UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,  D. C. 20549
FORM 10-Q
Mark One

     /X/  QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
          SECURITIES AND EXCHANGE ACT OF 1934
               For the quarterly period ended September 30, 1998
     
     //   TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF
          THE EXCHANGE ACT
         For the transition period from _______ to _______
                 Commission File Number:  33-81890
                    Community Bankshares, Inc.
                __________________________________
      (Exact name of registrant as specified in its charter)

               Georgia                            58-1415887
     (State or other jurisdiction of            (IRS Employer
      incorporation or organization)          Identification No.)

                      448 North  Main Street,
                     Cornelia, Georgia  30531
             (Address of principal executive offices)
                            (Zip Code)
                          (706) 778-2265
       (Registrant's telephone number, including area code)
                                 
                                N/A
          (Former name, former address and former fiscal
                year, if changed since last report)

Indicate by check mark whether the registrant has (1) has
  filed all reports required to be filed by Section 13 or
  15 (d) of the Securities Exchange Act of 1934 during
  the preceding 12 months (or for such shorter period
  that the registrant was required to file such reports)
  and (2) has been subject to such filing requirements
  for the past 90 days.     Yes  X     No

               APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of
November 1, 1998:  2,169,830
<PAGE>
                                 
                    COMMUNITY BANKSHARES, INC.
                         AND SUBSIDIARIES
                               INDEX

                                    Page No.
PART I.   FINANCIAL INFORMATION

Item 1.   Financial Statements

     Consolidated Balance Sheet -
     September 30, 1998 and December 31, 1997              2

     Consolidated Statements of Operations
     and Comprehensive Income for Three
     Months Ended September 30, 1998 and 1997
     and Nine Months Ended September 30, 1998
     and 1997                                              3

     Consolidated Statements of Cash Flows -
     Nine Months Ended September 30, 1998 and 1997         4

     Notes to Consolidated Financial Statements            5

Item 2.   Management's Discussion and Analysis of
     Financial Condition and Results of Operations         6

PART II.   OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8 - K               7

     Signatures                                            8

<PAGE>
                  PART I - FINANCIAL INFORMATION
                                 
ITEM 1.   FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                    COMMUNITY BANKSHARES, INC.
                         AND SUBSIDIARIES
                    CONSOLIDATED BALANCE SHEETS
             SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
                      (Dollars in thousands)
                            (Unaudited)
                                                                     
                    Assets                          1998        1997
<S>                                               <C>         <C>
Cash and due from banks                         $  25,064   $  23,957
Interest-bearing deposits in banks                    946         769
Federal funds sold                                  7,110       5,960
Securities available-for-sale                      44,038      53,282
Securities held-to-maturity (fair value                              
     $31,609 and $29,558)                          30,218      28,719
Loans held for sale                                 2,955       2,561
                                                                     
Loans                                             298,310     242,660
Less allowance for loan losses                      4,548       4,024
          Loans, net                              293,762     238,636
                                                                     
Premises and equipment                             13,748      12,115
Other assets                                       14,371      11,080
                                                                     
          Total assets                          $ 432,212   $ 377,079
                                                                     
     Liabilities and Stockholders' Equity                            
                                                                     
Deposits                                                             
    Noninterest-bearing demand                  $  55,987   $  50,768
    Interest-bearing demand                        84,450      72,854
    Savings                                        19,736      16,276
    Time, $100,000 and over                        64,920      55,849
    Other time                                    153,291     139,798
          Total deposits                          378,384     335,545
Other borrowings                                    5,347         462
Other liabilities                                   9,050       7,331
          Total liabilities                       392,781     343,338
                                                                     
Commitments and contingent liabilities                               
                                                                     
Redeemable common stock held by ESOP, 362,241                        
     and 344,531 shares outstanding, at fair
     value                                         11,168      10,622
                                                                     
Stockholders' equity                                                 
    Common stock, par value $1; 5,000,000                            
        shares authorized; 2,169,830                                 
        shares issued and outstanding               2,170       2,170
    Capital surplus                                 6,036       6,036
    Retained earnings                              19,736      14,783
    Accumulated other comprehensive income,                          
         net of tax                                   321         130
          Total stockholders' equity               28,263      23,119
                                                                     
 Total liabilities and stockholders' equity     $ 432,212   $ 377,079
<FN>                                                                 
See Notes to Consolidated Financial Statements.                      
</FN>                                                                
</TABLE>                                                             
<PAGE>

