##### Table of Contents



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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-QSB

|      |  |                                                                                         
|----- |  | ----------------------------------------------------------------------------------------
|[X]   |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|     
|      |  | For the quarterly period ended June 30, 2002                                            
|     
|[   ] |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|     
|      |  | For the transition period from _____________ to _____________                           

Commission File No. 333-35548

SOUTHERN COMMUNITY BANCORP

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(Exact Name of Small Business Issuer as Specified in its Charter


|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Florida                                                        |  | 59-3619325                          
|                                                               |  |                                     
|(State or
Other Jurisdiction of
Incorporation or Organization) |  | (I.R.S. Employer Identification No.)

250 North Orange Avenue, Orlando, Florida 32801

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(Address of Principal Executive Offices)


(407) 648-1844

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(Issuers telephone number, including area code)


Check whether the issuer: (1) has 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 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 [   ]

As of July 19, 2002, the issuer had 6,693,064 outstanding shares of
common stock, par value $1.00 per share.



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TABLE OF CONTENTS



|                                                                                                                   |                                                                                               |  |  |  |  |  |  | 
|------------------------------------------------------------------------------------------------------------------ | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I FINANCIAL INFORMATION                                                                                      
|                                                                                                                   | Item 1. Financial Statements.                                                                
|Condensed Consolidated Balance Sheets (Unaudited) ($ in thousands, except per share amounts)                      
|Condensed Consolidated Balance Sheet ($ in thousands, except per share amounts)                                   
|Condensed Consolidated Statements of Operations (Unaudited) ($ in thousands, except per share amounts)            
|Condensed Consolidated Statements of Operations (Unaudited) ($ in thousands, except per share amounts)            
|Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) ($ in thousands)                     
|Condensed Consolidated Statements of Cash Flows (Unaudited) ($ in thousands)                                      
|Condensed Consolidated Statements of Cash Flows (Unaudited), Continued ($ in thousands)                           
|Condensed Consolidated Statement of Stockholders Equity (Unaudited) Six Months Ended June 30, 2002 (In thousands)
|Notes to Condensed Consolidated Financial Statements (unaudited)                                                  
|Review by Independent Certified Public Accountants                                                                
|Report on Review by Independent Certified Public Accountants                                                      
|                                                                                                                   | Item 2. Managements Discussion and Analysis of Results of Operations and Financial Condition
|PART II OTHER INFORMATION                                                                                         
|                                                                                                                   | Item 2. Changes in Securities and Use of Proceeds.                                           
|                                                                                                                   | Item 5. Other Information.                                                                   
|                                                                                                                   | Item 6. Exhibits.                                                                            
|SIGNATURES                                                                                                        

SOUTHERN COMMUNITY BANCORP
FORM 10-QSB
June 30, 2002

INDEX

|                                                                                                                                                                 |  |          |    | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------- | -- | 
|                                                                                                                                                                 |  | Page No.
|                                                                                                                                                                 |  |         
|PART I: FINANCIAL INFORMATION                                                                                                                                    |  |          |   
|                                                                                                                                                                
|Item 1. Condensed Consolidated Financial Statements                                                                                                              |  |          | 1 
|                                                                                                                                                                
|Condensed Consolidated
Balance Sheets - June 30, 2002 and 2001
(unaudited) and December 31, 2001                                                                 |  |          | 2 
|                                                                                                                                                                
|Condensed Consolidated Statements of Operations (Unaudited) -
Three Months Ended June 30, 2002 and 2001
Six Months Ended June 30, 2002 and 2001                  |  |          | 3 
|                                                                                                                                                                
|Condensed Consolidated Statements of Comprehensive
Income (Loss) (Unaudited) -
Three Months Ended June 30, 2002 and 2001
Six Months Ended June 30, 2002 and 2001 |  |          | 5 
|                                                                                                                                                                
|Condensed Consolidated Statements of Cash Flows (Unaudited) -
Six Months Ended June 30, 2002 and 2001                                                            |  |          | 6 
|                                                                                                                                                                
|Condensed Consolidated Statement of Stockholders Equity (Unaudited) -
Six Months Ended June 30, 2002                                                            |  |          | 8 
|                                                                                                                                                                
|Notes to Condensed Consolidated Financial Statements (Unaudited)                                                                                                 |  |          | 9 
|                                                                                                                                                                
|Review by Independent Certified Public Accountants                                                                                                               |  |          | 13
|                                                                                                                                                                
|Report on Review by Independent Certified Public Accountants                                                                                                     |  |          | 14
|                                                                                                                                                                
|Item 2. Managements Discussion and Analysis of Results of Operations
and Financial Condition                                                                    |  |          | 15
|                                                                                                                                                                
|                                                                                                                                                                
|PART II: OTHER INFORMATION                                                                                                                                      
|                                                                                                                                                                
|Item 2. Changes in Securities and Use of Proceeds                                                                                                                |  |          | 27
|                                                                                                                                                                
|Item 5. Other Information                                                                                                                                        |  |          | 28
|                                                                                                                                                                
|Item 6. Exhibits and Reports on Form 8-K                                                                                                                         |  |          | 28
|                                                                                                                                                                
|Signatures                                                                                                                                                       |  |          | 29





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##### Table of Contents






PART I
FINANCIAL INFORMATION




Item 1. Financial Statements.

SOUTHERN COMMUNITY BANCORP AND SUBSIDIARIES




Condensed Consolidated Balance Sheets (Unaudited)
($ in thousands, except per share amounts)

|                                                                             |                                                                                                                                     |                                            |         |             |         |      |         |         |         | 
|---------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | ----------- | ------- | ---- | ------- | ------- | ------- | 
|                                                                             |                                                                                                                                     |                                            |         | At June 30,
|                                                                             |                                                                                                                                     |                                            |         |            
|                                                                             |                                                                                                                                     |                                            |         | 2002        |         | 2001
|                                                                             |                                                                                                                                     |                                            |         |             |         |     
|                                                                             | Assets                                                                                                                              |                                            |         |             |         |      |         |         |        
|Cash and due from banks                                                      |                                                                                                                                     | $                                          | 11,604  |             |         |      | 13,476  |        
|Interest-bearing deposits and federal funds sold                             |                                                                                                                                     |                                            | 60,832  |             |         |      | 47,485  |        
|                                                                             |                                                                                                                                     |                                            |         |             |         |      |         |        
|                                                                             | Cash and cash equivalents                                                                                                           |                                            |         | 72,436      |         |      |         | 60,961  |        
|Securities available for sale                                                |                                                                                                                                     |                                            | 52,505  |             |         |      | 22,010  |        
|Loans, net of allowance for loan losses of
$5,190 in 2002 and $3,466 in 2001 |                                                                                                                                     |                                            | 405,818 |             |         |      | 270,181 |        
|Accrued interest receivable                                                  |                                                                                                                                     |                                            | 2,170   |             |         |      | 1,657   |        
|Federal Home Loan Bank stock, at cost                                        |                                                                                                                                     |                                            | 212     |             |         |      | 212     |        
|Premises and equipment, net                                                  |                                                                                                                                     |                                            | 17,653  |             |         |      | 12,410  |        
|Deferred income tax asset                                                    |                                                                                                                                     |                                            | 1,078   |             |         |      | 588     |        
|Bank owned life insurance                                                    |                                                                                                                                     |                                            | 3,945   |             |         |      | 2,659   |        
|Goodwill, net                                                                |                                                                                                                                     |                                            | 971     |             |         |      | 1,038   |        
|Foreclosed assets, net                                                       |                                                                                                                                     |                                            | 207     |             |         |      | 88      |        
|Other assets                                                                 |                                                                                                                                     |                                            | 301     |             |         |      | 514     |        
|                                                                             |                                                                                                                                     |                                            |         |             |         |      |         |        
|                                                                             | Total assets                                                                                                                        |                                            | $       | 557,296     |         |      |         | 372,318 |        
|                                                                             |                                                                                                                                     |                                            |         |             |         |      |         |        
|Liabilities and Stockholders Equity                                         |                                                                                                                                     |                                            |         |             |         |      |         |        
|Liabilities:                                                                 |                                                                                                                                     |                                            |         |             |         |      |         |        
|                                                                             | Non-interest-bearing demand deposits                                                                                                |                                            | $       | 48,103      |         |      |         | 30,439  |        
|                                                                             | Savings, money-market and NOW deposits                                                                                              |                                            |         | 197,417     |         |      |         | 145,796 |        
|                                                                             | Time deposits                                                                                                                       |                                            |         | 246,910     |         |      |         | 147,467 |        
|                                                                             |                                                                                                                                     |                                            |         |             |         |      |         |        
|                                                                             |                                                                                                                                     | Total deposits                             |         |             | 492,430 |      |         |         | 323,702 | 
|                                                                             | Other borrowings                                                                                                                    |                                            |         | 2,691       |         |      |         | 2,069   |        
|                                                                             | Official checks                                                                                                                     |                                            |         | 3,406       |         |      |         | 2,637   |        
|                                                                             | Other liabilities                                                                                                                   |                                            |         | 2,433       |         |      |         | 1,447   |        
|                                                                             |                                                                                                                                     |                                            |         |             |         |      |         |        
|                                                                             |                                                                                                                                     | Total liabilities                          |         |             | 500,960 |      |         |         | 329,855 | 
|                                                                             |                                                                                                                                     |                                            |         |             |         |      |         |        
|Stockholders equity:                                                        |                                                                                                                                     |                                            |         |             |         |      |         |        
|                                                                             | Common stock, $1.00 par value, 10,000,000 shares
authorized, 6,693,064 and 2,691,868 shares issued
and outstanding in 2002 and 2001 |                                            |         | 6,693       |         |      |         | 2,692   |        
|                                                                             | Additional paid-in capital                                                                                                          |                                            |         | 49,654      |         |      |         | 40,341  |        
|                                                                             | Accumulated deficit                                                                                                                 |                                            |         | (389        | )       |      |         | (711    | )      
|                                                                             | Accumulated other comprehensive income                                                                                              |                                            |         | 378         |         |      |         | 141     |        
|                                                                             |                                                                                                                                     |                                            |         |             |         |      |         |        
|                                                                             |                                                                                                                                     | Total stockholders equity                 |         |             | 56,336  |      |         |         | 42,463  | 
|                                                                             |                                                                                                                                     |                                            |         |             |         |      |         |        
|                                                                             |                                                                                                                                     | Total liabilities and stockholders equity |         | $           | 557,296 |      |         |         | 372,318 | 
|                                                                             |                                                                                                                                     |                                            |         |             |         |      |         |        

See Accompanying Notes to Condensed Consolidated Financial Statements.

