other areas of South Carolina. As a result, we do not generally attempt to
compete for the banking relationships of large corporations, but concentrate our efforts
on small- to medium-sized businesses and individuals. We believe we have competed
effectively in this market by offering quality and personal service.

# Employees

As
of March 23, 2006, we had 37 full-time employees and 3 part-time employees.

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# SUPERVISION AND
REGULATION

Both
the company and the bank are subject to extensive state and federal banking laws and
regulations that impose specific requirements or restrictions on and provide for general
regulatory oversight of virtually all aspects of our operations. These laws and
regulations are generally intended to protect depositors, not shareholders. The following
summary is qualified by reference to the statutory and regulatory provisions discussed.
Changes in applicable laws or regulations may have a material effect on our business and
prospects. Beginning with the enactment of the Financial Institutions Reform Recovery and
Enforcement Act in 1989 and followed by the FDIC Improvement Act in 1991 and the
Gramm-Leach-Bliley Act in 1999, numerous additional regulatory requirements have been
placed on the banking industry in the past several years, and additional changes have been
proposed. Our operations may be affected by legislative changes and the policies of
various regulatory authorities. We cannot predict the effect that fiscal or monetary
policies, economic control, or new federal or state legislation may have on our business
and earnings in the future.

The
following discussion is not intended to be a complete list of all the activities regulated
by the banking laws or of the impact of such laws and regulations on our operations. It is
intended only to briefly summarize some material provisions.

# USA PATRIOT Act of 2002

In
October 2002, the USA PATRIOT Act of 2002 was enacted in response to the terrorist attacks
in New York, Pennsylvania, and Washington D.C. that occurred on September 11, 2001. The
PATRIOT Act is intended to strengthen U.S. law enforcements and the intelligence
communities abilities to work cohesively to combat terrorism on a variety of fronts.
The potential impact of the PATRIOT Act on financial institutions is significant and wide
ranging. The PATRIOT Act contains sweeping anti-money laundering and financial
transparency laws and imposes various regulations, including standards for verifying
client identification at account opening, and rules to promote cooperation among financial
institutions, regulators, and law enforcement entities in identifying parties who may be
involved in terrorism or money laundering.

# Check 21

On
October 28, 2003, President Bush signed into law the Check Clearing for the 21st Century
Act, also known as Check 21. The new law, which became effective October 28, 2004, gives
substitute checks, such as a digital image of a check and copies made from
that image, the same legal standing as the original paper check. Some of the major
provisions include:

| | o | allowing check truncation without making it mandatory;
| | - | ------------------------------------------------------

| | o | demanding that every financial institution communicate to accountholders in writing a
description of its substitute check processing program and their rights under the law;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | legalizing substitutions for and replacements of paper checks without agreement from consumers;
| | - | -----------------------------------------------------------------------------------------------

| | o | retaining in place the previously mandated electronic collection and return of checks
between financial institutions only when individual agreements are in place;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | requiring that when accountholders request verification, financial institutions produce
the original check (or a copy that accurately represents the original) and demonstrate
that the account debit was accurate and valid; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | requiring recrediting of funds to an individuals account on the next business day
after a consumer proves that the financial institution has erred.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------

This
new legislation will likely affect bank capital spending as many financial institutions
assess whether technological or operational changes are necessary to stay competitive and
take advantage of the new opportunities presented by Check 21.

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# CommunitySouth
Bancshares, Inc.

We
own 100% of the outstanding capital stock of the bank, and therefore we are considered to
be a bank holding company under the federal Bank Holding Company Act of 1956 and the South
Carolina Banking and Branching Efficiency Act.

The
Bank Holding Company Act. Under the Bank Holding Company Act, we are subject to
periodic examination by the Federal Reserve and are required to file periodic reports of
our operations and any additional information that the Federal Reserve may require. Our
activities at the bank and holding company levels are limited to:

| | o | banking and managing or controlling banks;
| | - | ------------------------------------------

| | o | furnishing services to or performing services for our subsidiaries; and
| | - | -----------------------------------------------------------------------

| | o | engaging in other activities that the Federal Reserve determines to be so closely related
to banking and managing or controlling banks as to be a proper incident thereto. | 
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

Investments,
Control, and Activities. With certain limited exceptions, the Bank Holding Company Act
requires every bank holding company to obtain the prior approval of the Federal Reserve
before:

| | o | acquiring substantially all the assets of any bank;
| | - | ---------------------------------------------------

| | o | acquiring direct or indirect ownership or control of any voting shares of any bank if
after the acquisition it would own or control more than 5% of the voting shares of such
bank (unless it already owns or controls the majority of such shares); or | 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

| | o | merging or consolidating with another bank holding company.
| | - | -----------------------------------------------------------

In
addition, and subject to certain exceptions, the Bank Holding Company Act and the Change
in Bank Control Act, together with regulations promulgated thereunder, require Federal
Reserve approval prior to any person or company acquiring control of a bank
holding company. Control is conclusively presumed to exist if an individual or company
acquires 25% or more of any class of voting securities of a bank holding company. Control
is rebuttably presumed to exist if a person acquires 10% or more, but less than 25%, of
any class of voting securities and either the company has registered securities under
Section 12 of the Securities Exchange Act of 1934 or no other person owns a greater
percentage of that class of voting securities immediately after the transaction. Because
we had more than more than 500 shareholders of record on December 31, 2005, we will file a
form 8/A in April 2006. After such filing, our securities will be registered under Section
12 of the Securities Exchange Act. The regulations provide a procedure for rebutting
control when ownership of any class of voting securities is below 25%.

Under
the Bank Holding Company Act, a bank holding company is generally prohibited from engaging
in, or acquiring direct or indirect control of more than 5% of the voting shares of any
company engaged in, nonbanking activities unless the Federal Reserve Board, by order or
regulation, has found those activities to be so closely related to banking or managing or
controlling banks as to be a proper incident thereto. Some of the activities that the
Federal Reserve Board has determined by regulation to be proper incidents to the business
of a bank holding company include:

| | o | making or servicing loans and certain types of leases; o engaging in certain insurance and
discount brokerage activities;
| | - | -------------------------------------------------------------------------------------------------------------------------

| | o | performing certain data processing services;
| | - | --------------------------------------------

| | o | acting in
certain circumstances as a fiduciary or investment or financial adviser;
| | - | ----------------------------------------------------------------------------------

| | o | owning savings
associations; and
| | - | --------------------------------

| | o | making investments in certain corporations or projects designed primarily to promote
community welfare.
| | - | -------------------------------------------------------------------------------------------------------

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The
Federal Reserve Board imposes certain capital requirements on the company under the Bank
Holding Company Act, including a minimum leverage ratio and a minimum ratio of
qualifying capital to risk-weighted assets. These requirements are described
below under CommunitySouth Bank & Trust  Capital Regulations.
Subject to our capital requirements and certain other restrictions, we are able to borrow
money to make a capital contribution to the bank, and these loans may be repaid from
dividends paid from the bank to the company. Our ability to pay dividends will be subject
to regulatory restrictions as described below in CommunitySouth Bank & Trust
 Dividends. We are also able to raise capital for contribution to the bank by
issuing securities without having to receive regulatory approval, subject to compliance
with federal and state securities laws.

