<PAGE>
 
                    U.S. SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, DC   20549
 
                                  FORM 10-QSB

 
     [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE 
          SECURITIES EXCHANGE ACT OF 1934
 
          For the quarterly period ended December 31, 1996
 
     [ ]  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 0-24476
                                               -------

                   SOUTH CAROLINA COMMUNITY BANCSHARES, INC.
                   -----------------------------------------
            (Exact name of Registrant as specified in its Charter)


            Delaware                                    22-0999615
-------------------------------          ---------------------------------------
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
 incorporation or organization)

110 S. Congress Street, Winnsboro, South Carolina            29180
-------------------------------------------------         ----------
     (Address of principal executive offices)             (Zip Code)

Registrant's telephone number, including area code: (803) 635-5536
                                                    --------------

          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 (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.

                                       X  Yes      No
                                      ---      ---        

          As of December 31, 1996, there were 705,410 shares of the Registrant's
common stock, par value $0.01 per share, outstanding. The Registrant has no
other classes of common equity outstanding.

          Transitional small business disclosure format:

                                          Yes     X  No
                                      ---        ---   
<PAGE>
 
                   SOUTH CAROLINA COMMUNITY BANCSHARES, INC.
                                AND SUBSIDIARY


                           WINNSBORO, SOUTH CAROLINA

                                     Index


<TABLE>
<CAPTION>
PART I.                                                                                   PAGE(S)
-------                                                                                   -------
<S>                                                                                      <C>

FINANCIAL INFORMATION

ITEM 1.
Financial Statements
 
Consolidated Balance Sheets-(Unaudited) as of June 30, 1996, and December 31, 1996........     3 
 
Consolidated Statements of Income - (Unaudited) for the three and six months
  ended December 31, 1995 and 1996........................................................     4
 
Consolidated Statements of Stockholders' Equity (unaudited)...............................     5
 
Consolidated Statements of Cash Flows - (Unaudited) for the three and six months
  ended December 31, 1995 and 1996........................................................   6-7
 
Notes to (Unaudited) Consolidated Financial Statements....................................   8-9
 
ITEM 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations..... 10-13
 
PART II.
--------
 
OTHER INFORMATION
 
Item 1.   Legal Proceedings...............................................................    14
                                                                            
Item 2.   Changes in Securities...........................................................    14
                                                                            
Item 3.   Defaults Upon Senior Securities.................................................    14
 
Item 4.   Submission of Matters to a Vote of Security Holders.............................    14
                                                                            
Item 5.   Other Information...............................................................    15
                                                                                                          
Item 6.   Exhibits and Reports on Form 8-K ...............................................    15 
                                                                          
Signatures................................................................................    16
 
Exhibit 27 Financial Data Schedule........................................................ 17-18
</TABLE>

                                       2
<PAGE>
 
                   SOUTH CAROLINA COMMUNITY BANCSHARES, INC.
                                AND SUBSIDIARY

                          Consolidated Balance Sheets
                                  (Unaudited)
                       (in thousands, except share data)
<TABLE>
<CAPTION>
 
                                                JUNE 30,   DECEMBER 31,
                                              -------------------------
ASSETS                                            1996         1996
------                                        ------------  -----------
<S>                                           <C>           <C>
Cash and due from banks                          $   416        $   135
Interest earning deposits                          4,171          4,885
Investment securities:                
  Held to maturity (market value of                 
   $4,774 and $3,679)                              4,749          3,650 
Loans receivable, net                             33,338         35,475
Mortgage-backed securities:
  Held to maturity (market value of $62       
   and $55)                                           62             55
Premises and equipment, net                          415            530
Federal Home Loan Bank stock                         429            429
Interest receivable                                  347            339
Real estate                                          156            245
Prepaid expenses and other assets                     89            176
                                                 -------        -------
                                      
          Total assets                           $44,172        $45,919
                                                 =======        =======
                                            
