Edgar Filing: COMMUNITY BANKSHARES INC /SC/

SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934.
(Amendment No. )

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COMMUNITY BANKSHARES, INC.
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(Name of Registrant as Specified In Its Charter)

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(Name of Person(s) Filing Proxy Statement if other than the Registrant)

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Fee paid previously with preliminary materials

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COMMUNITY BANKSHARES, INC.
791 Broughton Street
Post Office Box 2086
Orangeburg, South Carolina 29115

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held May 8, 2002

TO THE SHAREHOLDERS:

Notice is hereby given that the Annual Meeting of the Shareholders (the
"Annual Meeting") of Community Bankshares, Inc., a South Carolina corporation
(the "Company"), will be held at Florence National Bank, 2009 Hoffmeyer Road,
Florence, South Carolina at 2:00 p.m., on Wednesday, May 8, 2002, for the
following purposes:

(1) To elect six directors to serve three-year terms;

(2) To ratify the appointment of J. W. Hunt & Company, LLP as independent
auditors for the Company for the fiscal year ending December 31, 2002;
and

(3) To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.

Only record holders of Common Stock of the Company at the close of
business on March 22, 2002, are entitled to notice of and to vote at the Annual
Meeting or any adjournment thereof.

You are cordially invited and urged to attend the Annual Meeting in
person. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE
COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENCLOSED,
SELF-ADDRESSED, STAMPED ENVELOPE. IF YOU NEED ASSISTANCE IN COMPLETING YOUR
PROXY, PLEASE CALL THE COMPANY AT (803) 535-1060. IF YOU ARE THE RECORD OWNER OF
YOUR SHARES AND ATTEND THE ANNUAL MEETING AND DESIRE TO REVOKE YOUR PROXY AND
VOTE IN PERSON YOU MAY DO SO. IN ANY EVENT, A PROXY MAY BE REVOKED BY THE RECORD
OWNER OF SHARES AT ANY TIME BEFORE IT IS EXERCISED.

THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
APPROVAL OF ALL THE PROPOSALS PRESENTED.

By Order of the Board of Directors

William W. Traynham
President

Orangeburg, South Carolina
April 8, 2002

Community Bankshares, Inc.
791 Broughton Street
Post Office Box 2086
Orangeburg, South Carolina 29115

PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
to be Held May 8, 2002

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This Proxy Statement is furnished to shareholders of Community Bankshares,
Inc., a South Carolina corporation (herein, unless the context otherwise
requires, together with its subsidiaries, the "Company"), in connection with the
solicitation of proxies by the Company's Board of Directors for use at the
Annual Meeting of Shareholders to be held at Florence National Bank, 2009
Hoffmeyer Road, Florence, South Carolina at 2:00 p.m. on May 8, 2002, or any
adjournment thereof (the "Annual Meeting"), for the purposes set forth in the
accompanying Notice of Annual Meeting of Shareholders.

Solicitation of proxies may be made in person or by mail, telephone or
other electronic means by directors, officers and regular employees of the
Company. The Company may also ask banking institutions, brokerage firms,
custodians, nominees and fiduciaries to forward solicitation materials to the
beneficial owners of Common Stock of the Company held of record by such persons,
and the Company will reimburse the reasonable forwarding expenses. The cost of
solicitation of proxies will be paid by the Company. This Proxy Statement was
first mailed to shareholders on or about April 8, 2002.

The Company's principal executive offices are located at 791 Broughton
Street, Orangeburg, South Carolina 29115. The Company's telephone number is
(803) 535-1060.

ANNUAL REPORT

The Annual Report on Form 10-K covering the Company's fiscal year ended
December 31, 2001, including financial statements, constitutes the Company's
Annual Report to Shareholders and is included (without exhibits) with this Proxy
Statement. Such Annual Report does not form any part of the material for
solicitation of proxies.

REVOCATION OF PROXY

Any record shareholder who returns the accompanying proxy may revoke such
proxy at any time prior to its exercise (a) by giving written notice to the
Company of such revocation, (b) by voting in person at the meeting, or (c) by
executing and delivering to the Company a later dated proxy. Attendance at the
Annual Meeting will not in itself constitute revocation of a proxy. Any written
notice or proxy revoking a proxy should be sent to Community Bankshares, Inc.,
791 Broughton Street, Orangeburg, South Carolina 29115, Attention: William W.
Traynham, President. Written notice of revocation or delivery of a later dated
proxy will be effective upon receipt thereof by the Company.

QUORUM AND VOTING

The Company's only voting security is its no par value Common Stock
("Common Stock"), each share of which entitles the holder thereof to one vote on
each matter to come before the Annual Meeting. At the close of business on March
22, 2002 (the "Record Date"), the Company had issued and outstanding 3,299,674
shares of Common Stock, which were held of record by approximately 1,925
persons. Only shareholders of record at the close of business on the Record Date

are entitled to notice of and to vote on matters that come before the Annual
Meeting. Notwithstanding the Record Date specified above, the Company's stock
transfer books will not be closed and shares of the Common Stock may be
transferred subsequent to the Record Date. However, all votes must be cast in
the names of holders of record on the Record Date.

