SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549

                                   FORM 10-KSB

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 1998     Commission File Number 24749

                        CLOVER COMMUNITY BANKSHARES, INC.
              (Exact Name of Small Business Issuer in its Charter)

         South Carolina                                   58-2381062
(State or Other Jurisdiction of             (IRS Employer Identification Number)
Incorporation or Organization)

            124 North Main Street, Clover, South Carolina 29710
                (Address of Principal Executive Office, Zip Code)

         Issuer's Telephone Number, Including Area Code: (803) 222-7660

Securities Registered Pursuant to Section 12(b) of the Act:

                                      None
                                (Title of Class)

Securities Registered Pursuant to Section 12(g) of the Act:

                           Common Stock ($.01 par value)
                                (Title of Class)

         Check whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during the past 12
months  (or  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 [_]

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

         State issuer's revenues for the most recent fiscal year.  $4,713,323

         The aggregate  market value of the voting and non-voting  common equity
held by  non-affiliates on March 1, 1999, was  approximately  $6,704,416.  As of
March 1, 1999, there were 1,011,120 shares of the Registrant's  Common Stock, no
par value,  outstanding.  For purposes of the foregoing  calculation  only,  all
directors and executive officers of the Registrant have been deemed affiliates.

                       DOCUMENTS INCORPORATED BY REFERENCE

     (1)  Portions of the Annual Report to the  Shareholders  for the year ended
          December 31, 1998 - Parts I and II

     (2)  Portions  of the  Registrant's  Proxy  Statement  for the 1999  Annual
          Meeting of Shareholders - Part III

          Transitional Small Business  Disclosure Format.
          Yes __   No X

<PAGE>



                          10-KSB CROSS REFERENCE INDEX

                                     Part I                                 Page
Item 1   Description of Business ........................................      1
Item 2   Description of Property ........................................      9
Item 3   Legal Proceedings ..............................................     10
Item 4   Submission of Matters to a Vote of Security Holders ............   None
                                     Part II
Item 5   Market for Common Equity and Related Stockholder Matters .......     11
Item 6   Management's Discussion and Analysis or Plan of Operation ......     11
Item 7   Financial Statements ...........................................     11
Item 8   Changes In and Disagreements with Accountants ..................
           on Accounting and Financial Disclosure .......................   None
                                    Part III
Item 9   Directors and Executive Officers, Promoters and Control
         Persons; Compliance With Section 16(a) of the Exchange Act .....      *
Item 10  Executive Compensation .........................................      *
Item 11  Security Ownership of Certain Beneficial Owners and Management .      *
Item 12  Certain Relationships and Related Transactions .................      *
                            Part IV
Item 13  Exhibits and Reports on  Form 8-K

     * Incorporated  by reference to the  Registrant's  Proxy  Statement for the
     1999 Annual Meeting of Shareholders

<PAGE>

                                     PART I

         This Annual Report on Form 10-KSB contains  forward-looking  statements
as  defined  by  the  Private   Securities   Litigation   Reform  Act  of  1995.
Forward-looking  statements  should be read with the  cautionary  statements and
important  factors  included in this Form  10-KSB.  (See Item 6. -  Management's
Discussion and Analysis of Financial  Condition and Results of Operations,  Safe
Harbor  for  Forward-Looking  Statements.)  Forward-looking  statements  include
statements concerning plans,  objectives,  goals,  strategies,  future events or
performance and underlying assumptions and other statements which are other than
statements  of  historical  facts.  Such  forward-  looking  statements  may  be
identified,   without  limitation,  by  the  use  of  the  words  "anticipates,"
"estimates,"  "expects," "intends," "plans," "predicts," "projects," and similar
expressions.  The Company's expectations,  beliefs and projections are expressed
in good  faith and are  believed  by the  Company  to have a  reasonable  basis,
including without limitation,  management's  examination of historical operating
trends,  data  contained in the Company's  records and other data available from
third  parties,  but there can be no assurance that  management's  expectations,
beliefs or projections will result or be achieved or accomplished.