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##### Table of Contents



SOUTHERN COMMUNITY BANCORP AND SUBSIDIARIES




Condensed Consolidated Balance Sheet
($ in thousands, except per share amounts)

|                                                  |                                                                                                      |                                            |         |              |         | 
|------------------------------------------------- | ---------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | ------------ | ------- | 
|                                                  |                                                                                                      |                                            |         | At          
|                                                  |                                                                                                      |                                            |         | December 31,
|                                                  |                                                                                                      |                                            |         | 2001        
|                                                  |                                                                                                      |                                            |         |             
|                                                  | Assets                                                                                               |                                            |         |              |        
|Cash and due from banks                           |                                                                                                      | $                                          | 14,625  |             
|Federal funds sold                                |                                                                                                      |                                            | 15,504  |             
|                                                  |                                                                                                      |                                            |         |             
|                                                  |                                                                                                      | Cash and cash equivalents                  |         |              | 30,129  | 
|Securities available for sale                     |                                                                                                      |                                            | 41,472  |             
|Loans, net of allowance for loan losses of $4,457 |                                                                                                      |                                            | 352,161 |             
|Accrued interest receivable                       |                                                                                                      |                                            | 2,083   |             
|Federal Home Loan Bank stock, at cost             |                                                                                                      |                                            | 212     |             
|Premises and equipment, net                       |                                                                                                      |                                            | 16,229  |             
|Deferred income tax asset                         |                                                                                                      |                                            | 1,236   |             
|Bank owned life insurance                         |                                                                                                      |                                            | 3,445   |             
|Goodwill, net                                     |                                                                                                      |                                            | 971     |             
|Foreclosed assets, net                            |                                                                                                      |                                            | 907     |             
|Other assets                                      |                                                                                                      |                                            | 282     |             
|                                                  |                                                                                                      |                                            |         |             
|                                                  |                                                                                                      | Total assets                               |         | $            | 449,127 | 
|                                                  |                                                                                                      |                                            |         |             
|                                                  | Liabilities and Stockholders Equity                                                                 |                                            |         |              |        
|Liabilities:                                      |                                                                                                      |                                            |         |             
|                                                  | Non-interest-bearing demand deposits                                                                 |                                            | $       | 37,397       |        
|                                                  | Money-market deposits                                                                                |                                            |         | 37,379       |        
|                                                  | Savings and NOW deposits                                                                             |                                            |         | 140,354      |        
|                                                  | Time deposits                                                                                        |                                            |         | 184,843      |        
|                                                  |                                                                                                      |                                            |         |             
|                                                  |                                                                                                      | Total deposits                             |         |              | 399,973 | 
|                                                  | Other borrowings                                                                                     |                                            |         | 1,658        |        
|                                                  | Official checks                                                                                      |                                            |         | 3,308        |        
|                                                  | Other liabilities                                                                                    |                                            |         | 1,840        |        
|                                                  |                                                                                                      |                                            |         |             
|                                                  |                                                                                                      | Total liabilities                          |         |              | 406,779 | 
|                                                  |                                                                                                      |                                            |         |             
|Stockholders equity:                             |                                                                                                      |                                            |         |             
|                                                  | Common stock, $1.00 par value, 10,000,000 shares
authorized, 5,460,202 shares issued and outstanding |                                            |         | 5,460        |        
|                                                  | Additional paid-in capital                                                                           |                                            |         | 38,206       |        
|                                                  | Accumulated deficit                                                                                  |                                            |         | (1,406       | )      
|                                                  | Accumulated other comprehensive income                                                               |                                            |         | 88           |        
|                                                  |                                                                                                      |                                            |         |             
|                                                  |                                                                                                      | Total stockholders equity                 |         |              | 42,348  | 
|                                                  |                                                                                                      |                                            |         |             
|                                                  |                                                                                                      | Total liabilities and stockholders equity |         | $            | 449,127 | 
|                                                  |                                                                                                      |                                            |         |             

See Accompanying Notes to Condensed Consolidated Financial Statements.

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SOUTHERN COMMUNITY BANCORP AND SUBSIDIARIES




Condensed Consolidated Statements of Operations (Unaudited)
($ in thousands, except per share amounts)

|                                                                 |                                               |                           |           |                    |       |      |           |       |       | 
|---------------------------------------------------------------- | --------------------------------------------- | ------------------------- | --------- | ------------------ | ----- | ---- | --------- | ----- | ----- | 
|                                                                 |                                               |                           |           | Three Months Ended
|                                                                 |                                               |                           |           | June 30,          
|                                                                 |                                               |                           |           |                   
|                                                                 |                                               |                           |           | 2002               |       | 2001
|                                                                 |                                               |                           |           |                    |       |     
|Interest income:                                                 |                                               |                           |           |                    |       |      |           |      
|                                                                 | Loans                                         |                           | $         | 7,321              |       |      |           | 5,037 |      
|                                                                 | Securities available for sale                 |                           |           | 644                |       |      |           | 315   |      
|                                                                 | Other interest-earning assets                 |                           |           | 195                |       |      |           | 515   |      
|                                                                 |                                               |                           |           |                    |       |      |           |      
|                                                                 |                                               | Total interest income     |           |                    | 8,160 |      |           |       | 5,867 | 
|                                                                 |                                               |                           |           |                    |       |      |           |      
|Interest expense:                                                |                                               |                           |           |                    |       |      |           |      
|                                                                 | Deposits                                      |                           |           | 3,565              |       |      |           | 3,475 |      
|                                                                 | Other borrowings                              |                           |           | 8                  |       |      |           | 11    |      
|                                                                 |                                               |                           |           |                    |       |      |           |      
|                                                                 |                                               | Total interest expense    |           |                    | 3,573 |      |           |       | 3,486 | 
|                                                                 |                                               |                           |           |                    |       |      |           |      
|Net interest income                                              |                                               |                           | 4,587     |                    |       |      | 2,381     |      
|                                                                 | Provision for loan losses                     |                           |           | 441                |       |      |           | 661   |      
|                                                                 |                                               |                           |           |                    |       |      |           |      
|Net interest income after provision for loan losses              |                                               |                           | 4,146     |                    |       |      | 1,720     |      
|                                                                 |                                               |                           |           |                    |       |      |           |      
|Noninterest income:                                              |                                               |                           |           |                    |       |      |           |      
|                                                                 | Service charges on deposit accounts           |                           |           | 116                |       |      |           | 95    |      
|                                                                 | Other service charges and fees                |                           |           | 391                |       |      |           | 148   |      
|                                                                 | Earnings on bank owned life insurance         |                           |           | 48                 |       |      |           | 39    |      
|                                                                 | Gain on sale of securities available for sale |                           |           | 89                 |       |      |           | 63    |      
|                                                                 |                                               |                           |           |                    |       |      |           |      
|                                                                 |                                               | Total noninterest income  |           |                    | 644   |      |           |       | 345   | 
|                                                                 |                                               |                           |           |                    |       |      |           |      
|Noninterest expense:                                             |                                               |                           |           |                    |       |      |           |      
|                                                                 | Salaries and employee benefits                |                           |           | 1,902              |       |      |           | 1,223 |      
|                                                                 | Occupancy expense                             |                           |           | 721                |       |      |           | 457   |      
|                                                                 | Data processing                               |                           |           | 247                |       |      |           | 181   |      
|                                                                 | Printing and office supplies                  |                           |           | 80                 |       |      |           | 78    |      
|                                                                 | Marketing and advertising                     |                           |           | 107                |       |      |           | 51    |      
|                                                                 | Professional fees                             |                           |           | 118                |       |      |           | 85    |      
|                                                                 | Preopening expense                            |                           |           | 65                 |       |      |           |      |      
|                                                                 | Other                                         |                           |           | 369                |       |      |           | 300   |      
|                                                                 |                                               |                           |           |                    |       |      |           |      
|                                                                 |                                               | Total noninterest expense |           |                    | 3,609 |      |           |       | 2,375 | 
|                                                                 |                                               |                           |           |                    |       |      |           |      
|Earnings (loss) before income taxes                              |                                               |                           | 1,181     |                    |       |      | (310      | )    
|                                                                 | Income taxes (benefit)                        |                           |           | 431                |       |      |           | (118  | )    
|                                                                 |                                               |                           |           |                    |       |      |           |      
|Net earnings (loss)                                              |                                               | $                         | 750       |                    |       |      | (192      | )    
|                                                                 |                                               |                           |           |                    |       |      |           |      
|Basic earnings (loss) per share                                  |                                               | $                         | .13       |                    |       |      | (.04      | )    
|                                                                 |                                               |                           |           |                    |       |      |           |      
|Weighted-average number of common shares outstanding for basic   |                                               |                           | 5,580,263 |                    |       |      | 4,464,320 |      
|                                                                 |                                               |                           |           |                    |       |      |           |      
|Diluted earnings (loss) per share                                |                                               | $                         | .13       |                    |       |      | (.04      | )    
|                                                                 |                                               |                           |           |                    |       |      |           |      
|Weighted-average number of common shares outstanding for diluted |                                               |                           | 5,802,810 |                    |       |      | 4,464,320 |      
|                                                                 |                                               |                           |           |                    |       |      |           |      
|Dividends per share                                              |                                               | $                         |          |                    |       |      |          |      
|                                                                 |                                               |                           |           |                    |       |      |           |      

See Accompanying Notes to Condensed Consolidated Financial Statements.

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##### Table of Contents



SOUTHERN COMMUNITY BANCORP AND SUBSIDIARIES




Condensed Consolidated Statements of Operations (Unaudited)
($ in thousands, except per share amounts)

|                                                                 |                                               |                           |           |                  |        |      |           |       |        | 
|---------------------------------------------------------------- | --------------------------------------------- | ------------------------- | --------- | ---------------- | ------ | ---- | --------- | ----- | ------ | 
|                                                                 |                                               |                           |           | Six Months Ended
|                                                                 |                                               |                           |           | June 30,        
|                                                                 |                                               |                           |           |                 
|                                                                 |                                               |                           |           | 2002             |        | 2001
|                                                                 |                                               |                           |           |                  |        |     
|Interest income:                                                 |                                               |                           |           |                  |        |      |           |      
|                                                                 | Loans                                         |                           | $         | 14,014           |        |      |           | 9,069 |       
|                                                                 | Securities available for sale                 |                           |           | 1,107            |        |      |           | 627   |       
|                                                                 | Other interest-earning assets                 |                           |           | 331              |        |      |           | 1,015 |       
|                                                                 |                                               |                           |           |                  |        |      |           |      
|                                                                 |                                               | Total interest income     |           |                  | 15,452 |      |           |       | 10,711 | 
|                                                                 |                                               |                           |           |                  |        |      |           |      
|Interest expense:                                                |                                               |                           |           |                  |        |      |           |      
|                                                                 | Deposits                                      |                           |           | 6,955            |        |      |           | 6,200 |       
|                                                                 | Other borrowings                              |                           |           | 23               |        |      |           | 11    |       
|                                                                 |                                               |                           |           |                  |        |      |           |      
|                                                                 |                                               | Total interest expense    |           |                  | 6,978  |      |           |       | 6,211  | 
|                                                                 |                                               |                           |           |                  |        |      |           |      
|Net interest income                                              |                                               |                           | 8,474     |                  |        |      | 4,500     |      
|                                                                 | Provision for loan losses                     |                           |           | 846              |        |      |           | 1,145 |       
|                                                                 |                                               |                           |           |                  |        |      |           |      
|Net interest income after provision for loan losses              |                                               |                           | 7,628     |                  |        |      | 3,355     |      
|                                                                 |                                               |                           |           |                  |        |      |           |      
|Noninterest income:                                              |                                               |                           |           |                  |        |      |           |      
|                                                                 | Service charges on deposit accounts           |                           |           | 236              |        |      |           | 168   |       
|                                                                 | Other service charges and fees                |                           |           | 667              |        |      |           | 210   |       
|                                                                 | Earnings on bank owned life insurance         |                           |           | 95               |        |      |           | 78    |       
|                                                                 | Gain on sale of securities available for sale |                           |           | 122              |        |      |           | 459   |       
|                                                                 |                                               |                           |           |                  |        |      |           |      
|                                                                 |                                               | Total noninterest income  |           |                  | 1,120  |      |           |       | 915    | 
|                                                                 |                                               |                           |           |                  |        |      |           |      
|Noninterest expense:                                             |                                               |                           |           |                  |        |      |           |      
|                                                                 | Salaries and employee benefits                |                           |           | 3,723            |        |      |           | 2,101 |       
|                                                                 | Occupancy expense                             |                           |           | 1,454            |        |      |           | 782   |       
|                                                                 | Data processing                               |                           |           | 484              |        |      |           | 289   |       
|                                                                 | Printing and office supplies                  |                           |           | 168              |        |      |           | 140   |       
|                                                                 | Marketing and advertising                     |                           |           | 227              |        |      |           | 115   |       
|                                                                 | Professional fees                             |                           |           | 222              |        |      |           | 155   |       
|                                                                 | Preopening expense                            |                           |           | 131              |        |      |           |      |       
|                                                                 | Other                                         |                           |           | 734              |        |      |           | 509   |       
|                                                                 |                                               |                           |           |                  |        |      |           |      
|                                                                 |                                               | Total noninterest expense |           |                  | 7,143  |      |           |       | 4,091  | 
|                                                                 |                                               |                           |           |                  |        |      |           |      
|Earnings before income taxes                                     |                                               |                           | 1,605     |                  |        |      | 179       |      
|                                                                 | Income taxes                                  |                           |           | 588              |        |      |           | 65    |       
|                                                                 |                                               |                           |           |                  |        |      |           |      
|Net earnings                                                     |                                               | $                         | 1,017     |                  |        |      | 114       |      
|                                                                 |                                               |                           |           |                  |        |      |           |      
|Basic earnings per share                                         |                                               | $                         | .18       |                  |        |      | .03       |      
|                                                                 |                                               |                           |           |                  |        |      |           |      
|Weighted-average number of common shares outstanding for basic   |                                               |                           | 5,533,846 |                  |        |      | 3,986,680 |      
|                                                                 |                                               |                           |           |                  |        |      |           |      
|Diluted earnings per share                                       |                                               | $                         | .18       |                  |        |      | .03       |      
|                                                                 |                                               |                           |           |                  |        |      |           |      
|Weighted-average number of common shares outstanding for diluted |                                               |                           | 5,756,678 |                  |        |      | 4,021,594 |      
|                                                                 |                                               |                           |           |                  |        |      |           |      
|Dividends per share                                              |                                               | $                         |          |                  |        | $    |          |      
|                                                                 |                                               |                           |           |                  |        |      |           |      