<TABLE>
<CAPTION>
                    COMMUNITY BANKSHARES, INC.
                         AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF OPERATIONS
                      AND COMPREHESIVE INCOME
        THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 AND
           NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
         (Dollars in thousands, except per share amounts)
                            (Unaudited)
                                                                          
                                       Three Months         Nine Months
                                          Ended                Ended
                                      September 30,        September 30,
                                      1998      1997        1998      1997
<S>                                  <C>       <C>        <C>       <C>
Interest income                                                           
    Loans                          $  7,785  $  6,475   $ 21,818  $ 17,537
    Taxable securities                  631       717      2,041     2,279
    Nontaxable securities               448       336      1,256       947
    Deposits in banks                    14        61         32        78
    Federal funds sold                   98       156        317       521
          Total interest income       8,976     7,745     25,464    21,362
                                                                          
Interest expense on deposits                                              
    Deposits                          4,101     3,308     11,704     9,652
    Other borrowings                     15        10         32        32
          Total interest expense      4,116     3,318     11,736     9,684
                                                                          
          Net interest income         4,860     4,427     13,728    11,678
Provision for loan losses               224       247        764       636
          Net interest income                                             
          after provision
          for loan losses             4,636     4,180     12,964    11,042
                                                                          
Other income                                                              
    Service charges on deposit                                            
        accounts                        643       497      1,859     1,465
    Other service charges and fees      130       191        386       477
    Gains on sale of loans              157       261        372       539
    Trust Department fees                29        20         83        65
    Net realized gains on sales of                                        
        securities                       30        15         41         9
    Nonbank subsidiary                                                    
        non-interest income           3,536     1,170      7,175     6,120
    Other operating income              131         7        376       302
          Total other income          4,656     2,161     10,292     8,977
                                                                          
Other expenses                                                            
    Salaries and employee benefits    2,662     2,350      7,562     7,317
    Occupancy expense                   355       264        969       765
    Equipment expense                   492       306      1,396       911
    Other operating expenses          1,684     1,253      4,753     4,168
          Total other expenses        5,193     4,173     14,680    13,161
                                                                          
          Income before income
          taxes                       4,099     2,168      8,576     6,858
                                                                          
Income tax expense                    1,399       689      2,838     2,210
                                                                          
          Net income               $  2,700  $  1,479   $  5,738  $  4,648
                                                                          
Other comprehensive income                                                
     (loss),net of tax:
     Unrealized gains (losses) on                                         
          securities available-for-                                       
          sale arising during
          the period                    209       140        191       141

          Less:  reclassification                                         
                adjustment for                                            
                gains included
                in net income            18         9         25         5

     Total other comprehensive                                            
          income                        227       149        216       146
                                                                          
          Comprehensive income     $  2,927  $  1,628   $  5,954  $  4,794
                                                                          
Basic earnings per common share    $   1.24  $   0.71   $   2.64  $   2.29
Diluted earnings per common share      1.23      0.68       2.61      2.26
Cash dividends per share of       
    common stock                   $  0.037  $  0.034   $  0.110  $  0.102
<FN>                                                                      
See Notes to Consolidated                                                 
Financial Statements.
</FN>                                                                     
</TABLE>                                                                  
<PAGE>
<TABLE>
<CAPTION>
                    COMMUNITY BANKSHARES, INC.
                         AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF CASH FLOWS
       FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
                      (Dollars in thousands)
                            (Unaudited)
                                 
                                                       1998        1997
<S>                                                 <C>         <C>
OPERATING ACTIVITIES                                                   
    Net income                                    $   5,738   $   4,648
    Adjustments to reconcile net income to                             
        net cash provided by operating
        activities:
        Depreciation and amortization                 1,441         772
        Provision for loan losses                       764         636
        Provision for other real estate                  10          50
        Deferred income taxes                          (221)       (147)
        Increase in loans held for sale                (394         171
        Net realized (gains) losses on securities                      
          available-for-sale                            (41)         (9)
        Net (gains) losses on sale of other real
          estate                                         (3)         42
        Increase in interest receivable                (740)       (463)
        Increase in interest payable                    651         508
        Increase (decrease) in taxes payable          1,112        (438)
        Increase (decrease) in accounts                                
          receivable of nonbank subsidiary           (1,136)        915
        Increase (decrease) in work in                                 
          process of nonbank subsidiary                (804)      1,277
        Increase (decrease) in accruals and                            
          payables of nonbank subsidiary                270      (1,684)
        Other operating activities                   (1,164)       (352)
                                                                       
