UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 8-K

                                AMENDMENT NO. 1

                                 CURRENT REPORT

     Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)  July 1, 2002

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


        South Carolina                  000-22054             57-0966962
(State or other jurisdiction of        (Commission         (I.R.S. Employer
incorporation or organization)        File Number)       Identification No.)


             791 Broughton Street, Orangeburg, South Carolina 29116
              (Address of principal executive offices and zip code)

Registrant's telephone number, including area code (803) 535-1060

                                       N/A

         (Former name or former address, if changed since last report.)







Item 2.   Acquisition or Disposition of Assets.

(a)  Effective  July  1,  2002,  Community  Bankshares,  Inc.  ("CBI")  acquired
Ridgeway  Bancshares,  Inc.  ("Ridgeway")  pursuant to an Agreement  and Plan of
Merger,  dated as of  November  20,  2001.  Ridgeway is a bank  holding  company
organized under the laws of South Carolina with its principal  executive  office
in Ridgeway,  South  Carolina.  Ridgeway  operates  principally  through Bank of
Ridgeway,  a South Carolina state chartered bank with three offices in Fairfield
and Richland Counties.

     Pursuant to the merger, each outstanding share of Ridgeway common stock has
been  converted  into the right to acquire  25 shares of CBI  common  stock plus
$100.00 cash, subject to the right of Ridgeway  shareholders to make an election
to  receive  more or less  stock  or  cash.  The cash  will be paid  from  CBI's
available funds.

(b)  Not applicable.

Item 7.  Financial Statements and Exhibits

(a)  Financial Statements of Business Acquired.

     The  following  financial  statements  of Ridgeway  Bancshares,  Inc.,  the
acquired company, are included with this filing:

     Report of Independent Accountants
     Consolidated Balance Sheets as of December 31, 2001 and 2000 (audited)
     Consolidated  Statements  of  Operations  for the Years ended  December 31,
        2001, 2000 and 1999 (audited)
     Consolidated   Statements   of   Changes   in   Shareholders'   Equity  and
        Comprehensive  Income for the Years ended  December 31,  2001,  2000 and
        1999 (audited)
     Consolidated  Statements  of Cash Flows for the Years  ended  December  31,
        2001, 2000 and 1999 (audited)
     Notes to Consolidated Financial Statements

     Condensed Consolidated Balance Sheets as of June 30, 2002 and December 31,
        2001 (unaudited)
     Condensed Consolidated  Statements of Operations for the Six Months ended
        June 30, 2002 and 2001 (unaudited)
     Condensed Consolidated  Statements of Cash Flows for the Six Months ended
        June 30, 2002 and 2001 (unaudited)










                            RIDGEWAY BANCSHARES, INC.

                        Consolidated Financial Statements

                  Years Ended December 31, 2001, 2000, and 1999

                                       and

                        Report of Independent Accountants





                            RIDGEWAY BANCSHARES, INC.











                                Table of Contents


                                                                                                            Page No.
                                                                                                            
Independent Accountants' Report...................................................................................1
Consolidated Balance Sheets.......................................................................................2
Consolidated Statements of Operations.............................................................................3
Consolidated Statements of Changes in Shareholders' Equity and Comprehensive Income...............................4
Consolidated Statements of Cash Flows.............................................................................5
Notes to Consolidated Financial Statements.....................................................................6-20













                       TOURVILLE, SIMPSON & CASKEY, L.L.P.
                          CERTIFIED PUBLIC ACCOUNTANTS
                              POST OFFICE BOX 1769
                         COLUMBIA, SOUTH CAROLINA 29202

                            TELEPHONE (803) 252-3000
                               FAX (803) 252-2226
WILLIAM E. TOURVILLE, CPA                                   MEMBER AICPA SEC AND
HARRIET S. SIMPSON, CPA, CISA, CDP                             PRIVATE COMPANIES
R. JASON CASKEY, CPA                                           PRACTICE SECTIONS

JOHN T. DRAWDY, JR., CPA
TIMOTHY R. ALFORD, CPA
W. CLAYTON HESLOP, CPA
TIMOTHY S. VOGEL, CPA



                        REPORT OF INDEPENDENT ACCOUNTANTS



The Board of Directors
Ridgeway Bancshares, Inc.
Ridgeway, South Carolina


We have  audited  the  accompanying  consolidated  balance  sheets  of  Ridgeway
Bancshares,  Inc.  and its  subsidiary  as of December 31, 2001 and 2000 and the
related   statements  of  operations,   changes  in  shareholders'   equity  and
comprehensive  income,  and cash flows for the years ended  December  31,  2001,
2000, and 1999. These consolidated  financial  statements are the responsibility
of the  Company's  management.  Our  responsibility  is to express an opinion on
these consolidated financial statements based on our audits.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  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 consolidated
financial statements. An audit also includes assessing the accounting principles
used and the 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 financial  statements  referred to above present fairly, in
all material respects,  the financial position of Ridgeway Bancshares,  Inc. and
its  subsidiary  as of  December  31,  2001 and 2000,  and the  results of their
operations and their cash flows for the years ended December 31, 2001, 2000, and
1999 in conformity with accounting  principles  generally accepted in the United
States of America.




Tourville, Simpson & Caskey, L.L.P.
Columbia, South Carolina
January 10, 2002



                                       1



                           RIDGEWAY BANCSHARES, INC.


                          Consolidated Balance Sheets
                           December 31, 2001 and 2000



                                                                                                     2001                    2000
                                                                                                     ----                    ----
Assets
                                                                                                                 
 Cash and cash equivalents:
 Cash and due from banks ............................................................           $  3,480,366           $  2,938,982
 Federal funds sold and securities purchased
   under agreements to resell .......................................................              5,334,000              5,960,000
                                                                                                ------------           ------------
     Total cash and cash equivalents ................................................              8,814,366              8,898,982

 Time deposits with other banks .....................................................                148,000                137,000

 Investment securities:
  Securities available-for-sale .....................................................              8,708,680              7,559,684
  Securities held-to-maturity (market value of $19,726,656 in 2001
   and $16,220,805 in 2000) .........................................................             19,351,695             16,116,759
  Nonmarketable equity securities ...................................................                 63,648                 63,648
                                                                                                ------------           ------------
     Total investment securities ....................................................             28,124,023             23,740,091

Loans receivable: ...................................................................             40,818,194             39,804,725
 Less allowance for loan losses .....................................................                417,404                387,529
                                                                                                ------------           ------------
   Loans, net .......................................................................             40,400,790             39,417,196
Premises and equipment, net .........................................................                737,013                773,165
Accrued interest receivable .........................................................                600,410                601,553
Other assets ........................................................................                495,539                573,394
                                                                                                ------------           ------------

     Total assets ...................................................................           $ 79,320,141           $ 74,141,381
                                                                                                ============           ============

Liabilities
 Deposits:
  Non-interest bearing demand deposits ..............................................           $ 10,261,425           $  9,839,029
  Interest bearing demand deposits ..................................................              9,966,249              9,211,538
  Money market accounts .............................................................             10,024,776             10,161,177
  Savings ...........................................................................              7,499,607              7,621,758
  Certificates of deposit of $100,000 and over ......................................              7,475,636              6,864,350
  Certificates of deposit of under $100,000 .........................................             22,125,126             19,992,563
                                                                                                ------------           ------------
     Total deposits .................................................................             67,352,819             63,690,415
  Accrued interest payable ..........................................................                130,313                171,663
  Securities sold under agreements to repurchase ....................................              3,134,270              2,418,501
  Other liabilities .................................................................                  7,238                 20,320
                                                                                                ------------           ------------
     Total liabilities ..............................................................             70,624,640             66,300,899
                                                                                                ------------           ------------

Commitments and Contegencies (Notes 5 and 11)

Shareholders' Equity
 Common stock, no par value; 100,000 shares authorized; .............................              2,200,000              2,200,000
  40,000 shares issued and outstanding
 Accumulated other comprehensive income (loss) ......................................                 68,467                (18,413)
 Retained earnings ..................................................................              6,427,034              5,658,895
                                                                                                ------------           ------------
     Total shareholders' equity .....................................................              8,695,501              7,840,482
                                                                                                ------------           ------------

     Total liabilities and shareholders' equity .....................................           $ 79,320,141           $ 74,141,381
                                                                                                ============           ============


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



                                       2


                           RIDGEWAY BANCSHARES, INC.

