**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**


**Form
      10-Q**




x
              QUARTERLY
                    REPORT UNDER SECTION 13 AND 15(d) OF THE SECURITIES EXCHANGE
                    ACT OF
                    1934


For
      the
      quarterly period ended March
      31, 2007





o
            TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
                1934


For
      the
      transition period from _______ to _______





Commission
      File Number: 000-25345





**Community
      Capital Bancshares, Inc.**


(Exact
      name of registrant as specified in its charter)




Georgia
              
              58-2413468(State
                  or other jurisdiction of
                  Incorporation or organization)
              
              (IRS
                  Employer Identification
                  No.)


P.O.
                  Drawer 71269, Albany, Georgia 31708(Address
                  of principal executive
                  offices)


(229)
                    446-2265(Registrant’s
                    telephone number, including area
                    code)




Not Applicable(Former
                      name, former address and former fiscal
                      year, if changed since last report)


Indicate
      by check mark whether the registrant (1) filed all reports required to be filed
      by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days.





Yes
x No 
      o




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer or a non-accelerated filer. See definition of “accelerated
      filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act (check
      one).





Large
                Accelerated Filer o
            Accelerated
                Filer o
            Non-Accelerated
                Filer  x





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


Yes oNo x


****


**APPLICABLE
      ONLY TO CORPORATE ISSUERS:**





Indicate
      the number of shares outstanding of each of the issuer’s classes of common stock
      as of May 7, 2007: 3,023,633 shares
















**PART
                  I –
                  FINANCIAL INFORMATION**
              **Page
                  No.**ITEM
                  1.
              Financial
                  StatementsConsolidated
                  balance sheets as of December 31, 2006 and March
                  31, 2007 (unaudited)
              3Consolidated
                  statements of income (unaudited)
                for
                  the three months ended March 31, 2006 and
                  2007
              4Consolidated
                  statements of comprehensive income (unaudited) for thethree
                  months ended March 31, 2006 and 2007
              5Consolidated
                  statements of cash flows (unaudited) for the
                three
                  months ended March 31, 2006 and 2007
              6Notes
                  to consolidated financial
                  statements
              7Item
                  2.
              Management’s
                  Discussion and Analysis of Financial Condition
                  and Results of Operations
              10Item
                  3.
              Quantitative
                  and Qualitative Disclosures about Market
                  Risk
              13Item
                  4.
              Controls
                  and procedures
              13**PART
                  II – OTHER INFORMATION**ITEM
                  1.
              Legal
                  Proceedings
              15ITEM
                  1A.
              Risk
                  Factors
              15ITEM
                  2.
              Unregistered
                  Sales of Equity Securities and Use of
                  Proceeds
              15ITEM
                  3.
              Defaults
                  upon Senior Securities
              15ITEM
                  4.
              Submission
                  of matters to a vote of Security
                  Holders
              15ITEM
                  5.
              Other
                  Information
              15ITEM
                  6.
              Exhibits
              15









**Community
      Capital Bancshares, Inc.**


**and
        Subsidiaries**
 **Consolidated
        Balance Sheets**
 (Dollars
        in thousands)
  March
                    31,
                  2007
                  (unaudited)
                
                **December
                    31,**
                  **2006****Assets**Cash
                    and due from banks
                
                $
                11,239
                
                $
                7,408Federal
                    funds sold
                
                
                4,858
                
                
                6,400Securities
                    available for sale, at fair value
                
                
                37,128
                
                
                36,524Restricted
                    equity securities, at cost
                
                
                2,674
                
                
                2,434Loans
                
                
                212,187
                
                
                225,630Less
                    allowance for loan losses
                
                
                5,624
                
                
                5,507Loans,
                    net
                
                
                206,563
                
                
                220,123Premises
                    and equipment
                
                
                6,687
                
                
                6,758Premises
                    and equipment held for sale
                
                
                3,022
                
                
                3,022Goodwill
                
                
                2,334
                
                
                2,334Core
                    deposit premium
                
                
                230
                
                
                240Other
                    assets
                
                
                12,190
                
                
                11,693**Total
                    Assets******
                
                $
                286,925
                
                $
                296,936**Liabilities
                    and Shareholders’ Equity**DepositsNon-interest
                    bearing
                
                $
                23,132
                
                $
                19,480Interest
                    bearing
                
                
                203,731
                
                
                218,073Total
                    deposits
                
                
                226,863
                
                
                237,553Other
                    borrowings
                
                
                27,000
                
                
                27,000Guaranteed
                    preferred beneficial interests in junior subordinated
                    debentures
                