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
 
Deposits                                         $31,273        $33,500
Advance payments for taxes and insurance              23             17
Accrued expenses and other liabilities               385            355
Income taxes:                                  
  Current                                             68             27
  Deferred                                           114            131
                                                 -------        -------
          Total liabilities                       31,863         34,030
                                                 -------        -------
Stockholders' equity:                                
  Preferred stock ($.01 par value, 200,00              
     shares authorized; none outstanding)             -              -
  Common stock ($.01 par value, 1,400,000         
   shares authorized; 780,275 shares issued;       
   735,410 outstanding at June 30, 1996,    
   and 705,410 at December 31, 1996)                   8              8
  Paid in capital                                  7,279          7,297
  Retained earnings, substantially                 
   restricted                                      6,769          6,724 
  Treasury stock, at cost (44,865 shares              
   at June 30, 1996 and 74,865 at                 
   December 31, 1996)                               (790)        (1,255) 
  Unearned compensation:                          
    Employee Stock Ownership Plan                   (514)          (481)
    Management Recognition Plan                     (443)          (404)
                                                 -------        -------
          Total stockholders' equity              12,309         11,889
                                                 -------        -------
                                                  
          Total liabilities and            
           stockholders' equity                  $44,172        $45,919
                                                 =======        ======= 
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.

                                       3
<PAGE>
 
                   SOUTH CAROLINA COMMUNITY BANCSHARES, INC.
                                AND SUBSIDIARY

                       Consolidated Statements of Income
                                  (Unaudited)
                  (in thousands, except net income per share)
<TABLE>
<CAPTION>
 
                                          FOR THREE MONTHS ENDED      FOR SIX MONTHS ENDED
                                               DECEMBER 31,               DECEMBER 31,
                                        --------------------------  ------------------------
                                             1995        1996            1995      1996
                                          ----------  ----------      ---------  ---------
<S>                                       <C>         <C>             <C>        <C>
Interest income:                                                 
  Loans                                        $702        $748         $1,419     $1,453
  Mortgage-backed securities                      2           -              4          2
  Investments                                    81          70            175        147
  Interest earning deposits                      73          68            126        128
                                              -----       -----         ------     ------
          Total interest income                 858         886          1,724      1,730
                                                                   
Interest expense:                                                
  Deposits                                      416         419            830        817
                                              -----       -----         ------     ------
          Net interest income                   442         467            894        913
                                                                 
Provision for loan losses                        -           -              -          -
                                              -----       -----         ------     ------
          Net interest income after                              
           provision for loan losses            442         467            894        913
                                              -----       -----         ------     ------
                                                                 
Noninterest income:                                              
  Other                                          10          14             14         27
                                              -----       -----         ------     ------
          Total noninterest income               10          14             14         27
                                              -----       -----         ------     ------
                                                                   
Noninterest expenses:                                            
  Compensation and employee benefits            168         149            314        285
  Net occupancy expense                          13          15             29         27
  Deposit insurance premiums                     17          21             34        232
  Data processing                                10          14             19         25
  Other                                          65          58            126        118
                                              -----       -----         ------     ------
          Total noninterest expenses            273         257            522        687
                                              -----       -----         ------     ------
                                                                   
          Income before income taxes            179         224            386        253
                                                                   
Income tax expense                               68          90            147        103
                                              -----       -----         ------     ------
                                                                   
          Net income                           $111        $134         $  239     $  150
                                              =====       =====         ======     ======
                                                                   
Weighted average common equivalent                               
 shares outstanding                             751         684            753        688
                                                                   
Net income per share                           $.15        $.20           $.32       $.22
</TABLE>
  The accompanying notes are an integral part of these consolidated financial
statements.