The presence in person or by proxy of the holders of one-third of the
outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum at the Annual Meeting. If a share is
represented for any purpose at the Annual Meeting by the presence of the
registered owner or a person holding a valid proxy for the registered owner, it
is deemed to be present for the purposes of establishing a quorum. Therefore,
valid proxies which are marked "Abstain" or "Withhold" or as to which no vote is
marked, including proxies submitted by brokers that are the record owners of
shares (so-called "broker non-votes"), will be included in determining the
number of votes present or represented at the Annual Meeting. If a quorum is not
present or represented at the meeting, the shareholders entitled to vote,
present in person or represented by proxy, have the power to adjourn the meeting
from time to time, without notice other than an announcement at the meeting,
until a quorum is present or represented. Directors, officers and regular
employees of the Company may solicit proxies for the reconvened meeting in
person or by mail, telephone or telegraph. At any such reconvened meeting at
which a quorum is present or represented, any business may be transacted that
might have been transacted at the meeting as originally noticed.

If a quorum is present at the meeting, directors will be elected by a
plurality of the votes cast by shares present and entitled to vote at the
meeting. Votes that are withheld or shares that are not voted in the election of
directors will have no effect on the outcome of election of directors.
Cumulative voting will not be permitted.

If a quorum is present, all other matters which may be considered and
acted upon by the holders of Common Stock at the Annual Meeting, including
ratification of appointment of J. W. Hunt & Company, LLP as accountants for the
fiscal year ending December 31, 2002, will be approved if the votes cast in
favor of the proposal at the Annual Meeting exceed the votes cast against the
proposal.

ACTIONS TO BE TAKEN BY THE PROXIES

If the shareholder appropriately specifies how the proxy is to be voted,
it will be voted in accordance with his specifications. If the shareholder does
not specify how the proxy is to be voted, the proxy will be voted "FOR" the
election of the persons named in this Proxy Statement as the Board of Directors'
nominees for election to the Board of Directors, and "FOR" the ratification of
the appointment of J. W. Hunt & Company, LLP as accountants for the fiscal year
ending December 31, 2002. As to any other matter of business which may be
brought before the Annual Meeting, a vote may be cast pursuant to the
accompanying proxy in accordance with the best judgment of the persons voting
the same, but the Board of Directors does not know of any such other business.

SHAREHOLDER PROPOSALS

Any shareholder of the Company who wishes to present a proposal for action
at the 2003 Annual Meeting of Shareholders must deliver the proposal to the
executive offices of the Company, 791 Broughton Street, Orangeburg, South
Carolina 29115, Attention: William W. Traynham, President. Any shareholder who
wishes for the Company to include any such proposal in its proxy statement and
form of proxy for the 2003 Annual Meeting of Shareholders must deliver the
proposal to the executive offices of the Company to Mr. Traynham's attention no
later than December 9, 2002. If any shareholder proposal is not received by Mr.
Traynham by February 27, 2003, proxies solicited by management of the Company
will be voted on the proposal in the discretion of the designated proxy agents.
Only proper proposals that are timely received will be included in the Company's
proxy statement and proxy.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of March 1, 2002, the number and
percentage of outstanding shares beneficially owned by (i) each person known by
the Company to own more than 5% of the outstanding Common Stock, (ii) each
director and director nominee of the Company, (iii) each person named in the
Summary Compensation Table, and (iv) all executive officers and directors of the
Company as a group.

Number of % of
Shares Common
Name (and Address Position in the Company Beneficially Stock
of 5% Shareholders) and the Banks* Owned Ownership**
------------------- -------------- ----- -----------

E. J. Ayers, Jr. Director CBI, ONB, SNB, and FNB, Chairman and 91,980 (1) 2.78%
Chief Executive Officer of CBI
Alvis J. Bynum Director CBI and SNB 32,685 (2) **
Martha Rose C. Carson Director CBI and ONB 70,940 (3) 2.14%
Anna O. Dantzler Director CBI and ONB 99,500 (4) 3.01%
A. Wade Douroux Director 66,818 (5) 2.02%
J. M. Guthrie Director CBI, Chairman of ONB, Chairman 167,750 (6) 5.07%
Post Office Box 649 Executive Committee of CBI
Orangeburg, SC 29116

Richard L. Havekost Director CBI and FNB 12,450 (7) **
Phil P. Leventis Director CBI and SNB, Chairman of SNB 43,550 (8) 1.32%
Jesse A. Nance Director CBI and FNB, President and Chief 15,668 (9) **
Executive Officer of FNB
William H. Nock Director CBI and SNB, Chief Executive Officer 63,317 (10) 1.91%
and President of SNB
Samuel F. Reid, Jr. Director CBI and ONB 53,702 (11) 1.62%
William W. Traynham Director CBI, ONB, SNB and FNB, President of 60,341 (12) 1.82%
CBI, Chief Financial Officer of CBI
J. Otto Warren, Jr. Director CBI and ONB, Vice Chairman of CBI 176,519 (13) 5.33%
Post Office Box 666
Orangeburg, SC 29116

Wm. Reynolds Williams Director CBI and FNB, 17,188 (14) **
Chairman of FNB
Michael A. Wolfe Director CBI and ONB, Chief Executive Officer 59,651 (15) 1.80%
and President of ONB
All executive officers and 1,050,226 (16) 30.36%
directors as a group (16 persons)

*CBI - the Company; ONB - Orangeburg National Bank; SNB - Sumter National Bank;
FNB - Florence National Bank. **Percentages not shown are less than one percent.