Source
of Strength; Cross-Guarantee. In accordance with Federal Reserve Board policy, we are
expected to act as a source of financial strength to the bank and to commit resources to
support the bank in circumstances in which we might not otherwise do so. Under the Bank
Holding Company Act, the Federal Reserve Board may require a bank holding company to
terminate any activity or relinquish control of a nonbank subsidiary, other than a nonbank
subsidiary of a bank, upon the Federal Reserve Boards determination that such
activity or control constitutes a serious risk to the financial soundness or stability of
any depository institution subsidiary of the bank holding company. Further, federal bank
regulatory authorities have additional discretion to require a bank holding company to
divest itself of any bank or nonbank subsidiaries if the agency determines that
divestiture may aid the depository institutions financial condition.

The
Gramm-Leach-Bliley Act. The Gramm-Leach-Bliley Act was signed into law on November 12,
1999. Among other things, the Act repealed the restrictions on banks affiliating with
securities firms contained in sections 20 and 32 of the Glass-Steagall Act. The Act also
permits bank holding companies that become financial holding companies to engage in a
statutorily provided list of financial activities, including insurance and securities
underwriting and agency activities, merchant banking, and insurance company portfolio
investment activities. The Act also authorizes activities that are
complementary to financial activities. We have not elected to become a
financial holding company.

The
Act is intended, in part, to grant to community banks certain powers as a matter of right
that larger institutions have accumulated on an ad hoc basis. Nevertheless, the Act may
have the result of increasing the amount of competition that we face from larger
institutions and other types of companies. In fact, it is not possible to predict the full
effect that the Act will have on us.

South
Carolina State Regulation. As a South Carolina bank holding company under the South
Carolina Banking and Branching Efficiency Act, we are subject to limitations on sale or
merger and to regulation by the South Carolina Board of Financial Institutions. We are not
required to obtain the approval of the Board prior to acquiring the capital stock of a
national bank, but we must notify them at least 15 days prior to doing so. We must receive
the Boards approval prior to engaging in the acquisition of a South Carolina
state-chartered bank or another South Carolina bank holding company.

# CommunitySouth Bank
& Trust

The
bank operates as a state bank incorporated under the laws of the State of South Carolina
and is subject to examination by the South Carolina Board of Financial Institutions.
Deposits in the bank are insured by the FDIC up to a maximum amount, which is generally
$100,000 per depositor subject to aggregation rules.

The
South Carolina Board of Financial Institutions and the FDIC regulate or monitor virtually
all areas of the banks operations, including:

| | o | security devices and procedures;
| | - | --------------------------------

| | o | adequacy of capitalization and loss reserves;
| | - | ---------------------------------------------

| | o | loans;
| | - | ------

| | o | investments;
| | - | ------------

| | o | borrowings;
| | - | -----------

9

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| | o | deposits;
| | - | ---------

| | o | mergers;
| | - | --------

| | o | issuances of securities;
| | - | ------------------------

| | o | payment of dividends;
| | - | ---------------------

| | o | interest rates payable on deposits;
| | - | -----------------------------------

| | o | interest rates or fees chargeable on loans;
| | - | -------------------------------------------

| | o | establishment of branches;
| | - | --------------------------

| | o | corporate reorganizations;
| | - | --------------------------

| | o | maintenance of books and records; and
| | - | -------------------------------------

| | o | adequacy of staff training to carry on safe lending and deposit gathering practices.
| | - | ------------------------------------------------------------------------------------

The
South Carolina Board of Financial Institutions requires the bank to maintain specified
capital ratios and imposes limitations on the banks aggregate investment in real
estate, bank premises, and furniture and fixtures. The South Carolina Board of Financial
Institutions also requires the bank to prepare quarterly reports on the banks
financial condition in compliance with its minimum standards and procedures.

Under
the FDIC Improvement Act, all insured institutions must undergo regular on site
examinations by their appropriate banking agency. The cost of examinations of insured
depository institutions and any affiliates may be assessed by the appropriate agency
against each institution or affiliate as it deems necessary or appropriate. Insured
institutions are required to submit annual reports to the FDIC, their federal regulatory
agency, and their state supervisor when applicable. The FDIC Improvement Act directs the
FDIC to develop a method for insured depository institutions to provide supplemental
disclosure of the estimated fair market value of assets and liabilities, to the extent
feasible and practicable, in any balance sheet, financial statement, report of condition
or any other report of any insured depository institution. The FDIC Improvement Act also
requires the federal banking regulatory agencies to prescribe, by regulation, standards
for all insured depository institutions and depository institution holding companies
relating, among other things, to the following:

| | o | internal controls;
| | - | ------------------

| | o | information systems and audit systems;
| | - | --------------------------------------

| | o | loan documentation;
| | - | -------------------

| | o | credit
underwriting;
| | - | --------------------

| | o | interest rate risk exposure; and
| | - | --------------------------------

| | o | asset quality.
| | - | --------------

Holding
companies which have been registered or have undergone a change in control within the past
two years or which have been deemed by the Federal Reserve Board to be troubled
institutions must give the Federal Reserve Board 30 days prior notice of the
appointment of any senior executive officer or director. Within the 30 day period, the
Federal Reserve Board, as the case may be, may approve or disapprove any such appointment.