              Net cash provided by                                     
                 operating activities                 5,483       5,926
                                                                       
INVESTING ACTIVITIES                                                   
    Purchases of securities available-for-sale      (12,936)    (16,355)
    Proceeds from sales of securities                                  
      available-for-sale                              6,161       7,202
    Proceeds from maturities of securities                             
      available-for-sale                             16,378       6,297
    Purchases of securities held-to-maturity         (2,329)     (7,463)
    Proceeds from maturities of securities                             
      held-to-maturity                                  830         831
    Net increase in Federal funds sold               (1,150)     (1,460)
    Net increase in interest-bearing                                   
     deposits in banks                                 (177)       (509)
    Net increase in loans                           (56,017)    (23,613)
    Purchase of premises and equipment               (2,862)     (2,591)
    Net cash acquired in branch acquisition             171           -
    Proceeds from sales of other real estate             70         341
                                                                       
              Net cash used in                                         
                investing activities                (51,861)    (37,320)
                                                                       
FINANCING ACTIVITIES                                                   
    Net increase (decrease) in deposits              42,839      28,433
    Increase in other borrowings                      5,000           -
    Repayment of other borrowings                      (115)       (115)
    Proceeds from issuance of Common                                   
      Stock                                               -         143
    Dividends paid                                     (239)       (212)
              Net cash provided by                                     
                financing activities                 47,485      28,249
Net increase (decrease) in cash and                                    
   due from banks                                 $  (1,107)  $  (3,145)
                                                                       
Cash and due from banks at beginning of the Year     23,957      19,480
                                                                       
Cash and due from banks at end of the Year        $  25,064   $  16,335
                                                                       
SUPPLEMENTAL DISCLOSURES                                               
    Cash paid for:                                                     
        Interest                                  $  11,085   $   9,176
                                                                       
        Income taxes                              $   1,947   $   2,795
                                                                       
NONCASH TRANSACTIONS                                                   
    Unrealized (gains) losses on                                       
      securities available-for sale               $    (318)  $    (235)
                                                                       
    Principal balances on loans and premises                           
      and equipment transferred to other                               
      real estate                                 $     127   $     220
                                                                       
BRANCH ACQUISITION                                                     
    Net cash acquired                             $     171   $       -
                                                                       
    Loans                                         $   2,981           -
    Premises and equipment                               10           -
    Other assets                                         14           -
    Core deposit intangible                             759           -
    Deposits                                        (5,838)           -
    Other liabilities                                  (25)           -
                                                                       
         Net liabilities assumed, net of                               
           cash and due from banks of $171        $ (2,099)   $       -
                                                                       
<FN>
See Notes to Consolidated Financial Statements
</FN>
</TABLE>
<PAGE>


                    COMMUNITY BANKSHARES, INC.
                         AND SUBSIDIARIES
                                 
             NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
                                 
NOTE 1.   BASIS OF PRESENTATION

The consolidated financial information included herein is
unaudited; however, such information reflects all adjustments
(consisting solely of normal recurring adjustments) which are, in
opinion of management, necessary for a fair statement of results
for the interim periods.

The results of operations for the nine month period ending
September 30, 1998 are not necessarily indicative of the results
to be expected for the full year.

NOTE 2.   CURRENT ACCOUNTING DEVELOPMENTS

The Financial Accounting Standards Board (FASB) has issued, and
the Company has adopted, Statement of Financial Accounting
Standards (SFAS) No. 125, "Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities".  This
statement provides accounting and reporting standards for
transfers and servicing of financial assets and extinguishments of
liabilities based on consistent application of a financial-
components approach that focuses on control.  It distinguishes
transfers of financial assets that are sales from transfers that
are secured borrowings.  The adoption of this statement did not
have a material effect on the company's financial statements.

