UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D. C. 20549

FORM 10-Q

|ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the quarter period ended
March 31, 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 Number: 33-81890

Community Bankshares, Inc.



|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

N/A

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APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common
stock, as of May 1, 2002: 2,186,330

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COMMUNITY BANKSHARES, INC.
AND SUBSIDIARIES
INDEXPage No.PART I.
FINANCIAL INFORMATIONItem 1.
Financial StatementsConsolidated
Balance Sheets -March 31, 2002 and December 31, 2001
2Consolidated Statements of
Incomeand Comprehensive Income for ThreeMonths Ended March 31, 3002 and 2001
3Consolidated
Statements of Cash Flows -Three  Months Ended
March 31, 2002 and 2001
4Notes to
Consolidated  Financial Statements
6Item 2.
Managements Discussion and Analysis ofFinancial Condition and Results of
Operations
9PART II
OTHER INFORMATION12Item 6.
Exhibits and Reports on Form 8 - K
13Signatures
14




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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

|COMMUNITY BANKSHARES, INC.                                                                                                                                                
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|AND SUBSIDIARIES                                                                                                                                                          
|                                                                                                                                                                          
|CONSOLIDATED BALANCE SHEETS                                                                                                                                               
|MARCH 31, 2002 AND DECEMBER 31, 2001                                                                                                                                      
|(Dollars in thousands)                                                                                                                                                    
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|Assets                                                                                                                                                                    
|Cash and due from banks                                                                                                                                                   
|Interest-bearing deposits in banks                                                                                                                                        
|Federal funds sold                                                                                                                                                        
|Securities available-for-sale                                                                                                                                             
|Securities held-to-maturity (fair value$29,701 and $30,384)                                                                                                               
|Restricted equity securities                                                                                                                                              
|                                                                                                                                                                          
|Loans                                                                                                                                                                     
|Less allowance for loan losses                                                                                                                                            
|                                                                                                                                                                          
|Loans, net                                                                                                                                                                
|                                                                                                                                                                          
|                                                                                                                                                                          
|Premises and equipment                                                                                                                                                    
|                                                                                                                                                                          
|Other assets                                                                                                                                                              
|                                                                                                                                                                          
|                                                                                                                                                                          
|Total assets                                                                                                                                                              
|                                                                                                                                                                          
|                                                                                                                                                                          
|Liabilities, Redeemable Common Stock and Shareholders’ Equity                                                                                                             
|                                                                                                                                                                          
|Deposits                                                                                                                                                                  
|Noninterest-bearing demand                                                                                                                                                
|Interest-bearing demand                                                                                                                                                   
|Savings                                                                                                                                                                   
|Time, $100,000 and over                                                                                                                                                   
|Other time                                                                                                                                                                
|                                                                                                                                                                          
|Total deposits                                                                                                                                                            
|Other borrowings                                                                                                                                                          
|Other liabilities                                                                                                                                                         
|                                                                                                                                                                          
|Total liabilities                                                                                                                                                         
|                                                                                                                                                                          
|                                                                                                                                                                          
|Redeemable common stock held by ESOP, net of unearned ESOP shares related

      to ESOP debt guarantee of $1,550,000 at March 31, 2002and December 31, 2001, respectively
|                                                                                                                                                                          
|                                                                                                                                                                          
|Shareholders' equity                                                                                                                                                      
|Common stock, par value $1; 5,000,000Shares authorized; 2,186,330 
        Shares issued and outstanding                                                                  
|Capital surplus                                                                                                                                                           
|Retained earnings                                                                                                                                                         
|Accumulated other comprehensive income (loss), 
         net of tax                                                                                                       
|                                                                                                                                                                          
|Total shareholders' equity                                                                                                                                                
|                                                                                                                                                                          
|                                                                                                                                                                          
|Total liabilities, redeemable common stock and shareholders' equity                                                                                                       
|                                                                                                                                                                          
|                                                                                                                                                                          
|See Notes to Consolidated Financial Statements.                                                                                                                           

2

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COMMUNITY BANKSHARES, INC.AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOMEAND COMPREHESIVE INCOMETHREE MONTHS ENDED MARCH 31, 2002 AND 2001(Dollars in thousands, except per share amounts)(Unaudited)Three Months EndedMarch 31,2002


