SECURITIES AND EXCHANGE COMMISSION
                         Washington, D.C. 20549
                                FORM 10-K

 /x/            Annual Report Pursuant to Section 13 or 15(d) of

                       The Securities Exchange Act of 1934
                 For the Fiscal Year Ended December 31, 1996

 / /           Transition Report Pursuant to Section 13 or 15(d) of

                      The Securities Exchange Act of 1934

                        Commission File Number 33-81890

                          Community Bankshares, Inc. 
            ------------------------------------------------------
            (Exact name of registrant as specified in its charter)

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

        400 North Main Street, Cornelia, Georgia 30531
    ---------------------------------------------------------
    (Address of principal executive office)        (Zip Code)

Registrant's telephone number, including area code:  (706) 778-2265

Name of exchange on which registered:  None

Securities registered pursuant to Section 12(g) of the Act:  None

         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.   Yes  X        No 
                                        ----         ---- 
     Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K.   X   Not applicable.  Registrant is not required to
           ----
be registered under the Securities Exchange Act of 1934.

     Aggregate market value of the voting stock held by non-
affiliates (which for purposes hereof are all holders other than
executive officers and directors) of the Registrant as of March
24, 1997:  $18,026,800 (computed by reference to the price at
which the stock was sold in the average bid and ask price as of
March 24, 1997).

     As of March 24, 1997, 2,004,830 shares of Common Stock were
issued and outstanding, par value $1.00 per share.



<PAGE>
                              PART I

ITEM 1.   BUSINESS.

     Community Bankshares, Inc. (the "Company") was organized
under the laws of Georgia in 1980 and commenced operations in
1981.  The Company is a registered bank holding company.  All of
the Company's activities are currently conducted by or through
its subsidiaries, Community Bank & Trust - Habersham ("Community-
Habersham"), Community Bank & Trust - Alabama ("Community-
Alabama"), Community Bank & Trust - Jackson ("Community-Jackson")
and Community Bank & Trust - Troup, ("Community-Troup")
(collectively, the "Community Banking Subsidiaries") and the non-
bank subsidiary of Community-Habersham, Financial Supermarkets,
Inc. ("Financial Supermarkets").

     All references herein to the Company include Community
Bankshares, Inc., the Community Banking Subsidiaries and
Financial Supermarkets unless the context indicates a different
meaning.  Unless otherwise indicated, all information in this
Prospectus has been adjusted for the stock split effected as a
Common Stock dividend and the associated reduction in par value
of the Common Stock.

Business Description of Community Banking Subsidiaries
------------------------------------------------------

     GENERAL.  Each of the Community Banking Subsidiaries is
community-oriented and offers such customary banking services as
consumer and commercial checking accounts, NOW accounts, savings
accounts, certificates of deposit, lines of credit and money
transfers.  Each Community Banking Subsidiary finances commercial
and consumer transactions, makes secured and unsecured loans, and
provides a variety of other banking services.

     DEPOSITS.  Each Community Banking Subsidiary offers a full
range of depository accounts and services to both consumers and
businesses.  At December 31, 1996, the Company's aggregate
deposit base, totaling approximately $278.7 million, consisted of
approximately $36.9 million in noninterest-bearing demand
deposits (13.3% of total deposits), approximately $61.7 million
in interest-bearing demand deposits (including money market
accounts) (22.1% of total deposits), approximately $13.9 million
in savings deposits (5% of total deposits), approximately $117.9
million in time deposits in amounts less than $100,000 (42.3% of
total deposits), and approximately $48.3 million in time deposits
of $100,000 or more (17.3% of total deposits).

     LOANS.  Each Community Banking Subsidiary makes both secured
and unsecured loans to individuals, firms and corporations, and
both consumer and commercial lending operations include various
types of credit for customers.  In addition, the Company operates
a loan production office in Gainesville, Georgia through
Community-Habersham.  The Gainesville loan production (the "LPO")
office funds and sells on the open market loans guaranteed by the
Small Business Administration (the "SBA").  Secured loans include
first and second real estate mortgage loans.  Each Community
Banking Subsidiary also makes direct installment loans to
consumers on both a secured and unsecured basis.  At December 31,
1996, consumer, real estate (including mortgage and construction
loans) and commercial loans represented approximately 18.1%,
32.9% and 49.0%, respectively, of the Company's total loan


                              -2-<PAGE>
portfolio.  The real estate loans made by each Community Banking
Subsidiary include residential real estate construction,
acquisition and development loans, as well as loans for other
purposes which are secured by real estate.

     Commercial lending is directed principally towards
businesses within the defined trade area of the Community Banking
Subsidiaries or which are existing or potential deposit customers
of the Community Banking Subsidiaries.  The Gainesville loan
production office, however, makes a large portion of loans to
individuals and businesses that are not located in its market
area.  Loans categorized as commercial loans are not secured by
real estate.  Collateral includes marketable securities,
certificates of deposit, accounts receivable, inventory and
equipment.  Commercial lending decisions are based upon a
determination of the borrower's ability and willingness to repay
the loan, which in turn are impacted by such factors as the
borrower's cash flow, sales trends and inventory levels, as well
as relevant economic conditions.  This category includes loans
made to individual, partnership or corporate borrowers and
obtained for a variety of purposes.  Risks associated with these
loans can be significant.  Risks include, but are not limited to,
fraud, bankruptcy, economic downturn, deteriorated or non-
existing collateral, and changes in interest rates.

     Loans secured by real estate which are made to businesses
are categorized as real estate loans.  Often, real estate
collateral is deemed to be superior to other collateral available
to small-to medium-sized businesses.  The underwriting standards
of and risks to the Community Banking Subsidiaries are as
described below with respect to real estate loans.

     The Community Banking Subsidiaries offer traditional first
mortgage loans to individuals for single-family structures.  The
loans are sold in the secondary market.  Since the Community
Banking Subsidiaries are originators of mortgages rather than
investors, they sell them servicing-released.  They offer loan-
to-value amounts from 70% to 95%.  Various types of fixed-rate
and variable-rate products are available.  Risks involved with
residential mortgage lending include, but are not limited to,
title defects, fraud, general real estate market deterioration,
inaccurate appraisals, interest rate fluctuations and financial
deterioration of the borrower.

     The Community Banking Subsidiaries also make residential
construction loans, generally for one-to-four unit structures. 
The Community Banking Subsidiaries require a first lien position
on the loans associated with construction projects and offer
these loans only to bona fide professional building contractors. 
Loan disbursements require independent, on-site inspections to
assure the project is on budget and that the loan proceeds are
being used in accordance with the plans, specifications and
survey for the construction project and not being diverted to
other uses.  The loan-to-value ratio for such loans is usually
75% to 85% of the as-built appraised value.  Loans for
construction can present a high degree of risk to the Community
Banking Subsidiaries, depending on, among other things, whether
the builder can sell the home to a buyer, whether the buyer can
obtain permanent financing, whether the transaction produces
income in the interim, and the nature of changing economic
conditions.


                               -3-
<PAGE>
     Additionally, the Community Banking Subsidiaries make
acquisition and development loans to approved developers for the
purpose of developing acreage into single-family lots on which
houses will be built.  The loan-to-value ratio for such loans
does not exceed 75% of the value as defined by an independent
appraisal, or 100% of the cost, whichever is less.  Loans for
acquisition and development can present a high degree of risk to
the Community Banking Subsidiaries, depending upon, among other
things, whether the developer can find builders to buy the lots,
whether the builders can obtain financing, whether the
transaction produces income in the interim, and the nature of
changing economic conditions.

     In addition, the Community Banking Subsidiaries make
consumer loans, consisting primarily of installment loans to
individuals for personal, family and household purposes,
including loans for automobiles, home improvements and
investments.  Consumer lending decisions are based on a
determination of the borrower's ability and willingness to repay
the loan, which in turn are impacted by such factors as the
borrower's income, job stability, previous credit history and
collateral for the loan.  Risks associated with these loans
include, but are not limited to, fraud, deteriorated or non-
existing collateral, general economic downturn, and consumer
financial problems.

     LENDING POLICY.  The current lending strategy of each
Community Banking Subsidiary is to offer consumer, real estate
and commercial credit services to individuals and entities that
meet the Company's credit standards.  Each Community Banking
Subsidiary provides its lending officers with written guidelines
for lending activities.  Lending authority is delegated by the
Board of Directors of the particular Community Banking Subsidiary
to loan officers, each of whom is limited in the amount of
secured and unsecured loans which he or she can make to a single
borrower or related group of borrowers.

     LOAN REVIEW AND NONPERFORMING ASSETS.  Each Community
Banking Subsidiary reviews its loan portfolio to determine
deficiencies and corrective action to be taken, and the Company
reviews the loan portfolio of each Community Banking Subsidiary. 
Senior lending officers conduct periodic reviews of borrowers
with total direct and indirect indebtedness of $75,000 or more
and ongoing review of all past due loans.  Past due loans are
reviewed at least weekly by lending officers and a summary report
is reviewed monthly by the particular Community Banking
Subsidiary's Board of Directors.  Each Board of Directors reviews
all loans over $100,000, whether current or past due, at least
once annually.  In addition, each Community Banking Subsidiary
maintains internal classifications of problem and potential
problem loans.

     ASSET/LIABILITY MANAGEMENT.  Each Community Banking
Subsidiary's Board of Directors is charged with establishing
policies to manage the assets and liabilities of the bank.  Each
Board's task is to manage asset growth, net interest margin and
liquidity and capital.  The Board directs the bank's overall
acquisition and allocation of funds.  At its monthly meetings,
the Board receives a report from the President of the bank with
regard to the monthly asset and liability funds budget and income
and expense budget in relation to the actual composition and flow


                               -4-
<PAGE>
of funds, the ratio of the amount of rate-sensitive assets to the
amount of rate-sensitive liabilities, the amount of interest rate
risk and equity market value exposure under varying rate
environments, the ratio of loan loss reserve to outstanding loans
and other variables, such as expected loan demand, investment
opportunities, core deposit growth within specified categories,
regulatory changes, monetary policy adjustments and the overall
condition of the local, state and national economy.

     INVESTMENT POLICY.  The Company's investment portfolio
policy is to maximize income consistent with liquidity, asset
quality and regulatory constraints.  The policy is reviewed from
time to time by the Company's Board of Directors.  Individual
transactions, portfolio composition and performance are reviewed
and approved monthly by the Board of Directors or a committee
thereof.  The President of each Community Banking Subsidiary
implements the policy and reports to the bank's full Board of
Directors on a monthly basis information concerning sales,
purchases, resultant gains or losses, average maturity, federal
taxable equivalent yields and appreciation or depreciation by
investment categories.

Business Description of Non-Banking Subsidiary
----------------------------------------------

     Financial Supermarkets was created with the goal of
strengthening the competitive position of the nation's community
banks in the current regulatory environment and given the recent
growth of relatively larger commercial banks.  Financial
Supermarkets, formed as a Georgia corporation in 1984, is a
wholly-owned subsidiary of Community-Habersham and has three
divisions.

     Financial Supermarkets' primary division, The Supermarket
Bank , provides various consulting and licensing services to
financial institutions in connection with the establishment of
bank branches in supermarkets.  These services are marketed to
interstate, regional and community financial institutions. 
Financial Supermarkets enters into agreements with major
supermarket chains for the rights to establish bank branches in
particular sites.  Financial Supermarkets then licenses such
rights, along with the right to operate the "Supermarket Bank ,"
to individual financial institutions, in addition to providing
consulting services to such institutions ranging from providing
alternative construction designs to coordinating employee
training.

     Since 1984, Financial Supermarkets has assisted clients with
the development of Supermarket Bank facilities in grocery stores
throughout the United States.  Financial Supermarkets primarily
competes in the in-store bank branch consulting business with
International Banking Technologies of Atlanta and Memphis-based
National Commerce Bancorp.

     Over its ten-year history, Financial Supermarkets has
expanded the scope of its business beyond the supermarket bank
industry.  In 1988, it formed a consulting division for the
financial services industry.  The division is based in Atlanta
and works with financial institutions across the United States
with regard to state and federal regulatory compliance issues and
other day-to-day operational matters.


                              -5-
<PAGE>
     In 1992, Financial Supermarkets formed a full-service
marketing consulting firm to consult with financial institutions
throughout north Georgia, in addition to working closely with
Supermarket Bank  clients to develop related advertising and
marketing programs.  In 1994, Financial Supermarkets formed a
travel agency to provide customers with a full range of travel
services.

Competition
-----------

     The banking business is highly competitive.  Community-
Habersham competes with four other depository institutions in
Habersham County, Georgia; Community-Jackson competes with five
other depository institutions in Jackson County, Georgia;
Community-Alabama competes with two other depository institutions
in Bullock County, Alabama and Community-Troup competes with six
other depository institutions in Troup County, Georgia.  Each
Community Banking Subsidiary also competes with other financial
service organizations, including savings and loan associations,
finance companies, credit unions and certain governmental
agencies.  To the extent that banks must maintain noninterest-
earning reserves against deposits, they may be at a competitive
disadvantage when compared with other financial service
organizations that are not required to maintain reserves against
substantially equivalent sources of funds.  Further, the
increased competition from investment bankers and brokers and
other financial service organizations may have a significant
impact on the competitive environment in which each Community
Banking Subsidiary operates.

Employees
---------

     At December 31, 1996 the Company had 201 full-time employees
and 30 part-time employees.  Neither the Company nor any of its
subsidiaries is a party to any collective bargaining agreement,
and management of the Company believes that its employee
relations are good.

Supervision and Regulation
--------------------------

     GENERAL.  The Company is a registered bank holding company
subject to regulation by the Board of Governors of the Federal
Reserve (the "Federal Reserve") under the Bank Holding Company
Act of 1956, as amended (the "Bank Holding Act").  The Company is
required to file financial information with the Federal Reserve
periodically and is subject to periodic examination by the
Federal Reserve. 

     The Bank Holding Act requires every bank holding company to
obtain the prior approval of the Federal Reserve before (i) it
may acquire direct or indirect ownership or control of more than
5% of the voting shares of any bank that it does not already
control; (ii) it or any of its subsidiaries, other than a bank,
may acquire all or substantially all of the assets of a bank; and
(iii) it may merge or consolidate with any other bank holding
company.  In addition, a bank holding company is generally
prohibited from engaging in, or acquiring, direct or indirect
control of the voting shares of any company engaged in non-
banking activities.  This prohibition does not apply to


                              -6-<PAGE>
activities found by the Federal Reserve, by order or regulation,
to be so closely related to banking or managing or controlling
banks as to be a proper incident thereto.  Some of the activities
that the Federal Reserve has determined by regulation or order to
be closely related to banking are:  making or servicing loans and
certain types of leases; performing certain data processing
services; acting as fiduciary or investment or financial advisor;
providing discount brokerage services; underwriting bank eligible
securities; underwriting debt and equity securities on a limited
basis through separately capitalized subsidiaries; and making
investments in corporations or projects designed primarily to
promote community welfare.

     The Company must also register with the Department of
Banking and Finance of the State of Georgia (the "DBF") and file
periodic information with the DBF.  As part of such registration,
the DBF requires information with respect to the financial
condition, operations, management and intercompany relationships
of the Company and Community-Habersham, Community-Jackson and
Community-Troup and related matters.  The DBF may also require
such other information as is necessary to keep itself informed as
to whether the provisions of Georgia law and the regulations and
orders issued thereunder by the DBF have been complied with, and
the DBF may examine the Company and each of the Georgia Community
Banking Subsidiaries.

     The Company is an "affiliate" of the Community Banking
Subsidiaries under the Federal Reserve Act, which imposes certain
restrictions on (i) loans by the Community Banking Subsidiaries
to the Company, (ii) investments in the stock or securities of
the Company by the Community Banking Subsidiaries, (iii) the
Community Banking Subsidiaries' taking the stock or securities of
an "affiliate" as collateral for loans by the Community Banking
Subsidiaries to a borrower and (iv) the purchase of assets from
the Company by the Community Banking Subsidiaries.  Further, a
bank holding company and its subsidiaries are prohibited from
engaging in certain tie-in arrangements in connection with any
extension of credit, lease or sale of property or furnishing of
services.

     Community-Habersham, Community-Jackson and Community-Troup,
as Georgia banking associations, are subject to the supervision
of, and are regularly examined by, the Federal Deposit Insurance
Corporation (the "FDIC") and the DBF.  Community-Alabama is
subject to the supervision and examination of the Alabama State
Banking Department (the "ABD") in addition to the FDIC.  Both the
FDIC and the DBF must grant prior approval of any merger,
consolidation or other corporate reorganization involving
Community-Habersham, Community-Jackson or Community-Troup.  The
ABD must grant prior approval of any merger, consolidation or
other corporate reorganization involving Community-Alabama.  A
bank can be held liable for any loss incurred by, or reasonably
expected to be incurred by, the FDIC in connection with the
default of a commonly-controlled institution.

     PAYMENT OF DIVIDENDS.  The Company is a legal entity
separate and distinct from the Community Banking Subsidiaries. 
Most of the revenues of the Company result from dividends paid to
it by the Community Banking Subsidiaries.  There are statutory
and regulatory requirements applicable to the payment of
dividends by the Community Banking Subsidiaries, as well as by
the Company to its shareholders.

                               7-
<PAGE>
     The Community Banking Subsidiaries are each state-chartered
banks regulated by the DBF or ABD, as applicable, and the FDIC. 
Under the regulations of the DBF, dividends may not be declared
out of the retained earnings of a Georgia bank without first
obtaining the written permission of the DBF unless such bank
meets all of the following requirements:

     (a)  Total classified assets as of the most recent
examination of the bank do not exceed 80% of equity capital (as
defined by regulation);

     (b)  The aggregate amount of dividends declared or
anticipated to be declared in the calendar year does not exceed
50% of the net profits after taxes but before dividends for the
previous calendar year; and

     (c)  The ratio of equity capital to adjusted assets is not
less than 6%.

     Under the regulations of the ABD, dividends may be declared
by a state bank without obtaining the prior written approval of
the ABD only if (i) the bank's surplus (as defined by regulation)
is equal to at least 20% of its capital (as defined by
regulation) and (ii) the aggregate of all dividends declared or
anticipated to be declared in the calendar year does not exceed
the total of its net earnings (as defined by regulation) of that
year combined with its retained net earnings of the preceding two
years, less any required transfers to surplus.  No dividends may
be paid from an Alabama bank's surplus without the prior written
approval of the ABD.

     The payment of dividends by the Company and the Community
Banking Subsidiaries may also be affected or limited by other
factors, such as the requirement to maintain adequate capital
above regulatory guidelines.  In addition, if, in the opinion of
the applicable regulatory authority, a bank under its
jurisdiction is engaged in or is about to engage in an unsafe or
unsound practice (which, depending upon the financial condition
of the Community Banking Subsidiaries, could include the payment
of dividends), such authority may require, after notice and
hearing, that such bank cease and desist from such practice.  The
FDIC has issued a policy statement providing that insured banks
should generally only pay dividends out of current operating
earnings.  In addition to the formal statutes and regulations,
regulatory authorities consider the adequacy of each of the
Community Banking Subsidiary's total capital in relation to its
assets, deposits and other such items.  Capital adequacy
considerations could further limit the availability of dividends
to the Community Banking Subsidiaries.  At December 31, 1996,
retained earnings available from the Community Banking
Subsidiaries to pay dividends totaled approximately $2.5 million. 
For 1996, the Company's cash dividend payout to shareholders was
6.58% of net income.

     MONETARY POLICY.  The results of operations of the Community
Banking Subsidiaries are affected by credit policies of monetary
authorities, particularly the Federal Reserve.  The instruments
of monetary policy employed by the Federal Reserve include open
market operations in U.S. government securities, changes in the
discount rate on bank borrowings and changes in reserve
requirements against bank deposits.  In view of changing


                               -8-
<PAGE>
conditions in the national economy and in the money markets, as
well as the effect of actions by monetary and fiscal authorities,
including the Federal Reserve, no prediction can be made as to
possible future changes in interest rates, deposit levels, loan
demand or the business and earnings of the Community Banking
Subsidiaries.

     CAPITAL ADEQUACY.  The Federal Reserve and the FDIC have
implemented substantially identical risk-based rules for
assessing bank and bank holding company capital adequacy.  These
regulations establish minimum capital standards in relation to
assets and off-balance sheet exposures as adjusted for credit
risk.  Banks and bank holding companies are required to have (1)
a minimum level of total capital (as defined) to risk-weighted
assets of eight percent (8%); (2) a minimum Tier One Capital (as
defined) to risk-weighted assets of four percent (4%); and (3) a
minimum stockholders' equity to risk-risk-weighted assets of four
percent (4%).  In addition, the Federal Reserve and the FDIC have
established a minimum three percent (3%) leverage ratio of Tier
One Capital to total assets for the most highly-rated banks and
bank holding companies.  "Tier One Capital" generally consists of
common equity not including unrecognized gains and losses on
securities, minority interests in equity accounts of consolidated
subsidiaries and certain perpetual preferred stock less certain
intangibles.  The Federal Reserve and the FDIC will require a
bank holding company and a bank, respectively, to maintain a
leverage ratio greater than three percent (3%) if either is
experiencing or anticipating significant growth or is operating
with less than well-diversified risks in the opinion of the
Federal Reserve.  The Federal Reserve and the FDIC use the
leverage ratio in tandem with the risk-based ratio to assess the
capital adequacy of banks and bank holding companies.  The FDIC,
the Office of the Comptroller of the Currency (the "OCC") and the
Federal Reserve amended, effective January 1, 1997, the capital
adequacy standards to provide for the consideration of interest
rate risk in the overall determination of a bank's capital ratio,
requiring banks with greater interest rate risk to maintain
adequate capital for the risk.  The revised standards are not
expected to have a significant effect on the Company's capital
requirements.

     In addition, effective December 19, 1992, a new Section 38
to the Federal Deposit Insurance Act implemented the prompt
corrective action provisions that Congress enacted as a part of
the Federal Deposit Insurance Corporation Improvement Act of 1991
(the "1991 Act").  The "prompt corrective action" provisions set
forth five regulatory zones in which all banks are placed largely
based on their capital positions.  Regulators are permitted to
take increasingly harsh action as a bank's financial condition
declines.  Regulators are also empowered to place in receivership
or require the sale of a bank to another depository institution
when a bank's capital leverage ratio reaches two percent (2%). 
Better capitalized institutions are generally subject to less
onerous regulation and supervision than banks with lesser amounts
of capital.