The FASB has issued, and the Company has adopted, SFAS No. 128,
"Earnings Per Share".  SFAS No. 128 supersedes Accounting
Principals Board Opinion No. 15 "Earnings Per Share" and specifies
the computation, presentation, and disclosure requirements for
earnings per share (EPS) for entities with publicly held common
stock or potential issuable common stock.  SFAS No. 128 replaced
the presentation of primary EPS with a presentation of basic EPS
and fully diluted EPS with diluted EPS.  It also requires dual
presentation of basic and diluted EPS on the face of the income
statement for all entities with complex capital structures and
requires a reconciliation of the numerator and denominator for the
basic EPS computation to the numerator and denominator of the
diluted EPS computation.  SFAS No. 128 is effective for financial
statements for both interim and annual periods ending after
December 15, 1997.  The adoption of this statement did not have a
material effect on the Company's financial statements.

The FASB has issued, and the Company has adopted, SFAS No. 130,
"Reporting Comprehensive Income".  This statement establishes
standards for reporting and display of comprehensive income and
its components in the financial statements.  SFAS No. 130 requires
all items that are required to be recognized under accounting
standards as components of comprehensive income to be reported in
a financial statement that is displayed in equal prominence with
the other financial statements.  The term "comprehensive income"
is used in the SFAS to describe the total of all components of
comprehensive income including net income.  "Other comprehensive
income" refers to revenues, expenses, gains and losses that are
included in comprehensive income but excluded from earnings under
current accounting standards.  Currently, "other comprehensive
income" for the Company consists of items previously recorded
directly in equity under SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities".  SFAS No. 130 is
effective for fiscal years and interim periods beginning after
December 15, 1997.

NOTE 3    EARNINGS PER COMMON SHARE

The following is a reconciliation of net income (the numerator)
and weighted-average shares outstanding (the denominator) used in
determining basic and diluted earnings per common share (EPS).
<TABLE>
<CAPTION>
                         Three Months Ended September 30,1998
                   ( Dollars in Thousands, except per share amounts)

                          Net        Weighted-              
                         Income   Average Shares     Per
                      (Numerator)  (Denominator)    Share
                                                    Amount
  <S>                   <C>       <C>             <C>       
  Basic EPS                2,700            2,170      1.24 
  Effect of Dilutive                                        
      Securities Stock                                     
      options                  0               26
                        --------         --------  -------- 
  Diluted EPS              2,700            2,196      1.23 
                        ========         ========  ======== 

                         Three Months Ended September 30, 1997
                     (Dollars in Thousands, except per share amounts)
                                
                          Net        Weighted-              
                         Income   Average Shares     Per
                     (Numerator)   (Denominator)    Share
                                                   Amount
                                                            
  Basic EPS                1,479            2,076      0.71 
  Effect of Dilutive                                        
      Securities Stock                                     
      options                  0               91
                        --------         --------  -------- 
  Diluted EPS              1,479            2,167      0.68 
                        ========         ========  ======== 
                                                            
                          Nine Months Ended September 30, 1998
                     (Dollars in Thousands, except per share amounts)
                     
                          Net        Weighted-              
                         Income   Average Shares     Per
                     (Numerator)   (Denominator)    Share
                                                    Amount
                                                            
  Basic EPS                5,738            2,170      2.64 
  Effect of Dilutive                                        
      Securities Stock                                     
      options                  0               26
                        --------         --------  -------- 
  Diluted EPS              5,738            2,196      2.61 
                        ========         ========  ======== 
                                                            
                          Nine Months Ended September 30, 1997
                     (Dollars in Thousands, except per share amounts)
                       
                          Net        Weighted-              
                         Income   Average Shares     Per
                     (Numerator)   (Denominator)    Share
                                                    Amount
                                                            
  Basic EPS                4,648            2,033      2.29 
  Effect of Dilutive                                        
      Securities Stock                                     
      options                  0               24
                        --------         --------  -------- 
  Diluted EPS              4,648            2,057      2.26 
                        ========         ========  ======== 
                                                            

</TABLE>
<PAGE>
                                 
                                 
ITEM 2.  MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
                                 
Forward Looking Statements
----------------------------------------------
The following appears in accordance with the Securities Litigation
Reform Act.  These financial statements and financial review
include forward looking statements that involve inherent risks and
uncertainties.  A number of important factors could cause actual
results to differ materially from those in the forward looking
statements.  Those factors include fluctuations in interest rates,
inflation, government regulations, economic conditions, Year 2000
issues and competition in the geographic business areas in which
the Company conducts its operations.

Management Discussion and Analysis
----------------------------------------------
The following is management's discussion and analysis of certain
significant factors which have affected the Company's financial
position and operating results during the periods included in the
accompanying consolidated financial statements.

