Exhibit 13Annual Report of the Company for the year ended 2005

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# Exhibit 13

# CommunitySouth Bank
& Trust

# 2005 Annual Report

[Insert Photograph]

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Mission StatementThe mission
of CommunitySouth Bancshares, Inc. and its wholly-owned subsidiary, CommunitySouth Bank
& Trust, is to be the most customer-centered, premier financial services provider in
the Upstate banking market in order to enhance shareholder value and promote the welfare
of our employees and the communities we serve.

Locations[Map of State of South
Carolina and Locations]

Selected HighlightsTotal assets of $136.8 million as of
December 31, 2005  up 359% from year ended 2004.

Stock price grew from $10 per share
in January 2005 to $19 per share by December 31, 2005  an increase of 90%, although
no established trading market has developed for our common stock. Because of the limited
number of shares, this price may not be indicative of the market value of our common
stock.

Successfully raised $30 million during an initial public offering, the largest ever
for a bank in South Carolina.

CommunitySouth Bancshares, Inc. Board
of Directors declared a five-for-four stock split.

Achieved the breakeven point on a GAAP
basis after just seven months of operation.

Experienced substantial deposit and loan
growth, increasing loans to $115.7 million and deposits to $107 million.

Closed over $21
million in residential originations by December 31, 2005.

Opened new full-service branches
in Easley and Mauldin and Loan Production Offices in Spartanburg and Greenwood.

2

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[Insert Photograph of
CEO, President, and Chairman]

# To Our Shareholders,
Customers and Friends:

THE VISIONTwo years ago, we
set out to build a financial institution like no other in the Upstate of South Carolina.
One that is locally owned and operated, staffed by self-motivated seasoned banking
professionals, and guided by a service culture that puts the customer at the center of the
business model. A growth- oriented bank centered on impeccable customer service,
innovation, and expansion. In short, we set out to build the premier Upstate bank 
the community bank of choice in one of the fastest growing markets in the Southeast. And
while there is much hard work ahead, we believe we have turned our vision into reality in
our first year of operation.

OUR ACCOMPLISHMENTS2005 was a tremendous year for
CommunitySouth. The year began with the company completing its initial public offering,
raising $30 million in capital, making CommunitySouth the most highly capitalized de novo
bank ever in South Carolina. Thanks to the dedication, expertise, and hard work of our
directors, officers, and employees many of our earliest plans have come to fruition.

Since
commencing operations in January, 2005, CommunitySouth (as of December 31, 2005) has:

| | o | Achieved the breakeven point on a
GAAP basis after just seven months of operation, well ahead of our plan and peer banks.
| | - | -------------------------------------------------------------------------------------------------------------------------

| | o | Become a $136.8 million financial institution (based on assets). CommunitySouth is one of
the fastest growing de novo banks in South Carolina.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------

| | o | Experienced substantial deposit and loan growth, increasing loans to $115.7 million and
deposits to $107 million.
| | - | -----------------------------------------------------------------------------------------------------------------

| | o | Closed in excess of $21 million in
residential mortgage loan originations.
| | - | --------------------------------------------------------------------------

| | o | Stock price grew from $10 per share
in January, 2005 to $19 per share by December 31, 2005  an increase of 90%.
| | - | ----------------------------------------------------------------------------------------------------------------

| | o | CommunitySouth Bancshares, Inc. Board of Directors declared a five-for-four stock split.
| | - | ----------------------------------------------------------------------------------------

| | o | Opened two full service branches,
two loan production offices, and a mortgage division.
| | - | ---------------------------------------------------------------------------------------

The significant investments we have made
in people, infrastructure, and technology will allow us to execute on our strategic plan
of expanding our franchise and increasing future earnings.

3

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2005  THE YEAR IN REVIEW2005 marked our first year of operation.
Net loss for 2005 totaled $615,627 or $0.16
per share. Net loss for 2005 totaled $615,627 or $0.16 per share.  This loss was a result of our start-up operation
and was 45% less than our plan. Total assets grew from $29.8
million to $136.8 million, which was 39% ahead of plan. Outstanding loans at year end
totaled $115.7 million and compared favorably to planned loans of $70 million. This strong
loan growth necessitated a contribution to our loan provision expense of $1.6 million; however,
there were no loans written off, criticized assets, or thirty day past due loans.
While this is a tribute to our quality loan underwriting, it also underscores the
imbedded earnings capacity of our Bank. Our deposits have also grown at a rapid rate. Year
end deposits of $107 million compare favorably to planned deposits of $70 million.

MARKET PRESENCE As of December 31, 2005,
CommunitySouth operated two branches, two loan production offices, and a mortgage division
in four high-growth communities in the Upstate of South Carolina. This investment in
facilities, along with our future expansion plans, underscores our commitment to expanding
our convenience in the Upstate market. We are confident that this market is vibrant enough
to support our planned growth  and most importantly our intense customer-focused
brand of banking. While we have only .38% percent of the total Upstate deposit market
share, our business model and growth plan will allow us to win business from other banks
in this rapidly growing market.

OUR TEAMTo open one of the fastest growing
banks in all of South Carolina it takes teamwork, dedication, professionalism, and a level
of flexibility above and beyond what is normally seen in todays banking environment.
Our associates exemplify these qualities on a daily basis at CommunitySouth. They resonate
with a special energy and enthusiasm around our customers and demonstrate an unwavering
commitment to our vision and mission. Opening the bank has been an exciting yet
challenging year for our employees. They have endured 12 months in our Easley modular
facility with confined work spaces, as many as three associates per office. They have
worked through systems installation, technological challenges, construction of our
headquarters office, and renovating leased facilities, just to name a few. We are proud to
report that our associates demonstrated absolute commitment to ensuring that the
companys work was done. We can honestly say that our CommunitySouth associates are
some of the most dedicated professionals in our industry.

# 

DELIVERING THE
COMMUNITYSOUTH CUSTOMER EXPERIENCECommunitySouth was formed in order to
bring to the market a more responsive and flexible sales and service culture not currently
being offered by the community, regional, super- regional, or mega-banks in the area. In
this regard, our number one corporate goal always has been, and still is, excellence in
customer service.

Our customers enjoy a consistent, professional, and inviting banking environment.
Upon entering the bank, our customers are
greeted within their second step into the lobby and treated to freshly baked cookies, soft
drinks, coffee, and water. At the teller line, customers are called by name and always
thanked for their business. Upon opening an account, a customer always receives a follow
up call to ensure that they are 100% satisfied with their account. Our phones are always
answered by a live person in a local office. An automated system or an associate at an
out-of-town location will never answer an incoming call at CommunitySouth. Loan requests
and service issues are responded to in a most prompt manner and all customers have direct
access to senior management.

4

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At CommunitySouth, we recognize that
a traditional banking environment just does not work for todays busy consumers and
business owners. The market simply demands convenience and innovation from their bank.
From our free deposit courier service for commercial customers to our surcharge-free ATM
policy for CommunitySouth account holders, along with our extended weekday and Saturday
banking hours, we strive to be the Upstates most convenient banking franchise. All
of us at CommunitySouth demonstrate an unwavering focus to being available when and where
our customers need us.

CommunitySouths banking service
package affords our customers the opportunity to utilize our state of the art products and
services. These include totally free business and personal checking, a variety of savings
solutions at extremely competitive rates, free online banking with bill pay for both
businesses and consumers, automated telebanc, and courtesy overdraft coverage. We also
offer an array of business, consumer, and mortgage loan options, all at extremely
competitive interest rates.Throughout the year we aggressively marketed our convenience
and product initiatives through not only our people, but also with focused local
advertising campaigns.

COMMUNITYSOUTH INTO THE
FUTURE2006 holds much opportunity for our
company. However, we have a tremendous amount of work ahead. Our number one corporate goal
remains providing a level of customer service that is unmatched in the market. We are also
committed to expanding not only our loan portfolio, but more importantly our deposit
gathering efforts, and in particular, low cost core deposits. This will be accomplished by
acquiring new customer relationships and deepening existing customer relationships. Last,
but certainly not least, we remain steadfast in our commitment to expanding our branch
network into other Upstate communities, staffing these offices with seasoned banking
professionals with a strong local market knowledge, and building a recognizable banking
brand in the market.In closing, we are deeply grateful for the progress we have made in
this our inaugural year. We would like to thank you, our shareholders, for sharing the
CommunitySouth vision, our directors for their guidance and leadership, and our officers,
and employees for their commitment to providing our customers a level of service unmatched
in the market. Finally, we would like to thank our customers for their loyalty and
entrusting us with their financial future.We are proud of our accomplishments and trust
that you share in our pride. Your questions and/or comments are welcome.Sincerely,

|                     |  |                        
|-------------------- |  | -----------------------
|Daniel E. Youngblood |  | C. Allan Ducker, III   
|Chairman             |  | Chief Executive Officer

5

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# Selected Financial Data

The following selected financial data
for the year ended December 31, 2005 and for the period March 20, 2004 (inception) to
December 31, 2004 was derived from the consolidated financial statements and other data of
CommunitySouth Bancshares, Inc. and subsidiary (the Company). The selected
financial data should be read in conjunction with the consolidated financial statements of
the Company, including the accompanying notes, included elsewhere herein.

|                                                    | 2005 | 2004       
|--------------------------------------------------- | ---- | -----------
|(Dollars in thousands except per share data)        |      |            
|Income Statement Data:                              |     
|Interest income                                     |      | $     4,985
|Interest expense                                    |      | 1,863      
|                                                    |      |            
|Net interest income                                 |      | 3,122      
|Provision for loan losses                           |      | (1,558     
|                                                    |      |            
|Net interest income after provision for loan losses |      | 1,564      
|Noninterest income                                  |      | 321        
|Noninterest expense                                 |      | 2,680      
|                                                    |      |            
|Loss before income taxes                            |      | (795       
|Income tax benefit                                  |      | (179       
|                                                    |      |            
|Net loss                                            |      | $      (616
|                                                    |      |            
|Balance Sheet Data (period end):                    |     
|Assets                                              |      | $ 136,826  
|Earning assets                                      |      | 134,946    
|Securities (1)                                      |      | 83         
|Loans (2)                                           |      | 115,704    
|Allowance for loan losses                           |      | 1,558      
|Deposits                                            |      | 106,972    
|Shareholders' equity                                |      | 28,286     
|Per-Share Data:                                     |     
|Net loss                                            |      | $    (0.16 
|Book value (period end)                             |      | 7.55       
|Return on Equity and Assets:                        |     
|Return on average assets                            |      | (0.77      
|Return on average equity                            |      | (2.24      
|Average equity to average assets ratio              |      | 34.55      

_________________(1)    
          Nonmarketable securities are stated at cost.

(2)    
          Loans are stated at gross amounts before allowance for loan losses.

6

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# Forward Looking
Statements

This report contains
forward-looking statements within the meaning of the securities laws. All
statements that are not historical facts are forward-looking statements. You
can identify these forward-looking statements through our use of words such as
may, will, expect, anticipate,
believe, intend, estimate, project,
continue, or other similar words. Forward-looking statements include, but are
not limited to, statements regarding our future business prospects, revenues, working
capital, liquidity, capital needs, interest costs, income, business operations and
proposed services.

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

| | o | our rapid growth to date and short operating history;
| | - | -----------------------------------------------------

| | 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 lack of seasoning of our loan portfolio, especially given our rapid loan growth;
| | - | ------------------------------------------------------------------------------------

| | o | the
level of allowance for loan losses;
| | - | ---------------------------------------

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

| | 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.
| | - | --------------------------------------------------------------------------------------------------------------------

We undertake no obligation to
publicly update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise. In light of these risks, uncertainties, and
assumptions, the forward-looking events discussed in this report might not occur.

Market for Common Stock and Dividends
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.