                
                4,124
                
                
                4,124Other
                    liabilities
                
                
                1,608
                
                
                1,467**Total
                    Liabilities**
                
                
                259,595
                
                
                270,144Shareholders’
                    equityPreferred
                    stock, par value not stated; 2,000,000 shares authorized;no
                    shares issued
                
                $
                —
                
                $
                —Common
                    stock, $1.00 par value, 10,000,000 shares authorized;3,078,612
                    and 3,074,210 shares issued
                
                
                3,079
                
                
                3,074Capital
                    surplus
                
                
                23,105
                
                
                23,032Retained
                    earnings
                
                
                2,003
                
                
                1,654Accumulated
                    other comprehensive loss
                
                
                (470
                )
                
                (568
                )Less
                    cost of treasury stock, 51,838 and 53,475 shares as of March
                    31, 2007 and
                    December 31, 2006 respectively
                
                
                (387
                )
                
                (400
                )**Total
                    Shareholders’ Equity**
                
                
                27,330
                
                
                26,792**Total
                    Liabilities and Shareholders’ Equity**
                
                $
                286,925
                
                $
                296,936




3


**Community
        Capital Bancshares, Inc.**
 **and
        Subsidiaries**
 **Consolidated
        Statements of Income (unaudited)**
 **For
        the three months ended March 31, 2007 and 2006**
 **(Dollars
        in thousands, except earnings per share)**


**Three
                  months ended****March
                  31, 2007**
              
              **March
                  31, 2006****Interest
                  Income**Loans
              
              $
              4,737
              
              $
              4,830Investment
                  securities
              
              
              435
              
              
              469Deposits
                  in banks
              
              
              2
              
              
              —Federal
                  funds sold
              
              
              73
              
              
              184**Total
                  interest income**
              
              
              5,247
              
              
              5,483**Interest
                  expense**Deposits
              
              
              2,345
              
              
              2,119Other
                  borrowed money
              
              
              376
              
              
              538**Total
                  interest expense**
              
              
              2,721
              
              
              2,657**Net
                  interest income**
              
              
              2,526
              
              
              2,826Provision
                  for loan losses
              
              
              241
              
              
              479**Net
                  interest income after provision for loan losses**
              
              
              2,285
              
              
              2,347**Other
                  income**Service
                  charges on deposit accounts
              
              
              233
              
              
              312Financial
                  service fees
              
              
              61
              
              
              56Mortgage
                  origination fees
              
              
              33
              
              
              198Gain
                  on sale of foreclosed properties
              
              
              1
              
              
              —Increase
                  in cash surrender value of bank owned life insurance
                  policies
              
              
              63
              
              
              60Other
                  operating income
              
              
              59
              
              
              27**Total
                  other income**
              
              
              450
              
              
              653**Other
                  expenses**Salaries
                  and employee benefits
              
              
              1,111
              
              
              1,427Equipment
                  and occupancy expense
              
              
              278
              
              
              317Marketing
                  expense
              
              
              37
              
              
              39Data
                  processing expense
              
              
              164
              
              
              162Administrative
                  expenses
              
              
              201
              
              
              411Legal
                  and professional
              
              
              84
              
              
              109Directors
                  fees
              
              
              84
              
              
              66Amortization
                  of intangible assets
              
              
              9
              
              
              11Stationery
                  and supply expense
              
              
              35
              
              
              62Other
                  operating expenses
              
              
              129
              
              
              164**Total
                  other expense**
              
              
              2,132
              
              
              2,768**Income
                  before income taxes**
              
              
              603
              
              
              232Income
                  tax expense
              
              
              192
              
              
              73**Net
                  Income**
              
              $
              411
              
              $
              159Basic
                  earnings per share
              
              $
              .14
              
              $
              .05Diluted****earnings
                  per share
              
              $
              .13
              
              $
              .05Weighted
                  average common shares outstanding
              
              
              3,022,548
              
              
              2,914,972Weighted
                  average diluted common shares outstanding
              
              
              3,103,903
              
              
              3,013,704Dividends
                  Declared per share
              
              
              .02
              
              
              .02
  4


**Community
        Capital Bancshares, Inc.**
 **and
        Subsidiaries**
 **Consolidated
        Statements of Comprehensive Income (unaudited)**
 Three
        months ended March 31, 2007 and 2006
 (Dollars
        in thousands)





**2007**
            
            **2006****Net
                Income**
            
            $
            411
            
            $
            159Other
                comprehensive Income (loss)Net
                unrealized holding gains (losses) arising during the period, net
                of tax
                expense (benefit) of $54,000 in 2007 and $(34,000) in
                2006.
            