Deposit
Insurance. The FDIC has adopted a risk-based assessment system for determining an
insured depository institutions insurance assessment rate. The system takes into
account the risks attributable to different categories and concentrations of assets and
liabilities. An institution is placed into one of three capital categories: (1) well
capitalized; (2) adequately capitalized; or (3) undercapitalized. The FDIC also assigns an
institution to one of three supervisory subgroups, based on the FDICs determination
of the institutions financial condition and the risk posed to the deposit insurance
funds. Assessments range from 0 to 27 cents per $100 of deposits, depending on the
institutions capital group and supervisory subgroup. In addition, the FDIC imposes
assessments to help pay off the $780 million in annual interest payments on the $8 billion
Financing Corporation bonds issued in the late 1980s as part of the government rescue of
the thrift industry. The FDIC assessment rate on our bank deposits currently is zero but
may change in the future. The FDIC may increase or decrease the assessment rate schedule
on a semiannual basis. An increase in the BIF assessment rate could have a material
adverse effect on our earnings, depending on the amount of the increase.

10

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Transactions
With Affiliates and Insiders.The bank is subject to the provisions of Section 23A of
the Federal Reserve Act, which places limits on the amount of loans or extensions of
credit to, or investments in, or certain other transactions with, affiliates and on the
amount of advances to third parties collateralized by the securities or obligations of
affiliates. The aggregate of all covered transactions is limited in amount, as to any one
affiliate, to 10% of the banks capital and surplus and, as to all affiliates
combined, to 20% of the banks capital and surplus. Furthermore, within the foregoing
limitations as to amount, each covered transaction must meet specified collateral
requirements. Compliance is also required with certain provisions designed to avoid the
taking of low quality assets.

The
bank is subject to the provisions of Section 23B of the Federal Reserve Act which, among
other things, prohibits an institution from engaging in certain transactions with certain
affiliates unless the transactions are on terms substantially the same, or at least as
favorable to such institution or its subsidiaries, as those prevailing at the time for
comparable transactions with nonaffiliated companies. The bank is subject to certain
restrictions on extensions of credit to executive officers, directors, certain principal
shareholders, and their related interests. Such extensions of credit (i) must be made on
substantially the same terms, including interest rates and collateral, as those prevailing
at the time for comparable transactions with third parties and (ii) must not involve more
than the normal risk of repayment or present other unfavorable features.

The
Federal Reserve Board has recently issued Regulation W, which codifies prior regulations
under Sections 23A and 23B of the Federal Reserve Act and interpretative guidance with
respect to affiliate transactions. Regulation W incorporates the exemption from the
affiliate transaction rules but expands the exemption to cover the purchase of any type of
loan or extension of credit from an affiliate. In addition, under Regulation W:

| | o | a bank and its subsidiaries may not purchase a low-quality asset from an affiliate;
| | - | -----------------------------------------------------------------------------------

| | o | covered transactions and other specified transactions between a bank or its subsidiaries
and an affiliate must be on terms and conditions that are consistent with safe and sound
banking practices; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | with some exceptions, each loan or extension of credit by a bank to an affiliate must be
secured by collateral with a market value ranging from 100% to 130%, depending on the type
of collateral, of the amount of the loan or extension of credit.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Regulation
W generally excludes all non-bank and non-savings association subsidiaries of banks from
treatment as affiliates, except to the extent that the Federal Reserve Board decides to
treat these subsidiaries as affiliates. The regulation also limits the amount of loans
that can be purchased by a bank from an affiliate to not more than 100% of the banks
capital and surplus.

Dividends.
          A South Carolina state bank may not pay dividends from its capital. All
          dividends must be paid out of undivided profits then on hand, after deducting
          expenses, including reserves for losses and bad debts. The bank is authorized to
          pay cash dividends up to 100% of net income in any calendar year without
          obtaining the prior approval of the South Carolina Board of Financial
          Institutions, provided that the bank received a composite rating of one or two
          at the last federal or state regulatory examination. The bank must obtain
          approval from the South Carolina Board of Financial Institutions prior to the
          payment of any other cash dividends. In addition, under the FDICIA, the bank may
          not pay a dividend if, after paying the dividend, the bank would be
          undercapitalized.

Branching.
          Under current South Carolina law, we may open branch offices throughout South
          Carolina with the prior approval of the South Carolina Board of Financial
          Institutions. In addition, with prior regulatory approval, the bank will be able
          to acquire existing banking operations in South Carolina.

Community
Reinvestment Act. The Community Reinvestment Act requires that, in connection with
examinations of financial institutions within their respective jurisdictions, a financial
institutions primary regulator, which is the FDIC for the bank, shall evaluate the
record of each financial institution in meeting the credit needs of its local community,

11

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including low and moderate income neighborhoods. These
factors are also considered in evaluating mergers, acquisitions, and applications to open
a branch or facility. Failure to adequately meet these criteria could impose additional
requirements and limitations on our bank.

The
Gramm-Leach-Bliley Act. Under the Gramm-Leach-Bliley Act, subject to certain
conditions imposed by their respective banking regulators, national and state-chartered
banks are permitted to form financial subsidiaries that may conduct financial
or incidental activities, thereby permitting bank subsidiaries to engage in certain
activities that previously were impermissible. The Gramm-Leach-Bliley Act imposes several
safeguards and restrictions on financial subsidiaries, including that the parent
banks equity investment in the financial subsidiary be deducted from the banks
assets and tangible equity for purposes of calculating the banks capital adequacy.
In addition, the Gramm-Leach-Bliley Act imposes new restrictions on transactions between a
bank and its financial subsidiaries similar to restrictions applicable to transactions
between banks and nonbank affiliates.

The
Gramm-Leach-Bliley Act also contains provisions regarding consumer privacy. These
provisions require financial institutions to disclose their policy for collecting and
protecting confidential information. Customers generally may prevent financial
institutions from sharing personal financial information with nonaffiliated third parties
except for third parties that market an institutions own products and services.
Additionally, financial institutions generally may not disclose consumer account numbers
to any nonaffiliated third party for use in telemarketing, direct mail marketing, or other
marketing to the consumer.