7

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# COMMUNITYSOUTH BANCSHARES, INC.
MANAGEMENTS DISCUSSION AND ANLYSIS OR PLAN OF OPERATION

# Basis of Presentation

The following discussion should be
read in conjunction with the Companys Financial Statements and the Notes thereto and
the other financial data included elsewhere in this Annual Report. The financial
information provided below has been rounded in order to simplify its presentation.
However, the ratios and percentages provided below are calculated using the detailed
financial information contained in the Financial Statements, the Notes thereto and the
other financial data included elsewhere in this Annual Report.

# General

CommunitySouth Bancshares, Inc. is a
bank holding company headquartered in Easley, South Carolina. Its subsidiary,
CommunitySouth Bank and Trust (the Bank), opened for business on January 18, 2005. The
principal business activity of the Bank is to provide banking services to domestic
markets, principally in the upstate of South Carolina. The deposits of the Bank are
insured by the Federal Deposit Insurance Corporation. The Company completed an initial
public offering of its common stock in which it sold a total of 3,744,855 shares at $8.00
per share as adjusted for the 5-for-4 stock split effected in the form of a stock dividend
on January 16, 2006 to shareholders of record as of December 15, 2005. All share and per
share information has been adjusted for the stock split. Proceeds of the offering were
used to pay organizational costs and provide the initial capital for the Bank.

# Overview

The following discussion describes
our results of operations for the year ended December 31, 2005 and also analyzes our
financial condition as of December 31, 2005. Because our bank opened for business on
January 18, 2005, a comparison of the year ended December 31, 2005 to the year ended
December 31, 2004 is not meaningful. Until January 2005, our principal activities related
to our organization, the conducting of our initial public offering, the pursuit of
approvals from the State Board of Financial Institutions for our application to charter
the bank, the pursuit of approvals from the Federal Reserve to become a bank holding
company, and the pursuit of approvals from the FDIC for our application for insurance of
the deposits of the bank. We received approval from the FDIC, Federal Reserve Board
(Federal Reserve), and the State Board of Financial Institutions in January
2005, and commenced business on January 18, 2005.

Like most community banks, we derive
most of our income from interest we receive on our loans and investments. Our primary
source of funds for making these loans and investments is our deposits, on which we pay
interest. Consequently, one of the key measures of our success is our amount of net
interest income, or the difference between the income on our interest-earning assets, such
as loans and investments, and the expense on our interest-bearing liabilities, such as
deposits. Another key measure is the spread between the yield we earn on these
interest-earning assets and the rate we pay on our interest-bearing liabilities.

Of course, there are risks inherent
in all loans, so we maintain an allowance for loan losses to absorb probable losses on
existing loans that may become uncollectible. We establish and maintain this allowance by
charging a provision for loan losses against our operating earnings. In the following
section we have included a detailed discussion of this process.

In addition to earning interest on
our loans and investments, we earn income through fees and other expenses we charge to our
customers. We describe the various components of this noninterest income, as well as our
noninterest expense, in the following discussion.

Results of OperationsResults of operations are
only presented for the year ended December 31, 2005 since the Bank
opened for business on January 18, 2005.

Net interest income for the year
ended December 31, 2005 was $3.1 million. Total interest income for the year was $5.0
million and was partially offset by interest expense of $1.9 million. Interest income is
composed of interest and fees on loans of $4.5 million, interest on federal funds sold of
$370,000, and other investment income of $71,000.

The Companys net interest
spread and net interest margin were 2.76% and 4.18%, respectively, in 2005. The yield on
earning assets was 6.68%. The largest component of earning assets was loans which had a
yield of 7.10%. Total interest bearing liabilities had a cost of 3.92%.

8

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The provision for loan losses was
$1.6 million in 2005. The charges to the provision were to maintain the allowance for loan
losses at a level sufficient to cover estimated losses inherent in the loan portfolio.

Noninterest income for the year ended
December 31, 2005 totaled $321,000. The largest component of noninterest income was fees
from the origination of mortgage loans of $274,000. Service charges on deposit accounts
totaled $27,000 for the year ended December 31, 2005.

Noninterest expense totaled $2.7
million for the year ended December 31, 2005. Noninterest expense includes the cost of
personnel and operations, two full service branches and two loan production offices.
Salaries and employee benefits, the largest component of noninterest expense, totaled $1.4
million for the year. All of the other categories of noninterest expense totaled $1.3
million for the year.

The Companys net loss for the
year ended December 31, 2005 was $616,000. The net loss for the period is after the
recognition of an income tax benefit of $179,000. See Notes 1 and 6 to the consolidated
financial statements for additional information about income taxes.

# Net Interest Income

General.
          The largest component of the Companys net income is its net interest
          income, which is the difference between the income earned on assets and interest
          paid on deposits and borrowings used to support such assets. Net interest income
          is determined by the yields earned on the Companys interest-earning assets
          and the rates paid on its interest-bearing liabilities, as well as the relative
          amounts of interest-earning assets and interest-bearing liabilities. Net
          interest income divided by average interest-earning assets represents the
          Companys net interest margin.

9

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Average Balances, Income and
Expenses and Rates. The following tables set forth, for the year ended
December 31, 2005, information related to the Companys average balance sheet and its
average yields on earning assets and average costs of interest-bearing liabilities. Such
yields are derived by dividing income or expense by the average balance of the
corresponding earning assets or interest-bearing liabilities. Average balances have been
derived from the daily balances throughout the periods indicated.

|                                       | Average | Income/     | Yield/
|-------------------------------------- | ------- | ----------- | ------
|
|Assets                                 |         |             |       
|Earning assets:                        |        
|Loans (1)                              |         | $ 63,985    |       
|Securities, taxable                    |         | 22          |       
|Federal funds sold and other           |         | 10,610      |       
|                                       |         |             |       
|Total earning assets                   |         | 74,617      |       
|                                       |         |             |       
|Cash and due from banks                |         | 3,605       |       
|Premises and equipment                 |         | 1,346       |       
|Other assets                           |         | 679         |       
|Allowance for loan losses              |         | (806        | )     
|                                       |         |             |       
|Total assets                           |         | $ 79,441    |       
|                                       |         |             |       
|Liabilities                            |        
|Interest-bearing liabilities:          |        
|Federal funds purchased                |         | $        48 |       
|Interest-bearing                       |        
|transaction accounts                   |         | 926         |       
|Savings deposits                       |         | 2,410       |       
|Time deposits                          |         | 44,090      |       
|                                       |         |             |       
|Total interest-bearing liabilities     |         | 47,474      |       
|                                       |         |             |       
|Demand deposits                        |         | 4,102       |       
|Accrued interest and other liabilities |         | 421         |       
|                                       |         |             |       
|Total liabilities                      |         | 51,997      |       
|Shareholders' equity                   |         | 27,444      |       
|                                       |         |             |       
|Total liabilities and                  |        
|shareholders' equity                   |         | $ 79,441    |       
|                                       |         |             |       
|Net interest spread                    |         |             |       
|                                       |         |             |       
|Net interest income                    |         |             |       
|                                       |         |             |       
|Net interest margin                    |         |             |       
|                                       |         |             |       

_________________

|(1) |  | There were no loans in nonaccrual status in 2005. The effect of fees
               collected on loans in 2005 totaling $207,645 increased the annualized yield on
               loans by 0.32% from 6.78%. The effect on the annualized yield on earning assets
               in 2005 was an increase of 0.28% from 6.40%. The effect on net interest spread
               and net interest margin in 2005 was an increase of 0.28% and 0.27% from 2.48%
               and 3.91%, respectively.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Interest
Sensitivity. The Company monitors and manages the pricing and maturity of
its assets and liabilities in order to diminish the potential adverse impact that changes
in interest rates could have on its net interest income. The principal monitoring
technique employed by the Company is the measurement of the Companys interest
sensitivity gap, which is the positive or negative dollar difference between
assets and liabilities that are subject to interest rate repricing within a given period
of time. Interest rate sensitivity can be managed by repricing assets or liabilities,
selling securities available for sale, replacing an asset or liability at maturity, or
adjusting the interest rate during the life of an asset or liability. Managing the amount
of assets and liabilities repricing in this same time interval helps to hedge the risk and
minimize the impact on net interest income of rising or falling interest rates.

10

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The following table sets forth the
Companys interest rate sensitivity at December 31, 2005.

|                                    |  | After Three |   | Greater   |  
|----------------------------------- |  | ----------- | - | --------- | -
|
|
|
|Assets                              |  |             |   |           |  
|Earning assets:                     | 
|Loans                               |  | $78,532     |   | $   3,729 |  
|Investment securities and Fed Funds |  | 17,499      |   | -         |  
|                                    |  |             |   |           |  
|Total earning assets                |  | 96,031      |   | 3,729     |  
|                                    |  |             |   |           |  
|Liabilities                         | 
|Interest-bearing liabilities:       | 
|Interest-bearing deposits:          | 
|Demand deposits                     |  | 2,025       |   | -         |  
|Savings deposits                    |  | 4,284       |   | -         |  
|Time deposits                       |  | 7,636       |   | 81,484    |  
|                                    |  |             |   |           |  
|Total interest-bearing liabilities  |  | 13,945      |   | 81,484    |  
|                                    |  |             |   |           |  
|Period gap                          |  | $82,086     |   | $(77,755  | )
|                                    |  |             |   |           |  
|Cumulative gap                      |  | $82,085     |   | $   4,331 |  
|                                    |  |             |   |           |  
|Ratio of cumulative gap             | 
|to total earning assets             |  | 61.58       | % | 3.25      | %

The above table reflects the balances
of interest-earning assets and interest-bearing liabilities at the earlier of their
repricing or maturity dates. Overnight federal funds are reflected at the earliest pricing
interval due to the immediately available nature of the instruments. Scheduled payment
amounts of fixed rate amortizing loans are reflected at each scheduled payment date.
Scheduled payment amounts of variable rate amortizing loans are reflected at each
scheduled payment date until the loan may be repriced contractually; the unamortized
balance is reflected at that point. Interest-bearing liabilities with no contractual
maturity, such as savings deposits and interest-bearing transaction accounts, are
reflected in the earliest repricing period due to contractual arrangements which give the
Company the opportunity to vary the rates paid on those deposits within a thirty-day or
shorter period. Fixed rate time deposits, principally certificates of deposit, are
reflected at their contractual maturity date.

The Company generally would benefit
from increasing market rates of interest when it has an asset-sensitive gap position and
generally would benefit from decreasing market rates of interest when it is
liability-sensitive. The Company is cumulatively asset sensitive over all periods.
However, the Companys gap analysis is not a precise indicator of its interest
sensitivity position. The analysis presents only a static view of the timing of maturities
and repricing opportunities, without taking into consideration that changes in interest
rates do not affect all assets and liabilities equally. Net interest income may be
impacted by other significant factors in a given interest rate environment, including
changes in the volume and mix of earning assets and interest-bearing liabilities.

# Provision and Allowance
for Loan Losses

General.    
          The Company has developed policies and procedures for evaluating the overall
          quality of its credit portfolio and the timely identification of potential
          problem loans. On a quarterly basis, the Companys Board of Directors
          reviews and approves the appropriate level for the Companys allowance for
          loan losses based upon managements recommendations, the results of the
          internal monitoring and reporting system, and an analysis of economic conditions
          in its market.

Additions to the allowance for loan
losses, which are expensed as the provision for loan losses on the Companys income
statement, are made periodically to maintain the allowance at an appropriate level based
on managements analysis of the estimated losses inherent in the loan portfolio. Loan
losses and recoveries are charged or credited directly to the allowance. The amount of the
provision is a function of the level of loans outstanding, the level of nonperforming
loans, historical loan loss experience, the amount of loan losses actually charged against
the reserve during a given period, and current and anticipated economic conditions.