See Accompanying Notes to Condensed Consolidated Financial Statements.

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SOUTHERN COMMUNITY BANCORP AND SUBSIDIARIES




Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
($ in thousands)

|                                                                                  |  |                    |       |                  |  |      |      |      |  |  |       |  |  |  |      |  
|--------------------------------------------------------------------------------- |  | ------------------ | ----- | ---------------- |  | ---- | ---- | ---- |  |  | ----- |  |  |  | ---- | -
|                                                                                  |  | Three Months Ended |       | Six Months Ended
|                                                                                  |  | June 30,           |       | June 30,        
|                                                                                  |  |                    |       |                 
|                                                                                  |  | 2002               |       | 2001             |  | 2002 |      | 2001
|                                                                                  |  |                    |       |                  |  |      |      |     
|Net earnings (loss)                                                               |  | $                  | 750   |                  |  |      | (192 | )    |  |  | 1,017 |  |  |  | 114  |  
|Net change in unrealized gain (loss) on securities
available for sale, net of tax |  |                    | 580   |                  |  |      | (53  | )    |  |  | 290   |  |  |  | (142 | )
|                                                                                  |  |                    |       |                  |  |      |      |      |  |  |       |  |  |  |      |  
|Comprehensive income (loss)                                                       |  | $                  | 1,330 |                  |  |      | (245 | )    |  |  | 1,307 |  |  |  | (28  | )
|                                                                                  |  |                    |       |                  |  |      |      |      |  |  |       |  |  |  |      |  

See Accompanying Notes to Condensed Consolidated Financial Statements.

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SOUTHERN COMMUNITY BANCORP AND SUBSIDIARIES




Condensed Consolidated Statements of Cash Flows (Unaudited)
($ in thousands)

|                                                 |                                                                                           |                                                          |                                           |         |                  |         |        |         |       |         |  
|------------------------------------------------ | ----------------------------------------------------------------------------------------- | -------------------------------------------------------- | ----------------------------------------- | ------- | ---------------- | ------- | ------ | ------- | ----- | ------- | -
|                                                 |                                                                                           |                                                          |                                           |         | Six Months Ended
|                                                 |                                                                                           |                                                          |                                           |         | June 30,        
|                                                 |                                                                                           |                                                          |                                           |         |                 
|                                                 |                                                                                           |                                                          |                                           |         | 2002             |         | 2001  
|                                                 |                                                                                           |                                                          |                                           |         |                  |         |       
|Cash flows from operating activities:            |                                                                                           |                                                          |                                           |         |                  |         |        |        
|Net earnings                                     |                                                                                           | $                                                        | 1,017                                     |         |                  |         | 114    |        
|                                                 | Adjustments to reconcile net earnings to net cash
provided by operating activities:       |                                                          |                                           |         |                  |         |        |         |      
|                                                 |                                                                                           | Provision for loan losses                                |                                           |         | 846              |         |        |         | 1,145 |        
|                                                 |                                                                                           | Depreciation and amortization                            |                                           |         | 863              |         |        |         | 304   |        
|                                                 |                                                                                           | Gain on sale of securities available for sale            |                                           |         | (122             | )       |        |         | (459  | )      
|                                                 |                                                                                           | Provision for deferred income taxes                      |                                           |         |                 |         |        |         | (129  | )      
|                                                 |                                                                                           | Net amortization of premiums and discounts on securities |                                           |         | (12              | )       |        |         | 6     |        
|                                                 |                                                                                           | Net amortization of deferred loan fees and costs         |                                           |         | (468             | )       |        |         | (72   | )      
|                                                 |                                                                                           | Common stock issued as compensation                      |                                           |         | 143              |         |        |         | 11    |        
|                                                 |                                                                                           | Earnings on bank owned life insurance                    |                                           |         | (95              | )       |        |         | (78   | )      
|                                                 |                                                                                           | Increase in accrued interest receivable                  |                                           |         | (87              | )       |        |         | (233  | )      
|                                                 |                                                                                           | Increase in other assets                                 |                                           |         | (19              | )       |        |         | (279  | )      
|                                                 |                                                                                           | Increase in official checks                              |                                           |         | 98               |         |        |         | 1,063 |        
|                                                 |                                                                                           | Increase in accrued other liabilities                    |                                           |         | 593              |         |        |         | 328   |        
|                                                 |                                                                                           |                                                          |                                           |         |                  |         |        |        
|                                                 |                                                                                           |                                                          | Net cash provided by operating activities |         |                  | 2,757   |        |         |       | 1,721   |  
|                                                 |                                                                                           |                                                          |                                           |         |                  |         |        |        
|Cash flows from investing activities:            |                                                                                           |                                                          |                                           |         |                  |         |        |        
|                                                 | Calls and repayments of securities available for sale                                     |                                                          |                                           | 10,888  |                  |         |        | 11,934  |      
|                                                 | Purchases of securities available for sale                                                |                                                          |                                           | (44,586 | )                |         |        | (23,239 | )    
|                                                 | Proceeds from sale of securities available for sale                                       |                                                          |                                           | 23,247  |                  |         |        | 12,165  |      
|                                                 | Net increase in loans                                                                     |                                                          |                                           | (53,522 | )                |         |        | (77,868 | )    
|                                                 | Purchases of premises and equipment                                                       |                                                          |                                           | (2,287  | )                |         |        | (2,170  | )    
|                                                 | Net proceeds from sales of foreclosed assets                                              |                                                          |                                           | 187     |                  |         |        |        |      
|                                                 | Purchase of bank owned life insurance                                                     |                                                          |                                           | (405    | )                |         |        |        |      
|                                                 | Net proceeds from sale of premises and equipment                                          |                                                          |                                           |        |                  |         |        | 1,215   |      
|                                                 | Cash and cash equivalents acquired in connection with merger with Peninsula
Bancorp, Inc. |                                                          |                                           |        |                  |         |        | 12,127  |      
|                                                 |                                                                                           |                                                          |                                           |         |                  |         |        |        
|                                                 |                                                                                           |                                                          | Net cash used in investing activities     |         |                  | (66,478 | )      |         |       | (65,836 | )
|                                                 |                                                                                           |                                                          |                                           |         |                  |         |        |        
|Cash flows from financing activities:            |                                                                                           |                                                          |                                           |         |                  |         |        |        
|                                                 | Net increase in deposits                                                                  |                                                          |                                           | 92,457  |                  |         |        | 91,317  |      
|                                                 | Net increase in other borrowings                                                          |                                                          |                                           | 1,033   |                  |         |        | 612     |      
|                                                 | Proceeds from issuance of common stock, net                                               |                                                          |                                           | 12,538  |                  |         |        | 5,834   |      
|                                                 |                                                                                           |                                                          |                                           |         |                  |         |        |        
|                                                 |                                                                                           |                                                          | Net cash provided by financing activities |         |                  | 106,028 |        |         |       | 97,763  |  
|                                                 |                                                                                           |                                                          |                                           |         |                  |         |        |        
|Net increase in cash and cash equivalents        |                                                                                           |                                                          | 42,307                                    |         |                  |         | 33,648 |        
|Cash and cash equivalents at beginning of period |                                                                                           |                                                          | 30,129                                    |         |                  |         | 27,313 |        
|                                                 |                                                                                           |                                                          |                                           |         |                  |         |        |        
|Cash and cash equivalents at end of period       |                                                                                           | $                                                        | 72,436                                    |         |                  |         | 60,961 |        
|                                                 |                                                                                           |                                                          |                                           |         |                  |         |        |        