Other
Regulations. Interest and other charges collected or contracted for by the bank are
subject to state usury laws and federal laws concerning interest rates. The banks
loan operations are also subject to federal laws applicable to credit transactions, such
as:

| | o | the federal Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers;
| | - | ----------------------------------------------------------------------------------------------

| | o | the Home Mortgage Disclosure Act of 1975, requiring financial institutions to provide
information to enable the public and public officials to determine whether a financial
institution is fulfilling its obligation to help meet the housing needs of the community
it serves;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | the Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed
or other prohibited factors in extending credit;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------

| | o | the Fair Credit Reporting Act of 1978, governing the use and provision of information to
credit reporting agencies;
| | - | -------------------------------------------------------------------------------------------------------------------

| | o | the Fair Debt Collection Act, governing the manner in which
consumer debts may be collected by collection agencies; and
| | - | -----------------------------------------------------------------------------------------------------------------------

| | o | the rules and regulations of
the various federal agencies charged with the responsibility of implementing such federal laws.
| | - | ----------------------------------------------------------------------------------------------------------------------------

In
addition, the deposit operations of the bank are subject to:

| | o | the Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of
consumer financial records and prescribes procedures for complying with administrative
subpoenas of financial records; and | 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | 

| | o | the Electronic Funds Transfer Act and Regulation E issued by the Federal Reserve Board to
implement that Act, which govern automatic deposits to and withdrawals from deposit
accounts and customers rights and liabilities arising from the use of automated
teller machines and other electronic banking services. | 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

Capital
Regulations. The federal bank regulatory authorities have adopted risk-based capital
guidelines for banks and bank holding companies that are designed to make regulatory
capital requirements more sensitive to differences in risk profiles among banks and bank
holding companies and account for off-balance sheet items. The guidelines are minimums,
and the federal regulators have noted that banks and bank holding companies contemplating
significant expansion programs should not allow expansion to diminish their capital ratios
and should maintain ratios in excess of the minimums. We have not received any notice
indicating that either

12

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the company or the bank is subject to
higher capital requirements. The current guidelines require all bank holding companies and
federally-regulated banks to maintain a minimum risk-based total capital ratio equal to
8%, of which at least 4% must be Tier 1 capital. Tier 1 capital includes common
shareholders equity, qualifying perpetual preferred stock, and minority interests in
equity accounts of consolidated subsidiaries, but excludes goodwill and most other
intangibles and excludes the allowance for loan and lease losses. Tier 2 capital includes
the excess of any preferred stock not included in Tier 1 capital, mandatory convertible
securities, hybrid capital instruments, subordinated debt and intermediate term-preferred
stock, and general reserves for loan and lease losses up to 1.25% of risk-weighted assets.

Under
these guidelines, banks and bank holding companies assets are given
risk-weights of 0%, 20%, 50%, or 100%. In addition, certain off-balance sheet items are
given credit conversion factors to convert them to asset equivalent amounts to which an
appropriate risk-weight applies. These computations result in the total risk-weighted
assets. Most loans are assigned to the 100% risk category, except for first mortgage loans
fully secured by residential property and, under certain circumstances, residential
construction loans, both of which carry a 50% rating. Most investment securities are
assigned to the 20% category, except for municipal or state revenue bonds, which have a
50% rating, and direct obligations of or obligations guaranteed by the United States
Treasury or United States Government agencies, which have a 0% rating.

The
federal bank regulatory authorities have also implemented a leverage ratio, which is equal
to Tier 1 capital as a percentage of average total assets less intangibles, to be used as
a supplement to the risk-based guidelines. The principal objective of the leverage ratio
is to place a constraint on the maximum degree to which a bank holding company may
leverage its equity capital base. The minimum required leverage ratio for top-rated
institutions is 3%, but most institutions are required to maintain an additional cushion
of at least 100 to 200 basis points.

The
FDIC Improvement Act established a new capital-based regulatory scheme designed to promote
early intervention for troubled banks which requires the FDIC to choose the least
expensive resolution of bank failures. The new capital-based regulatory framework contains
five categories of compliance with regulatory capital requirements, including well
capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized, and critically undercapitalized.
To qualify as a well capitalized institution, a bank must have a leverage
ratio of no less than 5%, a Tier 1 risk-based ratio of no less than 6%, and a total
risk-based capital ratio of no less than 10%, and the bank must not be under any order or
directive from the appropriate regulatory agency to meet and maintain a specific capital
level. Following the completion of our initial public offering in February 2005, based on
our calculations, we qualified as well capitalized.

Under
the FDIC Improvement Act regulations, the applicable agency can treat an institution as if
it were in the next lower category if the agency determines (after notice and an
opportunity for hearing) that the institution is in an unsafe or unsound condition or is
engaging in an unsafe or unsound practice. The degree of regulatory scrutiny of a
financial institution increases, and the permissible activities of the institution
decreases, as it moves downward through the capital categories. Institutions that fall
into one of the three undercapitalized categories may be required to do some or all of the
following:

| | o | submit a capital restoration plan;
| | - | ----------------------------------

| | o | raise additional capital;
| | - | -------------------------

| | o | restrict their growth, deposit interest rates, and other activities;
| | - | --------------------------------------------------------------------

| | o | improve their
management;
| | - | -------------------------

| | o | eliminate management fees; or
| | - | -----------------------------

| | o | divest themselves of all or a part of their
operations.
| | - | -------------------------------------------------------

These
capital guidelines can affect us in several ways. If we grow at a rapid pace, our capital
may be depleted too quickly, and a capital infusion from the holding company may be
necessary, which could impact our ability to pay dividends. Our capital levels currently
are more than adequate; however, rapid growth, poor loan portfolio performance, poor
earnings performance, or a combination of these factors could change our capital position
in a relatively short period of time.

13

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Failure
to meet these capital requirements would mean that a bank would be required to develop and
file a plan with its primary federal banking regulator describing the means and a schedule
for achieving the minimum capital requirements. In addition, such a bank would generally
not receive regulatory approval of any application that requires the consideration of
capital adequacy, such as a branch or merger application, unless the bank could
demonstrate a reasonable plan to meet the capital requirement within a reasonable period
of time. A bank that is not well capitalized is also subject to certain
limitations relating to so-called brokered deposits. Bank holding companies
controlling financial institutions can be called upon to boost the institutions
capital and to partially guarantee the institutions performance under their capital
restoration plans.

Enforcement
Powers. The Financial Institutions Reform Recovery and Enforcement Act expanded and
increased civil and criminal penalties available for use by the federal regulatory
agencies against depository institutions and certain institution-affiliated
parties. Institution-affiliated parties primarily include management, employees, and
agents of a financial institution, as well as independent contractors and consultants such
as attorneys and accountants and others who participate in the conduct of the financial
institutions affairs. These practices can include the failure of an institution to
timely file required reports or the filing of false or misleading information or the
submission of inaccurate reports. Civil penalties may be as high as $1,000,000 a day for
such violations. Criminal penalties for some financial institution crimes have been
increased to 20 years. In addition, regulators are provided with greater flexibility to
commence enforcement actions against institutions and institution-affiliated parties.
Possible enforcement actions include the termination of deposit insurance. Furthermore,
banking agencies power to issue cease-and-desist orders were expanded. Such orders
may, among other things, require affirmative action to correct any harm resulting from a
violation or practice, including restitution, reimbursement, indemnification or guarantees
against loss. A financial institution may also be ordered to restrict its growth, dispose
of certain assets, rescind agreements or contracts, or take other actions as determined by
the ordering agency to be appropriate.