11

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The Companys allowance for loan
losses is based upon judgments and assumptions about risk elements in the portfolio,
future economic conditions, and other factors affecting borrowers. The process includes
identification and analysis of loss potential in various portfolio segments utilizing a
credit risk grading process and specific reviews and evaluations of significant problem
credits. In addition, management monitors the overall portfolio quality through observable
trends in delinquencies, charge-offs, and general and economic conditions in the service
area. The adequacy of the allowance for loan losses and the effectiveness of the
Companys monitoring and analysis system are also reviewed periodically by the
banking regulators and the Companys independent auditors.

Based on present information and an
ongoing evaluation, management considers the allowance for loan losses to be adequate to
meet presently known and inherent losses in the loan portfolio. Managements judgment
about the adequacy of the allowance is based upon a number of assumptions about future
events which it believes to be reasonable but which may or may not be accurate. Thus,
there can be no assurance that charge-offs in future periods will not exceed the allowance
for loan losses or that additional increases in the allowance for loan losses will not be
required. The Company does not allocate the allowance for loan losses to specific
categories of loans but evaluates the adequacy on an overall portfolio basis utilizing a
risk grading system.

The following table sets forth
certain information with respect to the Companys allowance for loan losses and the
composition of charge-offs and recoveries for the year ended December 31, 2005.

Allowance for Loan Losses

|                                                          | 
|--------------------------------------------------------- | 
|(Dollars in thousands)                                    | 
|Total loans outstanding at end of period                  | 
|                                                          | 
|Average loans outstanding                                 | 
|                                                          | 
|Balance of allowance for loan losses at beginning of year | 
|Provision for loan losses                                 | 
|                                                          | 
|                                                          | 
|                                                          | 
|Allowance for loan losses to period end loans             | 
|                                                          | 

# Nonperforming Assets

Nonperforming
Assets. There were no nonaccrual loans, loans past due 90 days or more and
still accruing interest, or restructured loans at December 31, 2005.

The Companys policy with
respect to nonperforming assets is as follows. Accrual of interest will be discontinued on
a loan when management believes, after considering economic and business conditions and
collection efforts that the borrowers financial condition is such that the
collection of interest is doubtful. A delinquent loan will generally be placed in
nonaccrual status when it becomes 90 days or more past due unless the estimated net
realizable value of collateral exceeds the principal balance and accrued interest. When a
loan is placed in nonaccrual status, all interest which has been accrued on the loan but
remains unpaid will be reversed and deducted from current earnings as a reduction of
reported interest income. No additional interest will be accrued on the loan balance until
the collection of both principal and interest becomes reasonably certain. When a problem
loan is finally resolved, there may ultimately be an actual writedown or charge-off of the
principal balance of the loan to the allowance for loan losses.

Potential Problem
Loans. Potential problem loans are loans that are not included in impaired
loans (nonaccrual loans or loans past due 90 days or more and still accruing), but about
which management has become aware of information about possible credit problems of the
borrowers that causes doubt about their ability to comply with current repayment terms. At
December 31, 2005, the Company had not identified any criticized or classified loans
through its internal review mechanisms. The results of this internal review process are
considered in determining managements assessment of the adequacy of the allowance
for loan losses.

12

---

# Noninterest Income and
Expense

Noninterest
Income. The largest component of noninterest income was mortgage
origination fees which totaled $274,000 for the year ended December 31, 2005.

The following table sets forth the
principal components of noninterest income for the year ended December 31, 2005.

|                                    | 
|----------------------------------- | 
|(Dollars in thousands)              | 
|Mortgage origination fees           | 
|Service charges on deposit accounts | 
|Other income                        | 
|                                    | 
|Total noninterest income            | 
|                                    | 

Noninterest Expense.Salaries and employee benefits comprised the largest component of noninterest expense
which totaled $1.4 million for the year ended December 31, 2005. All of the other categories of noninterest
expense totaled $1.3 million for the year ended December 31, 2005 and 2004 periods, respectively.

The following table sets forth the
primary components of noninterest expense for the year ended December 31, 2005.

|(Dollars in thousands)           | 2005
|-------------------------------- | ----
|Salaries and benefits            |     
|Professional fees                |     
|Advertising                      |     
|Office Supplies                  |     
|Data processing                  |     
|Net Occupancy                    |     
|Depreciation                     |     
|Equipment maintenance and rental |     
|Loan expenses                    |     
|Telephone                        |     
|Other                            |     
|                                 |     
|Total noninterest expense        |     
|                                 |     

# Earning Assets

Loans.    
          Loans are the largest category of earning assets and typically provide
          higher yields than the other types of earning assets. Loans also entail greater
          credit and liquidity risks than most of the Companys other investments and
          short-term interest-earning cash and cash equivalents, which management attempts
          to control and counterbalance. Loans averaged $64.0 million in 2005. At December
          31, 2005, total loans were $115.7 million.

13

---

The following table sets forth the
composition of the loan portfolio by category at December 31, 2005 and highlights the
Companys general emphasis on mortgage lending.

|                           |  | Percent of
|-------------------------- |  | ----------
|
|Real estate - construction |  | $  35,742 
|Real estate - mortgage     |  | 68,965    
|Commercial and industrial  |  | 9,082     
|Consumer                   |  | 1,915     
|                           |  |           
|Total loans, gross         |  | 115,704   
|                           |  |           
|Allowance for loan losses  |  | 1,558     
|                           |  |           
|Net loans                  |  | $114,146  
|                           |  |           

The largest component of loans in the
Companys loan portfolio is real estate mortgage loans. At December 31, 2005, real
estate mortgage loans, which consist of first and second mortgages on single or
multi-family residential dwellings, commercial loans and other loans secured by
multi-family properties and farmland, totaled $69.0 million and represented 59.61% of the
total loan portfolio. In the context of this discussion, a real estate mortgage
loan is defined as any loan, other than a loan for construction purposes, secured by
real estate, regardless of the purpose of the loan. It is common practice for financial
institutions in the Companys market area to obtain a security interest in real
estate whenever possible, in addition to any other available collateral. This collateral
is taken to reinforce the likelihood of the ultimate repayment of the loan and tends to
increase the magnitude of the real estate loan portfolio component.

The demand for residential and
commercial real estate loans in the upstate South Carolina market is strong due to the
historically low interest rate environment. We would anticipate this demand to slow if
interest rates continue to rise.

Real estate construction loans
totaled $35.7 million at December 31, 2005. In the context of this discussion, a
real estate construction loan is defined as any loan for construction
purposes, secured by real estate, regardless of the purpose of the loan. It is common
practice for financial institutions in the Companys market area to obtain a security
interest in real estate whenever possible, in addition to any other available collateral.
This collateral is taken to reinforce the likelihood of the ultimate repayment of the loan
and tends to increase the magnitude of the real estate loan portfolio component.

Commercial and industrial loans
totaled $9.1 million at December 31, 2005, and comprised 7.85% of the total portfolio. In
the context of this discussion, a commercial and industrial loan is defined as
any loan for a non-consumer purpose, not secured by real estate.

The Companys loan portfolio
also includes consumer loans. At December 31, 2005, consumer loans totaled $1.9 million
and represented 1.66% of the total loan portfolio.

The Companys loan portfolio
reflects the diversity of its upstate South Carolina market. The Companys offices
are located in Easley, Spartanburg, Mauldin and Greenwood, South Carolina. Management
expects the area to remain stable with continued growth in the near future. The diversity
of the economy creates opportunities for all types of lending. The Company does not engage
in foreign lending.

14

---

The repayment of loans in the loan
portfolio as they mature is also a source of liquidity for the Company. The following
table sets forth the Companys loans maturing within specified intervals at December
31, 2005.

|                                    |  | Over One |  |        
|----------------------------------- |  | -------- |  | -------
|
|
|
|Real estate - construction          |  | $17,359  |  | $18,383
|Real estate - mortgage              |  | 16,105   |  | 48,692 
|Commercial and industrial           |  | 4,349    |  | 4,321  
|Consumer                            |  | 786      |  | 438    
|                                    |  |          |  |        
|                                    |  | $38,599  |  | $71,834
|                                    |  |          |  |        
|Loans maturing after one year with: | 
|Fixed interest rates                |  |          |  |        
|                                    |  |          |  |        
|Floating interest rates             |  |          |  |        
|                                    |  |          |  |        
|                                    |  |          |  |        
|                                    |  |          |  |        

The information presented in the
above table is based on the contractual maturities of the individual loans, including
loans which may be subject to renewal at their contractual maturity. Renewal of such loans
is subject to review and credit approval as well as modification of terms upon their
maturity. Consequently, management believes this treatment presents fairly the maturity
and repricing structure of the loan portfolio shown in the above table.

Investment
Securities. The investment securities portfolio is also a component of the
Companys total earning assets. Total securities averaged $23,000 in 2005. At
December 31, 2005, the total securities portfolio was $82,700. All securities were
non-marketable equity investments recorded at their cost.

The following table sets forth the
fair value of the securities held by the Company at December 31, 2005.

|                                | 
|------------------------------- | 
|(Dollars in thousands)          | 
|Nonmarketable equity securities | 
|                                | 
|Total investment securities     | 
|                                | 

Short-Term  Investments.  Short-term  investments,  which consist  primarily of federal funds sold,  averaged $10.6
million in 2005 with a weighted  average  yield of 4.15%.  These  funds are an  important  source of the  Company's
liquidity.  Federal  funds are generally  invested in an earning  capacity on an overnight  basis.  At December 31,
2005,  federal  funds  were  $17.5  million at an  overnight  rate of 3.95%.  The  maximum  outstanding  balance of
federal funds sold at any month end during the year was $29.3 million.

Deposits

General.  Average  interest-bearing  liabilities  totaled $47.5 million in 2005.  Average  total  deposits  totaled
$51.5 million during 2005.  At December 31, 2005 total deposits were $107.0 million.

The  following  table sets forth the average  deposits of the Company by category  for the year ended  December 31,
2005.

|(Dollars in thousands)     | Amount | Average Rate
|-------------------------- | ------ | ------------
|Noninterest bearing demand |        | $  4,102    
|Interest bearing demand    |        | 926         
|Savings                    |        | 2,410       
|Time                       |        | 44,090      
|                           |        |             
|Total                      |        | $51,528     
|                           |        |             

15

---

The following table sets forth the deposits
of the Company by category as of December 31, 2005.

|                              |  | Percent of
|----------------------------- |  | ----------
|
|Noninterest bearing demand    |  | $    6,706
|Interest bearing demand       |  | 2,025     
|Savings                       |  | 4,284     
|Time deposits less than $100  |  | 15,698    
|Time deposits of $100 or over |  | 17,897    
|Brokered deposits             |  | 60,362    
|                              |  |           
|Total deposits                |  | $106,972  
|                              |  |           

Core deposits, which exclude
certificates of deposit of $100,000 or more and brokered deposits, provide a relatively
stable funding source for the Companys loan portfolio and other earning assets. The
Companys core deposits were $28.7 million at December 31, 2005, or 26.84% of total
deposits. Certificates of deposit of $100,000 or more and brokered deposits are not
considered core deposits because their retention can be expected to be heavily influenced
by rates offered at renewal. Due to the developed national market for certificates of
deposit, we anticipate being able to either renew or replace these deposits when they
renew; however, no assurance can be given that we will be able to replace them with
deposits with the same terms.

Deposits have been a primary source
of funding. Management anticipates that deposits will continue to be the
Companys primary source of funding in the future. The Companys loan-to-deposit
ratio was 108% at December 31, 2005. The maturity distribution of the Companys time
deposits of $100,000 or over at December 31, 2005, is set forth in the following table.

# Maturities of
Certificates of Deposit of $100,000 or More (Including Brokered Deposits)

|                                            |  |        | After Six |         | 
|------------------------------------------- |  | ------ | --------- | ------- | 
|
|
|
|Certificates of deposit of $100,000 or more |  | $6,600 |           | $34,394 | 

Approximately 8% of the
Companys time deposits of $100,000 or over had scheduled maturities within three
months, and 97% had maturities within twelve months. Large certificate of deposit
customers tend to be extremely sensitive to interest rate levels, making these deposits
less reliable sources of funding for liquidity planning purposes than core deposits.

