SECURITIES AND EXCHANGE COMMISSION

                             Washington, D. C. 20549

                                    FORM 10-Q

                QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the Quarterly Period Ended March 31, 1997

                           Commission File No. 2-89588

                        COMMUNITY BANKSHARES INCORPORATED
             (Exact name of registrant as specified in its charter)

                   Virginia                             54-1290793
          (State of Incorporation)          (I.R.S. Employer Identification No.)


                            200 North Sycamore Street
                                  P.O. Box 2166
                           Petersburg, Virginia 23804
                    (Address of principal executive offices)

                                 (804) 861-2320
                         (Registrant's telephone number)

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


Indicate the number of shares outstanding of each of the registrant's classes of
common  stock as of March 31, 1997:  Common  Stock,  $3.00 par value,  1,901,080
shares.
<PAGE>
                        COMMUNITY BANKSHARES INCORPORATED
                                    FORM 10-Q

                                 March 31, 1997


                                     INDEX

                                                                           Page
                                                                           ----

Part I.  Financial Information

         Consolidated Balance Sheets as of March 31, 1997
                and December 31, 1996                                       3

         Consolidated Statements of Income for the three months and
                fiscal year to date ended March 31, 1997 and 1996           4

         Consolidated Statements of Cash Flows for the three
                 months ended March 31, 1997 and 1996                       5

          Management's Discussion and Analysis of the Financial
                  Condition and Results of Operations                       6


Part II.  Other Information                                                12
<PAGE>
Part I.  Financial Information

                                       COMMUNITY BANKSHARES INCORPORATED
                                    Consolidated Balance Sheets (Unaudited)
                                                (In Thousands)
<TABLE>
<CAPTION>
<S> <C>
                                                     March 31,             December 31,
ASSETS                                                 1997                   1996
------                                                 ----                   ----

Cash and cash equivalents:
       Cash and due from banks                       $   9,094              $   9,338
       Federal funds sold                            $   6,058              $   5,392
                                                     ---------              ---------
                   Total cash and cash equivalents   $  15,152              $  14,730
                                                     ---------              ---------

Securities available for sale, at fair value         $  19,559              $  19,337
Investment securities                                $  16,180              $  16,886
                                                     ---------              ---------
                   Total securities                  $  35,739              $  36,223
                                                     ---------              ---------

Loans, net of unearned income                        $ 117,894              $ 116,381
      Less allowance for loan losses                 $   1,369              $   1,246
                                                     ---------              ---------
                   Net loans                         $ 116,525              $ 115,135

Bank premises and equipment, net                     $   2,594              $   2,653
Other real estate owned                              $     501              $     767
Accrued interest receivable                          $   1,180              $   1,081
Other assets                                         $   1,640              $   1,425
                                                     ---------              ---------

                   Total assets                      $ 173,331              $ 172,014
                                                     =========              =========
LIABILITIES AND STOCKHOLDER'S EQUITY
Deposits:
     Demand deposits                                 $  25,495              $  28,498
     Interest-bearing demand deposits                $  42,933              $  39,865
     Savings deposits                                $  28,871              $  27,479
     Time Deposits, $100,000 and over                $  11,132              $  10,752
     Other time deposits                             $  44,176              $  45,412
                                                     ---------              ---------
                   Total deposits                    $ 152,607              $ 152,006
                                                     ---------              ---------

Accrued interest payable                             $     480              $     478
Other liabilities                                    $     779              $     541
Guaranteed debt of Employee Stock
        Ownership Trust                              $     240              $     240
                                                     ---------              ---------
                   Total liabilities                 $ 154,106              $ 153,265
                                                     ---------              ---------

Stockholder's equity
     Capital stock                                   $   5,703              $   5,703
     Surplus                                         $   1,712              $   1,712
     Retained earnings                               $  12,413              $  11,717
     Unrealized gains (losses) on securities
          available for sale, net of taxes           $    (365)             $    (145)
                                                     ---------              ---------
                   Total stockholder's equity        $  19,463              $  18,987
                                                     ---------              ---------
                   Unearned ESOP shares              $    (238)             $    (238)