                                       4
<PAGE>
 
                   SOUTH CAROLINA COMMUNITY BANCSHARES, INC.
                                AND SUBSIDIARY

                Consolidated Statements of Stockholders' Equity
                                  (Unaudited)
                       (in thousands, except share data)

<TABLE>
<CAPTION>
                                                                                UNEARNED COMPENSATION
                                          COMMON  PAID-IN  RETAINED   TREASURY  ---------------------
                                          STOCK   CAPITAL  EARNINGS    STOCK     FOR ESOP    FOR MRP      TOTAL
                                          ------  -------  --------   --------   --------    --------    -------
<S>                                       <C>     <C>      <C>        <C>        <C>         <C>         <C>
Balance at June 30, 1995                      $8   $7,227    $6,704     $  -        $(589)   $    -      $13,350
 
Net income                                   -        -         488        -          -           -          488
 
Cash dividends ($.60 per share)              -        -        (423)       -          -           -         (423)
 
Purchase of MRP shares                       -        -         -          -          -          (568)      (568)
 
ESOP and MRP compensation earned             -         52       -          -           75         125        252
 
Treasury stock purchased (44,865 shares)     -        -         -         (790)       -           -         (790)
                                          ------  -------    ------   --------   --------     -------    ------- 
 
Balance at June 30, 1996                       8    7,279     6,769       (790)      (514)       (443)    12,309
 
Net income                                   -        -         150        -          -           -          150
                                             
Cash Dividend ($.30 per share)               -        -        (212)       -          -           -         (212)
                                             
ESOP and MRP compensation earned             -         18        17        -           33          39        107
 
Treasury stock purchased (30,000 shares)     -        -         -         (465)       -           -         (465)
                                          ------  -------    ------   --------   --------     -------    ------- 
 
Balance at December 31, 1996                  $8   $7,297    $6,724    $(1,255)     $(481)      $(404)   $11,889
                                          ======  =======    ======   ========   ========     =======    =======
 
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements

                                       5
<PAGE>
 
                   SOUTH CAROLINA COMMUNITY BANCSHARES, INC.
                                AND SUBSIDIARY

                     Consolidated Statements of Cash Flows
                                  (Unaudited)
                                (in thousands)
<TABLE>
<CAPTION>
 
 
                                           FOR SIX MONTHS ENDED
                                               DECEMBER 31,
                                         -----------------------
                                             1995       1996
                                          ---------   ---------
<S>                                       <C>         <C>
Operating activities:
Net income                                   $  239     $   150
Adjustments to reconcile net income to
 net cash provided (used) by operating
 activities:
   Depreciation                                  14          15
   Loss on sale of real estate owned              6           -
   Deferred income taxes (benefit)               (6)         17
   Amortization of premium (accretion
    of discounts) on investment            
    securities                                   (5)         (1)
   Amortization of unearned                
    compensation                                142          90
   Purchase of MRP shares                      (484)          -
   Net increase (decrease) in              
    deferred loan fees                          (13)        (17)
   (Increase) decrease in accrued           
    interest receivable                          11           8
   (Increase) decrease in prepaid           
    expenses and other assets                    25         (87)
   Increase (decrease) in income           
    taxes payable                               (25)        (41)
   Increase (decrease) in accrued       
    expenses and other liabilities                9         (16)
                                             ------      ------   
          Net cash provided (used) by        
           operating activities                  87         118
                                             ------      ------
 
Investing activities:
  Net (increase) decrease in loans              374      (2,212)
  Proceeds from sale of real estate owned        58          -
  Proceeds from maturities of
   investment securities                      1,500       1,300
  Purchase of investment securities held            
   to maturity                                   -         (200) 
  Principal payments on mortgage-backed            
   securities                                     8           7
  Purchases of premises and equipment            (1)       (130)
                                             ------     -------
          Net cash provided (used) by        
            investing activities              1,939      (1,235) 
                                             ------     -------  
</TABLE>



                                                            (continued)