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SOUTHERN COMMUNITY BANCORP AND SUBSIDIARIES




Condensed Consolidated Statements of Cash Flows (Unaudited), Continued
($ in thousands)

|                                                   |                                                                                                 |                                                                                                                              |                                        |   |                  |  |      |  |       |        | 
|-------------------------------------------------- | ----------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------- | -------------------------------------- | - | ---------------- |  | ---- |  | ----- | ------ | 
|                                                   |                                                                                                 |                                                                                                                              |                                        |   | Six Months Ended
|                                                   |                                                                                                 |                                                                                                                              |                                        |   | June 30,        
|                                                   |                                                                                                 |                                                                                                                              |                                        |   |                 
|                                                   |                                                                                                 |                                                                                                                              |                                        |   | 2002             |  | 2001
|                                                   |                                                                                                 |                                                                                                                              |                                        |   |                  |  |     
|Supplemental disclosures of cash flow information: |                                                                                                 |                                                                                                                              |                                        |   |                  |  |      | 
|                                                   | Cash paid during the period
for:                                                                |                                                                                                                              |                                        |   |                  |  |      |  |      
|                                                   |                                                                                                 | Interest                                                                                                                     |                                        | $ | 7,119            |  |      |  | 6,048 |       
|                                                   |                                                                                                 |                                                                                                                              |                                        |   |                  |  |      | 
|                                                   |                                                                                                 | Income taxes                                                                                                                 |                                        | $ | 490              |  |      |  |      |       
|                                                   |                                                                                                 |                                                                                                                              |                                        |   |                  |  |      | 
|                                                   | Noncash financing and investing activities:                                                     |                                                                                                                              |                                        |   |                  |  |      |  |      
|                                                   |                                                                                                 | Change in accumulated other comprehensive income (loss), unrealized gain
(loss) on securities available for sale, net of tax |                                        | $ | 290              |  |      |  | (142  | )     
|                                                   |                                                                                                 |                                                                                                                              |                                        |   |                  |  |      | 
|                                                   |                                                                                                 | Transfer of loans to foreclosed assets                                                                                       |                                        | $ | 207              |  |      |  | 88    |       
|                                                   |                                                                                                 |                                                                                                                              |                                        |   |                  |  |      | 
|                                                   |                                                                                                 | Loans originated on sales of foreclosed assets                                                                               |                                        | $ | 720              |  |      |  |      |       
|                                                   |                                                                                                 |                                                                                                                              |                                        |   |                  |  |      | 
|                                                   | Assets and liabilities acquired in connection with merger with Peninsula
Bancorp, Inc. in 2001: |                                                                                                                              |                                        |   |                  |  |      |  |      
|                                                   |                                                                                                 |                                                                                                                              | Securities available for sale          |   |                  |  |      |  | $     | 3,890  | 
|                                                   |                                                                                                 |                                                                                                                              |                                        |   |                  |  |      | 
|                                                   |                                                                                                 |                                                                                                                              | Loans, net                             |   |                  |  |      |  | $     | 42,740 | 
|                                                   |                                                                                                 |                                                                                                                              |                                        |   |                  |  |      | 
|                                                   |                                                                                                 |                                                                                                                              | Premises and equipment                 |   |                  |  |      |  | $     | 2,054  | 
|                                                   |                                                                                                 |                                                                                                                              |                                        |   |                  |  |      | 
|                                                   |                                                                                                 |                                                                                                                              | Deposits                               |   |                  |  |      |  | $     | 50,160 | 
|                                                   |                                                                                                 |                                                                                                                              |                                        |   |                  |  |      | 
|                                                   |                                                                                                 |                                                                                                                              | Other borrowings                       |   |                  |  |      |  | $     | 1,457  | 
|                                                   |                                                                                                 |                                                                                                                              |                                        |   |                  |  |      | 
|                                                   |                                                                                                 |                                                                                                                              | Other assets, net of other liabilities |   |                  |  |      |  | $     | 54     | 
|                                                   |                                                                                                 |                                                                                                                              |                                        |   |                  |  |      | 
|                                                   |                                                                                                 |                                                                                                                              | Goodwill                               |   |                  |  |      |  | $     | 1,046  | 
|                                                   |                                                                                                 |                                                                                                                              |                                        |   |                  |  |      | 
|                                                   |                                                                                                 |                                                                                                                              | Common stock issued                    |   |                  |  |      |  | $     | 10,295 | 
|                                                   |                                                                                                 |                                                                                                                              |                                        |   |                  |  |      | 

See Accompanying Notes to Condensed Consolidated Financial Statements.

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SOUTHERN COMMUNITY BANCORP AND SUBSIDIARIES




Condensed Consolidated Statement of Stockholders Equity (Unaudited)
Six Months Ended June 30, 2002
(In thousands)

|                                                                                                           |  |        |       |         |  |             |        |               |  |               |        |       |  |             |     |  |  |  |        | 
|---------------------------------------------------------------------------------------------------------- |  | ------ | ----- | ------- |  | ----------- | ------ | ------------- |  | ------------- | ------ | ----- |  | ----------- | --- |  |  |  | ------ | 
|                                                                                                           |  |        |       |         |  |             |        |               |  |               |        |       |  | Accumulated |     |  |  | 
|                                                                                                           |  |        |       |         |  | Additional  |        |               |  |               |        | Other |  | Total      
|                                                                                                           |  | Common |       | Paid-in |  | Accumulated |        | Comprehensive |  | Stockholders'
|                                                                                                           |  | Stock  |       | Capital |  | Deficit     |        | Income        |  | Equity       
|                                                                                                           |  |        |       |         |  |             |        |               |  |              
|Balance at December 31, 2001                                                                               |  | $      | 5,460 |         |  |             | 38,206 |               |  |               | (1,406 | )     |  |             | 88  |  |  |  | 42,348 | 
|Net earnings (unaudited)                                                                                   |  |        |      |         |  |             |       |               |  |               | 1,017  |       |  |             |    |  |  |  | 1,017  | 
|Net change in unrealized gain on
securities available for sale,
net of tax of $158 (unaudited)             |  |        |      |         |  |             |       |               |  |               |       |       |  |             | 290 |  |  |  | 290    | 
|Common stock issued as compensation
(unaudited)                                                            |  |        | 18    |         |  |             | 125    |               |  |               |       |       |  |             |    |  |  |  | 143    | 
|Sale of common stock in connection
with 401(k) Profit Sharing Plan
(unaudited)                             |  |        | 35    |         |  |             | 250    |               |  |               |       |       |  |             |    |  |  |  | 285    | 
|Sale of common stock in connection with
Employee Stock Purchase Plan
(unaudited)                           |  |        | 15    |         |  |             | 112    |               |  |               |       |       |  |             |    |  |  |  | 127    | 
|Sale of common stock (unaudited)                                                                           |  |        | 14    |         |  |             | 109    |               |  |               |       |       |  |             |    |  |  |  | 123    | 
|Sale of common stock in connection with
private placement offering, less
offering costs of $83
(unaudited) |  |        | 1,151 |         |  |             | 10,852 |               |  |               |       |       |  |             |    |  |  |  | 12,003 | 
|                                                                                                           |  |        |       |         |  |             |        |               |  |               |        |       |  |             |     |  |  |  |        | 
|Balance at June 30, 2002 (unaudited)                                                                       |  | $      | 6,693 |         |  |             | 49,654 |               |  |               | (389   | )     |  |             | 378 |  |  |  | 56,336 | 
|                                                                                                           |  |        |       |         |  |             |        |               |  |               |        |       |  |             |     |  |  |  |        | 

See Accompanying Notes to Condensed Consolidated Financial Statements.

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SOUTHERN COMMUNITY BANCORP AND SUBSIDIARIES




Notes to Condensed Consolidated Financial Statements (unaudited)

1.     General.In the opinion of the management of Southern Community
Bancorp and its subsidiaries (the Company or Southern), the accompanying
condensed consolidated financial statements contain all adjustments (consisting
principally of normal recurring accruals) necessary to present fairly the
financial position at June 30, 2002 and 2001, and the results of operations for
the three- and six-month periods then ended and cash flows for the six-month
periods ended June 30, 2002 and 2001. The results of operations and other data
for the three and six months ended June 30, 2002 are not necessarily indicative
of the results to be expected for the year ending December 31, 2002.

Southern Community Bancorp (the Holding Company) owns all of the
outstanding common stock of Southern Community Bank (the Orlando Bank),
Southern Community Bank of Southwest Florida (the Bonita Springs Bank) and
Southern Community Bank, Atlantic (the Daytona Beach Bank). The banks are
state chartered commercial banks and their deposits are insured by the Federal
Deposit Insurance Corporation (FDIC) through the Bank Insurance Fund. The
Daytona Beach Bank was acquired by the Company on April 30, 2001.

The Orlando Bank owns 100% of the outstanding common stock of Southern
Community Insurance Agency, Inc. (the Insurance Agency). The Insurance Agency
refers customers of the Orlando Bank to certain insurance agencies for the
purchase of insurance products. In January 2001, the Holding Company acquired a
50% equity interest in Southern Community Bank Mortgage LLC (the Mortgage
Company). The Mortgage Company originates, processes and closes residential
mortgage loans in central Florida.

2.     Loan Impairment and Losses.The Company performs a quarterly loan
loss analysis to identify impaired loans as defined by SFAS 114 and 118. The
Companys impaired loans were as follows (in thousands):

|                                      |  |             |       |                 |  |      |       |   |  |  |       |  
|------------------------------------- |  | ----------- | ----- | --------------- |  | ---- | ----- | - |  |  | ----- | -
|                                      |  | At June 30, |       |                 |  |     
|                                      |  |             |       | At December 31,
|                                      |  | 2002        |       | 2001            |  | 2001
|                                      |  |             |       |                 |  |     
|Gross loans with no related allowance |  | $           |      |                 |  |      |      |   |  |  |      |  
|Gross loans with related allowance    |  |             | 2,247 |                 |  |      | 2,417 |   |  |  | 2,307 |  
|Less: Allowance on the loans          |  |             | (225  | )               |  |      | (121  | ) |  |  | (186  | )
|                                      |  |             |       |                 |  |      |       |   |  |  |       |  
|Net investment in impaired loans      |  | $           | 2,022 |                 |  |      | 2,296 |   |  |  | 2,121 |  
|                                      |  |             |       |                 |  |      |       |   |  |  |       |  

The average net investment in collateral dependent impaired loans and
interest income recognized and received on these loans were as follows (in
thousands):

|                                             |  |                    |       |                  |  |      |       |      |  |  |       |  |  |  |       | 
|-------------------------------------------- |  | ------------------ | ----- | ---------------- |  | ---- | ----- | ---- |  |  | ----- |  |  |  | ----- | 
|                                             |  | Three Months Ended |       | Six Months Ended
|                                             |  | June 30,           |       | June 30,        
|                                             |  |                    |       |                 
|                                             |  | 2002               |       | 2001             |  | 2002 |       | 2001
|                                             |  |                    |       |                  |  |      |       |     
|Average net investment in impaired loans     |  | $                  | 2,035 |                  |  |      | 2,285 |      |  |  | 2,072 |  |  |  | 1,492 | 
|                                             |  |                    |       |                  |  |      |       |      |  |  |       |  |  |  |       | 
|Interest income recognized on impaired loans |  | $                  |      |                  |  |      | 2     |      |  |  |      |  |  |  | 45    | 
|                                             |  |                    |       |                  |  |      |       |      |  |  |       |  |  |  |       | 
|Interest income received on impaired loans   |  | $                  |      |                  |  |      | 2     |      |  |  |      |  |  |  | 45    | 
|                                             |  |                    |       |                  |  |      |       |      |  |  |       |  |  |  |       | 

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An analysis of the change in the allowance for loan losses was as
follows (in thousands):

|                               |  |                    |       |      |  |  |       |  
|------------------------------ |  | ------------------ | ----- | ---- |  |  | ----- | -
|                               |  | Three Months Ended
|                               |  | June 30,          
|                               |  |                   
|                               |  | 2002               |       | 2001
|                               |  |                    |       |     
|Balance at beginning of period |  | $                  | 4,834 |      |  |  | 2,279 |  
|Provision charged to earnings  |  |                    | 441   |      |  |  | 661   |  
|Allowance acquired upon merger |  |                    |      |      |  |  | 537   |  
|Net charge-offs                |  |                    | (85   | )    |  |  | (11   | )
|                               |  |                    |       |      |  |  |       |  
|Balance at end of period       |  | $                  | 5,190 |      |  |  | 3,466 |  
|                               |  |                    |       |      |  |  |       |  

|                               |  |                  |       |      |  |  |       |  
|------------------------------ |  | ---------------- | ----- | ---- |  |  | ----- | -
|                               |  | Six Months Ended
|                               |  | June 30,        
|                               |  |                 
|                               |  | 2002             |       | 2001
|                               |  |                  |       |     
|Balance at beginning of period |  | $                | 4,457 |      |  |  | 1,795 |  
|Provision charged to earnings  |  |                  | 846   |      |  |  | 1,145 |  
|Allowance acquired upon merger |  |                  |      |      |  |  | 537   |  
|Net charge-offs                |  |                  | (113  | )    |  |  | (11   | )
|                               |  |                  |       |      |  |  |       |  
|Balance at end of period       |  | $                | 5,190 |      |  |  | 3,466 |  
|                               |  |                  |       |      |  |  |       |  

3.     Stock Dividend.The Companys Board of Directors declared a
two-for-one stock split, effected in the form of a 100% stock dividend, on
August 6, 2001 to stockholders of record on October 19, 2001. All per share
information has been restated for the three- and six-month periods ended June
30, 2001 to reflect this split.