                      Consolidated Statements of Operations
              For the Years Ended December 31, 2001, 2000, and 1999



                                                                                     2001               2000                1999
                                                                                     ----               ----                ----
Interest income:
                                                                                                                 
 Loans, including fees .................................................          $3,660,489          $3,410,292          $2,941,423
 Investment securities:
  Taxable ..............................................................             891,397             912,003             919,085
  Tax-exempt ...........................................................             436,938             437,632             444,786
  Nonmarketable equity securities ......................................               2,144               3,609               4,631
 Federal funds sold and securities purchased
   under agreements to resell ..........................................             236,970             218,083             210,617
 Time deposits with other banks ........................................               8,281               8,241               6,713
                                                                                  ----------          ----------          ----------
     Total .............................................................           5,236,219           4,989,860           4,527,255
                                                                                  ----------          ----------          ----------

Interest expense:
 Deposits ..............................................................           2,021,820           1,882,089           1,658,883
 Federal funds purchased and securities sold
   under agreement to repurchase .......................................              91,473             161,356              85,262
                                                                                  ----------          ----------          ----------
     Total .............................................................           2,113,293           2,043,445           1,744,145
                                                                                  ----------          ----------          ----------

Net interest income ....................................................           3,122,926           2,946,415           2,783,110

Provision for loan losses ..............................................              80,000              75,000              60,000
                                                                                  ----------          ----------          ----------

Net interest income after provision for loan losses ....................           3,042,926           2,871,415           2,723,110
                                                                                  ----------          ----------          ----------

Other operating income
 Service charges on deposit accounts ...................................             564,019             480,961             406,495
 Other service charges and fees ........................................             148,255             161,589             125,461
 Other income ..........................................................              25,297              28,824              31,048
                                                                                  ----------          ----------          ----------
     Total .............................................................             737,571             671,374             563,004
                                                                                  ----------          ----------          ----------

Other operating expenses
 Salaries and benefits .................................................           1,196,653           1,172,132           1,082,389
 Net occupancy and equipment expense ...................................             213,826             220,604             196,691
 Other operating expense ...............................................             868,979             745,510             637,540
                                                                                  ----------          ----------          ----------
     Total .............................................................           2,279,458           2,138,246           1,916,620
                                                                                  ----------          ----------          ----------

Income before income taxes .............................................           1,501,039           1,404,543           1,369,494

Income tax expense .....................................................             412,900             375,825             359,800
                                                                                  ----------          ----------          ----------

Net income .............................................................          $1,088,139          $1,028,718          $1,009,694
                                                                                  ==========          ==========          ==========

Earnings per share
 Weighted average common shares outstanding ............................              40,000              40,000              40,000
 Net income ............................................................          $    27.20          $    25.72          $    25.24



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


                                       3


                           RIDGEWAY BANCSHARES, INC.

           Consolidated Statements of Changes in Shareholders' Equity
                  and Comprehensive Income For the Years Ended
                       December 31, 2001, 2000, and 1999



                                                         Common Stock               Accumulated
                                                         ------------                  Other
                                                                                  Comprehensive          Retained
                                                  Shares             Amount        Income (Loss)         Earnings            Total
                                                  ------             ------        -------------         --------            -----
                                                                                                         
Balance, December 31, 1998 ............            40,000        $ 2,200,000        $    56,874        $ 4,152,483      $ 6,409,357

Net income ............................                                                                  1,009,694        1,009,694

Other comprehensive income ............                                                (139,514)                           (139,514)
                                                                                                                        -----------
  Comprehensive income ................                                                                                     870,180
                                                                                                                        -----------

Cash dividends declared
  -$6.30 per share  ...................                                                                   (252,000)        (252,000)
                                              -----------        -----------        -----------        -----------      -----------


Balance, December 31, 1999 ............            40,000          2,200,000            (82,640)         4,910,177        7,027,537

Net income ............................                                                                  1,028,718        1,028,718

Other comprehensive income ............                                                  64,227                              64,227
                                                                                                                        -----------
  Comprehensive income ................                                                                                   1,092,945
                                                                                                                        -----------

Cash dividends declared
 -$7.00 per share .....................                                                                   (280,000)        (280,000)
                                              -----------        -----------        -----------        -----------      -----------

Balance, December 31, 2000 ............            40,000          2,200,000            (18,413)         5,658,895        7,840,482

Net income ............................                                                                  1,088,139        1,088,139

Other comprehensive income ............                                                  86,880                              86,880
                                                                                                                        -----------
  Comprehensive income ................                                                                                   1,175,019
                                                                                                                        -----------

Cash dividends declared
-$8.00 per share ......................                                                                   (320,000)        (320,000)
                                              -----------        -----------        -----------        -----------      -----------

Balance, December 31, 2001 ............            40,000        $ 2,200,000        $    68,467        $ 6,427,034      $ 8,695,501
                                              ===========        ===========        ===========        ===========      ===========



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


                                       4


                           RIDGEWAY BANCSHARES, INC.

                      Consolidated Statements of Cash Flows
              For the Years Ended December 31, 2001, 2000, and 1999



                                                                                     2001               2000                 1999
                                                                                     ----               ----                 ----
Cash flows from operating activities:
                                                                                                              
  Net income ...........................................................       $  1,088,139        $  1,028,718        $  1,009,694
  Adjustments to reconcile net income to net cash
   provided by operating activities:
    Depreciation .......................................................             89,185              87,785              73,366
    Provision for possible loan losses .................................             80,000              75,000              60,000
    Premium amortization less accretion ................................             (1,137)              1,135                (512)
    Deferred income tax provision (benefit) ............................            (15,345)            (25,969)            (36,680)
    Amortization of intangible assets ..................................             42,000              42,000              50,524
    (Increase) decrease in accrued interest receivable .................              1,143             (30,335)           (115,688)
    (Increase) decrease in other assets ................................                174              (6,079)             33,154
    Increase (decrease) in accrued interest payable ....................            (41,350)              8,295               1,800
    Increase (decrease) in other liabilities ...........................            (13,082)            (69,863)             46,695
                                                                               ------------        ------------        ------------
      Net cash provided by operating activities ........................          1,229,727           1,110,687           1,122,353
                                                                               ------------        ------------        ------------

Cash flows from investing activities:
  Proceeds from maturities of securities available-for-sale ............          8,500,000           2,700,000           3,100,000
  Purchases of securities available-for-sale ...........................         (9,500,000)           (490,313)         (2,999,817)
  Proceeds from maturities of securities held-to-maturity ..............          7,769,757           2,195,137           2,083,015
  Purchases of securities held-to-maturity .............................        (11,014,646)         (2,222,010)         (6,207,114)
  Net increase in loans to customers ...................................         (1,063,594)         (6,102,884)         (3,237,668)
  Purchase of premises and equipment ...................................            (53,033)            (26,526)           (229,777)
  Net increase in time deposits with other banks .......................            (11,000)             (7,000)                  -
                                                                               ------------        ------------        ------------
      Net cash used by investing activities ............................         (5,372,516)         (3,953,596)         (7,491,361)
                                                                               ------------        ------------        ------------

Cash flows from financing activities:
  Net increase in demand and savings deposits ..........................            918,555           4,922,242             711,851
  Net increase (decrease) in certificates of deposit ...................          2,743,849           3,796,527            (196,707)
  Net increase in securities sold under agreements
   to repurchase  ......................................................            715,769             216,231             837,669
  Cash dividends paid ..................................................           (320,000)           (280,000)           (252,000)
                                                                               ------------        ------------        ------------
      Net cash provided by financing activities ........................          4,058,173           8,655,000           1,100,813
                                                                               ------------        ------------        ------------

Net increase (decrease) in cash and cash equivalents ...................            (84,616)          5,812,091          (5,268,195)

Cash and cash equivalents, beginning of period .........................          8,898,982           3,086,891           8,355,086
                                                                               ------------        ------------        ------------

Cash and cash equivalents, end of period ...............................       $  8,814,366        $  8,898,982        $  3,086,891
                                                                               ============        ============        ============





                                       5



                            RIDGEWAY BANCSHARES, INC.

                   Notes to Consolidated Financial Statements

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis  of  Presentation  and  Consolidation  -  The  accompanying   consolidated
financial  statements  include the accounts of Ridgeway  Bancshares,  Inc.  (the
Company),  its  wholly-owned  subsidiary,  Bank of Ridgeway (the Bank),  and the
Bank's wholly-owned subsidiary, Ridgeway Insurance Agency (the Agency). The Bank
provides commercial banking services to domestic markets principally in northern
Richland County and in Fairfield County, South Carolina.  The Agency has been in
a  dormant  status  for the  past  several  years.  The  consolidated  financial
statements  include  the  accounts of the parent  company  and its  wholly-owned
subsidiary  after  elimination  of all  significant  intercompany  balances  and
transactions.

The accounting and reporting  policies of the Company reflect industry practices
and  conform  to  generally  accepted  accounting  principles  in  all  material
respects.  All  significant  intercompany  accounts and  transactions  have been
eliminated.

Management's Estimates - The preparation of consolidated financial statements in
conformity with generally accepted accounting  principles requires management to
make estimates and  assumptions  that affect the reported  amounts of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the reporting period. Actual results could differ from those estimates.

Material  estimates that are  particularly  susceptible  to  significant  change
relate to the  determination  of the  allowance  for losses on loans,  including
valuation  allowances  for  impaired  loans  and the  valuation  of real  estate
acquired  in  connection  with  foreclosures  or in  satisfaction  of loans.  In
connection  with the  determination  of the  allowances  for losses on loans and
foreclosed  real  estate,   management   obtains   independent   appraisals  for
significant  properties.  Management must also make estimates in determining the
estimated useful lives and methods for depreciating premises and equipment.

