##### Table of Contents



U.S. SECURITIES AND EXCHANGE
 COMMISSION

WASHINGTON, D. C. 20549


FORM 10-QSB



|[X] | QUARTERLY
 REPORT PURSUANT TO 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- | ---------------------------------------------------------------------------------

For the quarterly period
 ended September 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 Number:
 333-85952

SOUTHERN COMMUNITY BANCSHARES,
 INC.

---

(Exact name of small business
 issuer as specified in its charter)




|Georgia                          |  | 58 - 2639705           
|-------------------------------- |  | -----------------------
|                                 |  |                        
|(State or
 other jurisdiction of |  | (I.R.S. Employer       
|incorporation
 or organization)  |  | Identification
 Number)



525 North Jeff Davis Drive,
 Fayetteville, Georgia 30214


---

(Address of principal executive office)




(770) 461-4365


---

(Issuers
 telephone number)




N/A


---

(Former name, former address
 and former fiscal year, if changed since last report)


Check whether the issuer (1) filed all
 reports required to be filed by Section 13 or 15(d) of the Exchange Act 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  [   ]

State the number of shares outstanding of
 each of the issuers classes of common stock, as of November 7, 2002: 1,305,185;
 no par value

Transitional Small Business Disclosure
 Format      
Yes   [   ]   No  [X]



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TABLE OF CONTENTS



|                                           |                                                                                       |                                                                      |  |  |  |  |  | 
|------------------------------------------ | ------------------------------------------------------------------------------------- | -------------------------------------------------------------------- |  |  |  |  |  | 
|PART I - FINANCIAL INFORMATION            
|                                           | ITEM I.  FINANCIAL STATEMENTS                                                        
|                                           |                                                                                       | CONDENSED CONSOLIDATED BALANCE SHEET                                
|                                           |                                                                                       | CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
|                                           |                                                                                       | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                     
|                                           |                                                                                       | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                
|                                           | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                           | Item 3. CONTROLS AND PROCEDURES                                                      
|PART II - Other Information               
|                                           | Item 6. Exhibits and Reports on Form 8-K.                                            
|SIGNATURES                                
|Certificate of CEO pursuant to Section 906
|Certificate of CFO pursuant to Section 906



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##### Table of Contents



SOUTHERN COMMUNITY
 BANCSHARES, INC. AND SUBSIDIARY

INDEX



|                               |                                                                                                 |                                                                                                                                       |        | Page
|------------------------------ | ----------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------- | ------ | ----
|                               |                                                                                                 |                                                                                                                                       |        |     
|Part I.  Financial Information |                                                                                                 |                                                                                                                                       |       
|                               | Item 1.  Financial Statements                                                                   |                                                                                                                                       |        |     
|                               |                                                                                                 | Condensed Consolidated Balance Sheet as of September 30, 2002                                                                         |        | 3   
|                               |                                                                                                 | Condensed Consolidated Statements of Income and Comprehensive
 Income for the Three and Nine Months Ended September 30, 2002 and 2001 |        | 4   
|                               |                                                                                                 | Condensed Consolidated Statements of Cash Flows For The Nine
 Months Ended September 30, 2002 and 2001                                |        | 5   
|                               |                                                                                                 | Notes to Condensed Consolidated Financial Statements                                                                                  |        | 6   
|                               | Item 2.  Managements Discussion and Analysis of
 Financial Condition and Results of Operations |                                                                                                                                       | 7 - 11 |     
|                               | Item 3.  Controls and Procedures                                                                |                                                                                                                                       | 11     |     
|Part II.  Other Information    |                                                                                                 |                                                                                                                                       |       
|                               | Item 6.  Exhibits and Reports on Form 8-K                                                       |                                                                                                                                       | 12     |     
|                               | Signatures                                                                                      |                                                                                                                                       | 13     |     
|                               | Certifications                                                                                  |                                                                                                                                       | 14-19  |     