16

---

# Capital

The Federal Reserve and bank
regulatory agencies require bank holding companies and financial institutions to maintain
capital at adequate levels based on a percentage of assets and off-balance sheet
exposures, adjusted for risk weights ranging from 0% to 100%. The Federal Reserve
guidelines contain an exemption from the capital requirements for small bank holding
companies. On February 27, 2006, the Federal Reserve approved a new rule expanding
the definition of a small bank holding company. The new definition will
include bank holding companies with less than $500 million in total assets. Bank holding
companies will not qualify under the new definition if they (i) are engaged in significant
non-banking activities either directly or indirectly through a subsidiary, (ii) conduct
significant off-balance sheet activities, including securitizations or managing or
administering assets for third parties, or (iii) have a material amount of debt or equity
securities (including trust preferred securities) outstanding that are registered with the
SEC. The new rule will be effective on March 30, 2006. Although the Company has less than
$500 million in assets, it is unclear at this point whether it will otherwise meet the
requirements for qualifying as a small bank holding company. According to the
Federal Reserve, the revision of the criterion to exclude any bank holding company that
has outstanding a material amount of SEC-registered debt or equity securities reflects the
fact that SEC registrants typically exhibit a degree of complexity of operations and
access to multiple funding sources that warrants excluding them from the new policy
statement and subjecting them to the capital guidelines.   In the adopting
release for the new rule, the Federal Reserve stated that what constitutes a
material amount of SEC-registered debt or equity for a particular bank holding
company depends on the size, activities and condition of the relevant bank holding
company.  In lieu of using fixed measurable parameters of materiality across all
institutions, the rule provides the Federal Reserve with supervisory flexibility in
determining, on a case-by-case basis, the significance or materiality of activities
or securities outstanding such that a bank holding company should be excluded from the
policy statement and subject to the capital guidelines. Prior to adoption of this new
rule, our holding company was not subject to these capital guidelines, as it had less than
$150 million in assets. Until the Federal Reserve provides further guidance on the new
rules, it will be unclear whether our holding company will be subject to the exemption
from the capital requirements for small bank holding companies. Regardless, our bank
currently falls under these minimum capital requirements as set per bank regulatory
agencies.

Failure to meet minimum capital
requirements can initiate certain mandatory and possibly additional discretionary actions
by regulators that, if undertaken, could have a material effect on the Banks
financial statements. Under capital adequacy guidelines and the regulatory framework for
prompt corrective action, the Bank must meet specific capital guidelines that involve
quantitative measures of the Banks assets, liabilities, and certain
off-balance-sheet items as calculated under regulatory accounting practices. The
Banks capital amounts and classifications are also subject to qualitative judgments
by the regulators about components, risk weightings, and other factors.

Quantitative measures established by
regulation to ensure capital adequacy require the Bank to maintain minimum ratios of Tier
1 and total capital as a percentage of assets and off-balance-sheet exposures, adjusted
for risk weights ranging from 0% to 100%. Tier 1 capital of the Bank consists of common
shareholders equity, excluding the unrealized gain or loss on securities
available-for-sale, minus certain intangible assets. The Banks Tier 2 capital
consists of the allowance for loan losses subject to certain limitations. Total capital
for purposes of computing the capital ratios consists of the sum of Tier 1 and Tier 2
capital. The regulatory minimum requirements are 4% for Tier 1 capital and 8% for total
risk-based capital.

The Bank is also required to maintain
capital at a minimum level based on quarterly average assets, which is known as the
leverage ratio. Only the strongest banks are allowed to maintain capital at the minimum
requirement of 3%. All others are subject to maintaining ratios 1% to 2% above the
minimum.

17

---

The Bank exceeded the regulatory
capital requirements at December 31, 2005 as set forth in the following table.

# Analysis of Capital and
Capital Ratios

|                                                                   | 
|------------------------------------------------------------------ | 
|
|
|
|(Dollars in thousands)                                             | 
|Tier 1 capital                                                     | 
|Tier 2 capital                                                     | 
|                                                                   | 
|Total qualifying capital                                           | 
|                                                                   | 
|Risk-adjusted total assets (including off-balance-sheet exposures) | 
|                                                                   | 
|Tier 1 risk-based capital ratio                                    | 
|Total risk-based capital ratio                                     | 
|Tier 1 leverage ratio                                              | 

# Off-Balance Sheet Risk

Through its operations, the Bank has
made contractual commitments to extend credit in the ordinary course of its business
activities. These commitments are legally binding agreements to lend money to the
Banks customers at predetermined interest rates for a specified period of time. At
December 31, 2005, the Bank had issued commitments, including standby letters of credit,
to extend credit of $25.0 million through various types of commercial lending
arrangements. Approximately $18.1 million of these commitments to extend credit had
variable rates.

The following table sets forth the
length of time until maturity for unused commitments to extend credit at December 31,
2005.

|                                      |  | After One | After Three |           |  |         
|------------------------------------- |  | --------- | ----------- | --------- |  | --------
|
|
|
|Unused commitments to extend credit $ |  | 86        |             | $     812 |  | $  7,683
|Standby letters of credit             |  | 239       |             | -         |  | 2,521   
|                                      |  |           |             |           |  |         
|                                      |  | $325      |             | $     812 |  | $10,204 
|                                      |  |           |             |           |  |         

The Bank evaluates each
customers creditworthiness on a case-by-case basis. The amount of collateral
obtained, if deemed necessary by the Bank upon extension of credit, is based on its credit
evaluation of the borrower. Collateral varies but may include accounts receivable,
inventory, property, plant and equipment, commercial and residential real estate.

# Critical Accounting
Policies

The Company has adopted various
accounting policies which govern the application of accounting principles generally
accepted in the United States in the preparation of our financial statements. Its
significant accounting policies are described in the footnotes to the consolidated
financial statements at December 31, 2005, included in this Annual Report to Shareholders,
and as filed with the Companys Annual Report on Form 10-KSB. Certain accounting
policies involve significant judgments and assumptions which have a material impact on the
carrying value of certain assets and liabilities. These accounting policies are considered
to be critical accounting policies. The judgments and assumptions used are based on
historical experience and other factors, which are believed to be reasonable under the
circumstances. Because of the nature of the judgments and assumptions, actual results
could differ from these judgments and estimates which could have a material impact on the
carrying values of assets and liabilities and results of operations.

Management believes the allowance for
loan losses is a critical accounting policy that requires the most significant judgments
and estimates used in preparation of the consolidated financial statements. Refer to the
portion of this discussion that addresses the allowance for loan losses for a description
of our processes and methodology for determining our allowance for loan losses.

18

---

# Liquidity Management

Liquidity management involves
monitoring the Companys sources and uses of funds in order to meet its day-to-day
cash flow requirements while maximizing profits. Liquidity represents the ability of a
Company to convert assets into cash or cash equivalents without significant loss and to
raise additional funds by increasing liabilities. Without proper liquidity management, the
Company would not be able to perform the primary function of a financial intermediary and
would, therefore, not be able to meet the needs of the communities it serves.

Liquidity management is made more
complex because different balance sheet components are subject to varying degrees of
management control. For example, the timing of maturities of the investment portfolio is
very predictable and subject to a high degree of control at the time investment decisions
are made. However, net deposit inflows and outflows are far less predictable and are not
subject to nearly the same degree of control. The Company also has the ability to obtain
funds from various financial institutions should the need arise.

# Impact of Inflation

Unlike most industrial companies, the
assets and liabilities of financial institutions such as the Bank are primarily monetary
in nature. Therefore, interest rates have a more significant effect on the Banks
performance than do the effects of changes in the general rate of inflation and change in
prices. In addition, interest rates do not necessarily move in the same direction or in
the same magnitude as the prices of goods and services. As discussed previously,
management seeks to manage the relationships between interest sensitive assets and
liabilities in order to protect against wide interest rate fluctuations, including those
resulting from inflation.

# Recently Issued
Accounting Standards

Accounting standards and
pronouncements of a recent nature are discussed in Notes to Consolidated Financial
Statements, Note 1  Summary of Significant Accounting Policies. Other accounting
standards that have been issued or proposed by authoritative standards-setting bodies that
do not require adoption until a future date are not expected to have a material impact on
the consolidated financial statements upon adoption.

19

---

# REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and
Board of Directors CommunitySouth Bancshares, Inc. and SubsidiaryEasley, South Carolina

We
have audited the accompanying consolidated balance sheets of CommunitySouth Bancshares, Inc. and
Subsidiary(the Company) as of December 31, 2005 and 2004, and
the related consolidated statements of operations, changes in shareholders equity, and cash flows
for the year ended December 31, 2005 and for the period March 20, 2004 (inception) through
December 31, 2004. These consolidated financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these consolidated financial statements
based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the consolidated financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as well as
evaluating the overall consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In
our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position of CommunitySouth Bancshares, Inc. and Subsidiaryas of December 31, 2005 and 2004 and the results of their operations and
their cash flows for the year ended December 31, 2005 and for the period March 20, 2004
(inception) through December 31, 2004 in conformity with accounting principles generally
accepted in the United States of America.

/s/ Elliott Davis, LLC  
Elliott Davis, LLC Greenville, South Carolina February 24, 2006

20

---

# CONSOLIDATED BALANCE
SHEETS

|                                               | December 31, 2005 | December 31, 2004
|---------------------------------------------- | ----------------- | -----------------
|Assets                                         |                   |                  
|Cash and cash equivalents                      |                  
|Cash and due from bank                         |                   | $     1,660,333  
|Federal funds sold                             |                   | 17,499,000       
|                                               |                   |                  
|Total cash and cash equivalents                |                   | 19,159,333       
|Restricted cash                                |                   | -                
|Other investments, at cost                     |                   | 82,700           
|Loans, net                                     |                   | 114,145,631      
|Accrued interest receivable                    |                   | 444,386          
|Property and equipment, net                    |                   | 2,658,128        
|Other assets                                   |                   | 336,143          
|                                               |                   |                  
|Total assets                                   |                   | $ 136,826,321    
|                                               |                   |                  
|Liabilities and Shareholders' Equity           |                  
|Liabilities                                    |                  
|Noninterest bearing deposits                   |                   | $     6,706,055  
|Interest bearing deposits                      |                   | $ 100,266,247    
|                                               |                   |                  
|Total deposits                                 |                   | 106,972,302      
|Subscriptions to be refunded                   |                   | -                
|Accrued expense                                |                   | 202,393          
|Accrued interest payable                       |                   | 1,197,586        
|Other liabilities                              |                   | 167,730          
|                                               |                   |                  
|Total liabilities                              |                   | 108,540,011      
|                                               |                   |                  
|Shareholders' Equity                           |                  
|Preferred stock, par value $.01 per share      |                  
|10,000,000 shares authorized, no shares issued |                   | -                
|Common stock, par value $.01 per share         |                  
|10,000,000 shares authorized 3,744,855 issued  |                  
|and outstanding at December 31, 2005 and       |                  
|December 31, 2004                              |                   | 37,449           
|Additional paid-in capital                     |                   | 29,393,361       
|Retained deficit                               |                   | (1,144,500       
|                                               |                   |                  
|Total shareholders' equity                     |                   | 28,286,310       
|                                               |                   |                  
|Total liabilities and shareholders' equity     |                   | $ 136,826,321    
|                                               |                   |                  

The
accompanying notes are an integral part of the consolidated financial statements.