While  management  uses available  information to recognize  losses on loans and
foreclosed  real estate,  future  additions to the  allowances  may be necessary
based on changes in local economic conditions. In addition, regulatory agencies,
as an  integral  part of their  examination  process,  periodically  review  the
Company's  allowances  for  losses on loans and  foreclosed  real  estate.  Such
agencies may require the Company to recognize  additions to the allowances based
on their  judgments  about  information  available  to them at the time of their
examination.  Because of these  factors,  it is possible that the allowances for
losses on loans and foreclosed real estate may change in the near term.

Significant  Group  Concentrations  of  Credit  Risk  - Most  of  the  Company's
activities are with customers  located within Fairfield and Richland Counties in
South  Carolina.  Note 4  discusses  the types of  securities  that the  Company
invests in. Note 5 discusses  the types of lending that the Company  engages in.
The Company does not have any significant  concentrations to any one industry or
customer.

Investment  Securities Held to Maturity - Investment securities held to maturity
are stated at cost,  adjusted  for  amortization  of premium  and  accretion  of
discount computed by the straight-line  method.  The Company has the ability and
management has the intent to hold designated  investment securities to maturity.
Reductions in market value  considered by management to be other than  temporary
are  reported  as a  realized  loss and a  reduction  in the  cost  basis of the
security.

Investment    Securities     Available-for-Sale    -    Investment    securities
available-for-sale  are carried at  amortized  cost and  adjusted  to  estimated
market  value by  recognizing  the  aggregate  unrealized  gains or  losses in a
valuation  account.  Aggregate  market  valuation  adjustments  are  recorded in
shareholders'  equity net of deferred  income taxes.  Reductions in market value
considered by  management to be other than  temporary are reported as a realized
loss and a reduction in the cost basis of the security.  The adjusted cost basis
of securities available-for-sale is determined by specific identification and is
used in computing the gain or loss upon sale.

Nonmarketable  Equity Securities - Nonmarketable  equity securities  include the
Company's investments in the stock of Community Financial Services. The stock is
carried  at cost  because  it has no quoted  market  value  and no ready  market
exists.  Dividends  received  from the  investment  is  included  as a  separate
component in interest income.



                                       6

                            RIDGEWAY BANCSHARES, INC.

                   Notes to Consolidated Financial Statements


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

Loans - Interest  income on loans is  computed  based upon the unpaid  principal
balance. Interest income is recorded in the period earned.

The accrual of interest income is discontinued  when a loan becomes 90 days past
due as to principal or interest. Management may elect to continue the accrual of
interest  when the  estimated net  realizable  value of  collateral  exceeds the
principal balance and accrued interest. Impaired loans are measured based on the
present value of discounted  expected cash flows.  When it is determined  that a
loan is impaired, a direct charge to bad debt expense is made for the difference
between  the net  present  value of  expected  future  cash  flows  based on the
contractual rate and the Company's recorded  investment in the related loan. The
corresponding entry is to a related valuation account.  Interest is discontinued
on impaired loans when  management  determines  that a borrower may be unable to
meet payments as they become due.

The Company  identifies  impaired loans through its normal  internal loan review
process.  Loans  on  the  Company's  problem  loan  watch  list  are  considered
potentially impaired loans. These loans are evaluated in determining whether all
outstanding  principal and interest are expected to be collected.  Loans are not
considered  impaired if a minimal  delay  occurs and all  amounts due  including
accrued  interest at the  contractual  interest rate for the period of delay are
expected to be collected.  At December 31, 2001,  management has determined that
no  impairment  of loans  existed  that  would  have a  material  effect  on the
Company's financial statements.

Allowance  for Loan Losses - An allowance for possible loan losses is maintained
at a level deemed  appropriate by management to provide adequately for known and
inherent risks in the loan  portfolio.  The allowance is based upon a continuing
review of past loan  loss  experience,  current  economic  conditions  which may
affect the borrowers' ability to pay and the underlying  collateral value of the
loans. Loans, which are deemed to be uncollectible, are charged off and deducted
from the  allowance.  The provision  for possible loan losses and  recoveries on
loans previously charged off are added to the allowance.

Premises  and  Equipment  - Premises  and  equipment  are  stated at cost,  less
accumulated  depreciation.  The provision for depreciation is computed primarily
by the  declining-balance  method.  Rates of depreciation are generally based on
the  following  estimated  useful  lives:  buildings - 30 years;  furniture  and
equipment - 5 to 15 years. The cost of assets sold or otherwise disposed of, and
the related  accumulated  depreciation  are eliminated from the accounts and the
resulting gains or losses are reflected in the income statement. Maintenance and
repairs  are  charged to current  expense  as  incurred,  and the costs of major
renewals and improvements are capitalized.

Other Real Estate Owned - Other real estate owned includes real estate  acquired
through  foreclosure  and  loans  accounted  for as in  substance  foreclosures.
Collateral is considered foreclosed in substance when the borrower has little or
no equity in the fair value of the  collateral,  proceeds  for  repayment of the
debt can be  expected  to come  only from the sale of the  collateral  and it is
doubtful that the borrower can rebuild equity or otherwise repay the loan in the
foreseeable  future.  Other real estate owned is initially recorded at the lower
of cost  (principal  balance of the former loan plus costs of  improvements)  or
estimated fair value.

Any  write-downs  at the dates of  acquisition  are charged to the allowance for
possible loan losses.  Expenses to maintain such assets,  subsequent write-downs
and gains and losses on disposal are included in other expenses.

Intangible Assets - Intangible assets consist of core deposit premiums resulting
from the  acquisition of the Blythewood  branch.  The core deposit  premiums are
being amortized over fifteen years using the straight-line method.

Income and Expense  Recognition  - The accrual  method of accounting is used for
all  significant  categories  of  income  and  expense.  Immaterial  amounts  of
insurance commissions and other miscellaneous fees are reported when received.


                                       7


                            RIDGEWAY BANCSHARES, INC.

                   Notes to Consolidated Financial Statements


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

Retirement Benefits - The Company sponsors a trusteed  non-contributory  defined
benefit pension plan covering  employees who have completed at least 1,000 hours
of service within one year and have attained age twenty-one.  The funding policy
for this plan is to contribute  annually an amount  between the minimum  funding
amount   required  by  ERISA  and  the  maximum   tax-deductible   contribution.
Contributions  are  intended  to provide  not only for  benefits  attributed  to
service to date but also for those expected to be earned in the future. See Note
13.

A trusteed  retirement savings plan is sponsored by the Company,  which provides
retirement benefits to substantially all officers and employees who meet certain
age and service  requirements.  The plan includes a "salary  reduction"  feature
pursuant to Section  401(k) of the  Internal  Revenue  Code.  Under the plan and
present policies,  participants are permitted to make contributions up to 15% of
their annual  compensation.  At its  discretion,  the Company can make  matching
contributions up to 100% of the participants' contributions. Expenses charged to
earnings for the retirement  savings plan were approximately  $18,193,  $18,536,
and $16,853 in 2001, 2000, and 1999, respectively.

Income taxes - Income taxes are the sum of amounts  currently  payable to taxing
authorities  and the net changes in income taxes payable or refundable in future
years.  Income  taxes  deferred  to future  years  are  determined  utilizing  a
liability   approach.   This  method  gives  consideration  to  the  future  tax
consequences  associated with differences  between the financial  accounting and
tax bases of certain assets and liabilities,  principally the allowance for loan
losses.

Earnings Per Share - Earnings per share is  calculated  by dividing  earnings by
the weighted average number of common shares outstanding during the year.

Comprehensive  Income - Accounting  principles generally require that recognized
revenue, expenses, gains, and losses be included in net income. Although certain
changes  in assets  and  liabilities,  such as  unrealized  gains and  losses on
available-for-sale  securities,  are  reported  as a separate  component  of the
equity  section of the balance  sheet,  such items,  along with net income,  are
components of comprehensive income.

The  components  of other  comprehensive  income and  related tax effects are as
follows:



                                                                                                  Year Ended December 31,
                                                                                                  -----------------------
                                                                                       2001               2000               1999
                                                                                       ----               ----               ----
                                                                                                                 
Unrealized holding gains (losses) on available-for-sale  securities .......         $ 137,906          $ 101,948          $(221,451)

Reclassification adjustment for (gains) losses realized
 in net income  ...........................................................                 -                  -                  -
                                                                                    ---------          ---------          ---------

Net unrealized gains (losses) on securities ...............................           137,906            101,948           (221,451)

Tax effect ................................................................           (51,026)           (37,721)            81,937
                                                                                    ---------          ---------          ---------

Net-of-tax amount .........................................................         $  86,880          $  64,227          $(139,514)
                                                                                    =========          =========          =========




                                       8


                            RIDGEWAY BANCSHARES, INC.