4.     Earnings Per Share.Earnings per share of common stock were
computed on the basis of the weighted-average number of shares of common stock
outstanding. Diluted earnings per share were computed based on the
weighted-average number of shares outstanding plus the effect of outstanding
stock options, computed using the treasury stock method. Such options were
antidilutive for the three months ended June 30, 2001. The following table
presents the calculations of earnings per share ($ in thousands, except per
share amounts):

|                                                                                    |                                                                      |  |                                  |     |        |  |           |           |           |  |   |     | 
|----------------------------------------------------------------------------------- | -------------------------------------------------------------------- |  | -------------------------------- | --- | ------ |  | --------- | --------- | --------- |  | - | --- | 
|                                                                                    |                                                                      |  | Three Months Ended June 30, 2002
|                                                                                    |                                                                      |  |                                 
|                                                                                    |                                                                      |  |                                  |     |        |  | Weighted- |           |           |  |  
|                                                                                    |                                                                      |  |                                  |     |        |  | Average   |           | Per Share
|                                                                                    |                                                                      |  | Earnings                         |     | Shares |  | Amount   
|                                                                                    |                                                                      |  |                                  |     |        |  |          
|Basic earnings per share:                                                           |                                                                      |  |                                  |     |        |  |           |           |           |  |   |    
|                                                                                    | Net earnings available to
common stockholders                        |  | $                                | 750 |        |  |           | 5,580,263 |           |  | $ | .13 | 
|                                                                                    |                                                                      |  |                                  |     |        |  |           |           |           |  |   |    
|Effect of dilutive securities -
Incremental shares from assumed
exercise of options |                                                                      |  |                                  |     |        |  | 222,547   |           |           |  |   |    
|                                                                                    |                                                                      |  |                                  |     |        |  |           |           |           |  |   |    
|Diluted earnings per share:                                                         |                                                                      |  |                                  |     |        |  |           |           |           |  |   |    
|                                                                                    | Net earnings available to common
stockholders and assumed
conversion |  | $                                | 750 |        |  |           | 5,802,810 |           |  | $ | .13 | 
|                                                                                    |                                                                      |  |                                  |     |        |  |           |           |           |  |   |    

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|                                |                                                                      |  |                           |       |        |  |           |           |           |  |        |     |        |  |         |     |           |  |  |           |  |  |   |     | 
|------------------------------- | -------------------------------------------------------------------- |  | ------------------------- | ----- | ------ |  | --------- | --------- | --------- |  | ------ | --- | ------ |  | ------- | --- | --------- |  |  | --------- |  |  | - | --- | 
|                                |                                                                      |  | Six Months Ended June 30,
|                                |                                                                      |  |                          
|                                |                                                                      |  | 2002                      |       | 2001  
|                                |                                                                      |  |                           |       |       
|                                |                                                                      |  |                           |       |        |  | Weighted- |           |           |  |        |     |        |  |         |     | Weighted- |  |  |           | 
|                                |                                                                      |  |                           |       |        |  | Average   |           | Per Share |  |        |     |        |  | Average |     | Per Share
|                                |                                                                      |  | Earnings                  |       | Shares |  | Amount    |           | Earnings  |  | Shares |     | Amount
|                                |                                                                      |  |                           |       |        |  |           |           |           |  |        |     |       
|Basic earnings per share:       |                                                                      |  |                           |       |        |  |           |           |           |  |        |     |        |  |         |     |           |  |  |           |  |  |   |    
|                                | Net earnings available to
common stockholders                        |  | $                         | 1,017 |        |  |           | 5,533,846 |           |  | $      | .18 |        |  | $       | 114 |           |  |  | 3,986,680 |  |  | $ | .03 | 
|                                |                                                                      |  |                           |       |        |  |           |           |           |  |        |     |        |  |         |     |           |  |  |           |  |  |   |    
|Effect of dilutive securities - |                                                                      |  |                           |       |        |  |           |           |           |  |        |     |        |  |         |     |           |  |  |           |  |  |   |    
|                                | Incremental shares from assumed
exercise of options                  |  |                           |       |        |  |           | 222,832   |           |  |        |     |        |  |         |     |           |  |  | 34,914    |  |  |   |     | 
|                                |                                                                      |  |                           |       |        |  |           |           |           |  |        |     |        |  |         |     |           |  |  |           |  |  |   |    
|Diluted earnings per share:     |                                                                      |  |                           |       |        |  |           |           |           |  |        |     |        |  |         |     |           |  |  |           |  |  |   |    
|                                | Net earnings available to common
stockholders and assumed
conversion |  | $                         | 1,017 |        |  |           | 5,756,678 |           |  | $      | .18 |        |  | $       | 114 |           |  |  | 4,021,594 |  |  | $ | .03 | 
|                                |                                                                      |  |                           |       |        |  |           |           |           |  |        |     |        |  |         |     |           |  |  |           |  |  |   |    

5.     Regulatory Capital.The Holding Company, the Orlando Bank, the
Bonita Springs Bank and the Daytona Beach Bank are required to maintain certain
minimum regulatory capital requirements. The following is a summary at June 30,
2002 of the regulatory capital requirements and the actual capital on a
percentage basis:

|                                                |                     |  |        |       |             |  |            |      |  
|----------------------------------------------- | ------------------- |  | ------ | ----- | ----------- |  | ---------- | ---- | -
|                                                |                     |  |        |       |             |  | Regulatory
|                                                |                     |  | Actual |       | Requirement
|                                                |                     |  |        |       |            
|Total capital to risk-weighted assets           |                     |  |        |       |             |  |            |     
|                                                | Consolidated        |  |        | 13.03 | %           |  |            | 8.00 | %
|                                                | Bonita Springs Bank |  |        | 11.80 | %           |  |            | 8.00 | %
|                                                | Orlando Bank        |  |        | 8.26  | %           |  |            | 8.00 | %
|                                                | Daytona Beach Bank  |  |        | 12.82 | %           |  |            | 8.00 | %
|Tier I capital to risk-weighted assets          |                     |  |        |       |             |  |            |     
|                                                | Consolidated        |  |        | 11.91 | %           |  |            | 4.00 | %
|                                                | Bonita Springs Bank |  |        | 10.79 | %           |  |            | 4.00 | %
|                                                | Orlando Bank        |  |        | 7.10  | %           |  |            | 4.00 | %
|                                                | Daytona Beach Bank  |  |        | 11.78 | %           |  |            | 4.00 | %
|Tier I capital to total assets  leverage ratio |                     |  |        |       |             |  |            |     
|                                                | Consolidated        |  |        | 10.38 | %           |  |            | 4.00 | %
|                                                | Bonita Springs Bank |  |        | 10.19 | %           |  |            | 4.00 | %
|                                                | Orlando Bank        |  |        | 6.30  | %           |  |            | 4.00 | %
|                                                | Daytona Beach Bank  |  |        | 10.63 | %           |  |            | 4.00 | %

6.     Other Events.On December 18, 2000, the Holding Company entered into
an Agreement and Plan of Merger (the Merger Agreement) with Peninsula Bancorp,
Inc., pursuant to which Peninsula agreed to merge with and into the Holding
Company. Peninsula was the parent company of Peninsula Bank of Central Florida
(Peninsula Bank), a state bank

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with three offices in Volusia County, Florida.
The merger was consummated on April 30, 2001. Under the terms of the Merger
Agreement, each share of Peninsula common stock was converted into 0.625 shares
of the common stock of the Holding Company. The Holding Company issued 623,940
shares of common stock in connection with this transaction. The Holding Company
accounted for this transaction using the purchase method of accounting.
Peninsula Banks name was subsequently changed to Southern Community Bank,
Atlantic.

The results for the three and six months ended June 30, 2001 include the results
of Peninsula from the effective date of the merger. The excess purchase price
over fair market value of the net assets acquired of $1.0 million was allocated
to goodwill which was being amortized over twenty years. However, the Company
adopted FASB 142, Goodwill and Other Intangible Assets on January 1, 2002. Under
this standard, goodwill amortization ceased and the asset will be evaluated
periodically for impairment. The unaudited proforma results below assume the
acquisition at the beginning of 2001 (dollars in thousands, except per share
amounts):

|                           |  |                    |       |                  |  |   |        | 
|-------------------------- |  | ------------------ | ----- | ---------------- |  | - | ------ | 
|                           |  | Three Months Ended |       | Six Months Ended
|                           |  | June 30, 2001      |       | June 30, 2001   
|                           |  |                    |       |                 
|Interest income            |  | $                  | 6,189 |                  |  | $ | 12,004 | 
|                           |  |                    |       |                  |  |   |        | 
|Net interest income        |  | $                  | 2,504 |                  |  | $ | 5,082  | 
|                           |  |                    |       |                  |  |   |        | 
|Net (loss) earnings        |  | $                  | (205  | )                |  | $ | 66     | 
|                           |  |                    |       |                  |  |   |        | 
|(Loss) earnings per share: |  |                    |       |                  |  |   |        | 
|Basic                      |  | $                  | (.05  | )                |  | $ | .01    | 
|                           |  |                    |       |                  |  |   |        | 
|Diluted                    |  | $                  | (.05  | )                |  | $ | .01    | 
|                           |  |                    |       |                  |  |   |        | 

In managements opinion, the unaudited proforma combined results of
operations are not indicative of the actual results that would have occurred had
the acquisition been consummated at the beginning of the year ended December 31,
2001 or of future operations of the combined entities under the ownership and
management of the Company.

7.     New Bank Charter.The Company has applied for and received all
required approvals from the regulating agencies to open Southern Community Bank
of South Florida (the South Florida Bank) in Boca Raton, Florida. The Company
plans to transfer the Boca Raton branch of the Orlando Bank into the new South
Florida Bank in August 2002.

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SOUTHERN COMMUNITY BANCORP AND SUBSIDIARIES




Review by Independent Certified Public Accountants

Hacker, Johnson & Smith PA, the Companys independent certified public
accountants, have made a limited review of the financial data as of June 30,
2002 and 2001 and for the three-and six-month periods then ended, presented in
this document, in accordance with standards established by the American
Institute of Certified Public Accountants.

Their report furnished pursuant to Article 10 of Regulation S-X is
included herein.

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Report on Review by Independent Certified Public Accountants

The Board of Directors
Southern Community Bancorp
Orlando, Florida:

We have reviewed the accompanying condensed consolidated balance sheets
of Southern Community Bancorp and Subsidiaries (the Company) as of June 30,
2002 and 2001, and the related condensed consolidated statements of operations
and comprehensive income (loss) for the three and six month periods then ended,
the related condensed consolidated statement of stockholders equity for the six
month period ended June 30, 2002 and the related condensed consolidated
statements of cash flows for the six-month periods ended June 30, 2002 and 2001.
These financial statements are the responsibility of the Companys management.