(1) Includes 1,680 shares owned by Nancy R. Ayers, Mr. Ayers' wife; 2,730
shares owned by an IRA for the benefit of Nancy R. Ayers; 1,680 shares held
by an IRA for the benefit of Mr. Ayers; and 10,250 shares subject to stock
options which are currently exercisable.
(2) Includes 5,874 shares owned by Marjorie F. Bynum, Mr. Bynum's wife; and
8,150 shares subject to stock options which are currently exercisable.
(3) Includes 10,250 shares subject to stock options which are currently
exercisable.
(4) Includes 10,250 shares subject to stock options which are currently
exercisable.
(5) Includes 44,548 shares held in escrow pending the satisfaction of certain
financial performance results by Community Resource Mortgage, Inc.
(6) Includes 157,500 shares owned jointly with Lou D. Guthrie, Mr. Guthrie's
wife; and 10,250 shares subject to stock options which are currently
exercisable.
(7) Includes 4,050 shares subject to stock options which are currently
exercisable.
(8) Includes 10,891 shares owned by LPT Enterprises, a limited partnership;
2,422 shares owned by an IRA for the benefit of Mr. Leventis; and 8,150
shares subject to stock options which are currently exercisable.
(9) Includes 4,771 shares owned by an IRA for the benefit of Mr. Nance, 541
shares owned by Martha F. Nance, Mr. Nance's wife; and 10,250 shares
subject to stock options which are currently exercisable.
(10) Includes 1,359 shares owned by the Nock Family Trust; 468 shares owned by
an IRA for the benefit of Linda H. Nock, Mr. Nock's wife; 39,697 shares
held by Paine Webber for benefit of Mr. Nock; 2,760 shares held by Scott &
Stringfellow for the benefit of Linda Nock; and 18,650 shares subject to
stock options which are currently exercisable.
(11) Includes 14,052 shares held by Mr. Reid as trustee for his minor children;
16,800 shares owned by Rosa G. Reid, Mr. Reid's wife; and 10,250 shares
subject to stock options which are currently exercisable.
(12) Includes 18,436 shares owned jointly with Margaret S. Traynham, Mr.
Traynham's wife; 2,038 shares owned jointly with minor children; and 18,650
shares subject to stock options which are currently exercisable.
(13) Includes 53,000 shares owned by Mildred J. Warren, Mr. Warren's wife; and
10,250 shares subject to stock options which are currently exercisable.
(14) Includes 4,738 shares owned jointly with Mary T. Williams, Mr. Williams'
wife; and 4,050 shares subject to stock options which are currently
exercisable.
(15) Includes 2,151 shares owned by Joye McGrady Wolfe as custodian for minor
children; and 18,650 shares subject to stock options which are currently
exercisable.
(16) Includes 164,512 shares subject to stock options which are currently
exercisable.

ELECTION OF DIRECTORS

The Bylaws of the Company provide for a Board of Directors consisting of
not less than nine nor more than twenty-four directors divided into three
classes each serving three-year staggered terms. The number of directors is
currently fixed by the Board at fifteen. Five directors have been nominated for
re-election by the shareholders at the 2002 Annual Meeting to serve for
three-year terms. One new director has also been nominated for election by the
shareholders to serve a three-year term. All directors serve until their
successors are elected and qualified to serve. All of the nominees except Mr.
Douroux are presently directors of the Company and have served continuously
since first becoming directors.

Should any of the nominees become unable or unwilling to accept nomination
or election, the persons acting under the proxy intend to vote for the election,
in his or her stead, of such other person or persons as the Board of Directors
of the Company may recommend. The Board of Directors has no reason to believe
that any of the proposed directors will be unable or unwilling to serve if
elected.

MANAGEMENT

Directors

The table below sets forth the age, business experience for the past five
years, and term in office for each of the directors of the Company. Each of the
directors of the Company is also a director of one or more of the Company's
subsidiaries. There are no family relationships among any of the directors or
executive officers of the Company.

Name, Address (and age) Director Since Business Experience During the Past 5 Years
----------------------- --------------- -------------------------------------------

Nominees for Election to Serve until 2005

Martha Rose C. Carson (66) 1987* President, Marty Rae, Inc., apparel and furniture retailers
Orangeburg, S.C.

A. Wade Douroux (30) 2001 President and Chief Executive Officer, Community Resource Mortgage,
Inc. (formerly Resource Mortgage Corporation) since 1995

J. M. Guthrie (74) 1987* President, Superior Motors, Inc., car dealership; Chairman
Orangeburg, S.C. of the Board of Directors of Orangeburg National Bank since March 1998

Phil P. Leventis (55) 1996 President and Chief Executive Officer, Dixie Central
Sumter, S.C. Distributing Co., Inc., wholesale beverage distributor; member of
the South Carolina State Senate; Chairman of the Board of Directors
of Sumter National Bank since June 1996

Wm. Reynolds Williams (56) 1998 Attorney, Managing Partner, Willcox, Buyck & Williams,
Florence, S.C. P.A.; Chairman of the Board of Directors of Florence National Bank since
July 1998

Michael A. Wolfe (44) 1992* President of Orangeburg National Bank since 1992,
Orangeburg, S.C. Chief Executive Officer of Orangeburg National Bank since June 1996

Current Directors Whose Terms Expire in 2004

Anna O. Dantzler (62) 1994 Retired since 1989; former customer service representative
Orangeburg, S.C. for Orangeburg National Bank

Richard L. Havekost (61) 1998 Licensed professional engineer; Principal in Raldex, Inc.
Florence S.C. (investor in motel properties); Principal and Secretary of RDBP,
Inc. (retail beverage store); 1967-1993, employed by Nucor Corp. in
various capacities, including Vice President of Nucor Corp. and
General Manager of the Florence Division

William H. Nock (56) 1996 President and Chief Executive Officer, Sumter National Bank
Sumter, S.C. since June 1996

Samuel F. Reid, Jr. (53) 1994 Attorney, Horger, Barnwell & Reid
Orangeburg, S.C.