                   Notes to Consolidated Financial Statements


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

Statement  of Cash Flows - For  purposes of  reporting  cash flows,  the Company
considers  certain highly liquid debt  instruments  purchased with a maturity of
three months or less to be cash  equivalents.  Cash equivalents  include amounts
due from banks, federal funds sold, and securities purchased under agreements to
resell.

During 2001,  2000,  and 1999,  the Company  paid  $2,154,643,  $2,035,150,  and
$1,742,345, respectively, for interest. Cash paid for income taxes was $445,990,
$442,944, and $371,310 in 2001, 2000, and 1999, respectively.

Changes in the valuation account of securities available-for-sale, including the
deferred tax effects,  are considered non-cash  transactions for purposes of the
statement  of cash  flows  and are  presented  in  detail  in the  notes  to the
financial statements.

Off-Balance-Sheet  Financial  Instruments - In the ordinary  course of business,
the Company enters into  off-balance-sheet  financial instruments  consisting of
commitments to extend credit and letters of credit. These financial  instruments
are  recorded  in the  financial  statements  when they  become  payable  by the
customer.

Recent  Accounting  Pronouncements  - In  July,  2001 the  Financial  Accounting
Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS)
No. 141,  Business  Combinations and SFAS No. 142, Goodwill and Other Intangible
Assets.  SFAS 141 eliminates  the pooling of interests  method of accounting for
business combinations and requires the use of the purchase method. The Statement
also requires that intangible assets be reported separately from goodwill.  This
Statement is effective for all transactions initiated after June 30, 2001. Under
SFAS 142, goodwill is no longer subject to amortization;  however,  it should be
evaluated  for  impairment  on at least an annual basis and adjusted to its fair
value. In addition,  an acquired  intangible should be separately  recognized if
the benefit of the  intangible  asset is obtained  through  contractual or other
legal rights,  or if the intangible  asset can be sold,  transferred,  licensed,
rented or exchanged, regardless of intent to do so. However, the FASB recommends
that financial  institutions  continue to follow the basic guidelines of SFAS 72
in recording and amortizing goodwill and other unidentifiable intangible assets.
The Company adopted SFAS 141 on July 1, 2001. SFAS 142 is effective for entities
with fiscal years  beginning after December 15, 2001. The Company plans to adopt
SFAS 142 on January 1, 2002. The adoption of these Statements is not expected to
have a material impact on the consolidated financial statements.

In June  1998,  the  FASB  issued  Statement  (SFAS)  No.  133,  Accounting  for
Derivative Instruments and Hedging Activities,  which as amended by SFAS No, 137
and SFAS 138 is effective for fiscal years  beginning  after June 15, 2000. This
Statement   establishes   accounting  and  reporting  standards  for  derivative
instruments and hedging  activities,  including certain  derivative  instruments
embedded  in  other  contracts,  and  requires  that  an  entity  recognize  all
derivatives  as assets or  liabilities  in the balance sheet and measure them at
fair value. The accounting for changes in the fair value of a derivative depends
on how the derivative is used and how the derivative is designated.  The Company
adopted SFAS 133 on July 1, 2000.  The adoption of SFAS No. 133 did not have any
impact on the consolidated  financial  statements since the Company did not have
any  derivative  instruments  nor any derivative  instruments  embedded in other
contracts in 2001 or 2000.

Reclassifications  - Certain captions and amounts in the consolidated  financial
statements  of 2000  and  1999  were  reclassified  to  conform  with  the  2001
presentation.


NOTE 2 - MERGER WITH COMMUNITY BANKSHARES, INC.

On  November  22,  2001,  the Company  announced  that it had signed a letter of
intent  to  merge  with  Community  Bankshares,  Inc.,  a bank  holding  company
headquartered in Orangeburg,  South Carolina. Under the agreement, the Company's
shareholders will receive 25 shares of Community Bankshares, Inc.'s common stock
for each share of the  Company's  common stock and $100 in cash.  Following  the
merger,  the Bank of  Ridgeway  will  continue  to  operate  as a  wholly  owned
subsidiary of Community Bankshares,  Inc. The merger is expected to be completed
by April 1, 2002.



                                       9


                            RIDGEWAY BANCSHARES, INC.

                   Notes to Consolidated Financial Statements


NOTE 3 - CASH AND DUE FROM BANKS

The Company is  required by  regulation  to  maintain  an average  cash  reserve
balance  based on a percentage of deposits.  The average  amount of the required
cash  reserve  balances  at  December  31,  2001  and  December  31,  2000  were
approximately $522,000 and $546,000, respectively.


NOTE 4 - INVESTMENT SECURITIES

The amortized cost and estimated market values of securities  available-for sale
at December 31, 2001 and 2000 were:



                                                                                              Gross Unrealized            Estimated
                                                                      Amortized               ----------------             Market
                                                                         Cost             Gains             Losses          Value
                                                                         ----             -----             ------          -----
December 31, 2001:
                                                                                                              
 U.S. Government agencies and corporations .....................       $8,000,000       $  117,344       $   13,435       $8,103,909
 Obligations of state and political subdivisions ...............          600,000            4,771                -          604,771
                                                                       ----------       ----------       ----------       ----------

     Total securities ..........................................       $8,600,000       $  122,115       $   13,435       $8,708,680
                                                                       ==========       ==========       ==========       ==========

December 31, 2000:
 U.S. Treasuries ...............................................       $1,498,005       $    1,483       $    2,613       $1,496,875
 U.S. Government agencies and corporations .....................        5,990,905            5,256           36,048        5,960,113
 Obligations of state and political subdivisions ...............          100,000            2,696                -          102,696
                                                                       ----------       ----------       ----------       ----------

     Total securities ..........................................       $7,588,910       $    9,435       $   38,661       $7,559,684
                                                                       ==========       ==========       ==========       ==========



The amortized cost and estimated  market value of securities held to maturity at
December 31, 2001 and 2000 were:



                                                                                              Gross Unrealized            Estimated
                                                                      Amortized               ----------------             Market
                                                                         Cost             Gains             Losses          Value
                                                                         ----             -----             ------          -----
December 31, 2001
                                                                                                             
 U.S. Government agencies & corporations ......................       $10,084,061       $  176,802       $    7,187      $10,253,676
 Obligations of state and political subdivisions ..............         9,267,634          220,848           15,502        9,472,980
                                                                      -----------       ----------       ----------      -----------

     Total securities .........................................       $19,351,695       $  397,650       $   22,689      $19,726,656
                                                                      ===========       ==========       ==========      ===========

December 31, 2000:
 U.S. Government agencies & corporations ......................       $ 7,098,958       $    7,573       $   26,734      $ 7,079,797
 Obligations of state and political subdivisions ..............         9,017,801          140,116           16,909        9,141,008
                                                                      -----------       ----------       ----------      -----------

     Total securities .........................................       $16,116,759       $  147,689       $   43,643      $16,220,805
                                                                      ===========       ==========       ==========      ===========




There were no sales of investment securities during 2001 or 2000.




                                       10


                            RIDGEWAY BANCSHARES, INC.

                   Notes to Consolidated Financial Statements


NOTE 4 - INVESTMENT SECURITIES - continued

The  amortized  cost and  estimated  market value of  investment  securities  at
December 31, 2001 based on their  contractual  maturities are summarized  below.
Actual maturities may differ from contractual  maturities  because borrowers may
have the right to call or prepay obligations without penalty.

                                                                  2001
                                                                  ----
                                                                       Estimated
                                                        Amortized        Market
                                                          Cost           Value
                                                          ----           -----
Due within one year ............................     $ 1,010,293     $ 1,013,596
Due after one year but within five years .......      21,261,059      21,659,653
Due after five years but within ten years ......       5,515,363       5,595,891
Due after ten years ............................         164,980         166,196
                                                     -----------     -----------

Total ..........................................     $27,951,695     $28,435,336
                                                     ===========     ===========


At  December  31,  2001  and 2000  investment  securities  with a book  value of
$11,564,062  and $8,543,148 and a market value of  $11,840,108  and  $8,523,642,
respectively, were pledged as collateral to secure public deposits and for other
purposes.


NOTE 5 - LOANS

Loans consisted of the following:

                                                            December 31,
                                                            ------------
                                                       2001              2000
                                                       ----              ----
Real estate ................................       $24,969,988       $23,602,492
Home equity ................................         2,238,060         2,420,481
Commercial and industrial loans ............         4,480,227         5,045,202
Consumer ...................................         8,429,228         8,019,601
All other loans ............................           700,691           716,949
                                                   -----------       -----------

                                                   $40,818,194       $39,804,725
                                                   ===========       ===========


As of December 31, 2001 and 2000,  management had placed loans totaling $187,422
and  $225,340 in  nonaccrual  status  because the loans were not  performing  as
originally  contracted.  Loans  ninety days or more past due and still  accruing
interest were $165,472 and $355,233 at December 31, 2001 and 2000, respectively.
No impairment has been  recognized  because  management has determined  that the
discounted  value of expected  proceeds from the sale of  collateral,  typically
real estate, exceeds the carrying amount of these loans.