We conducted our reviews in accordance with standards established by
the American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquires of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with auditing standards generally accepted in the United States of
America, the objective of which is the expression of an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such an
opinion.

Based on our reviews, we are not aware of any material modifications
that should be made to the condensed consolidated financial statements referred
to above for them to be in conformity with accounting principles generally
accepted in the United States of America.

We have previously audited, in accordance with auditing standards
generally accepted in the United States of America, the consolidated balance
sheet as of December 31, 2001, and the related consolidated statements of
operations, stockholders equity and cash flows for the year then ended (not
presented herein); and in our report dated January 25, 2002 we expressed an
unqualified opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying condensed consolidated balance
sheet as of December 31, 2001, is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.

HACKER, JOHNSON & SMITH PA
Orlando, Florida
July 17, 2002

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Item 2. Managements Discussion and Analysis of Results of Operations and Financial Condition

This Form 10-QSB contains forward looking statements which represent
Southerns expectations and beliefs including, but not limited to, statements
concerning Southerns operations, performance, financial condition, growth or
strategies. For this purpose, any statements contained in this Form 10-QSB that
are not statements of historical fact may be deemed to be forward looking
statements. Without limiting the generality of the foregoing, words such as
may, will, expect, believe, estimate, anticipate or continue or
the negative or other variations thereof or comparable terminology are intended
to identify forward looking statements. The statements by their nature involve
substantial risks and uncertainties, certain of which are beyond Southerns
control, and actual results may differ materially depending on a variety of
important factors, including but not limited to the potential impact of changes
in interest rates, competition, credit risks and collateral, changes in local or
regional economic conditions, the ability of Southern to continue its growth
strategy, dependence on management and key personnel, and regulatory
supervision.

Recent Developments

Public Offering.During the second quarter of 2002, Southern completed
a public offering of shares of its common stock. Southern received gross
proceeds of $12.1 million from the sale of 1,151,047 shares at a price of $10.50
per share. Southern utilized the proceeds of the offering as follows:



| |  |  | To make a capital contribution of $10.1 million to Southerns new
bank, Southern Community Bank of South Florida. This bank is based
in Boca Raton, Florida.                                                        
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | To reimburse the organizers of the Boca Raton bank for approximately
$308,000 of organizational expenses.                                                                                                           
|
| |  |  | To pay approximately $83,000 of offering expenses.                                                                                                                                                                  
|
| |  |  | To fund approximately $1.6 million of a $2.2 million working capital
reserve which has been established by Southern for the purpose of
making additional capital contributions to the Boca Raton bank, if
necessary.

Opening of Boca Raton Bank.On August 5, 2002, Southern opened Southern
Community Bank of South Florida. This banks principal office is located in Boca
Raton, Florida. Southern contributed $10.1 million in capital to the new bank
upon its opening. Additionally, Southerns Orlando bank transferred
approximately $68 million of assets to the new bank, including $42 million in
loans, $25 million in cash and cash equivalents, and various fixed assets and
other assets, including the Orlando banks branch located in Boca Raton,
Florida.

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##### Table of Contents



Results of Operations  Three Months Ended June 30, 2002 and 2001

Southern had net earnings for the second quarter of 2002 of $750,000,
compared to a net loss of $192,000 for the comparable period in 2001. Earnings
before income taxes in the second quarter of 2002 were $1.2 million compared to
a loss of $310,000 in the second quarter of 2001. The improvement in earnings
was primarily due to a substantial increase in net interest income, which grew
from $2.4 million in the second quarter of 2001 to $4.6 million in the second
quarter of 2002. As discussed below, the increase in net interest income was
principally a result of an improvement in Southerns net interest margin and the
growth in assets.

Net Interest Income.Southerns operating results depend primarily on
Southerns net interest income, which is a difference between interest income on
interest-earning assets and interest expense on interest-bearing liabilities.
Net interest income is determined by the difference between yields earned on
interest-earning assets and rates paid on interest- bearing liabilities and the
relative amounts of interest-earning assets and interest-bearing liabilities.
Southerns interest rates spread is affected by regulatory, economic and
competitive factors that influence interest rates, loan demand and deposit
flows. In addition, Southerns net earnings are also affected by the level of
non-performing loans and foreclosed assets, as well as the level of its
non-interest income, and its non-interest expenses, such as salaries and
employee benefits.

Interest income for the second quarter of 2002 was $8.2 million,
compared to $5.9 million for the second quarter of 2001. The growth in interest
income primarily reflects the growth in Southerns assets, which grew from
$372.3 million at June 30, 2001 to $557.3 million at June 30, 2002, partially
offset by a decrease in the average yield earned on interest-earning assets.
During the same period, net loans grew from $270.2 million to $405.8 million.
The increase in assets is primarily attributable to the growth of Southerns
business, in southeast Florida, where Southern opened a branch in the [fall] of
2001.

Interest expense was $3.5 million for the second quarter of 2001
compared with $3.6 million for the second quarter of 2002. The increase in
interest expense is primarily due to the higher level of deposits which were
used to support the growth in loans. Most of the deposit growth was attributable
to Southerns new operations in southeast Florida. The increase in interest
expense was partially offset by a decrease in the average cost of deposits.

Southerns net interest margin increased from approximately 3.1% for
the second quarter of 2001 to approximately 3.6% for the second quarter of 2002.
The positive change in the net interest margin is due in part to the repricing
of a relatively high priced deposit product at the end of 2001. Southern had
utilized this product in 2000 and 2001 to attract deposits to support growth and
liquidity. Due to the sharp decline in market interest rates in the first half
of 2001, this product adversely impacted Southerns net interest margin during
2001. Southerns net interest margin improved after December 31, 2001, when the
product was repriced to market rates. The net interest margin was also
positively

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##### Table of Contents



impacted by the decrease in interest rates in the economy, which
reduced the yields paid by Southern on its other deposits and interest bearing
liabilities more rapidly than the yield earned on the Companys loans and
investment securities.

Noninterest Income.Noninterest income in the second quarter of 2002
totaled $644,000, compared with $345,000 in 2001. Customer service charges
totaled $116,000 in 2002, up from $95,000 in 2001, due to an increase in the
average number of deposit accounts. Other service charges and fees totaled
$391,000 in 2002, up from $148,000 in 2001. This increase was primarily caused
by an increase in insurance referral fees, as well as overall growth of
Southern. Gains on the sale of securities available for sale totaled $89,000 in
2002, compared to $63,000 in 2001.

Provision for Loan Losses.The provision for loan losses totaled
$441,000 in the second quarter of 2002 compared to $661,000 in 2001. The
allowance for loan losses at June 30, 2002 was $5.2 million. See Allowance and
Provision for Loan Losses below.

Noninterest Expenses.Noninterest expenses for the second quarter of
2002 totaled $3.6 million, up 52.0% from $2.4 million in 2001. Noninterest
expenses included the following:



| |  |  | Salaries and employee benefits represented 52.7% of total
non-interest expenses in 2002. Salaries and employee benefits
increased 55.5% to $1.9 million in 2002 from $1.2 million in 2001.
The increase was primarily due to the addition of employees in
connection with the acquisition of the Daytona Beach bank, and the
opening of new branches by the Orlando bank and the Bonita Springs
bank, together with salary increases and higher benefit costs.                                            
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Occupancy and equipment expense in 2002 totaled $721,000, up 57.8%
from $457,000 in 2001. This increase was primarily due to the
acquisition of the Daytona Beach bank and the opening of new
branches by the Orlando bank and the Bonita Springs bank.                                                                                                                                                                                                                                                   
|
| |  |  | Other non-interest expenses for the second quarter of 2002 totaled
$986,000, up 41.9% from $695,000 in 2001. Other non-interest
expenses included data processing, printing and office supplies,
marketing and advertising, professional fees, preopening expenses
and other expenses. The increase resulted from the acquisition of
the Daytona Beach bank, the opening of additional branches as well
as organizational expense associated with the new Boca Raton bank,
which opened on August 5, 2002.

Income Tax Provision.The income tax provision totaled $431,000 in 2002
(effective rate of 36.5%) compared to a tax benefit of $118,000 in 2001
(effective rate of 38.1%).

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##### Table of Contents



Results of Operations  Six Months Ended June 30, 2002 and 2001

Southern had net earnings for the first half of 2002 of $1.0 million,
compared to net earnings of $114,000 for the comparable period in 2001. Earnings
before income taxes in the first half of 2002 were $1.6 million compared to
$179,000 in the first half of 2001. The improvement in earnings was primarily
due to a substantial increase in net interest income, which grew from $10.7
million in the first half of 2001 to $15.5 million in the first half of 2002. As
discussed below, the increase in net interest income was principally a result of
an improvement in Southerns net interest margin and the growth in assets.

Net Interest Income.Southerns operating results depend primarily on
Southerns net interest income, which is a difference between interest income on
interest-earning assets and interest expense on interest-bearing liabilities.
Net interest income is determined by the difference between yields earned on
interest-earning assets and rates paid on interest- bearing liabilities and the
relative amounts of interest-earning assets and interest-bearing liabilities.
Southerns interest rates spread is affected by regulatory, economic and
competitive factors that influence interest rates, loan demand and deposit
flows. In addition, Southerns net earnings are also affected by the level of
non-performing loans and foreclosed real estate, as well as the level of its
non-interest income, and its non-interest expenses, such as salaries and
employee benefits.

Interest income for the first half of 2002 was $15.5 million, compared
to $10.7 million for the first half of 2001. The growth in interest income
primarily reflects the growth in Southerns assets, which grew from $372.3
million at June 30, 2001 to $557.3 million at June 30, 2002, partially offset by
a decrease in the average yield earned on interest-earning assets. During the
same period, net loans grew from $270.2 million to $405.8 million. The increase
in assets is primarily attributable to the growth of Southerns business in
southeast Florida.

Interest expense was $7.0 million for the first half of 2002 compared
with $6.2 million for the first half of 2001. The increase in interest expense
is primarily due to the higher level of deposits which were used to support the
growth in loans. Most of the deposit growth was attributable to Southerns new
operations in southeast Florida. The increase in interest expense was partially
offset by a decrease in the average cost of deposits.

Southerns net interest margin increased from approximately 3.5% for
the first half of 2001 to approximately 3.6% for the first half of 2002. The
positive change in the net interest margin is due in part to the repricing of a
relatively high priced deposit product at the end of December 2001. Southern had
utilized this product in 2000 and 2001 to attract deposits to support growth and
liquidity. Due to the sharp decline in market interest rates in the first half
of 2001, this product adversely impacted Southerns net interest margin during
2001. Southerns net interest margin improved after December 31, 2001, when the
product was repriced to market rates. The net interest margin was also
positively impacted by the decrease in interest rates in the economy, which
reduced the yields paid by Southern on its other deposits and interest bearing
liabilities more rapidly than the yields earned on the Companys loans and
investment securities.

18



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##### Table of Contents



Noninterest Income.Noninterest income in the first half of 2002
totaled $1.1 million, compared with $915,000 in 2001. Customer service charges
totaled $236,000 in 2002, up from $168,000 in 2001, due to an increase in the
average number of deposit accounts. Other service charges and fees totaled
$667,000 in 2002, up from $210,000 in 2001. This increase was primarily caused
by an increase in insurance referral fees, as well as overall growth of
Southern. Gains on the sale of securities available for sale totaled $122,000 in
2002, compared to $459,000 in 2001.