William W. Traynham (46) 1992* President and Chief Financial Officer of the Company
Orangeburg, S.C.

Current Directors whose Terms Expire in 2003

E. J. Ayers, Jr. (69) 1987* Chairman of the Board of Directors and Chief Executive
Orangeburg, S.C. Officer of the Company since January, 1999; retired President, C.M.
Dukes Oil Co., oil distributor and auto parts supplier

Alvis J. Bynum (64) 1996 Retired President, Cities Supply Co., waterwork supplies
Sumter, S.C. distributor

J. Otto Warren, Jr. (74) 1987* President, Warren and Griffin Lumber Co., Inc. and Home
Orangeburg, S.C. Builder's Supply Co., Inc., builders' supply and lumber manufacturer

Jesse A. Nance (48) 1998 President and Chief Executive Officer of Florence National
Florence S.C. Bank since July, 1998; Vice President of the Company from June, 1997
to July, 1998; Vice President of First Union National Bank of South
Carolina from November, 1989 to June, 1997

--------------------
* Includes service as Director of Orangeburg National Bank prior to formation of
the Company in 1992.

Executive Officers

Information about Mr. Ayers, the Chief Executive Officer of the
Company, and Mr. Traynham, the President and Chief Financial Officer of the
Company, is set forth above under "--Directors." Donald Newnham, age 64, is
Senior Vice President, Operations, of the Company. Mr. Newnham has been employed
by the Company since March 1998. Prior to that time, from 1981 to 1998, Mr.
Newnham was Senior Vice President and Operations Administrator of First National
Bank, Orangeburg, South Carolina.

Meetings of the Board of Directors and Committees

The Board of Directors of the Company held 14 meetings during 2001.
Each director, except Martha Rose Carson and Reynolds Williams, attended at
least 75% of the total number of meetings of the Board of Directors and meetings
of committees on which he served during the period in 2001 for which he served
as director.

The Company has an Audit Committee comprised of Alvis J. Bynum
(chairman), Martha Rose C. Carson, Anna O. Dantzler, Richard L. Havekost, Samuel
F. Reid, Jr. and J. Otto Warren, Jr., all of whom are non-employee directors.
The Audit Committee oversees the internal and external audit function. The Audit
Committee met five times in 2001. The Audit Committee acts pursuant to a written
charter adopted by the Board of Directors. Each member of the Audit Committee is
independent as defined in Section 121 (A) of the American Stock Exchange's
listing standards, as modified or supplemented.

The Company has a Compensation Committee comprised of Richard L.
Havekost (chairman), Wm. Reynolds Williams, J. M. Guthrie, Samuel F. Reid, Phil
P. Leventis and Alvis J. Bynum. The Compensation Committee makes recommendations
to the Board of Directors concerning the compensation for the senior officers of
the Company. The Compensation Committee met five times during 2001.

Nomination of Directors

The Company's Articles of Incorporation provide that no person shall be
eligible to be elected a director at a meeting of shareholders unless that
person has been nominated by a shareholder entitled to vote at the meeting by
giving written notice of such nomination to the Secretary of the Company at
least 30 days prior to the date of the meeting.

The Board of Directors acts as a nominating committee and will consider
recommendations by shareholders of persons to be included as management nominees
for directors if the following procedures are met. Recommendations shall be in
writing and be delivered or mailed to the President of the Company not less than
30 days or more than 50 days prior to any meeting of shareholders called for the
election of directors. Such recommendations shall contain the following
information to the extent known by the shareholder making the recommendation:
(1) the name and address of each proposed nominee; (2) the principal occupation
of each proposed nominee; (3) the total number of shares that will be voted for
each proposed nominee; (4) the name and residence address of the shareholder
making the recommendation; and (5) the number of shares owned by the shareholder
making the recommendation.

MANAGEMENT COMPENSATION

Executive Officer Compensation

The following table summarizes for the years ended December 31, 2001,
2000 and 1999 the compensation paid to the Chairman and Chief Executive Officer
of the Company and to executive officers of the Company or its subsidiaries who
received compensation greater than $100,000 in 2001.

Summary Compensation Table

Long-Term
Compensation
------------
Awards
Annual ------------
Compensation Securities
------------ Underlying All Other
Year Salary Bonus Options(1) Compensation (2)
---- ------ ----- --- ----------- ----------------

E. J. Ayers, Jr. 2001 $ 82,000 $17,258 5,000 $ 2,460
Chairman and Chief Executive Officer of 2000 82,000 - - 12,163
Community Bankshares 1999 82,000 - 5,250 8,200
William W. Traynham 2001 $135,000 $28,414 5,000 $ 4,333
President of Community Bankshares 2000 135,000 9,450 - 23,562
1999 130,000 9,450 5,250 21,250
Michael A. Wolfe 2001 $135,000 $28,414 5,000 $ 5,869
President and Chief Executive Officer 2000 135,000 9,450 - 26,268
of Orangeburg National Bank 1999 130,000 9,450 5,250 21,250
William H. Nock 2001 $135,000 $28,414 5,000 $ 4,185
President and Chief Executive Officer 2000 135,000 4,050 - 4,050
of Sumter National Bank 1999 130,000 4,050 5,250 3,900
Jesse A. Nance(4) 2001 $117,874 $15,527 5,000 $ 3,248
President and Chief Executive Officer 2000 109,847 5,737 - 3,220
of Florence National Bank 1999 101,840 5,737 5,250 3,055

-----------------------------------------
(1) Adjusted to reflect the 5% stock dividend issued January 31, 2001.
(2) This column sets forth Company contributions to the 401(K) plan on behalf
of the named executive officers. For Messrs. Wolfe and Traynham, it also
includes unused sick and vacation leave payments in 2000 and 1999. Such
payments totaled $7,780 and $7,500 in 2000 and 1999, respectively, to each
of Mr. Wolfe and Mr. Traynham.