Item 1.  Description of Business

                              FORM OF ORGANIZATION

         Clover Community  Bankshares,  Inc. (the "Company") is a South Carolina
corporation and a bank holding company  incorporated  March 4, 1998. The Company
commenced  operations on June 5, 1998, upon  effectiveness of the acquisition of
Clover Community Bank (the "Bank") as a wholly owned  subsidiary.  The principal
business of the Company is ownership and operation of the Bank.

                               BUSINESS OF BANKING

General

         The Bank was incorporated under the laws of the State of South Carolina
as a state chartered bank on August 18, 1987 and commenced operations on October
1, 1987.  The Bank operates under the  jurisdiction  of the South Carolina State
Board of  Financial  Institutions  (the "State  Board"),  and its  deposits  are
insured by the Federal Deposit Insurance Corporation ("FDIC"). The Bank is not a
member of the Federal Reserve System.  The Bank engages in a general  commercial
banking  business,  emphasizing  the banking needs of  individuals  and small to
medium-sized business and professional concerns in its primary service area, and
offers a full range of deposit  services and short to medium term commercial and
other loans,  as well as various other  services from a single office in Clover,
South  Carolina.  The Bank does not  exercise  trust  powers or other  fiduciary
services at this time.

         The Bank offers the full range of deposit  services  that are typically
available in most banks and savings and loan  associations,  including  checking
accounts,  NOW accounts,  savings  accounts,  and other time deposits of various
types ranging from daily money market  accounts to longer-term  certificates  of
deposit.  The  transaction  accounts and time  certificates  are tailored to the
Bank's principal market area at rates  competitive to those offered in the area.
All deposit  accounts are insured by the FDIC up to the maximum amount ($100,000
per depositor,  subject to aggregation  rules). The Bank solicits these accounts
from individuals,  businesses,  associations and organizations, and governmental
authorities.

         The Bank  offers a full  range  of  short  to  medium-term  commercial,
personal,  and  mortgage  loans.  Commercial  loans  include  both  secured  and
unsecured  loans for working  capital  (including  inventory  and  receivables),
business expansion (including acquisition of real estate and improvements),  and
purchase of equipment  and  machinery.  Personal  (or  consumer)  loans  include
secured  and  unsecured  loans for  financing  automobiles,  home  improvements,
education, and personal investments. The Bank also offers mortgage loans secured
by personal residences.

         The Bank offers travelers  checks,  safe deposit boxes,  MasterCard and
Visa accounts,  ATM cards,  and overdraft lines of credit to its customers.  The
Bank  does not  offer  trust  services.  The Bank is a member  of  regional  and
national  networks  of  automated  teller  machines  that  may be  used  by Bank
customers in major cities  throughout  South Carolina and the United States,  as
well as in various cities worldwide.

                                       2

<PAGE>

Employees

     At December 31, 1998, the Company employed 22 people.

Market Area

         The Bank's primary  service area includes the Clover  community in York
County,  South Carolina.  York County is located in the north central portion of
South  Carolina  about  75 miles  north of  Columbia,  South  Carolina  and just
southwest of Charlotte,  North Carolina. The county is bounded by North Carolina
to the north,  by Lancaster  County to the east, by Cherokee County to the west,
and by Chester  County to the south.  Clover is near the North  Carolina line in
the  northwest  corner of the  county.

Competition

         The Bank generally competes with other financial  institutions  through
the selection of banking products and services offered, the pricing of services,
the level of service provided, the convenience and availability of services, and
the degree of expertise and the personal  manner in which  services are offered.
South   Carolina   law  permits   statewide   branching  by  banks  and  savings
institutions, and many financial institutions in the state have branch networks.
Consequently,  commercial  banking  in South  Carolina  is  highly  competitive.
Furthermore,  as a consequence  of  legislation  recently  enacted by the United
States Congress,  out-of-state  banks not previously allowed to operate in South
Carolina  may  commence  operations  and compete in the Bank's  primary  service
areas.  Many large banking  organizations  currently  operate in the  respective
market  areas of the Bank,  several  of which  are  controlled  by  out-of-state
ownership.