21

---

# CONSOLIDATED
STATEMENTS OF OPERATIONS

|                                                      |  | For the period March 20, |  
|----------------------------------------------------- |  | ------------------------ | -
|
|
|Interest income                                       |  |                          |  
|Interest and dividends on investments                 |  | $    440,849             |  
|Interest and fees on loans                            |  | 4,544,194                |  
|                                                      |  |                          |  
|Total interest income                                 |  | 4,985,043                |  
|Interest expense - deposits                           |  | 1,862,899                |  
|                                                      |  |                          |  
|Net interest income                                   |  | 3,122,144                |  
|Provision for loan loss                               |  | 1,558,000                |  
|                                                      |  |                          |  
|Net interest income after provision for loan losses   |  | 1,564,144                |  
|                                                      |  |                          |  
|Noninterest income                                    | 
|Mortgage origination fees                             |  | 274,427                  |  
|Other                                                 |  | 46,475                   |  
|                                                      |  |                          |  
|Total noninterest income                              |  | 320,902                  |  
|                                                      |  |                          |  
|Noninterest expense                                   | 
|Salaries and benefits                                 |  | 1,353,659                |  
|Professional fees                                     |  | 104,412                  |  
|Advertising                                           |  | 200,541                  |  
|Supplies                                              |  | 113,298                  |  
|Data processing                                       |  | 135,448                  |  
|Occupancy                                             |  | 149,008                  |  
|Depreciation                                          |  | 166,310                  |  
|Equipment maintenance and rental                      |  | 52,054                   |  
|Loan expenses                                         |  | 90,791                   |  
|Telephone                                             |  | 52,506                   |  
|Other                                                 |  | 261,681                  |  
|                                                      |  |                          |  
|Total noninterest expense                             |  | 2,679,708                |  
|                                                      |  |                          |  
|Loss before income taxes                              |  | (794,662                 | )
|Income tax benefit                                    |  | (179,035                 | )
|                                                      |  |                          |  
|Net loss                                              |  | $  (615,627              | )
|                                                      |  |                          |  
|Basic and diluted loss per share                      |  | $  (.16                  | )
|                                                      |  |                          |  
|Weighted average basic and diluted shares outstanding |  | 3,744,855                |  
|                                                      |  |                          |  

(1)    
          Adjusted for 5-for-4 stock split effective January 16, 2006.

The
accompanying notes are an integral part of the consolidated financial statements.

22

---

# CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITYFor the period March 20, 2004
(inception) through December 31, 2004and for the year ended
December 31, 2005

|                                  |  |  |  |           | Total
|--------------------------------- |  |  |  | --------- | -----
|
|
|Proceeds from sales of stock      |  |  |  |           |      
|(less offering costs of $446,427) |  |  |  | 3,744,855 |      
|Net loss                          |  |  |  | -         |      
|                                  |  |  |  |           |      
|Balance at  December 31, 2004     |  |  |  | 3,744,855 |      
|Net loss                          |  |  |  | -         |      
|Additional offering costs         |  |  |  | -         |      
|                                  |  |  |  |           |      
|Balance at  December 31, 2005     |  |  |  | 3,744,855 |      
|                                  |  |  |  |           |      

(1)    
          Adjusted for 5-for-4 stock split effective January 16, 2006.

The
accompanying notes are an integral part of the consolidated financial statements.

23

---

# CONSOLIDATED
STATEMENTS OF CASH FLOWS

|                                                          |  | For the period
|--------------------------------------------------------- |  | --------------
|
|
|
|
|
|Operating activities                                      |  |               
|Net loss                                                  |  |               
|Adjustments to reconcile net loss to net cash provided by |  |               
|(used in) operating activities:                           |  |               
|Provision for loan losses                                 |  |               
|Depreciation and amortization                             |  |               
|Deferred income tax benefit                               |  |               
|Increase in accrued interest receivable                   |  |               
|Increase in accrued interest payable                      |  |               
|Increase in accrued expenses                              |  |               
|Decrease (increase) in other assets                       |  |               
|Increase in other liabilities                             |  |               
|                                                          |  |               
|Net cash provided by (used in) operating activities       |  |               
|                                                          |  |               
|Investing activities                                      |  |               
|Decrease in restricted cash                               |  |               
|Net increase in loans outstanding                         |  |               
|Purchase of FHLB stock                                    |  |               
|Purchase of property and equipment                        |  |               
|                                                          |  |               
|Net cash used in investing activities                     |  |               
|                                                          |  |               
|Financing activities                                      |  |               
|Net increase in deposit accounts                          |  |               
|Refund of subscriptions                                   |  |               
|Additional stock offering costs                           |  |               
|Net proceeds from sale of stock                           |  |               
|                                                          |  |               
|Net cash provided by financing activities                 |  |               
|                                                          |  |               
|Net (decrease) increase in cash and cash equivalents      |  |               
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD            |  |               
|                                                          |  |               
|CASH AND CASH EQUIVALENTS, END OF PERIOD                  |  |               
|                                                          |  |               
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION          |  |               
|Cash paid for:                                            |  |               
|Interest                                                  |  |               
|                                                          |  |               
|Income taxes                                              |  |               
|                                                          |  |               

The
accompanying notes are an integral part of the consolidated financial statements.

24

---

# COMMUNITYSOUTH BANCSHARES, INC.
NOTES TO CONSOLIDATD FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2005
AND FOR THE PERIOD MARCH 20, 2004 (INCEPTION) THROUGH DECEMBER 31, 2004

# NOTE 1  SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES

Business activity and organization
CommunitySouth Bancshares, Inc. (the Company) is a South Carolina
corporation organized for the purpose of owning and controlling all of the capital stock
of CommunitySouth Bank and Trust (the Bank). The Bank is a state chartered
bank organized under the laws of South Carolina in Pickens County, South Carolina. From
inception on March 20, 2004 through January 18, 2005, the Company engaged in
organizational and pre-opening activities necessary to obtain regulatory approvals and to
prepare its subsidiary, the Bank, to commence business as a financial institution. The
company received approval from the Federal Deposit Insurance Corporation
(FDIC), Federal Reserve (FRB) and the State Board of Financial
Institutions in January 2005.

The Bank began operations on January
18, 2005. The Bank primarily is engaged in the business of accepting deposits insured by
the FDIC, and providing commercial, consumer and mortgage loans to the general public.

The Company sold 3,744,855 shares of
common stock at $8 per share in an initial public offering that was completed on February
15, 2005 (as adjusted for the 5-for-4 stock split effected in the form of a stock dividend
on January 16, 2006 to stockholders of record as of December 15, 2005). The offering
raised $29,430,810, net of offering costs. The directors and officers of the Company
purchased 527,625 shares at $8 per share for a total of $4,221,000.

Basis of Presentation The Company was accounted for as a development stage enterprise as defined by
Financial Accounting Standards Board (FASB) Statement of Financial Accounting
Standards (SFAS) No. 7, Accounting and Reporting by Development Stage
Enterprises, prior to the Banks opening as the Company devoted substantially all
of its efforts to establishing a new business, and thus, comparison of the year ended
December 31, 2005 to December 31, 2004 is not meaningful. When the Bank opened, certain
reclassifications and adjustments were made to the financial statements to reflect that
the Company is now accounted for as an operating company.

The accounting and reporting policies
conform to accounting principles generally accepted in the United States of America and to
general practices in the banking industry. The Company uses the accrual basis of
accounting.

Principles of Consolidation The consolidated financial statements include the accounts of CommunitySouth
Bancshares, Inc., the parent company, and CommunitySouth Bank and Trust, its wholly owned
subsidiary. All significant intercompany items have been eliminated in the consolidated
statements.

Managements Estimates
 The preparation of consolidated financial statements in conformity with generally
accepted accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of income
and expenses during the reporting period. Actual results could differ from those
estimates.

Disclosure Regarding Segments
 The Company reports as one operating segment, as management reviews the results of
operations of the Company as a single enterprise.

Cash and Cash Equivalents For purposes of reporting cash flows, cash and cash equivalents include cash on
hand, amounts due from banks, short-term interest bearing deposits and federal funds sold.
Cash and cash equivalents have an original maturity of three months or less.

Concentrations of Credit Risk
 Financial instruments, which potentially subject the Company to concentrations of
credit risk, consist principally of loans receivable, investment securities, federal funds
sold and amounts due from banks.

The Company makes loans to
individuals and small businesses for various personal and commercial purposes primarily in
the upstate region of South Carolina. The Companys loan portfolio is not
concentrated in loans to any single borrower or in a relatively small number of borrowers.
Additionally, management is not aware of any concentrations of loans to classes of
borrowers or industries that would be similarly affected by economic conditions.

25

---

In addition to monitoring potential
concentrations of loans to particular borrowers or groups of borrowers, industries and
geographic regions, management monitors exposure to credit risk that could arise from
potential concentrations of lending products and practices such as loans that subject
borrowers to substantial payment increases (e.g. principal deferral periods, loans with
initial interest-only periods, etc), and loans with high loan-to-value ratios.
Additionally, there are industry practices that could subject the Company to increased
credit risk should economic conditions change over the course of a loans life. For
example, the Company makes variable rate loans and fixed rate principal-amortizing loans
with maturities prior to the loan being fully paid (i.e. balloon payment loans). These
loans are underwritten and monitored to manage the associated risks. Management has
determined that there is no concentration of credit risk associated with its lending
policies or practices.

The Companys investment
portfolio consists of nonmarketable equity securities. Management believes credit risk
associated with the equity securities is not significant. The Company places its deposits
and correspondent accounts with and sells its federal funds to high quality institutions.
Management believes credit risk associated with correspondent accounts is not significant.

Nonmarketable Equity
Securities  Nonmarketable equity securities include the cost of the
Companys investment in the stock of the Federal Home Loan Bank of Atlanta
(FHLB). The stock has no quoted market value and no ready market exists.
Investment in the FHLB is a condition of borrowing from the FHLB, and the stock is pledged
to collateralize such borrowings. At December 31, 2005, the Companys investment in
FHLB stock was $82,700. The dividend received on this stock is included in interest and
dividends on investments.

Loans Receivable  Loans
are stated at their unpaid principal balance less an allowance for loan losses and net
deferred loan origination fees. Interest income is computed using the simple interest
method and is recorded in the period earned. Loan origination fees collected and certain
loan origination costs are deferred and the net amount is accreted as income using a
method that approximates the level yield method over the life of the related loans.

When serious doubt exists as to the
collectibility of a loan or when a loan becomes ninety days past due as to principal or
interest, interest income generally is discontinued unless the estimated net realizable
value of collateral exceeds the principal balance and accrued interest. When interest
accruals are discontinued, income earned but not collected is reversed.

The Company identifies impaired loans
through its normal internal loan review process. Loans on the Companys problem loan
watch list are considered potentially impaired loans. These loans are evaluated in
determining whether all outstanding principal and interest are expected to be collected.
Loans are not considered impaired if a minimal payment delay occurs and all amounts due,
including accrued interest at the contractual interest rate for the period of delay, are
expected to be collected. At December 31, 2005, management has determined that the Company
had no impaired loans.

Allowance for Loan Losses
 The Company provides for loan losses using the allowance method. Provisions for
loan losses are added to the allowance through charges to operating expenses. Loans which
are determined to be uncollectible are charged against the allowance and recoveries on
loans previously charged off are added to the allowance. The provision for loan losses is
the amount deemed appropriate by management to establish an adequate allowance to meet the
present and foreseeable risk characteristics of the current loan portfolio.
Managements judgment is based on periodic and regular evaluation of individual
loans, the overall risk characteristics of the various portfolio segments, delinquency
trends, and prevailing and anticipated economic conditions. While management uses the best
information available to make evaluations, future adjustments to the allowance may be
necessary if economic conditions differ substantially from the assumptions used in making
the evaluation. The allowance for loan losses is subject to periodic evaluation by various
regulatory authorities and may be subject to adjustment upon their examination.

Property and Equipment 
Premises, furniture and equipment are stated at cost, less accumulated depreciation.
Depreciation expense is computed by the straight-line method, based on the estimated
useful lives for furniture and equipment of 5 to 10 years. Leasehold improvements are
amortized over the life of the lease. Maintenance and repairs are charged to current
expense. The costs of major renewals and improvements are capitalized.