Effect
of Governmental Monetary Policies. Our earnings are affected by domestic economic
conditions and the monetary and fiscal policies of the United States government and its
agencies. The Federal Reserve Banks monetary policies have had, and are likely to
continue to have, an important impact on the operating results of commercial banks through
its power to implement national monetary policy in order, among other things, to curb
inflation or combat a recession. The monetary policies of the Federal Reserve Board have
major effects upon the levels of bank loans, investments and deposits through its open
market operations in United States government securities and through its regulation of the
discount rate on borrowings of member banks and the reserve requirements against member
bank deposits. It is not possible to predict the nature or impact of future changes in
monetary and fiscal policies.

Proposed
Legislation and Regulatory Action. New regulations and statutes are regularly proposed
that contain wide-ranging proposals for altering the structures, regulations, and
competitive relationships of the nations financial institutions. We cannot predict
whether or in what form any proposed regulation or statute will be adopted or the extent
to which our business may be affected by any new regulation or statute.

# Risk Factors

We are a new bank that
has incurred losses to date, and there is a risk we may never become profitable.

14

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Our
bank is a de novo bank that began operations in January 2005. As is typical with most new
banks, we incurred substantial start-up expenses and are still operating with an
accumulated deficit. In order for us to become profitable, we will need to attract a
larger number of customers to deposit and borrow money. Our future profitability is also
dependent on numerous other factors including the continued success of the economy of the
community and favorable government regulation. While the economy in this area has been
strong in recent years, an economic downturn in the area would hurt our business. We are
also a highly regulated institution. Our ability to
grow and achieve profitability may be adversely affected by state and federal regulations
that limit a banks right to make loans and purchase securities. Although we expect
to become cumulatively profitable in our fourth year of operation, there is a risk that a deterioration
of the local economy or adverse government regulation could affect our plans. If this
happens, we may never become cumulatively profitable and you will lose part or all of your investment.

We are dependent on key
individuals and the loss of one or more of these key individuals could curtail our growth
and adversely affect our prospects.

Allan
Ducker, our chief executive officer, and David Miller, our president, have extensive and
long-standing ties within our market area and substantial experience with our operations
which has contributed significantly to our growth. If we lose the services of Messrs.
Ducker or Miller, they would be difficult to replace and our business and development
could be materially and adversely affected. We maintain key man life insurance policies in
the amount of $1.0 million on each of Messrs. Ducker and Miller.

Our
success also depends, in part, on our continued ability to attract and retain experienced
loan originators, as well as other management personnel. Competition for personnel is
intense, and we may not be successful in attracting or retaining qualified personnel. Our
failure to compete for these personnel, or the loss of the services of several of such key
personnel, could adversely affect our growth strategy and seriously harm our business,
results of operations, and financial condition.

Our decisions regarding
credit risk and allowances for loan losses may materially and adversely affect our business.

Making
loans and other extensions of credit is an essential element of our business. Although we
seek to mitigate risks inherent in lending by adhering to specific underwriting practices,
our loans and other extensions of credit may not be repaid. The risk of nonpayment is
affected by a number of factors, including:

| | o | the duration of the credit;
| | - | ---------------------------

| | o | credit risks of a particular customer;
| | - | --------------------------------------

| | o | changes in economic and industry conditions; and
| | - | ------------------------------------------------

| | o | in the case of a collateralized loan, risks resulting from uncertainties about the future
value of the collateral.
| | - | ------------------------------------------------------------------------------------------------------------------

We
attempt to maintain an appropriate allowance for loan losses to provide for potential
losses in our loan portfolio. We periodically determine the amount of the allowance based
on consideration of several factors, including:

| | o | an ongoing review of the quality, mix, and size of our overall loan portfolio;
| | - | ------------------------------------------------------------------------------

| | o | our
historical loan loss experience; o evaluation of economic conditions;
| | - | -------------------------------------------------------------------------

| | o | regular reviews of
loan delinquencies and loan portfolio quality; and
| | - | ---------------------------------------------------------------------

| | o | the amount and quality of collateral,
including guarantees, securing the loans.
| | - | -------------------------------------------------------------------------------

There
is no precise method of predicting credit losses. Therefore, we face the risk that
charge-offs in future periods will exceed our allowance for loan losses and that
additional increases in the allowance for loan losses will be required. Additions to the
allowance for loan losses would result in a decrease of our net income, and possibly our
capital.

Lack of seasoning of our
loan portfolio may increase the risk of credit defaults in the future.

Due
to our short operating history, all of the loans in our loan portfolio and our lending
relationships are of relatively recent origin. In general, loans do not begin to show
signs of credit deterioration or default until they have been outstanding for some period

15

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of time, a process we refer to as seasoning. As a result, a portfolio of older
loans will usually behave more

predictably than a newer portfolio.
Because our loan portfolio is relatively new, the current level of delinquencies and
defaults may not be representative of the level that will prevail when the portfolio
becomes more seasoned, which may be higher than current levels. If delinquencies and
defaults increase, we may be required to increase our provision for loan losses, which
would adversely affect our results of operations and financial condition.

An economic downturn,
especially one affecting Pickens, Greenville and Spartanburg Counties, could reduce our customer
base, our level ofdeposits, and demand for financial products such as loans.

Our
success will significantly depend upon the growth in population, income levels, deposits,
and housing starts in our market of Pickens, Greenville and Spartanburg Counties. If the community in
which we operate does not grow or if prevailing economic conditions locally or nationally
are unfavorable, our business may not succeed. An economic downturn would likely
contribute to the deterioration of the quality of our loan portfolio and reduce our level
of deposits, which in turn would hurt our business. If an economic downturn occurs in the
economy as a whole, or in Pickens, Greenville and Spartanburg Counties, borrowers may be less likely
to repay their loans as scheduled. Moreover, the value of real estate or other collateral
that may secure our loans could be adversely affected. Unlike many larger institutions, we
are not able to spread the risks of unfavorable local economic conditions across a large
number of diversified economies. An economic downturn could, therefore, result in losses
that materially and adversely affect our business.

Changes in prevailing
interest rates may reduce our profitability.