         The  Bank  faces   competition   from  both  federally   chartered  and
state-chartered  banks  and  thrift  institutions,  as  well as  credit  unions,
consumer finance companies,  insurance companies,  and other institutions in the
Bank's market area. Some of these competitors are not subject to the same degree
of regulation and restriction  imposed upon the Bank. Many of these  competitors
also have broader  geographic  markets and  substantially  greater resources and
lending  limits than the Bank and offer  certain  services such as trust banking
that the Bank does not currently provide. In addition, many of these competitors
have numerous branch offices located  throughout the extended market area of the
Bank  which may  provide  these  competitors  with an  advantage  in  geographic
convenience that the Bank does not have at present. Such competitors may also be
in a position to make more effective use of media advertising, support services,
and electronic technology than can the Bank.

         Currently  there  are  two  other  commercial  banks  operating  in the
community of Clover,  which is the Bank's existing  primary service area.  There
are  eight  other  commercial  banks,  five  credit  unions,   and  one  savings
institution operating in York County.


                                        3

<PAGE>

                         EFFECT OF GOVERNMENT REGULATION

         Bank  holding  companies  and banks  are  extensively  regulated  under
federal and state law. To the extent that the  following  information  describes
statutory  and  regulatory  provisions,  it is  qualified  in  its  entirety  by
reference to such  statutes and  regulations.  Any change in  applicable  law or
regulation may have a material effect on the business of the Holding Company and
the Bank.

General

         As a bank holding company registered under the Bank Holding Company Act
("BHCA"),  the Company is subject to supervision,  and to regular  inspection by
the Federal  Reserve.  The Company is also  subject to  regulation  by the State
Board. The Bank is a state bank subject to regulation by the State Board and the
FDIC.  The following  discussion  summarizes  certain  aspects of those laws and
regulations  that affect the Company and the Bank.  Proposals to change the laws
and  regulations  governing  the  banking  industry  are  frequently  raised  in
Congress, the state legislature and before the various bank regulatory agencies.
The  likelihood and timing of any changes and the impact such changes might have
on the Company and the Bank are difficult to determine.

         Under the BHCA, the Company's  activities and those of its subsidiaries
are limited to banking, managing or controlling banks, furnishing services to or
performing services for its subsidiaries or engaging in any other activity which
the Federal  Reserve  determines to be so closely related to banking or managing
or controlling banks as to be a proper incident thereto.  The BHCA prohibits the
Company  from  acquiring  direct  or  indirect  control  of more  than 5% of the
outstanding  voting stock or substantially all of the assets of any bank or from
merging or  consolidating  with  another  bank  holding  company  without  prior
approval of the Federal  Reserve.  In making  such  determinations,  the Federal
Reserve is required to consider  whether the performance of such activities by a
bank holding company or its  subsidiaries  can reasonably be expected to produce
benefits to the public such as greater  convenience,  increased  competition  or
gains in  efficiency  that  outweigh  possible  adverse  effects,  such as undue
concentration  of  resources,  decreased  or unfair  competition,  conflicts  of
interest or unsound banking practices.

         Additionally,  the BHCA prohibits the Company from engaging in, or from
acquiring  ownership or control of more than 5% of the outstanding  voting stock
of any  company  engaged in, a  non-banking  business  unless  such  business is
determined by the Federal  Reserve to be so closely  related to banking as to be
properly incident thereto.

         In addition to  registration  with the Federal  Reserve under the BHCA,
all South  Carolina  bank holding  companies  must register with the State Board
under the South Carolina Bank Holding  Company Act (the "South Carolina Act"). A
registered  bank holding  company must provide the State Board with  information
with  respect  to  the  financial   condition,   operations,   management,   and
inter-company  relationships  of the holding company and its  subsidiaries.  The
State Board may also  require  such other  information  as is  necessary to keep
itself  informed  about  whether the  provisions  of South  Carolina law and the
regulations  and orders issued  thereunder by the State Board have been complied
with, and the State Board may make  examinations of any bank holding company and
its subsidiaries.