            
            98
            
            
            (67
            )**Comprehensive
                income**
            
            $
            509
            
            $
            92




5


**Community
        Capital Bancshares, Inc.**
 **and
        Subsidiaries**
 **Consolidated
        Statements of Cash Flows (unaudited)**
 Three
        Months ended March 31, 2007 and 2006
 (Dollars
        in thousands)




**2007**
            ****
            **2006****Cash
                Flows from operating activities:**Net
                income
            
            $
            411
            
            $
            159Adjustments
                to reconcile net income to net cash used in operating
                activities:Depreciation
            
            
            108
            
            
            118Amortization
                of core deposit premiums
            
            
            9
            
            
            11Provision
                for loan losses
            
            
            241
            
            
            479Provision
                for deferred taxes
            
            
            4
            
            
            (23
            )(Increase)
                decrease in interest receivable
            
            
            292
            
            
            (227
            )Other
                operating activities
            
            
            (678
            )
            
            53Net
                cash provided by operating activities
            
            
            387
            
            
            570**Cash
                Flows from Investing Activities:**Purchase
                of property and equipment
            
            
            (39
            )
            
            (443
            )Net
                decrease in federal funds sold
            
            
            1,542
            
            
            2,025Net
                (increase) decrease in loans
            
            
            13,320
            
            
            (22,587
            )Proceeds
                from maturities of securities available for sale
            
            
            769
            
            
            782Purchase
                of securities available for sale
            
            
            (1,463
            )
            
            (580
            )Net
                cash provided by (used in) investing activities
            
            
            14,129
            
            
            (20,803
            )**Cash
                Flows from Financing Activities:**Net
                increase (decrease) in deposits
            
            
            (10,690
            )
            
            28,080Net
                decrease in other borrowings
            
            
            —
            
            
            (8,000
            )Dividends
                paid
            
            
            (61
            )
            
            (60
            )Proceeds
                from exercise of stock warrants and options
            
            
            47
            
            
            14Net
                treasury stock transactions
            
            
            19
            
            
            —Net
                cash provided by (used in) financing activities
            
            
            (10,685
            )
            
            20,034Net
                increase (decrease) in cash
            
            
            3,831
            
            
            (199
            )Cash
                and due from banks at beginning of period
            
            
            7,408
            
            
            6,931Cash
                and due from banks at end of period
            
            $
            11,239
            
            $
            6,732**Supplemental
                Disclosure**Cash
                paid for interest
            
            $
            2,749
            
            
            2,356Income
                taxes
            
            
            169
            
            
            200**Non-Cash
                Transaction**Unrealized
                losses on securities available for sale
            
            $
            152
            
            $
            101




6




**Community
      Capital Bancshares, Inc.**


**and
      Subsidiaries**


**Notes
      to Financial Statements**





**Note
              1.**
            **Organization
                and Summary of Significant Accounting
                Policies**





**Nature
      of Business**





Community
      Capital Bancshares, Inc. (the “Company”) is a multi-bank holding company whose
      principal activity is the ownership and management of its wholly-owned bank
      subsidiaries, Albany Bank and Trust, N.A., and AB & T National Bank,
      collectively referred to as “the Banks.” Albany Bank and Trust’s main office is
      located in Albany, Dougherty County, Georgia, with two full service branches
      in
      Albany and one full service branch in Leesburg, Georgia. AB&T National
      Bank’s main office is located in Dothan, Houston County, Alabama and has a full
      service branch located in Auburn, Alabama. The Banks provide a full range of
      banking services to individual and corporate customers in their primary market
      areas.





**Basis
      of Presentation**





The
      consolidated financial statements include the accounts of the Company and its
      subsidiaries. Significant intercompany transactions and balances have been
      eliminated in consolidation.





In
      preparing the consolidated financial statements in conformity with generally
      accepted accounting principles, management is required to make estimates and
      assumptions that affect the reported amounts of assets and liabilities and
      the
      disclosure of contingent assets and liabilities as of the date of the balance
      sheet and reported amounts of revenues and expenses during the reporting period.
      Actual results could differ from those estimates.