                                       6
<PAGE>
 
                   SOUTH CAROLINA COMMUNITY BANCSHARES, INC.
                                AND SUBSIDIARY

                     Consolidated Statements of Cash Flows
                                  (Unaudited)
                                (in thousands)
<TABLE>
<CAPTION>
                                           FOR SIX MONTHS ENDED
                                               DECEMBER 31,
                                          ----------------------
                                             1995        1996
                                          ----------  ----------
<S>                                       <C>         <C>
Financing activities:
  Net increase (decrease) in deposits          $  272      $2,227
  Increase (decrease) in advance payments          
   for taxes and insurance                         -           (6) 
  Purchase of treasury stock                       -         (465)
  Dividends paid                                 (180)       (206)
                                               ------      ------
          Net cash provided (used) by          
           financing activities                    92       1,550
                                               ------      ------ 
Net increase (decrease) in cash and           
 cash equivalents                               1,944         433 
 
Cash and cash equivalents at beginning       
 of period                                      3,149       4,587
                                               ------      ------ 

Cash and cash equivalents at end of          
 period                                        $5,093      $5,020
                                               ======      ====== 
Supplemental disclosures of cash flow
-------------------------------------
 information
 -----------
  Cash paid during the period for:
   Interest                                    $  826      $  831
                                               ======      ======
 
  Noncash investing and financing
   activities:
    Real estate acquired in
     satisfaction of
     mortgage loans                            $    4      $   89
                                               ======      ======
 
  Dividends declared but not paid              $  234      $  212
 
</TABLE>



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

                                       7
<PAGE>
 
                   SOUTH CAROLINA COMMUNITY BANCSHARES, INC.
                                AND SUBSIDIARY

                  Notes to Consolidated Financial Statements
                                  (Unaudited)


1. General
   -------


   South Carolina Community Bancshares, Inc. (the "Company") was incorporated
   under the laws of the State of Delaware for the purpose of becoming the
   savings and loan holding company of Community Federal Savings Bank (the
   "Savings Bank"). Both companies are headquartered in Winnsboro, South
   Carolina. The Company is engaged primarily in the business of directing,
   planning and coordinating the business activities of the Savings Bank. The
   financial statements of the Savings Bank are presented on a consolidated
   basis with those of the Company.

2. Basis of Preparation
   --------------------

   The accompanying unaudited consolidated financial statements were prepared in
   accordance with instructions for Form 10-QSB and therefore, do not include
   all disclosures necessary for a complete presentation of the consolidated
   balance sheets, consolidated statements of income, consolidated statements of
   stockholders' equity, and consolidated statements of cash flows in conformity
   with generally accepted accounting principles. However, all adjustments which
   are, in the opinion of management, necessary for the fair presentation of the
   interim financial statements have been included. All such adjustments are of
   a normal recurring nature. The statements of income for the three and six
   month periods ended December 31, 1996, are not necessarily indicative of the
   results which may be expected for the entire year.

   It is suggested that these consolidated financial statements be read in
   conjunction with the audited consolidated financial statements and notes
   thereto for the Company for the year ended June 30, 1996.

3. Earnings Per Share
   ------------------

   Earnings per share amounts for the three and six month periods ended December
   31, 1995 and 1996, are based on the average number of shares and equivalents
   outstanding throughout the period. Unallocated ESOP shares are not considered
   as outstanding for purposes of this calculation.

4. Deposit Insurance Assessment
   ----------------------------

   The Savings Bank recorded the special assessment for deposit insurance
   premiums of approximately $193,000 in operations for the six months ending
   December 31, 1996, with an after tax impact on net income of approximately
   $119,000. Effective January 1, 1997, the 

                                       8
<PAGE>

SOUTH CAROLINA COMMUNITY BANCSHARES, INC.
AND SUBSIDIARY                          NOTES TO CONSOLIDATED FINANCIAL
                                        STATEMENTS, CONTINUED
--------------------------------------------------------------------------
 
   Savings Bank began paying reduced premium assessments in accordance with 
   the BIF/SAIF legislation.

5.  Tax Bad Debt Reserves
    ---------------------

   With the repeal of the reserve method of accounting for thrift bad debt
   reserves for tax years beginning after December 31, 1995, the Company will
   have to recapture its post-1987 excess reserves over a six-year period. The
   amount of the post-1987 excess is approximately $132,000. Since the tax
   effect of this excess had been previously recorded as deferred income taxes
   the Company will have no impact on its results of operations when the excess
   reserves are recaptured.