     The FDIC has adopted regulations implementing the prompt
corrective action provisions of the 1991 Act, which place
financial institutions in the following five categories based
upon capitalization ratios: (1) a "well capitalized" institution
has a total risk-based capital ratio of at least 10%, a Tier One


                              -9-
<PAGE>
risk-based ratio of at least 6% and a leverage ratio of at least
5%; (2) an "adequately capitalized" institution has a total risk-
based capital ratio of at least 8%, a Tier One risk-based ratio
of at least 4% and a leverage ratio of at least 4%; (3) an
"undercapitalized" institution has a total risk-based capital
ratio of under 8%, a Tier One risk-based ratio of under 4% or a
leverage ratio of under 4%; (4) a "significantly
undercapitalized" institution has a total risk-based capital
ratio of under 6%, a Tier One risk-based ratio of under 3% or a
leverage ratio of under 3%; and (5) a "critically
undercapitalized" institution has a leverage ratio of 2% or less. 
Institutions in any of the three undercapitalized categories
would be prohibited from declaring dividends or making capital
distributions.  The FDIC regulations also establish procedures
for "downgrading" an institution to a lower capital category
based on supervisory factors other than capital.  Under the
FDIC's regulations, all of the Community Banking Subsidiaries
were "well capitalized" institutions at December 31, 1996.

          Set forth below are pertinent capital ratios for the
Company and the Community Banking Subsidiaries as of December 31,
1996.
<TABLE>
<CAPTION>
                  Minimum Capital        Community-         Community-          Community-         Community-
                    Requirement          Habersham            Jackson            Alabama              Troup           The Company
                    -----------          ---------            --------           --------             -----           -----------
                 <S>                        <C>                <C>                <C>                 <C>                <C>
                  Tier One Capital          12.91              10.62%             12.60%              16.02%             12.28%
                   to Risk-based
                 Assets:  4.00%<F1>

                  Total Capital to          14.17%             11.87%             13.85%              17.27%             13.48%
                     Risk-based
                 Assets:  8.00%<F2>

                   Leverage Ratio            8.91%              7.47%              7.75%              11.90%              8.51%
                 (Tier One Capital
                 to Total Assets): 
                      3.00%<F3>
<FN>
<F1> Minimum required ratio for "well capitalized" banks is 6%
<F2> Minimum required ratio for "well capitalized" banks is 10%
<F3> Minimum required ratio for "well capitalized" banks is 5%
</FN>
</TABLE>

     RECENT LEGISLATIVE AND REGULATORY ACTION.  On April 19,
1995, the four federal bank regulatory agencies adopted revisions
to the regulations promulgated pursuant to the Community
Reinvestment Act (the "CRA"), which are intended to set distinct
assessment standards for financial institutions.  The revised
regulation contains three evaluation tests:  (i) a lending test
which will compare the institution's market share of loans in
low- and moderate-income areas to its market share of loans in
its entire service area and the percentage of a bank's
outstanding loans to low- and moderate-income areas or
individuals, (ii) a services test which will evaluate the
provisions of services that promote the availability of credit to
low- and moderate-income areas, and (iii) an investment test,
which will evaluate an institution's record of investments in
organizations designed to foster community development, small-


                              -10-<PAGE>
and minority-owned businesses and affordable housing lending,
including state and local government housing or revenue bonds. 
The regulation is designed to reduce some paperwork requirements
of the current regulations and provide regulators, institutions
and community groups with a more objective and predictable manner
with which to evaluate the CRA performance of financial
institutions.  The rule became effective on January 1, 1996, at
which time evaluation under streamlined procedures began for
institutions with assets of less than $250 million that are owned
by a holding company with total assets of less than $1 billion. 
It is not anticipated that these regulations will have any
appreciable impact on the Company and the Community Banking
Subsidiaries.

     Congress and various federal agencies (including, in
addition to the Community Banking Subsidiaries' regulatory
agencies, the Department of Housing and Urban Development, the
Federal Trade Commission and the Department of Justice)
(collectively the "Federal Agencies") responsible for
implementing the nation's fair lending laws have been
increasingly concerned that prospective home buyers and other
borrowers are experiencing discrimination in their efforts to
obtain loans.  In recent years, the Department of Justice has
filed suit against financial institutions, which it determined
had discriminated, seeking fines and restitution for borrowers
who allegedly suffered from discriminatory practices.  Most, if
not all, of these suits have been settled (some for substantial
sums) without a full adjudication on the merits.

     On March 8, 1994, the Federal Agencies, in an effort to
clarify what constitutes lending discrimination and specify the
factors the agencies will consider in determining if lending
discrimination exists, announced a joint policy statement
detailing specific discriminatory practices prohibited under the
Equal Opportunity Act and the Fair Housing Act. In the policy
statement, three methods of proving lending discrimination were
identified:  (1) overt evidence of discrimination, when a lender
blatantly discriminates on a prohibited basis, (2) evidence of
disparate treatment, when a lender treats applicants differently
based on a prohibited factor even where there is no showing that
the treatment was motivated by prejudice or a conscious intention
to discriminate against a person, and (3) evidence of disparate
impact, when a lender applies a practice uniformly to all
applicants, but the practice has a discriminatory effect, even
where such practices are neutral on their face and are applied
equally, unless the practice can be justified on the basis of
business necessity.

     On September 23, 1994, President Clinton signed the Reigle
Community Development and Regulatory Improvement Act of 1994 (the
"Regulatory Improvement Act"). The Regulatory Improvement Act
contains funding for community development projects through banks
and community development financial institutions and also
numerous regulatory relief provisions designed to eliminate
certain duplicative regulations and paperwork requirements.

     On September 29, 1994, President Clinton signed the Reigle-
Neal Interstate Banking and Branching Efficiency Act of 1994 (the
"Federal Interstate Bill") which amends federal law to permit
bank holding companies to acquire existing banks in any state
effective September 29, 1995, and any interstate bank holding
company is permitted to merge its various bank subsidiaries into


                               -11-<PAGE>
a single bank with interstate branches after May 31, 1997. States
have the authority to authorize interstate branching prior to
June 1, 1997, or alternatively, to opt out of interstate
branching prior to that date.  The Georgia Financial Institutions
Code was amended in 1994 to permit the acquisition of a Georgia
bank or bank holding company by out of-state bank holding
companies beginning July 1, 1995.  On September 29, 1995, the
interstate banking provisions of the Georgia Financial
Institutions Code were superseded by the Federal Interstate Bill.

     On January 26, 1996, the Georgia legislature adopted a bill
(the "Georgia Intrastate Bill") to permit, effective July 1,
1996, any Georgia bank or group of affiliated banks under one
holding company to establish up to an aggregate of three new or
additional branch banks anywhere within the State of Georgia,
excluding any branches established by a bank in a county in which
the bank is already located.  After July 1, 1998, all
restrictions on state-wide branching would be removed.  Prior to
adoption of the Georgia Intrastate Bill, Georgia only permitted
branching within a county, via merger or consolidation with an
existing bank or in certain other limited circumstances.

     FDIC INSURANCE ASSESSMENTS FOR THE COMMUNITY BANKING
SUBSIDIARIES.  The Community Banking Subsidiaries are subject to
FDIC deposit insurance assessments for the Bank Insurance Fund
(the "BIF").  In the first six months of 1995, the Community
Banking Subsidiaries were assessed $.23 per $100 of deposits,
except for Community-Troup which was assessed $.26 per $100 of
deposits, based upon a risk-based system whereby banks were
assessed on a sliding scale depending upon their placement in
nine separate supervisory categories, from $.23 per $100 of
deposits for the healthiest banks (those with the highest
capital, best management and best overall condition) to as much
as $.31 per $100 of deposits for the less-healthy institutions,
for an average $.259 per $100 of deposits.

     On August 8, 1995, the FDIC lowered the BIF premium for
healthy banks 83% from $.23 per $100 in deposits to $.04 per $100
in deposits, while retaining the $.31 level for the riskiest
banks.  The average assessment rate therefore ranges from $.232
to $.044 per $100 of deposits.  The new rate took effect on
September 29, 1995.  On September 15, 1995, the FDIC refunded
$142,498 to the Community Banking Subsidiaries for premium
overpayments in the second and third quarter of 1995.  On
November 14, 1995, the FDIC again lowered the BIF premium for
healthy banks from $.04 per $100 of deposits to zero for the
highest rated institutions (92% of the industry).  As a result,
each of the Community Banking Subsidiaries has paid only the
legally required annual minimum payment of $2,000 per year for
insurance for the 1996 year.  Had the current rates been in
effect for all of 1994 and 1995, the annual FDIC insurance
premiums paid by the Community Banking Subsidiaries collectively
would have been reduced by $331,000 for 1994 and $185,000 for
1995.

     On September 29, 1996, the Economic Growth and Regulatory
Paperwork Reduction Act of 1996 was enacted (the "1996 Act"). 
The 1996 Act's chief accomplishment was to provide for the
recapitalization of the Savings Association Insurance Fund
("SAIF") by levying a one-time special assessment on SAIF
deposits to bring the fund to a reserve ratio equal to $.25 per
$100 of insured deposits and to provide that beginning in 1997,


                              -12-<PAGE>
BIF assessments would be used to help pay off the $780 million in
annual interest payments on the $8 billion Financing Corporation
("FICO") bonds issued in the late 1980s as part of the government
rescue of the thrift industry.  The law provides that BIF
assessments for FICO bond payments must be set at a rate equal to
20% of the SAIF rates for such assessments in for 1997, 1998 and
1999.  After 1999, all FDIC insured institutions will pay the
same assessment rates.  For the first six months of 1997, the
assessment for the FICO bond payments will be $.0132 per $100 of
deposits for BIF deposits and $.0648 per $100 of deposits for
SAIF deposits.  The FDIC announced on November 26th that the
premium for the first six months for deposit insurance
assessments would range from zero to $.27 per $100 of deposits
with 94% of banks paying nothing for deposit insurance.  One of
the provisions of the 1996 Act was to eliminate the minimum
$2,000 per year charge for deposit insurance.  As a result, the
Community Banking Subsidiaries will pay no premium for deposit
insurance in the first six months of 1997 and will pay a first
quarter FICO bond assessment of $6,640.00 in the aggregate.  The
Bill also provided for certain limited regulatory relief and
modifications to certain out-of-state regulations.

ITEM 2.   PROPERTIES.

     Community-Habersham's main office is located at 400 North
Main Street, Cornelia, Georgia.  Community-Jackson's main office
is located at 117 North Elm Street, Commerce, Georgia. 
Community-Alabama's main office is located at 202 N. Powell
Street, Union Springs, Alabama.  Community-Troup's main office is
located at 201 Broad Street, LaGrange, Georgia. Community-
Habersham has nine branch offices (two owned and seven leased,
six of which are operated in supermarkets) located in Cornelia,
Clarkesville, Cleveland, Demorest, and Gainesville, Georgia, and
Community-Jackson has four branch offices (all leased, three of
which are operated in supermarkets) located in Commerce and
Jefferson, Georgia.  Community-Alabama has one branch (leased and
operated in a supermarket) in Montgomery, Alabama.  Financial
Supermarkets leases its main office located in Cornelia, Georgia
as well as a division office in Atlanta, Georgia.  Community-
Habersham leases the property occupied by the loan production
office in Gainesville.  Management of the Company believes that
all of its properties are adequately covered by insurance.

ITEM 3.   LEGAL PROCEEDINGS.

          The Company is not a party to, nor is any of its
property the subject of, any material pending legal proceedings.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

          No matters were submitted to a vote of security holders
of the Company during the fourth quarter of its fiscal year.

ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
          MATTERS.

     There is no established public trading market for the Common
Stock.  As of January 1, 1997, there were 437 holders of record
of the Common Stock.

     In 1996 the Company paid cash dividends of $.135 per share. 
In addition, the Company had a thirty-for-one stock split


                              -13-<PAGE>
effected as a stock dividend on December 28, 1995.  The Company
paid cash dividends of $.13 in 1995 (as restated to reflect the
thirty-for-one stock split).  The Company intends to continue to
pay cash dividends.  However, the amount and frequency of
dividends will be determined by the Company's Board of Directors
in light of the earnings, capital requirements and the financial
condition of the Company, and no assurances can be given that
dividends will be paid in the future.  Additionally, the Company
will be unable to pay dividends if it is in violation of certain
financial covenants under a loan agreement with SunTrust Bank. 
The Company's ability to pay dividends will also be dependent on
cash dividends paid to it by the Community Banking Subsidiaries. 
The ability of the Community Banking Subsidiaries to pay
dividends to the Company is restricted by applicable regulatory
requirements.  See "ITEM 1--BUSINESS--Supervision and
Regulation."



                              -31-<PAGE>
                             PART II

ITEM 6.   SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                                            Year Ended December 31,

                                                          1996           1995          1994           1993          1992
                                                          ----           ----          ----           ----          ----
                                                                 Dollars in Thousands, Except Per Share Amounts
                                                         -----------------------------------------------------------------
<S>                                                     <C>            <C>          <C>            <C>            <C>
SELECTED INCOME STATEMENT DATA:

   Total interest income                                 24,465         21,871        17,911         16,948        17,800

   Total interest expense                                11,236          9,875         7,553          7,386         8,619

   Net interest income                                   13,229         11,996        10,358          9,562         9,181

   Provisions for loan losses                               757            849           750            926         1,578

   Non bank subsidiary income                             5,559          3,780         3,007          2,160         1,292


   Other operating income                                 2,833          2,433         2,325          2,131         1,953

   Other operating expenses                              14,950         12,970        11,606         10,143         9,351

   Net income                                             4,044          3,125         2,419          2,194         1,039

   Net income per share of common stock                    1.93           1.54          1.21           1.10          0.54

   Cash dividends per share                                0.14           0.13          0.12           0.12          0.11


SELECTED BALANCE SHEET DATA:

   Total assets                                   $     315,579   $    270,007  $    250,468  $     228,599  $    214,564

   Total deposits                                       278,709        242,442       224,761        205,514       193,429

   Other borrowings                                         616            787         2,233          2,144         2,600

   Redeemable common stock held 

    by ESOP                                              6,177              -             -              -             -

   Shareholders' equity                                  21,083         22,469        19,004         17,220        15,241
</TABLE>

                               -32-
<PAGE>
ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND PLAN OF OPERATION.


MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1996 AND
1995

        The following is a discussion and analysis of the
Company's financial condition at December 31, 1996 and the
results of operations for the three year period ended December
31, 1996. The purpose of this discussion is to focus on
information about the Company's financial condition and results
of operations which are not otherwise apparent from the audited
consolidated financial statements included in this Annual Report.
This discussion and analysis should be read in conjunction with
the consolidated financial statements and related notes and the
selected financial information and statistical data presented
elsewhere in this Annual Report. All financial information and
statistical data for years ended prior to December 31, 1995 have
been restated to include the acquisition of Community-Troup,
which was accounted for as a pooling-of-interest.

        BALANCE SHEET REVIEW. The Company's assets continued to
grow during 1996.  For the year ended December 31, 1996,
consolidated assets grew $45.6 million, or 16.88%, up from 1995's
growth of $19.5 million or 7.80%. During 1996, the Company's
average assets were $289.3 million, compared with $256.6 million
during 1995. This represents a 12.75% increase in average assets
during 1996 compared with a 9.04% increase during 1995.

        Total earning assets, which include investment
securities, loans, federal funds sold, and interest-bearing
deposits in banks increased $34.0 million or 13.78% during 1996.
During 1995, earning assets increased $22.3 million, or 9.92%.
Average earning assets for 1996 were $263.3 million, an increase
of 12.18% over average earning assets in 1995 which were $234.7
million or an increase of 9.16% over 1994.

        The most significant increase in earning assets during
1996 was in net loans, the Company's most profitable earning
asset, which increased by $26.0 million or 14.73%. During 1995
net loans increased by $18.3 million, or 11.65%. The Company's
average net loans for 1996 were $187.8 million, a 12.07% increase
over average loans for 1995. In 1995 average net loans were
$167.6 million, a 13.28% increase over 1994. This increase in
loans was principally the result of Community-Habersham's efforts
to promote loan growth through marketing and the continued growth
of the loan production office (LPO), which began showing results
in late 1994 and has continued through 1996.  

        During 1996 average federal funds sold were $11.9 million
an increase of $2.7 million or 29.7% over 1995. This increase was
largely attributable to the fact that during 1996 the relatively
level yield curve militated against moving excess funds into
short term investment securities as well as the Company's desire
to maintain liquidity to fund loans. Average federal funds for
1995 was $9.1 million an increase of $1.6 million or 21.9% over
1994.

                               -33-<PAGE>
        In 1996, the amount of investment securities increased by
$11.1 million or 20.2%. This increase was mainly attributable to
the significant increase in deposits along with management's
intentions to maintain the appropriate mix of earning assets in
accordance with the company's asset/liability policy.
Management's philosophy is to maintain a loan-to-deposit ratio of
75% and maintain adequate liquidity to meet the demands of their
depositors and borrowers. The loan-to-deposit ratio was 74% for
both December 31, 1996, and 1995.

        The growth in assets for the year ended December 31, 1996
was funded primarily by growth in deposits. Consolidated deposits
grew $36.3 million, or 14.96% as compared to $17.7 million in
1995. The majority of the growth was in time deposits, both under
and over $100,000, which increased in total by $26.0 million in
1996 as compared to an increase in 1995 of $17.2 million. This
change in the deposit make-up resulted primarily from the rising
interest-rate environment in 1995 and 1996. As interest rates
rise, depositors are more likely to invest available funds in
longer-term traditional deposit accounts, while the reverse
occurs in a falling interest-rate environment. 

        As shown in Table 2 of the Selected Statistical Data, the
average yield on time deposits for the year ended December 31,
1996 increased 21 basis points, while short-term deposit accounts
decreased 13 basis points. Total yield on interest-bearing
liabilities increased 13 basis points compared to a decrease of 3
basis points on interest-earning assets, reducing the net
interest spread by 16 basis points compared to 1995. The net
interest spread for 1995 was 4.46% up 12 basis points over 1994.

        In 1994, the Company adopted Financial Accounting
Standards Board ("FASB") Statement Number 115 which upon adoption
required the Community Banking Subsidiaries to classify their
investments in debt and equity securities as trading, available
for sale, or held to maturity. Upon the adoption of FASB 115 in
1994, the Company transferred $11.3 million of securities
previously classified as held to maturity to securities available
for sale. The Company was required to adjust the securities
classified as available for sale to fair value and record the
unrealized gain or loss as a component of equity, resulting in
unrealized losses of $420,000 as of December 31, 1994. In October
of 1995, FASB allowed entities a window in which management could
reevaluate their classifications of securities under FASB 115 and
reclassify their portfolios based on their current understanding
of FASB 115. Under this special provision, the Company
transferred $29.6 million of securities from securities held to
maturity to securities available for sale, resulting in an
unrealized loss included in shareholders' equity of $114,000. It
is management's intention to maximize earnings yet provide ample
liquidity to fund loan growth as well as reposition the portfolio
in a changing interest rate environment. By reclassifying these
securities, management became more capable of accomplishing its
objectives without jeopardizing regulatory capital requirements.

        At December 31, 1996, the Company reported net unrealized
losses of $124,000 in the securities available for sale portfolio
as compared to net unrealized losses of $136,000 at December 31,
1995. Net unrealized losses represent the difference in the
amortized cost of those securities compared to the fair value at
those dates and are included in shareholders' equity, net of the
deferred tax effect. Losses would only be realized if the Company

                               -34-<PAGE>
sold any security within the available for sale portfolio.
Management sells securities to meet liquidity needs and may sell
securities in rising interest-rate environments to take advantage
of higher returns in the long run. In 1996 the Company sold $3.5
million of securities classified as available for sale, realizing
net losses of $14,000 on a consolidated basis. The current losses
will be more than offset by increased returns of the subsequent
security purchases. The held to maturity securities portfolio
included net unrealized gains of $172,000 at December 31, 1996
compared to net unrealized gains of $203,000 at December 31,
1995. This decrease is mainly attributable to the increasing
rates in the bond market. A rising interest rate environment is
inversely related to the fixed-rate portion of the securities
portfolio. In 1996 and 1995 rates increased moderately.  This
interest rate increase caused the Company's fixed rate portfolio
to decline slightly in value from the prior year.  Table 4 of the
Selected Statistical Data summarizes the combined investment
portfolios by types of securities.  U.S. Treasury and other U.S.
Government agencies and corporations represent 41.7% of the total
portfolio, which typically provide reasonable returns with
limited risk. The remaining portfolio is comprised of municipal
securities, mortgage-backed securities, and other investments
which provide, in general, higher returns on a tax equivalent
basis, with greater risk elements. Management continually
monitors the Company's investment portfolios and utilizes
forecasting models to project the Company's net interest margin
in various rising, flat, and falling interest-rate scenarios. In
a changing interest rate environment, management would act to
change the Company's asset or liability composition and interest
sensitivity in response to a definitive change in the direction
of interest rates. The Company actively manages the mix of asset
and liability maturities to control the effects of changes in the
general level of interest rates on net interest income. Except
for the effect of inflation on interest rates, inflation does not
have a material impact on the Company due to variability and
short-term maturities of its earning assets. At December 31,
1996, 64.2% of the Company's earning assets repriced or matured
within one year.

        LIQUIDITY AND CAPITAL RESOURCES. The liquidity and
capital resources of the Company and the Community Banking
Subsidiaries are monitored by management and on a periodic basis
by state and federal regulatory authorities. The individual
Community Banking Subsidiaries' liquidity ratios at December 31,
1996 were considered satisfactory under their own guidelines as
well as regulatory guidelines. At that date, the Community
Banking Subsidiaries' short-term investments were adequate to
cover any reasonably anticipated immediate need for funds.

        The purpose of liquidity management is to ensure that
cash flow is sufficient to satisfy demands for credit,
withdrawals, and other needs of the Company. Traditional sources
of liquidity include asset maturities and growth in core
deposits. A company may achieve its desired liquidity objectives
from the management of assets and liabilities, and through funds
provided by operations. Funds invested in short-term marketable
instruments and the continuous maturing of other earning assets
are sources of liquidity from the asset perspective. The
liability base provides sources of liquidity through deposit
growth and accessibility to market sources of funds.


                               -35-<PAGE>
        Scheduled loan payments are a relatively stable source of
funds, but loan payoffs and deposit flows are influenced by
interest rates, general economic conditions and competition and
may fluctuate significantly. The Company attempts to price its
deposits to meet its asset/liability objectives consistent with
local market conditions.

        Cash flows for the Company are of three major types. Cash
flows from operating activities consist primarily of interest and
fees received on loans, interest received on investment
securities, federal funds sold, and interest-bearing deposits
less cash paid for interest and operating expenses. Investing
activities use cash for the purchase of interest-bearing
deposits, investment securities, fixed assets and to fund loans.
Investing activities also generate cash from the proceeds of
matured interest-bearing deposits, matured investment securities,
sales of investment securities, loan repayments and principal
prepayments of securities. Cash flows from financing activities
generate cash from a net increase in deposit accounts and other
borrowed funds. Financing activities use cash for the payment of
cash dividends and notes payable.