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##### Table of Contents






PART I - FINANCIAL INFORMATION



ITEM I.  FINANCIAL STATEMENTS


SOUTHERN COMMUNITY BANCSHARES, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2002(Unaudited)



|Assets                                                                                             |   |            
|-------------------------------------------------------------------------------------------------- | - | -----------
|Cash and due from banks                                                                            | $ | 3,288,476  
|Federal funds sold                                                                                 |   | 7,848,000  
|Securities available-for-sale, at fair value                                                       |   | 16,112,911 
|Loans                                                                                              |   | 84,735,594 
|Less allowance for loan losses                                                                     |   | 1,018,682  
|                                                                                                   |   |            
|Loans, net                                                                                         |   | 83,716,912 
|                                                                                                   |   |            
|Premises and equipment                                                                             |   | 3,569,869  
|Other assets                                                                                       |   | 695,029    
|                                                                                                   |   |            
|Total assets                                                                                       | $ | 115,231,197
|                                                                                                   |   |            
|Liabilities and Stockholders Equity                                                               |   |            
|Deposits                                                                                           |   |            
|Noninterest-bearing                                                                                | $ | 13,388,076 
|Interest-bearing                                                                                   |   | 85,665,828 
|                                                                                                   |   |            
|Total deposits                                                                                     |   | 99,053,904 
|Securities sold under repurchase agreements                                                        |   | 2,493,138  
|Other liabilities                                                                                  |   | 336,018    
|                                                                                                   |   |            
|Total liabilities                                                                                  |   | 101,883,060
|                                                                                                   |   |            
|Stockholders equity                                                                               |   |            
|Capital stock, no par value; 10,000,000 shares authorized;1,153,864 shares
 issued and outstanding |   | 12,391,795 
|Retained earnings                                                                                  |   | 836,516    
|Accumulated other comprehensive income                                                             |   | 119,826    
|                                                                                                   |   |            
|Total stockholders equity                                                                         |   | 13,348,137 
|                                                                                                   |   |            
|Total liabilities and stockholders equity                                                         | $ | 115,231,197
|                                                                                                   |   |            

The accompanying notes are an integral part of these
 condensed consolidated financial statements.

3



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##### Table of Contents



SOUTHERN COMMUNITY BANCSHARES, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001(Unaudited)



|                                                                                     | Three Months EndedSeptember 30, |           | Nine Months EndedSeptember 30,
|------------------------------------------------------------------------------------ | ------------------------------- | --------- | ------------------------------
|                                                                                     |                                 |           |                               
|                                                                                     | 2002                            |           |                               
|                                                                                     |                                 |           |                               
|Interest income                                                                      |                                 |           |                               
|Loans                                                                                | $                               | 1,649,913 |                               
|Taxable securities                                                                   |                                 | 132,035   |                               
|Nontaxable securities                                                                |                                 | 20,504    |                               
|Federal funds sold                                                                   |                                 | 28,192    |                               
|                                                                                     |                                 |           |                               
|Total interest income                                                                |                                 | 1,830,644 |                               
|                                                                                     |                                 |           |                               
|                                                                                     |                                 |           |                               
|Interest expense                                                                     |                                 |           |                               
|Deposits                                                                             |                                 | 605,127   |                               
|Other borrowings                                                                     |                                 | 8,346     |                               
|                                                                                     |                                 |           |                               
|Total interest expense                                                               |                                 | 613,473   |                               
|                                                                                     |                                 |           |                               
|Net interest income                                                                  |                                 | 1,217,171 |                               
|Provision for loan losses                                                            |                                 | 139,249   |                               
|                                                                                     |                                 |           |                               
|Net interest income after provision for loan losses                                  |                                 | 1,077,922 |                               
|                                                                                     |                                 |           |                               
|Other income                                                                         |                                 |           |                               
|Service charges on deposit accounts                                                  |                                 | 74,920    |                               
|Gain on sales of
 securities available-for-sale                                      |                                 | 32,288    |                               
|Other operating income                                                               |                                 | 46,576    |                               
|                                                                                     |                                 |           |                               
|Total other income                                                                   |                                 | 153,784   |                               
|                                                                                     |                                 |           |                               
|Other expenses                                                                       |                                 |           |                               
|Salaries and employee benefits                                                       |                                 | 385,094   |                               
|Occupancy and equipment expenses                                                     |                                 | 125,712   |                               
|Other operating expenses                                                             |                                 | 237,797   |                               
|                                                                                     |                                 |           |                               
|Total other expenses                                                                 |                                 | 748,603   |                               
|                                                                                     |                                 |           |                               
|Net income before income taxes                                                       |                                 | 483,103   |                               
|Income tax expense                                                                   |                                 | 188,326   |                               
|                                                                                     |                                 |           |                               
|Net income                                                                           |                                 | 294,777   |                               
|                                                                                     |                                 |           |                               
|Other comprehensive income (loss)                                                    |                                 |           |                               
|Unrealized gains on securities
 available-for-sale arising during period, net of tax |                                 | 28,829    |                               
|Reclassification adjustment for
 gains realized in net income, net of tax            |                                 | (21,309   | )                             
|                                                                                     |                                 |           |                               
|Other comprehensive income (loss)                                                    |                                 | 7,520     |                               
|                                                                                     |                                 |           |                               
|Comprehensive income                                                                 | $                               | 302,297   |                               
|                                                                                     |                                 |           |                               
|Basic earnings per common share                                                      | $                               | 0.30      |                               
|                                                                                     |                                 |           |                               
|Diluted earnings per common share                                                    | $                               | 0.30      |                               
|                                                                                     |                                 |           |                               
|Cash dividends declared
 per share of common stock                                   | $                               |          |                               
|                                                                                     |                                 |           |                               