                                       9
<PAGE>
 
Item 2.
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS


GENERAL

The following discussion and analysis is intended to assist in understanding the
financial condition and the results of operations of the Company.  References to
the "Company" include South Carolina Community Bancshares, Inc. and/or Community
Federal Savings Bank as appropriate.

RECENT DEVELOPMENTS

On October 25, 1996 the Company closed on its agreement with First Palmetto
Savings Bank to acquire a branch office in Winnsboro, South Carolina.  The
Company purchased branch loans of approximately $2.2 million and assumed deposit
account liabilities of approximately $4.0 million.  In connection with the
acquisition of the deposit accounts, the Company paid a premium of approximately
$219,000.  The Company also received cash at the closing of the deal of
approximately $1.5 million due to the fact that it assumed more liabilities than
assets purchased.



COMPARISON OF FINANCIAL CONDITION AT JUNE 30, 1996 AND DECEMBER 31, 1996

The Company's total consolidated assets increased by approximately $1.7 million
or 3.9% from $44.2 million at June 30, 1996 to $45.9 million at December 31,
1996.  The increase in assets for the period was primarily attributable to the
acquisition of the branch facility.

The composition of the Company's balance sheet has not been materially affected
by market conditions between June 30, 1996 and December 31, 1996.  Net loans
increased $2.1 million or 6.4%.  This increase resulted from the Company's
acquisition of approximately $2.2 million from the branch acquisition.

Consistent with its historical lending practices, virtually all of the Company's
loan portfolio at December 31, 1996  consisted primarily of fixed rate loans
with maturities up to twenty-five (25) years. Consequently, the Company is
exposed to a high degree of interest rate risk in a rising interest rate
environment.  The Company has historically accepted this risk in light of its
relatively high capital levels.  See Liquidity and Capital Resources" discussion
below.

Deposits increased $2.2 million  or 7.1%, from $31.3 million at June 30, 1996 to
$33.5 million at December 31, 1996.  The increase in deposits was primarily
attributable to a $1.3 million growth in Now accounts and $1.5 million growth in
certificates of deposit. This growth is directly the result of deposits assumed
with the branch acquisition.

                                       10
<PAGE>
 
COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 1995
AND 1996

NET INCOME.  Net income increased $23,000 or 20.7% from $111,000 for the three
months ended December 31, 1995 to $134,000 for the three months ended December
31, 1996.  The return on average assets was 1.01% for the three months ended
December 31,  1995 compared  to 1.15% for the three months ended December 31,
1996.  This increase resulted primarily from an increase in net interest income
combined with an overall decrease in non-interest expenses.

NET INTEREST INCOME.  Net interest income increased $25,000 or 5.7% from
$442,000 for the three months ended December 31, 1995 to $467,000 for the three
months ended December 31, 1996. The improvement in net interest income primarily
reflects an increase in average interest-earning assets for the Company of  $2.0
million or 4.7% for the three months ended December 31, 1996 as compared to 1995
as a result of the loan growth from the branch acquisition.  The interest rate
spread increased from 2.52% for three months ending December 31, 1995 to 2.92%
for the three months ending December 31, 1996.

INTEREST INCOME.  Total interest income increased $28,000 from $858,000 for the
three months ended December 31, 1995 to $886,000 for the three months ended
December 31, 1996.  Interest on loans increased $46,000, or 6.6%.  Interest on
investments decreased $11,000 as the average portfolio decreased.

INTEREST EXPENSE.  Interest expense increased $3,000 from $416,000 for the three
months ended December 31, 1995 to $419,000 for the three months ended December
31, 1996.  The increase for the three months ending December 31, 1996 was the
result of a $3.3  million increase in the average deposit outstanding offset by
a 53 basis point decrease in the cost of funds.  The majority of this deposit
growth came as a result of the branch acquisition.