                   Total liabilities and
                           stockholder's equity      $ 173,331              $ 172,014
                                                     =========              =========


                                         - 3 -
<PAGE>
                                              COMMUNITY BANKSHARES INCORPORATED
                                        Consolidated Statements of Income (Unaudited)
<CAPTION>

                                                                                                       Fiscal year to date
                                                                              Quarter ended             Three months ended
                                                                                 March 31,                  March 31,
                                                                         -----------------------       --------------------
                                                                           1997           1996          1997          1996
                                                                           ----           ----          ----          ----
Interest  income:
       Interest and fees on loans                                          $2,837        $2,728        $2,837        $2,728
       Interest on securities:
              U.S. Treasury securities and U.S.government
                      agency and corporation obligations                   $  576        $  516        $  576        $  516
              Obligations of states and political subdivisions
             Taxable securities                                            $    5        $    5        $    5        $    5
             Tax-exempt securities                                         $   25        $   12        $   25        $   12
              Other securities                                             $   15        $   22        $   15        $   22
       Interest on Federal funds sold                                      $   56        $   74        $   56        $   74
                                                                           ------        ------        ------        ------
                              Total interest income                        $3,514        $3,357        $3,514        $3,357

Interest expense:
       Interest on deposits                                                $1,355        $1,347        $1,355        $1,347
       Interest on Federal funds purchased                                 $ --          $    2        $ --          $    2
                                                                           ------        ------        ------        ------

                              Total interest expense                       $1,355        $1,349        $1,355        $1,349
                                                                           ------        ------        ------        ------
                               Net interest income                         $2,159        $2,008        $2,159        $2,008
                                                                           ------        ------        ------        ------

Provision for loan losses                                                  $ --          $   50        $ --          $   50
                          Net interest income after provision
                                    for loan losses                        $2,159        $1,958        $2,159        $1,958
                                                                           ------        ------        ------        ------

Other income:
       Service charges, commissions and fees                               $  237        $  266        $  237        $  266
       Security gains (losses)                                             $ --          $   29        $ --          $   29
       Gain on sale of bank premises and equipment                         $ --          $ --          $ --          $ --
       Gain on sale of other real estate                                   $ --          $   40        $ --          $   40
       Other operating income                                              $   61        $    5        $   61        $    5
                                                                           ------        ------        ------        ------

                              Total other income                           $  298        $  340        $  298        $  340

Other expenses:
       Salaries and benefits                                               $  767        $  707        $  767        $  707
       Expense on premises and fixed assets, net                           $  211        $  209        $  211        $  209
       Other operating expenses                                            $  371        $  317        $  371        $  317
                                                                           ------        ------        ------        ------

                              Total other expenses                         $1,349        $1,233        $1,349        $1,233

Income before income taxes                                                 $1,108        $1,065        $1,108        $1,065
Income tax expense                                                         $  411        $  374        $  411        $  374
                                                                           ------        ------        ------        ------

                              Net income                                   $  697        $  691        $  697        $  691
                                                                           ------        ------        ------        ------
Earnings per common and common equivalent
        shares (based on 1,973,848; 1,999,930
         1,973,848; 1,939,101 respectively)                                 $0.35         $0.35         $0.35         $0.35
                                                                           ------        ------        ------        ------
Earnings per common share, assuming full
         dilution( based on 1,973,848; 1,999,930
         1,973,848; 1,999,930 respectively)                                 $0.35         $0.35         $0.35         $0.35
                                                                           ------        ------        ------        ------

                                                            - 4 -

<PAGE>
                                         COMMUNITY BANKSHARES INCORPORATED
                                 Consolidated Statements of Cash Flows (Unaudited)
                                    Three Months Ended March 31, 1997 and 1996
<CAPTION>