Material
      estimates that are particularly susceptible to significant change in the
      near-term relate to the determination of the allowance for loan losses, the
      valuation of foreclosed real estate, goodwill, intangible assets, deferred
      tax
      assets and contingent assets and liabilities. The determination of the adequacy
      of the allowance for loan losses is based on estimates that are susceptible
      to
      significant changes in the economic environment and market conditions. In
      connection with the determination of the estimated losses on loans and the
      valuation of foreclosed real estate, management obtains independent appraisals
      for significant collateral. Intangible assets, primarily goodwill and core
      deposit premiums, are evaluated annually for impairment.





The
      interim financial statements included herein are unaudited but reflect all
      adjustments which, in the opinion of management, are necessary for a fair
      presentation of the financial position and results of operations for the interim
      period presented. All such adjustments are of a normal recurring nature. The
      results of operations for the periods ended March 31, 2007 and 2006 are not
      necessarily indicative of the results of a full year’s operations, and should be
      read in conjunction with the Company’s annual report for the year ended December
      31, 2006 as filed on Form 10-K.





The
      accounting principles followed by the Company and the methods of applying these
      principles conform with accounting principles generally accepted in the United
      States of America (GAAP) and with general practices within the banking
      industry.




7




**Income
      Taxes**





Deferred
      income tax assets and liabilities are determined using the balance sheet method.
      Under this method, the net deferred tax asset or liability is determined based
      on the tax effects of the temporary differences between the book and tax basis
      of the various balance sheet assets and liabilities and gives current
      recognition to changes in the tax rates and laws.





The
      Company and its subsidiaries file a consolidated income tax return. Each entity
      provides for income taxes based on its contribution to the income taxes
      (benefits) of the consolidated group.








**Stock
      Compensation Plans**





At
      March
      31, 2007, the Company had two fixed stock option plans under which it had
      granted options to its employees and directors to purchase common stock at
      the
      fair market price on the date of the grant. Both plans provide for “incentive
      stock options” and “non-qualified stock options”. The incentive stock options
      are intended to qualify under Section 442 of the Internal Revenue Code for
      favorable tax treatment.





On
      March
      11, 1999, the Company’s shareholders approved the 1998 Stock Incentive Plan
      under which options to purchase 303,574 shares of its common stock may be
      granted to directors, officers and employees. Both incentive stock options
      and
      nonqualified stock options may be granted under the plan. At March 31, 2007,
      there were 100,242 shares available under the plan.





On
      April
      24, 2000, the Board of Directors adopted the 2000 Outside Directors Stock Option
      Plan under which nonqualified stock options to purchase up to 21,429 shares
      of
      the Company’s common stock may be granted to directors who are not employees of
      the Company or any of its affiliates and to the Chairman of the Board of
      Directors, regardless of whether he is an employee of the Company. The plan
      provides for an annual grant of a nonqualified stock option to purchase 142
      shares of the Company’s common stock to each existing non-employee director and
      a nonqualified stock option to purchase 285 shares of the Company’s common stock
      to the Chairman of the Board of Directors as of the date of each annual
      shareholders’ meeting. Options granted pursuant to this plan are generally
      nontransferable except by will or the laws of descent and distribution unless
      otherwise permitted by the Board of Directors. These options are fully vested
      and exercisable immediately, subject to any restriction imposed by the primary
      federal regulator of the Company. The exercise price of these options must
      be
      equal to the fair market value of the common stock on the date the option is
      granted. The term of the options may not exceed ten years from the date of
      grant. At March 31, 2007 there were 7,364 shares available for issuance under
      this plan.





The
      Company has issued non-qualified stock options to its Chairman and members
      of
      senior management in previous years totaling 71,428 shares. Additionally 302,420
      warrants were issued to founding directors of the Company. These options and
      warrants are described in more detail in the Annual Report for the year ended
      December 31, 2006.





Prior
      to
      January 1, 2006, the Company accounted for its stock option plans under the
      recognition and measurement provision of Accounting Principles Board (“APB”)
      Opinion No. 25, *Accounting
      for Stock Issued* to *Employees,* and
      related Interpretations, as permitted by FASB No. *123,Accounting
      for Stock-Based Compensation.* Effective
      January 1, 2006, the Company adopted FASB No. 123R, *Share-Based
      Payment,* utilizing
      the “modified prospective” method as described in FASB No. 123R. In the
“modified prospective” method, compensation cost is recognized for all stock-
      based payments granted after the effective date and for all unvested awards
      granted prior to the effective date. In accordance with FASB No. 123R, prior
      period amounts were not restated. FASB No. 123R also requires the tax benefits
      associated with these stock-based payments to be classified as financing
      activities in the Consolidated Statement of Cash Flows, rather than as operating
      cash flows as required under previous regulations. As of March 31, 2007 there
      was $220,000 in unrecognized compensation expense which will be recognized
      over
      3.3 years.