Financial Condition

As of September 30, 1998, the Company continues to experience
growth in total assets, total loans and total deposits as compared
to December 31, 1997.  Total assets, loans, and deposits increased
by 14.62%, 22.85% and 12.77% respectively.  The growth in deposits
and loans is higher than prior year, but consistent with
management's expectations.  The growth in assets is attributable
to growth in deposits and retention of earnings.  Management
expects the growth to continue in the future.

Liquidity

As of September 30, 1998, the Liquidity Ratio was 23.26% which is
within the Company's target range of 20 - 25%.  The Banks have
available lines of credit to meet unexpected liquidity needs.
Liquidity is measured by the ratio of net cash, short term and
marketable securities to net deposits and short term Liabilities.

Interest Rate Risk

The Company's overall interest rate risk was less than 6% of net
interest income subjected to rising and falling rates of 200 basis
points.

Capital

Banking regulations require the Company to maintain capital levels
in relation to Company assets.  At September 30, 1998, the
Company's capital ratios were considered satisfactory based on
regulatory minimum capital requirements.  The minimum capital
requirements and the actual capital ratios for the Company at
September 30, 1998 were as follows:
<TABLE>


                                  Actual        Regulatory 
                                                   Minimum
  <S>                   <C>               <C>              
  Leverage                         8.46%             4.00% 
      Risked Based                                         
  Capital ratios:
      Core Capital                11.22%             4.00% 
      Total Capital               12.47%             8.00% 
                                                           
</TABLE>
Results of Operation

Net interest income for the nine month period ended September 30,
1998 is up 17.55% over the same period for 1997, from $11,678,000
to $13,728,000, and is up 9.78% for the three month period ending
September 30, 1998 from $4,427,000 to $4,860,000 for 1998.
Interest income was up by 19.20% for the nine month period ending
September 30, 1998 from $21,362,000 to $25,464,000 and up 15.89%
for the three month period ending September 30, 1998 from
$7,745,000 to $8,976,000.  Interest expense was up 21.19%  or
$2,052,000 for the nine month period ended September 30, 1998,
over the same period in 1997 and up 24.05%  or $798,000 for the
three month period ending September 30, 1998, as compared to 1997.
The increase in interest income is due to an increase of 21.71% or
$68,415,000 in earning assets from September 30, 1997 to September
30, 1998.  Investment securities decreased by $1,548,000 or 2.04%
during the period primarily to meet the loan demand.  Total loans
increased during the last year by $72,429,000 or 31.65%. The
increase in interest income, interest expense, and net interest
income were consistent with the budget projections made by
management and are on target to be consistent with annual
projections. Included in the above are $7,339,000 and $18,225,000
in loans and deposits, respectively, which were assumed through
the purchase of two bank branches during the past twelve month
period.

The provision for loan losses was $764,000 for the first nine
months of 1998.  This provision will fluctuate based on Small
Business Administration (SBA) loans closed, as the Company has a
policy of reserving 5% of the un-guaranteed portion of any SBA
loans.  The Company currently has reserves totaling  $946,712 for
its un-guaranteed portion of SBA loans.

The following table furnishes information on the Loan Loss Reserve
for the current nine month reporting period and the same period
for 1997.
<TABLE>
<CAPTION>
                                         1998      1997 
   <S>                              <C>       <C>       
   Beginning Balance                  $ 4,024   $ 3,592 
                                                        
   Less Charge Offs:                                    
        Real Estate Loans                 (7)      (35) 
        Commercial Loans                 (75)      (94) 
        Consumer Loans                  (277)     (111) 
        Credit Cards                      (8)       (4) 
                                                        
   Plus Recoveries                                      
        Real Estate Loans                  18        27 
        Commercial Loans                   20         9 
        Consumer Loans                     89        36 
        Credit Cards                        0         0 
                                                        
   Plus Provision                         764       636 
                                     --------  -------- 
   Ending Balance                     $ 4,548   $ 4,056 
                                     ========  ======== 

The loan loss reserve for the company is evaluated monthly and
adjusted to reflect the risk in the portfolio in the following
manner.  We use four different methods of measuring risk in the
portfolio:  (a)  Risk in our watch list of loans and past due
ratios;  (b)  Historical charge offs;  ( c) Peer group comparisons;
and (d)  Percentage of classified loans.  We then compare results
to reserve balances to assure any and all identified risk are
covered.