                                                                                          1997             1996
                                                                                          ----             ----
Cash Flows from Operating Activities
     Net income                                                                         $    755         $    691
     Adjustments to reconcile net income to net cash and
            cash equivalents provided by operating activities:
                  Depreciation of bank premises and equipment                           $     86         $     91
                  Provision for loan losses                                             $   --           $     50
                  Amortization and accretion of investment securities                   $      4         $      5
                  (Gain) loss on sale of bank premises and equipment                    $   --           $   --
                  (Gain) loss on sale of other securities                               $   --           $   --
                  (Gain) loss on sale of other real estate                              $     30         $    (40)
                  Changes in operating assets and liabilities:
                            (Increase) Decrease in accrued interest receivable          $    (99)        $    (95)
                            (Increase) Decrease in prepaid expenses                     $     (9)        $    (61)
                            (Increase) Decrease in accrued interest payable             $      2         $    (21)
                            (Increase) Decrease in unrealized securities losses         $   (211)        $   (119)
                            (Increase) Decrease in deferred income taxes                $   (177)        $    (72)
            Net change in other operating assets and liabilities                        $    213         $     15
                                                                                        --------         --------

                               Net cash and cash equivalents provided
                                    by operating activities                             $    594         $    444

Cash Flows from Investing Activities
     Proceeds from sale of investment securities                                        $  1,220         $  4,722
     Proceeds from maturities of investment securities                                  $  1,091         $  1,214
     Purchase of investment securities                                                  $ (1,345)        $ (6,457)
     Purchase of other real estate                                                      $   (206)        $    (20)
     Net increase in loans                                                              $ (1,389)        $ (3,460)
     Proceeds from sale of bank premises and equipment                                  $   --           $   --
     Proceeds from sale of other real estate                                            $    441         $    185
     Capital expenditures                                                               $    (27)        $    (37)
                                                                                        --------         --------
                               Net cash and cash equivalents used in
                                    investing activities                                $   (215)        $ (3,853)

Cash Flows from Financing Activities
     Net increase (decease) in deposits                                                 $     44         $   (473)
     Net increase (decrease) in federal funds purchased                                 $   --           $    720
     Issuance of common stock                                                           $   --           $    102
     Dividends paid                                                                     $   --           $   --
                                                                                        --------         --------
                               Net cash and cash equivalents provided
                                    by financing activities                             $     44         $    349

Increase (decrease) in cash and cash equivalents                                        $    423         $ (3,060)

Cash and cash equivalents at beginning of period                                        $ 14,729         $ 13,652
                                                                                        --------         --------

Cash and cash equivalents at end of period                                              $ 15,152         $ 10,592
                                                                                        --------         --------

Supplemental Disclosure of Cash Flow Information
     Cash payments for:
            Interest                                                                    $  1,352         $  1,382
                                                                                        --------         --------

            Income taxes                                                                $   --           $    456
                                                                                        --------         --------
</TABLE>


                                                       - 5 -

<PAGE>

MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS




     Community  Bankshares  Incorporated (the "Company") is a multi-bank holding
company organized under Virginia law which provides  financial  services through
its wholly-owned subsidiaries, The Community Bank and Commerce Bank of Virginia.
Both subsidiary  banks are full service retail  commercial banks offering a wide
range of  banking  services,  including  demand  and time  deposits,  as well as
commercial,  industrial,  residential  construction,  residential  mortgage  and
consumer loans. The Company's  primary trade areas are the Petersburg,  Virginia
area and the Richmond, Virginia area. The Company operates nine branch locations
in these trade areas.

     The following discussion provides information about the major components of
the  results of  operations  and  financial  condition,  liquidity  and  capital
resources of Community  Bankshares  Incorporated.  This  discussion and analysis
should be read in conjunction with the Consolidated Financial Statements.

Overview. Net income for the first three months of 1997 of $0.697 million was an
increase of .87% over the first three months of 1996. Earnings per share for the
three months ended March 31, 1997 was $.35  compared to $.35 for the same period
last year.