8




**Accounting
      Standards**





In
      September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS
      157, Fair Value Measurements. The standard provides guidance for using fair
      value to measure assets and liabilities. It defines fair value, establishes
      a
      framework for measuring fair value under generally accepted accounting
      principles and expands disclosures about fair value measurement. Under the
      standard, fair value refers to the price that would be received to sell an
      asset
      or paid to transfer a liability in an orderly transaction between market
      participants in the market in which the reporting entity transacts. It clarifies
      the principle that fair value should be based on the assumptions market
      participants would use when pricing the asset or liability. In support of this
      principle, the standard establishes a fair value hierarchy that prioritizes
      the
      information used to develop those assumptions. Under the standard, fair value
      measurements would be separately disclosed by level within the fair value
      hierarchy. Statement 157 is effective for financial statements issued for fiscal
      years beginning after November 15, 2007. The Company is currently evaluating
      the
      impact the adoption of this statement could have on its financial condition,
      results of operations and cash flows.





In
      July
      2006, the FASB issued Interpretation No. 48, *Accounting
      for Uncertainty in Income Taxes - An Interpretation of FASB Statement No. 109.* This
      interpretation addresses the accounting for uncertainty in income taxes
      recognized in a Company’s financial statements in accordance with FASB Statement
      No. 109, *Accounting
      for Income Taxes* .
      It
      prescribes a comprehensive model for recognizing, measuring, presenting and
      disclosing in the financial statements tax positions taken or expected to be
      taken in a tax return. It requires that only benefits from tax positions that
      are more-likely-than-not of being sustained upon examination should be
      recognized in the financial statements. These benefits would be recorded at
      amounts considered to be the maximum amounts more-likely-than-not of being
      sustained. At the time these positions become more-likely-than-not to be
      disallowed, their recognition would be reversed. This interpretation is
      effective for fiscal years beginning after December 15, 2006 and is not expected
      to have a material impact on the Company’s financial condition or results of
      operations.




9




**Management’sDiscussion
      and Analysis of Financial Condition and
      Results of Operations**





This
      discussion is intended to assist in an understanding of the Company’s financial
      condition and results of operations. This analysis should be read in conjunction
      with the financial statements and related notes appearing in Item 1 of this
      Form
      10-Q and Management’s Discussion and Analysis of Financial Condition and Results
      of Operations appearing in the Company’s Form 10-K for the year ended December
      31, 2006.





**Financial
      Condition**





As
      of
      March 31, 2007 the Company’s total assets were $286,925,000 representing a
      decrease of $10,011,000 or 3.37% from December 31, 2006. Earning assets consist
      of federal funds sold, investment securities and loans. These assets provide
      the
      majority of the Company’s earnings. The mix of earning assets is a reflection of
      management’s philosophy regarding earnings versus risk.




Federal
      funds sold represent an overnight investment of funds and can be converted
      immediately to cash. At March 31, 2007, the Company had $4,858,000 in federal
      funds sold. At December 31, 2006, the Company had federal funds sold of
      $6,400,000.




Investment
      securities consist of U.S. Government and Agency securities and municipal bonds.
      These investments are used to provide fixed maturities and as collateral for
      advances and large public fund deposits. From December 31, 2006 to March 31,
      2007, investment securities increased by $844,000. All securities are classified
      as available for sale, and are carried at current market values.




The
      loan
      portfolio is the largest earning asset and is the primary source of earnings
      for
      the Company. At March 31, 2007 net loans were $206,563,000. The loan portfolio
      decreased $13,561,000 or 6.16% over the year-end amount. The decline in
      outstanding loans during the current period is due to the payoff of out of
      area
      loans which have not yet been replaced. At March 31, 2007, the allowance for
      loan losses was $5,624,000 or 2.65% of total loans. Management believes this
      is
      an adequate but not excessive amount based upon the composition of the current
      loan portfolio and current economic conditions. The relationship of the
      allowance to total loans will vary over time based upon management’s evaluation
      of the loan portfolio. Management evaluates the adequacy of the allowance on
      a
      monthly basis and adjusts it accordingly by a monthly charge to earnings using
      the provision for loan losses. During the first quarter of 2007, the provision
      for potential loan losses was $241,000 as compared to the 2006 amount of
      $479,000. The reserve was based upon management’s estimate to provide for
      potential loan losses inherent in the current outstanding loan
      portfolio.