                                       11


                            RIDGEWAY BANCSHARES, INC.

                   Notes to Consolidated Financial Statements


NOTE 5 - LOANS - continued

Transactions in the allowance for loan losses are summarized below:

                                           2001            2000           1999
                                           ----            ----           ----
Balance, January 1 ................     $ 387,529      $ 334,209      $ 304,837
Provision charged to expense ......        80,000         75,000         60,000
Charge-offs .......................       (68,744)       (44,871)       (47,445)
Recoveries ........................        18,619         23,191         16,817
                                        ---------      ---------      ---------

Balance, December 31 ..............     $ 417,404      $ 387,529      $ 334,209
                                        =========      =========      =========


The Company is a party to financial instruments with  off-balance-sheet  risk in
the normal  course of business  to meet the  financing  needs of its  customers.
These  financial  instruments  include  commitments to extend credit and standby
letters of credit.  Those instruments  involve, to varying degrees,  elements of
credit  and  interest  rate  risk in  excess  of the  amount  recognized  in the
statements of financial  position.  The contractual or notional amounts of those
instruments  reflect the extent of  involvement  the  Company has in  particular
classes of financial instruments.

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 written is represented by the contractual or notional
amount of those instruments. The Company uses the same credit policies in making
commitments  and  conditional   obligations  as  it  does  for  on-balance-sheet
instruments.

Standby  letters of credit  written are  conditional  commitments  issued by the
Company to guarantee the performance of a customer to a third party.  The credit
risk  involved  in  issuing  letters of credit is  essentially  the same as that
involved in extending loans to customers.

Commitments  to extend  credit are  agreements  to lend to a customer as long as
there is no violation of any condition established in the contract.  Commitments
generally  have fixed  expiration  dates or other  termination  clauses  and may
require  payment of a fee. Since some of the  commitments are expected to expire
without  being  drawn  upon,  the total  commitment  amounts do not  necessarily
represent  future cash  requirements.  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 counter-party.

Collateral  held for  commitments to extend credit and standby letters of credit
varies  but  may  include  accounts  receivable,   inventory,  property,  plant,
equipment, and income-producing commercial properties.

The  following  table  summarizes  the  Company's   off-balance-sheet  financial
instruments whose contractual amounts represent credit risk at December 31, 2001
and 2000:

                                                        2001              2000
                                                        ----              ----
Commitments to extend credit ...............        $6,128,656        $5,417,598
Standby letters of credit ..................           295,000           273,000



Management is not aware of any significant concentrations of loans to classes of
borrowers or industries that would be affected similarly by economic conditions.
At December 31, 2001, the Company was not committed to lend additional  funds to
borrowers having loans in nonaccrual status.



                                       12


                            RIDGEWAY BANCSHARES, INC.

                   Notes to Consolidated Financial Statements


NOTE 6 - PREMISES AND EQUIPMENT

Premises and equipment consisted of the following:

                                                             December 31,
                                                             ------------
                                                        2001               2000
                                                        ----               ----
Land .......................................        $  145,185        $  145,185
Buildings and improvements .................           949,343           943,823
Furniture and equipment ....................           474,083           632,497
                                                    ----------        ----------
                                                     1,568,611         1,721,505
Less, accumulated depreciation .............           831,598           948,340
                                                    ----------        ----------

                                                    $  737,013        $  773,165
                                                    ==========        ==========



NOTE 7 - DEPOSITS

At December 31, 2001, the scheduled maturities of time deposits are as follows:

2002                                                                 $27,488,442
2003                                                                   1,450,691
2004                                                                     431,482
2005                                                                      78,722
2006 and thereafter                                                      151,425
                                                                     -----------

                                                                     $29,600,762
                                                                     ===========


Overdrawn  deposit  accounts in the amount of $65,536 are classified as loans as
of December 31, 2001.


NOTE 8 - SHORT-TERM BORROWINGS

Short-term  borrowings  payable at December 31, 2001 and 2000 consist of federal
funds  purchased  and  securities  sold under  agreements  to  repurchase  which
generally mature on a one to thirty day basis. Information concerning securities
sold under agreements to repurchase is summarized as follows:

                                                         2001            2000
                                                         ----            ----
Average balance during the year ................     $2,811,211      $2,894,137
Average interest rate during the year ..........           3.25%           5.48%
Maximum month-end balance during the year ......     $3,416,845      $4,663,044


Under the terms of the  repurchase  agreement,  the Company sells an interest in
securities issued by United States Government  Agencies,  and the Company agrees
to repurchase  the same  securities  the following  business day. The securities
sold under  these  agreements  are the  identical  securities  on the  Company's
balance sheet captioned as securities  purchased under agreements to resell.  As
of December 31, 2001, the par value and market value of the  securities  held by
the  third-party  for the underlying  agreements were $3,000,000 and $3,176,326,
respectively.



                                       13


                            RIDGEWAY BANCSHARES, INC.

                   Notes to Consolidated Financial Statements


NOTE 9 - RELATED PARTY TRANSACTIONS

Certain parties  (principally certain directors and stockholders of the Company,
their immediate families and business interests) were loan customers of, and had
other  transactions  in the normal course of business with the Company.  Related
party loans are made on substantially the same terms,  including  interest rates
and collateral, as those prevailing at the time for comparable transactions with
unrelated  persons and do not involve  more than normal risk of  collectibility.
The  aggregate  dollar  amount of loans to  related  parties  was  $730,652  and
$844,208 at December 31, 2001 and 2000, respectively.


NOTE 10 - UNUSED LINES OF CREDIT

As of December  31,  2001,  the  Company had unused  lines of credit to purchase
federal funds from other financial institutions totaling $5,750,000. These lines
of credit  are  available  on a one to seven day  basis  for  general  corporate
purposes.  The lenders  have  reserved  the right not to renew their  respective
lines.


NOTE 11 - COMMITMENTS AND CONTINGENCIES

The Company was not  involved as  defendant  in any  litigation  at December 31,
2001.  Management  and legal  counsel are not aware of any pending or threatened
litigation,  or unasserted claims or assessments that could result in losses, if
any, that would be material to the financial statements.


NOTE 12 - RESTRICTIONS ON SUBSIDIARY DIVIDENDS, LOANS, OR ADVANCES

South Carolina banking regulations  restrict the amount of dividends that can be
paid to shareholders.  All of the Bank's dividends to Ridgeway Bancshares,  Inc.
are payable only from the  undivided  profits of the Bank. At December 31, 2001,
the Bank's undivided profits were $6,413,580. The Bank is authorized to pay cash
dividends up to 100% of net income in any calendar  year without  obtaining  the
prior approval of the  Commissioner of Banking provided that the Bank received a
composite  rating  of  one  or  two at the  last  Federal  or  State  regulatory
examination.  Under Federal Reserve Board  regulations,  the amounts of loans or
advances from the Bank to the parent company are also restricted.


NOTE 13 - EMPLOYEE BENEFITS

The Company has a  contributory  defined  benefit  pension  plan,  which  covers
substantially  all employees.  Employees  covered under the plan are eligible to
participate after attainment of age 21 and completion of at least 1,000 hours of
service,  and pension  benefits  are based on salary and years of  service.  All
employees are fully vested in the plan after 7 years of service. The actuarially
determined  pension  benefits are based on the aggregate  method.  The Company's
funding  policy  provides  that  payments to the plan shall be  consistent  with
minimum government  funding  regulations plus additional  amounts,  which may be
approved by the Company from time to time.



                                       14


                            RIDGEWAY BANCSHARES, INC.

                   Notes to Consolidated Financial Statements


NOTE 13 - EMPLOYEE BENEFITS - continued

Plan assets are stated at fair value and consist  primarily of  interest-bearing
certificates  of deposit and U.S.  Governments  bonds.  The table of actuarially
computed  benefit  obligations  and net assets of the plan at December 31, 2001,
2000, and 1999 is presented below:






                                                                                   2001                 2000                 1999
                                                                                   ----                 ----                 ----
                                                                                                                 
Benefit obligation ..................................................           $ 727,834            $ 687,651            $ 659,915
Fair Value of plan assets ...........................................             672,394              641,693              646,383
                                                                                ---------            ---------            ---------

Funded status .......................................................           $ (55,440)           $ (45,958)           $ (13,532)
                                                                                =========            =========            =========

Prepaid (unfunded) benefit cost recognized in the
 statement of financial position  ...................................           $  (6,446)           $    (486)           $     537
                                                                                =========            =========            =========


The weighted-average assumptions for 2001 and 2000 are as follows:

                                                         2001              2000
                                                         ----              ----
Discount rate ..............................             7.25%             7.25%
Expected return on plan assets .............             7.25%             7.25%
Rate of compensation increase ..............             5.00%             5.00%

Benefit cost ...............................       $   61,960        $   59,023
Employer contribution ......................           56,000            58,000
Plan participants' contributions ...........                -                 -
Benefits paid ..............................           11,667               476


NOTE 14 - OTHER EXPENSES

Other  expenses  for the years  ended  December  31,  2001,  2000,  and 1999 are
summarized as follows:

                                              2001          2000           1999
                                              ----          ----           ----
Stationery and printing ..............      $ 68,805      $ 59,406      $ 58,258
Postage and freight ..................        72,647        55,881        58,638
Data processing services .............       304,020       194,377       148,930
Intangible costs .....................        42,000        42,000        50,524
Merger expenses ......................        24,529        74,600             -
Other ................................       356,978       319,246       321,190
                                            --------      --------      --------

    Total ............................      $868,979      $745,510      $637,540
                                            ========      ========      ========


                                       15


                            RIDGEWAY BANCSHARES, INC.