     The  Company's  return on average  equity has decreased for the first three
months of 1997 over 1996.  The return on average equity was 14.31% for the three
months ended March 31, 1997,  compared to 16.52% in 1996.  The return on average
assets amounted to 1.61% and 1.71% for the three months ended March 31, 1997 and
1996.

Net Interest  Income.  Net interest  income  represents the principal  source of
earnings  for the  Company.  Net  interest  income  equals  the  amount by which
interest  income  exceeds  interest  expense.  Changes  in the volume and mix of
interest-earning  assets  and  interest-bearing  liabilities,  as well as  their
respective  yields  and  rates,  have a  significant  impact on the level of net
interest income.

     Net interest income  increased 10.27% to $2.159 million for the first three
months of 1997.  This increase was  attributable  to the growth in the Company's
loan portfolio.  Total loans  outstanding  increased 1.21%, or $1.21 million for
the first three  months of 1997.  The Company has had a  consistent  increase in
loan demand.  It is management's  belief that the increase in the lending volume
is a result of  competitive  pricing and,  responsiveness  to loan demands.  The
ability to make timely loan decisions is an operating characteristic that often

                                      - 6 -
<PAGE>


allows the Company the  opportunity to meet the needs of borrowers  before their
competitors.  The Company is competitive with rates and origination fees charged
on loans. However,  since 67.31% of the entire loan portfolio may be repriced in
one year or less,  the  Company  has the  ability to  respond  quickly to market
changes in rate structures.

     Interest expense for the three months ended March 31, 1997,  increased only
0.44% to $1.355  million as compared  to $1.349  million for the same period one
year  earlier.  This  small  increase  was due to an  increase  in the volume of
interest-bearing liabilities.

Provision for Possible  Loan Losses.  The provision for possible loan losses was
not  increased for the first three months of 1997 as compared to $50,000 for the
same period one year earlier.  This provision is an estimate of an amount deemed
adequate to provide for potential  losses in the portfolio.  The level of losses
is  affected  by  general  economic  trends  as  well  as  conditions  affecting
individual borrowers.  The allowance is also subject to regulatory  examinations
and  determination  as to adequacy,  which may take into account such factors as
the methodology used to calculate the allowance and comparison to peer groups.

     The allowance for loan losses  totaled  $1.369 million at March 31, 1997 or
1.16% of total  loans,  as  compared to $1.246 or 1.07% at  December  31,  1996.
Non-performing assets totaled $1.686 million at March 31,1997 compared to $2.070
million at December 31, 1996.  The multiple of the  allowance for loan losses to
non-performing  assets  was 0.81x at March 31,  1997 and 0.61x at  December  31,
1996.  Management  constantly  evaluates  non-performing loans relative to their
collateral value and makes appropriate reductions in the carrying value of those
loans based on that review.

     The  allowance for loan losses  related to loans  identified as impaired is
primarily  based on the  excess  of the  loan's  current  outstanding  principal
balance over the estimated  fair market value of the related  collateral.  For a
loan that is not  collateral-dependent,  the allowance is recorded at the amount
by which the outstanding principal balance exceeds the current best estimate for
the future cash flows on the loan  discounted at the loan's  effective  interest
rate.

     Loans, including impaired loans, are generally placed in non-accrual status
when they are delinquent in principal and interest payments greater than 90 days
and the loan is not well  secured  and in process  of  collection.  Accruals  of
interest  are  discontinued  until it becomes  certain that both  principal  and
interest can be repaid. The Company does have loans that are contractually past



                                      - 7 -


<PAGE>

due greater  than 90 days that are not in  non-accrual  status,  however,  those
loans are still  accruing  because  they are well  secured and in the process of
collection.  A loan  is well  secured  if  collateralized  by  liens  on real or
personal property, including securities, that have a realizable value sufficient
to discharge the debt in full or by the  guarantee of a financially  responsible
party.

     If foreclosure of property is required, the property is generally sold at a
public auction in which the Company may participate as a bidder.  If the Company
is the successful  bidder, the acquired real estate property is then included in
the Company's real estate owned account until it is sold.