        For the year ended December 31, 1996, $23.9 million in
cash flows from operating activities were provided by interest
and fees received from loans, securities and federal funds.
Approximately $7.3 million in cash flows were provided by service
charges, nonbank subsidiary income, sale of loans and other
income. Cash flows used in operating activities consisted of
$10.8 million of interest paid on deposits and borrowings, $8.3
million paid for salaries and other personnel benefits and $8.5
million paid for occupancy and equipment expenses, income taxes
and other operating payments. Cash flows of $17.2 million were
provided by the proceeds of sales and maturities of investment
securities. Cash flows of $28.3 million were used to purchase
investment securities.  Cash flows provided by financing
activities consisted of $36.3 million in net increases in
deposits and were primarily used to fund the $27.0 million net
increase in loans. The net increase in cash and due from banks
and other interest-bearing deposits for the year ended December
31, 1996 was $6.0 million, which includes a net decrease in other
borrowings of $171,000.  

        For the year ended December 31, 1995, $21.5 million in
cash flows from operating activities were provided by interest
and fees received from loans, securities and federal funds.
Approximately $7.9 million in cash flows were provided by service
charges, nonbank subsidiary income, sale of loans and other
income. Cash flows used in operating activities consisted of $9.0
million of interest paid on deposits and borrowings, $6.8 million
paid for salaries and other personnel benefits and $6.9 million
paid for occupancy expenses, income taxes and other operating
payments. Cash flows of $20.0 million were provided by the
proceeds of sales and maturities of investment securities. Cash
flows of $19.7 million were used to replace all of those
securities maturing and sold. Cash flows provided by financing
activities consisted of $17.7 million in net increases in
deposits and were primarily used to fund the $19.7 million net
increase in loans. The net decrease in cash and due from banks
for the year ended December 31, 1995 was $1.3 million, which
includes a net decrease in other borrowings of $1.4 million.

                             -36-<PAGE>
        At December 31, 1996, the Company's and Community Banking
Subsidiaries' capital ratios were considered adequate based on
the minimum capital requirements of the FDIC and applicable state
regulatory agencies. During 1996, the Company increased capital,
by retaining net earnings of $3.8 million and issuing $1.0
million of common stock, compared to an increase in 1995 of $2.9
million in retained net earnings and $253,000 in common stock.
Management believes that the liquidity and capital ratios of the
Company and the Community Banking Subsidiaries are adequate based
on regulatory requirements.

        The Company is capable of meeting its debt service
requirements related to existing long-term debt and other
borrowings through dividends available from its subsidiaries and
current operations. At December 31, 1996, approximately $2.5
million was available to be paid as dividends to the Company from
the Community Banking Subsidiaries. Although the Company
considers that it has adequate capital to meet its short-term
needs, the Company, at times, may seek additional capital to
support its long-term business goals, including expansion of its
fixed asset base, and for general corporate purposes.

        For a tabular presentation of the Community Banking
Subsidiaries' capital ratios at December 31, 1996, see
"SUPERVISION AND REGULATION". 

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

        EFFECTS OF INFLATION. Inflation impacts banks differently
than non-financial institutions. Banks, as financial
intermediaries, have assets which are primarily monetary in
nature and which tend to fluctuate with inflation. A bank can
reduce the impact of inflation by managing its rate sensitivity
gap, which represents the difference between rate-sensitive
assets and rate-sensitive liabilities. The Company, through its
asset-liability committee, attempts to structure the assets and
liabilities and manage the rate-sensitivity gap, thereby seeking
to minimize the potential effects of inflation. See
"Asset/Liability Management".


RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1996 AND
1995

NET INTEREST INCOME. The Company's results of operations are
influenced by management's ability to effectively manage interest
income and expense, to minimize loan and investment losses, to
generate non-interest income and to control operating expenses.
Because interest rates are determined by market forces and
economic conditions beyond the control of the Company, the
Company's ability to generate net interest income is dependent
upon its ability to obtain an adequate net interest spread
between the rate paid on interest-bearing liabilities and the
rate earned on interest-earning assets. Net interest income
increased by $1.2 million for the year ended December 31, 1996 as
compared to an increase of $1.6 million for the same period in
1995. The increase in net interest income is attributable to

                               -37-<PAGE>
increases in earning assets, particularly loans. The yield on
interest-earning assets declined 3 basis points in 1996 from
1995. The decrease in the rates on interest-earning assets
resulted in a decrease in interest income of $43,000, as shown in
Table 3 of the Selected Statistical Data. This decrease combined
with the increase in average earning assets of $28.6 million, net
of the increase in average interest-bearing liabilities of $21.7
million, accounts for the 10.3% increase in net interest income.
Net interest income increased for all Community Banking
Subsidiaries as shown below: 
<TABLE>
<CAPTION>
                                                   Net Interest Income     Increase/
                                                   1996         1995       (Decease)
                                                   ----         ----       ---------
                                                         (Dollars in Thousands)
                     <S>                         <C>         <C>           <C>
                     Community-Habersham         $  8,274    $  7,557      $    717
                     Community-Jackson              2,713       2,399           314
                     Community-Alabama              1,050         843           207
                     Community-Troup                1,251       1,162            89
                                                   ------      ------         -----
                                                 $ 13,288    $ 11,961      $  1,327
                                                   ======      ======         =====
</TABLE>
             The 16 basis point decrease in the net interest spread in
Table 2 is indicative of the changes in the interest rate
environment. The increase in rates on time deposits slightly
outpaced the increase in rates on loans which was the main cause
for the decrease in net interest spread. The Company will
continue to actively monitor and maintain the net interest spread
to counter act the current market trends.  Net interest income
for 1995 increased $1.6 million over 1994. The significant
increase is mainly attributable to the increase in interest
yields on interest-earning assets outpacing the increase in the
rates on interest-bearing liabilities by 12 basis points.  The
net yield on interest-earning assets increased 29 basis points in
1995 over 1994.  Table 2 of the Selected Statistical Data depicts
the interest yields and interest income and expense for the three
years ended December 31, 1996.  


        PROVISION FOR LOAN LOSSES. Provision for loan losses for
the year ended December 31, 1996 decreased by $92,000 from
$849,000 at December 31, 1995. This decrease is associated with
improved loan quality, as management maintains an allowance for
loan losses based on the evaluation of potential problem loans as
well as minimal reserves for all loans based on past net
charge-off experience. Provision of loan losses increased $99,000
in 1995 compared to 1994 mainly due to the significant increase
in loans and management's wishes to maintain adequate reserves.
The guaranteed portion of loans generated by the LPO are
subsequently sold. Because most loans generated by the LPO are
out-of-market, the loans generated by the LPO require additional
allowances due to the greater risk of loss in the event of a
default. These loans, however, are subjected to the same
underwriting standards and periodic loan review procedures as
other loans by the Community Banking Subsidiaries. 

        As shown in Table 8 of the Selected Statistical Data,
nonperforming loans, which includes nonaccrual and restructured
loans, decreased $346,000 from December 31, 1995 compared to a
$1,381,000 increase over 1994. The increase over 1994 is mainly

                           -38-<PAGE>
attributable to two borrowers who filed bankruptcy in 1995.
Management has reviewed these loans and determined that the
likelihood of any loss in principal is minimal because the loans
are adequately collateralized. The ratio of the allowance for
loan losses to nonperforming loans increased from 147% at
December 31, 1995 to 207% at December 31, 1996. In 1995, the
Company adopted FASB 114 and 118, which requires that impaired
loans be measured based on the present value of expected future
cash flows, the loan's observable market price or at the fair
value of the collateral if collateral dependent. At December 31,
1996, the loans associated with the two borrowers mentioned above
were identified as impaired, as were all nonaccrual loans, but
the Company determined that no reserves were required because of
the Company's collateral positions.  

        The allowance for loan losses as a percentage of total
loans outstanding at December 31, 1996 and 1995 was 1.75% and
1.71% respectively. Net charge-offs in 1996 decreased by $250,000
from $475,000 in 1995, and the net charge-off ratio decreased
from .28% in 1995 to .12% in 1996. Based on management's
evaluation of the loan portfolio, including a review of past loan
losses, current conditions which may affect borrowers' ability to
repay and the underlying collateral value of the loans,
management considers the allowance for loan losses to be
adequate.  

        The Company continues to have a concentration in real
estate loans, representing 32.6% and 39.8%, respectively, of
total loans at December 31, 1996 and 1995.  Management has
implemented policies to limit extensions of credit to one
borrower and its affiliates. By this method, along with proper
underwriting standards, a fully implemented loan review system
and geographic diversification, management attempts to minimize
the risk associated with the concentrations of credit.

        OTHER INCOME. Other operating income consists of income
from operations of the Community Banking Subsidiaries and
Financial Supermarkets . Traditional non-interest income of the
Community Banking Subsidiaries accounts for only 33.8%, or $2.8
million, of total other income for 1996, 39.2% in 1995, and 43.6%
in 1994.

<TABLE>
<CAPTION>
                                                     Other Operating Income       Increase
                                                        1996       1995          (Decrease)
                                                        ----       ----          ---------
                                                         (Dollars in Thousands)
              <S>                                   <C>          <C>              <C>
             Community Banking Subsidiaries
                     Community-Habersham            $  3,065     $  2,087         $    978
                     Community-Jackson                   732          753              (21)
                     Community-Alabama                   164          168               (4)
                     Community-Troup                     176          141               35
                                                      ------       ------            -----
                                                    $  4,137     $  3,149         $    988
                                                      ======       ======            =====

                     Financial Supermarkets(R)      $  5,559     $  3,780         $  1,779
                                                      ======       ======            =====
</TABLE>

                                -39-<PAGE>
        The majority of the increase in other operating income of
the Community Banking Subsidiaries is related to the growth in
deposits. Service charges on deposit accounts increased by
$205,000 and $76,000, respectively, for the years ended December
31, 1996 and 1995. These increases normally have a direct
relationship with the change in demand deposit and savings
accounts. Average demand deposit and savings accounts increased
$9.8 million in 1996 compared to $1.9 increase in 1995 over 1994.
The decrease in other income for Community-Jackson is mainly
attributable to a decrease in gains on the sale of loans. The
decrease in other income for Community-Alabama is partly
attributable to a one time trust fee of $12,000 in 1995. Included
in other operating income of the Community Banking Subsidiaries
are gains on sale of loans recognized by Community-Habersham and
Jackson of $302,000 and $80,000, respectively. This represents a
decrease from 1995 of $79,500.

        The allocation of services as a percentage of total
income for Financial Supermarkets  is shown below:

                                    FINANCIAL SUPERMARKETS(R)

           Supermarket sales                                                75%
           Supermarket consulting and ancillary services                    20
           Consulting                                                        5
                                                                           ---
                                                                           100%

             The primary business of Financial Supermarkets(R) "FSI" is
the sales and related services offered to establish and operate a
Supermarket Bank(R) service center. In 1996, Financial
Supermarkets(R) had net sales revenue of $4.2 million compared to
$2.4 million in 1995, an increase of $1.8 million or 73.2%.  The
increase in net sales revenues in 1995 over 1994 was $600,000, or
30.5%. 

        In 1996 FSI entered into a contract with Nations
Bank South to construct and install up to 240 Supermarket Bank units
in the Southeastern United States.  This contract significantly
increased net income as well as other expenses in 1996.  During
1996 FSI installed a total of 46 banking center units, of which
15 were part of the NationsBank contract. Income related to the
NationsBank contract began to be recognized in the fourth quarter of 1996 as
the first phase of the project to install 40 banking units.  In 1997
NationsBank restructured the contract to provide that FSI would not be
involved in the installation of any additional banking center units after
the first 40 units.  The contract provides, however, that FSI will receive
monthly consulting feees in connection with any supermarket bank units
constructed by NationsBank in Winn-Dixie Stores located in the state of
Florida.  These consulting fees will continue for 15 years from the
date the supermarket unit is opened, decreasing gradually after
each five year period.  The estimated income from the original 40
units is approximately $360,000 a year during the first five year period.


        FSI continues to maintain a steady flow of new supermarket
banking units to be completed outside of the Nations Bank contract.
FSI has continued to increase its number of units completed for each of
the last three years and this trend is expected to continue with the
exception of the extraordinary increase last year and this year related
to the NationsBank Contract.

                               -40-<PAGE>
        NON-INTEREST EXPENSE. Other expenses increased for the
year ended December 31, 1996 by $2.20 million, compared to $1.4
million in 1995, a 15.27% increase. Most significant in both
years were increases of $1.5 million and $857,000 in salaries and
employee benefits, respectively. The increase in salaries and
benefits is directly related to the growth of the Community
Banking Subsidiaries and Financial Supermarkets. For the years
ended December 31, 1996, 1995, and 1994 the Company had total
employees of 216, 172, and 149, respectively. Other expenses for
1995 increased $1.4 million or 11.75% compared to 1994, primarily
for the same reasons stated above.

        Deposit insurance premiums decreased by $253,000 for each
year ended December 31, 1996 and 1995 due to regulatory changes.
Expenses associated with other real estate decreased by $90,000
in 1996 and declined by $203,000 during 1995. Other operating
expenses increased by $610,000 in 1996 compared to $13,000 in
1995.  The increase in other operating expenses include expenses
preparing for the Nations Bank contract discussed earlier, the
travel expenses related to the Nations Bank contract, and
expenses associated with adding five additional branch locations. 

                               -41-<PAGE>
<TABLE>
<CAPTION>
                                                                       Other Expenses              Increase
                                                                    1996           1995           (Decrease)
                                                                    ----           ----           ---------
                                                                   (Dollars in Thousands)
<S>                  <S>                                      <C>              <C>               <C>
The Company
                     Salaries and benefits                    $    8,266       $    6,785         $    1,481
                     Equipment expenses                            1,374            1,272                102
                     Occupancy expenses                              807              699                108
                     Deposit Insurance premiums                       12              265               (253)
                     Data processing expenses                        422              329                 93
                     Travel expenses                                 531              526                  5
                     Office supply expenses                          373              302                 71
                     Professional fees                               253              400               (147)
                     Other real estate expenses                      135              225                (90)
                     Other operating expenses                      2,777            2,167                610
                                                                  ------           ------              -----
                                                              $   14,950       $   12,970         $    1,980
                                                                  ======           ======              =====
</TABLE>

              INCOME TAXES. The Company incurred income tax
expenses of $1.9 million in 1996 which represented an effective
tax rate of 32%, compared to tax expense of $1.3 million in 1995,
or an effective tax rate of 29%. The increase in the effective
tax rate is related to the income of Financial Supermarkets,
which does not generate tax-free income as do the Community
Banking Subsidiaries.  Income tax expense increased $148,000 from
1994 to $1,265,000 in 1995.  The effective tax rate at December
31, 1994 was 28%. 

             NET INCOME. The Company's net income for 1996 was
$4,044,000, as compared to $3,125,000 in 1995, an increase of
29.41%. The increase in net income between 1996 and 1995 is
primarily attributable to the additional interest and fees on
loans related to growth and the performance of Financial
Supermarkets. Net income for 1995 increased to $3,125,000 or 29%
over 1994's net income of $2,419,000.  

             ASSET/LIABILITY MANAGEMENT. The Company's objective
is to manage assets and liabilities to maintain satisfactory and
consistent profitability. Officers of each Community Banking
Subsidiary are charged with monitoring policies and procedures
designed to ensure an acceptable asset/liability mix.
Management's philosophy is to support asset growth primarily
through growth of core deposits within the Community Banking
Subsidiaries' market areas. 

             The Company's asset/liability mix is monitored
regularly with a report reflecting the interest rate sensitive
assets and interest rate sensitive liabilities is prepared and
presented to the Board of Directors of each Community Banking
Subsidiary monthly. Management's objective is to monitor interest
rate sensitive assets and liabilities so as to minimize the
impact on earnings of substantial fluctuations in interest rates.
An asset or liability is considered to be interest rate-sensitive
if it will reprice or mature within the time period analyzed,
usually one year or less. The interest rate-sensitivity gap is
the difference between the interest-earning assets and
interest-bearing liabilities scheduled to mature or reprice
within the relevant period. A gap is considered positive when the
amount of interest rate-sensitive assets exceeds the amount of

                               -42-<PAGE>
interest rate-sensitive liabilities. A gap is considered negative
when the amount of interest rate-sensitive liabilities exceeds
the interest rate-sensitive assets. During a period of rising
interest rates, a negative gap would tend to adversely affect net
interest income, while a positive gap would tend to result in an
increase in net interest income. Conversely, during a period of
falling interest rates, a negative gap would tend to result in an
increase in net interest income, while a positive gap would tend
to adversely affect net interest income. If the Company's assets
and liabilities were equally flexible and moved concurrently, the
impact of any increase or decrease in interest rates on net
interest income would be minimal.

             A simple interest rate "gap" analysis by itself may
not be an accurate indicator of how net interest income will be
affected by changes in interest rates. Accordingly, the Company
also evaluates how changes in interest rates impacts the
repayment of particular assets and liabilities. Income associated
with interest-earning assets and costs associated with
interest-bearing liabilities may not be affected uniformly by
changes in interest rates. In addition, the magnitude and
duration of changes in interest rates may significantly impact on
net interest income. For example, although certain assets and
liabilities may have similar maturities or periods of repricing,
they may react in different degrees to changes in market interest
rates. Interest rates on certain types of assets and liabilities
fluctuate in advance of changes in general market rates, while
interest rates on other types may lag behind changes in general
market rates. In addition, certain assets, such as adjustable
rate mortgage loans, have features (generally referred to as
"interest rate caps and floors") which limit changes in interest
rates. Also, prepayments and early withdrawal levels could
deviate significantly from those assumed in calculating the
interest rate gap. The ability of many borrowers to service their
debts may decrease in the event of an interest rate increase.
Changes in interest rates also effect the Company's liquidity
position. If deposits are not priced in response to market rates,
a loss of deposits could occur which would negatively effect the
Company's liquidity position.

             At December 31, 1996, the Company's cumulative one
year interest rate sensitivity gap ratio was .81%. The Company
was cumulatively within its targeted range of 80% to 120% for all
time horizons. 

             The following table sets forth the distribution of
the repricing of the Company's earning assets and
interest-bearing liabilities as of December 31, 1996, the
interest rate sensitivity gap, the cumulative interest
rate-sensitivity gap, the interest rate-sensitivity gap ratio and
the cumulative interest rate-sensitivity gap ratio. The table
also sets forth the time periods in which earning assets and
liabilities will mature or may reprice in accordance with their
contractual terms. However, the table does not necessarily
indicate the impact of general interest rate movements on the net
interest margin since the repricing of various categories of
assets and liabilities is subject to competitive pressures and
the needs of the Company's customers. In addition, various assets
and liabilities indicated as repricing within the same period may
in fact, reprice at different times within such period and at
different rates.

                                -43-<PAGE>
<TABLE>
<CAPTION>
                                                           Community Bankshares, Inc.
                                                             Consolidated Gap Report


                                                          After              After
                                                          Three              One
                                                          Months            Year but
                                          Within            but              Within           After
                                           Three          Within             Five             Five
                                          Months         One Year            Years            Years            Total
                                          ------         --------            -----            -----            -----
                                                                (Dollars in Thousands)
<S>                                   <C>                <C>              <C>              <C>             <C>
Earnings assets:
   Interest-bearing deposits          $     208          $   - -          $   - -          $   - -         $     208
   Federal funds sold                     8,345              - -              - -              - -             8,345
   Investment securities                 37,923             4,090           23,999               60           66,072
   Loans                                 78,432            50,960           56,139           20,255          205,786
                                        -------            ------           ------           ------          -------
                                      $ 124,908          $ 55,050         $ 80,138         $ 20,315        $ 280,411
                                        -------            ------           ------           ------          -------
Interest-bearing liabilities:
   Interest-bearing demand
      deposits                        $  61,676          $   - -          $    - -         $    - -        $  61,676
   Savings                               13,949              - -               - -              - -           13,949
   Time deposits, $100,000
      and over                           19,655            22,668            5,561              444           48,328
   Time deposits, less than
      $100,000                           37,738            66,956           12,349              836          117,879
   Other borrowings                          39               115              462              - -              616
                                        -------            ------           ------           ------          -------
                                      $ 133,057          $ 89,739         $ 18,372         $  1,280        $ 242,448
                                        -------            ------           ------           ------          -------
Interest rate sensitivity
       gap                           $  (8,149)         $ (34,689)        $ 61,766         $ 19,035        $  37,963
                                        ======            =======           ======           ======           ======
Cumulative interest rate
       sensitivity gap               $  (8,149)         $ (42,838)        $ 18,928         $ 37,963
                                        ======            =======           ======           ======
Interest rate sensitivity
       gap ratio                          0.94                .61             4.36            15.87
                                          ====                ===             ====            =====
Cumulative interest rate
       sensitivity gap ratio              0.94                .81             1.08             1.16
                                          ====                ===             ====            =====
</TABLE>

                               -44-<PAGE>

                  SELECTED STATISTICAL INFORMATION

The tables and schedules on the following pages set forth certain
significant financial information and statistical data with respect to
the distribution of assets, liabilities and shareholders' equity of the
Company; the interest rates and interest differentials experienced by the
Company; changes in interest income and expense related to rate and
volume; the investment portfolio of the Company; the loan portfolio of
the Company, including types of loans, maturities and sensitivity to
changes in interest rates and information on nonperforming loans; summary
of the loan loss experience and reserves for loan losses of the Company;
types of deposits of the Company and the return on equity and assets for
the Company. 


                               -45-<PAGE>
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY:
INTEREST RATES AND INTEREST DIFFERENTIALS

Table 1   Average Balances
<TABLE>
<CAPTION>
The condensed average balance sheets for the periods indicated are
presented below <F1>.