The Provision for Loan Losses for the nine month period ended
September 30, 1998 represented 208% of charge offs for the same
period, while the provision for the first nine months of 1997
represented 261% of the charge offs recorded in that period.  The
reserve at the end of September 30, 1998 represented 374% of non
accrual loans while the reserve at September 30, 1997 represented
715% of non accrual loans.  Non accrual loans have increased from
$567,000 at September 30, 1997 to $1,215,000 as of September 30,
1998, due mainly to the addition of two large SBA loans.
Management does not anticipate any loss on these loans. The Company
is well within its policy limit of maintaining a loan loss reserve
of at least 200% of non-performing assets.  The Loan Loss Reserve
balance to total loan ratio at September 30, 1998 was 1.51% as
compared to 1.77% at September 30, 1997.  The decrease in this
ratio is due to the strong loan demand experienced in all the
Company's market areas.  Management considered the Loan Loss
Reserve to be adequate to absorb any losses that may be incurred.

The following table is a summary of Non Accrual, Past due and
Restructured Debt

</TABLE>
<TABLE>
<CAPTION>
                        September 30, 1998
                                 
                     Non-accrual  Past Due    Restructured  
                        Loans      90 days        Debt      
                                    still                   
                                  accruing
  <S>                <C>         <C>          <C>           
  Real Estate Loans           30          55             0  
  Commercial Loans           509         127           683  
  Consumer Loans             676         264             0  
                           -----       -----         -----           
  Total                    1,215         446           683  
                           =====       =====         =====
                                
</TABLE>
                        September 30, 1997
<TABLE>
<CAPTION>
                     Non-accrual  Past Due    Restructured  
                        Loans      90 days        Debt      
                                    still                   
                                  accruing
  <S>                <C>         <C>          <C>           
  Real Estate Loans           10          16             0  
  Commercial Loans           240         387           604  
  Consumer Loans             317         276             0  
                          ------      ------         -----
  Total                      567         679           604  
                          ======      ======         =====
</TABLE>
Loans  classified for regulatory purposes as loss, doubtful,
substandard, or special mention that have not been included in the
table above do not represent or result from trends or uncertainties
which management reasonably expects will materially impact future
operating results, liquidity or capital resources.  These
classified loans do not represent material credits about which
management is aware of any information which causes management to
have serious doubts as to the ability of such borrows to comply
with the loan payment terms.

The bank places loans on non-accrual at such a time it is apparent
that the collection of all principal and interest is questionable
and the loan is either past due 90 days or bankruptcy has been
filed.

Other income increased by 14.65% or $1,315,000 during the nine
month period ended September 30, 1998 as compared to the same
period for 1997 and the three month period ending September 30,
1998 showed a 115.46% or $2,495,000 increase over the same three
month period of 1997.  Although the Company has had fewer
installations of supermarket bank units during 1998 as compared to
1997, the income for the nine month and three month periods
increased due to compensation received as a result of the
termination of the Company's Master Consulting Agreement with
Nationsbanc Services, Inc. ("Nationsbanc") on August 14, 1998.
Under the terms of the Agreement, Nationsbanc's on going obligation
under the Master Consulting Agreement are limited to paying monthly
consulting fees with respect to the seventy-nine supermarket
locations it will continue to operate in Winn-Dixie stores.
Service charges on deposit accounts increased by $394,000 or 26.89%
for the nine month period ended September 30, 1998, and $146,000 or
29.38% for the three month period ended September 30, 1998, as
compared to the same periods in 1997.  The major increase was the
increase in non-sufficient funds (NSF) charges of $371,000 and
$133,000 for the nine month period and the three month period ended
September 30, 1998, respectively, compared to the same period in
1997.  NSF charges increased primarily as a result of the Company's
continued growth in accounts in the totally free checking program.
The gains on sale of loans decreased by $167,000 or 30.98%  during
the nine month period ended September 30, 1998 as compared to the
same period for 1997.  This  decrease is due to a smaller number of
SBA loan originations during 1998 compared to 1997.  Trust
department income for the first three quarters of 1998 increased to
$83,000 compared to $65,000 for the same period of 1997.