Provision for Loan Losses.The provision for loan losses totaled
$846,000 in the first half of 2002 compared to $1.1 million in 2001. The
allowance for loan losses at June 30, 2002 was $5.2 million. See Allowance and
Provision for Loan Losses below.

Noninterest Expenses.Noninterest expenses for the first half of 2002
totaled $7.1 million, up 74.6% from $4.1 million in 2001. Noninterest expenses
included the following:



| |  |  | Salaries and employee benefits represented 52.1% of total
non-interest expenses in 2002. Salaries and employee benefits
increased 77.2% to $3.7 million in 2002 from $2.1 million in 2001.
The increase was primarily due to the addition of employees in
connection with the acquisition of the Daytona Beach bank and the
opening of new branches by the Orlando bank and the Bonita Springs
bank, together with salary increases and higher benefit costs.                 
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Occupancy and equipment expense in 2002 totaled $1.5 million, up
85.9% from $782,000 in 2001. This increase was primarily due to the
acquisition of the Daytona Beach bank and the opening of new
branches by the Orlando bank and the Bonita Springs bank.                                                                                                                                                                                                                   
|
| |  |  | Other non-interest expenses for the first half of 2002 totaled $2.0
million, up 62.7% from $1.2 million in 2001. Other non-interest
expenses included data processing, printing and office supplies,
marketing and advertising, professional fees, preopening expenses
and other expenses. The increase resulted from the acquisition of
the Daytona Beach bank, the opening of additional branches as well
as organizational expense associated with the new Boca Raton bank.

Income Tax Provision.The income tax provision totaled $588,000 in 2002
(effective rate of 36.6%) compared with $65,000 in 2001 (effective rate of
36.3%).

Capital Expenditures

Southern makes capital expenditures in order to improve its ability to
provide quality services to its customers. Capital expenditures for the six
months ended June 30, 2002 equaled $2.3 million compared to $2.2 million in
2001. Most of these expenses are related to purchase and construction of new
branches.

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##### Table of Contents



Asset Quality and Credit Risk

Securities Available for Sale.Southern maintains a high quality
investment portfolio including securities of U.S. government entities,
mortgage-backed securities and municipal bonds. Southern believes that the
securities have very little risk of default. At June 30, 2002, all of the
securities held in Southerns investment portfolio were classified available for
sale and were rated A or better (with a majority rated triple A). A rating
of A or better means that the bonds are of upper medium grade, with strong
ability to repay, possibly with some susceptibility to adverse economic
conditions or changing circumstances. Ratings are assigned by independent
rating agencies and are subject to the accuracy of reported information
concerning the issuers and the subjective judgment and analysis of the rating
agencies. They are not a guarantee of collectibility.

The following table sets forth information regarding the composition of
the investment portfolio for June 30, 2002 and 2001:

Investment Portfolio

|                                    |  |                |        |      |  |  |        | 
|----------------------------------- |  | -------------- | ------ | ---- |  |  | ------ | 
|                                    |  | June 30,      
|                                    |  |               
|                                    |  | 2002           |        | 2001
|                                    |  |                |        |     
|                                    |  | (in thousands)
|U.S. Government agencies securities |  | $              | 31,120 |      |  |  | 20,153 | 
|Mortgage-backed securities          |  |                | 21,132 |      |  |  | 1,857  | 
|Municipal bonds                     |  |                | 253    |      |  |  |       | 
|                                    |  |                |        |      |  |  |        | 
|                                    |  | $              | 52,505 |      |  |  | 22,010 | 
|                                    |  |                |        |      |  |  |        | 

Loans.Southern maintains a high quality portfolio of real estate,
commercial and consumer loans. All loans over individual lending limits are
reviewed and approved by Southerns loan committee, which ensures that loans
comply with applicable credit standards. In most cases, Southern requires
collateral from the borrowers. The type and amount of collateral varies, but may
include residential or commercial real estate, deposits held by financial
institutions, U.S. Treasury securities, other marketable securities and personal
property. Southern monitors collateral values to ensure that they are maintained
at proper levels.

As of June 30, 2002, the majority of Southerns real estate loans were
loans secured by real estate in central and south Florida. This level of
concentration could present a potential credit risk to Southern because the
ultimate collectibility of these loans is susceptible to adverse changes in real
estate market conditions in these markets. Southern has sought to address this
risk by limiting most loans to a maximum of 75% of the appraised value of the
underlying real estate and maximum amortization schedules of 20 years with
maturity dates not exceeding five years.

The following table divides Southerns loan portfolio into five
categories. Most of the loans are short-term and may be renewed or rolled over
at maturity. At that time, Southern

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##### Table of Contents



undertakes a complete review of the
borrowers credit worthiness and the value of any collateral. If these items are
satisfactory, Southern will generally renew the loan at prevailing interest
rates.

Types of Loans

|                                           |             |   |                |         |      |  |         |         | 
|------------------------------------------ | ----------- | - | -------------- | ------- | ---- |  | ------- | ------- | 
|                                           |             |   | June 30,      
|                                           |             |   |               
|                                           |             |   | 2002           |         | 2001
|                                           |             |   |                |         |     
|                                           |             |   | (in thousands)
|Commercial                                 |             | $ | 98,735         |         |      |  | 56,474  |        
|Commercial real estate                     |             |   | 168,282        |         |      |  | 69,446  |        
|Residential real estate                    |             |   | 39,125         |         |      |  | 16,106  |        
|Construction                               |             |   | 95,265         |         |      |  | 114,194 |        
|Consumer and other                         |             |   | 11,859         |         |      |  | 19,137  |        
|                                           |             |   |                |         |      |  |         |        
|                                           | Total loans |   |                | 413,266 |      |  |         | 275,357 | 
|Less:                                      |             |   |                |         |      |  |         |        
|Allowance for loan losses                  |             |   | (5,190         | )       |      |  | (3,466  | )      
|Net deferred loan fees and other discounts |             |   | (2,258         | )       |      |  | (1,710  | )      
|                                           |             |   |                |         |      |  |         |        
|                                           | Loans, net  |   | $              | 405,818 |      |  |         | 270,181 | 
|                                           |             |   |                |         |      |  |         |        

Commercial Loans.Southern makes commercial loans to businesses located
in its target markets. The credit risk associated with business lending is
influenced by general economic conditions, deterioration in a borrowers capital
position resulting in increasing debt to equity ratios, deterioration in a
borrowers cash position resulting in a liquidity problem, and decreasing
revenues due to inefficient operations of the borrower. These loans are
generally secured by corporate assets, marketable securities or other liquid
financial instruments. These loans totaled approximately $98.7 million or 23.9%
of total loans at June 30, 2002, compared with $56.5 million or 20.5% of total
loans at June 30, 2001. The growth in commercial loans was primarily due to new
loans originated in southeast Florida.

Real Estate Loans.Southerns real estate loans totaled $302.7 million
or 73.2% of total loans at June 30, 2002, and $199.7 million or 72.5% at June
30, 2001.

Southern makes real estate loans secured by commercial real estate,
including loans to acquire or refinance office buildings, warehouses and
apartments. These loans generally require a loan to value of not more than 75%.
Most of these loans have a maturity of five years or less. Almost all of these
loans are secured by real property located in central and south Florida. These
loans totaled $168.3 million, or 40.7% of total loans at June 30, 2002 compared
with $69.4 million or 25.2% of total loans at June 30, 2001. The growth in
commercial real estate loans was primarily due to new loans originated in
southeast Florida. Risks associated with commercial

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real estate mortgage loans
include reliability of appraisals, deterioration of market values, environmental
contamination, and accelerated depreciation of property due to deferred
maintenance.

Residential real estate loans totaled $39.1 million, or 9.4% of total
loans at June 30, 2002, compared with $16.1 million, or 5.8% at June 30, 2001.
Residential real estate mortgage loans are predominately adjustable rate home
mortgages which generally require a loan-to-collateral value of not more than
90% and equity credit lines which generally limit the loan-to-collateral value
to not more than 90%. Most loans have a maximum term of five to seven years.
Almost all of the residential real estate mortgage loans are secured by homes in
central and south Florida. Risks associated with residential real estate
mortgage loans include reliability of appraisals, deterioration of market
values, environmental contamination, and accelerated depreciation of property
due to deferred maintenance.

Construction loans totaled $95.3 million or 23.1% of total loans at
June 30, 2002 compared to $114.2 million or 41.5% of total loans at June 30,
2001. The decline in construction loans was due in part to the reclassification
of certain construction loans to commercial real estate loans, and the
refocusing of marketing efforts. Southern primarily makes construction loans on
property located in central and south Florida.

Consumer and Other Loans.Southern offers consumer loans and personal
and secured loans. The security for these loans ordinarily consists of
automobiles, consumer goods, marketable securities, certificates of deposit and
similar items. These loans totaled approximately $11.9 million, or 2.9% of total
loans, on June 30, 2002, compared with $19.1 million, or 7.0% of total loans, on
June 30, 2001. Risks associated with installment loans include loss of
employment of borrowers, declines in the financial condition of borrowers
resulting in delinquencies, and rapid depreciation of loan collateral.

Commitments.Southern had legally binding commitments to extend credit,
including unused lines of credit and letters of credit, totaling $116.0 million
at June 30, 2002.

Nonperforming Assets and Past Due Loans

Nonperforming assets consist of nonaccrual loans and assets acquired in
partial or total satisfaction of problem loans which are known as foreclosed
assets. Past due loans are loans that are delinquent 30 days or more which are
still accruing interest.

Southerns credit review and approval process is critical to Southerns
ability to minimize non-performing assets on a long term basis. In addition to
the negative impact on interest income, non-performing assets also increase
operating costs due to the expense of collection efforts. It is Southerns
policy to place all loans which are past due 90 days or more on non-accrual
status, subject to exceptions made on a case by case basis.

The following table presents Southerns non-performing assets and past
due loans for 2002 and 2001.

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Non-Performing Assets and 90 Day Past Due Loans

|                                |  |                        |       |      |  |  |       | 
|------------------------------- |  | ---------------------- | ----- | ---- |  |  | ----- | 
|                                |  | June 30,              
|                                |  |                       
|                                |  | 2002                   |       | 2001
|                                |  |                        |       |     
|                                |  | (amounts in thousands)
|Nonaccrual loans                |  | $                      | 2,868 |      |  |  | 3,079 | 
|Foreclosed assets               |  |                        | 207   |      |  |  | 88    | 
|                                |  |                        |       |      |  |  |       | 
|Total nonperforming assets      |  | $                      | 3,075 |      |  |  | 3,167 | 
|                                |  |                        |       |      |  |  |       | 
|Accruing loans past due 90 days |  | $                      | 1,446 |      |  |  | 1,231 | 
|                                |  |                        |       |      |  |  |       | 

Southerns non-performing loans and loans past due 90 days were $4.3
million at June 30, 2002, or 1.0% of total loans of $413.3 million.
Non-performing loans at June 30, 2002 consisted of commercial and residential
real estate loans. Southern believes that its non-performing loans are well
secured and are unlikely to result in any material losses. Total non-performing
assets and accruing loans past due 90 days totaled $4.5 million at June 30, 2002
compared to $4.4 million at June 30, 2001.