Aggregated Option Exercises in 2001 and 2001 Year End Option Values

The following table sets forth information about stock options held at
December 31, 2001 by the executive officers listed in the Summary Compensation
Table. No options were exercised in 2001.

Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options 12/31/01 Options 12/31/01(1)
---------------- -------------------
Name Exercisable(2) Unexercisable(3) Exercisable Unexercisable
---- -------------- ---------------- ----------- -------------

E. J. Ayers 5,250 5,000 $ 893 $10,000
Jesse A. Nance 5,250 5,000 893 10,000
William H. Nock 13,650 5,000 58,085 10,000
William W. Traynham 13,650 5,000 58,085 10,000
Michael A. Wolfe 13,650 5,000 58,085 10,000

--------------------------------
(1) Based on a fair value of $13.00 per share, the closing price of a share of
Community Bankshares common stock on December 31, 2001.
(2) Each of the above persons holds options for 5,250 shares at an exercise
price per share of $12.83. Messrs. Nock, Traynham and Wolfe also each have
options for 8,400 shares at an exercise price per share of $7.62.
(3) These options have an exercise price of $11.00 per share.

Option Grants in Last Fiscal Year

The following table sets forth information about options granted to the
executive officers listed in the Summary Compensation Table in 2001.

Individual Grants
-----------------
Number of % of Total
Securities Options Potential Realizable Value at
Underlying Granted to Exercise Assumed Annual Rates of Stock
Options Employees Price Expiration Price Appreciation for 10-Year
Name Granted(1) in 2001 (per share) Date Option Term(2)
---- ---------- ------- ----------- ---- --------------
5% 10%
------- -------

E. J. Ayers 5,000 5.3% $11.00 2/26/11 $34,589 $87,656
Jesse A. Nance 5,000 5.3% $11.00 2/26/11 $34,589 $87,656
William H. Nock 5,000 5.3% $11.00 2/26/11 $34,589 $87,656
William W. Traynham 5,000 5.3% $11.00 2/26/11 $34,589 $87,656
Michael A. Wolfe 5,000 5.3% $11.00 2/26/11 $34,589 $87,656

--------------------
(1) These options were granted on February 26, 2001 and became exercisable on
February 26, 2002.
(2) The amounts in these columns are the result of calculations based on the
assumption that the market price of Community Bankshares common stock will
appreciate in value from the date of grant to the end of the ten-year
option term at rates of 5% and 10% per year. The 5% and 10% annual
appreciation assumptions are required by the Securities and Exchange
Commission; they are not intended to forecast possible future appreciation,
if any, of Community Bankshares' stock price.

Compensation Committee Interlocks And Insider Participation

The members of the Compensation Committee for the year ended December
31, 2001 were Richard L. Havekost, Chair, Alvis J. Bynum, J. M. Guthrie, Phil P.
Leventis, Samuel F. Reid and Wm. Reynolds Williams.

The law firm of Horger, Barnwell and Reid, in which Samuel F. Reid is a
partner, provided legal services to the Company in 2001, and is continuing to
provide legal services to the Company in 2002. The law firm of Willcox, Buyck
and Williams, P.A. in which Wm. Reynolds Williams is a member, provided legal
services to the Company in 2001, and is continuing to provide legal services to
the Company in 2002.

Board Report On Executive Officer Compensation

The Compensation Committee is required to provide the shareholders a
report discussing the basis for the Compensation Committee's action in
establishing compensation for Community Bankshares' and its subsidiaries'
executive officers.

The philosophy of Community Bankshares' compensation program is to
offer competitive compensation opportunities for executive officers of Community
Bankshares and its subsidiaries, which are based on individual contribution and
on Community Bankshares' performance. The compensation paid is designed to
retain and reward executive officers that are capable of leading Community
Bankshares in achieving its business objectives in an industry characterized by
complexity, competitiveness and change. The compensation of Community
Bankshares' and its subsidiaries' executive officers is reviewed and approved
annually by the Compensation Committee.

Annual compensation for Community Bankshares' Chief Executive Officer
and other senior executive officers consists of three elements.

o A base salary that is determined by individual contribution and
performance, and which is designed to provide a base level of
compensation comparable to that provided key executives of other
financial institutions of similar size and performance.

o A short-term cash incentive program that is directly linked to
individual performance and to Community Bankshares' performance.
In this program one-half of the officer's incentive is paid by
the applicable subsidiary and one-half by Community Bankshares.
Incentive payments for the President and the Chief Executive
Officer of Community Bankshares are determined by the Board of
Directors of Community Bankshares.

o A long-term incentive program that provides from time to time
stock options to executive officers. Stock option grants provide
an incentive that focuses the executive's attention on managing
Community Bankshares from the perspective of a stockholder with
an equity stake in the business. The economic value of any stock
option granted is directly tied to the future performance of
Community Bankshares' stock and will provide value to the
recipient only when the price of Community Bankshares' stock
increases over the option grant price.