2001Interest incomeLoans
$
9,396

$
10,939Taxable securities

627


698Nontaxable securities

697


593Deposits in banks

3


7Federal funds sold

104


220Total interest income

10,827


12,457Interest expense on depositsDeposits

4,279


6,022Other borrowings

168


164Total interest expense

4,447


6,186Net interest income

6,380


6,271Provision for loan losses

529


406Net interest income after 
               Provision for loan losses

5,851


5,865Other incomeService charges on deposit accounts

1,165


969Other service charges and fees

337


291Trust Department fees

33


44Gains on sale of loans

14


52Nonbank subsidiary non-interest income

1,939


3,655Security transactions, net

145


-Other operating income

183


181Total other income

3,816


5,192Other expensesSalaries and employee benefits

4,394


4,411Equipment expense

769


801Occupancy expense

453


427Other operating expenses

2,210


2,549Total other expenses

7,826


8,188Income before income taxes

1,841


2,869Income tax expense

485


902Net income
$
1,356

$
1,967Other comprehensive income
(loss):Unrealized gains (losses) on securities:
          Unrealized holding gains (losses)  arising during  Periods

(221)


467Reclassification adjustment  for (gains) losses realized in net 
                    income

(87)


-Total other comprehensive income (loss)

(308)


467Comprehensive income
$
1,048

$
2,434Basic earnings per common share
$
0.62

$
0.90Diluted earnings per common share
$
0.61

$
0.89Cash dividends per share of common stock
$
0.0600

$
0.0500See Notes to Consolidated Financial Statements.


3

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COMMUNITY BANKSHARES, INC.AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001(Dollars in thousands)(Unaudited)2002

2001OPERATING ACTIVITIESNet income
$
1,356
$
1,967Adjustments to reconcile net income to 
        net cash provided by (used in) operatingactivities:Depreciation and amortization

810

799Provision for loan losses

529

406Deferred income taxes

(306)

(146)Decrease in loans held for sale

-

653Net realized gains on securities 
          available-for-sale

(145)

-Net (gains) losses on sale of other real estate

(3)

14Decrease in interest receivable

665

439Increase  in interest payable

664

2,364Increase (decrease) in taxes payable

510

(574)Increase in accounts 
          receivable of nonbank subsidiary

(846)

(1,839)Decrease in work in 
          process of nonbank subsidiary

253

402Decrease in accruals and 
          payables of nonbank subsidiary

(1,158)

(5,119)Net other operating activities

(1,506)

582Net cash provided by 
                (used in) operating activities

823

(52)INVESTING ACTIVITIESPurchases of securities available-for-sale

(8,621)

(9,228)Proceeds from sales of securitiesAvailable-for-sale

5,118

-Proceeds from maturities of securitiesAvailable-for-sale

321

4,806Proceeds from maturities of securitiesHeld-to-maturity

836

621Net increase in Federal funds sold

(18,940)

(9,985)Net increase in interest-bearingDeposits in banks

(29)

(38)Net increase in loans

(9,466)

(12,984)Purchase of premises and equipment

(500)

(1,039)Proceeds from sales of other real estate

755

433Net cash used in 
                investing activities

(30,526)

(27,414)Principal balances on loans  
       Transferred to otherreal estate
$
2,428
$
-


4

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FINANCING ACTIVITIESNet increase  in deposits

26,752

18,206Repayment of other borrowings

(56)

(56)Dividends paid

(131)

(109)Net cash provided by 
                Financing activities

26,565

18,041Net decrease in cash and 
   due from banks
$
(3,138)
$
(9,425)Cash and due from banks at beginning of the period

37,182

38,410Cash and due from banks at end of the period
$
34,044
$
28,985SUPPLEMENTAL DISCLOSURESCash paid for:Interest
$
3,783
$
3,822Income taxes
$
75
$
474NONCASH TRANSACTIONS


See Notes to Consolidated Financial Statements

5

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COMMUNITY BANKSHARES, INC.
AND SUBSIDIARIES

NOTES 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 three month period ending March 31, 2002 are not
necessarily indicative of the results to be expected for the full year.

NOTE 2.             
RECENT DEVELOPMENTS

In July 2001, the Financial Accounting Standards Board (“FASB”) issued
Statement No. 141 (SFAS No. 141), “Business Combinations” and Statement No. 142 (SFAS No. 142), “Goodwill and
Other Intangible Assets”.  SFAS No. 141 requires that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001.  SFAS No. 141 also specifies criteria that intangible assets acquired in a
purchase method business combination must meet to be recognized and reported apart from goodwill.  SFAS No. 142 requires that
goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least
annually in accordance with the provisions  of SFAS No. 142.  The impact of this change will be a reduction of
amortization expense of $2,000 per quarter.  However, goodwill will be evaluated prior to June 30 to determine if any
write-down because of impairment is warranted.  SFAS No. 142 also requires that intangible assets with estimable useful lives
be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment. 
SFAS No. 141 was effective July 1, 2001 while the provisions of SFAS No. 142 were adopted effective January 1, 2002.