Other operating expenses increased by 11.54% or $1,519,000 for the
nine month period ended September 30, 1998, and 24.44% or
$1,020,000 for the three month period ending September 30, 1998 as
compared to the same period in 1997.  Salaries and benefits
increased by $245,000 or 3.35% during the nine month period ended
September 30, 1998 compared to the same period in 1997.  Although
full time equivalent employees increased from 234 at the end of
September 1997 to 283 at the end of September 1998, the amount
being accrued for incentive compensation decreased, because or less
supermarket banking unit installations during  1998 compared to
1997, resulting in an overall small net increase in salaries and
benefits.  Salaries and benefits increased by 13.28% or $312,000
for the three month period ended September 1998, due to the
incentive compensation related to the additional non-bank
subsidiary income received during the quarter.  Equipment and
occupancy expenses were up by 41.11% or $689,000 for the nine month
period ended September 30, 1998, and 48.60% or $277,000 for the
three month period ending September 30, 1998, as compared to the
same period in 1997. The increase in full time equivalent employees
as well as equipment and occupancy expenses was influenced by the
addition of four brick and mortar facilities and one supermarket
banking center during the past twelve months, as well as, the
ongoing maintenance of existing facilities.  In addition, the
increase in the equipment and occupancy expense has increased even
more in the past quarter due to the installation of a new data
processing system.  Management anticipates equipment and occupancy
expenses to continue to increase during the forth quarter of 1998
and the first quarter of 1999 as the installation of the new data
processing system is completed.

Net income for the nine month period ended September 30, 1998, was
$5,738,000 or an increase of 23.45% and for the three month period
ended September 30, 1998, was $2,700,000 or an increase of 82.56%
over the same periods for 1997.  The net income was more than
budgeted numbers for both periods for the reasons previously
discussed and is above management's expectations.

The company is not aware of any other known trends, events or
uncertainties, other than the effect of events as described above,
that will have or that are reasonably likely to have a material
effect on its liquidity, capital resources or operations.  The
Company is also not aware of any current recommendations by the
regulatory authorities which, if they were implemented, would have
such an effect.

YEAR 2000 COMPLIANCE

The Company utilizes and depends upon data processing systems and
software to conduct its business.  The "year 2000 issue" arises
from the widespread use of computer programs that rely on two-digit
codes to perform computations or decision-making functions.  Many
of these programs may fail due to an inability to properly
interpret date codes beginning January 1, 2000.  For example, such
programs may misinterpret "00" as the year 1900 rather than 2000.
In addition, some equipment, being controlled by microprocessor
chips, may not deal appropriately with the year "00".  The Bank is
evaluating its computer systems to determine which modifications
and expenditures will be necessary to make its systems compatible
with year 2000 requirements.


The Year 2000 - Impact and Readiness

Community Bankshares, Inc. performed an  organizational wide
assessment  to ascertain the impact of Year 2000 issues on
information technology systems and non-technology systems. In l997,
a Year 2000 Task Force Committee was appointed with the Chief
Financial Officer directing the program, including remediation
efforts .The Company has viewed  Year 2000 readiness as not only an
information or technology problem, but as a corporate wide
challenge and placed the issue at the forefront of all strategic
planning.

The organization has addressed technology risks affecting all areas
of operations including the identification of vendors and service
providers which are critical to the Company.  The Company has
implemented a program of ongoing awareness to address corporate
banking customers and financial counterparties.  In addition the
Company has addressed contingency  planning and recovery  through
a plan of prevention and contingency procedures.

Based on the complex nature of organizational operations, corporate
wide objectives have been:
1) Minimize disruptions of service to the institution and its
customers, 2) Ensure timely resumption of operations and 3) Limit
losses to earnings and capital.

Based on documented risk assessments,  the  readiness plan covers
all aspects of operations, which are defined as the current
operations,  the conversion period and the " worse case scenario"
situation.    The term mission  critical  has been assigned to
electronic systems, components,  third parties, vendors and any non-
IT systems that have been identified as having an impact on bank
operations.  The Company has identified  back-up and alternate
processing vendors and locations.

The organization's remediation program was implemented during the
first quarter of 1997 and although  the organization will not be
compliant as of December 31, 1998,  conversion to a new data system
will be completed  during the first quarter of l999.  Compliant is
defined as follows:  1) To correctly process dated before and after
the year 2000, 2) To recognize the year 2000 as a leap year, 3) To
accept and display dates unambiguously and 4) To correctly process
logic dates that are used for  " non-date functions "

In May of l998, a Year 2000 Readiness-Key Milestones Testing Plan
was adopted that defined the Company's testing strategy.  This plan
will continue to be modified , if needed, to address any change in
the remediation plans so as to effectively  address current testing
needs and issues.  The testing phase of the Year 2000 program is
the most prominent and plans are in place to have testing results
reviewed by employees independent of in-house testing.  As the
testing procedures are completed, the results will be presented to
the Board of Directors along with supporting documentation.