                                                                          Year Ended December 31,
                                                                1996                1995               1994
                                                                ----                ----               ----
                                                                            (Dollars in Thousands)
                     ASSETS
<S>                                                       <C>                  <C>                 <C>
Cash and due from banks                                   $     13,539         $    10,844         $    9,959
Interest-bearing deposits in banks                                 364                 293                902
Taxable securities                                              43,337              43,506             45,784
Nontaxable securities                                           16,520              11,206             10,372
Unrealized losses on securities
   available for sale                                             (130)               (256)              (240)
Federal funds sold                                              11,864               9,146              7,501
Loans <F2>                                                     191,180             170,525            150,426
Allowance for loan losses                                       (3,368)             (2,944)            (2,494)
Other assets                                                    16,013              14,271             13,119
                                                             ---------           ---------           --------
                                                          $    289,319         $   256,591         $  235,329
                                                             =========           =========           ========

Total interest-earning assets                             $    263,265         $   234,676         $  214,985
                                                             =========           =========           ========
     LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits:
   Noninterest-bearing demand                            $     33,052         $    28,031        $    24,445
   Interest-bearing demand                                     57,240              53,498             55,726
   Savings                                                     13,145              12,141             11,624
   Time                                                       153,814             135,493            119,969
                                                            ---------           ---------          ---------
      Total deposits                                     $    257,251         $   229,163        $   211,764
Other borrowings                                                  885               2,205              1,794
Other liabilities                                               6,489               4,389              3,681
                                                            ---------           ---------          ---------
      Total liabilities                                  $    264,625         $   235,757        $   217,239
                                                            ---------           ---------          ---------
Shareholders' equity <F3><F4>                            $     24,694         $    20,834        $    18,090
                                                            ---------           ---------          ---------
                                                         $    289,319         $   256,591        $   235,329
                                                            =========           =========          =========

Total interest-bearing liabilities                       $    225,084         $   203,337        $   189,113
                                                            =========           =========          =========
<FN>
<F1>  Average balances were determined using the daily average
      balances during the year for each category.
<F2>  Average loans include nonaccrual loans and are stated net of
      unearned income.
<F3>  In accordance with SFAS 115, average unrealized losses on
      securities available for sale have been included in average
      shareholders' equity at $276,000, $154,000, and $189,000 for
      1996, 1995, and 1994 respectively, which is the average balance
      for the year, net of average taxes.
<F4>  Average shareholders' equity includes redeemable common stock
      held by ESOP.
</FN>
</TABLE>

                               -46-<PAGE>
TABLE 2   INTEREST INCOME AND INTEREST EXPENSE

        The following tables set forth the amount of the Company's
interest income and interest expense for each category of
interest-earning assets and interest-bearing liabilities and the average
interest rate for total interest-earning assets and total
interest-bearing liabilities, net interest spread and net yield on
average interest-earning assets.
<TABLE>
<CAPTION>
                                                                       Year Ended December 31,
                                                         1996                     1995                     1994
                                                         ----                     ----                     ----
                                                        Average                 Average                    Average
                                                   Interest   Rate        Interest     Rate         Interest     Rate
                                                   --------   ----        --------     ----         --------     ----
<S>                                                <C>        <C>          <C>         <C>         <C>            <C>
INTEREST INCOME:
       Interest and fees on loans <F1>            $  20,440   10.69%       $ 18,146    10.64%      $   14,419     9.59%
       Interest on taxable securities                 2,483    5.73           2,550     5.86            2,534     5.53
       Interest on nontaxable securities <F2>           908    5.50             641     5.72              640     6.17
       Interest on Federal funds sold                   625    5.27             518     5.66              289     3.85
       Interest on deposits in banks                      9    2.47              16     5.46               29     3.22
                                                     ------    ----          ------     ----           ------     ----
                 Total interest income            $  24,465    9.29%       $ 21,871     9.32%       $  17,911     8.33%
                                                     ------                  ------                    ------
INTEREST EXPENSE:
       Interest on interest-bearing
             demand deposits                      $   1,797    3.14%       $  1,749     3.27%        $  1,718     3.08%
       Interest on savings deposits                     372    2.83             343     2.83              330     2.84
       Interest on time deposits                      9,002    5.85           7,647     5.64            5,411     4.51
       Interest on other borrowings                      65    7.34             136     6.17               94     5.24
                                                     ------                   -----     ----            -----     ----
                 Total interest expense           $  11,236    4.99%       $  9,875     4.86%        $  7,553     3.99%
                                                     ------                   -----                     -----

NET INTEREST INCOME                               $  13,229                $ 11,996                  $ 10,358
                                                     ======                  ======                    ======
       Net interest spread                                     4.30%                   4.46%                      4.34%
       Net yield on average
         interest-earning assets                               5.02%                   5.11%                      4.82%
<FN>
<F1>  Interest and fees on loans include $771,000, $512,000, and
      $1,117,000 of loan fee income for the years ended December 31, 1996,
      1995, and 1994, respectively. Interest income recognized during 1996,
      1995, and 1994 on nonaccrual loans was $41,000, $24,000, and $20,000,
      respectively.
<F2>  Yields on nontaxable securities have not been computed on a tax
      equivalent basis.
</FN>
</TABLE>

TABLE 3   RATE AND VOLUME ANALYSIS

        The following table describes the extent to which changes in
interest rates and changes in volume of interest-earning assets and
interest-bearing liabilities have affected the Company's interest income
and expense during the year indicated. For each category of

                                -47-<PAGE>
interest-earning assets and interest-bearing liabilities, information is
provided on changes attributable to (1) change in volume (change in
volume multiplied by old rate); (2) change in rate (change in rate
multiplied by old volume); and (3) a combination of change in rate and
change in volume. The changes in interest income and interest expense
attributable to both volume and rate have been allocated proportionately
to the change due to volume and the change due to rate.
<TABLE>
<CAPTION>
                                                                      Year Ended December 31,
                                                                          1996 vs. 1995
                                                                        Changes Due To:
                                                                                        Increase 
                                                             Rate       Volume         (Decrease)
                                                             ----       ------         ----------
                                                                    (Dollars in Thousands)
<S>                                                    <C>            <C>            <C>
Increase (decrease) in:
   Income from interest-earning assets:
   Interest and fees on loans                          $     85        $  2,209       $  2,294
   Interest on taxable securities                           (57)            (10)           (67)
   Interest on nontaxable securities                        (25)            292            267
   Interest on Federal funds sold                           (36)            143            107
   Interest on deposits in banks                            (10)              3             (7)
                                                           ----          ------          -----
        Total interest income                          $    (43)       $  2,637       $  2,594
                                                           ----          ------          -----
  Expense from interest-bearing liabilities:
  Interest on interest-bearing deposits                $    (73)       $    121       $     48
  Interest on savings deposits                                1              28             29
  Interest on time deposits                                 291           1,064          1,355
  Interest on other borrowings                               21             (92)           (71)
                                                           ----           -----          -----
        Total interest expense                         $    240        $  1,121       $  1,361
                                                           ----           -----          -----
        Net interest income                            $   (283)       $  1,516       $  1,233
                                                          =====           =====          =====
                                                                Year Ended December 31,
                                                                    1995 vs. 1994
                                                                   Changes Due To:
                                                                                        Increase 
                                                           Rate         Volume         (Decrease)
                                                           ----         ------         ----------
                                                                     (Dollars in Thousands)
Increase (decrease) in:
   Income from interest-earning assets:
   Interest and fees on loans                          $  1,684        $  2,043       $  3,727
   Interest on taxable securities                           146            (130)            16
   Interest on nontaxable securities                        (48)             49              1
   Interest on Federal funds sold                           156              73            229
   Interest on deposits in banks                             13             (26)           (13)
                                                           ----           -----          -----
       Total interest income                           $ (1,951)       $  2,009       $  3,960
                                                           ----           -----          -----
   Expense from interest-bearing liabilities:
   Interest on interest-bearing deposits               $    101        $    (70)      $     31
   Interest on savings deposits                              (2)             15             13
   Interest on time deposits                              1,476             760          2,236
   Interest on other borrowings                              18              24             42
                                                           ----           -----          -----
       Total interest expense                          $  1,593        $    729       $  2,322
                                                           ----           -----          -----
       Net interest income                             $    358        $  1,280       $  1,638
                                                          =====           =====          =====
</TABLE>
                               -48-<PAGE>
                          INVESTMENT PORTFOLIO

TABLE 4   TYPES OF INVESTMENTS
<TABLE>
<CAPTION>

The carrying amounts of securities at the dates indicated are summarized
as follows <F1>:

                                                                             December 31,
                                                               1996              1995              1994
                                                               ----              ----              ----
                                                                       (Dollars in Thousands)
<S>                                                      <C>               <C>               <C>
U.S. Treasury and other U.S. Government
     agencies and corporations                           $     27,561      $    27,965       $     30,683
Municipal securities                                           19,788           14,203             10,279
Mortgage-backed securities                                     17,806           12,140             13,003
Equity securities                                                 917              658                883
                                                               ------           ------             ------
                                                         $     66,072      $    54,966       $     54,848
                                                               ======           ======             =======
<FN>
<F1>  Securities include "held to maturity" securities
      carried at amortized cost and "available for sale"
      securities carried at fair value in accordance
      with SFAS 115.
</FN>
</TABLE>
          The Community Banking Subsidiaries' mortgage-backed
security portfolio consists of sixty U.S. Government corporation
sponsored collateralized mortgage obligations. The actual
maturities of these securities will differ from the contractual
maturities because borrowers on the underlying loans may have the
right to prepay obligations with or without prepayment penalties.
Decreases in interest rates will generally cause prepayments to
accelerate while increases in the interest rates will have the
reverse effect on prepayments. Prepayments of the underlying
mortgages may shorten the life of the security, thereby adversely
affecting the yield to maturity. In an increasing interest rate
environment, the Community Banking Subsidiaries may have a
security yielding a return less than the current yields on
comparable securities.  However, because the majority of these
securities in mortgage-backed securities have adjustable rates,
the negative effects of changes in interest rates on earnings and
the carrying values of these securities are somewhat mitigated.

                              -49-<PAGE>
Table 5   Maturities

               The amounts of securities in each category as of
December 31, 1996 are shown in the following table according to
contractual maturity classifications of one year or less, after
one year through five years, after five years through ten years,
and after ten years.
<TABLE>
<CAPTION>

                          U.S. Treasury and Other
                          U.S. Government Agencies
                             and corporations <F3>      Municipal securities <F2>     Other Securities<F4>
                           Amount        Yield <F1>     Amount      Yield <F1>        Amount       Yield <F1>
                           ------        -----          ------      -----             ------       -----
<S>                       <C>             <C>        <C>             <C>             <C>           <C>
One year or less          $  3,900        5.11%      $  3,016        5.91%           $   917       4.53%

After one year
  through five years        26,384        5.84          3,480        5.61                - -         - -

After five years
  through ten years          5,495        6.75           4,201       5.21                - -         - -

After ten years              9,588        6.10           9,091       5.14                - -         - -
                            ------                      ------                          ----       -----

     Total               $  45,367        5.94%      $  19,788       5.35%            $  917       4.53%

<FN>
<F1>   Yields were computed using book value, coupon interest,
       adding discount accretion or subtracting premium
       amortization, as appropriate, on a ratable basis over the
       life of each security. The weighted average yield for each
       maturity range was computed using the carrying value of
       each security in that range.

<F2>  Yields on municipal securities have not been computed on a tax
      equivalent basis.

<F3>  The above schedule includes mortgage-backed securities based on
      their contractual maturity date. In practice, cash flow in
      these securities is significantly faster than their stated
      maturity schedules.

<F4>  Other securities consists of equity securities and are included
      in the under one year maturity range because the securities
      have no contractual maturity date.

</FN>
</TABLE>
                                  -50-<PAGE>
LOAN PORTFOLIO

Table 6   Types of Loans

          The amount of loans outstanding at the indicated dates are
shown in the following table according to the type of loan.
<TABLE>
<CAPTION>
                                                                        December 31,
                                              1996             1995           1994            1993           1992
                                              ----             ----           ----            ----           ----
                                                                    (Dollars in Thousands)
<S>                                     <C>              <C>             <C>            <C>            <C>
Commercial, financial
  and agricultural <F1>                 $   102,231      $    77,871     $    77,437    $    60,032    $     57,589
Real estate-construction                      9,506            8,036           8,703          7,430           8,364
Real estate-mortgage                         57,566           63,312          50,856         56,639          58,050
Consumer and other <F2>                      36,483           30,072          25,269         20,848          18,391
                                           --------          -------         -------        -------         -------
                                        $   205,786      $   179,291     $   162,265    $   144,949    $    142,394
Less allowance for loan losses               (3,592)          (3,060)         (2,686)        (2,457)         (2,242)
                                           --------          -------         -------        -------         -------
     Net loans                          $   202,194      $   176,231     $   159,579    $   142,492    $    140,152
                                           ========          =======         =======        =======         =======

<FN>
<F1>  Commercial, financial and agricultural loans include loans
      held for sale which are disclosed separately in the
      consolidated balance sheets.

<F2>  Amounts are disclosed net of unearned loan income.
</FN>
</TABLE>

          See "BUSINESS   Business Description of the Community Banking
Subsidiaries - Loans" for a description of the composition of each loan
category, the underwriting criteria and risks that are unique to each
category.

                               -51-<PAGE>
TABLE 7   MATURITIES AND SENSITIVITIES OF LOANS TO CHANGES IN INTEREST
          RATES

          Total loans as of December 31, 1996 are shown in the following
table according to maturity classifications one year or less, after one
year through five years and after five years.
<TABLE>
<CAPTION>
                                                                                 December 31, 1996
                                                                                 -----------------
                                                                              (Dollars in Thousands)
<S>                                                                                  <C>
Maturity:
 One year or less:
        Commercial, financial and agricultural                                        $  70,241
        Real estate-construction                                                          9,506
        All other loans                                                                  33,415
                                                                                        -------
                                                                                      $ 113,162
                                                                                        -------
After one year through five years:
        Commercial, financial and agricultural                                        $  -2,701
        Real estate-construction                                                            --
        All other loans                                                                  47,375
                                                                                        -------
                                                                                      $  60,076
                                                                                        -------
After five years:
        Commercial, financial and agricultural                                        $   7,842
        Real estate-construction                                                            --
        All other loans                                                                  24,706
                                                                                        -------
                                                                                      $  32,548
                                                                                        -------
                                                                                      $ 205,786
                                                                                        =======
</TABLE>

     The following table summarizes loans at December 31, 1996 with due
dates after one year which have predetermined and floating or
adjustable interest rates.
<TABLE>
<CAPTION>
                                                                       December 31, 1996 
                                                                    (Dollars in Thousands)

      <S>                                                               <C>
      Predetermined interest rates                                      $   60,542
      Floating or adjustable interest rates                                 32,082
                                                                            ------

                                                                        $   92,624
                                                                            ======
</TABLE>

     Records were not available to present the above information in
each loan category listed in the first paragraph above and could
not be reconstructed without undue burden and cost to the Company.

                               -52-<PAGE>
Table 8   Nonaccrual, Past Due and Restructured Loans

     Information with respect to nonaccrual past due and restructured loans
at the indicated dates is as follows:
<TABLE>
<CAPTION>
                                                                             December 31,

                                                         1996        1995         1994        1993        1992
                                                         ----        ----         ----        ----        ----
                                                                        (Dollars in Thousands)
<S>                                                 <C>            <C>          <C>        <C>          <C>
Nonaccrual loans                                    $    1,119     $  1,456     $  640     $  1,649     $ 2,059

Loans contractually past due ninety days
   or more as to interest or principal
   payments and still accruing                             445          345        310           62         385

Loans, the terms of which have been
   renegotiated to provide a reduction
   or deferral of interest or principal
   because of deterioration in the
   financial position of the borrower                     620           629         64           73          78

Loans, now current about which there are
   serious doubts as to the ability of
   the borrower to comply with present
   loan repayment terms                                   - -          - -         - -           - -          - -
</TABLE>
   The reduction in interest income associated with nonaccrual
and renegotiated loans as of December 31, 1996 is as follows:
<TABLE>
<CAPTION>
                                                                                     December 31, 1996
                                                                                     -----------------
<S>                                                                                      <C>
Interest income that would have been recorded on nonaccrual 
   and restructured loans under original terms                                           $120,000
                                                                                          =======

Interest income that was recorded on nonaccrual and restructured loans                   $ 41,000
                                                                                            =====
</TABLE>

     The Community Banking Subsidiaries' policy is 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 and (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. 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 and
which causes management to have serious doubts as to the ability of such
borrowers to comply with the loan repayment terms. 

                              -53-<PAGE>
COMMITMENTS AND LINES OF CREDIT

     The Community Banking Subsidiaries will, in the normal
course of business, commit to extend credit in the form of letters of
credit or lines of credit. The amount of outstanding loan commitments and
letters of credit at December 31, 1996 and 1995 were $17,131,000 and
$20,678,000, respectively.

SUMMARY OF LOAN LOSS EXPERIENCE

TABLE 9

     The following table summarizes average loan balances for
each year determined using the daily average balances during the year;
changes in the reserve for possible loan losses arising from loans
charged off and recoveries on loans previously charged off; additions to
the reserve which have been charged to operating expense; and the ratio
of net charge-offs during the year to average loans.
<TABLE>
<CAPTION>
                                                                         December 31,
                                                  1996           1995           1994           1993           1992
                                                  ----           ----           ----           ----           ----
                                                                        (Dollars in Thousands)
<S>                                            <C>            <C>            <C>            <C>             <C>
Average amount of loans outstanding            $ 191,180      $ 170,525      $ 150,426      $ 143,531       $ 139,304
                                                 =======        =======        =======        =======         =======
Balance of allowance for loan losses
   at beginning of year                        $   3,060      $   2,686      $   2,457      $   2,242       $   2,030
                                                 -------        -------        -------        -------         -------
Loans charged off
   Commercial                                  $   (118)      $   (221)      $   (344)      $   (441)       $   (744)
   Real estate mortgage                              - -            - -            - -          (237)           (183)
   Consumer                                        (211)          (331)          (244)          (157)           (680)
                                                 -------        -------        -------        -------         -------
                                               $   (329)      $   (552)      $   (588)      $   (835)       $ (1,607)
                                                 -------        -------        -------        -------         -------

Loans recovered
   Commercial                                  $       5      $      12      $      11      $       7       $      77
   Real estate mortgage                               35             12              5              5              36
   Consumer                                           64             53             51            112             128
                                                 -------        -------        -------        -------         -------
                                               $     104      $      77      $      67      $     124       $     241
                                                 -------        -------        -------        -------         -------
Net charge-offs                                $    (225)     $    (475)     $    (521)     $    (711)      $  (1,366)
                                                 -------        -------        -------        -------         -------
Additions to allowance charged
   to operating expense during year            $     757      $     849      $     750      $     926       $   1,578
                                                 -------        -------        -------        -------         -------
Balance of allowance for loan losses
   at end of year                              $   3,592      $   3,060      $   2,686      $   2,457       $   2,242
                                                 -------        -------        -------        -------         -------
Ratio of net loans charged off during
   the year to average loans outstanding           0.12%          0.28%          0.35%          0.50%           0.98%
                                                   ====           ====           ====           ====            ====
</TABLE>
                              -54-
<PAGE>
ALLOWANCE FOR LOAN LOSSES

     The provision for possible loan losses is created by
direct charges to income. Losses on loans are charged against the
allowance in the year in which such loans, in management's opinion,
become uncollectible. Recoveries during the year are credited to this
allowance. The factors that influence management's judgment in
determining the amount charged to income are past loan loss experience,
composition of the loan portfolio, evaluation of possible future losses,
current economic conditions and other relevant factors. The Company's
allowance for loan losses was approximately $3,592,000 at December 31,
1996, representing 1.75% of total loans, compared with $3,060,000 at
December 31, 1995, which represented 1.71% of total loans. The allowance
for loan losses is reviewed regularly based on management's evaluation of
current risk characteristics of the loan portfolio, as well as the impact
of prevailing and expected economic business conditions. Management
considers the allowance for loan losses adequate to cover possible loan
losses at December 31, 1996.

     Historically, management has not allocated the Company's
allowance for loan losses to specific categories of loans. However, based
on management's best estimate and historical experience, the allocation
of the allowance for loan losses for December 31, 1996, 1995, 1994, 1993,
and 1992 is summarized below:
<TABLE>
<CAPTION>
                                         ALLOCATION OF ALLOWANCE FOR LOAN LOSSES

                                                     December 31,
                                 1996        1995        1994        1993        1992
                                 ----        ----        ----        ----        ----
                                                 (Dollars in Thousands)
     <S>                       <C>         <C>         <C>         <C>         <C>
     Commercial                $ 1,830     $ 1,347     $ 1,508     $ 1,219     $ 1,091
     Real estate                   105         467         599         492         525
     Consumer                    1,657       1,246         579         746         626
                                 -----       -----       -----       -----       -----
                               $ 3,592     $ 3,060     $ 2,686     $ 2,457     $ 2,242
                                 =====       =====       =====       =====       =====

                                    Percent of Loans in Each Category to Total Loans

                                                      December 31,
                                 1996        1995        1994         1993        1992
                                 ----        ----        ----         ----        ----

      Commercial                  50%         43%         48%          41%         40%
      Real estate                 33          40          37           44          47
      Consumer                    17          17          15           15          13
                                 ---         ---         ---          ---         ---
                                 100%        100%        100%         100%        100%
                                 ===         ===         ===          ===         ===
</TABLE>
                               -55-<PAGE>
DEPOSITS

TABLE 10

<TABLE>
<CAPTION>

     Average amount of deposits and average rates paid thereon,
classified as to noninterest-bearing demand deposits, interest-bearing
demand and savings deposits and time deposits, for the years
indicated are presented below. <F1>

                                                                      Year Ended December 31,
                                                          1996                    1995                    1994
                                                          ----                    ----                    ----
                                                               Average                  Average                 Average
                                                  Balance        Rate       Balance      Rate      Balance        Rate
                                                  -------        ----       -------      ----      -------        ----
      <S>                                       <C>              <C>     <C>            <C>     <C>               <C>
      Noninterest-bearing demand deposits       $  33,052        - -%    $   28,031      - -%   $   24,445         - -%
      Interest-bearing demand deposits             57,240        3.14        53,498      3.27       55,726        3.08
      Savings deposits                             13,145        2.83        12,141      2.83       11,624        2.84
      Time deposits                               153,814        5.85       135,493      5.64      119,969        4.51
                                                  -------                   -------                -------
           Total deposits                       $ 257,251                $  229,163             $  211,764
                                                  =======                   =======                =======

<FN>
<F1>     Average balances were determined using the daily average balances
         during the year for each category.
</FN>
</TABLE>

     The amounts of time certificates of deposit issued in amounts of
$100,000 or more as of December 31, 1996 are shown below by category,
which is based on time remaining until maturity of (1) three months
or less, (2) over three through six months, (3) over six through
twelve months and (4) over twelve months.

<TABLE>
<CAPTION>
                                                                December 31, 1996
                                                                -----------------
                                                             (Dollars in Thousands)
        <S>                                                          <C>
        Three months or less                                         $ 18,824
        Over three through six months                                  11,600
        Over six through twelve months                                 10,190
        Over twelve months                                              7,714
                                                                       ------
                              Total                                  $ 48,328
                                                                       ======
</TABLE>

                            -56-<PAGE>
RETURN ON ASSETS AND SHAREHOLDERS' EQUITY

Table 11

     The following rate of return information for the years
indicated is presented below.
<TABLE>
<CAPTION

                                                              Year Ended December 31,
                                                        1996            1995             1994
                                                        ----            ----             ----
      <S>                                             <C>              <C>              <C>
      Return on assets <F1>                            1.40%            1.22%            1.03%
      Return on equity <F2>                           16.38%           15.00%           13.37%
      Dividend payout ratio <F3><F5>                   7.25%            8.44%            9.92%
      Equity to assets ratio <F4>                      8.54%            8.12%            7.69%
<FN>
<F1>  Net income divided by average total assets.
<F2>  Net income divided by average equity.
<F3>  Dividends declared per share divided by net income per share.
<F4>  Average equity divided by average total assets.
<F5>  Dividends declared per share after restatement for the stock split
      as disclosed in the consolidated financial statements are $0.14,
      $0.13, and $0.12 per share for 1996, 1995 and 1994, respectively.
</TABLE>
                             -57-<PAGE>
ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

                       INDEPENDENT AUDITOR'S REPORT



To the Board of Directors
Community Bankshares, Inc. 
   and Subsidiaries 
Cornelia, Georgia


         We have audited the accompanying consolidated balance
sheets of  Community Bankshares, Inc. and subsidiaries as of
December 31, 1996 and 1995, and the related consolidated
statements of income, shareholders' equity and cash flows for
each of the three years in the period ended December 31, 1996. 
These financial statements are the responsibility of the
Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.