Non-Interest  Income.  For the three months  ended March 31, 1997,  non-interest
income  decreased  $42,000  or 12.35% to  $0.298million  as  compared  to $0.340
million one year  earlier.  The decrease was primarily due to a one time gain on
the sale of other  real  estate  owned in the  amount  of  $40,000  in the first
quarter of last year.

Non-Interest  Expense.  Non-interest  expense  of $1.349  million  for the three
months ended March 31, 1997, was an increase of $0.116 million or 9.41% over the
$1.233  million for the same period last year.  Salaries and employee  benefits,
the largest component on non-interest  expense increased 8.49% to $0.767 million
for the first three months of 1997.

Financial Condition

     Total  assets as of March 31, 1997 were  $173.331  million,  an increase of
0.77% from $172.014  million at December 31, 1996. Net loan volume for the three
months  ended March 31, 1997 stood at  $116.525  million,  an increase of $1.390
million or 1.21% over the $115.135 million recorded at December 31, 1996.

     Deposits  for the three  months  ended  March 31,  1997  stood at  $152.607
million an increase of $0.601 million or 0.40% over the $152.006 at December 31,
1996.

     Total  securities  for the three  months  ended March 31, 1997 were $35.739
million a  decrease  of $0.484  million  or 1.21%  from the  $36.223  million at
December 31, 1996. The securities portfolio is maintained to manage excess funds
in  order  to  provide  diversification  and  liquidity  in  the  overall  asset
management policy.  The maturity of securities  purchased are based on the needs
of the Company and current yields and other market conditions.

     Securities  are  classified as  held-to-maturity  when  management  has the
positive  intent and the Company has the ability at the time of purchase to hold
them  until  maturity.  These  securities  are  carried  at cost,  adjusted  for
amortization of premium and accretion of discount. Securities to be held for

                                      - 8 -


<PAGE>

indefinite  periods  of time and not  intended  to be  held-to-maturity  or on a
long-term basis are classified as  available-for-sale  and accounted for at fair
market value on an aggregate  basis.  Unrealized gains or losses are reported as
increases or decreases in stockholder's equity, net of the related tax effect.


Capital Resources

     Capital resources represent funds, earned or obtained, over which financial
institutions  can exercise greater or longer control in comparison with deposits
or  borrowed  funds.  The  adequacy  of the  Company's  capital is  reviewed  by
management  on an ongoing  basis with  reference to the size,  composition,  and
quality of the Company's resources and consistency with regulatory  requirements
and industry  standards.  Management seeks to maintain a capital  structure that
will assure an adequate level of capital to support anticipated asset growth and
absorb potential losses.

     The Federal  Reserve,  along with the  Comptroller  of the Currency and the
Federal  Deposit  Insurance  Corporation,  has  adopted  capital  guidelines  to
supplement the existing  definitions  of capital for regulatory  purposes and to
establish minimum capital  standards.  Specifically,  the guidelines  categorize
assets and  off-balance  sheet  items into four  risk-weighted  categories.  The
minimum ratio of qualifying  total capital to  risk-assets is 8.0% of which 4.0%
must be Tier 1 capital,  consisting of common  equity,  retained  earnings and a
limited amount of perpetual preferred stock, less certain goodwill items.




                                      - 9 -
<PAGE>



     At March 31, 1997,  the Company's  ratio of total capital to  risk-weighted
assets was 18.02%  and its ratio of Tier 1 capital to  risk-weighted  assets was
16.85%.  Both ratios  exceeded the fully  phased-in  capital  requirements.  The
following  summarizes  the Company's  regulatory  capital and related  ratios at
March 31, 1997 (dollars in thousands):

                  Tier 1 Capital                              $ 19.590
                  Tier 2 Capital                              $  1.369
                  Total risk-based capital                    $ 19.590
                  Total risk-weighted assets                  $116.285

                    Capital Ratios:
                    Tier 1 risk-based capital  ratio            16.85%
                    Total risk-based capital  ratio             18.02% 
                    Tier 1 Capital to average total assets      11.56%