Non-earning
      assets consist of premises and equipment, and other assets. Premises and
      equipment decreased during the year as a result depreciation expense during
      the
      first quarter. Other assets consist primarily of bank owned life insurance,
      other real estate owned, and accrued interest receivable. Bank owned life
      insurance and other real estate owned increased $57,000 and $379,000
      respectively, over the year-end amount. Accrued interest receivable decreased
      $292,000 over the previous year-end amount as a result of a smaller loan
      portfolio upon which to accrue interest.




The
      Company funds its assets primarily through deposits from customers.
      Additionally, it borrows funds from other sources to provide longer term fixed
      rate funding for its assets. The Company must pay interest on the majority
      of
      these funds and attempts to price these funds competitively in the market place
      but at a level that it can safely re-invest the funds profitably. At March
      31,
      2007, total deposits were $226,863,000 as compared to the year-end amount of
      $237,553,000. This is a decrease of $10,690,000 or 4.50%. The decreased deposits
      occurred as a result of reduced funding needs for loans during the
      quarter.




10




Interest
      bearing deposits are comprised of the following categories:




**March
                31, 2007**
            
            **December
                31, 2006**Interest
                bearing demand and savings
            
            $
            61,363,000
            
            $
            61,242,000Certificates
                of deposit in denominations of $100,000 or greater
            
            
            85,464,000
            
            
            96,977,000Other
                Certificates of deposit
            
            
            56,904,000
            
            
            59,854,000Total
            
            $
            203,731,000
            
            $
            218,073,000




Other
      borrowings consist of Federal Home Loan Bank advances and are secured by
      investment securities and loans of Albany Bank & Trust. There was no
      activity in other borrowings during the quarter.




**Capital
      Adequacy**




The
      following table presents the Company’s regulatory capital position as of March
      31, 2007.




Tier
                  1 Capital to risk weighted assets Ratio, actual
              14.41%Tier
                  1 Capital minimum requirement
              4.00%Tier
                  2 Capital to risk weighted assets Ratio, actual
              15.67%Tier
                  2 Capital minimum requirement
              8.00%Tier
                  1 Leverage Ratio
              10.86%Tier
                  1 Leverage Ratio minimum requirement
              4.00%




The
      Company’s ratios are well above the required regulatory minimums under capital
      adequacy guidelines and provide a sufficient basis to support future growth
      of
      the Company. The Banks remain above the required regulatory capital minimums
      and
      the Company has the ability to support the Banks’ capital levels should the need
      arise.




**Results
      of operations**




Net
      income for the three months ended March 31, 2007 was $411,000 as compared to
      net
      income of $159,000 for the same period in 2006.





Total
      interest income decreased $237,000 for the three months ended March 31, 2007
      or
      4.32% compared to the same period in the previous year. This was the result
      of
      decreased interest income on loans, primarily due to the smaller loan portfolio
      in the current year.





Interest
      expense for the three months ended March 31, 2007 was $2,721,000, which is
      an
      increase of $64,000 or 2.41% over the same period in the previous year. This
      increase is indicative of the generally higher level of interest rates as
      compared to 2006, although deposit volumes are lower than the prior
      year.





Net
      interest income after the provision for loan losses was $2,285,000 for the
      three
      months ended March 31, 2007 as compared to the 2006 amount of $2,347,000. This
      is a decrease of $62,000 or 2.64%. Net interest income before the provision
      for
      loan losses decreased $300,000 due to lower volumes of earning assets and higher
      cost of funds. This decline was offset by the lower provision for loan losses.
      The provision for loan losses was $238,000 less than the previous
      year.





Other
      noninterest income decreased $203,000 to $450,000 for the three months ended
      March 31, 2007 as compared to the same period in 2006. Service charges on
      deposit accounts decreased $79,000 to $233,000 due to a decrease in the number
      of demand deposit accounts as compared to the previous year and the decreased
      insufficient funds activity of the customer base. Additionally, mortgage
      origination fees also decreased $165,000 to $33,000 when compared to the same
      period in 2006. This decrease is the result of the separation of the mortgage
      origination office in Charleston, South Carolina from the Company in November,
      2006.