Residential Loan Origination
Fees  The Company offers residential loan origination service to its customers
in its immediate market area. The loans are offered on terms and prices offered by the
Companys correspondents and are closed in the name of the correspondents. The
Company receives fees for services it provides in conjunction with the origination
services it provides. The fees are recognized at the time the loans are closed by the
Companys correspondent.

26

---

Advertising 
Advertising, promotional, and other business development costs generally are expensed as
incurred. External costs incurred in producing media advertising are expensed the first
time the advertising takes place. External costs relating to direct mailing costs are
expensed in the period in which the direct mailings are sent.

Income Taxes  Income
taxes are the sum of amounts currently payable to taxing authorities and the net changes
in income taxes payable or refundable in future years. Income taxes deferred to future
years are determined utilizing an asset and liability approach. This method gives
consideration to the future tax consequences associated with differences between financial
accounting and tax bases of certain assets and liabilities which are principally the
allowance for loan losses, depreciable premises and equipment, and net operating loss
carryforwards.

Loss Per Share  Basic
loss per share represents the net loss allocated to shareholders divided by the
weighted-average number of common shares outstanding during the period. Dilutive loss per
share reflects additional common shares that would have been outstanding if dilutive
potential common shares had been issued. Potential common shares that may be issued by the
Company relate to both outstanding warrants and stock options, and are determined using
the treasury stock method. Due to the net loss for the years ended December 31, 2005 and
the period March 20, 2004 (inception) through December 31, 2004, the outstanding warrants
and stock options were anti-dilutive, therefore dilutive loss per share and dilutive
shares are not presented for the period.

Warrants and Stock Options Upon completion of the offering, the Company agreed to issue warrants to the
organizing directors for the purchase of one share of common stock at $8.00 per share for
every two shares purchased in the stock offering, up to a maximum of 12,500 warrants per
director. The warrants were fully vested 120 days after January 18, 2005 and will expire
on January 18, 2015. Warrants held by directors of the Company will expire 90 days after
the director ceases to be a director or officer of the Company (365 days if due to death
or disability). The Company issued a total of 137,125 warrants. In addition, the Company
has adopted a stock option plan. As of December 31, 2005 the Company has 577,534
outstanding options to employees and directors. The Company accounts for the warrants and
stock options under the recognition and measurement principals of Accounting Principles
Board (APB) Opinion No. 25,Accounting for Stock Issued to Employees,
and related interpretations. No stock-based compensation cost is reflected in the net
income, as all warrants and stock options granted under these plans have an exercise price
equal to the market value of the underlying common stock on the date of grant. All stock
option and warrant amounts have been adjusted for the 5-for-4 stock split effected in the
form of a stock dividend on January 16, 2006 to stockholders of record as of December 15,
2005.

The table set forth below summarizes
the impact the fair market value recognition provisions of SFAS No. 123 would have had on
net loss and earnings per common share if the Company had applied these provisions to
stock-based compensation for the year ended December 31, 2005 (in thousands, except per
share data).

|                                                             | 
|------------------------------------------------------------ | 
|Net loss, as reported                                        | 
|Deduct: Total stock-based employee and director compensation | 
|expense determined under fair value-based methods for all    | 
|awards, net of related tax effects                           | 
|                                                             | 
|Proforma net loss                                            | 
|                                                             | 
|Earnings per share                                           | 
|Basic and diluted - as reported                              | 
|Basic and diluted - pro-forma                                | 

The Company granted 589,064 options
and 137,125 warrants during the year ended December 31, 2005. The weighted average fair
value of options and warrants granted approximated $3.32. The fair value of each option
and warrant granted is estimated on the date of grant using the Black-Scholes
option-pricing model with the following weighted-average assumptions: dividend yield of
0%, expected volatility of 20% , average risk-free interest rate of 4% and expected lives
of 10 years.

Off-Balance-Sheet Financial
Instruments  In the ordinary course of business, the Company enters into
off-balance-sheet financial instruments consisting of commitments to extend credit and
letters of credit. These financial instruments are recorded in the financial statements
when they become payable by the customer.

27

---

Recently Issued Accounting
Standards The following is a summary of recent authoritative pronouncements
that affect accounting, reporting, and disclosure of financial information by the Company:

In December 2004, the FASB issued
SFAS No. 123 (revised 2004), Share-Based Payment (SFAS No. 123(R)).
SFAS No. 123(R) will require companies to measure all employee stock-based compensation
awards using a fair value method and record such expense in its financial statements. In
addition, the adoption of SFAS No. 123(R) requires additional accounting and disclosure
related to the income tax and cash flow effects resulting from share-based payment
arrangements. SFAS No. 123(R) is effective beginning as of the first annual reporting
period beginning after December 15, 2005. SFAS No. 123(R) allows for adoption using either
the modified prospective or modified retrospective methods. The Company anticipates using
the modified prospective method when this statement is adopted in the first quarter of
2006. The Company has evaluated the impact upon adoption of SFAS No. 123(R) and related
guidance and has concluded that the adoption will not have a material impact on financial
position or results of operations upon adoption.

In December 2004, the FASB issued
SFAS No. 153, Exchanges of Nonmonetary Assets  an amendment of APB Opinion No.
29. The standard is based on the principle that exchanges of nonmonetary assets should
be measured based on the fair value of the assets exchanged and eliminates the exception
under APB Opinion No. 29 for an exchange of similar productive assets and replaces it with
an exception for exchanges of nonmonetary assets that do not have commercial substance. A
nonmonetary exchange has commercial substance if the future cash flows of the entity are
expected to change significantly as a result of the exchange. The standard is effective
for nonmonetary exchanges occurring in fiscal periods beginning after June 15, 2005. The
adoption of SFAS No. 153 is not expected to have any impact on the Companys
financial position or results of operations.

In May 2005, the FASB issued SFAS No.
154, Accounting Changes and Error Corrections  a replacement of APB
Opinion No. 20 and FASB Statement No. 3. SFAS No. 154 establishes retrospective
application as the required method for reporting a change in accounting principle, unless
it is impracticable, in which case the changes should be applied to the latest practicable
date presented. SFAS No. 154 also requires that a correction of an error be reported as a
prior period adjustment by restating prior period financial statements. SFAS No. 154 is
effective for accounting changes and corrections of errors made in fiscal years beginning
after December 15, 2005.

In March 2005, the FASB issued FASB
Interpretation (FIN) No. 47, Accounting for Conditional Asset Retirement
Obligations  an interpretation of FASB Statement No. 143. This Interpretation
clarifies that the term conditional asset retirement obligation as used in
SFAS No. 143, Accounting for Asset Retirement Obligations, refers to a legal obligation to
perform an asset retirement activity in which the timing and (or) method of settlement are
conditional on a future event that may or may not be within the control of the entity. The
obligation to perform the asset retirement activity is unconditional even though
uncertainty exists about the timing and (or) method of settlement. Thus, the timing and
(or) method of settlement may be conditional on a future event. Accordingly, an entity is
required to recognize a liability for the fair value of a conditional asset retirement
obligation if the fair value of the liability can be reasonably estimated. The fair value
of a liability for the conditional asset retirement obligation should be recognized when
incurred  generally upon acquisition, construction, or development and (or) through
the normal operation of the asset. Uncertainty about the timing and (or) method of
settlement of a conditional asset retirement obligation should be factored into the
measurement of the liability when sufficient information exists. FIN No. 47 is effective
no later than the end of fiscal years ending after December 15, 2005. The Company adopted
FIN No. 47 in 2005 and its adoption had no effect on the Companys financial position
or results of operations.

In March 2004, the FASB issued
Emerging Issues Task Force (EITF) Issue No. 03-1, The Meaning of
Other-Than-Temporary Impairment and its Application to Certain Investments. This issue
addresses the meaning of other-than-temporary impairment and its application to
investments classified as either available for sale or held to maturity under SFAS No. 115
and it also provides guidance on quantitative and qualitative disclosures. The disclosure
requirements in paragraph 21 of this Issue were adopted by the Company effective December
31, 2003. The recognition and measurement guidance in paragraphs 6-20 of this Issue was to
be applied to other-than-temporary impairment evaluations in reporting periods beginning
after June 15, 2004, but was delayed by FASB action in October 2004 through the issuance
of a proposed FASB Staff Position (FSP) on the issue. In July 2005, the FASB
issued FSP FAS 115-1 and FSP FAS 124-1  The Meaning of Other-Than-Temporary
Impairment and its Application to Certain Investments. This FSP addresses the
determination as to when an investment is considered impaired, whether that impairment is
other than temporary, and the measurement of an impairment loss. This FSP also includes
accounting considerations subsequent to the recognition of an other-than-temporary
impairment and requires certain disclosures about unrealized losses that have not been
recognized as other-than-temporary impairments. This FSP will be effective for
other-than-temporary impairment analysis conducted in periods beginning after December 15,
2005. The Company has evaluated the impact of adopting of FSP FAS 115-1 and FSP FAS 124-1
and has concluded that the adoption will not have a material impact on financial position
and results of operations.

In December 2005, the FASB issued FSP
SOP 94-6-1, Terms of Loan Products that May Give Rise to a Concentration of Credit
Risk. The disclosure guidance in this FSP is effective for interim and annual periods
ending after December 19, 2005. The FSP states that the terms of certain loan products may
increase a reporting entitys exposure to credit risk and thereby may result in a
concentration of credit risk as that term is used in SFAS No. 107, either as an individual
product type or as a group of products with similar features. SFAS No. 107 requires
disclosures about each significant concentration, including information about the
(shared) activity, region, or economic characteristic that identifies the
concentration. The FSP suggests possible shared characteristics on which significant
concentrations may be determined which include, but are not limited to (1) loans that
subject borrowers to significant payment increases, (2) loans with terms that permit
negative amortization, and (3) loans with high loan-to-value ratios. This FSP requires
entities to provide the disclosures required by SFAS No. 107 for loan products that are
determined to represent a concentration of credit risk in accordance with the guidance of
this FSP for all periods presented. The Company adopted this disclosure standard effective
December 31, 2005.

28

---

Other accounting standards that have
been issued or proposed by the FASB or other standards-setting bodies that do not require
adoption until a future date are not expected to have a material impact on the
Companys consolidated financial statements upon adoption.

Risks and Uncertainties 
In the normal course of its business, the Company encounters two significant types of
risks: economic and regulatory. There are three main components of economic risk: interest
rate risk, credit risk and market risk. The Company is subject to interest rate risk to
the degree that its interest-bearing liabilities mature or reprice at different speeds, or
on different basis, than its interest-earning assets. Credit risk is the risk of default
on the Companys loan portfolio that results from borrowers inability or
unwillingness to make contractually required payments. Market risk reflects changes in the
value of collateral underlying loans receivable and the valuation of real estate held by
the Company.

The Company is subject to the
regulations of various governmental agencies. These regulations can and do change
significantly from period to period. The Company also undergoes periodic examinations by
the regulatory agencies, which may subject it to further changes with respect to asset
valuations, amounts of required loss allowances and operating restrictions from the
regulators judgments based on information available to them at the time of their
examination.

Reclassifications 
Certain captions and amounts in the 2004 financial statements were reclassified to conform
with the 2005 presentation. Such reclassifications had no effect on previously reported
net loss or shareholders equity.

29

---

# NOTE 2  CASH AND
DUE FROM BANKS

The Bank is required to maintain
average reserve balances, computed by applying prescribed percentages to its various types
of deposits, either at the Bank or on deposit with the FRB. At December 31, 2005, these
required reserves were met by vault cash.

# NOTE 3  LOANS
RECEIVABLE

Major classifications of loans
receivable are summarized as follows:

|                               | December 31,
|------------------------------ | ------------
|
|Real estate - construction     |             
|Real estate - mortgage         |             
|Commercial and industrial      |             
|Consumer and other             |             
|                               |             
|Total loans, gross             |             
|Less allowance for loan losses |             
|                               |             
|Total loans, net               |             
|                               |             

Loans are stated net of deferred fees
and costs.