PROVISION FOR LOAN LOSSES.  The Company did not record any provision for loan
losses for either of the three month periods ended December 31.  Historically,
management has emphasized the Company's loss experience over other factors in
establishing provisions for loan losses.  However, management has reviewed the
allowance for loan losses in relation to the Company's composition of its loan
portfolio and observations of the general economic climate and loan loss
expectations. The ratio of allowance to non-performing loans at December 31,
1996  was 49.3% and nonperforming loans to total loans was only 1.66%.

NON-INTEREST INCOME.   Non-interest income continues to be an insignificant
source of income for the Company. This income was $10,000 for the three months
ending December 31, 1995 and $14,000 for the same period in 1996.

NON-INTEREST EXPENSE.  Non-interest expense decreased by $16,000 from $273,000
for the three months ending December 31, 1995 to $257,000 for 1996.  The
decrease was the direct result of a $19,000 decrease in compensation expense
primarily from reduced expense for the Company's MRP plan.  Other non-interest
expense items remained relatively stable with anticipated inflationary
increases.

                                       11
<PAGE>
 
INCOME TAXES.   Income tax expense for the three months ending December 31, 1996
was $90,000 compared to $68,000 for the same period in 1995.  The increase was
the result of pre-tax income being $45,000 more for the three months in 1996.


COMPARISON OF RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 1995
AND 1996

NET INCOME.  Net income decreased $89,000 or 37.2% from $239,000 for the six
months ended December 31, 1995 to $134,000 for the six months ended December 31,
1996.  Included in operations for the six months ending December 31, 1996 was
$193,000 for the SAIF premium assessment signed into law on September 3, 1996.
The after tax effect of this one-time special assessment was approximately
$119,000.  The return on average assets was 1.09% for the six months ended
December 31,  1995 compared  to .67% for the six months ended December 31, 1996.


NET INTEREST INCOME.  Net interest income increased $19,000 or 2.1% from
$894,000 for the six months ended December 31, 1995 to $913,000 for the six
months ended December 31, 1996. The improvement in net interest income primarily
reflects an increase in average interest-earning assets for the Company of  $2.1
million or 4.9% for the six months ended December 31, 1996 as compared to 1995
as a result of the loan growth from the branch acquisition.  The interest rate
spread increased from 2.58% for six months ending December 31, 1995 to 2.63% for
the six months ending December 31, 1996.

INTEREST INCOME.  Total interest income increased $6,000 or .3% for the six
months ended December 31, 1996.  Interest on loans increased $34,000, or 2.4%,
while interest on investments decreased $28,000 as the average portfolio
decreased.

INTEREST EXPENSE.  Interest expense decreased $13,000 from $830,000 for the six
months ended December 31, 1995 to $817,000 for the six months ended December 31,
1996.  The decrease for the six months ending December 31, 1996 was the result
of a 38 basis point decrease in the cost of funds  offset by a $1.8  million
increase in the average deposits outstanding.  The majority of this deposit
growth came as a result of the branch acquisition.

PROVISION FOR LOAN LOSSES.  The Company did not record any provision for loan
losses for either of the six month periods ended December 31.  Historically,
management has emphasized the Company's loss experience over other factors in
establishing provisions for loan losses.  However, management has reviewed the
allowance for loan losses in relation to the Company's composition of its loan
portfolio and observations of the general economic climate and loan loss
expectations. The ratio of allowance to non-performing loans at December 31,
1996  was 49.3% and nonperforming loans to total loans was only 1.66%.

NON-INTEREST INCOME.   Non-interest income continues to be an insignificant
source of income for the Company.   This income was $14,000 for the six months
ending December 31, 1995 and $27,000 for the same period in 1996.  The increase
is the result of new banking services being offered by the Company.

                                       12
<PAGE>
 
NON-INTEREST EXPENSE.  Non-interest expense increased by $165,000 from $522,000
for the six months ending December 31, 1995 to $687,000 for 1996.  The increase
was the direct result of the Company recognizing $193,000 of additional deposit
insurance premiums during the six months ending December 31, 1996.  Compensation
expense decreased by $29,000 for the six month period in 1996 compared to 1995
as only $40,000 of MRP compensation was expensed during the six months of 1996
compared to $86,000 for 1995. Other non-interest expense items remained
relatively stable in comparison for both six month periods.