                   Notes to Consolidated Financial Statements


NOTE 15 - INCOME TAXES

Income tax expense  included in the statement of operations  for the years ended
December 31, 2001, 2000, and 1999 are summarized as follows:



                                                                                  2001                 2000                  1999
                                                                                  ----                 ----                  ----
Currently payable:
                                                                                                                 
  Federal .........................................................            $ 377,501            $ 353,346             $ 348,060
  State ...........................................................               50,744               48,448                48,420
                                                                               ---------            ---------             ---------
                                                                                 428,245              401,794               396,480
                                                                               ---------            ---------             ---------
Deferred:
  Federal .........................................................               31,329               10,804              (107,687)
  State ...........................................................                4,352                  948               (10,930)
                                                                               ---------            ---------             ---------
                                                                                  35,681               11,752              (118,617)
                                                                               ---------            ---------             ---------

                                                                               $ 463,926            $ 413,546             $ 277,863
                                                                               =========            =========             =========

Income tax expense is allocated as follows:
  To continuing operations ........................................            $ 412,900            $ 375,825             $ 359,800
  To shareholders' equity .........................................               51,026               37,721               (81,937)
                                                                               ---------            ---------             ---------

                                                                               $ 463,926            $ 413,546             $ 277,863
                                                                               =========            =========             =========



Net deferred income taxes of $129,182 and $164,863 were included in other assets
at December 31, 2001 and 2000,  respectively.  Deferred income taxes result from
temporary  differences in the recognition of certain items of income and expense
for tax and financial reporting purposes.

The gross  amounts of deferred  tax assets and deferred  tax  liabilities  as of
December 31, 2001, 2000, and 1999 are as follows:



                                                                                    2001                  2000                1999
                                                                                    ----                  ----                ----
Deferred tax assets:
                                                                                                                   
  Allowance for loan losses .........................................             $160,701             $149,199             $128,670
  Available-for-sale securities .....................................                    -               10,814               48,535
  Organizational expense ............................................                6,211                8,281               10,219
  Other .............................................................                2,482                  187                    -
                                                                                  --------             --------             --------
    Total deferred tax assets .......................................              169,394              168,481              187,424
                                                                                  --------             --------             --------

Deferred tax liabilities:
  Accumulated accretion and amortization
   on investment securities  ........................................                    -                3,618               10,603
  Available-for-sale securities .....................................               40,212                    -                    -
  Other .............................................................                    -                    -                  206
                                                                                  --------             --------             --------
    Total deferred tax liabilities ..................................               40,212                3,618               10,809
                                                                                  --------             --------             --------

    Net deferred tax asset ..........................................             $129,182             $164,863             $176,615
                                                                                  ========             ========             ========





                                       16


                            RIDGEWAY BANCSHARES, INC.

                   Notes to Consolidated Financial Statements


NOTE 15 - INCOME TAXES - continued

Deferred tax assets  represent the future tax benefit of deductible  differences
and,  if it is more  likely  than not that a tax asset will not be  realized,  a
valuation  allowance is required to reduce the  recorded  deferred tax assets to
net realizable value.  Management has determined that it is more likely than not
that the entire  deferred tax asset at December  31, 2001 will be realized,  and
accordingly, has not established a valuation allowance.

A reconciliation between the income tax expense for the years ended December 31,
2001,  2000, and 1999 and the amount computed by applying the Federal  statutory
rate of 34% to income before income taxes follows:



                                                                                     2001                2000                1999
                                                                                     ----                ----                ----
                                                                                                                 
Tax expense at statutory rate ..........................................          $ 510,353           $ 477,545           $ 465,628
State income tax, net of Federal income tax effect .....................             33,998              32,601              27,671
Tax exempt interest income .............................................           (156,687)           (155,113)           (154,188)
Disallowed interest expense ............................................             20,398              21,659              18,075
Other, net .............................................................              4,838                (867)              2,614
                                                                                  ---------           ---------           ---------

     Total .............................................................          $ 412,900           $ 375,825           $ 359,800
                                                                                  =========           =========           =========




NOTE 16 - REGULATORY MATTERS

The Company and the Bank 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 material
effect on the Company's financial statements.  Under capital adequacy guidelines
and the regulatory  framework for prompt corrective  action, the Company and the
Bank must meet specific capital guidelines that involve quantitative measures of
the Company's and the Bank's assets, liabilities,  and certain off-balance-sheet
items as calculated under regulatory accounting practices. The Company's and the
Bank's  capital  amounts and  classifications  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  ratios (set forth in the
table  below)  of  Tier 1 and  total  capital  as a  percentage  of  assets  and
off-balance-sheet exposures,  adjusted for risk weights ranging from 0% to 100%.
Tier 1 capital of the  Company  and the Bank  consists  of common  shareholders'
equity, excluding the unrealized gain or loss on securities  available-for-sale,
minus certain  intangible  assets.  Tier 2 capital consists of the allowance for
loan  losses  subject to certain  limitations.  Total  capital  for  purposes of
computing the capital ratios consists of the sum of Tier 1 and Tier 2 capital.

The  Company and the Bank are also  required  to  maintain  capital at a minimum
level  based on average  assets  (as  defined),  which is known as the  leverage
ratio.  Only the strongest  institutions  are allowed to maintain capital at the
minimum requirement. All others are subject to maintaining ratios 1% to 2% above
the minimum.

As  of  the  most   recent   regulatory   examination,   the  Bank  was   deemed
well-capitalized under the regulatory framework for prompt corrective action. To
be categorized well capitalized, the Bank must maintain total risk-based, Tier 1
risk-based,  and Tier 1 leverage  ratios as set forth in the table below.  There
are no  conditions  or events that  management  believes have changed the Bank's
categories.



                                       17


                            RIDGEWAY BANCSHARES, INC.

                   Notes to Consolidated Financial Statements


NOTE 16 - REGULATORY MATTERS - continued

The following  table  summarizes the capital  amounts and ratios of the Bank and
the regulatory minimum requirements at December 31, 2001 and 2000.



                                                                                                                     To Be Well-
                                                                                                                 Capitalized Under
                                                                                           For Capital           Prompt Corrective
                                                                     Actual             Adequacy Purposes        Action Provisions
                                                                     ------             -----------------        -----------------
                                                              Amount         Ratio     Amount        Ratio     Amount        Ratio
                                                              ------         -----     ------        -----     ------        -----
December 31, 2001
                                                                                                            
 Total capital (to risk-weighted assets) ...............       $8,721         20.26%    $3,444         8.00%    $4,305        10.00%
 Tier 1 capital (to risk-weighted assets) ..............        8,304         19.29%     1,722         4.00%     2,583         6.00%
 Tier 1 capital (to average assets) ....................        8,304         10.69%     3,107         4.00%     3,884         5.00%

December 31, 2000
 Total capital (to risk-weighted assets) ...............       $7,879         21.18%    $2,976         8.00%    $3,720        10.00%
 Tier 1 capital (to risk-weighted assets) ..............        7,492         20.14%     1,488         4.00%     2,232         6.00%
 Tier 1 capital (to average assets) ....................        7,492         10.40%     2,881         4.00%     3,602         5.00%



The Federal Reserve Board has similar  requirements for bank holding  companies.
The Company is currently not subject to these  requirements  because the Federal
Reserve  guidelines  contain an exemption for bank holding  companies  with less
than $150,000,000 in consolidated assets.




                                       18


                            RIDGEWAY BANCSHARES, INC.

                   Notes to Consolidated Financial Statements


NOTE 17 - RIDGEWAY BANCSHARES, INC. (PARENT COMPANY ONLY)

Presented below are the condensed financial  statements for Ridgeway Bancshares,
Inc. (Parent Company Only).