Our
results of operations depend in large part upon the level of our net interest income,
which is the difference between interest income from interest-earning assets, such as
loans and mortgage-backed securities, and interest expense on interest-bearing
liabilities, such as deposits and other borrowings. Depending on the terms and maturities
of our assets and liabilities, a significant change in interest rates could have a
material adverse effect on our profitability. Many factors cause changes in interest
rates, including governmental monetary policies and domestic and international economic
and political conditions. While we intend to manage the effects of changes in interest
rates by adjusting the terms, maturities, and pricing of our assets and liabilities, our
efforts may not be effective and our financial condition and results of operations could
suffer. After operating in a historically low interest rate environment, the Federal
Reserve began raising short-term interest rates in the second quarter of 2004. We are
positioned to benefit from a rising interest rate environment in the immediate short-term
time frame. However, no assurance can be given that the Federal Reserve will actually
continue to raise interest rates or that the results we anticipate will actually occur.

We are subject to
extensive regulation that could limit or restrict our activities.

We
operate in a highly regulated industry and are subject to examination, supervision, and
comprehensive regulation by various regulatory agencies. Our compliance with these
regulations is costly and restricts certain of our activities, including payment of
dividends, mergers and acquisitions, investments, loans and interest rates charged,
interest rates paid on deposits, and locations of offices. We are also subject to
capitalization guidelines established by our regulators, which require us to maintain
adequate capital to support our growth.

The
laws and regulations applicable to the banking industry could change at any time, and we
cannot predict the effects of these changes on our business and profitability. Because
government regulation greatly affects the business and financial results of all commercial
banks and bank holding companies, our cost of compliance could adversely affect our
ability to operate profitably.

The
Sarbanes-Oxley Act of 2002, and the related rules and regulations promulgated by the
Securities and Exchange Commission that are now applicable to us, have increased the
scope, complexity, and cost of corporate governance, reporting, and disclosure practices.

16

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We
face strong competition for customers, which could prevent us from obtaining customers
and may cause us to pay higher interestrates to attract customers.

The
banking business is highly competitive, and we experience competition in our market from
many other financial institutions. We compete with commercial banks, credit unions,
savings and loan associations, mortgage banking firms, consumer finance companies,
securities brokerage firms, insurance companies, money market funds, and other mutual
funds, as well as other super-regional, national, and international financial institutions
that operate offices in our primary market areas and elsewhere. We compete with these
institutions both in attracting deposits and in making loans. In addition, we have to
attract our client base from other existing financial institutions and from new residents.
Many of our competitors are well-established, larger financial institutions. These
institutions offer some services, such as extensive and established branch networks, that
we do not currently provide. There is a risk that we will not be able to compete
successfully with other financial institutions in our market, and that we may have to pay
higher interest rates to attract deposits, resulting in reduced profitability. In
addition, competitors that are not depository institutions are generally not subject to
the extensive regulations that apply to us.

We will face risks with
respect to future expansion and acquisitions or mergers.

Although
we do not have any current plans to do so, we may seek to acquire other financial
institutions or parts of those institutions. We may also expand into new markets or lines
of business or offer new products or services. These activities would involve a number of
risks, including:

| | o | taking additional time and creating expense associated with identifying and evaluating
potential acquisitions and merger partners;
| | - | ----------------------------------------------------------------------------------------------------------------------------------

| | o | using inaccurate estimates and judgments to evaluate credit, operations, management, and
market risks with respect to the target institution or assets;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | diluting our existing shareholders in an acquisition;
| | - | -----------------------------------------------------

| | o | taking additional time and creating expense associated with evaluating new markets for
expansion, hiring experienced local management, and opening new offices, as there may be a
substantial time lag between these activities before we generate sufficient assets and
deposits to support the costs of the expansion;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | taking a significant amount of time negotiating a transaction or working on expansion
plans, resulting in managements attention being diverted from the operation of our
existing business;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | taking time and creating expense integrating the operations and personnel of the combined
businesses;
| | - | -----------------------------------------------------------------------------------------------------

| | o | creating an adverse short-term effect on our results of operations; and
| | - | -----------------------------------------------------------------------

| | o | losing key employees and customers as a result of an acquisition that is poorly received.
| | - | -----------------------------------------------------------------------------------------

We have never acquired another
institution before, so we lack experience in handling any of these risks. There is also a
risk that any expansion effort will not be successful.

# Item 2. Description of
Property.

Our
main office is located at 6650 Calhoun Memorial Highway, Easley, South Carolina 29640. We
are constructing a new main office to be located at 6602 Calhoun Memorial Highway, Easley,
South Carolina 29640. The site is approximately 1.2 acres in size, and the building will
be approximately 10,000 square feet. We own this site and expect to complete construction
in the second quarter of 2006. In the interim period, we are leasing the adjoining site
and operating out of a temporary facility. We opened a loan production office in
Spartanburg and Greenwood, South Carolina. We converted the Spartanburg office to a full
service branch in January 2006. We also have a full service branch at 787 E Butler Road,
Mauldin, South Carolina 29662.

17

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# Item 3. Legal
Proceedings.

We
are not a party to, nor are any of our properties subject to, any material legal
proceedings, other than routine litigation incidental to our business.

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

No
matter was submitted to a vote of security holders during the fourth quarter of the fiscal
year covered by this report.

18

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# Part II

# Item 5. Market for
Common Equity and Related Stockholder Matters.

Our common stock is not listed on any
exchange. However, the stock was approved for quotation on the OTC Bulletin Board under
the symbol CBSO in March 2006. Quotations on the OTC Bulletin Board reflect
inter-dealer prices, without retail mark-up, mark-down, or commissions, and may not
represent actual transactions. Because we were not approved for quotation until March
2006, meaningful stock price data is unavailable for this report. During 2005, management
is aware of a few transactions in which our common stock traded in the price range of $14
to $19 per share. However, management has not ascertained that these transactions are the
result of arms length negotiations between the parties, and because of the limited
number of shares involved, these prices may not be indicative of the market value of our
common stock.

As
of March 23, 2006, there were 3,744,855 shares of common stock outstanding held by
approximately 1,139 shareholders of record.

We
have not declared or paid any cash dividends on our common stock since our inception. For
the foreseeable future we do not intend to declare cash dividends. We intend to retain
earnings to grow our business and strengthen our capital base. Our ability to pay
dividends depends on the ability of our subsidiary, CommunitySouth Bank & Trust, to
pay dividends to us. As a South Carolina state bank, CommunitySouth may only pay dividends
out of its net profits, after deducting expenses, including losses and bad debts. In
addition, the bank is prohibited from declaring a dividend on its shares of common stock
until its surplus equals its stated capital. At December 31, 2005, the bank was prohibited
from declaring a dividend because it had an accumulated deficit of $1,064,984.