The accompanying notes are an integral part
 of these condensed consolidated financial statements.

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##### Table of Contents



SOUTHERN COMMUNITY BANCSHARES, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001(Unaudited)



|                                                                                   | 2002 |             | 2001
|---------------------------------------------------------------------------------- | ---- | ----------- | ----
|                                                                                   |      |             |     
|OPERATING ACTIVITIES                                                               |      |             |     
|Net income                                                                         | $    | 712,352     |     
|Adjustments to reconcile net income to net cash
 provided by operating activities: |      |             |     
|Depreciation                                                                       |      | 206,818     |     
|Provision for loan losses                                                          |      | 231,248     |     
|Gain on sales of securities available-for-sale                                     |      | (40,035     | )   
|Net other operating activities                                                     |      | (132,818    | )   
|                                                                                   |      |             |     
|Net cash provided by operating activities                                          |      | 977,565     |     
|                                                                                   |      |             |     
|INVESTING ACTIVITIES                                                               |      |             |     
|Purchases of securities available-for-sale                                         |      | (12,184,223 | )   
|Proceeds from maturities of securities available-for-sale                          |      | 4,001,940   |     
|Proceeds from sales of securities available-for-sale                               |      | 5,220,499   |     
|Net increase in federal funds sold                                                 |      | (5,316,000  | )   
|Net increase in loans                                                              |      | (19,028,629 | )   
|Purchase of premises and equipment                                                 |      | (715,185    | )   
|                                                                                   |      |             |     
|Net cash used in investing activities                                              |      | (28,021,598 | )   
|                                                                                   |      |             |     
|FINANCING ACTIVITIES                                                               |      |             |     
|Net increase in deposits                                                           |      | 24,358,924  |     
|Net increase (decrease) in repurchase agreements                                   |      | 282,899     |     
|Proceeds from sale of common stock                                                 |      | 4,286,012   |     
|                                                                                   |      |             |     
|Net cash provided by financing activities                                          |      | 28,927,835  |     
|                                                                                   |      |             |     
|Net increase in cash and due from banks                                            |      | 1,883,802   |     
|Cash and due from banks, beginning of period                                       |      | 1,404,674   |     
|                                                                                   |      |             |     
|Cash and due from banks, end of period                                             | $    | 3,288,476   |     
|                                                                                   |      |             |     

The accompanying notes are an integral part
 of these condensed consolidated financial statements.

5



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##### Table of Contents



SOUTHERN COMMUNITY BANCSHARES, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)



|NOTE 1. |  | BASIS OF PRESENTATION                                                                                                                                                                                                                                                                                                                                                                    
|------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |  |                                                                                                                                                                                                                                                                                                                                                                                          
|        |  | The consolidated financial
 information included for Southern Community
Bancshares, Inc. (the Company) and Southern Community Bank (theBank)
 herein is unaudited; however, such information reflects all
adjustments (consisting solely of normal recurring adjustments) which are, in
the opinion of management, necessary for a fair statement of results for the
interim periods.
|        |  |                                                                                                                                                                                                                                                                                                                                                                                          
|        |  | The results of operations
 for the three and nine month periods ended
September 30, 2002 are not necessarily indicative of the results to be
expected for the full year.                                                                                                                                                                                                                 
|        |  |                                                                                                                                                                                                                                                                                                                                                                                          
|NOTE 2. |  | EARNINGS PER COMMON SHARE                                                                                                                                                                                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                                                          
|        |  | Presented below is a summary of the
 components used to calculate basic and diluted earnings per common share for the periods
 ended September 30, 2002 and 2001.                                                                                                                                                                                                                        