See Notes to Consolidated Financial Statements

6

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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).

Three Months Ended March 31, 2002
(Dollars and shares in Thousands,
except per share amounts)Net
Income
(Numerator)
Weighted-Average
Shares
(Denominator)
Per Share
AmountBasic EPS
$1,356
2,186
$0.62Effect of Dilutive Securities
     Stock options
0
19
(0.01)Diluted EPS
$1,356
2,205
$0.61Three Months Ended March 31, 2001
(Dollars and shares in Thousands,
except per share amounts)Net
Income
(Numerator)
Weighted-Average
Shares
(Denominator)
Per Share
AmountBasic EPS
$1,967
2,179
$0.90Effect of Dilutive Securities
     Stock options
0
22
(0.01)Diluted EPS
$1,967
2,201
$0.89


7

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NOTE 4.             
SEGMENT INFORMATION

Selected segment information by industry segment for the periods ended March 31, 2002 and
2001 is as follows:

|                                    | Reportable Segments(Dollars in thousands)
|----------------------------------- | -----------------------------------------
|                                    |                                          
|For the Period Ended March 31, 2002 |                                          
|                                    |                                          
|                                    |                                          
|Revenue from external customers     |                                          
|Intersegment revenues (expenses)    |                                          
|Segment profit (loss)               |                                          
|Segment assets                      |                                          



|                                    | Reportable Segments(Dollars in thousands)
|----------------------------------- | -----------------------------------------
|                                    |                                          
|For the Period Ended March 31, 2001 |                                          
|                                    |                                          
|                                    |                                          
|Revenue from external customers     |                                          
|Intersegment revenues (expenses)    |                                          
|Segment profit                      |                                          
|Segment assets                      |                                          



|                                           | 2002 |       | 2001
|------------------------------------------ | ---- | ----- | ----
|                                           |      |       |     
|                                           |      |       |     
|Net Income                                 |      |       |     
|                                           |      |       |     
|Total profit for reportable segments       | $    | 2,372 |     
|Non-reportable segment loss                |      | (337) |     
|Elimination of intersegment (gains) losses |      | (679) |     
|                                           |      |       |     
|Total consolidated other income            | $    | 1,356 |     
|                                           |      |       |     



|                                     | 2002
|------------------------------------ | ----
|                                     |     
|                                     |     
|Total Assets                         |     
|                                     |     
|Total assets for reportable segments | $   
|Non-reportable segment assets        |     
|Elimination of intersegment assets   |     
|                                     |     
|Total consolidated assets            | $   
|                                     |     



8

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COMMUNITY BANKSHARES, INC.
AND SUBSIDIARIES

ITEM
2.   MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS



Forward Looking StatementsThe following appears in accordance with the Securities Litigation Reform Act.  These
financial statements and discussion and analysis 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 and competition in the geographic business areas in which we conduct operations.

The terrorist attacks that occurred in New York City and Washington D.C. on September 11,
2001, and the United States’ subsequent response to these events have resulted in a general economic slowdown that may
adversely effect our banking business.  Economic slowdowns or recessions in our primary market areas may be accompanied by
reduced demand for credit, decreasing interest margins and declining real estate values, which may in turn result in a decrease in
net earnings and an increased possibility of potential loan losses in the event of default.  Any sustained period of decreased
economic activity, increased delinquencies, foreclosures or losses could limit our growth and negatively affect our results of
operations.  We cannot predict the extent, duration of these events or effect upon our business and operations.  We will,
however, closely monitor the effect of these events upon our business, and make adjustments to our business strategy as deemed
necessary.

Management’s Discussion and AnalysisThe following is management’s discussion and analysis of certain significant factors
which have affected our financial position and operating results during the periods included in the accompanying consolidated
financial statements.

Financial Condition

As of March 31, 2002, we continue to experience growth in total assets, total loans and
total deposits as compared to December 31, 2001.  Total assets, loans, and deposits increased by 4.09%, 1.46% and 4.76%
respectively.  The growth in loans, although less the same period in 2001, is consistent with management’s
expectations.  The growth in deposits is greater than the prior comparable period and is 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 March 31, 2002, the liquidity ratio was 21.39% which is within our 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

Our overall interest rate risk was less than 3% of net interest income subjected to rising
and falling rates of 200 basis points.  Our guideline is to allow no more than 8% change in net interest income for these
scenarios; therefore, we are within policy guidelines.  We have positioned ourselves to  minimize the impact of further
changes in rates in either direction.