                                        4

<PAGE>

Obligations of the Company to its Subsidiary Bank

         A number of obligations  and  restrictions  are imposed on bank holding
companies  and their  depository  institution  subsidiaries  by Federal  law and
regulatory  policy that are designed to reduce  potential  loss  exposure to the
depositors of such  depository  institutions  and to the FDIC insurance funds in
the event the depository  institution  is in danger of becoming  insolvent or is
insolvent.  For example, under the policy of the Federal Reserve with respect to
bank holding company operations,  a bank holding company is required to serve as
a source of financial strength to its subsidiary depository  institutions and to
commit resources to support such  institutions in  circumstances  where it might
not do so absent such policy. In addition,  the "cross-guarantee"  provisions of
the  Federal  Deposit  Insurance  Act,  as  amended  ("FDIA"),  require  insured
depository  institutions under common control to reimburse the FDIC for any loss
suffered or reasonably  anticipated by either the Savings Association  Insurance
Fund ("SAIF") or the Bank  Insurance Fund ("BIF") of the FDIC as a result of the
default of a  commonly  controlled  insured  depository  institution  or for any
assistance  provided  by the FDIC to a commonly  controlled  insured  depository
institution  in  danger  of  default.  The  FDIC  may  decline  to  enforce  the
cross-guarantee  provisions  if it  determines  that a  waiver  is in  the  best
interest  of the  SAIF or the BIF or both.  The  FDIC's  claim  for  damages  is
superior to claims of stockholders of the insured depository  institution or its
holding  company but is subordinate to claims of depositors,  secured  creditors
and  holders of  subordinated  debt  (other  than  affiliates)  of the  commonly
controlled insured depository institutions.

         The FDIA also provides that amounts  received from the  liquidation  or
other resolution of any insured  depository  institution by any receiver must be
distributed (after payment of secured claims) to pay the deposit  liabilities of
the  institution  prior to payment  of any other  general  or  unsecured  senior
liability,   subordinated  liability,  general  creditor  or  stockholder.  This
provision  would give  depositors  a preference  over  general and  subordinated
creditors  and  stockholders  in the event a receiver is appointed to distribute
the assets of the Bank.

         Any capital  loans by a bank holding  company to any of its  subsidiary
banks are  subordinate  in right of payment  to  deposits  and to certain  other
indebtedness of such subsidiary  bank. In the event of a bank holding  company's
bankruptcy,  any  commitment  by the bank  holding  company  to a  federal  bank
regulatory  agency to maintain the capital of a subsidiary  bank will be assumed
by the bankruptcy trustee and entitled to a priority of payment.

Capital Adequacy Guidelines for Bank Holding Companies and State Banks

         The various federal bank regulators,  including the Federal Reserve and
the FDIC,  have adopted  risk-based  capital  requirements  for  assessing  bank
holding company and bank capital adequacy. These standards define what qualifies
as capital and  establish  minimum  capital  standards in relation to assets and
off-balance sheet exposures, as adjusted for credit risks.

         The Company's and the Bank's  December 31, 1998 ratios are set forth in
the Annual Report to Shareholders for the year ended December 31, 1998 under the
caption "Management's Discussion and Analysis -- Capital Resources."

         Failure to meet capital  guidelines could subject the Bank to a variety
of enforcement remedies, including termination of deposit insurance by the FDIC.

         The risk-based  capital standards of both the Federal Reserve Board and
the FDIC explicitly identify  concentrations of credit risk and the risk arising
from non-traditional  activities,  as well as an institution's ability to manage
these  risks,  as  important  factors to be taken into  account by the agency in
assessing an institution's overall capital adequacy. The capital guidelines also
provide that an institution's exposure to a decline in the economic value of its
capital due to changes in interest rates be considered by the agency as a factor
in  evaluating a bank's  capital  adequacy.  The Federal  Reserve Board also has
recently issued  additional  capital  guidelines for bank holding companies that
engage in certain trading activities.

Payment of Dividends

         The  Company is a legal  entity  separate  and  distinct  from its bank
subsidiary.  Most of the  revenues of the  Company  are  expected to result from
dividends  paid to the Company by the Bank.  There are statutory and  regulatory
requirements  applicable to the payment of dividends by subsidiary banks as well
as by the Company to its  stockholders.