|                                                                                                                                  | Three Months EndedSeptember 30, |         | Nine Months EndedSeptember 30,
|--------------------------------------------------------------------------------------------------------------------------------- | ------------------------------- | ------- | ------------------------------
|                                                                                                                                  |                                 |         |                               
|                                                                                                                                  | 2002                            |         | 2001                          
|                                                                                                                                  |                                 |         |                               
|Net income                                                                                                                        | $                               | 294,777 |                               
|                                                                                                                                  |                                 |         |                               
|Weighted average common shares outstanding                                                                                        |                                 | 967,554 |                               
|Net effect of the assumed exercise of stock options based
 on the treasury stock method using average market price for the period |                                 | 7,207   |                               
|                                                                                                                                  |                                 |         |                               
|Total weighted average common shares
 and common stock equivalents outstanding                                                    |                                 | 974,761 |                               
|                                                                                                                                  |                                 |         |                               
|Diluted earnings per common share                                                                                                 | $                               | 0.30    |                               
|                                                                                                                                  |                                 |         |                               



|NOTE 3. |  | COMMON STOCK OFFERING                                                                                                                                                                                                                
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |  |                                                                                                                                                                                                                                      
|        |  | We are in the process
 of offering to sell a maximum of 640,000 shares of
common stock at a price of $12.50 per share. As of September 30, 2002, we
have sold 342,881 shares of common stock. The offering expires December
31, 2002.

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##### Table of Contents



SOUTHERN COMMUNITY BANCSHARES,
 INC. AND SUBSIDIARY



|Item 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
 AND RESULTS OF OPERATIONS
|------- | --------------------------------------------------------------------------------------

The 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 condensed
 consolidated financial statements.

Forward-Looking Statements

This quarterly report contains certain forward-looking
 statements which are based on certain assumptions and describe future plans, strategies,
 and our expectations. These forward-looking statements are generally identified
 by use of the words believe, expect, intend,
 anticipate, estimate, project, or similar expressions.
 Our ability to predict results or the actual effect of future plans or strategies
 is inherently uncertain. Factors which could have a material adverse effect on
 our operations include, but are not limited to, changes in interest rates, general
 economic conditions, legislation and regulation, monetary and fiscal policies of
 the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve
 Board, the quality or composition of our loan and investment portfolios, demand
 for loan products, deposit flows, competition, demand for financial services in
 our market area, and accounting principles and guidelines. You should consider
 these risks and uncertainties in evaluating forward-looking statements and should
 not place undue reliance on such statements. We will not publicly release the result
 of any revisions which may be made to any forward-looking statements to reflect
 events or circumstances after the date of such statements or to reflect the occurrence
 of anticipated or unanticipated events.

FINANCIAL CONDITION

Total assets increased $29.5 million from
 $85.7 million to $115.2 million, or 34.4% for the nine months ended September 30,
 2002. The increase in total assets in 2002 is slightly less than the 39.3% growth
 for the same period in 2001. The growth in both years continues to be funded primarily
 by increases in total deposits, which increased by $24.4 million in both years.
 The net increase in total assets for the nine months ended September 30, 2002 consisted
 primarily of an increase of $19.0 million in total loans, an increase of $1.9 million
 in cash and due from banks, an increase in Federal funds sold of $5.3 million, and
 an increase of $3.0 million in securities available-for-sale. The loan to deposit
 ratio at September 30, 2002 was 86% compared to 88% at December 31, 2001. The decrease
 in the loan to deposit ratio as compared to December 31, 2001 is due to total loans
 increasing by $19.0 million and total deposits increasing by $24.4 million.

Stockholders equity increased by $5.0
 million for the nine months ended September 30, 2002. This net increase consists
 of net income of $712,000, a decrease in unrealized gains on securities of $11,000
 and proceeds from our stock offering of $4.3 million. We anticipate selling the
 maximum of 640,000 shares by the expiration date of December 31, 2002.