INCOME TAXES.   Income tax expense for the six months ending December 31, 1996
was $103,000 compared to $147,000 for the same period in 1995.  The decrease was
the result of pre-tax income being $133,000 less for the six months in 1996.


LIQUIDITY AND CAPITAL RESOURCES.  The Company's primary sources of funds are new
deposits , investment maturities and proceeds from principal and interest
payments on loans.  While maturities of investments and scheduled amortization
of loans are a predictable source of funds, deposit flows and mortgage
prepayments are greatly influenced by general interest rates, economic
conditions and competition.  The Company's primary investing activity is loan
originations.  The Company maintains liquidity levels adequate to fund loan
commitments, investment opportunities, deposit withdrawals and other financial
commitments.  Commitments to fund loans at December 31, 1996 were approximately
$32,000.

At December 31, 1996, there were no material commitments for capital
expenditures.

At December 31, 1996, management had no knowledge of any trends, events or
uncertainties that will have or are reasonably likely to have material effects
on the liquidity, capital resources or operations of the Company.  Further at
December 31, 1996, management was not aware of any current recommendations by
the regulatory authorities which, if implemented, would have such an effect.

The  Bank exceeded all of its capital requirements at December 31, 1996.  The
Bank had the following capital ratios at December 31, 1996:
<TABLE>
<CAPTION>
                                          DECEMBER 31, 1996
                                          -----------------
<S>                                       <C>
Tier I capital to adjusted total assets          23.2%
Tier I to risk-weighted assets                   51.8%
Total capital to risk-weighted assets            53.0%
 
</TABLE>

                                       13
<PAGE>
 
Part II.                 OTHER INFORMATION



Item 1.  Legal Proceedings
         -----------------

      From time to time, the Company and any subsidiary may be a party to
      various legal proceedings incident to its or their business. At December
      31, 1996, there were no legal proceedings to which the Company or any
      subsidiary was a party, or to which of any of their property was subject,
      which were expected by management to result in a material loss.

Item 2.  Changes in Securities
         ---------------------

      None

Item 3.  Defaults Upon Senior Securities
         -------------------------------

      None

Item 4.  Submission of Matters to a Vote of Security Holders
         ---------------------------------------------------

      The following matters were voted upon at the annual meeting of
      stockholders of South Carolina Community Bancshares, Inc. Held December
      11, 1996 (the "Meeting"), and received the indicated votes:

      (i) The voting as to the election of Messrs. Alan W. Pullen and Philip C.
          Wilkins was as follows:
<TABLE>
<CAPTION>
                       For    Withheld
                     -------  --------
<S>                  <C>      <C>
Alan W. Pullen       602,687        30
Philip C. Wilkins    602,717         -
</TABLE>

      There were -0- broker non-votes.

      (ii) The approval of the ratification of Crisp Hughes & Co., L.L.P. as
           independent auditors of the Company for the year ending June 30,
           1997.
<TABLE>
<CAPTION>
                              For     Against   Abstain
                            --------  --------  --------
<S>                         <C>       <C>       <C>
Number of votes             602,717       -0-       -0-
Percentage of votes cast        100%      -0-%      -0-%
</TABLE>

      There were -0- broker non-votes.

                                       14
<PAGE>
 
Item 5.  Other Information
         -----------------

      None
 
Item 6.  Exhibits and Reports on Form 8-K
         --------------------------------
 
       27     Financial Data Schedule

      No reports on Form 8-K were filed during the quarter ended December 31,
      1996.

                                       15
<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 thereunto duly authorized.

                               SOUTH CAROLINA COMMUNITY BANCSHARES, INC.



Date:       February 18, 1997         By /s/ Alan W. Pullen
        ------------------------        --------------------------------
                                        Alan W. Pullen
                                        (President and Chief  Executive
                                         Officer)

                                       16