Allowance and Provision for Loan Losses

Southern evaluates the adequacy of its allowance for loan losses as
part of its ongoing credit review and approval process. The review process is
intended to identify, as early as possible, customers who may be facing
financial difficulties. Once identified, the extent of the clients financial
difficulty is carefully monitored by Southerns loan review officer, who
recommends to the directors loan committee the portion of any credit that needs
a specific reserve allocation or should be charged off. Other factors considered
by the loan committee in evaluating the adequacy of the allowance include
overall loan volume, historical net loan loss experience, the level and
composition of non-accrual and past due loans, local economic conditions, and
value of any collateral. From time to time, specific amounts of the reserve are
designated for certain loans in connection with the loan committees review
officers analysis of the adequacy of the allowance for loan losses.

While the largest portion of this allowance is typically intended to
cover specific loan losses, it is considered a general reserve which is
available for all credit-related purposes. The allowance is not a precise
amount, but is derived based upon the above factors and represents managements
best estimate of the amount necessary to adequately cover probable losses from
current credit exposures. The provision for loan losses is a charge against
current earnings and is determined by management as the amount needed to
maintain an adequate allowance.

Management relied on these factors, as well as its assessment of the
financial condition of specific clients facing financial difficulties, in
deciding to increase the allowance for loan

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losses to $5.2 million at June 30,
2002, from $4.5 million at December 31, 2001 and $3.5 million at June 30, 2001.

As discussed above, Southern opened its new Boca Raton bank on August
5, 2002. Southern anticipates that it will establish an allowance for loan
losses for this bank of approximately $500,000 with respect to the loans which
are being transferred to the Boca Raton bank by the Orlando bank.

Financial Condition

Southerns goal is to maintain a high quality and liquid balance sheet.
Southern seeks to achieve this objective through increases in collateralized
loans, a strong portfolio of real estate loans and a stable portfolio of
investment securities of high quality.

Cash and Cash Equivalents.Southern had cash and cash equivalents of
$72.4 million at June 30, 2002, compared to $61.0 million at June 30, 2001.
Southerns relatively high level of cash and cash equivalents reflects the
success of its efforts to obtain deposits in southeast Florida for its new Boca
Raton bank. Southern transferred approximately $31 million in cash and cash
equivalents to the new Boca Raton bank in August 2002.

Securities Available for Sale.On June 30, 2002, securities available
for sale were $52.5 million or 10.1% of total earning assets. Southerns
strategy for its investment account is to maintain a high quality portfolio. The
investment portfolio, all of which has been classified as available for sale,
increased 138.6% from $22.0 million in the second quarter of 2001.

Loans.Loans were $405.8 million as of June 30, 2002, compared to
$270.2 million as of June 30, 2001. See Asset Quality and Credit Risk 
Loans, above.

Interest-Bearing Liabilities.Interest bearing liabilities primarily
consisted of deposits and other borrowings. Total interest-bearing liabilities
were $447.0 million at June 30, 2002, up from $295.3 million in 2001. There was
an increase in savings, money-market and NOW deposits of $51.6 million or 35.4%
compared to 2001. There was also a significant increase in time deposits of
$99.4 million or 67.4% compared to 2001. The growth in Southerns deposits
reflects Southerns marketing efforts to obtain deposits in southeast Florida
for its new South Florida Bank. Southern believes that attracting deposits is an
important step in establishing this bank and its target market.

Liquidity and Rate Sensitivity

The principal functions of asset and liability management are to
provide for adequate liquidity, to manage interest rate exposure by maintaining
a prudent relationship between rate sensitive assets and liabilities and to
manage the size and composition of the balance sheet so as to maximize net
interest income.

Liquidity is the ability to provide funds at minimal cost to meet
fluctuating deposit withdrawals or loan demand. These demands are met by
maturing assets and the capacity to

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raise funds from internal and external
sources. Southern primarily utilizes cash, federal funds sold and securities
available for sale to meet its liquidity needs. Although not utilized in
managing daily liquidity needs, the sale of investment securities provides a
secondary source of liquidity.

Fluctuating interest rates, increased competition and changes in the
regulatory environment continue to significantly affect the importance of
interest-rate sensitivity management. Rate sensitivity arises when interest
rates on assets change in a different period of time or a different proportion
than that of interest rates on liabilities. The primary objective of
interest-rate sensitivity management is to prudently structure the balance sheet
so that movements of interest rates on assets and liabilities are highly
correlated and produce a reasonable net interest margin even in periods of
volatile interest rates.

Regular monitoring of assets and liabilities that are rate sensitive
within 30 days, 90 days, 180 days and one year is an integral part of Southerns
rate-sensitivity management process. It is Southerns policy to maintain a
reasonable balance of rate-sensitive assets and liabilities on a cumulative one
year basis, thus minimizing net interest income exposure to changes in interest
rates. Southerns sensitivity position at June 30, 2002 was such that net
interest income would increase modestly if there were an increase in short-term
interest rates.

Southern monitors the interest rate risk sensitivity with traditional
gap measurements. The gap table has certain limitations in its ability to
accurately portray interest sensitivity; however, it does provide a static
reading of Southerns interest rate risk exposure.

As of June 30, 2002, Southern was liability sensitive
(interest-sensitive liabilities subject to repricing exceeded interest-sensitive
assets subject to repricing) on a 365-day basis to the extent of $3.7 million.
This negative gap at June 30, 2002 was 0.7% of total assets compared with a
negative gap of 11.8% at June 30, 2001. Southerns target gap position is in the
range of negative 20% and positive 20%. The significant improvement in
Southerns gap position reflects a shift in deposits, particularly certificates
of deposit, to longer maturities, and Southerns relatively high level of cash
and cash equivalents.

While the absolute level of gap is a measurement of interest rate risk,
the quality of the assets and liabilities in the balance sheet must be analyzed
in order to understand the degree of interest rate risk taken by Southern.
Southern does not invest in any derivative products in order to manage or hedge
its interest rate risk.

Capital

One of Southerns primary objectives is to maintain a strong capital
position to merit the confidence of customers, bank regulators and stockholders.
A strong capital position helps Southern withstand unforeseen adverse
developments and take advantage of attractive lending and investment
opportunities when they arise.

Southerns tier one capital was 11.91% and the total capital was 13.03%
of risk-based assets at June 30, 2002. These risk-based capital ratios were well
in excess of the minimum

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requirements of 4.0% for tier one and 8.0% for total
risk-based capital ratios. Southerns leverage ratio (tier one capital to total
average quarterly assets) of 10.38% at June 30, 2002, was also in excess of the
minimum 4.0% requirement. Southern has committed to the Federal Reserve that it
will maintain, on a consolidated basis, a ratio of total capital to risk based
assets of at least 10% until January 2004.

Southern increased its capital during the second quarter of 2002
through the completion of its public offering. Southern received net proceeds of
$12.1 million from the offering. See Recent Developments above.

Southern currently anticipates that it will need to raise additional
capital during the next 12 months in order to support its planned growth of its
subsidiaries. Southern is currently considering several alternatives for raising
additional capital, including the possible sale of Southerns common stock or
other securities issued by Southern. However, Southern has not yet developed any
specific plans for obtaining such capital.

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PART II
OTHER INFORMATION




Item 2. Changes in Securities and Use of Proceeds.

Private Sales of Securities

During the second quarter of 2002, Southern issued a total of 500
shares of common stock in a transaction which was not registered under the
Securities Act of 1933 in reliance upon the exemption provided under Section
4(2) of the Securities Act:



| |  |  | In April 2002, Southern issued 500 shares of common stock to an
officer at a price $8.25 per share. Southern issued these shares
pursuant to a commitment made in the fall of 2001.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Public Offering

During December 2001, Southern commenced a public offering of 1,200,000
shares of its common stock at a price of $10.50 per share. The shares were
offered on behalf of Southern by its executive officers who did not receive any
compensation for their efforts.

Southern competed the offering in June 2002. Southern received gross
proceeds of $12.1 million from the sale of 1,151,047 shares. Southern utilized
the proceeds as follows:



| |  |  | To make a capital contribution of $10.1 million to Southerns new
Boca Raton bank. The new bank will initially utilize these proceeds
to purchase marketable securities. The new bank will liquidate these
securities as necessary to make loans and to pay its start-up and
operating expenses.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | To reimburse the organizers of the new Boca Raton bank for
approximately $308,000 in organization costs.                                                                                                                                                                                        
|
| |  |  | To pay approximately $83,000 in costs for the offering.                                                                                                                                                                                                                                         
|
| |  |  | To fund approximately $1.6 million of a $2.2 million working capital
reserve which Southern has established for the purpose of making
additional capital contributions to the new Boca Raton bank, if
necessary.                                                                                

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Item 5. Other Information.

At a meeting of Southerns board of directors held on August 5, 2002,
Southern elected the following persons to serve as directors for the terms set
forth below:

|                   |  |                    |  | 
|------------------ |  | ------------------ |  | 
|Name of Director   |  | Expiration of Term
|                   |  |                   
|Dennis G. Bedley   |  | 2005 (Class I)    
|Gregory K. Talbott |  | 2003 (Class II)   
|Alfred J. Cinque   |  | 2004 (Class III)  




Item 6. Exhibits.

(a)  Exhibits.

| |  |             |  |  |             | 
| |  | ----------- |  |  | ----------- | 
| |  | Exhibit No. |  |  | Description
| |  |             |  |  |            



| |                
| | ---------------
| | Not applicable.

(b)  Reports on Form 8-K.



| |                
| | ---------------
| | Not applicable.

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SIGNATURES

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

|                      |  |                                                                                                                      
|--------------------- |  | ---------------------------------------------------------------------------------------------------------------------
|                      |  | SOUTHERN COMMUNITY BANCORP
(Registrant)                                                                              
|                     
|                     
|                     
|Date: August 14, 2002 |  |                                                                                                                      
|                      |  | /s/ Charlie W. Brinkley, Jr.                                                                                         
|                      |  | Charlie W. Brinkley, Jr.
Chairman of the Board of Directors
and Chief Executive Officer
(Principal Executive Officer)
|                     
|                     
|Date: August 14, 2002 |  |                                                                                                                      
|                      |  | /s/ Stephen McGee                                                                                                    
|                      |  | Stephen McGee
Chief Financial Officer                                                                                
|                     
|                     
|Date: August 14, 2002 |  |                                                                                                                      
|                      |  | /s/ Stephen R. Jeuck                                                                                                 
|                      |  | Stephen R. Jeuck
Vice President
(Principal Accounting Officer)                                                       

Certification Required Under Section 906 of the Sarbanes-Oxley Act of 2002

The undersigned hereby certify that this report fully complies with the
requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934 and that the information contained in this report fairly presents in all
material respects the financial condition and results of operations of the
Registrant as of and for the periods presented in this report.

|                      |  |                                                                                                                      
|--------------------- |  | ---------------------------------------------------------------------------------------------------------------------
|Date: August 14, 2002 |  |                                                                                                                      
|                      |  | /s/ Charlie W. Brinkley, Jr.                                                                                         
|                      |  | Charlie W. Brinkley, Jr.
Chairman of the Board of Directors
and Chief Executive Officer
(Principal Executive Officer)
|                     
|                     
|Date: August 14, 2002 |  |                                                                                                                      
|                      |  | /s/ Stephen McGee                                                                                                    
|                      |  | Stephen McGee
Chief Financial Officer                                                                                
|                     
|                     
|Date: August 14, 2002 |  |                                                                                                                      
|                      |  | /s/ Stephen R. Jeuck                                                                                                 
|                      |  | Stephen R. Jeuck
Vice President
(Principal Accounting Officer)                                                       

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