# Item 6.
Managements Discussion and Analysis or Plan of Operation.

The
information required by Item 6 is hereby incorporated by reference from our annual report
to shareholders for the year ended December 31, 2005.

# Item 7. Financial
Statements.

The
information required by Item 7 is hereby incorporated by reference from our annual report
to shareholders for the year ended December 31, 2005.

# Item 8. Changes in and
Disagreements with Accountants on Accounting and Financial Disclosure.

None

# Item 8A. Controls and
Procedures.

As
of the end of the period covered by this report, we carried out an evaluation, under the
supervision and with the participation of our management, including our Chief Executive
Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and
procedures as defined in Exchange Act Rule 13a-15(e). Based upon that evaluation, our
Chief Executive Officer and Chief Financial Officer have concluded that our current
disclosure controls and procedures are effective as of December 31, 2005. There have been
no significant changes in our internal controls over financial reporting during the fourth
fiscal quarter ended December 31, 2005 that have materially affected, or are reasonably
likely to materially affect, our internal controls over financial reporting.

The
design of any system of controls and procedures is based in part upon certain assumptions
about the likelihood of future events. There can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions, regardless of
how remote.

19

---

# Part III

# Item 9. Directors,
Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the
Exchange Act.

The
information required by Item 9 is hereby incorporated by reference from our proxy
statement for our 2006 annual meeting of shareholders to be held on May 16, 2006.

# Item 10. Executive
Compensation.

The
information required by Item 10 is hereby incorporated by reference from our proxy
statement for our 2006 annual meeting of shareholders to be held on May 16, 2006.

# Item 11. Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The
information required by Item 11 is hereby incorporated by reference from our proxy
statement for our 2006 annual meeting of shareholders to be held on May 16, 2006.

# Item 12. Certain
Relationships and Related Transactions.

The
information required by Item 12 is hereby incorporated by reference from our proxy
statement for our 2006 annual meeting of shareholders to be held on May 16, 2006.

# Item 13. Exhibits.

|3.1. | Articles of Incorporation (incorporated by reference to Exhibit 3.1 of the Company's Form SB-2, File No. 333-117053).
|---- | ---------------------------------------------------------------------------------------------------------------------

|3.2. | Bylaws (incorporated by reference to Exhibit 3.2 of the Company's Form SB-2, File No. 333-117053).
|---- | --------------------------------------------------------------------------------------------------

|4.1. | See Exhibits 3.1 and 3.2 for provisions in CommunitySouth Bancshares, Inc.'s Articles of Incorporation and Bylaws defining
   the rights of holders of the common stock (incorporated by reference to Exhibit 4.1 of the Company's Form SB-2, File No.
   333-117053).
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.2 | Form of certificate of common stock (incorporated by reference to Exhibit 4.2 of the Company's Form SB-2, File No.
   333-117053).
|--- | ----------------------------------------------------------------------------------------------------------------------------------

|10.1. | Employment Agreement between CommunitySouth Bancshares, Inc. and C. Allan Ducker, III dated March 29, 2004 (incorporated
 by reference to Exhibit 10.1 of the Company's Form SB-2, File No. 333- 117053).*
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.2 | Employment Agreement between CommunitySouth Bancshares, Inc. and David A. Miller dated March 29, 2004 (incorporated by
 reference to Exhibit 10.2 of the Company's Form SB-2, File No. 333-117053).*
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.3 | Form of Stock Warrant Agreement (incorporated by reference to Exhibit 10.1 of the Company's Form 10-QSB filed on August 15,
   2005).*
|---- | --------------------------------------------------------------------------------------------------------------------------------------

|10.4 | Master Loan Purchase Agreement between Bank of Tennessee and CommunitySouth Bank and Trust (incorporated by reference
   to Exhibit 10.6 of the Company's Form SB-2, File     No. 333-117053).
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

20

---

|10.5 | Employment Agreement between CommunitySouth Bancshares, Inc. and John W. Hobbs dated August 17, 2004 (incorporated by
   reference to Exhibit 10.7 of the Company's Form SB-2, File No. 333-117053).*
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.6 | Commercial Loan Agreement between Nexity Bank and Community Bancshares, Inc. dated July 26, 2004 (incorporated by reference
   to Exhibit 10.9 of the Company's Form SB-2, File No. 333-117053).
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.7 | Option and Agreement of Sale dated August 18, 2004 by and between CommunitySouth Bancshares, Inc. and Daniel E. Youngblood
   (incorporated by reference to Exhibit 10.10 of the Company's Form SB-2 as, File No. 333-117053).
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.8 | Ground Lease Agreement dated August 18, 2004 by and between CommunitySouth Bancshares, Inc. and Daniel E. Youngblood
   (incorporated by reference to Exhibit 10.11 of the Company's Form SB-2, File No. 333-117053).
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.9 | CommunitySouth Bancshares, Inc. 2005 Stock Incentive Plan and Form of Option Agreement (incorporated by reference to
   Exhibit 10.9 of the Company's Form 10-KSB for the year ended December 31, 2004).*
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.10 | Standard Form of Design-Build Agreement and General Conditions between CommunitySouth Bancshares, Inc. and Trehel
    Corporation dated August 3, 2005 (incorporated by reference to Exhibit 10.1 of the Company's Form 10-QSB filed on November
    14, 2005).
|----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|13 | Annual Report of the Company for the year ended 2005
|-- | ----------------------------------------------------

|21.1 | Subsidiaries of the Company.
|---- | ----------------------------

|24.1 | Power of Attorney (filed as part of the signature page herewith).
|---- | -----------------------------------------------------------------

|31.1 | Rule 15d-14(a) Certification of the Chief Executive Officer.
|---- | ------------------------------------------------------------

|31.2 | Rule 15d-14(a) Certification of the Chief Financial Officer.
|---- | ------------------------------------------------------------

|32 | Section 1350 Certifications.
|-- | ----------------------------

_________________      *Management contract of compensatory plan or arrangement required to be filed as an Exhibit
to this Annual Report on Form 10-KSB.

# Item 14. Principal
Accountant Fees and Services.

The
information required by Item 14 is hereby incorporated by reference from our proxy
statement for our 2006 annual meeting of shareholders to be held on May 16, 2006.