9

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Capital

Banking regulation requires the Company and the Banks to maintain capital levels in
relation to our assets.  At March 31, 2002, the Company’s and the Bank’s capital ratios were considered
satisfactory based on regulatory minimum capital requirements.  The minimum capital requirements and the actual consolidated
capital ratios at March 31, 2002 were as follows:



| |                              | Actual | Regulatory Minimum
| | ---------------------------- | ------ | ------------------
| |                              |        |                   
| | Leverage                     | 8.73%  | 4.00%             
| | Risked Based Capital ratios: |        |                   
| | Core Capital                 | 11.79% | 4.00%             
| | Total Capital                | 13.04% | 8.00%             
| |                              |        |                   
| |                              |        |                   





10

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Results of Operation

Net interest income for the three month period ended March 31, 2002 increased 1.74% to
$6,380,000 over $6,271,000 for the same period for 2001.  Interest income for the three month period was down by 13.09% from
$12,457,000 to $10,827,000.  This decrease in interest income is due to decrease in the prime interest rate during the period
from 8.0% to 4.75%  During that period, the net interest margin for the company declined from 4.71% to 4.25%.  Earning
assets increased by 10.62% or $58,431,000 at March 31, 2002 as compared to March 31, 2001.  The largest increase in earning
assets since March 31, 2001 was the increase in loans of $31,376,000 or 7.28%.  Investment securities increased by $13,919,000
while Federal Funds sold increased by $13,190,000.  For the first three months of 2002, earning assets increased by
$27,587,000 or 4.75%.  Interest expense on interest bearing deposits was down by $1,743,000 or 28.94% for the first three
months of 2002 over the same period for 2001.  Interest bearing deposits increased 11.51% or $51,829,000 as of  March 31,
2002 as compared to March 31, 2001.  For the first three months of 2002, interest bearing deposits increased by $21,114,000 or
4.39%.

The loan loss reserve is evaluated monthly and adjusted to reflect the risk in the
portfolio in the following manner.  We use two different methods of measuring risk in the portfolio:  (a) Risk in our
watch list of loans and past due ratios and (b) Percentage of classified loans.  We then compare results to reserve balances
to assure any and all identified risk are covered.

The following table furnishes information on the loan loss reserve for the current three
month reporting period and the same period for 2001.

| |                         | 2002    | 2001   
| | ----------------------- | ------- | -------
| |                         |         |        
| | Beginning Balance       | $ 6,652 | $ 6,307
| |                         |         |        
| | Less Charge Offs:       |         |        
| | Commercial Loans        | (3)     | (1)    
| | Real Estate Loans       | (243)   | (43)   
| | Consumer Loans          | (204)   | (192)  
| |                         |         |        
| |                         | (450)   | (236)  
| |                         |         |        
| | Plus Recoveries         |         |        
| | Commercial Loans        | 0       | 4      
| | Real Estate Loans       | 2       | 3      
| | Consumer Loans          | 50      | 32     
| |                         |         |        
| |                         | 52      | 39     
| |                         |         |        
| |                         |         |        
| |                         |         |        
| | Net Charge-offs         | (398)   | (197)  
| |                         |         |        
| | Provision for loan loss | 529     | 406    
| |                         |         |        
| | Ending Balance          | $ 6,783 | $ 6,516
| |                         |         |        

11

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The majority of the real estate loan charge-off for 2002 related to one loan and does not
represent a general decline in the real estate portfolio.

The provision for loan losses was $529,000 and $406,000 for the first three months of 2002
and 2001 respectively.  The provision for loan losses for the three month period ended March 31, 2002 represented 118% of
charge offs for the same period, while the provision for the first three months of 2001 represented 206% of the charge offs
recorded in that period.  The reserve at March 31, 2002 represented 189% of non-accrual loans while the reserve at March 31,
2001 represented 217% of non-accrual loans. Non accrual loans have increased from $3,003,000 at March 31, 2001 to $3,593,000 as of
March 31, 2002.  Past due loans greater than 90 days and accruing interest have decreased from $2,418,000 in 2001 to
$1,921,000 in 2002.  The increase in non-accrual loans is indicative of the overall state of the economy.  Management is
aware of a deterioration in loan quality believed to be related to the continuing decline in the overall economy.  Management
has reviewed the non-accrual loans individually and determined that the likelihood of any significant loss of principal is
mitigated due to the value of the collateral securing these loans.  As of March 31, 2002, non-accrual loans and other real
estate owned totaled approximately $8,394,000, which  contributes to our being outside our guideline of non-performing assets
compared to the loan loss reserve.  The loan loss reserve balance to the total loan ratio at March 31, 2002 was 1.47% as
compared to 1.51% at March 31, 2001.  As of March 31, 2002, management considered our allowance for loan losses adequate to
cover any known losses.