         We conducted our audits in accordance with generally
accepted auditing standards.  Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. 
We believe that our audits provide a reasonable basis for our
opinion.


         In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects, the
financial position of Community Bankshares, Inc. and subsidiaries
as of December 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in
the period ended December 31, 1996, in conformity with generally
accepted accounting principles.




   /s/ Mauldin & Jenkins, LLC



Atlanta, Georgia
January 10, 1997
                               -58-<PAGE>
                            COMMUNITY BANKSHARES, INC.
                                 AND SUBSIDIARIES


                           CONSOLIDATED BALANCE SHEETS
                            DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
                                                                                            1996                      1995 
                                      Assets                                                ----                      ----
                                      ------
<S>                                                                                    <C>                     <C>
Cash and due from banks                                                                $   19,479,573          $    13,645,886
Interest-bearing deposits in banks                                                            208,224                        0
Federal funds sold                                                                          8,345,000               12,195,000
Securities available-for-sale                                                              47,417,952               42,686,184
Securities held-to-maturity (fair value $18,826,126 and $12,483,394)                       18,653,842               12,280,209
Loans held for sale                                                                         2,484,117                  450,000
Loans                                                                                     203,301,540              178,841,321
Less allowance for loan losses                                                              3,591,958                3,060,479
                                                                                       --------------           --------------
          Loans, net                                                                      199,709,582              175,780,842

Premises and equipment                                                                      8,115,002                5,740,766
Other assets                                                                               11,165,622                7,228,359
                                                                                       --------------           --------------
          TOTAL ASSETS                                                                 $  315,578,914           $  270,007,246
                                                                                       ==============           ==============

                    Liabilities, Redeemable Common Stock and Shareholders' Equity
                    -------------------------------------------------------------

Deposits
    Noninterest-bearing demand                                                         $   36,877,267           $   32,318,426
    Interest-bearing demand                                                                61,676,438               57,835,690
    Savings                                                                                13,949,338               12,075,162
    Time, $100,000 and over                                                                48,327,634               39,842,247
    Other time                                                                            117,878,692              100,370,127
                                                                                       --------------           --------------
         TOTAL DEPOSITS                                                                   278,709,369              242,441,652
Other borrowings                                                                              616,399                  786,939
Other liabilities                                                                           8,992,947                4,309,630
                                                                                       --------------           --------------
         TOTAL LIABILITIES                                                                288,318,715              247,538,221
                                                                                       --------------           --------------
Commitments and contingent liabilities 


Redeemable common stock held by ESOP, 308,870 shares outstanding
     at December 31, 1996, at fair value                                                    6,177,400                   -     
                                                                                       --------------           --------------
Shareholders' equity 
    Common stock, par value $1; 5,000,000 shares authorized; 2,004,830
        issued and outstanding at December 31, 1996; 1,954,500 issued
        and outstanding at December 31, 1995                                                2,004,830                1,954,500

    Capital surplus                                                                         5,276,520                4,323,055
    Retained earnings                                                                      13,875,615               16,274,898
    Unrealized losses on securities available-for-sale, net of tax                           (74,166)                 (83,428)
                                                                                       --------------           --------------
          TOTAL SHAREHOLDERS' EQUITY                                                       21,082,799               22,469,025
                                                                                       --------------           --------------

          TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND SHAREHOLDERS' EQUITY          $  315,578,914           $  270,007,246
                                                                                       ==============           ==============
</TABLE>
See Notes to Consolidated Financial Statements.
                              -59-<PAGE>
                   COMMUNITY BANKSHARES, INC.
                        AND SUBSIDIARIES


                CONSOLIDATED STATEMENTS OF INCOME
          YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
                                                                           1996                  1995                   1994
                                                                           ----                  ----                   ----
<S>                                                                   <C>                    <C>                  <C>
Interest income

    Loans                                                             $  20,439,949          $ 18,146,625          $  14,418,904
    Taxable securities                                                    2,482,767             2,550,283              2,534,108
    Nontaxable securities                                                   907,794               640,702                639,893
    Deposits in banks                                                         8,855                15,538                 29,638
    Federal fund sold                                                       625,274               517,688                288,905
                                                                      -------------          ------------          -------------
          TOTAL INTEREST INCOME                                          24,464,639            21,870,836             17,911,448
                                                                      -------------          ------------          -------------
INTEREST EXPENSE
    Deposits                                                             11,170,833             9,738,965              7,458,452
    Other borrowings                                                         64,940               136,094                 94,397
                                                                      -------------          ------------          -------------
          TOTAL INTEREST EXPENSE                                         11,235,773             9,875,059              7,552,849
                                                                      -------------          ------------          -------------
NET INTEREST INCOME                                                      13,228,866            11,995,777             10,358,599
PROVISION FOR LOAN LOSSES                                                   757,262               848,800                750,190
                                                                      -------------          ------------          -------------
          NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES            12,471,604            11,146,977              9,608,409
                                                                      -------------          ------------          -------------
OTHER INCOME
    Service charges on deposits accounts                                  1,543,707             1,338,805              1,263,290
    Other service charges, commissions and fees                             498,401               372,609                310,751
    Trust department fees                                                   103,085               117,309                 70,098
    Nonbank subsidiary income                                             5,558,705             3,780,324              3,007,397
    Gain on sale of loans                                                   381,636               461,145                391,156
    Net realized losses on securities available-for-sale                   (13,749)              (65,247)                (5,255)
    Other                                                                   320,342               207,600                294,860
                                                                      -------------          ------------          -------------
          TOTAL OTHER INCOME                                              8,392,127             6,212,545              5,332,297
                                                                      -------------          ------------          -------------
OTHER EXPENSES
    Salaries and employee benefits                                        8,265,776             6,785,323              5,928,216
    Equipment expenses                                                    1,373,968             1,271,574                885,740
    Occupancy expenses                                                      807,364               699,173                644,736
    Deposit insurance premiums                                               12,000               264,757                518,418
    Data processing expenses                                                422,188               328,823                237,334
    Travel expenses                                                         531,488               525,805                396,930
    Office supply expenses                                                  373,163               302,237                203,774
    Professional fees                                                       252,747               399,794                208,389
    Other real estate expenses                                              134,533               224,759                427,861
    Other operating expenses                                              2,777,080             2,167,596              2,154,455
                                                                      -------------          ------------          -------------
          TOTAL OTHER EXPENSES                                           14,950,307            12,969,841             11,605,853
                                                                      -------------          ------------          -------------
          INCOME BEFORE INCOME TAXES                                      5,913,424             4,389,681              3,334,853

INCOME TAX EXPENSE                                                        1,869,229             1,264,611                916,311
                                                                      -------------          ------------          -------------

          NET INCOME                                                  $   4,044,195          $  3,125,070          $   2,418,542
                                                                      =============          ============          =============
NET INCOME PER SHARE OF COMMON STOCK                                  $        1.93          $       1.54          $        1.21
                                                                      =============          ============          =============
WEIGHTED AVERAGE SHARES OUTSTANDING                                       2,091,419             2,034,494              2,001,580
                                                                      =============          ============          =============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
                                   60<PAGE>
                                           COMMUNITY BANKSHARES, INC.
                                               AND SUBSIDIARIES


                               CONSOLIDATED STATEMENTS OF  SHAREHOLDERS' EQUITY
                                  YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
                                                                                                      Unrealized
                                                                                                         Gains
                                                                                                     (Losses) on
                                                                                                      Securities
                                         Common Stock                                                 Available-           Total
                                   -----------------------         Capital          Retained           for-Sale,      Shareholders'
                                   Shares      Par Value           Surplus          Earnings          Net of Tax          Equity
                                   ------      ---------           -------          --------          -----------         ------
<S>                             <C>           <C>                <C>              <C>               <C>             <C>
BALANCE, DECEMBER 31,
    1993                           64,342     $      643,420     $  5,380,843     $  11,195,941     $         -     $   17,220,204
    Net income                          -                  -                          2,418,542               -          2,418,542
    Cash dividends declared,
        $.12  per share                 -                  -                -          (214,593)              -           (214,593)
    Net change in unrealized
        losses on securities
        available-for-sale,
        net of tax                      -                  -                -                 -          (419,906)        (419,906)
                                ---------      --------------    ------------      ------------      ------------    -------------
BALANCE, DECEMBER 31,
    1994                           64,342             643,420       5,380,843        13,399,890          (419,906)      19,004,247
    Net income                          -                   -               -         3,125,070                 -        3,125,070
    Cash dividends declared, 
        $.13 per share                  -                   -               -          (250,062)                -         (250,062)
    Issuance of common
         stock                        808               8,080         245,212                 -                 -          253,292
    Recapitalization of 
        common stock                                (586,350)         586,350                 -                 -                -
    30 for 1 stock split        1,889,350          1,889,350       (1,889,350)                -                 -                -
    Net change in unrealized
        losses on securities
        available-for-sale,
        net of tax                      -                  -                -                 -           336,478          336,478
                                ---------      --------------    ------------      ------------      ------------    -------------
BALANCE, DECEMBER 31,
    1995                        1,954,500           1,954,500       4,323,055        16,274,898           (83,428)      22,469,025
    Net income                          -                   -               -         4,044,195                 -        4,044,195
    Cash dividends declared,
        $.14  per share                 -                   -               -          (266,078)                -         (266,078)
    Issuance of common
        stock                      50,330              50,330         953,465                 -                 -        1,003,795
     Adjustment for shares
        owned by ESOP                                                                (6,177,400)                        (6,177,400)
    Net change in unrealized
        losses on securities
        available-for-sale,
        net of tax                      -                   -               -                 -            9,262             9,262
                                ---------      --------------    ------------      ------------      ------------    -------------
Balance, December 31,
    1996                        2,004,830      $    2,004,830    $  5,276,520      $ 13,875,615      $   (74,166)    $  21,082,799
                                =========      ==============    ============      ============      ===========     =============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                               61<PAGE>
                 COMMUNITY BANKSHARES, INC.
                      AND SUBSIDIARIES


           CONSOLIDATED STATEMENTS OF CASH FLOWS
        YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
                                                                       1996                      1995                   1994
                                                                       ----                      ----                   ----

<S>                                                              <C>                     <C>                      <C>
OPERATING ACTIVITIES
    Net income                                                   $    4,044,195          $     3,125,070          $    2,418,542
    Adjustments to reconcile net income to net cash
        provided by operating activities:
        Depreciation                                                    926,807                  788,974                 821,503
        Amortization of intangibles                                       8,911                   11,311                  11,311
        Provision for loan losses                                       757,262                  848,800                 750,190
        Provision for other real estate losses                          110,000                  167,000                 120,000
        Deferred income taxes                                          (197,515)                 (33,852)               (192,280)
        (Increase) decrease in loans held for sale                   (2,034,117)               1,692,625              (2,142,625)
        Net realized losses on securities                                13,749                   65,247                   5,255
          available-for-sale
        Net losses on sale of other real estate                           2,722                   12,468                 155,234
        Increase in interest receivable                                (576,126)                (405,008)               (701,250)
        Increase (decrease) in interest payable                         395,738                  865,574                (824,026)
        Increase (decrease) in taxes payable                            274,814                 (221,057)                320,729
        (Increase) decrease in accounts receivable of 
             nonbank subsidiary                                      (1,127,313)                 850,185                (909,024)
        Increase in work in process of nonbank subsidiary            (1,383,105)                 (37,553)                 90,628
        Increase (decrease) in accruals and payables of 
             nonbank subsidiary                                       3,773,361                 (432,685)                694,966
        Other operating activities                                     (437,924)                (605,672)                331,304
                                                                  -------------             ------------               ---------
              Net cash provided by operating activities               4,551,459                6,691,427                 950,457
                                                                  -------------             ------------               ---------

INVESTING ACTIVITIES
    Purchases of securities available-for-sale                      (21,318,882)             (13,726,854)             (5,881,083)
    Proceeds from sales of securities available-for-sale              3,465,702                9,242,423               1,240,625
    Proceeds from maturities of securities                           13,119,694                5,307,709               4,027,795
       available-for-sale
    Purchases of securities held-to-maturity                         (7,042,587)              (6,018,408)             (9,585,809)
    Proceeds from maturities of securities                              668,954                5,407,364               6,157,921
        held-to-maturity
    Net (increase) decrease in Federal funds sold                     3,850,000               (5,985,000)               4,465,000
    Net (increase) decrease  in interest-bearing deposits              (208,224)                 797,000               (198,000)
         in banks
    Net increase in loans                                           (24,980,798)             (19,733,873)            (16,752,385)
    Purchase of premises and equipment                               (3,495,693)              (1,014,579)             (1,494,884)
    Disposal of premises and equipment                                  194,650                   26,300                 434,129
    Proceeds from sale of other real estate                             189,463                1,416,756               1,080,771
                                                                  -------------             ------------               ---------
              Net cash used in investing activities                 (35,557,721)             (24,281,162)            (16,505,920)
                                                                  -------------             ------------               ---------
</TABLE>
                                62
<PAGE>
                 COMMUNITY BANKSHARES, INC.
                      AND SUBSIDIARIES


            CONSOLIDATED STATEMENTS OF CASH FLOWS 
        YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
                                                                          1996                  1995                   1994
                                                                          ----                  ----                   ----

<S>                                                                <C>                     <C>                  <C>
FINANCING ACTIVITIES
    Increase in deposits                                           $   36,267,717          $  17,680,181        $   19,247,233
    Net increase in other borrowings                                    1,616,399                428,415               376,974
    Repayment of other borrowings                                      (1,786,939)            (1,874,376)             (288,554)
    Proceeds from the issuance of common stock                          1,003,795                253,292                     -
    Dividends  paid                                                      (261,023)              (246,035)             (214,593)
                                                                     ------------            -----------          ------------

          Net cash provided by financing activities                    36,839,949             16,241,477            19,121,060
                                                                     ------------            -----------           -----------

Net increase (decrease) in cash and due from banks                      5,833,687            (1,348,258)             3,565,597

Cash and due from banks at beginning of year                           13,645,886             14,994,144            11,428,547
                                                                     ------------            -----------           -----------

Cash and due from banks at end of year                             $   19,479,573          $  13,645,886         $  14,994,144
                                                                     ============            ===========           ===========
SUPPLEMENTAL DISCLOSURES
    Cash paid for:
        Interest                                                   $   10,840,035          $   9,009,485         $   8,376,875

        Income taxes                                               $    1,791,930          $   1,563,738         $     787,862

NONCASH TRANSACTIONS

    Unrealized (gains) losses on securities                        $     (12,031)          $   (396,287)         $     531,929
available-for-sale

    Principal balances of loans transferred to other 
        real estate                                                $      294,787          $     542,327         $   1,056,249

    Transfer of securities held-to-maturity to securities
        available-for-sale                                         $            0          $  29,644,758         $  11,299,745

</TABLE>
See Notes to Consolidated Financial Statements.

                                                63
<PAGE>
                    COMMUNITY BANKSHARES, INC.
                         AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         NATURE OF BUSINESS 

           Community Bankshares, Inc. (the Company) is a
           multi-bank holding company whose business is
           presently conducted by its wholly-owned subsidiaries,
           Community Bank & Trust - Habersham located in
           Cornelia, Georgia, Community Bank & Trust - Jackson
           located in Commerce, Georgia, Community Bank & Trust
           - Alabama located in Union Springs, Alabama, and
           Community Bank & Trust - Troup located in LaGrange,
           Georgia.  Financial Supermarkets, Inc. is a
           wholly-owned subsidiary of Community Bank & Trust -
           Habersham, which provides a variety of bank related
           products and services to the financial institution
           industry. 

           The banking subsidiaries are commercial banks
           operating independently of one another in their
           respective market areas.  The banking subsidiaries in
           Georgia have identified their primary market areas to
           be the county in which they are located and all
           surrounding counties.  The Georgia banking
           subsidiaries are all located approximately 85 miles
           from the metropolitan Atlanta area.  Community Bank &
           Trust - Alabama is located approximately 50 miles
           from Montgomery, Alabama.  Financial Supermarkets,
           Inc. currently provides products and services
           primarily in the southeastern United States; however,
           their products and services are marketed
           internationally.  The Banks provide a full range of
           banking services to individual and corporate
           customers in their primary market areas and
           surrounding counties.   

         BASIS OF PRESENTATION

           The consolidated financial statements include the
           accounts of the Company and its subsidiaries. 
           Significant intercompany transactions and accounts
           are eliminated in consolidation.

           The accounting and reporting policies of the Company
           conform to generally accepted accounting principles
           and general practices within the financial services
           industry.  In preparing the financial statements,
           management is required to make estimates and
           assumptions that affect the reported amounts of
           assets and liabilities as of the date of the balance
           sheet and revenues and expenses for the year.  Actual
           results could differ from those estimates.

         CASH AND CASH EQUIVALENTS 

           Cash on hand, cash items in process of collection,
           and amounts due from banks are included in cash and
           due from banks.<PAGE>
           The Company maintains amounts due from banks which,
           at times, may exceed Federally insured limits.  The
           Company has not experienced any losses in such
           accounts.

                                64<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------


NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         SECURITIES 

           Securities are classified based on management's
           intention on the date of purchase.  Securities which
           management has the intent and ability to hold to
           maturity are classified as held-to-maturity and
           reported at amortized cost.  All other debt
           securities are classified as available-for-sale and
           carried at fair value with net unrealized gains and
           losses included in shareholders' equity, net of tax. 
           Other equity securities without a readily
           determinable fair value are carried at cost.

           Interest and dividends on securities, including
           amortization of premiums and accretion of discounts,
           are included in interest income.  Realized gains and
           losses from the sales of securities are determined
           using the specific identification method.  

         LOANS HELD FOR SALE 

           Loans held for sale include mortgage and other loans
           and are carried at the lower of aggregate cost or
           fair value. 

         LOANS 

           Loans are carried at their principal amounts
           outstanding less unearned income and the allowance
           for loan losses.  Interest income on loans is
           credited to income based on the principal amount
           outstanding.

           Loan origination fees and certain direct costs of
           most loans are recognized at the time the loan is
           recorded.  Loan origination fees and costs incurred
           for other loans are deferred and recognized as income
           over the life of the loan.  Because net origination
           loan fees and costs are not material, the results of
           operations are not materially different than the
           results which would be obtained by accounting for
           loan fees and costs in accordance with generally
           accepted accounting principles.

           The allowance for loan losses is maintained at a
           level that management believes to be adequate to
           absorb potential losses in the loan portfolio. 
           Management's determination of the adequacy of the
           allowance is based on an evaluation of the portfolio,
           past loan loss experience, current economic
           conditions, volume, growth, composition of the loan
           portfolio, and other risks inherent in the portfolio. 
           In addition, regulatory agencies, as an integral part
           of their examination process, periodically review the
           Company's allowance for loan losses, and may require
           the Company to record additions to the allowance
           based on their judgment about information available
           to them at the time of their examinations.
                                65<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------



NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Loans (Continued)

           The accrual of interest on impaired loans is
           discontinued when, in management's opinion, the
           borrower may be unable to meet payments as they
           become due.  Interest income is subsequently
           recognized only to the extent cash payments are
           received.

           A loan is impaired when it is probable the Company
           will be unable to collect all principal and interest
           payments due in accordance with the terms of the loan
           agreement.  Individually identified impaired loans
           are measured based on the present value of payments
           expected to be received, using the contractual loan
           rate as the discount rate.  Alternatively,
           measurement may be based on observable market prices
           or, for loans that are solely dependent on the
           collateral for repayment, measurement may be based on
           the fair value of the collateral.  If the recorded
           investment in the impaired loan exceeds the measure
           of fair value, a valuation allowance is established
           as a component of the allowance for loan losses. 
           Changes to the valuation allowance are recorded as a
           component of the provision for loan losses.

         PREMISES AND EQUIPMENT 

           Premises and equipment are stated at cost less
           accumulated depreciation.  Depreciation is computed
           principally by the straight-line method over the
           estimated useful lives of the assets.

         OTHER REAL ESTATE OWNED 

         Other real estate owned represents properties acquired
         through foreclosure.  Other real estate owned is held
         for sale and is carried at the lower of the recorded
         amount of the loan or fair value of the properties less
         estimated selling costs.  Any write-down to fair value
         at the time of transfer to other real estate owned is
         charged to the allowance for loan losses.  Subsequent
         gains or losses on sale and any subsequent adjustment
         to the value are recorded as other expenses.

                                66<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         INCOME TAXES 

           Income tax expense consists of current and deferred
           taxes.  Current income tax provisions approximate
           taxes to be paid or refunded for the applicable year. 
           Deferred tax assets and liabilities are recognized on
           the temporary differences between the bases of assets
           and liabilities as measured by tax laws and their
           bases as reported in the financial statements. 
           Deferred tax expense or benefit is then recognized
           for the change in deferred tax assets or liabilities
           between periods.

           Recognition of deferred tax balance sheet amounts is
           based on management's belief that it is more likely
           than not that the tax benefit associated with certain
           temporary differences, tax operating loss
           carryforwards and  tax credits will be realized.  A
           valuation allowance is recorded for those deferred
           tax items for which it is more likely than not that
           realization will not occur.

           The Company and the Banks file a consolidated income
           tax return.  Each entity provides for income taxes
           based on its contribution to income taxes (benefits)
           of the consolidated group.

         SALE OF LOANS

           The Banks originate and sell participations in
           certain loans.  Gains are recognized at the time the
           sale is consummated.  The amount of gain recognized
           on the sale of a specific loan is equal to the
           percentage resulting from determining the fair value
           of the portion of the loan sold relative to the fair
           value of the entire loan including servicing rights. 
           Any material unrecognized gain is deferred and
           amortized into income over the term of the portion of
           the loan not sold.  Losses are recognized at the time
           the loan is identified as held for sale and the
           loan's carrying value exceeds its market value.

         TRUST DEPARTMENT

           Trust income is recognized on the cash basis in
           accordance with established industry practices. 
           Reporting of such fees on the accrual basis would
           have no material effect on reported income.

         NONBANK SUBSIDIARY REVENUE RECOGNITION 

           Financial Supermarkets, Inc., a wholly-owned
           subsidiary of Community Bank & Trust - Habersham,
           recognizes revenue and losses on its installation
           contracts on the completed-contract method of
           accounting.  Under this method, billings and costs
           are accumulated during the period of installation,
           but no profits are recorded before the completion of
           the work.  Provisions for estimated losses on
           uncompleted contracts are made at the time such<PAGE>
           losses are identified.  Operating expenses, including
           indirect costs and administrative expenses, are
           charged as incurred to periodic income and not
           allocated to contract costs.  Income from other
           consulting services is recognized as services are
           provided and costs and expenses are incurred for each
           individual contract.