                                        5

<PAGE>

Certain Transactions by the Company with its Affiliates

         Federal  law  regulates   transactions  between  the  Company  and  its
affiliates,  including  the  amount of the  Bank's  loans to or  investments  in
nonbank affiliates and the amount of advances to third parties collateralized by
securities of an affiliate. Further, a bank holding company and its subsidiaries
are prohibited  from engaging in certain tie-in  arrangements in connection with
any extension of credit, lease or sale of property or furnishing of services.

FDIC Insurance Assessments

         Because the Bank's deposits are insured by the BIF, the Bank is subject
to insurance  assessments imposed by the FDIC. The FDIC equalized the assessment
rates for BIF-insured and SAIF-insured deposits effective January 1, 1997. Thus,
for the semi-annual period beginning January 1, 1997, the assessments imposed on
all FDIC deposits for deposit insurance have an effective rate ranging from 0 to
27 basis points per $100 of insured  deposits,  depending  on the  institution's
capital position and other supervisory  factors.  However,  because  legislation
enacted in 1996 requires that both  SAIF-insured and BIF-insured  deposits pay a
pro rata portion of the interest due on the obligations  issued by the Financing
Corporation  ("FICO"),  the FDIC is currently assessing  BIF-insured deposits an
additional 1.26 basis points per $100 of deposits,  and SAIF-insured deposits an
additional 6.30 basis points per $100 of deposits,  to cover those  obligations.
The FICO assessment is based on deposit balances and will be adjusted  quarterly
to reflect  changes in the  assessment  bases of the  respective  funds based on
quarterly Call Report and Thrift Financial Report submissions.

Regulation of the Bank

         The Bank is also subject to  examination  by the South  Carolina  State
Board. In addition,  the Bank is subject to various other state and federal laws
and  regulations,  including  state usury laws,  laws  relating to  fiduciaries,
consumer credit and laws relating to branch banking.  The Bank's loan operations
are also  subject  to  certain  federal  consumer  credit  laws and  regulations
promulgated   thereunder,   including,   but  not   limited   to:  the   federal
Truth-In-Lending   Act,  governing  disclosures  of  credit  terms  to  consumer
borrowers; the Home Mortgage Disclosure Act, requiring financial institutions to
provide certain information  concerning their mortgage lending; the Equal Credit
Opportunity  Act and the Fair Housing  Act,  prohibiting  discrimination  on the
basis of  certain  prohibited  factors  in  extending  credit;  the Fair  Credit
Reporting  Act,  governing  the use  and  provision  of  information  to  credit
reporting agencies;  the Bank Secrecy Act, dealing with, among other things, the
reporting of certain  currency  transactions;  and the Fair Debt Collection Act,
governing  the manner in which  consumer  debts may be collected  by  collection
agencies.  The deposit  operations  of the Bank are also subject to the Truth in
Savings Act, requiring certain disclosures about rates paid on savings accounts;
the  Expedited  Funds  Availability  Act,  which  deals with  disclosure  of the
availability  of funds  deposited in accounts and the  collection  and return of
checks by banks;  the Right to Financial  Privacy Act,  which  imposes a duty to
maintain  certain   confidentiality   of  consumer  financial  records  and  the
Electronic  Funds Transfer Act and  regulations  promulgated  thereunder,  which
govern  automatic   deposits  to  and  withdrawals  from  deposit  accounts  and
customers'  rights and  liabilities  arising  from the use of  automated  teller
machines and other electronic banking services.

         The  Bank  is  also  subject  to  the  requirements  of  the  Community
Reinvestment  Act (the  "CRA").  The CRA imposes on  financial  institutions  an
affirmative  and  ongoing  obligation  to meet the credit  needs of their  local
communities,  including low- and moderate-income neighborhoods,  consistent with
the safe and sound operation of those institutions. Each financial institution's
actual performance in meeting community credit needs is evaluated as part of the
examination process, and also is considered in evaluating mergers,  acquisitions
and applications to open a branch or facility.

Other Safety and Soundness Regulations

         Prompt  Corrective  Action.  The federal  banking  agencies  have broad
powers under  current  federal law to take prompt  corrective  action to resolve
problems of insured depository institutions.  The extent of these powers depends
upon whether the  institutions in question are "well  capitalized,"  "adequately
capitalized,"    "undercapitalized,"    "significantly    undercapitalized"   or
"critically undercapitalized" (as defined in the regulations).