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LIQUIDITY

Liquidity management involves the matching
 of the cash flow requirements of customer withdrawals of funds and the funding of
 loan originations, and the ability of our subsidiary bank to meet those requirements.
 Management monitors and maintains appropriate levels of liquidity so that maturities
 of assets and deposit growth are such that adequate funds are provided to meet estimated
 customer withdrawals and loan requests.

At September 30, 2002, the Banks liquidity
 ratio was 21.99% which is above the Banks target ratio of 20%.

REGULATORY CAPITAL REQUIREMENTS

Banking regulations require us to maintain
 minimum capital levels in relation to assets. At September 30, 2002, the Banks
 capital ratios were considered well capitalized based on regulatory minimum capital
 requirements. The minimum capital requirements and the actual capital ratios for
 the Bank at September 30, 2002 are as follows:



|                          |  | Bank |       | RegulatoryMinimumRequirement
|------------------------- |  | ---- | ----- | ----------------------------
|                          |  |      |       |                             
|Leverage Capital Ratio    |  |      | 9.96  | %                           
|Risk-Based Capital Ratios |  |      |       |                             
|Core Capital              |  |      | 11.78 | %                           
|Total Capital             |  |      | 12.87 | %                           

We are not aware of any recommendations
 by the regulatory authorities, events or trends, which, if they were to be implemented,
 would have a material effect on our liquidity, capital resources, or operations.

RESULTS OF OPERATIONS

Net Interest Income. Net interest
 income increased by $433,000 and $1,230,000 for the three and nine month periods
 ended September 30, 2002, respectively, compared to the same periods in 2001. The
 increase in net interest income for both periods ended September 30, 2002 is attributable
 to an increase in earning assets of $30.4 million as compared to September 30, 2001.
 Loans increased during this period by $24.7 million, which generally provide greater
 yields to the Company. During this same period, total deposits increased by $26.7
 million, which included an increase of $22.5 million in interest-bearing deposits
 and an increase of $4.2 million in non-interest bearing deposits. The increase
 in net interest income is based on the spread between rates earned on interest earning
 assets and rates paid on interest bearing liabilities. The yield on total loans
 for the nine months ended September 30, 2002 is approximately 8.03% as compared
 to 9.82% for the same period in 2001. The yield on total interest earning assets
 for the nine months ended September 30, 2002 was 7.38% compared to 8.59% for the
 same period in 2001, or a decrease of 121 basis points. The rate paid on interest
 bearing liabilities for the same periods decreased by 237 basis points to

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3.12% from 5.49%. These decreases in yields
 are directly related to the decline in interest rates over the past two years.

Due to the increase in overall volume and
 the significant adjustment of rates paid on certificates of deposit, the net interest
 margin increased to 4.79% at September 30, 2002 as compared to 4.04% at September
 30, 2001.

Provision for Loan Losses. The provision
 for loan losses is based on managements evaluation of the economic environment,
 the history of charged off loans and recoveries, size and composition of the loan
 portfolio, nonperforming and past due loans, and other aspects of the loan portfolio.
 We review the allowance for loan loss on a quarterly basis and make provisions
 as necessary. A provision of $231,000 was made during the nine month period ending
 September 30, 2002 based upon this evaluation process as compared to $304,000 for
 the same period in 2001. The allowance for loan loss as a percentage of total loans
 was 1.20% at September 30, 2002, 1.22% at December 31, 2001, and 1.20% at September
 30, 2001. Management believes the allowance for loan loss at September 30, 2002
 is adequate to meet any foreseeable losses in the loan portfolio. The decrease
 in the provision in 2002 as compared to 2001 is reflective of the decrease in loan
 growth for the nine months ended September 30, 2002 as compared to the same period
 in 2001.

At September 30, 2002 and 2001, nonaccrual,
 past due, and restructured loans were as follows:



|                                                                                                          |  | September 30,2002      |     | September 30,2001
|--------------------------------------------------------------------------------------------------------- |  | ---------------------- | --- | -----------------
|                                                                                                          |  |                        |     |                  
|                                                                                                          |  | (Dollars in thousands)
|Total nonaccruing loans                                                                                   |  | $                      | 18  |                  
|Loans contractually past due ninety days or
 more as to interest or principal payments and still accruing |  |                        | 135 |                  
|Restructured loans                                                                                        |  |                        |    |                  

The increase in past due loans over ninety
 days consists primarily of loans that are secured by real estate. We do not anticipate
 any significant losses on these loans due to our collateral position in these loans.