11




Non-interest
      expense decreased $636,000, or 22.98% to $2,132,000, for the three months ended
      March 31, 2007 as compared to the same period in 2006. Salaries and employee
      benefits decreased $316,000 to $1,111,000 as compared to the 2006 amount of
      $1,427,000. This decrease was primarily due to the salary expense saved by
      the
      Company with respect to the employees of the Charleston mortgage production
      office. Administrative expenses decreased $210,000 to $201,000 or 51.22% as
      compared to the same period last year. The major area of decrease was consulting
      fees for profitability enhancement studies paid during the first quarter of
      2006
      that were not incurred at the same level in 2007.





Diluted
      earnings per share for the three months ended March 31, 2007 were $0.13 and
      increased $0.08, or 160%, as compared to the first quarter of the previous
      year.




**Off-Balance
      Sheet Arrangements**





Our
      financial statements do not reflect various commitments and contingent
      liabilities that arise in the normal course of business. These off-balance
      sheet
      financial instruments include commitments to extend credit and standby letters
      of credit. Such financial instruments are included in the financial statements
      when funds are distributed or when the instruments become payable. Our exposure
      to credit loss in the event of nonperformance by the other party to a financial
      instrument for commitments to extend credit, and standby letters of credit
      is
      represented by the contractual amount of those instruments. We use the same
      credit policies in making commitments as we do for on-balance sheet instruments.
      Although these amounts do not necessarily represent
      future cash requirements, a summary of our commitments as of March 31, 2007
      and
      December 31, 2006 are as follows:




**March
                    - 07**
              
              **December-06**Commitments
                  to extend credit
              
              $
              41,945,000
              
              $
              57,958,000Standby
                  letters of credit
              
              $
              1,020,000
              
              $
              1,020,000




**LIQUIDITY
      AND CAPITAL RESOURCES**





Liquidity
      is an important factor in our financial condition and affects our ability to
      meet the borrowing needs and deposit withdrawal requirements of our customers.
      Assets, consisting primarily of loans and investment securities, are funded
      by
      customer deposits, borrowed funds, and retained earnings. Maturities in the
      investment and loan portfolios also provide a steady flow of funds for
      reinvestment. In addition, our liquidity continues to be enhanced by a
      relatively stable core deposit base and the availability of additional funding
      sources. Management monitors its future liquidity needs based upon quarterly
      projections of loan and deposit growth. Management feels that it has sufficient
      capital and liquidity resources to support its future growth.




**REGULATORY
      MATTERS**





On
      July
      27, 2006, the Banks entered into the Agreements with the OCC. The Agreements
      were described in the Form 8-K filed on August 2, 2006. In order to comply
      with
      the Agreements, the Company has decreased its total assets in order to reach
      specified capital levels. Future growth in assets will be dependent upon the
      Banks having adequate capital to fund the growth.




12




**Forward-Looking
      Statements**





This
      document contains statements that constitute “forward-looking statements” within
      the meaning of Sections 27A of the Securities Act of 1933, as amended, and
      Sections 21E of the Securities Exchange Act of 1934, as amended. The words
      “believe”, “estimate”, “expect”, “intend”, “anticipate” and similar expressions
      and variations thereof identify certain of such forward-looking statements,
      which speak only as of the dates that they were made. The Company undertakes
      no
      obligation to publicly update or revise any forward-looking statements, whether
      as a result of new information, future events, or otherwise. Users are cautioned
      that any such forward-looking statements are not guarantees of future
      performance and involve risks and uncertainties that the actual results may
      differ materially from those indicated in the forward-looking statements as
      a
      result of various factors. For a discussion of the factors, risks and
      uncertainties that could cause our actual results to differ materially from
      estimates and projections contained in these forward-looking statements, please
      read the “Risk Factors” section of our report on Form 10-K for the year ended
      December 31, 2006. Users are cautioned not to place undue reliance on these
      forward-looking statements.





**ITEM
              3.**
            **QUANTITATIVE
                AND QUALITATIVE DISCLOSURES ABOUT MARKET
                RISK**




Market
      risk is a risk of loss arising from adverse changes in market prices and rates.
      The Company’s market risk is composed primarily of interest rate risk created by
      its lending and deposit taking activities. The primary purpose of managing
      interest rate risk is to reduce the effects of interest rate volatility on
      our
      financial condition and results of operations. Management addresses this risk
      through an active asset/liability management process and through management
      of
      maturities and repricing of interest-earning assets and interest-bearing
      liabilities. The Company’s market risk and strategies for market risk management
      are more fully described in its 2006 annual report on Form 10-K. There have
      been
      no changes in the assumptions used in monitoring interest rate risk as of March
      31, 2007. Through March 31, 2007, management has not utilized derivatives as
      a
      part of this process.