                                        6

<PAGE>

         A bank that is "undercapitalized"  becomes subject to provisions of the
FDIA restricting payment of capital distributions and management fees; requiring
FDIC to monitor the condition of the bank; requiring submission by the bank of a
capital  restoration  plan;  restricting  the  growth of the  bank's  assets and
requiring  prior  approval  of  certain  expansion  proposals.  A bank  that  is
"significantly undercapitalized" is also subject to restrictions on compensation
paid  to  senior  management  of  the  bank,  and a  bank  that  is  "critically
undercapitalized"  is further  subject to  restrictions on the activities of the
bank and restrictions on payments of subordinated  debt of the bank. The purpose
of these  provisions is to require banks with less than adequate  capital to act
quickly to restore their capital and to have the FDIC move promptly to take over
banks that are unwilling or unable to take such steps.

         Brokered Deposits.  Under current FDIC regulations,  "well capitalized"
banks may accept brokered deposits without restriction, "adequately capitalized"
banks may accept  brokered  deposits  with a waiver  from the FDIC  (subject  to
certain  restrictions on payment of rates), while  "undercapitalized"  banks may
not accept brokered  deposits.  The regulations  provide that the definitions of
"well capitalized", "adequately capitalized" and "undercapitalized" are the same
as the  definitions  adopted by the agencies to implement the prompt  corrective
action (described in the previous paragraph).

Interstate Banking

         In July 1994,  South Carolina  enacted  legislation  which  effectively
provides that,  after September 30, 1996,  out-of-state  bank holding  companies
(including bank holding  companies in the Southern Region,  as defined under the
statute) may acquire  other banks or bank holding  companies  having  offices in
South  Carolina upon the approval of the South Carolina State Board of Financial
Institutions and assuming  compliance with certain other  conditions,  including
that the effect of the transaction  not lessen  competition and that the laws of
the state in which the out-of-state bank holding company filing the applications
has its principal place of business permit South Carolina bank holding companies
to  acquire  banks and bank  holding  companies  in that  state.  Although  such
legislation has increased takeover activity in South Carolina, the Bank does not
believe that such  legislation  will have a material  impact on its  competitive
position. However, no assurance of such fact may be given.

         The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
has increased the ability of bank holding  companies and banks to operate across
state  lines.  Under  Riegle-Neal,   the  existing  restrictions  on  interstate
acquisitions  of banks by bank holding  companies have been repealed,  such that
the Company and any other adequately capitalized bank holding company located in
South Carolina can acquire a bank located in any other state, and a bank holding
company  located  outside South Carolina could acquire any South  Carolina-based
bank,  in  either  case  subject  to  certain   deposit   percentage  and  other
restrictions.  The legislation  also provides that,  unless an individual  state
elects  beforehand  either  (i) to  accelerate  the  effective  date  or (ii) to
prohibit  out-of-state  banks  from  operating  interstate  branches  within its
territory,  on or after June 1, 1997,  adequately  capitalized  and managed bank
holding  companies will be able to consolidate  their multistate bank operations
into a single bank subsidiary and to branch interstate through acquisitions.  De
novo  branching  by an  out-of-state  bank  would  be  permitted  only  if it is
expressly  permitted by the laws of the host state.  The  authority of a bank to
establish  and operate  branches  within a state will  continue to be subject to
applicable state branching laws. South Carolina law was amended,  effective July
1, 1996, to permit such  interstate  branching  but not de novo  branching by an
out-of-state  bank. This legislation has resulted in additional  acquisitions of
South Carolina financial  institutions by out-of-state  financial  institutions.
However,  the Company does not presently  anticipate that such  legislation will
have a material impact on its operations or future plans.

Legislative Proposals

         Other  proposed   legislation  which  could  significantly  affect  the
business of banking has been  introduced  or may be  introduced in Congress from
time to time.  Management  of the Bank cannot  predict the future course of such
legislative proposals or their impact on the Company and the Bank should they be
adopted.