For Community Bankshares' key executives, base salary is targeted to
approximate average salaries for individuals in similar positions with similar
levels of responsibilities who are employed by other banking organizations of
similar size and financial performance. During 2001, Community Bankshares set
the Chief Executive Officer's base salary at $82,000. During 2001 the Committee
set the base salary for each of Mr. Wolfe, President of Orangeburg National
Bank, Mr. Nock, President of Sumter National Bank, and Mr. Traynham, President
of Community Bankshares at $135,000. The base salary for Mr. Nance, President of
Florence National Bank, was $117,474.

The Compensation Committee annually reviews national, regional,
statewide, and local peer group salary data (to the extent available) to assist
it in setting appropriate levels of the Chief Executive Officer's and other
executive officers' base salaries. A second factor considered by the

Compensation Committee in setting and adjusting base salary was Community
Bankshares' 2001 financial performance. The Committee annually sets a base level
of consolidated income before taxes, which was $4 million for 2001. Income
earned above that level is multiplied by a factor of 4.5% to determine the
amount available for incentive payments to senior officers. This performance
indicator is updated annually based on current economic conditions and
expectations.

For Community Bankshares' key executives, the Compensation Committee
approved cash incentive bonuses based on 2001 results payable in 2002 that
ranged up to over 20% of base salary. The plan is designed so that over time
incentive payments may be as much as 40% of base pay. For purposes of
determining the cash incentive bonus payable during 2002 for 2001, Community
Bankshares considered actual operating results and individual performances of
the involved officers. The Committee completed its recommendations in early 2002
and the Board of Directors approved them in February 2002.

During 2002, Messrs. Traynham, Wolfe, and Nock were each paid a bonus
of $28,414 for 2001 Mr. Ayers was paid a bonus of $17,258. Mr. Nance was paid a
bonus of $15,527.

This report is provided as a summary of current Board practice with
regard to annual compensation review and authorization of executive officer
compensation and with respect to specific action taken for the Chief Executive
Officer.

During 2001, Community Bankshares acquired a mortgage company,
Community Resource Mortgage, Inc. Only the last two months of 2001 of its
operations will be reflected in the consolidated results of the Company. The
senior officer of the mortgage company is not currently included in the
Compensation Committee Report for 2001.

Richard L. Havekost, Chair Phil P. Leventis
Alvis J. Bynum Samuel F. Reid
J. M. Guthrie Wm. Reynolds Williams

Shareholder Performance Graph

The Company is required to provide its shareholders with a line graph
comparing the Company's cumulative total shareholder return with a performance
indicator of the overall stock market and either a published industry index or a
Company-determined peer comparison. Shareholder return (measured through
increases in stock price and payment of dividends) is often a benchmark used in
assessing corporate performance and the reasonableness of compensation paid
executive officers.

The performance graph below compares the Company's cumulative total
return over the most recent five year period with the Russell 2001 Index
(reflecting overall stock market performance for small cap stocks) and the SNL
Southeast Bank Index (reflecting changes in banking industry stocks in the
southeastern U. S.), and a peer group index consisting of all the publicly
traded banks and thrifts in South Carolina. Returns are shown on a total return
basis, assuming the reinvestment of dividends and a beginning stock index price
of $100 per share. Values presented are based on transactions as reported
through the American Stock Exchange.

Index 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
----- -------- -------- -------- -------- -------- --------

Community Bankshares, Inc. 100.00 228.10 235.84 221.27 200.31 242.55
Russell 2000 100.00 122.36 119.25 144.60 140.23 143.71
SNL Southeast Bank Index 100.00 151.59 161.38 127.00 127.52 158.86
Publicly Traded Banks and Thrifts in SC 100.00 173.09 175.87 135.11 112.88 153.96

Change of Control Agreements

In 1999, the Company entered into Change of Control Agreements with
Messrs. Ayers, Traynham, Wolfe, Nock and Nance. The principal purpose of the
agreements is to protect these executives against a change in control of the
Company. The agreements provide that, if within five years after the date of the
agreements, any change of control of the Company is effected, then the executive
will be entitled to certain benefits. A change of control of the Company will be
deemed to have been effected for purposes of the Agreement if: (i) voting
control of the Company is acquired, directly or indirectly, by any person or
group acting in concert, (ii) the Company is merged with or into any other
entity and the Company is not the surviving entity of the merger, (iii) voting
control of any subsidiary of the Company by which the executive is principally
employed is acquired, directly or indirectly, by any person or group acting in
concert, or (iv) any subsidiary of the Company by which the executive is
principally employed is merged with or into another entity that is not also a
subsidiary of the Company and such subsidiary is not the surviving entity of the
merger. If the executive terminates his employment with the Company or his
employment is terminated by the Company at any time within six months following
the effective date of a change in control, the executive will be entitled to a
lump sum payment equal to twice his annual salary in effect at the date of
termination. The Agreement requires certain adjustments in the event that the
lump sum payment exceeds the amount prescribed by Section 280G of the Internal
Revenue Code. The term of the Agreement extends automatically for an additional
year on each annual anniversary thereof, unless the Company gives 30 days prior
notice to the executive that the term will not be extended.

The foregoing description of the Change of Control Agreements is merely
a summary of such agreements and is qualified in its entirety by reference to
the agreements, the form of which is filed as an exhibit to the Company's Form
10-QSB for the quarter ended June 30, 1999.