                                67<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------


NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         EARNINGS PER SHARE

           Earnings per common share are computed by dividing
           net income by the weighted average number of shares
           of common stock and common stock equivalents
           outstanding.  Common stock equivalents include stock
           options.


NOTE 2.  SECURITIES 

           The amortized cost and fair value of securities are
           summarized as follows:
<TABLE>
<CAPTION>
                                                                          Gross          Gross
                                                          Amortized      Unrealized     Unrealized       Fair
                                                            Cost          Gains           Losses         Value
                                                          ---------      ----------     ----------      -----
     <S>                                               <C>            <C>           <C>             <C>
     Securities available-for-sale
       December 31, 1996:
     U.S. Government and agency
       securities                                      $  27,727,826  $   42,030     $  (209,345)    $  27,560,511
     State and municipal securities                        1,091,315      42,845             -           1,134,160
     Mortgage-backed securities                           17,805,102     147,327        (146,468)       17,805,961
     Equity securities                                       917,320         -             -               917,320
                                                       -------------  ----------     -----------     -------------
                                                       $  47,541,563  $  232,202     $  (355,813)    $  47,417,952
                                                       =============  ==========     ===========     =============

     December 31, 1995:
      U. S. Government and agency
       securities                                      $  28,170,618  $  132,095     $  (337,945)    $  27,964,768
     State and municipal securities                        1,842,027      81,126             -           1,923,153
     Mortgage-backed securities                           12,151,181     120,747        (131,665)       12,140,263
     Equity securities                                       658,000        -                -             658,000
                                                       -------------  ----------     -----------     -------------
                                                       $  42,821,826  $  333,968     $  (469,610)    $  42,686,184
                                                       =============  ==========     ===========     =============
</TABLE>
                                                                       68<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

NOTE 2.   SECURITIES (Continued)
<TABLE>
<CAPTION>
                                                                          Gross          Gross
                                                         Amortized      Unrealized     Unrealized        Fair
                                                           Cost            Gains         Losses          Value
                                                         ---------      ----------     ----------       ------
     <S>                                               <C>            <C>           <C>              <C>
     SECURITIES HELD-TO-MATURITY
        December 31, 1996:
        State and municipal securities                 $  18,653,842  $  234,164     $  (61,880)     $  18,826,126
                                                       =============  ==========     ==========      =============

     DECEMBER 31, 1995:
        State and municipal securities                 $  12,280,209  $  274,560     $  (71,375)     $  12,483,394
                                                       =============  ==========     ==========      =============
</TABLE>

The amortized cost and fair value of securities as of December 31, 1996
by contractual maturity are shown below.  Maturities may differ from
contractual maturities in mortgage-backed securities because the
mortgages underlying the securities may be called or prepaid with or
without penalty.  Therefore, these securities and equity securities are
not included in the categories in the following maturity summary.

<TABLE>
<CAPTION>
                                             Securities Available-for-Sale Securities Held-to-Maturity
                                             ----------------------------- ---------------------------
                                               Amortized          Fair      Amortized           Fair
                                                  Cost           Value          Cost            Value
                                             -------------  -------------  -----------     -----------
     <S>                                     <C>            <C>            <C>             <C>
     Due in one year or less                 $   4,324,497  $   4,316,306  $   240,799     $   242,067
     Due from one year to five years            22,487,566     22,376,314    3,274,919       3,384,730
     Due from five to ten years                  1,757,078      1,755,646    3,005,074       3,005,254
     Due after ten years                           250,000        246,405   12,133,050      12,194,075
     Mortgage-backed securities                 17,805,102     17,805,961       -               -
     Equity securities                             917,320        917,320       -               -
                                             -------------  -------------  ------------    -----------
                                             $  47,541,563  $  47,417,952  $ 18,653,842    $18,826,126
                                             =============  =============  ============    ===========
</TABLE>
Securities with a carrying value of $28,814,848 and $24,975,762 at
December 31, 1996 and 1995, respectively, were pledged to secure public
deposits and for other purposes.

                                    69<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------


NOTE 2.  SECURITIES (Continued)

Gains and losses on sales of securities available-for-sale consist of the
following:
<TABLE>
<CAPTION>
                                                             December 31,
                                        --------------------------------------------------
                                            1996               1995                 1994 
                                        -----------         ----------          ----------
     <S>                                <C>                 <C>                 <C>
     Gross gains                        $    21,143         $   28,109          $   1,068 

     Gross losses                           (34,892)           (93,356)            (6,323)
                                        -----------         ----------          ----------
     Net realized losses                $   (13,749)        $  (65,247)         $  (5,255)
                                        ===========         ==========          ==========
</TABLE>

Under special provisions adopted by the Financial Accounting Standards
Board in October 1995, the Banks transferred $29,644,758 from securities
held-to-maturity to securities available-for-sale on December 31, 1995,
resulting in a net unrealized loss of $189,519 which was included in
shareholders' equity at $113,711 net of related taxes of $75,808.


NOTE 3.  LOANS AND ALLOWANCE FOR LOAN LOSSES 

The composition of loans is summarized as follows:
<TABLE>
<CAPTION>
                                                                            December 31,
                                                                 ---------------------------------
                                                                      1996                  1995 
                                                                 ---------------------------------
     <S>                                                         <C>                 <C>
     Commercial, financial, and agricultural                     $  99,746,883       $  77,421,000
     Real estate - construction                                      9,506,000           8,036,000
     Real estate - mortgage                                         57,566,000          63,312,000
     Consumer                                                       28,659,000          26,068,000
     Other                                                           8,139,791           4,276,618
                                                                 -------------       -------------
                                                                   203,617,674         179,113,618
     Unearned income                                                  (316,134)           (272,297)
     Allowance for loan losses                                      (3,591,958)         (3,060,479)
                                                                 -------------       -------------
     Loans, net                                                  $ 199,709,582       $ 175,780,842
                                                                 =============       =============
</TABLE>

                               70<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------


NOTE 3.  LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

Changes in the allowance for loan losses for the years ended
December 31, 1996, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
                                                             1996                1995                 1994 
                                                       --------------      --------------       ---------------
     <S>                                               <C>                 <C>                  <C>
     Balance, Beginning of Year                        $    3,060,479      $    2,685,800       $    2,456,954 
      Provision charged to operations                         757,262             848,800              750,190 
      Loans charged off                                      (329,592)           (551,644)            (587,880)
      Recoveries of loans previously charged off              103,809              77,523               66,536 
                                                       --------------      --------------       --------------
     Balance, End of Year                              $    3,591,958      $    3,060,479       $    2,685,800 
                                                       ==============      ==============       ==============
</TABLE>
The total  recorded investment in impaired loans was $1,739,091
and $558,829 at December 31, 1996 and 1995, respectively. None of
these loans had a specific allowance for loan losses at December
31, 1996 and 1995 determined in accordance with generally
accepted accounting principles.  The average recorded investment
in impaired loans for 1996 and 1995 was $1,966,092 and $560,771,
respectively.  Interest income on impaired loans of $108,210 and
$41,176 was recognized for cash payments received for the years
ended 1996 and 1995, respectively.

The Banks have granted loans to certain directors, executive
officers and their  related entities.  The interest rates on
these loans were substantially the same as rates prevailing at
the time of the transaction and repayment terms are customary for
the type of loan involved.  Changes in related party loans for
the year ended December 31, 1996 are as follows:

   Balance, beginning of year                             $   2,503,772 
     Advances                                                 2,038,821 
     Repayments                                              (1,338,420)
                                                          -------------
     Balance, end of year                                 $   3,204,173

                              71<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

NOTE 4.  PREMISES AND EQUIPMENT

         Premises and equipment are summarized as follows:
<TABLE>
<CAPTION>
                                                          December 31
                                              ------------------------------
                                                  1996             1995
                                             ------------      -----------
   <S>                                       <C>               <C>
   Land                                      $  1,488,621      $   987,100 
   Buildings                                    5,040,830        4,782,763 
   Equipment                                    6,754,619        5,900,497 
   Equipment under capital leases                   -              178,415 
   Construction in process
        ($307,518 estimated cost to
        complete)                               1,652,390           14,085 
                                             ------------      ------------
                                               14,936,460       11,862,860 

   Accumulated depreciation, including $2,974
      of accumulated amortization at
      December 31, 1995 on equipment under
      capital leases                           (6,821,458)      (6,122,094)
                                             ------------      ------------
                                              $ 8,115,002      $  5,740,766
                                             ============      ============
</TABLE>
NOTE 5.  OTHER BORROWINGS

      Other borrowings consist of the following:
<TABLE>
<CAPTION>
                                                                                           December 31,
                                                                                     -------------------------
                                                                                     1996                  1995
                                                                                     ----                 -----
     <S>                                                                        <C>                <C>
     Note payable to bank, due in quarterly
          instalments of $38,526 with interest of                               $    616,399        $       -  
          7.25% at December 31, 1996, collateralized
          by 50,000 shares of common stock of Community
          Bank & Trust-Habersham.  Matures December 31, 2000.
     Note payable to bank, due in quarterly instalments
          of $31,250 with interest due                                                     -              406,250 
          quarterly at prime (8.5%) to April 1, 1999
          collateralized by 25,000 shares of common stock
          and 25,000 shares of preferred stock of Community
          Bank & Trust-Jackson, 7,275 shares of common stock
          of Community Bank & Trust-Habersham, and 500
          shares of common stock of Community Bank & Trust-Alabama.
     Note payable to bank, due in quarterly instalments of
          $20,833 with interest due                                                        -              208,333 
          monthly at the Eurodollar rate plus 2.5 %
          (8.1875% at December 31, 1995) to June 30, 1998,
          collateralized by 25,000 shares of common stock and
          25,000 shares of preferred stock of Community Bank
          & Trust-Jackson and 7,275 shares of Community
          Bank & Trust-Habersham.
     Capital lease obligation, due in monthly instalments of
          $3,744 to October 15,                                                            -              172,356 
          2000, discounted at a rate of 9.82%.                                   ------------        ------------
                                                                                 $    616,399        $    786,939 
                                                                                 ============        ============
</TABLE>
                               72<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

NOTE 5.     OTHER BORROWINGS (Continued)

            Aggregate maturities required on  other borrowings at
            December 31, 1996 are as follows: 

                  1997        $  154,100 
                  1998           154,100 
                  1999           154,100 
                  2000           154,099 
                              ----------
                              $  616,399 
                              ==========

NOTE 6.  EMPLOYEE BENEFIT PLANS

      INCENTIVE STOCK OPTION PLAN

      The Company has an Incentive Stock Option Plan in which the
      Company can grant to key personnel options for an aggregate
      of 225,000 shares of the Company's common stock at not less
      than the fair market value of such shares on the date the
      option is granted.  If the optionee owns shares of the
      Company representing more than 10% of the total combined
      voting power, then the price shall not be less than 110% of
      the fair market value of such shares on the date the option
      is granted.  Also, the option period will not exceed ten
      years from date of grant.

      In connection with the acquisition of The Bank of Troup
      County in 1994, the Company honored the stock options
      issued to the Bank's president under an employment
      contract.  The contract, dated March 8, 1993, granted
      options to purchase 500 shares of the Bank's common stock
      in cash for the years 1993, 1994, 1995 and 1996.  The
      options are exercisable at book value and expire thirty-one
      (31) days after the end of each respective year end.  At
      December 31, 1996, all the options had been exercised or
      had expired.
<TABLE>
<CAPTION>
                                               1996                             1995                                    1994 
                                        ----------------------         ------------------------            ------------------------
                                                     Weighted-                         Weighted-                          Weighted-
                                                     Average                           Average                            Average
                                                     Exercise                          Exercise                           Exercise
                                        Number       Price             Number          Price               Number         Price
                                        -------      ---------         -------         ---------           ------         ---------
     <S>                                <C>           <C>              <C>             <C>                 <C>            <C>
     Under option, beginning of year    204,000       $  6.42          204,000         $  6.42             150,000        $  5.21 
     Granted                                330         11.50              330            9.85              54,330           9.78 
     Exercised                             (330)        11.50               -               -                 -                -
     Terminated                              -            -               (330)           9.85                (330)          8.92 
                                        -------                        -------                             -------
     Under option and exercisable,
        end of year                     204,000          6.42          204,000            6.42             204,000           6.42 
                                        =======                        =======                             =======
</TABLE>
                                73
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

NOTE 6.  EMPLOYEE BENEFIT PLANS (Continued)

         INCENTIVE STOCK OPTION PLAN (CONTINUED)


                     Under Option and Exercisable, End of Year
    -----------------------------------------------------------------
                                                            Weighted-
                                         Weighted-           Average
                                          Average           Remaining
                      Range of           Exercise           Contracted
     Number            Prices              Price               Life
     ------          ---------           --------           ----------
     150,000         $   5.21            $   5.21                1 
     54,000              9.47 - 9.85         9.79                8 
     --------
     204,000 
     ========


   As permitted by Statement of Financial Accounting Standard No.
   123 "Accounting for Stock-Based Compensation" (SFAS No. 123),
   the Company recognizes compensation cost for stock-based
   employee compensation awards in accordance with APB Opinion
   No. 25, ("Accounting for Stock Issued to Employees").  The
   Company recognized no compensation cost for stock-based
   employee compensation awards for the years ended December 31,
   1996 and 1995.  The effect on operations was immaterial for
   the years ended December 31, 1996 and 1995.

401(K) PLAN

   The Company has a contributory 401(K) retirement plan covering
   substantially all employees.  Contributions to the plan
   charged to expense for the year ended December 31, 1996
   amounted to $26,237.

PROFIT-SHARING PLAN

   The Company had a noncontributory profit-sharing plans
   covering all employees, subject to certain minimum age service
   requirements.  The amount of the annual contribution to the
   plan is at the discretion of the Company's Board of Directors. 
   The amounts charged to expense were $386,482 and $275,220  for
   the years ended December 31, 1995 and 1994, respectively.  The
   plan was terminated effective January 1, 1996.

EMPLOYEE STOCK OWNERSHIP PLAN

   In 1996 the Company established an Employee Stock Ownership
   Plan (ESOP) for the benefit of employees who meet certain
   eligibility requirements.  The Plan was established on January
   1, 1996 in connection with the termination of the Company's
   Profit Sharing Plan.  Contributions to the Plan are determined
   by the Board of Directors of the Company taking into
   consideration the then prevailing financial conditions and
   fiscal requirements of the Company and such other factors as
   the Board of Directors may deem pertinent and applicable under
   the circumstances.  For the year ended December 31, 1996, the
   Company made a cash contribution of $488,500 to the Plan.  

                              74<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

NOTE 6.  EMPLOYEE BENEFIT PLANS (Continued)

   EMPLOYEE STOCK OWNERSHIP PLAN (CONTINUED)

      In accordance with the Plan, the Company is expected to
      honor the rights of certain participants to diversify their
      account balances or to liquidate their ownership of the
      common stock in the event of distribution.  The purchase
      price of the common stock is based on the fair market value
      of the Company's common stock as of the annual valuation
      date which precedes the date the put option is exercised. 
      No participant has exercised these rights since the
      inception of the Plan, and no significant cash outlay is
      expected during 1997.  However, since the redemption of
      common stock is outside the control of the Company, the
      Company's maximum cash obligation based on the approximate
      market prices of common stock as of the reporting date has
      been presented outside of shareholders' equity. The amount
      presented as redeemable common stock held by the ESOP in
      the consolidated balance sheet represents the Company's
      maximum cash obligation and has been reflected as a 
      reduction of retained earnings.

   At December the ESOP held 258,870 allocated shares and 50,000
   of committed-to-be-released shares.  Shares held by the ESOP
   are considered outstanding for purposes of calculating the
   Company's earnings per share.


NOTE 7.  INCOME TAXES

The income tax expense consists of the following:
<TABLE>
<CAPTION
                                                                                     December 31,
                                                                      ------------------------------------------
                                                                          1996           1995           1994
                                                                      -----------    -----------     -----------
     <S>                                                              <C>            <C>             <C>
     Current                                                          $ 2,112,253    $ 1,327,665     $ 1,159,768 
     Deferred                                                            (197,515)       (33,852)       (192,280)
     Current tax effect of net operating loss carryforward                (45,509)       (29,202)        (51,177)
                                                                      -----------    -----------     -----------
     Income tax expense                                               $ 1,869,229    $ 1,264,611     $   916,311
                                                                      ===========    ===========     ===========
</TABLE>
                                75<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 7.  INCOME TAXES (Continued)

   The Company's income tax expense differs from the amounts computed by
   applying the Federal income tax statutory rates to income before
   income taxes.  A reconciliation of the differences is as follows:
<TABLE>
<CAPTION>
                                                                       December 31,
                                        ------------------------------------------------------------------------
                                                   1996                     1995                      1994
                                        ----------------------   ----------------------    ----------------------
                                          Amount       Percent      Amount      Percent       Amount      Percent
                                        ------------   -------   ------------   -------    ------------   -------
     <S>                                <C>            <C>       <C>            <C>        <C>            <C>
     Tax provision at statutory rate    $  2,010,564     34%     $  1,492,492     34%      $  1,133,850     34%
     Tax-exempt interest                    (351,027)    (6)         (262,391)    (6)          (240,719)    (7)
     Disallowed interest                      47,859      1            32,469      1             24,030      1
     Current tax effect of net
     operating loss carryforward             (45,509)    (1)          (29,202)    (1)           (51,177)    (2)
     Nondeductible expenses                   59,692      1            32,469      1             57,164      2 
     State income taxes                      154,777      3                -       -                 -       -
     Other items                              (7,057)     -            (1,226)                   (6,837)     - 
                                        ------------   ----      ------------   ----       ------------   -----
     Income tax expense                 $  1,869,299     32%     $  1,264,611     29%      $    916,311     28%
                                        ============   ====      ============   ====       ============   =====
</TABLE>
The components of deferred income taxes are as follows:
<TABLE>
<CAPTION>
                                                             December 31,
                                                  ------------------------------
                                                       1996              1995
                                                  -----------        ----------
   <S>                                            <C>                 <C>
   Deferred tax assets:
     Loan loss reserves                           $ 1,069,063         $  851,521 
     Unrealized loss on securities                     50,017             52,214 
     Other                                                -                4,549 
     Net operating loss carryforward                  230,641            276,150 
     Valuation allowance                             (230,641)          (276,150)
                                                  -----------         ----------
                                                    1,119,080            908,284 
                                                  -----------         ----------

   Deferred tax liabilities:
     Depreciation                                     207,900            219,433 
     Accretion                                        111,385             84,797 
     Other                                                423                -
                                                  -----------         ----------
                                                      319,708            304,230 
                                                  -----------         ----------
     Net deferred tax assets                      $   799,372         $  604,054 
                                                  ===========         ==========
</TABLE>
At December 31, 1996, the Company has available net operating
loss carryforwards of approximately $678,000 for Federal income
tax purposes.  If unused, the carryforwards will expire in 2009.


                               76<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 8.  STOCK OPTIONS AND EARNINGS PER COMMON AND COMMON
         EQUIVALENT SHARE

         Earnings per common share and common equivalent share
         were computed by dividing net income by the weighted
         average number of shares of common stock and common
         stock equivalents outstanding.  The number of common
         shares was increased by the number of shares issuable
         upon the exercise of the stock options described in Note
         6.  This theoretical increase in the number of common
         shares was reduced by the number of common shares which
         are assumed to have been repurchased for the treasury
         with the proceeds from the exercise of the options;
         these purchases were assumed to have been made at the
         price per share that approximates market value.  The
         treasury stock method for determining the amount of
         dilution of stock options is based on the concept that
         common shares which could have been purchased with the
         proceeds of the exercise of common stock options at
         market value are not actually outstanding common shares. 
         The weighted average number of shares of common stock
         and common stock equivalents outstanding at December 31,
         1996, 1995 and 1994 was 2,091,419, 2,034,494 and
         2,001,580, respectively.

         Effective December 20, 1995, the Company recapitalized
         by reducing the par value of its common stock from $10
         to $1 and declaring a 30 for 1 stock split.  The above
         transactions increased the number of shares outstanding
         at December 31, 1995 to 1,954,500.  In accordance with
         generally accepted accounting principles, the weighted
         average number of shares for 1995 and 1994 were adjusted
         to reflect the stock split.

         Following is a summary of the computation of weighted
         average number of shares of common stock and common
         stock equivalents:

<TABLE>
<CAPTION
                                                                           December 31,
                                                            ---------------------------------------
                                                               1996         1995             1994
                                                            ---------      ---------      --------
     <S>                                                    <C>            <C>            <C>
     Weighted average common shares outstanding             1,961,597      1,944,373      1,930,260 
     Outstanding stock options                                204,000        204,660        204,990 
     Options considered to have been repurchased for the
      treasury based on an average book value of
      $17.66 and $11.50, respectively                         (74,178)      (114,539)      (133,670)
                                                            ---------      ---------      ---------
                                                            2,091,419      2,034,494      2,001,580
                                                            =========      =========      =========
</TABLE>


                                 77<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 9.   COMMITMENTS AND CONTINGENT LIABILITIES

In the normal course of business, the Company has entered into
off-balance-sheet financial instruments which are not reflected in the
financial statements.  These financial instruments include commitments to
extend credit and standby letters of credit.  Such financial instruments
are included in the financial statements when funds are disbursed or the
instruments become payable.  These instruments involve, to varying
degrees, elements of credit risk in excess of the amount recognized in
the balance sheet.

The Company's exposure to credit loss in the event of nonperformance by
the other party to the financial instrument for commitments to extend
credit and standby letters of credit is represented by the contractual
amount of those instruments.  A summary of the Company's commitments is
as follows:

                                                  December 31,
                                                  ------------
                                              1996                  1995
                                     ---------------          ---------------
     Commitments to extend credit    $    13,890,000          $    17,276,707 
     Standby letters of credit             3,241,200                3,401,200 
                                     ---------------          ---------------
                                     $    17,131,200          $    20,677,907 
                                     ===============          ===============

Commitments to extend credit generally have fixed expiration
dates or other termination clauses and may require payment of a
fee.  Since many of the commitments are expected to expire
without being drawn upon, the total commitment amounts do not
necessarily represent future cash requirements.  The credit risk
involved in issuing these financial instruments is essentially
the same as that involved in extending loans to customers.  The
Company evaluates each customer's creditworthiness on a
case-by-case basis.  The amount of collateral obtained, if deemed
necessary by the Company upon extension of credit, is based on
management's credit evaluation of the customer.  Collateral held
varies but may include real estate and improvements, crops,
marketable securities, accounts receivable, inventory, equipment,
and personal property.

Standby letters of credit are conditional commitments issued by
the Company to guarantee the performance of a customer to a third
party.  Those guarantees are primarily issued to support public
and private borrowing arrangements.  The credit risk involved in
issuing letters of credit is essentially the same as that
involved in extending loan facilities to customers.  Collateral
held varies as specified above and is required in instances which
the Company deems necessary.