                                        7

<PAGE>

Fiscal and Monetary Policy

         Banking is a business  which depends to a large extent on interest rate
differentials. In general, the difference between the interest paid by a bank on
its deposits and its other  borrowings,  and the interest  received by a bank on
its loans and  securities  holdings,  constitutes  the major portion of a bank's
earnings.  Thus, the earnings and growth of the Company and the Bank are subject
to the influence of economic  conditions  generally,  both domestic and foreign,
and also to the  monetary  and  fiscal  policies  of the  United  States and its
agencies,  particularly the Federal Reserve.  The Federal Reserve  regulates the
supply of money through various means,  including open-market dealings in United
States government  securities,  the discount rate at which banks may borrow from
the Federal Reserve,  and the reserve  requirements on deposits.  The nature and
timing of any changes in such  policies  and their impact on the Company and the
Bank cannot be predicted.

Item 2.  Description of Property

         The Bank owns in fee simple with no major  encumbrances,  real property
at the corner of North Main and Marion Street (124 North Main Street) in Clover,
South  Carolina,  where its offices are  located.  The  building  located on the
property  contains  approximately  7,000 square feet.  Management of the Company
believes the Bank's  facilities  are  suitable  and  adequate for the  Company's
needs.

Item 3.  Legal Proceedings

         The Bank is from  time to time a party  to  various  legal  proceedings
arising in the ordinary  course of business,  but  management of the Bank is not
aware  of  any  pending  or  threatened   litigation  or  unasserted  claims  or
assessments  that are  expected  to  result in  losses,  if any,  that  would be
material to the Bank's business and operations.

         Neither  the Company nor the Bank were  involved as  defendants  in any
litigation at December 31, 1998,  and  Management is not aware of any pending or
threatened litigation,  or unasserted claims or assessments that are expected to
result in losses,  if any, that would be material to the consolidated  financial
statements.

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

          No matters were  submitted for a vote of the security  holders  during
the fourth quarter of 1998.

                                     PART II

Item 5.  Market for Common Equity and Related Stockholder Matters

         The  information  set forth under the caption  "Market for Common Stock
and Dividends" and in Note J to the Company's  Consolidated Financial Statements
under the caption "Restrictions on Subsidiary  Dividends,  Loans or Advances" in
the Annual  Report to  Shareholders  for the year ended  December  31, 1998 (the
"1998 Annual Report") is incorporated  herein by reference.  The information set
forth in Part I,  Item 1 of this  Form  10-KSB  under  the  caption  "Effect  of
Government  Regulation -- Payment of Dividends" is also  incorporated  herein by
reference.

         In connection  with its  acquisition  of all of the Common Stock of the
Bank, in 1998, the Company  exchanged  shares of its Common Stock for all of the
outstanding  stock of the Bank.  Issuance of the  Company's  securities  in this
transaction  was  registered  under the Securities Act of 1933 in a Registration
Statement on Form S-4 (No. 333-47597).

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

        The information set forth under the caption "Management's Discussion and
Analysis" in the 1998 Annual Report is incorporated herein by reference.

Item 7.  Financial Statements

         The Consolidated  Financial  Statements,  including Notes thereto,  set
forth in the 1998 Annual Report are incorporated herein by reference.

                                       8

<PAGE>

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

         There were no disagreements with or changes in accountants.

                                    PART III

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

         (a)(1) Directors of the Company

         The  information  set forth under the captions  "ELECTION OF DIRECTORS"
and "SECTION  16(a)  BENEFICIAL  OWNERSHIP  REPORTING  COMPLIANCE"  in the Proxy
Statement to be used in conjunction with the 1999 Annual Meeting of Shareholders
(the  "Proxy   Statement"),   which  will  be  filed  within  120  days  of  the
Corporation's fiscal year end, is incorporated herein by reference.

         (2) Executive Officers of the Company

         Name (and Officer Since)           Age          Position

         James C. Harris, Jr.               48           President and Chief
         (1987)                                           Executive Officer

         Gwen M. Thompson                   44           Senior Vice President,
         (1987)                                          Cashier, and Secretary

         Frank M. Gadsden                   39           Vice President
         (1989)

         Earnest A. Robertson               54           Vice President
         (1992)

Mr.  Harris is the nephew by  marriage  of two  directors  of the Bank,  Ruby M.
Bennett  and H. Marvin  McCarter.