Director Compensation

Community Bankshares pays directors who are not employees of Community
Bankshares or its subsidiaries $200 per month for service as directors. In
addition, Orangeburg National Bank pays monthly fees of $600 to its non-employee
directors. Sumter National Bank pays $450 per month to its non-employee
directors. Florence National Bank pays $300 per month to its non-employee
directors. Community Resource Mortgage does not pay director fees. Each of the
non-employee directors of Community Bankshares, except A. Wade Douroux, serves
as a director of one of Community Bankshares' subsidiary banks. Director fees
paid by Community Bankshares in 2001 totaled $161,550. Director fees paid by
Orangeburg National Bank in 2001 totaled $72,000. Director fees paid by Sumter
National Bank in 2001 totaled $39,150. Director fees paid by Florence National
Bank in 2001 totaled $21,600.

Employee Benefit Plans

401(K) Plan

Effective January 1, 1990, Orangeburg National Bank established a
defined contribution plan pursuant to Internal Revenue Code Section 401(k). The
Plan was assumed by the Company upon acquisition of Orangeburg National Bank.
All employees who have completed 500 hours of service during a six-month period
and have attained age 18 will participate as of the January 1 or July 1 closest
to the date on which the employee meets the eligibility requirements.

A participant may elect to make tax deferred contributions up to a
maximum of 12% of eligible compensation. The Company will make a matching
contribution on behalf of each participant in the amount of 100% of the
deferral, not exceeding 3% of the participant's compensation. The Company may
also make elective contributions determined at the discretion of the Board of
Directors. The Company's contributions for the years ended December 31, 2001,
2000 and 1999, were $146,000, $119,000 and $122,000, respectively.

1997 Stock Option Plan

At the 2001 Annual Meeting, shareholders voted to amend the 1997 Stock
Option Plan for the purpose of increasing the number of shares reserved for
issuance under the Plan from 285,600 to 485,600 and permitting participation in
the Plan by non-employee directors of the Company. Of the additional shares,
100,000 were reserved for issuance pursuant to the exercise of incentive stock
options and 100,000 were reserved for issuance pursuant to the exercise of
non-qualified stock options.

Options may be granted pursuant to the plan to persons who are
employees of the Company or any subsidiary (including officers and directors who
are employees) at the time of grant. At December 31, 2001, the Company and its
subsidiaries had 126 employees. Non-employee directors are also permitted to
participate in the Plan. Such non-employee directors are only eligible to be
granted non-qualified stock options.

All incentive stock options must have an exercise price not less than
the fair market value of the Common Stock at the date grant, as determined by
the Board of Directors. Non-qualified options will have such exercise prices as
may be determined by the Board of Directors at the time of grant, and such
exercise prices may be less than fair market value. The Board of Directors may
set other terms for the exercise of the options but may not grant to any one
holder more than $100,000 of incentive stock options (based on the fair market
value of the optioned shares on the date of the grant of the option) which first
become exercisable in any calendar year. The Board of Directors also selects the
employees to receive grants under the plan and determines the number of shares
covered by options granted under the plan. No options may be exercised after ten
years from the date of grant, options may not be transferred except by will or
the laws of descent and distribution, and options may be exercised only while
the optionee is an employee of the Company, within three months after the date
of termination of employment, or within twelve months of death or disability.

The number of shares reserved for issuance under the Plan, the number of shares
covered by outstanding options, the exercise price and the exercise date of
options will be adjusted in the event of changes in the number of outstanding
shares of common stock effected without receipt of consideration by the Company.
The Board of Directors may amend, suspend or terminate the Plan, but may not
increase (except as discussed above) the maximum number of shares reserved for
issuance under the Plan, or materially modify the eligibility requirements under
the Plan without shareholder approval or ratification. The plan will terminate
on March 16, 2007, and no options will be granted thereunder after that date.

There are currently outstanding incentive options to purchase 238,115
shares and nonqualified options to purchase 161,050 shares.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The banks have loan and deposit relationships with some of the
directors of the Company and some of the directors of the subsidiaries of the
Company and with companies with which the directors are associated as well as
members of the immediate families of the directors ("Affiliated Persons"). (The
term "members of the immediate families" for purposes of this paragraph includes
each person's spouse, parents, children, siblings, mothers and fathers-in-law,
sons and daughters-in-law, and brothers and sisters-in-law.) The total loans
outstanding to these parties at December 31, 2001, were $10,367,000. Loans to
Affiliated Persons were made in the ordinary course of business, were made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons, and did
not, at the time they were made involve more than the normal risk of
collectibility or present other unfavorable features.

The law firm of Horger, Barnwell and Reid, in which Samuel F. Reid, a
director of the Company, is a partner, provided legal services to the Company in
2001, and is continuing to provide legal services to the Company in 2002. The
law firm of Willcox, Buyck and Williams, P.A. in which Wm. Reynolds Williams, a
director of the Company, is a member also provided legal services to the Company
in 2001, and is continuing to provide legal services to the Company in 2002.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE

As required by Section 16(a) of the Securities Exchange Act of 1934,
the Company's directors, its executive officers and certain individuals are
required to report periodically their ownership of the Company's Common Stock
and any changes in ownership to the Securities and Exchange Commission. Based on
a review of Forms 3, 4 and 5 and written representations made to the Company, it
appears that all such reports for these persons were filed in a timely fashion
during 2001, except that the Company inadvertently failed to file one Form 4 for
each of Phil P. Leventis and Wm. Reynolds Williams with respect to a purchase of
shares, and one Form 4 for each director with respect to the grant of stock
options during the year. It is the Company's practice to assist directors with
filing of Section 16(a) reports.