In the normal course of business, the Company is involved in
various legal proceedings.  In the opinion of management of the
Company, any liability resulting from such proceedings would not
have a material effect on the Company's financial statements.


                              78<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9.     COMMITMENTS AND CONTINGENT LIABILITIES (Continued)

The Company has leased thirteen various properties and telephone
equipment under various noncancelable agreements which expire
between January 1, 1997 to July 10, 2009 and require various
minimum annual rentals.  The leases related to properties also
require the payment of property taxes, normal maintenance and
insurance.

The total minimum rental commitment at December 31, 1996 is due
as follows:

   During the year ending December 31:
   1997                                     $  203,621 
   1998                                        161,104 
   1999                                        150,183 
   2000                                         91,775 
   2001                                         45,500 
   Due thereafter                               29,000 
                                              --------
                                            $  681,183 
                                              ========

The total rental expense for the years ended December 31, 1996,
1995 and 1994 is $360,978, $235,783 and $210,656, respectively.


NOTE 10.    CONCENTRATIONS OF CREDIT

The banking subsidiaries originate primarily commercial,
residential, and consumer loans to customers in their local
communities and surrounding counties.  The ability of the
majority of the Banks' customers to honor their contractual loan
obligations is dependent on their local economy as well as the
economy in the metropolitan Atlanta and Montgomery areas.  

Thirty-three percent (33%) of the Company's loan portfolio is
concentrated in loans secured by real estate.   A substantial
portion of these loans is in the Banks' primary market areas.  In
addition, a substantial portion of the real estate owned is
located in those same markets.  Accordingly, the ultimate
collectibility of the Company's loan portfolio and the recovery
of the carrying amount of other real estate owned are susceptible
to changes in market conditions in the Banks' primary market
areas.  

                                 79<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 10.    CONCENTRATIONS OF CREDIT (Continued)

      The Company's loan portfolio also includes a concentration,
      49% of the total portfolio, of commercial, financial, and
      agricultural loans.  These loans represent loans made
      primarily to local businesses in the Banks' market areas. 
      A portion of these loans are small business loans and
      residential loans originated by the loan production office,
      a division of Community Bank & Trust - Habersham, which are
      outside the Banks' primary market areas.  The Company's
      lending policies require loans of all types to be
      well-collateralized and supported by adequate cash flows.

      Other significant concentrations of credit by type of loan
      are set forth in Note 3.  The Banks, as a matter of policy,
      do not generally extend credit to any single borrower or
      group of related borrowers in excess of 25% of each
      individual Bank's statutory capital, or approximately
      $1,750,000, $600,000, $500,000, and $987,500 for Community
      Bank & Trust - Habersham, Jackson, Alabama, and Troup,
      respectively. 


NOTE 11.    REGULATORY MATTERS

      The Banks are subject to certain restrictions on the amount
      of dividends that may be declared without prior regulatory
      approval.  At December 31, 1996, approximately $2,453,000
      of retained earnings were available for dividend
      declaration without regulatory approval.

      The Company and Banks are subject to various regulatory
      capital requirements administered by the federal banking
      agencies.  Failure to meet minimum capital requirements can
      initiate certain mandatory - and possibly additional
      discretionary - actions by regulators that, if undertaken,
      could have a direct material effect on the financial
      statements.  Under capital adequacy guidelines and the
      regulatory framework for prompt corrective action, the
      Company and Banks must meet specific capital guidelines
      that involve quantitative measures of the assets,
      liabilities, and certain off-balance-sheet items as
      calculated under regulatory accounting practices.  The
      Company and Banks capital amounts and classification are
      also subject to qualitative judgments by the regulators
      about components, risk weightings, and other factors.

      Quantitative measures established by regulation to ensure
      capital adequacy require the Company and the Bank to
      maintain minimum amounts and ratios of total and Tier I
      capital to risk-weighted assets and Tier I capital to
      average assets.  Management believes, as of December 31,
      1996, the Company and the Banks meet all capital adequacy
      requirements to which it is subject.

                                      80<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11.    REGULATORY MATTERS (Continued)


As of December 31, 1996 and 1995, notification from the FDIC
categorized the Banks as well capitalized under the regulatory
framework for prompt corrective action.  To be categorized as
well capitalized, the Banks must maintain minimum total
risk-based, Tier I risk-based, and Tier I leverage ratios as set
forth in the following table.  There are no conditions or events
since that notification that management believes have changed the
Banks' category.

The Company and Banks' actual capital amounts and ratios are
presented in the following table.
<TABLE>
<CAPTION>
                                                                                                      To Be Well
                                                                        For Capital                 Capitalized Under
                                                                         Adequacy                  Prompt Corrective
                                                   Actual                Purposes                  Action Provisions
                                            -----------------          -----------------           -----------------
                                            Amount      Ratio          Amount       Ratio          Amount     Ratio
                                            ------      -----          ------       -----          ------     -----

                                                               (Dollars in Thousands)
                                            -------------------------------------------------------------------------
     <S>                                  <C>           <C>           <C>           <C>        <C>           <C>
     As of December 31, 1996
     Total Capital 
      (to Risk Weighted Assets):
     Consolidated                         $  29,751     13.48%         $  17,656     8.00%      $  22,070     10.00% 
     Community Bank & Trust - Habersham   $  18,362     14.17%         $  10,368     8.00%      $  12,960     10.00% 
     Community Bank & Trust - Jackson     $   5,212     11.87%         $   3,512     8.00%      $   4,390     10.00% 
     Community Bank & Trust - Alabama     $   2,548     13.85%         $   1,471     8.00%      $   1,839     10.00% 
     Community Bank & Trust - Troup       $   3,902     17.27%         $   1,807     8.00%      $   2,259     10.00% 
     Tier I Capital 
      (to Risk Weighted Assets):
     Consolidated                         $  27,109     12.28%         $   8,828     4.00%      $  13,242      6.00% 
     Community Bank & Trust - Habersham   $  16,736     12.91%         $   5,184     4.00%      $   7,776      6.00% 
     Community Bank & Trust - Jackson     $   4,660     10.62%         $   1,756     4.00%      $   2,634      6.00% 
     Community Bank & Trust - Alabama     $   2,318     12.60%         $     735     4.00%      $   1,103      6.00% 
     Community Bank & Trust - Troup       $   3,618     16.02%         $     903     4.00%      $   1,355      6.00% 
     Tier I Capital (to Average Assets):
          Consolidated                    $  27,109      8.51%         $ 12,757      4.00%      $  15,947      5.00% 
     Community Bank & Trust - Habersham   $  16,736      8.91%         $  7,516      4.00%      $   9,395      5.00% 
     Community Bank & Trust - Jackson     $   4,660      7.47%         $  2,495      4.00%      $   3,118      5.00% 
     Community Bank & Trust - Alabama     $   2,318      7.75%         $  1,196      4.00%      $   1,496      5.00% 
     Community Bank & Trust - Troup       $   3,618     11.90%         $  1,216      4.00%      $   1,520      5.00% 
</TABLE>


                               81<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 12.  BUSINESS COMBINATION

On November 18, 1994, the Company effected a business combination with
The Bank of Troup County by exchanging 7,502 shares of its common stock
for all of the common stock of The Bank of Troup County.  The combination
was accounted for as a pooling of interests and, accordingly, all prior
financial statements were restated to include The Bank of Troup County. 
The results of operations of the separate companies for periods prior to
the combination are summarized as follows:
<TABLE>
<CAPTION>
                                                                                Net Income
                                                                                ----------
     <S>                                                                        <C>
     For the period from January 1, 1994 through November 18, 1994:
     Community Bankshares, Inc.                                                 $1,837,094
     The Bank of Troup County                                                      114,593
                                                                                ----------
                                                                                $1,951,687
                                                                                ==========
</TABLE>

NOTE 13.  FAIR VALUE OF FINANCIAL INSTRUMENTS

          The following methods and assumptions were used by the
      Company in estimating its fair value disclosures for
      financial instruments.  In cases where quoted market prices
      are not available, fair values are based on estimates using
      discounted cash flow methods.  Those methods are
      significantly affected by the assumptions used, including
      the discount rates and estimates of future cash flows.  In
      that regard, the derived fair value estimates cannot be
      substantiated by comparison to independent markets and, in
      many cases, could not be realized in immediate settlement
      of the instrument.  The use of different methodologies may
      have a material effect on the estimated fair value amounts. 
      Also, the fair value estimates presented herein are based
      on pertinent information available to management as of
      December 31, 1996 and 1995.  Such amounts have not been
      revalued for purposes of these financial statements since
      those dates and, therefore, current estimates of fair value
      may differ significantly from the amounts presented herein.

      The following methods and assumptions were used by the
      Company in estimating fair values of financial instruments
      as disclosed herein:

      CASH, DUE FROM BANKS, AND FEDERAL FUNDS SOLD:

      The carrying amounts of cash, due from banks, and Federal
      funds sold approximate their fair value.

      AVAILABLE-FOR-SALE AND HELD-TO-MATURITY SECURITIES:

      Fair values for securities are based on quoted market
      prices.  The carrying values of equity securities with no
      readily determinable fair value approximate fair values.


                               82<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 13.    FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

         LOANS:

         For variable-rate loans that reprice frequently and have
         no significant change in credit risk, fair values are
         based on carrying values.  For other loans, the fair
         values are estimated using discounted cash flow methods,
         using interest rates currently being offered for loans
         with similar terms to borrowers of similar credit
         quality.  Fair values for impaired loans are estimated
         using discounted cash flow methods or underlying
         collateral values.

      DEPOSITS:

         The carrying amounts of demand deposits, savings
         deposits, and variable-rate certificates of deposit
         approximate their fair values.  Fair values for
         fixed-rate certificates of deposit are estimated using
         discounted cash flow methods, using interest rates
         currently being offered on certificates.

      OTHER BORROWINGS:

         The fair values of the Company's other borrowings are
         estimated using discounted cash flow methods based on
         the Company's current incremental borrowing rates for
         similar types of borrowing arrangements.

      ACCRUED INTEREST:

         The carrying amounts of accrued interest approximate
         their fair values.

      REDEEMABLE COMMON STOCK:

         The fair values of the Company's redeemable common stock
         approximates the recorded amounts.

      OFF-BALANCE SHEET INSTRUMENTS:

         Fair values of the Company's off-balance sheet financial
         instruments are based on fees charged to enter into
         similar agreements.  However, commitments to extend
         credit and standby letters of credit do not represent a
         significant value to the Company until such commitments
         are funded.  The Company has determined that these
         instruments do not have a distinguishable fair value and
         no fair value has been assigned.


                          83<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13.    FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

The estimated fair values of the Company's financial instruments
were as follows:
<TABLE>
<CAPTION>
                                                              December 31, 1996                       December 31, 1995
                                                       ------------------------------           ------------------------------
                                                       Carrying Amount       Fair Value          Carrying Amount       Fair Value
                                                       ---------------      -----------          ---------------       ----------
     <S>                                               <C>                 <C>                  <C>                 <C>
     Financial assets:
     Cash and due from banks, interest-bearing
     deposits in banks, and Federal funds sold         $  28,032,797       $ 28,032,797         $  25,840,886       $  25,840,886 
     Securities available-for-sale                        47,417,952         47,417,952            42,686,184          42,686,184 
     Securities held-to-maturity                          18,653,842         18,826,126            12,280,209          12,483,394 
     Loans held for sale                                   2,484,117          2,484,117               450,000             450,000 
     Loans, net                                          199,709,582        202,664,883           175,780,842         181,814,321 
     Accrued interest receivable                           4,098,221          4,098,221             3,522,095           3,522,095 

     Financial liabilities:
     Deposits                                            278,709,369        278,391,043           242,441,652         242,915,652 
     Other borrowings                                        616,399            616,399               786,939             786,939 
     Accrued interest payable                              2,855,753          2,855,753             2,460,015           2,460,015 
     Redeemable common stock                               6,177,400          6,177,400                  -                    -   
</TABLE>

NOTE 14.  SEGMENT INFORMATION


   The Company's operations have been classified into two
   business segments, banking and bank consulting services.  The
   banking segment involves traditional banking services offered
   through its four wholly-owned bank subsidiaries.  Financial
   Supermarkets, Inc. provides various consulting and licensing
   services to financial institutions in connection with the
   establishment of bank branches in supermarkets.  In connection
   with the establishment of a Supermarket Bank, Financial
   Supermarkets provides consulting services ranging from
   providing alternative construction designs to coordinating
   employee training.  Financial Solutions, a division of
   Financial Supermarkets, Inc. was formed to provide various
   consulting services to the financial institution industry
   including compliance, operational, advertising, marketing and
   travel related services.

   Total revenue by industry segment includes revenues from
   unaffiliated customers and affiliates. Revenues from
   affiliates are eliminated in consolidation.  Interest income,
   interest expenses, data processing fees, management fees and
   other various revenues and expenses between affiliates are
   recorded on the accrual basis of accounting consistent with
   similar transactions with customers outside the consolidated
   group.   In 1996, Financial Supermarkets, Inc. sold
   Supermarket Banks to affiliates recognizing gross profits of
   $128,113 which were eliminated in consolidation.  The current
   depreciation expense related to the gross profit for each
   purchase was eliminated in consolidation and the remaining
   amount will be eliminated over their estimated useful lives.

                              84<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 14.    SEGMENT INFORMATION (Continued)

Selected segment information by industry segment for the years
ended December 31, 1996, 1995 and 1994 is as follows:

<TABLE>
<CAPTION>
                                                                               INDUSTRY SEGMENT

                                         ---------------------------------------------------------------------------------------
                                               Bank                               Financial
     For the Year Ended                       Holding          Banking          Supermarkets,
       December 31, 1996                      Company       Subsidiaries            Inc.         Eliminations       Consolidated
     -------------------                      -------       ------------        -------------    ------------       ------------
<S>                                      <C>              <C>                   <C>                <C>              <C>
Revenues from unaffiliated customers     $       39,363   $   27,231,893        $   5,585,510      $    -           $  32,856,766
Revenues from affiliates                      5,728,347        1,362,730              347,752        (7,438,829)             -   
                                            -----------       ----------          -----------       -----------       -----------
   Total revenue                         $    5,767,710   $   28,594,623        $   5,933,262      $ (7,438,829)    $  32,856,766
                                            ===========       ==========          ===========       ===========       ===========
Income from continuing
   operations before 
   income taxes                          $    4,013,352   $    5,732,308        $   2,186,900      $ (6,019,136)    $   5,913,424
                                            ===========       ==========          ===========       ===========       ===========
Identifiabl eassets at 
   December 31, 1996                     $   28,541,867   $  315,922,943        $   9,299,430      $(38,185,326)    $ 315,578,914
                                            ===========      ===========          ===========       ===========       ===========

Depreciation and amortization
   expense                               $       61,172   $      762,328        $     112,218                       $     935,718
                                            ===========      ===========          ===========                         ===========
Premises and equipment
   acquisitions                          $       61,207   $    3,266,025        $     168,461                       $  3,495,693
                                            ===========      ===========          ===========                         ==========
</TABLE>
<TABLE>
<CAPTION>

                                                                                 INDUSTRY SEGMENT

                                           ---------------------------------------------------------------------------------------
                                                 Bank                               Financial
     For the Year Ended                         Holding          Banking          Supermarkets,
       December 31, 1995                        Company       Subsidiaries            Inc.         Eliminations       Consolidated
     -------------------                        -------       ------------        -------------    ------------       ------------

<S>                                        <C>               <C>                 <C>                 <C>              <C>
Revenues from unaffiliated customers       $        5,923    $  24,297,134       $    3,780,324      $    -           $ 28,083,381
Revenues from affiliates                        4,534,541          734,774              151,408        (5,420,723)           - 
                                              -----------       ----------          -----------       -----------       ----------
   Total revenue                           $    4,540,464    $  25,031,908       $    3,931,732      $ (5,420,723)    $ 28,083,381
                                              ===========       ==========          ===========       ===========       ==========
Income from continuing
  operations before 
  income taxes                             $    3,005,070    $   4,538,218       $    1,071,084      $ (4,224,691)    $  4,389,681
                                              ===========       ==========          ===========       ===========       ==========
Identifiable assets at 
   December 31, 1995                       $   23,438,211    $ 271,849,097       $    3,977,696      $(29,257,758)    $270,007,246
                                              ===========      ===========          ===========       ===========      ===========
Depreciation and amortization
  expense                                  $       50,662    $     658,894       $       90,729                       $    800,285
                                              ===========      ===========          ===========                          =========
Premises and equipment
   acquisitions                            $      264,036    $     650,866       $       99,677                      $   1,014,579
                                              ===========      ===========          ===========                          =========
</TABLE>

                               85<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 14.  SEGMENT INFORMATION (Continued)
<TABLE>
<CAPTION>
                                                                               INDUSTRY SEGMENT

                                         ---------------------------------------------------------------------------------------
                                               Bank                               Financial
 For the Year Ended                           Holding          Banking          Supermarkets,
   December 31, 1994                          Company       Subsidiaries            Inc.         Eliminations       Consolidated
 -------------------                          -------       ------------        -------------    ------------       ------------
 <S>                                          <C>            <C>                 <C>             <C>               <C>
 Revenues from unaffiliated customers         $    30,325    $    20,206,023     $   3,007,397   $    -            $  23,243,745
 Revenues from affiliates                       3,425,044            504,594           118,509        4,048,147           -
                                               ----------      -------------       -----------      -----------       ----------
 Total revenue                                $ 3,455,369    $    20,710,617     $   3,125,906   $    4,048,147    $  23,243,745
                                               ==========      =============       ===========      ===========       ==========
 Income from continuing
 operations before 
 income taxes                                 $ 2,249,189    $     3,362,772     $     759,458   $   (3,036,566)    $  3,334,853
                                               ==========      =============       ===========      ===========       ==========
 Identifiable assets at 
 December 31, 1994                           $ 20,075,741    $   251,015,762     $   3,686,029   $  (24,309,613)    $250,467,919
                                               ==========      =============       ===========      ===========      ===========
 Depreciation and amortization
 expense                                     $     36,789    $       585,992     $     210,033                      $    832,814
                                               ==========      =============       ===========                        ==========
 Premises and equipment
 acquisitions                                $    16,874     $     1,228,246     $     249,764                      $  1,494,884
                                               ==========      =============       ===========                        ==========
</TABLE>

                               86<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 15.  PARENT COMPANY ONLY FINANCIAL INFORMATION


The following information presents the condensed balance sheets as of
December 31, 1996 and 1995 and the statements of income and cash flows as
of and for the years ended December 31, 1996, 1995 and 1994:
<TABLE>
<CAPTION>
                             CONDENSED BALANCE SHEETS
                           DECEMBER 31, 1996 AND 1995
                                                                  1996                1995
                                                                  ----                ----
     <S>                                                    <C>                 <C>
     ASSETS
     Cash                                                   $     442,471       $     230,197 
     Investment in subsidiaries                                27,341,295          22,577,666 
     Equipment                                                    123,395             282,429 
     Other assets                                                 634,706             347,919 
                                                               ----------          ----------

     Total assets                                           $  28,541,867        $ 23,438,211 
                                                               ==========          ==========

     LIABILITIES
     Other borrowings                                       $    616,399        $    786,939 
     Other liabilities                                           543,432             182,247 
                                                              ----------           ---------
     Total liabilities                                         1,159,831             969,186 
                                                              ----------           ---------
     Redeemable common stock                                   6,177,400                -   
                                                              ----------          ----------
      Shareholders' equity                                    21,204,636          22,469,025 
                                                              ----------          ----------
     Total liabilities and shareholders' equity            $  28,541,867       $  23,438,211
                                                              ==========          ==========
</TABLE>

                                87<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 15.  PARENT COMPANY ONLY FINANCIAL INFORMATION (Continued)
<TABLE>
<CAPTION>
                             CONDENSED STATEMENTS OF INCOME
                        YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 


                                                                      1996                1995                1994
     <S>                                                       <C>                 <C>                     <C>
     INCOME
     Dividends from subsidiaries                               $    800,000        $    1,000,000           $    620,000 
     Interest                                                         4,641                 5,779                  3,872 
     Other income                                                 1,208,703             1,031,682                919,524 
                                                                  ---------            ----------             ----------
                                                                  2,013,344             2,037,461              1,543,396 
                                                                  ---------            ----------             ----------
     EXPENSE
     Interest                                                        63,365                61,218                 55,449 
     Salaries and employee benefits                               1,109,826               933,871                698,425 
     Equipment expense                                              213,985               278,547                224,118 
     Other expense                                                  367,183               261,758                228,188 
                                                                  ---------            ----------             ----------
                                                                  1,754,359             1,535,394              1,206,180 
                                                                  ---------            ----------             ----------
          Income before income tax  benefits and
             equity in undistributed earnings of subsidiaries       258,985               502,067                337,216 

     Income tax benefits                                           (152,680)             (120,000)               (54,759)
                                                                  ---------            ----------             ----------
     Income before equity in undistributed income
     of subsidiaries                                                411,665               622,067                391,975 

     Equity in undistributed income of subsidiaries               3,754,367             2,503,003              1,911,973 
                                                                  ---------            ----------             ----------
     Net income                                               $   4,166,032         $   3,125,070           $  2,303,948
                                                                  =========            ==========             ==========
</TABLE>

                               88<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 15.  PARENT COMPANY ONLY FINANCIAL INFORMATION (Continued)
<TABLE>
<CAPTION>
                           CONDENSED STATEMENTS OF CASH FLOWS
                      YEARS ENDED DECEMBER 31, 1996 ,1995 AND 1994 


                                                                 1996                      1995                   1994
     <S>                                                   <C>                      <C>                      <C>
     OPERATING ACTIVITIES
     Net income                                            $    4,166,032           $    3,125,070           $    2,303,948 
     Adjustments to reconcile net income to net
      cash provided by operating activities:
     Depreciation and amortization                                 61,172                   50,662                   36,789 
     Undistributed earnings of subsidiaries                    (3,754,367)              (2,503,003)              (1,911,973)
     Other operating activities                                    60,433                  (30,183)                  93,227 
                                                              -----------               ----------              -----------
     Net cash provided by operating activities                    533,270                  642,546                  521,991 
                                                              -----------               ----------              -----------
     INVESTING ACTIVITIES
     Purchases of premises and equipment                          (61,207)                (264,036)                     -   
     Investment in subsidiary                                  (1,000,000)                (500,000)                 (13,566)
     Disposal of premises and equipment                           167,979                     -                         -   
                                                              -----------               ----------              -----------
      Net cash used in investing activities                      (893,228)                (764,036)                 (13,566)
                                                              -----------               ----------              -----------
     FINANCING ACTIVITIES
     Advances on other borrowings                               1,616,399                  428,415                      -
     Repayment of other borrowings                             (1,786,939)                (336,280)                (288,554)
     Dividends paid                                              (261,023)                (246,035)                (214,593)
     Proceeds from the issuance of common stock                 1,003,795                  253,292                      -   
     Payments for fractional shares in business combination          -                        -                     (18,889)
                                                              -----------               ----------              -----------
     Net cash provided by (used in) financing activities          572,232                   99,392                 (522,036)
                                                              -----------               ----------              -----------
     Net increase (decrease) in cash                              212,274                  (22,098)                 (13,611)

     Cash at beginning of year                                    230,197                  252,295                   265,906 
                                                              -----------               ----------              -----------
     Cash at end of year                                     $    442,471             $    230,197              $    252,295 
                                                              ===========               ==========              ============
     SUPPLEMENTAL DISCLOSURE
     Cash paid during the year for interest                  $     63,365             $     61,218              $     55,449 

     NONCASH TRANSACTIONS
     Unrealized (gains) losses on securities
       available-for-sale                                    $     (9,262)           $    (336,478)             $    419,906 
</TABLE>

                               89<PAGE>
ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
          ACCOUNTING AND FINANCIAL DISCLOSURE.