It is our policy to discontinue the accrual
 of interest income when, in the opinion of management, collection of such interest
 becomes doubtful. This status is accorded such interest when (1) there is a significant
 deterioration in the financial condition of the borrower and full repayment of principal
 and interest is not expected or (2) the principal or interest is more than ninety
 days past due, unless the loan is both well-secured and in the process of collection.
 Accrual of interest on such loans is resumed when, in managements judgment,
 the collection of interest and principal becomes probable.

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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 borrowers to comply with the loan repayment terms.

Information regarding certain loans and
 allowance for loan loss data for the nine months ended September 30, 2002 and 2001
 is as follows:



|                                                                               |  | Nine Months EndedSeptember 30,
|------------------------------------------------------------------------------ |  | ------------------------------
|                                                                               |  |                               
|                                                                               |  | 2002                          
|                                                                               |  |                               
|                                                                               |  | (Dollars in thousands)        
|Average amount of loans outstanding                                            |  | $                             
|                                                                               |  |                               
|Balance of allowance for loan losses at beginning
 of period                   |  | $                             
|Loans charged off                                                              |  |                               
|Commercial and financial                                                       |  |                               
|Real estate                                                                    |  |                               
|Installment                                                                    |  |                               
|                                                                               |  |                               
|                                                                               |  |                               
|                                                                               |  |                               
|Loans recovered                                                                |  |                               
|Commercial and financial                                                       |  |                               
|Real estate                                                                    |  |                               
|Installment                                                                    |  |                               
|                                                                               |  |                               
|                                                                               |  |                               
|                                                                               |  |                               
|Net charge-offs                                                                |  |                               
|                                                                               |  |                               
|Additions to allowance charged to operating
 expense during period             |  |                               
|                                                                               |  |                               
|Balance of allowance for loan losses at end
 of period                         |  |                               
|                                                                               |  |                               
|Ratio of net loans charged-off during the
 period to average loans outstanding |  |                               
|                                                                               |  |                               

Other Income. Other income increased
 by $91,000 and decreased by $82,000 for the three and nine months ended September
 30, 2002, respectively, compared to the same periods in 2001. The most significant
 difference which affected the nine month period was a decrease in gains on sales
 of securities available-for-sale of $195,000. During 2001, loan growth was partially
 funded with the proceeds from the sale of securities. The decrease in other income
 was offset by an increase in service charges on deposit accounts of $35,000 and
 $98,000 for the three and nine months ended September 30, 2002, respectively. The
 increase in service charges is directly related to the growth in deposit accounts.

10



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Other Expenses. Other expenses increased
 by $201,000 and $659,000 for the three and nine months ended September 30, 2002
 as compared to the same periods in 2001. The most significant increases in 2002
 are increases of $81,000 and $288,000 in salaries and employee benefits and other
 operating expenses of $87,000 and $302,000 for the three and nine month periods
 ended September 30, 2002, respectively. The increase in salaries and employee benefits
 for both the three and nine month periods represent normal increases in salaries
 and an increase in the number of employees. At September 30, 2002, the number of
 full-time equivalent employees was 33 compared to 28 at September 30, 2001. Other
 operating expenses include one-time expenses of $121,000 related to the formation
 of the holding company and stock offering. Beginning in the fourth quarter of 2001,
 the Company began paying director fees which total $46,000 for the nine months ended
 September 30, 2002. The remaining increases in other operating expenses include
 increases in expenses directly related to increased activity in both loans and deposits.

Income Taxes. Income tax expense
 increased by $188,000 and $442,000 for the three and nine months ended September
 30, 2002 as compared to 2001. The effective tax rate for 2002 and 2001 was 38%
 and %, respectively. Prior to 2002, the Company had net operating loss carryforwards
 which were utilized to reduce tax expense.

Net Income. Net income increased
 by $89,000 and $119,000 for the three and nine months ended September 30, 2002 as
 compared to the same period in 2001. The primary reason for the increase in net
 income for the three and nine months ended September 30, 2002 as compared to the
 same period in 2001 is the increase in net interest income.