Activity in the allowance for loan
losses during the year ended December 31, 2005 and the period March 20, 2004 (inception) through
December 31, 2004 is summarized below:

|                                | 2005 | 2004
|------------------------------- | ---- | ----
|                                |      |     
|Balance, beginning of year      |      |     
|Provision charged to operations |      |     
|Chargeoffs                      |      |     
|                                |      |     
|Balance, end of year            |      |     
|                                |      |     

At December 31, 2005 and 2004, the Bank
had no impaired loans, no loans in nonaccrual status, no loans past due
ninety days or more and still accruing interest, and no restructured loans.

# NOTE 4  PROPERTY
AND EQUIPMENT

Property and equipment consisted of
the following:

|                                                | December 31,
|----------------------------------------------- | ------------
|
|Land                                            |             
|Leasehold improvements                          |             
|Property and equipment                          |             
|Construction in progress                        |             
|                                                |             
|Total                                           |             
|Less, accumulated depreciation and amortization |             
|                                                |             
|Property and equipment, net                     |             
|                                                |             

30

---

# NOTE 5  DEPOSITS

At December 31, 2005, the scheduled maturities
of certificates of deposit were as follows:

|Maturing In | Amount
|----------- | ------
|2006        |       
|2007        |       
|2008        |       
|2009        |       
|2010        |       
|Thereafter  |       
|            |       
|Total       |       
|            |       

Deposits from outside the
Companys market area obtained through brokers amounted to $60,362,000, or
approximately 56.43% of deposits at December 31, 2005.

# NOTE 6  INCOME
TAXES

Income tax expense for the year ended
December 31, 2005 and the period March 20, 2004 (inception) through
December 31, 2004 is summarized as follows:

|                      | 2005 | 2004
|--------------------- | ---- | ----
|Current portion       |      |     
|Federal               |      |     
|State                 |      |     
|                      |      |     
|Total current expense |      |     
|Deferred benefit      |      |     
|                      |      |     
|Income tax benefit    |      |     
|                      |      |     

The gross amounts of deferred tax
assets and deferred tax liabilities are as follows:

|                                | December 31, | 
|------------------------------- | ------------ | 
|
|Deferred tax assets             |              | 
|Allowance for loan losses       |              | 
|Organization and start-up costs |              | 
|Accumulated depreciation        |              | 
|                                |              | 
|Total deferred tax assets       |              | 
|Less valuation allowance        |              | 
|                                |              | 
|                                |              | 
|                                |              | 
|Deferred tax liabilities        |              | 
|Loan origination costs          |              | 
|Prepaid expenses                |              | 
|                                |              | 
|Total deferred tax liabilities  |              | 
|                                |              | 
|Net deferred tax asset          |              | 
|                                |              | 

Deferred tax assets represent the future
tax benefit of deductible differences and, if it is more likely than not that a tax asset
will not be realized, a valuation allowance is required to reduce the recorded deferred
tax assets to net realizable value. As of December 31, 2005 and 2004, in consideration of
the lack of an established earnings history, management has provided valuation allowances
of approximately 45% and 100%, respectively, to reflect its estimate of net realizable
value. The net tax asset is included in the caption other assets on the
balance sheet.

31

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A reconciliation between the income
tax expense and the amount computed by applying the Federal statutory rate of 34% for 2005
and 2004 to income before income taxes follows:

|                              | 2005 | 2004
|----------------------------- | ---- | ----
|Tax benefit at statutory rate |      |     
|Valuation allowance           |      |     
|Other                         |      |     
|                              |      |     
|Income tax benefit            |      |     
|                              |      |     

# NOTE 7  LEASES

Easley location  The
Company leases the site, modular facility and equipment on a month-to-month basis for
$7,154 per month for the temporary modular banking facility being used during the
construction of the main office in Easley.

Spartanburg location 
The Company has a ten year lease beginning November 15, 2005 for its Spartanburg office
with an initial monthly rental payment of $6,500, which increases over the term of the
lease up to $9,275 in the tenth year. The lease may be renewed for two consecutive
five-year terms with rental payments increasing 3% each year.

Greenwood location  The
Company has a six month lease for its Greenwood office with monthly rental payments of
$725, which was renewed in September 2005.

Mauldin location  The
Company has a ten year lease beginning November 15, 2005 for its Mauldin office with an
initial monthly rental payment of $2,417, which increases over the life of the lease up to
$2,872 per month in years seven through ten. The lease may be renewed for one five-year
term at a monthly rent of $3,302.

Greer location  The
Company has a ten year lease for its Greer office with an initial monthly rental payment
of $4,200, which will begin upon completion of construction which is anticipated to be
September 1, 2006.

Minimum future rental payments under
non-cancelable operating leases having remaining terms in excess of one year, for each of
the next five years in the aggregate are:

|                                     | 
|------------------------------------ | 
|2006                                 | 
|2007                                 | 
|2008                                 | 
|2009                                 | 
|2010                                 | 
|Thereafter                           | 
|                                     | 
|Total minimum future rental payments | 
|                                     | 

32

---

# NOTE 8  RELATED
PARTY TRANSACTIONS

Certain parties (principally certain
directors and executive officers of the Company, their immediate families and business
interests) (affiliates) are loan customers in the normal course of business
with the Bank. These loans are made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable transactions with
unrelated persons and do not involve more than the normal risk of collectibility. As of
December 31, 2005 the Bank had related party loans totaling $10,702,284. During 2005,
advances on related party loans totaled $11,344,106, and repayments were $641,822.

At December 31, 2005 affiliates had
deposits with the Bank in the amount of $1.7 million.

The Company also enters into other
transactions in the ordinary course of business with affiliates. Company policy requires
transactions with affiliates to be on terms no more favorable than could be obtained from
an unaffiliated third party and to be approved by a majority of disinterested directors.
The following are transactions entered into with affiliates during the year ended December
31, 2005 and for the period March 20, 2004 (inception) through December 31, 2004:

| | o | The Company leases the site for its temporary headquarters and banking facility in Easley
from a director at a cost $3,443 per month. Lease payments under this lease totaled
$41,316 during the year ended December 31, 2005 and $-0- for the period March 20,
2004 (inception) through December 31, 2004.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | The site for the permanent headquarters and branch office in Easley adjacent the temporary
location was purchased on March 16, 2005 from the same director from which the temporary
site is being leased at a purchase price of $775,000.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | The permanent Spartanburg branch location is leased for $6,500 per month from a
partnership in which two Company directors have a partnership interest. Lease payments on
that office totaled $13,000 during the year ended December 31, 2005 and $-0- for the
period March 20, 2004 (inception) through December 31, 2004.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | The Mauldin location leasehold improvements were constructed by a company owned by one of
our directors during the year ended December 31, 2005 at a cost of $255,199.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | The permanent headquarters and branch office in Easley was being constructed as of
December 31, 2005 by a company owned by one of our directors at a contract cost of
$1,974,059.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | A company in which one of our directors is an owner was the leasing agent for our
temporary Spartanburg office at cost $2,529 per month. Lease payments on that office
totaled $25,285 during the year ended December 31, 2005 and $-0- for the period March 20,
2004 (inception) through December 31, 2004.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# NOTE 9 
COMMITMENTS AND CONTINGENCIES

The Company is subject to claims and
lawsuits which arise primarily in the ordinary course of business. Management is not aware
of any legal proceedings which would have a material adverse effect on the financial
position or operating results of the Company. The company has a contract for construction
of its main office in the amount of approximately $2.0 million of which approximately $1.0
million remains to be funded.

# NOTE 10  SHARES
OUTSTANDING AND LOSS PER SHARE

On January 16, 2006, the Company
effected a 5-for-4 stock split in the form of a stock dividend for shareholders of record
as of December 15, 2005. All share and per share data has been adjusted for all periods
prior to split.

Basic loss per share is computed by
dividing net loss by the weighted-average number of common shares outstanding. Diluted
loss per share is computed by dividing net loss by the weighted-average number of common
shares outstanding and dilutive common share equivalents using the treasury stock method.
Dilutive common share equivalents include common shares issuable upon exercise of
outstanding stock warrants and stock options. Due to the net losses for the year ended
December 31, 2005 and the period March 20, 2004 (inception) through December 31, 2004,
therefore, basic loss per share and diluted earnings per share were the same. The
following is the basic and diluted loss per share computation:

|                                          | 2005 | 2004
|----------------------------------------- | ---- | ----
|Net loss to common shareholders           |      |     
|                                          |      |     
|Average common shares outstanding - basic |      |     
|                                          |      |     
|Basic and diluted loss per share          |      |     
|                                          |      |     

33

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# NOTE 11  STOCK
COMPENSATION PLANS

The table set forth below summarizes
stock option activity for the Companys stock compensation plans for the year ended
December 31, 2005 as adjusted for the 5-for-4 stock split.

|                                 | Stock Options | Warrants | 
|-------------------------------- | ------------- | -------- | 
|
|
|Outstanding at December 31, 2004 |               |          | 
|Granted                          |               |          | 
|Forfeited                        |               |          | 
|Exercised                        |               |          | 
|                                 |               |          | 
|Outstanding at December 31, 2005 |               |          | 
|                                 |               |          | 

The following table summarizes
information about stock options outstanding under the Companys plans at December 31,
2005 as adjusted for the 5-for-4 stock split effective January 16, 2006.

|                                | Outstanding | Exercisable
|------------------------------- | ----------- | -----------
|Number of options               |             |            
|Weighted average remaining life |             |            
|Weighted average exercise price |             |            
|High exercise price             |             |            
|Low exercise price              |             |            

At December 31, 2005, all of the
137,125 warrants were exercisable and had an average remaining life of 9.25 years.

# NOTE 12 
REGULATORY MATTERS

The Bank is subject to various
regulatory capital requirements administered by the federal banking agencies. Failure to
meet minimum capital requirements can initiate certain mandatory, and possibly additional
discretionary actions by regulators that, if undertaken, could have a direct material
adverse effect on the Banks financial condition. Under capital adequacy guidelines
and the regulatory framework for prompt corrective action, the Bank must meet specific
capital guidelines that involve quantitative measures of the Banks assets,
liabilities, and certain off-balance-sheet items as calculated under regulatory accounting
practices. The Banks capital amounts and classification are also subject to
qualitative judgments by the regulators about components, risk weightings, and other
factors.

Quantitative measures established by
regulation to ensure capital adequacy require the Bank to maintain minimum ratios of Tier
1 and total capital as a percentage of assets and off-balance-sheet exposures, adjusted
for risk weights ranging from 0% to 100%. Tier 1 capital consists of common
shareholders equity, excluding the unrealized gain or loss on securities
available-for-sale, minus certain intangible assets. Tier 2 capital consists of the
allowance for loan losses subject to certain limitations. Total capital for purposes of
computing the capital ratios consists of the sum of Tier 1 and Tier 2 capital. The
regulatory minimum requirements are 4% for Tier 1 and 8% for total risk-based capital.

The Bank is also required to maintain
capital at a minimum level based on total assets, which is known as the leverage ratio.
Only the strongest banks are allowed to maintain capital at the minimum requirement of 3%.
All others are subject to maintaining ratios 1% to 2% above the minimum.

As of December 31, 2005, the most
recent notification from the Banks primary regulator categorized it as
well-capitalized under the regulatory framework for prompt corrective action. There are no
conditions or events that management believes have changed the Banks category.

34

---

The following table summarizes the
capital amounts and ratios of the Bank and the regulatory minimum requirements at December
31, 2005.

|                                         |  |  |   |            | To Be Well- | 
|---------------------------------------- |  |  | - | ---------- | ----------- | 
|
|
|
|
|
|Total capital (to risk-weighted assets)  |  |  | $ | 20,602,000 |             | 
|Tier 1 capital (to risk-weighted assets) |  |  |   | 19,044,000 |             | 
|Tier 1 capital (to average assets)       |  |  |   | 19,044,000 |             | 

The FRB has similar requirements for
bank holding companies. The Company currently is not subject to these requirements because
the FRB applies its guidelines on a bank-only basis for bank holding companies with less
than $150,000,000 in consolidated assets.