Item 10.  Executive Compensation

         The information set forth under the caption  "MANAGEMENT  COMPENSATION"
in the Proxy Statement is incorporated herein by reference.

                                       9

<PAGE>

Item 11.  Security Ownership of Certain Beneficial Owners and Management

         The  information  set forth under the caption  "SECURITY  OWNERSHIP  OF
CERTAIN  BENEFICIAL  OWNERS" in the Proxy  Statement is  incorporated  herein by
reference.

Item 12.  Certain Relationships and Related Transactions

         The information  set forth under the caption  "EXTENSIONS OF CREDIT AND
OTHER TRANSACTIONS" in the Proxy Statement is incorporated herein by reference.

Item 13.  Exhibits and Reports on Form 8-K

(a) Exhibit No.(from              Description
    Item 601 of
    Regulation S-B)

         3.1                      Articles  of  Incorporation  (Incorporated  by
                                  reference   to   Exhibits   to    Registrant's
                                  Registration    Statement    on    Form    S-4
                                  (Registration No. 333-47597) (the "Form S-4"))

         3.2                      By-laws (Incorporated by reference Exhibits to
                                  to the Form S-4)

         4                        Specimen Stock certificate (Incorporated by 
                                  reference to Exhibits to the Form S-4)

         10.1                     Clover    Community     Bankshares    Dividend
                                  Reinvestment  Plan  (Incorporated by Reference
                                  to   Registration   Statement   on  Form   S-3
                                  (Registration No. 333-71777))

         13                       Portions of the Annual Report to Shareholders
                                  for the Year Ended December 31, 1998

         21                       Subsidiaries of the registrant

         23                       Consent of Donald G. Jones and Company, P.A.

         27                       Financial data schedule

(b) Report on Form 8-K filed February 4, 1999.

                                       10

<PAGE>

SIGNATURES

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

                              CLOVER COMMUNITY BANKSHARES, INC.

                                   s/James C. Harris, Jr.
Date: March  23, 1999           By:-------------------------------------------
                                   James C. Harris, Jr.
                                   Its President

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

<TABLE>
<CAPTION>
Signature                                   Capacity                                             Date

<S>                                         <C>                                                  <C>
                                            Director                                             March __,1999
-----------------------------
(Ruby M. Bennett)

s/Charles R. Burrell                        Director                                             March 23, 1999
-----------------------------
(Charles R. Burrell)

s/James C. Harris, Jr.                      President, Chief Executive Officer.                  March 23, 1999
-----------------------------               and Director
(James C. Harris, Jr.)        

                                            Chairman and Director                                March __, 1999
-----------------------------
(Herbert Kirsh)

                                            Director                                             March __, 1999
-----------------------------
(H. Marvin McCarter)

s/James H. Owen, Jr.                        Director                                             March 23, 1999
-----------------------------
(James H. Owen, Jr.)

s/Gwen M. Thompson                          Senior Vice President, Chief Financial and           March 23, 1999
-----------------------------                Accounting Officer, Cashier, Secretary
(Gwen M. Thompson)                           and Director

s/William C. Turner                         Director                                             March 23, 1999
-----------------------------
(William C. Turner)
</TABLE>

                                       11

<PAGE>




                                  EXHIBIT INDEX


         3.1                      Articles  of  Incorporation  (Incorporated  by
                                  reference   to   Exhibits   to    Registrant's
                                  Registration    Statement    on    Form    S-4
                                  (Registration No. 333-47597) (the "Form S-4"))

         3.2                      By-laws (Incorporated by reference Exhibits to
                                  to the Form S-4)

         4                        Specimen Stock certificate (Incorporated by 
                                  reference to Exhibits to the Form S-4)

         10.1                     Clover    Community     Bankshares    Dividend
                                  Reinvestment  Plan  (Incorporated by Reference
                                  to   Registration   Statement   on  Form   S-3
                                  (Registration No. 333-71777))

         13                       Portions of the Annual Report to Shareholders
                                  for the Year Ended December 31, 1998

         21                       Subsidiaries of the registrant

         23                       Consent of Donald G. Jones and Company, P.A.

         27                       Financial data schedule





                                       12