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

March 31, 2002

|                  | Non-accrual | Past Due       | Restructured
|----------------- | ----------- | -------------- | ------------
|                  | Loans       | 90 days        | Debt        
|                  |             | Still accruing |             
|                  |             |                |             
|Commercial Loans  | $       278 | $     406      | $     134   
|Real Estate Loans | 2,813       | 1,063          | 980         
|Consumer Loans    | 502         | 452            | 60          
|                  |             |                |             
|Total             | $    3,593  | $  1,921       | $  1,174    
|                  |             |                |             

March 31, 2001

|                  | Non-accrual | Past Due       | Restructured
|----------------- | ----------- | -------------- | ------------
|                  | Loans       | 90 days        | Debt        
|                  |             | Still accruing |             
|                  |             |                |             
|Commercial Loans  | $       255 | $      163     | $         0 
|Real Estate Loans | 2,356       | 1,906          | 673         
|Consumer Loans    | 392         | 349            | 62          
|                  |             |                |             
|Total             | $     3,003 | $   2,418      | $     735   
|                  |             |                |             
|                  |             |                |             

11

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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 banks place 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 decreased by 26.50% or $1,376,000 during the three month period ended March
31, 2002 as compared to the same period for 2001.  This decrease is primarily due to the slow down in activity associated with
an agreement between Financial Supermarkets, Inc. (FSI), a nonbank subsidiary, and the Canadian Imperial Bank of Commerce
(“CIBC”) to establish banking pavilions.  Due to slowing economic conditions, management anticipates fewer sales
of supermarket bank units and thus anticipates a decline in revenue during 2002 as compared to 2001.  Service charges on
deposit accounts increased by $196,000 or 20.23% for the three month period ended March 31, 2002, as compared to the same periods
in 2001.  During the last two quarters of 2001, the banks started charging a daily overdraft fee on accounts that are
overdrawn more than 1 day.  During the first three months of 2002 these fees total $149,000.  Non-sufficient funds (NSF)
charges increased $30,000 for the three month period ended March 31, 2002, as compared to the same period in 2001.  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 $38,000 during the three month period ended March 31, 2002 as compared
to the same period for 2001.  This decrease is due to a decreased level of SBA activity.

Other expenses decreased by 4.42% or $362,000 for the three month period ended March 31,
2002, as compared to the same periods in 2001.  Salaries and benefits decreased by $17,000 or 0.39% during the three month
period ended September 30, 2002 compared to the same period in 2001.  Full time equivalent employees increased from 365 at the
end of March 2001 to 367 at the end of March 2002.  Equipment and occupancy expenses were down by 0.49% or $6,000 for the
three month period ended March 31, 2002 as compared to the same period in 2001.  The increase in full time equivalent
employees was influenced by the addition of one new supermarket banking center during the past three months as well as the overall
growth of the Company’s banking operations.  In other operating expenses, travel expenses decreased $142,000 or 33.33%
due to a slow down in travel for non-bank subsidiary for the three month period ending March 31, 2002 as compared to the same
period in 2001.  Most of the reduction in expenses is associated with a reduced level of activity at FSI.

We incurred income tax expenses of $485,000 which represents an effective rate of 26% for
the three month period ended March 31, 2002 as compared to $902,000 which represents an effective tax rate of 31% for the same
period in 2001.  This is due to a  smaller portion of our income being fully taxable.

Net income for the three month period ended March 31, 2002, was $1,356,000 or a decrease
of 31.06% over the same periods for 2001.  Due to scheduling delays in supermarket bank installations, the variation in the
number of supermarket bank installations from year to year, as well as the current net interest margin; management does not
anticipate meeting its original budgeted projections and management does not anticipate an overall increase in earnings in 2002
compared to 2001.  Management is currently preparing new projected goals for 2002 income.

We are 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.  We are also not aware of any current recommendations by the regulatory authorities which, if they
were implemented, would have such an effect.

12

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PART II - OTHER INFORMATION



ITEM 6.         Exhibits and Reports on Form 8-K

> (a) Exhibits
>     None
> 
> (b)	Reports on Form 8-K
> 
> None



13

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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: May 15, 2002 | By:                       
|                   |                           



14