          During the Company's two most recent fiscal years, the
Company did not change accountants and had no disagreement with
its accountants on any matters of accounting principles or
practices or financial statement disclosure.


                             PART III

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
          PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE 
          ACT.

     The following is a brief description, as of December 31,
1996, of the business experience of each of the directors and
executive officers of the Company who, except as otherwise
indicated, has been or was engaged in his or her present or last
principal employment, in the same or a similar position, for more
than five years:

          Steven C. Adams     Mr. Adams has been an attorney with the firm
          (47)                of Adams, Ellard & Frankum, P.C. since 1973
                              and President of Chatham Transport Company,
                              a trucking company, since 1994.  He has been
                              a director of the Company, Community-
                              Habersham and Financial Supermarkets since
                              1990.

          Edwin B. Burr (63)  Mr. Burr has served as a director of the
                              Company since April of 1995 and Financial
                              Supermarkets since 1992.  Mr. Burr has been
                              President of Financial Solutions, a bank
                              consulting firm, since 1988.

          Elton S. Collins    Mr. Collins has been the President and Chief
          (54)                Executive Officer of Community-Jackson since
                              1982.

          Annette R. Fricks   Mrs.  Fricks has been an Executive Vice
          (52)                President and Corporate Secretary of the
                              Company and Community-Habersham since 1992
                              and 1967, respectively, and has also served
                              as Corporate Secretary of Financial
                              Supermarkets since 1984.

          Charles M. Miller   Mr. Miller has served as an Executive Vice
          (55)                President of the Company, the President and
                              Chief Operating Officer and director of
                              Community-Habersham and the Executive Vice
                              President and director of Financial
                              Supermarkets since 1990.  Mr. Miller has
                              served as a director of Community-Troup
                              since November 1994.  Mr. Miller previously
                              was President and a director of the
                              LaGrange, Georgia branch of Citizens and
                              Southern National Bank (now known as
                              NationsBank, N.A. (South)) from 1980-
                              1990.

                               -90-<PAGE>
          Harry H. Purvis     Mr. Purvis is a retired executive of Johnson
          (90)                & Johnson, Inc., a textile manufacturer, and
                              has been a director of the Company since
                              1981 and Community-Habersham since 1956. 
                              Mr. Purvis has also served as a director of
                              Financial Supermarkets since 1984.

          Harry L. Stephens   Mr. Stephens has been an Executive Vice
          (50)                President and the Chief Financial Officer of
                              the Company and Community-Habersham since
                              1992 and has served as Treasurer of
                              Financial Supermarkets since 1986.  He was
                              Senior Vice President of Community-Habersham
                              from 1986 to 1992.

          H. Calvin Stovall,  Mr. Stovall, who is retired, was the
          Jr. (81)            President and Treasurer of Stovall Tractor
                              Company, a retail farm equipment dealer,
                              from 1948 until November of 1995.  He has
                              served as the Chairman of the Company's
                              Board of Directors since 1981.  Mr. Stovall
                              has also served as a director of Community-
                              Habersham, Community-Jackson, Financial
                              Supermarkets and Community-Troup since 1963,
                              1982, 1984 and November 1994, respectively.

          Dean C. Swanson     Mr. Swanson is President of the Standard
          (64)                Group, a telecommunications company, and is
                              a director of Independent Telecommunications
                              Network.  Mr. Swanson has served as a
                              director of the Company, Community-Habersham
                              and Financial Supermarkets since 1981, 1972
                              and 1984, respectively.

          George D. Telford   Mr. Telford is a retired bank executive and
          (76)                has served as a director of the Company and
                              Community-Habersham since 1981 and 1965,
                              respectively, as well as of Financial
                              Supermarkets since 1993.

          J. Alton Wingate    Mr. Wingate has served as a director and the
          (57)                President and Chief Executive Officer of the
                              Company, Community-Habersham and Financial
                              Supermarkets since 1981, 1977 and 1984,
                              respectively.  Mr. Wingate has also been the
                              Chairman of the Board of Directors and a
                              director of Community-Jackson, Community-
                              Alabama  and Community-Troup since 1982,
                              1990 and November 1994, respectively.  Mr.
                              Wingate is a director of Ingles Markets,
                              Inc.

     Directors are elected at each annual meeting of shareholders
and hold office until the next annual meeting and until their
successors are elected and qualified.  The executive officers are
elected by the Board of Directors and serve at the will of the
Board. There are no family relationships between executive
officers and directors of the Company.

          The Company is not subject to Section 16(a) of the
Securities Exchange Age of 1934.

                                          -91-<PAGE>
ITEM 11.  EXECUTIVE COMPENSATION.

     The following table sets forth the annual and long-term
compensation paid by the Company's subsidiaries to the Chief
Executive Officer and each executive officer of the Company whose
salary and bonus exceeded $100,000 during the fiscal years ended
December 31, 1996, 1995, and 1994 (the "Named Executive
Officers").

<PAGE>
<TABLE>
<CAPTION>
                                                           Summary Compensation Table

                                      Annual Compensation                       Long-Term Compensation

     Name and Principal                   Salary                      Securities Underlying        All Other
          Position            Year        ($)<F1>     Bonus ($)<F2>     Options/SARS (#)       Compensation ($)
     ----------------------------------------------------------------------------------------------------------
 <S>                          <C>          <C>         <C>                 <C>                    <C>
 J. Alton Wingate             1996         $243,200    $367,271(7)             --                 $  20,784<F3>
    President and Chief       1995          237,600     256,364(7)             --                    18,194
    Executive Officer         1994          233,650     201,927(7)             --                    20,335

 Charles M. Miller            1996          141,000      20,000                --                    19,555<F4>
    Executive Vice            1995          141,000      12,500                --                    14,929
    President                 1994          141,000       7,500             3,000(8)                 14,099

 Harry L. Stephens            1996           88,000      43,000                --                    13,846<F5>
    Executive Vice            1995           83,000      27,500                --                    10,904
    President                 1994           78,000      27,000             6,000(8)                  9,270
    and Chief Financial
    Officer

 Annette R. Fricks            1996           78,000      43,000                --                    12,911
    Executive Vice            1995           73,000      30,000                --                    10,084
    President &               1994           68,000      27,000              15,000                   7,461
    Corporate
    Secretary
_________________________________
<FN>
<F1>  Includes directors fees.

<F2>  Bonuses are included in this report in the year paid.

<F3>  Includes premiums of $4,059.88 paid for Mr. Wingate's life insurance
      policies and estimated employee stock ownership plan ("ESOP")
      contributions of $16,724.87 Final ESOP contributions have not yet been
      determined for the 1996 fiscal year.

<F4>  Includes premiums of $3,089.06 paid for Mr. Miller's life insurance
      policies and estimated ESOP contributions of $16,466.11. 
      Final ESOP contributions have not yet been determined for
      the 1996 fiscal year.

<F5>  Includes premiums of $912.00 paid for Mr. Stephens' life insurance
      policies and estimated ESOP contributions of $12,934.23. 
      Final ESOP contributions have not yet been determined for
      the 1996 fiscal year.

<F6>  Includes premiums of $660.00 paid for Mrs. Fricks' life insurance
      policies and estimated ESOP contributions of $12,251.89.
      Final ESOP contributions have not yet been determined for
      the 1996 fiscal year.

<F7>  Mr. Wingate's bonus is contractually based on the performance of
      Financial Supermarkets, with caps and guaranteed rates of return
      before the bonus can be calculated and paid.

<F8>  Restated to reflect the 1995 stock split.
</FN>
</TABLE>


                             -92-<PAGE>
<TABLE>
<CAPTION>
                                Fiscal Year End Option/SAR Values
                                ---------------------------------
                                                                                Value of Unexercised
                                   Number of Unexercised                            in the Money
                                 Options at Fiscal Year End                          Options at
          Name                 Exercisable/Unexercisable (#)                    Fiscal Year End ($) 
          ----                 -----------------------------                    --------------------
 <S>                                     <C>                                          <C>
 J. Alton Wingate                        150,000/0                                    $2,218,500

 Charles M. Miller                        3,000/0                                        $30,450

 Harry L. Stephens                        6,000/0                                        $60,900

 Annette R. Fricks                        15,000/0                                      $152,250
</TABLE>


     DIRECTOR'S COMPENSATION.  The Chairman of the Board of the
Company currently receives a fee of $2,250 per month for service
as the Chairman of the Board and other directors of the Board of
the Company receive $2,000 a year for service on the Company's
Board of Directors.  The directors of Community-Habersham,
Community-Jackson, Community-Alabama, Community-Troup and
Financial Supermarkets currently receive fees of $10,000, $3,600,
$3,600, $3,000, and $4,000 per year, respectively.

     AGREEMENTS WITH OFFICERS.  In 1990, Community-Habersham
entered into an employment agreement with Mr. Miller pursuant to
which the parties agreed that Mr. Miller would serve as the
President, Chief Operating Officer and General Manager of
Community-Habersham.  The initial term of the agreement was one
year, subject to successive automatic renewals of one year each
unless (i) either party gives written notice at least 60 days
prior to the annual renewal date of the desire to terminate, or
(ii) Community-Habersham terminates for cause (as defined in the
agreement).

     The agreement provides for Mr. Miller to receive an annual
salary of $125,000 plus certain benefits and perquisites.  The
Agreement also entitles Mr. Miller to certain severance payments
following a change of control (as defined in the agreement) of
Community-Habersham.  Further, Mr. Miller agrees that he will not
compete with or solicit certain customers from Community-
Habersham within Habersham or Jackson County (or any contiguous
county) for a period of three years after termination of Mr.
Miller's employment with Community-Habersham.

     In 1987, Community-Habersham and Mr. Wingate entered into a
change-in-control agreement for a three year term, renewable for
an additional one year period annually thereafter in the sole
discretion of the compensation committee of the Board of
Directors of Community-Habersham.  In the event a change in
control (as defined in the agreement) of Community-Habersham
occurs and Mr. Wingate's employment is involuntarily terminated
other than for cause, disability or retirement or is voluntarily
terminated as a result of a material reduction of duties,
compensation or benefits or a forced relocation, the agreement
provides for the payment of certain severance benefits to Mr.
Wingate.  Such benefits include the continuation of salary

                               -93-
<PAGE>
payments to Mr. Wingate for a period of 36 months from the date
of termination, the payment of certain bonuses for the year in
which his employment is terminated and the following two calendar
years, the continuation of health and life insurance coverage and
the continued participation by Mr. Wingate in all employee
retirement plans.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT. 

     The following table sets forth the percent and number of
shares of the Common Stock beneficially owned as of January 1,
1997 by (i) each of the Named Executive Officers, (ii) each of
the directors of the Company, (iii) each shareholder who owns
greater than five percent (5%) of the Company's securities and
(iv) all executive officers and directors of the Company as a
group, without naming such individuals.  There were 2,004,830
shares outstanding on such date.

<TABLE>
<CAPTION>
                              Name of                              Amount of Shares                            Percent
                         Beneficial Owner                         Beneficially Owned                           of Class
                         ----------------                         ------------------                           --------
                 <S>                                             <C>                                             <C>
                 Joye H. Adams                                      141,720<F1>                                   7.07%
                 Steven C. Adams                                    423,710<F2><F3><F4><F5><F6>                  21.13%
                 Edwin B. Burr                                        1,080<F7>                                         *
                 Elton S. Collins                                   334,130<F3><F8><F11>                         16.67%
                 Community Bankshares, Inc.                         308,870<F9>                                  15.41%
                    Employee Stock Ownership Plan and Trust
                 Annette R. Fricks                                  21,550<F24><F25>                              1.07%
                 Emmett D. Hart                                   151,440<F10>                                    7.55%
                 Charles M. Miller                                  9,660<F23>                                        *
                 Harry H. Purvis                                    44,900<F13>                                   2.24%
                 Harry L. Stephens                                  7,410<F12>                                        *
                 H. Calvin Stovall, Jr.                           166,760<F14><F15>                               8.32%
                 Dean C. Swanson                                      30,000                                      1.50%
                 George D. Telford                                  75,840<F16>                                   3.78%
                 J. Alton Wingate                                                                                34.95%
                                                              700,690<F2><F3><F4><F17><F18><F19><F20><F21>
                 All executive officers and directors            1,103,490<F22>                                   55.04%
                    as a group (11 persons).

________________________
* less than one percent
<FN>
<F1>  Mrs. Adams' address is 664 Chenocetah Drive, Cornelia, Georgia
      30531.
<F2>  Includes an aggregate of 48,000 shares held by the Taft Chatham
      Trusts I and II with respect to which Messrs. Wingate and Adams are
      co-trustees and share voting and investment power.
<F3>  Includes 308,870 shares held by the Community Bankshares, Inc.
      ESOP with respect to which Messrs. Wingate,
      Adams and Collins are co-trustees and share voting and investment
      power.
<F4>  Includes 19,500 shares held by Chatham Transport Company with
      respect to which Messrs. Wingate and Adams share voting power.
<F5>  Includes 44,340 shares held by Mr. Adams as trustee for the F. Jack
      Adams Testamentary Trust, as to which Mr. Adams has voting and
      investment control.
<F6>  Mr. Adam's address is 20 North Main Street, Cornelia, Georgia 30531.
<F7>  Does not include 750 shares of Common Stock owned by Mr. Burr's
      wife, as to which he disclaims beneficial ownership.
                               -94-<PAGE>
<F8>  Mr. Collins' address is 1851 North Elm Street, Commerce, Georgia
      30329.
<F9>  The address of the ESOP is 400 North Main Street,
      Cornelia, Georgia 30531.
<F10> Mr. Hart's address is 1729 Davis (By-Pass) Road, LaGrange, Georgia
      30241.
<F11> Includes presently-exercisable options to acquire 3,000 shares of
      Common Stock.
<F12> Includes presently-exercisable options to acquire 6,000 shares of
      Common Stock.
<F13> Does not include 1,050 shares of Common Stock owned by Mr. Purvis'
      wife, as to which he disclaims beneficial ownership.
<F14> Mr. Stovall's address is 410 Grand View Circle, Cornelia, Georgia
      30531.
<F15> Does not include 250 shares of Common Stock owned by Mr. Stovall's
      wife, as to which he disclaims beneficial ownership.
<F16> Does not include 9,900 shares of Common Stock owned by Mr. Telford's
      wife, as to which he disclaims beneficial ownership.
<F17> Includes 16,500 shares held by the Estate of H. Milton Stewart, Sr.,
      of which Mr. Wingate is a co-trustee and has voting and investment
      control.
<F18> Includes 5,010 shares held by Mr. Wingate as Attorney-in-Fact for
      Virginia Hodgkinson as to which Mr. Wingate has voting and investment
      control.
<F19> Includes presently-exercisable options to acquire 150,000 shares of
      Common Stock.
<F20> Mr. Wingate's address is 400 North Main Street, Cornelia, Georgia
      30531.
<F21> Does not include 300 shares of Common Stock owned by Mr.
      Wingate's wife, as to which he disclaims beneficial ownership.
<F22> Includes presently-exercisable options to acquire 174,000 shares of
      Common Stock.
<F23> Does not include 420 shares of Common Stock owned by Mr. Miller's
      wife, as to which he disclaims beneficial ownership.
<F24> Does not include 2,640 shares of Common Stock owned by Mrs. Fricks'
      husband, as to which she disclaims beneficial ownership.
<F25> Includes presently-exercisable options to acquire 15,000 shares of
      Common Stock.
</FN>
</TABLE>

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

          Each of the Community Banking Subsidiaries has had, and
expects to have in the future, banking transactions in the
ordinary course of business with directors and officers of the
particular bank and the Company and their associates, including
corporations in which such officers or directors are
shareholders, directors and/or officers, on the same terms
(including interest rates and collateral) as those prevailing at
the time for comparable transactions with other persons.  Such
transactions have not involved more than the normal risk of
collectibility or presented other unfavorable features.

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON 
          FORM 8-K.

          (a)  Financial Statements.

          The following financial statements and notes thereto of
the Registrant are included in this Report:


                                -95-<PAGE>
          Independent Auditor's Report on the Financial Statement
          Consolidated Balance Sheets - December 31, 1996

          Consolidated Statement of Income for the Years Ended
          December 31, 1996, 1995 and 1994

          Consolidated Statements of Shareholder's Equity for the
          Years ended December 31, 1996, 1995 and 1994

          Consolidated Statements of Cash Flows for the Years
          Ended December 31, 1996, 1995 and 1994

  Notes to Consolidated Financial Statements

          (b)  Exhibits.

          The following exhibits are required to be filed with
this Report by Item 601 of Regulation S-K:

          Exhibit

          2    Agreement and Plan of Reorganization by and
               between the Registrant and The Bank of Troup
               County, dated May 26, 1993 (included as Exhibit 2
               to the Registrant's Form S-4 Registration
               Statement, Commission File No. 33-81890,
               previously filed with the Commission and
               incorporated herein by reference).

          3.1  Articles of Incorporation of the Registrant, as
               amended (included as Exhibit 3.1 to the
               Registrant's Form 10-K for the year ended December
               31, 1995, previously filed with the Commission and
               incorporated herein by reference).

          3.2  By-Laws of the Registrant (included as Exhibit 3.3
               to the Registrant's Form S-4 Registration
               Statement, Commission File No. 33-81890,
               previously filed with the Commission and
               incorporated herein by reference).

          4.1  See exhibits 3.1 and 3.2 for provisions of
               Articles of Incorporation and Bylaws as amended,
               which define the rights of the holders of Common
               Stock of the Registrant (included as Exhibit 4.1
               to the Registrant's Form S-4 Registration
               Statement, Commission File No. 33-81890,
               previously filed with the Commission and
               incorporated herein by reference).

          10.1 Incentive Stock Option Plan, as adopted August 17,
               1987 (included as Exhibit 10.1 to the Registrant's
               Form S-4 Registration Statement, Commission File
               No. 33-81890, previously filed with the Commission
               and incorporated herein by reference).

          10.2 Employment Agreement between Charles M. Miller and
               Community - Habersham, dated March 31, 1990
               (included as Exhibit 10.2 to the Registrant's Form
               S-4 Registration Statement, Commission File No.
               33-81890, previously filed with the Commission and
               incorporated herein by reference).


                                 -96-<PAGE>
          10.3 Agreement Regarding Change in Control between J.
               Alton Wingate and Community - Habersham, dated
               August 17, 1987 (included as Exhibit 10.3 to the
               Registrant's Form S-4 Registration Statement,
               Commission File No. 33-81890, previously filed
               with the Commission and incorporated herein by
               reference).

          10.4 Profit Sharing Plan, dated September 30, 1993
               (included as Exhibit 10.4 to the Registrant's Form
               S-4 Registration Statement, Commission File No.
               33-81890, previously filed with the Commission and
               incorporated herein by reference).

          10.5 Amended and Restated Revolving Credit and Term
               Loan Agreement Between The Citizens and Southern
               National Bank and the Registrant (included as
               Exhibit 10.5 to the Registrant's Form S-4
               Registration Statement, Commission File No. 33-
               81890, previously filed with the Commission and
               incorporated herein by reference).

          10.6 Revolving Credit/Term Loan Agreement between the
               Registrant and SunTrust Bank dated January 10,
               1996 (included as Exhibit 10.6 to the Registrant's
               Form 10-KSB for the year ended December 31, 1995, 
               previously filed with the Commission and
               incorporated herein by reference).

          10.7 Master Consulting Agreement between Financial
               Supermarkets, Inc. and NationsBanc Services, Inc.
               (included as Exhibit 10.1 to the Registrant's Form
               10-QSB for the period ended March 31, 1996 and
               incorporated herein by reference).

          21   List of Subsidiaries of Registrant (included as
               Exhibit 21 to the Registrant's Annual Report on
               Form 10-KSB for the year ended December 31, 1994,
               previously filed with the Commission and
               incorporated herein by this reference).

          27   Financial Data Schedule

          (c)  No reports on Form 8-K were filed during the last
quarter of 1996.




                             -97-
<PAGE>
                            SIGNATURES

          Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Registrant has duly
caused this Report on Form 10-K to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Cornelia,
State of Georgia, on the 25th of March, 1997.

                                   COMMUNITY BANKSHARES, INC.



                                   By:  /s/ J. Alton Wingate
                                        J. Alton Wingate
                                        President and Chief
                                        Executive Officer


                        POWER OF ATTORNEY

          KNOW ALL MEN BY THESE PRESENTS that each person whose
signature appears below constitutes and appoints J. Alton Wingate
or Harry L. Stephens and either of them (with full power in each
to act alone), as true and lawful attorneys-in-fact, with full
power of substitution, for him and in his name, place and stead,
in any and all capacities, to sign any amendments to this Report
on Form 10-K and to file the same, with all exhibits thereto and
other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that
said attorney-in-fact, or their substitute or substitutes, may
lawfully do or cause to be done by virtue thereof.

          Pursuant to the requirements of the Securities Act of
1933, this Registration Statement has been signed by the
following persons in the capacities indicated on the 25th day of
March, 1997.

                     Signature                            Title
          /s/ J. Alton Wingate               President and Chief Executive
              J. Alton Wingate               Officer (Principal Executive
                                             Officer) and Director

          /s/ Steven C. Adams                Director
              Steven C. Adams

          /s/ Edwin B. Burr                  Director
              Edwin B. Burr

<PAGE>
          /s/ Harry H. Purvis                Director
              Harry H. Purvis

          /s/ H. Calvin Stovall, Jr.         Director
              H. Calvin Stovall, Jr.

          /s/ Dean C. Swanson                Director
              Dean C. Swanson 

          /s/ George D. Telford              Director
              George D. Telford

          /s/ Harry L. Stephens              Executive Vice President and
              Harry L. Stephens              Chief Financial Officer
                                             (Principal Financial and
                                             Accounting Officer)

<PAGE>
      SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS
            FILED PURSUANT TO SECTION 15(D) OF THE ACT
       BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES
                PURSUANT TO SECTION 12 OF THE ACT.


          The Registrant has furnished annual reports and proxy
material to security holders, and copies of such documents have
been furnished to the Commission for its information.