Costs to Address Year 2000 Issues

During the fourth quarter of 1998, management implemented part of
its contengency plan and made a decision to proceed with a
traditional software provider vs. the client based software as
originally planned.  Although earnings have not been significantly
impacted as a result of this change, management has reviewed budget
items to identify any additional expenditures which might result
due to implementation of these contingency plans.  In addition,
based on the critical nature of  "worse case scenario" planning, a
list of  " unknowns" is being identified to explore any remote
difficulties in achieving remediation goals.  Overall, the Company
believes that since the majority of IT equipment and software is
relatively new and have been certified by the developers as being
Year 2000 compliant, the  IT budget will be adequate for Year 2000
programs as they relate to the installation of the Company's
network.  In addition, the Company currently estimates that costs
of assessing, testing, and remediation of Year 2000 issues
associated with the core processing system and other embedded
systems will total approximately $900,000.

Risks of Third-Party Year 2000 Issues

Prudent risk controls to manage the Year 2000 related  risks posed
by customers have been implemented and the broad categories of
customers have been identified.  They are: 1) Funds Takers, 2)
Funds Providers and 3) Capital Market/Asset Management
Counterparties.  Based on our analysis of the previously described
groups, the Company is able to look at different assumptions of
risk, liquidity and contingency.  A high level program of awareness
continues in this area with sub-committees of the Board of
Directors reviewing for financial risk.  Lending officers have been
asked to identify any economic factors in the bank's trade or
assessment areas that would have an impact on customers as a result
of a potential Year 2000 problem.

Another area of review for Year 2000 potential  liability  has been
that of fiduciary services.  Client assessment management through
the bank's trust department  has been identified and will continued
to be monitored.

Contingency Plans

In order to fully recognize the risks presented to the Company, "
worse case scenarios" have been  reasonably identified along with
estimated costs for recovery, personnel and other budget items.
Due to a significant change in the organization's remediation
plans, the IT program has been accelerated to insure all
renovations are completed and tested by March 31, 1999.

Throughout the pre-planning processes and plan implementation
periods, contingency planning and business resumption goals and
objectives have been of paramount importance.  Objectives in this
area have been 1) Practices implemented to conduct on-going risk
assessments of IT systems and non-IT systems, 2) An effective
business resumption plan coordinated with service providers, 3)
Testing procedures for contingency programs at least annually and
4) Implementation of appropriate corrective actions when needed.

Based on any  "unknown"  and  a " worse case scenario" , the
Company has conducted due diligence to determine the probability of
outsourcing data services in the event IT systems  experience
failure and even using a manual entry system . The Company has plans
to create system backup files prior to procseeing on any critical
dates to facilitate the recovery of mission critical systems.  
The Company believes any mission critical systems could be recovered.

Record retention policies have been amended to include all Year
2000 due diligence documents and any new acquisition, upgrades to
existing systems, or written agreements are reviewed prior to
execution for Year 2000 warrants or guarantees of readiness.

The foregoing are forward-looking statements reflecting
management's current assessment and estimates with respect to the
Company's Year 2000 compliance efforts and the impact of Year 2000
issues on the Company's business and operations.  Various factors
could cause actual plans and results to differ materially from
those contemplated by such assessments, estimates and forward-
looking statements, many of which are beyond the control of the
Company.  Some of these factors include, but are not limited to
representations by the Company's vendors and counterparties,
technological advances, economic considerations, and consumer
perceptions.  The Company's Year 2000 compliance program is an
ongoing process involving continual evaluation and may be subject
to change in response to new developments.

                    PART II - OTHER INFORMATION

ITEM 6.   Exhibits and Reports on Form 8-K

               (a)  Exhibits
               
                     Exhibit 10.8 Termination of Master Consulting
                                  Agreement
               
                     Exhibit 27.  Financial Data Schedule
               
               (b)  Reports on Form 8-K
               
                    None.
<PAGE>

                            SIGNATURES

In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



                              COMMUNITY BANKSHARES, INC.


DATE:  November 16, 1998      BY:  /s/  Harry L. Stephens
                              Harry L. Stephens,
                              Executive Vice President and
                              Chief Financial Officer
<PAGE>