**ITEM
              4.**
            **CONTROLS
                AND PROCEDURES**





As
      of the
      end of the period covered by this Quarterly Report on Form 10-Q, our principal
      executive officer and principal financial officer have evaluated the
      effectiveness of our “disclosure controls and procedures” (“Disclosure
      Controls”). Disclosure Controls, as defined in Rule 13a-15(e) of the Securities
      Exchange Act of 1934, as amended (the “Exchange Act”), are procedures that are
      designed with the objective of ensuring that information required to be
      disclosed in our reports filed under the Exchange Act, such as this Quarterly
      Report, is recorded, processed, summarized and reported within the time periods
      specified in the Securities and Exchange Commission’s rules and forms.
      Disclosure Controls are also designed with the objective of ensuring that such
      information is accumulated and communicated to our management, including our
      principal executive officer and principal financial officer, as appropriate
      to
      allow timely decisions regarding required disclosure.





Our
      management, including our principal executive officer and principal financial
      officer, does not expect that our Disclosure Controls will prevent all error
      and
      all fraud. A control system, no matter how well conceived and operated, can
      provide only reasonable, not absolute, assurance that the o bjectives
      of the control system are met. Further, the design of a control system must
      reflect the fact that there are resource constraints, and the benefits of
      controls must be considered relative to their costs. Because of the inherent
      limitations in all control systems, no evaluation of controls can provide
      absolute assurance that all control issues and instances of fraud, if any,
      within the company have been detected. These inherent limitations include the
      realities that judgments in decision-making can be faulty, and that breakdowns
      can occur because of simple error or mistake. The design of any system of
      controls also is based in part upon certain assumptions about the likelihood
      of
      future events, and there can be no assurance that any design will succeed in
      achieving its stated goals under all potential future conditions.





13




Based
      upon their controls evaluation, our principal executive officer and principal
      financial officer have concluded that our Disclosure Controls are effective
      at a
      reasonable assurance level.





There
      have been no changes in our internal controls over financial reporting during
      our first three months of the fiscal year that have materially affected, or
      are
      reasonably likely to materially affect, our internal control over financial
      reporting.




14




**PART
      II**





**ITEM
              1.**
            **Legal
                Proceedings**  None




**ITEM
              1A.**
            **Risk
                Factors**





You
      should carefully consider the risk factors discussed in Item 1A of Part I of
      our
      Annual Report on Form 10-K for the year ended December 31, 2006, which could
      materially affect our business, financial condition or future results. The
      risks
      described in our Annual Report on Form 10-K are not the only risks facing our
      Company. Additional risks and uncertainties not currently known to us or that
      we
      currently deem to be immaterial also may materially adversely affect our
      business, financial condition and/or operating results.





**ITEM
              2.**
            **UNREGISTERED
                SALES OF EQUITY SECURITIES AND USE OF
                PROCEEDS**


(a)
            None


(b)
            None


(c)
            None




**ITEM
              3.**
            **DEFAULTS
                UPON SENIOR SECURITIES**




None





**ITEM
              4.**
            **SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY HOLDERS**




None




**ITEM
              5.**
            **OTHER
                INFORMATION**




None





**Item
              6.**
            **Exhibits**




**31.1**
              Certification
                  of the Chief Executive officer pursuant to Rule 13a-14(a) under
                  the
                  Securities exchange act of 1934, as
                  amended.





**31.2**
              Certification
                  of the Chief Financial Officer pursuant toRule
                  13a-14(a) under the Securities exchange act of 1934, as
                  amended.





**32.1**
            Certification
                of the Chief Executive Officer and Chief Financial Officer pursuant
                to
                Rule 13a-14(b) under the Securities exchange act of 1934, as
                amended.




15




**SIGNATURES**




Pursuant
      to the requirements of the Securities and Exchange Act of 1934, the Registrant
      has duly caused this report to be signed on its behalf by the undersigned
      thereunto duly authorized.




**Community
                Capital Bancshares, Inc.**May
                11, 2007
            
            /s/
              John H. Monk, Jr.Date
            John
                H.
                Monk, Jr.Chief Executive
                Officer




May
              11, 2007
            
            /s/
              David J. BarankoDate
            David
                J. BarankoChief Financial Officer
              (Duly
                  authorized officer andprincipal
                  financial / accountingofficer)




16