# NOTE 13  UNUSED
LINES OF CREDIT

As of December 31, 2005, the Bank had
unused lines of credit to purchase federal funds from unrelated banks totaling $9,125,000.
These lines of credit are available on a one to fourteen day basis for general corporate
purposes. As of December 31, 2005, the Bank has no funds drawn from these lines. The
Company also has a line of credit to borrow funds from the FHLB up to 10% of the
Banks total assets subject to available collateral; availability under this facility
totaled $13,682,632 as of December 31, 2005. As of December 31, 2005, the Bank had not
drawn any advances on this line.

# NOTE 14 
RESTRICTIONS ON SUBSIDIARY DIVIDENDS, LOANS, OR ADVANCES

The ability of CommunitySouth
Bancshares, Inc. to pay cash dividends is dependent upon receiving cash in the form of
dividends from the Bank. However, there are restrictions on the ability of the Bank to
transfer funds to CommunitySouth Bancshares, Inc. in the form of cash dividends, loans, or
advances. 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.

# NOTE 15  FINANCIAL
INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

The Company is a party to financial
instruments with off-balance-sheet risk in the normal course of business to meet the
financing needs of its customers. These financial instruments consist of commitments to
extend credit and standby letters of credit. Commitments to extend credit are agreements
to lend to a customer as long as there is no violation of any condition established in the
contract. Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. A commitment involves, to varying degrees, elements of
credit and interest rate risk in excess of the amount recognized in the balance sheet. The
Companys exposure to credit loss in the event of nonperformance by the other party
to the instrument is represented by the contractual notional amount of the instrument.
Since certain commitments are expected to expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash requirements. The Company uses
the same credit policies in making commitments to extend credit as it does for
on-balance-sheet instruments. Letters of credit are conditional commitments issued to
guarantee a customers performance to a third party and have essentially the same
credit risk as other lending facilities. The Company has not recorded a liability for the
current carrying amount of the obligation to perform as a guarantor and no contingent
liability was considered necessary, as such amounts were not considered material.

Collateral held for commitments to
extend credit and letters of credit varies but may include accounts receivable, inventory,
property, plant, equipment and income-producing commercial properties.

The following table summarizes the
Companys off-balance-sheet financial instruments whose contract amounts represent
credit risk:

|                             | December 31, | 
|---------------------------- | ------------ | 
|
|Commitments to extend credit |              | 
|                             |              | 
|Standby letters of credit    |              | 
|                             |              | 

35

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# NOTE 16  FAIR
VALUE OF FINANCIAL INSTRUMENTS

The fair value of a financial
instrument is the amount at which the asset or obligation could be exchanged in a current
transaction between willing parties, other than in a forced or liquidation sale. Fair
value estimates are made at a specific point in time based on relevant market information
and information about the financial instruments. Because no market value exists for a
significant portion of the financial instruments, fair value estimates are based on
judgments regarding future expected loss experience, current economic conditions, risk
characteristics of various financial instruments, and other factors.

The following methods and assumptions
were used to estimate the fair value of significant financial instruments:

Cash and Due from
Banks  The carrying amount is a reasonable estimate of fair value.

Federal Funds
Sold  Federal funds sold are for a term of one day, and the carrying
amount approximates the fair value.

Other
Investments  The carrying value of nonmarketable equity securities
approximates the fair value since no ready market exists for the stocks.

Loans receivable
 For certain categories of loans, such as variable rate loans which are
repriced frequently and have no significant change in credit risk, fair values are based
on the carrying amounts. The fair value of other types of loans is estimated by
discounting the future cash flows using the current rates at which similar loans would be
made to borrowers with similar credit ratings and for the same remaining maturities.

Deposits
The fair value of demand deposits, savings, and money market accounts is the amount
payable on demand at the reporting date. The fair values of certificates of deposit are
estimated using a discounted cash flow calculation that applies current interest rates to
a schedule of aggregated expected maturities.

Accrued Interest Receivable and
Payable  The carrying value of these instruments is a reasonable
estimate of fair value.

The carrying values and estimated
fair values of the Companys financial instruments at December 31, 2005 are shown in
the following table (at December 31, 2004, the fair value for all financial instruments
equaled their carrying values).

|                                                                   | December 31, 2005 | 
|------------------------------------------------------------------ | ----------------- | 
|
|
|Financial Assets                                                   |                   | 
|Cash and due from banks                                            |                   | 
|Federal funds sold                                                 |                   | 
|Nonmarketable equity securities                                    |                   | 
|Loans receivable, gross                                            |                   | 
|Accrued interest receivable                                        |                   | 
|Financial Liabilities                                              |                   | 
|Demand deposit, interest-bearing transaction, and savings accounts |                   | 
|Certificates of deposit and other time deposits                    |                   | 
|Accrued interest payable                                           |                   | 

36

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# NOTE 17 
COMMUNITYSOUTH BANCSHARES, INC. (PARENT COMPANY ONLY)

Presented below are the condensed
financial statements for CommunitySouth Bancshares, Inc. (Parent Company only).

Condensed Balance Sheets

|                                           | December 31, | 
|------------------------------------------ | ------------ | 
|
|Assets                                     |              | 
|Cash                                       |              | 
|Restricted cash                            |              | 
|Investment in the Bank                     |              | 
|Fixed assets                               |              | 
|Other assets                               |              | 
|                                           |              | 
|Total assets                               |              | 
|                                           |              | 
|Liabilities and shareholders' equity       |              | 
|Subscriptions to be refunded               |              | 
|Other liabilities                          |              | 
|Shareholders' equity                       |              | 
|                                           |              | 
|Total liabilities and shareholders' equity |              | 
|                                           |              | 

Condensed Statements of Operations
For the year ended December 31, 2005 andfor the period March 20, 2004 (inception) through December 31, 2004

|                                                | 2005 | 2004
|----------------------------------------------- | ---- | ----
|Income                                          |      |     
|Expenses                                        |      |     
|                                                |      |     
|Income (loss) before income taxes and equity in |      |     
|undistributed losses of the Bank                |      |     
|Equity in undistributed losses of the Bank      |      |     
|                                                |      |     
|Net loss before taxes                           |      |     
|Income tax expense                              |      |     
|                                                |      |     
|Net loss                                        |      |     
|                                                |      |     

37

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# Condensed Statements
of Cash Flows For the year ended December 31, 2005 andfor the period March 20, 2004 (inception)
through December 31, 2004

|                                                     | 2005 | 2004
|---------------------------------------------------- | ---- | ----
|Cash flows from operating activities                 |      |     
|Net loss                                             |      |     
|Adjustments to reconcile net loss to net cash        |      |     
|provided by (used in) operating activities:          |      |     
|Increase in other assets                             |      |     
|Equity in undistributed losses of the Bank           |      |     
|Increase in other liabilities                        |      |     
|                                                     |      |     
|Net cash provided by (used in) operating activities  |      |     
|                                                     |      |     
|Cash flows from investing activities                 |      |     
|Purchase of property and equipment                   |      |     
|Decrease in restricted cash                          |      |     
|Purchase of Bank stock                               |      |     
|                                                     |      |     
|Net cash used in operating activities                |      |     
|                                                     |      |     
|Cash flows from financing activities                 |      |     
|Refund of subscriptions                              |      |     
|Additional stock offering costs                      |      |     
|Net proceeds from sale of stock                      |      |     
|                                                     |      |     
|Net cash provided by (used in) financing activities  |      |     
|                                                     |      |     
|Net increase (decrease) in cash and cash equivalents |      |     
|Cash and cash equivalents, beginning of period       |      |     
|                                                     |      |     
|Cash and cash equivalents, end of period             |      |     
|                                                     |      |     

38

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# Leadership

One of CommunitySouths greatest
strengths is the depth of experience of our executives who guide the companys
strategic and day-to-day operations. With over 100 years of collective banking and
financial industry experience, each member of the board and executive management team
provides the highest level of leadership and expertise.

Board of
DirectorsCommunitySouth Bancshares, Inc. and CommunitySouth Bank & Trust [Photographs of each Director]

|                          |  |  |                      
|------------------------- |  |  | ---------------------
|C. Allan Ducker, III      |  |  | David A. Miller      
|Chief Executive Officer   |  |  | President            
|CommunitySouth            |  |  | CommunitySouth       
|                          |  |  |                      
|D. Larry Brotherton, Ph.D |  |  | G. Dial Dubose       
|Owner                     |  |  | Vice President       
|Ortec, Inc.               |  |  | Town & Country Realty
|                          |  |  | of Easley, Inc.      
|W. Michael Riddle, D.D.S  |  |  | Joanne M. Rogers     
|Oral and Maxillofacial    |  |  | President            
|Surgeon                   |  |  | Lakeview Partners and
|                          |  |  | Palmetto Storage     

Executive
ManagementCommunitySouth Bancshares, Inc. and CommunitySouth Bank & Trust
[Photograph of each Executive Management]

|                        |  | 
|----------------------- |  | 
|John W. Hobbs           |  | 
|Chief Financial Officer |  | 

39

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# CORPORATE INFORMATION

|                           |  |  |                            
|-------------------------- |  |  | ---------------------------
|CORPORATE                  |  |  | Jay Davis                  
|INFORMATION                |  |  | Greenwood City Executive   
|EXECUTIVE OFFICERS         |  |  |                            
|C. Allan Ducker, III       |  |  | Tracy Martin               
|Chief Executive Officer    |  |  | Easley Branch Manager      
|David A. Miller            |  |  | Darlene Nations            
|President                  |  |  | Loan Operations Manager    
|                           |  |  |                            
|                           |  |  |                            
|                           |  |  |                            
|John W. Hobbs              |  |  | Curt Robinson              
|Chief Financial Officer    |  |  | Spartanburg Branch Manager 
|                           |  |  |                            
|                           |  |  |                            
|SENIOR VICE                |  |  | Sonia Strickland           
|PRESIDENTS                 |  |  | Mauldin Branch Manager     
|                           |  |  |                            
|                           |  |  |                            
|                           |  |  |                            
|Tom Hale                   |  |  | Sandy Upton                
|Senior Credit Officer      |  |  | Mortgage Division Manager  
|                           |  |  |                            
|                           |  |  | BRANCH LOCATIONS           
|Jeff Kirby                 |  |  | Main Office                
|Easley City Executive      |  |  | 6650 Calhoun Memorial Hwy. 
|                           |  |  | Easley, SC 29640           
|                           |  |  | Tel: 864.306.2540          
|                           |  |  | Fax: 864.306.3116          
|                           |  |  |                            
|                           |  |  |                            
|Wayne McKinney             |  |  | Spartanburg Office         
|Spartanburg City Executive |  |  | 531 East Main Street       
|                           |  |  | Spartanburg, SC 29302      
|                           |  |  | Tel: 864.573.6347          
|                           |  |  | Fax: 864.573.6459          
|Dwayne Stickler            |  |  | Mauldin Office             
|Mauldin City Executive     |  |  | 787-G East Butler Road     
|                           |  |  | Mauldin, SC 29662          
|                           |  |  | Tel: 864.272.0825          
|                           |  |  | Fax: 864.272.0829          
|VICE PRESIDENTS            |  |  | Greer Office coming soon   
|                           |  |  | 518 W Wade Hampton Blvd.   
|                           |  |  | Greer, SC 29650            
|Barbra Anderson            |  |  | Anderson Office coming soon
|Marketing Director         |  |  | 1510 North Main Street     
|                           |  |  | Anderson, SC 29621         

40

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We know whats
important to you.

www.communitysouthbankandtrust.com

CommunitySouth
Bancshares, Inc.6650 Calhoun Memorial Highway

Easley, SC

29640864.306.2540

Member FDICEqual Housing
Lender

[Logo Insert]

41