Item 3. CONTROLS AND PROCEDURES

Within 90 days prior to the date of filing
 of this report, we carried out an evaluation, under the supervision and with the
 participation of our Chief Executive Officer and the Chief Financial Officer, of
 the design and operation of our disclosure controls and procedures. Based on this
 evaluation, our Chief Executive Officer and the Chief Financial Officer concluded
 that our disclosure controls and procedures are effective for gathering, analyzing
 and disclosing the information that we are required to disclose in the reports we
 file under the Securities Exchange Act of 1934, within the time periods specified
 in the SECs rules and forms. Our Chief Executive Officer and the Chief Financial
 Officer also concluded that our disclosure controls and procedures are effective
 in timely alerting them to material information relating to our company required
 to be included in our periodic SEC filings. In connection with the new rules, we
 are in the process of further reviewing and documenting our disclosure controls
 and procedures, including our internal controls and procedures for financial reporting,
 and may from time to time make changes designed to enhance their effectiveness and
 to ensure that our systems evolve with our business.

There have been no significant changes in
 our internal controls or in other factors that could significantly affect internal
 controls subsequent to the date of this evaluation.

11



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##### Table of Contents






PART II - Other Information



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

|               |      |         |  |                                                                              
|-------------- | ---- | ------- |  | -----------------------------------------------------------------------------
|Exhibit
Number |      | Exhibit
|               |      |        
|               | 99.1 |         |  | Certificate of CEO pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|              
|               | 99.2 |         |  | Certificate of CFO pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.

12



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##### Table of Contents






SIGNATURES

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



|                         | SOUTHERN
 COMMUNITY    
|------------------------ | -----------------------
|                         | BANCSHARES, INC.       
|                         |                        
|                         |                        
|Date: November
 14, 2002 | /s/ Gary
 McGaha       
|                         |                        
|                         | Gary McGaha            
|                         | President
 and Director
|                         |                        
|                         |                        
|Date:
 November 14, 2002 | /s/
 Leslye Grindle    
|                         |                        
|                         | Leslye Grindle         
|                         | Vice President and     
|                         | Chief Financial Officer

13



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##### Table of Contents



CERTIFICATIONS

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Gary McGaha, President and C.E.O., certify that:



|1. |  | I have reviewed this quarterly report on Form 10-QSB of Southern
Community Bancshares, Inc.                                                                                                                                                                                                                                   
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;                   
|  
|4. |  | The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:                                                                                                         



| | a. |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiary, is made known to us by others within
that entity, particularly during the period in which this
quarterly report is being prepared;
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing of this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c. |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;                                                                                                                   



|5. |  | The registrants other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the
audit committee of registrants board of directors:
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a. |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data
and have identified for the registrants auditors any material
weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        

14



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##### Table of Contents





|6. |  | The registrants other certifying officer and I have indicated in this
quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                        |  |                                                   
|----------------------- |  | --------------------------------------------------
|Date: November 14, 2002 |  |                                                   
|                        |  |                                                   
|                        |  | /s/ Gary McGaha                                   
|                        |  |                                                   
|                        |  | Gary McGaha, President and
Chief Executive Officer

15



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##### Table of Contents



CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Leslye Grindle, C.F.O., certify that:



|1. |  | I have reviewed this quarterly report on Form 10-QSB of Southern
Community Bancshares, Inc.                                                                                                                                                                                                                                   
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;                   
|  
|4. |  | The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:                                                                                                         



| | a. |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiary, is made known to us by others within
that entity, particularly during the period in which this
quarterly report is being prepared;
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to
the filing of this quarterly report (the Evaluation Date);
and                                                                                                  
|
| | c. |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;                                                                                                                   



|5. |  | The registrants other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the
audit committee of registrants board of directors:
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a. |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrants ability to record, process, summarize and report
financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the
registrants internal controls; and                                                                                                                                        

16



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##### Table of Contents





|6. |  | The registrants other certifying officer and I have indicated in this
quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                        |  |                                                           
|----------------------- |  | ----------------------------------------------------------
|Date: November 14, 2002 |  |                                                           
|                        |  |                                                           
|                        |  | /s/ Leslye Grindle                                        
|                        |  |                                                           
|                        |  | Leslye Grindle, Vice President and
Chief Financial Officer

17