                                 Balance Sheets
                           December 31, 2001 and 2000



                                                                                                     2001                    2000
                                                                                                     ----                    ----
Assets
                                                                                                                    
  Cash ...........................................................................               $    5,240               $    3,458
  Investment in banking subsidiary ...............................................                8,682,048                7,827,028
  Other assets ...................................................................                    8,213                    9,996
                                                                                                 ----------               ----------

        Total assets .............................................................               $8,695,501               $7,840,482
                                                                                                 ==========               ==========

Liabilities and Shareholders' equity
  Liabilities ....................................................................               $        -               $        -

  Shareholders' equity ...........................................................                8,695,501                7,840,482
                                                                                                 ----------               ----------

        Total liabilities and shareholders' equity ...............................               $8,695,501               $7,840,482
                                                                                                 ==========               ==========




                            Statements of Operations
             For the years ended December 31, 2001, 2000, and 1999



                                                                                      2001              2000                 1999
                                                                                      ----              ----                 ----
Income
                                                                                                              
  Dividends from banking subsidiary ...................................         $   320,000         $   310,000        $          -

Expenses
  Other expenses ......................................................                   -                   -              26,542
                                                                                -----------         -----------        ------------

Income (loss) before income taxes and equity in
  undistributed earnings of banking subsidiary  .......................             320,000             310,000             (26,542)

  Income tax benefit ..................................................                   -                 175               9,821

  Equity in undistributed earnings of banking subsidiary ..............             768,139             718,543           1,026,415
                                                                                -----------         -----------        ------------

Net income ............................................................         $ 1,088,139         $ 1,028,718         $ 1,009,694
                                                                                ===========         ===========         ===========






                                       19


                            RIDGEWAY BANCSHARES, INC.

                   Notes to Consolidated Financial Statements


NOTE 17 - RIDGEWAY BANCSHARES, INC. (PARENT COMPANY ONLY) - continued

                           Statements of Cash Flows
             For the Years Ended December 31, 2001, 2000, and 1999



                                                                                      2001              2000               1999
                                                                                      ----              ----               ----
Cash flows from operating activities:
                                                                                                               
  Net income ...........................................................        $ 1,088,139         $ 1,028,718         $ 1,009,694
  Adjustments to reconcile net income to net cash provided
   by operating activities:
    Equity in undistributed earnings of banking subsidiary .............           (768,139)           (718,543)         (1,026,415)
    Decrease (increase) in other assets ................................              1,782                (175)             (9,821)
    (Decrease) increase in other liabilities ...........................                  -             (26,542)             26,542
                                                                                -----------         -----------         -----------
      Net cash provided by operating activities ........................            321,782             283,458                   -
                                                                                -----------         -----------         -----------

Cash flows from financing activities:
  Cash dividends paid ..................................................           (320,000)           (280,000)                  -
                                                                                -----------         -----------         -----------
    Net cash used by financing activities ..............................           (320,000)           (280,000)                  -
                                                                                -----------         -----------         -----------

Increase in cash .......................................................              1,782               3,458                   -

Cash, beginning ........................................................              3,458                   -                   -
                                                                                -----------         -----------         -----------

Cash, ending ...........................................................        $     5,240         $     3,458         $          -
                                                                                ===========         ===========         ===========






                                       20


                            RIDGEWAY BANCSHARES, INC
                      Condensed Consolidated Balance Sheet



          (Dolllars in thousands)                                                                         UNAUDITED
                                                                                                          June 30,      December 31,
          ASSETS                                                                                            2002           2001
                                                                                                            ----           ----

Cash and due from other financial institutions:
                                                                                                                     
     Non-interest bearing ........................................................................        $  3,085         $  3,494
     Federal funds sold ..........................................................................           6,541            5,334
                                                                                                          --------         --------
          Total cash and cash equivalents ........................................................           9,626            8,828
Interest bearing deposits in other banks .........................................................             148              148
Investment securities:
     Securities held to maturity .................................................................          15,891           19,352
     Securities available for sale ...............................................................           8,236            8,709

Loans ............................................................................................          43,883           40,818
     Less, allowance for loan losses .............................................................            (441)            (417)
                                                                                                          --------         --------
          Net loans ..............................................................................          43,442           40,401
                                                                                                          --------         --------

Premises and equipment ...........................................................................             710              737
Other intangible assets ..........................................................................             291              312
Other assets .....................................................................................             996              853
                                                                                                          --------         --------

          Total assets ...........................................................................        $ 79,340         $ 79,340
                                                                                                          ========         ========

          LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits:
     Non-interest bearing ........................................................................        $ 10,309         $ 10,267
     Interest bearing ............................................................................          56,224           57,095
                                                                                                          --------         --------
          Total deposits .........................................................................          66,533           67,362
Federal funds purchased and securities
     sold under agreements to repurchase .........................................................           3,600            3,134
Other liabilities ................................................................................           3,749              156
                                                                                                          --------         --------
          Total liabilities ......................................................................          73,882           70,652
                                                                                                          --------         --------

Shareholders' equity:
     Common stock
          $5 par, authorized shares, issued and outstanding 40,000 in 2002 and 2001 ..............             200              200
     Surplus .....................................................................................           2,000            2,000
     Retained earnings ...........................................................................           3,166            6,416
     Accumulated other comprehensive income ......................................................              92               72
                                                                                                          --------         --------
          Total shareholders' equity .............................................................           5,458            8,688
                                                                                                          --------         --------

          Total liabilities and shareholders' equity .............................................        $ 79,340         $ 79,340
                                                                                                          ========         ========


                                       21


                           RIDGEWAY BANCSHARES, INC.
                   Condensed Consolidated Statements of Income
                                  (Unaudited)


                                                                              Six Months Ended                Three Months Ended
                                                                                  June 30,                          June 30,
                                                                            2002            2001            2002              2001
                                                                            ----            ----            ----              ----
Interest income:
                                                                                                                 
  Loans, including fees ........................................          $ 1,636          $ 1,872          $   820          $   947
  Debt securities: .............................................              625              659              290              343
  Federal funds sold and securites .............................               70              148               45               64
   purchased under agreements to resell
  Time deposits with other banks ...............................                4                4                2                2
                                                                          -------          -------          -------          -------
       Total ...................................................            2,335            2,683            1,156            1,356
                                                                          -------          -------          -------          -------

Interest expense:
  Deposit accounts .............................................              647            1,114              308              548
  Federal funds purchased and securities sold ..................               14               55                7               34
                                                                          -------          -------          -------          -------
   under agreement to repurchase
       Total ...................................................              661            1,169              315              572
                                                                          -------          -------          -------          -------

Net interest income ............................................            1,674            1,514              841              784

Provision for loan losses ......................................               72               36               51               18
                                                                          -------          -------          -------          -------

Net interest income after provision for loan losses.............            1,602            1,478              790              766
                                                                          -------          -------          -------          -------

Other operating income:
  Service charges on deposit accounts ..........................              291              285              153              148
  Other ........................................................               67               79               24               29
                                                                          -------          -------          -------          -------
       Total ...................................................              358              364              177              177
                                                                          -------          -------          -------          -------

Other operating expenses:
  Salaries and employee benefits ...............................              635              600              326              304
  Net occupancy and equipment expense ..........................               96              108               47               53
    Amortization of intangible assets ..........................               21               21               10               10
  Other ........................................................              603              389              320              202
                                                                          -------          -------          -------          -------
       Total ...................................................            1,355            1,118              703              569
                                                                          -------          -------          -------          -------

Income before income taxes .....................................              605              724              264              374

Income tax expense .............................................              195              203               90              104
                                                                          -------          -------          -------          -------

Net income .....................................................          $   410          $   521          $   174          $   270
                                                                          =======          =======          =======          =======

Earnings per share
   Weighted average common shares outstanding ..................           40,000           40,000           40,000           40,000
   Net income ..................................................          $ 10.25          $ 13.03          $  4.35          $  6.75





                            RIDGEWAY BANCSHARES, INC
                Condensed Consolidated Statements of Cash Flows
                                  (Unaudiated)



                                                                                                         Six Months Ended June 30,
 (Dollars in thousands)                                                                                   2002               2001
                                                                                                          ----               ----
Cash flows from operating activities:
                                                                                                                    
  Net income ...............................................................................          $     410           $     521
  Adjustments to reconcile net income to net cash (used) provided by
   operating activities:
   Depreciation and amortization ...........................................................                 57                  65
   Provision for loan losses ...............................................................                 72                  36
   Premium amortization less accretion .....................................................                  9                 (10)
  Changes in operating assets and liabilities: .............................................               (143)                  6
   Increase (decrease) in other liabilities ................................................              3,593                  86
                                                                                                      ---------           ---------
      Net cash (used) provided by operating activities .....................................              3,998                 704
                                                                                                      ---------           ---------

Cash flows from investing activities:
  Proceeds from maturities of securities available-for-sale ................................              4,000               5,500
  Purchases of securities available-for-sale ...............................................             (3,507)             (6,978)
  Proceeds from maturities of securities held-to-maturity ..................................              3,577               1,826
  Purchases of securities held-to-maturity .................................................               (125)             (1,104)
  Net increase in loans to customers .......................................................             (3,113)               (770)
  Net increase in time deposits with other banks ...........................................                  -                 (11)
  Purchases of premises and equipment ......................................................                 (9)                (47)
                                                                                                      ---------           ---------
    Net cash (used) provided by investing activities .......................................                823              (1,584)
                                                                                                      ---------           ---------

Cash flows from financing activities:
  Net increase (decrease) in demand and time deposits ......................................               (829)                617
  Net increase (decrease) in federal funds purchased and securities sold ...................                466                 514
   under repurchase agreements
  Cash dividends paid ......................................................................             (3,660)               (160)
                                                                                                      ---------           ---------
   Net cash provided by financing activities ...............................................             (4,023)                971
                                                                                                      ---------           ---------

Net increase in cash and cash equivalents ..................................................                798                  91

Cash and cash equivalents, beginning of period .............................................              8,828               8,942
                                                                                                      ---------           ---------

Cash and cash equivalents, end of period ...................................................          $   9,626           $   9,033
                                                                                                      =========           =========

 




(b)  Pro forma financial information.