INDEPENDENT ACCOUNTANTS

The Board of Directors, upon the recommendation of the Audit Committee,
has appointed J. W. Hunt & Company, LLP, independent certified public
accountants, as independent auditors for the Company and its subsidiaries for
the current fiscal year ending December 31, 2002, subject to ratification by the
shareholders. A representative of J. W. Hunt & Company, LLP is expected to be
present at the 2002 Annual Meeting and will be given the opportunity to make a
statement on behalf of the firm if he or she so desires, and will respond to
appropriate questions from shareholders.

Audit Fees

During 2001, J. W. Hunt & Company, LLP did not bill the Company for
professional services rendered for the audit of the Company's annual financial
statements for the year ended December 31, 2001, but billed $7,500 for reviews
of the financial statements included in the Company's Forms 10-Q for that year.

The Company estimates that the total fees for the audit of its annual financial
statements for the year ended December 31, 2001 will be approximately $70,000.

Financial Information Systems Design and Implementation Fees

During the year ended December 31, 2001, J. W. Hunt & Company, LLP did
not provide the Company with any services related to financial information
systems design or implementation.

All Other Fees

During the year ended December 31, 2001, J. W. Hunt & Company, LLP
billed the Company an aggregate of $4,335 for other professional services
provided during 2001 including due diligence related to the acquisition of
Ridgeway Bancshares, preparation of Federal Home Loan Bank
agreed-upon-procedures reports, and other accounting research and consultation.
The Company estimates that J. W. Hunt & Company, LLP will bill an additional
$7,000 during 2002 for preparation of tax returns for 2001.

The Audit Committee has reviewed the services provided by J. W. Hunt &
Company, LLP discussed under the caption All Other Fees, and has considered
whether the provision of such services is compatible with maintaining J. W.
Hunt's independence.

AUDIT COMMITTEE REPORT

The Audit Committee of the Board of Directors has reviewed and
discussed with management the Company's audited financial statements for the
year ended December 31, 2001. The Audit Committee has discussed with the
Company's independent auditors, J. W. Hunt & Company, LLP, the matters required
to be discussed by SAS 61, as modified or supplemented. The Audit Committee has
also received the written disclosures and the letter from J. W. Hunt & Company,
LLP, required by Independence Standards Board Standard No. 1, as modified or
supplemented, and has discussed with J. W. Hunt & Company, LLP, their
independence. Based on the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the year
ended December 31, 2001.

Alvis J. Bynum, Chair Richard L. Havekost
Martha Rose C. Carson Samuel F. Reid, Jr.
Anna O. Dantzler J. Otto Warren, Jr.

AVAILABILITY OF ANNUAL REPORT ON FORM 10-K

A copy of the Company's Annual Report on Form 10-K for the year ended
December 31, 2001, including financial statements (but not including exhibits),
is being provided free of charge with this Proxy Statement to each shareholder
of record. Copies of exhibits to the Form 10-K will be provided upon written
request to William W. Traynham, President, Community Bankshares, Inc., Post
Office Box 2086, Orangeburg, South Carolina 29116, at a charge of 20(cent) per
page. Copies of the Form 10-K and exhibits may also be downloaded from the
Securities and Exchange Commission website at http://www.sec.gov.

OTHER BUSINESS

The Board of Directors of the Company does not know of any other
business to be presented at the Annual Meeting. If any other matters are
properly brought before the Annual Meeting, however, it is the intention of the
persons named in the accompanying proxy to vote such proxy in accordance with
their best judgment.

PROXY

COMMUNITY BANKSHARES, INC.

PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS - WEDNESDAY, MAY 8, 2002

E. J. Ayers, Jr. and J. Erwin Paxton, or either of them, with full
power of substitution, are hereby appointed as agent(s) of the undersigned to
vote as proxies all of the shares of Common Stock of Community Bankshares, Inc.
held of record by the undersigned on the Record Date at the Annual Meeting of
Shareholders to be held on May 8, 2002, and at any adjournment thereof, as
follows:

1. Election of [ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY
Directors. below to vote for all
nominees listed below

[ ] WITHHOLD AUTHORITY only on the following nominees:------------

--------------------------------------------------------------------

Instructions: To withhold authority to vote for any individual(s),
write the nominee's(s') name(s) on the line above.

NOMINEES: Three Year Terms: Martha Rose C. Carson, J. M. Guthrie, A. Wade
Douroux, Phil P. Leventis, Wm. Reynolds Williams
and Michael A. Wolfe

2. Proposal to ratify appointment of J. W. Hunt & Company, LLP, Certified
Public Accountants, as the Company's independent auditors for the fiscal
year ending December 31, 2002.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

3. And, in the discretion of said agents, upon such other business as may
properly come before the meeting, and matters incidental to the conduct of
the meeting. (Management at present knows of no other business to be
brought before the meeting.)

THE PROXIES WILL BE VOTED AS INSTRUCTED. IF NO CHOICE IS INDICATED WITH RESPECT
TO A MATTER WHERE A CHOICE IS PROVIDED, THIS PROXY WILL BE VOTED "FOR" SUCH
MATTER.

Please sign exactly as name appears below. When signing as attorney, executor,
administrator, trustee, or guardian, please give full title. If more than one
trustee, all should sign. All joint owners must sign.

Dated: , 2002
------------ ----------------------------------------

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