21

---

# SIGNATURES

In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

|                      |  | COMMUNITYSOUTH BANCSHARES, INC.      
|--------------------- |  | -------------------------------------
|                      |  |                                      
|Date:  March 21, 2006 |  | By:   /s/  C. Allan Ducker, III      
|                      |  | C. Allan Ducker, III                 
|                      |  | President and Chief Executive Officer

KNOW
ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and
appoints C. Allan Ducker, III, his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him and in his name, place and stead, in any
and all capacities, to sign any and all amendments to this Annual Report on Form 10-KSB,
and to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto attorney-in-fact and
agent full power and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that attorney-in-fact and
agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.

In
accordance with the Exchange Act, this report has been signed below by the following
persons on behalf of the registrant in the capacities and on the dates indicated.

|Signature | Title | Date
|--------- | ----- | ----

|/s/  David Larry BrothertonDavid Larry Brotherton | Director | March 21, 2006
|------------------------------------------------- | -------- | --------------

|/s/  G. Dial DuboseG. Dial Dubose | Director | March 21, 2006
|--------------------------------- | -------- | --------------

|/s/  C. Allan Ducker, IIIC. Allan Ducker, III | Chief Executive Officer, Director | March 21, 2006
|--------------------------------------------- | --------------------------------- | --------------

|/s/  David W. EdwardsDavid W. Edwards | Director | March 21, 2006
|------------------------------------- | -------- | --------------

|/s/  R. Wesley HammondR. Wesley Hammond | Director | March 21, 2006
|--------------------------------------- | -------- | --------------

|/s/  David A. MillerDavid A. Miller | President, Director | March 21, 2006
|----------------------------------- | ------------------- | --------------

|/s/  John W. HobbsJohn W. Hobbs | Chief Financial Officer andPrincipal Accounting Officer | March 21, 2006
|------------------------------- | ------------------------------------------------------- | --------------

|/s/  Arnold J. Ramsey*Arnold J. Ramsey* | Director | March 21, 2006
|--------------------------------------- | -------- | --------------

|/s/  W. Michael RiddleW. Michael Riddle | Director | March 21, 2006
|--------------------------------------- | -------- | --------------

22

---

|/s/  Joanne M. RogersJoanne M. Rogers | Director | March 21, 2006
|------------------------------------- | -------- | --------------

|/s/  B. Lynn SpencerB. Lynn Spencer | Director | March 21, 2006
|----------------------------------- | -------- | --------------

|/s/  J. Neal Workman, Jr.J. Neal Workman, Jr. | Director | March 21, 2006
|--------------------------------------------- | -------- | --------------

|/s/  Daniel E. YoungbloodDaniel E. Youngblood | Director | March 21, 2006
|--------------------------------------------- | -------- | --------------

23

---

# Exhibit Index

|3.1. | Articles of Incorporation (incorporated by reference to Exhibit 3.1 of the Company's Form SB-2, File No. 333-117053).
|---- | ---------------------------------------------------------------------------------------------------------------------

|3.2. | Bylaws (incorporated by reference to Exhibit 3.2 of the Company's Form SB-2, File No. 333-117053).
|---- | --------------------------------------------------------------------------------------------------

|4.1. | See Exhibits 3.1 and 3.2 for provisions in CommunitySouth Bancshares, Inc.'s Articles of Incorporation and Bylaws defining
   the rights of holders of the common stock (incorporated by reference to Exhibit 4.1 of the Company's Form SB-2, File No.
   333-117053).
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.2 | Form of certificate of common stock (incorporated by reference to Exhibit 4.2 of the Company's Form SB-2, File No.
   333-117053).
|--- | ----------------------------------------------------------------------------------------------------------------------------------

|10.1. | Employment Agreement between CommunitySouth Bancshares, Inc. and C. Allan Ducker, III dated March 29, 2004 (incorporated
 by reference to Exhibit 10.1 of the Company's Form SB-2, File No. 333- 117053).*
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.2 | Employment Agreement between CommunitySouth Bancshares, Inc. and David A. Miller dated March 29, 2004 (incorporated by
 reference to Exhibit 10.2 of the Company's Form SB-2, File No. 333-117053).*
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.3 | Form of Stock Warrant Agreement (incorporated by reference to Exhibit 10.1 of the Company's Form 10-QSB filed on August 15,
   2005).*
|---- | --------------------------------------------------------------------------------------------------------------------------------------

|10.4 | Master Loan Purchase Agreement between Bank of Tennessee and CommunitySouth Bank and Trust (incorporated by reference
   to Exhibit 10.6 of the Company's Form SB-2, File     No. 333-117053).
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.5 | Employment Agreement between CommunitySouth Bancshares, Inc. and John W. Hobbs dated August 17, 2004 (incorporated by
   reference to Exhibit 10.7 of the Company's Form SB-2, File No. 333-117053).*
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.6 | Commercial Loan Agreement between Nexity Bank and Community Bancshares, Inc. dated July 26, 2004 (incorporated by reference
   to Exhibit 10.9 of the Company's Form SB-2, File No. 333-117053).
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.7 | Option and Agreement of Sale dated August 18, 2004 by and between CommunitySouth Bancshares, Inc. and Daniel E. Youngblood
   (incorporated by reference to Exhibit 10.10 of the Company's Form SB-2 as, File No. 333-117053).
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.8 | Ground Lease Agreement dated August 18, 2004 by and between CommunitySouth Bancshares, Inc. and Daniel E. Youngblood
   (incorporated by reference to Exhibit 10.11 of the Company's Form SB-2, File No. 333-117053).
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.9 | CommunitySouth Bancshares, Inc. 2005 Stock Incentive Plan and Form of Option Agreement (incorporated by reference to
   Exhibit 10.9 of the Company's Form 10-KSB for the year ended December 31, 2004).*
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.10 | Standard Form of Design-Build Agreement and General Conditions between CommunitySouth Bancshares, Inc. and Trehel
    Corporation dated August 3, 2005 (incorporated by reference to Exhibit 10.1 of the Company's Form 10-QSB filed on November
    14, 2005).
|----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|13 | Annual Report of the Company for the year ended 2005
|-- | ----------------------------------------------------

24

---

|21.1 | Subsidiaries of the Company.
|---- | ----------------------------

|24.1 | Power of Attorney (filed as part of the signature page herewith).
|---- | -----------------------------------------------------------------

|31.1 | Rule 15d-14(a) Certification of the Chief Executive Officer.
|---- | ------------------------------------------------------------

|31.2 | Rule 15d-14(a) Certification of the Chief Financial Officer.
|---- | ------------------------------------------------------------

|32 | Section 1350 Certifications.
|-- | ----------------------------

25