     The following pro forma financial information is included with this filing.

                PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
                                   (Unaudited)

            The following  unaudited pro forma combined  condensed balance sheet
as of June 30, 2002 and  unaudited pro forma  combined  statements of income for
the six months ended June 30, 2002 and the year ended  December 31, 2001 combine
the  historical  financial  statements  of  Community  Bankshares  and  Ridgeway
Bancshares.  The pro forma  combined  condensed  statements  give  effect to the
merger  of  Ridgeway  Bancshares  into  Community  Bankshares  as if the  merger
occurred  on June 30, 2002 with  respect to the balance  sheet and on January 1,
2002 or January 1, 2001, respectively,  with respect to the statements of income
for the six months  ended June 30, 2002 and the year ended  December  31,  2001,
respectively.  The pro forma combined  condensed  statements  give effect to the
proposed merger under the purchase method of accounting.

            The  purchase  method of  accounting  requires  that all of Ridgeway
Bancshares  assets and  liabilities  be adjusted to their  estimated fair market
values as of the date of  acquisition.  For  purposes of the pro forma  combined
condensed statements,  fair market value of June 30, 2002 assets and liabilities
has  been  estimated  by  management  of  Community   Bankshares   using  market
information  on  July  30,  2002.   Accordingly,   these  adjustments  are  only
approximations.

            The pro forma combined condensed statements also contain adjustments
based on assumed interest rates and estimates by Community Bankshares management
regarding  changes in revenues and expenses  that  management  believes  will be
achieved after consummation of the merger. Of course,  there can be no assurance
that such changes will be of the magnitude  estimated or that they will occur at
all.

            The pro forma  financial  statements are provided for  informational
purposes.  The  pro  forma  combined  condensed  statements  of  income  are not
necessarily  indicative of actual  results that would have been achieved had the
merger been  consummated at the beginning of the periods  presented,  and is not
indicative of future results.




              UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
                                  June 30, 2002
                             (Dollars in thousands)



                                                                                                                           Community
                                                                                                                          Bankshares
                                                                   Community         Ridgeway                              Pro Forma
                                                                   Bankshares       Bancshares           Adjustments       Combined
                                                                   ----------       ----------           -----------       --------
ASSETS
                                                                                                                
      Cash and federal funds .............................        $ 23,482           $  9,774           $ (4,150)(1)        $ 29,106
      Investments ........................................          40,950             24,051                676(2)           65,677
      Loans, net of allowance ............................         251,993             43,442                636(2)          296,071
      Premises and equipment .............................           5,461                710                311(2)            6,482
      Goodwill ...........................................             921                                 3,061(3)           3,982
      Core deposit intangible ............................                                                 3,698(4)           3,698
      Other assets .......................................           3,076              1,271               (454)              3,893
                                                                  --------           --------           --------            --------

            Total assets .................................        $325,883           $ 79,248           $  3,778            $408,909
                                                                  ========           ========           ========            ========

LIABILITIES AND EQUITY
      Deposits ...........................................        $260,808           $ 66,534           $    163(2)         $327,505
      Short-term borrowings ..............................          13,246              3,600                                 16,846
      Long-term borrowings ...............................          20,280                  -                                 20,280
      Other liabilities ..................................           2,081              3,749             (2,890)(1)           2,940
      Shareholder equity .................................          29,468              5,365              6,505(5)           41,338
                                                                  --------           --------           --------            --------

            Total liabilities and equity .................        $325,883           $ 79,248           $  3,778            $408,909
                                                                  ========           ========           ========            ========


(1)  To record  payment of $4 million to Ridgeway  shareholders  and $150,000 in
     estimated direct costs associated with purchase.
(2)  To record estimated market value adjustment.
(3)  To record goodwill resulting from purchase.
(4)  To record estimated core deposit intangible.
(5)  To record issuance of $12.52 million in Community  Bankshares  common stock
     and elimination of $5.365 million in Ridgeway Bancshares equity.




           UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
                         Six Months Ended June 30, 2002
                             (Dollars in thousands)



                                                                                                                          Community
                                                                                                                          Bankshares
                                                             Community         Ridgeway                                   Pro Forma
                                                             Bankshares       Bancshares           Adjustments            Combined
                                                             ----------       ----------           -----------            --------

                                                                                                               
Interest income .................................           $  9,764            $  2,335            $    (30)(1)           $ 12,069
Interest expense ................................             (3,870)               (661)                                    (4,531)
                                                            --------            --------            --------               --------
      Net interest income .......................              5,894               1,674                 (30)(1)              7,538
Provision for loan losses .......................               (358)                (72)               (430)
Other income ....................................              3,437                 358                 150 (2)              3,945
Other expenses ..................................             (5,323)             (1,355)                 (3)(3)             (6,681)
                                                            --------            --------            --------               --------
      Income before taxes .......................              3,650                 605                 117                  4,372
Income taxes ....................................             (1,314)               (195)                (40)(4)             (1,549)
                                                            --------            --------            --------               --------

      Net income ................................           $  2,336            $    410            $     77               $  2,823
                                                            ========            ========            ========               ========


(1)  To record  opportunity  cost of $4,000,000 in cash  disbursed at an assumed
     federal funds rate of 1.5%.
(2)  To record estimated income from introduction of new products.
(3)  To  record  estimated   reduction  in  operating  expenses   subsequent  to
     consummation of the merger and amortization of core deposit intangible.
(4)  To record estimated tax effect of projected income increase.


           UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
                          Year Ended December 31, 2001
                             (Dollars in thousands)



                                                                                                                          Community
                                                                                                                          Bankshares
                                                             Community         Ridgeway                                   Pro Forma
                                                             Bankshares       Bancshares           Adjustments            Combined
                                                             ----------       ----------           -----------            --------

                                                                                                               
Interest income .................................           $ 21,201            $  5,229            $    (60)(1)           $ 26,370
Interest expense ................................            (10,261)             (2,113)                  -                (12,374)
                                                            --------            --------            --------               --------
      Net interest income .......................             10,940               3,116                 (60)                13,996
Provision for loan losses .......................               (650)                (80)                  -                   (730)
Other income ....................................              3,584                 743                 300 (2)              4,627
Other expenses ..................................             (7,810)             (2,279)                 (6)(3)            (10,095)
                                                            --------            --------            --------               --------
      Income before taxes .......................              6,064               1,500                 234                  7,798
Income taxes ....................................             (2,156)               (413)                (80)(4)             (2,649)
                                                            --------            --------            --------               --------

      Net income ................................           $  3,908            $  1,087            $    154               $  5,149
                                                            ========            ========            ========               ========


(1)  To record  opportunity  cost of $4,000,000 in cash  disbursed at an assumed
     federal funds rate of 1.5%.
(2)  To record estimated income from introduction of new products.
(3)  To  record  estimated   reduction  in  operating  expenses   subsequent  to
     consummation of the merger and amortization of core deposit intangible.
(4)  To record estimated tax effect of projected income increase.




(c)  Exhibits:

     Exhibit No.
     from Item
     601 of Reg. S-K     Description
     ---------------     -----------

          2             Agreement   and  Plan  of   Merger   between   Community
                        Bankshares,   Inc.   and   Ridgeway   Bancshares,   Inc.
                        (incorporated  by reference to Exhibit 2 to Registration
                        Statement on Form S-4, File No. 333-81900)

          23            Consent of Tourville, Simpson & Caskey, L.L.P.

                                       21





                                   SIGNATURES

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

                                           COMMUNITY BANKSHARES, INC.
                                           -------------------------------------
                                                   (Registrant)


                                                William W. Traynham
Date: September 16, 2002                    By:---------------------------------
                                                William W. Traynham
                                                President
















                                       22




                                  EXHIBIT INDEX

     Exhibit No.
     from Item
     601 of Reg. S-K     Description
     ---------------     -----------

         2              Agreement   and  Plan   of  Merger   between   Community
                        Bankshares,   Inc.   and   Ridgeway   Bancshares,   Inc.
                        (incorporated  by reference to Exhibit 2 to Registration
                        Statement on Form S-4, File No. 333-81900)

         23             Consent of Tourville, Simpson & Caskey, L.L.P.





















                                       23