Liquidity

     Liquidity  represents an  institution's  ability to meet present and future
financial  obligations through either the sale or maturity of existing assets or
the acquisition of additional funds through liability management.  Liquid assets
include  cash,   interest-bearing  deposits  with  banks,  federal  funds  sold,
investments  and loans  maturing  within one year.  As a result of the Company's
management  of liquid  assets and the  ability  to  generate  liquidity  through
liability  funding,  management  believes  that the  Company  maintains  overall
liquidity  sufficient to satisfy its  depositors'  requirements  and to meet its
customer's credit needs.

    For the three  months  ended  March 31, 1997 the  Company  provided  cash or
liquidity  from  operations  in the amount of $0.594  million.  This increase in
funds in  addition  to $.044  million in net cash  provided  by an  increase  in
deposits  and other  financing  activities  provided  a total of $0.638  million
available for investing during the first three months of 1997. The Company's net
investing  activities  used $0.215 million in the same period,  which produced a
net  increase  in  liquidity  of  approximately  $0.423  million.  Cash and cash
equivalents on hand at March 31, 1997 totaled  $15.152  million.  With 67.31% of
the loan portfolio  repricing or maturing in the next twelve months, the Company
has enough asset liquidity to meet the needs of maturing deposits.




                                     - 10 -
<PAGE>

Other Matters

     On January 14, 1997, the Board of Directors unanimously voted to enter into
an  Agreement  and  Plan for  Reorganization  (the  plan)  with  County  Bank of
Chesterfield  to combine  their  businesses.  County Bank of  Chesterfield  is a
Virginia state bank with its principal  office located in Midlothian,  Virginia.
The  combination of the two companies was  consummated  through a Share Exchange
under  Virginia law.  Under the terms of the Plan,  County Bank of  Chesterfield
will become a wholly-owned subsidiary of Community Bankshares Incorporated.  For
each share owned, the  shareholders of County Bank of Chesterfield  will receive
1.1054 shares of stock of Community  Bankshares  Incorporated.  The  transaction
will be accounted  for as a pooling of  interests.  CBI received an opinion from
its  independent  accounting  firm that the  transaction  does  qualify for such
accounting treatment.  The Stockholders of Community Bankshares Incorporated and
County Bank of  Chesterfield  will vote on approval  of the  Agreement  at their
Annual  Meetings  on  June  5,  1997.  If  adopted  by the  shareholders,  it is
anticipated  that the transaction  will become effective in the third quarter of
1997. The proposed transaction is subject to approval by regulatory authorities.

     If the  transaction  had been  consummated  prior to March  31,  1997,  the
accompanying financial statements would have included the financial position and
results  of  operations  of Count Bank of  Chesterfield.  Interest  income,  net
income,  and net income per share for the two years  ended  March 31, 1997 would
have been as follows:



                                   3/31/97          3/31/96           12/31/96
                                 (In thousands, except earnings per share data)

Interest Income                     $1,571           $1,471            $6,167
Net Income                          $  185           $  196            $  831
Earnings per common
   and equivalent share             $  .23           $  .25            $ 1.05
Earnings per common
   share, assuming full
   dilution                         $  .23           $  .25            $ 1.05





                                     - 11 -
<PAGE>

Part II. Other Information

Item:    1   Legal proceedings         None

         2   Changes in securities     None

         3   Defaults upon senior securities    None

         4   Results of votes of security holders        None

         5   Other information         None

         6   Exhibits and Reports on Form 8-K   None





























                                     - 12 -

<PAGE>

SIGNATURES

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




COMMUNITY BANKSHARES INCORPORATED




s/ Nathan S. Jones, 3rd.
-------------------------------------------------
Nathan S. Jones, 3rd
President and Chief Executive Officer





s/ Thomas H. Caffrey, Jr.
-------------------------------------------------
Thomas H. Caffrey, Jr.
Senior Vice President and Chief Financial Officer



Date:  May 14, 1997