Community Bankshares Inc. announced Tuesday consolidated net income of $2,572,000, or 57 cents per diluted share, for the year that ended Dec. 31, 2007, compared to $5,009,000, or $1.11 per diluted share, for the year that ended Dec. 31, 2006.

For the three months that ended Dec. 31, 2007, the company had a net loss of $775,000, or 17 cents per diluted share, compared to net income of $1,234,000, or 27 cents per diluted share, for the same period in 2006.

Consolidated assets for Community Bankshares totaled $577.3 million at Dec. 31, 2007, compared to $578.5 million at Dec. 31, 2006, a decrease of $1.2 million or .2 percent. For the same dates, gross loans totaled $464 million compared to $409.7 million, an increase of $54.3 million or 13.3 percent. Deposits totaled $482.4 million compared to $483.6 million, a decrease of $1.2 million or .3 percent, for the same dates.

The company also announced Tuesday that it will pay a dividend in March.

"After reviewing our 2008 capital plan which shows we will remain well-capitalized, and despite the fact that economic conditions and interest rates suggest 2008 may not be much improved over 2007, the board has decided to approve a first quarter 2008 dividend of 12 cents per share. It will be paid on March 31, 2008, to shareholders of record on March 14," said Samuel L. Erwin, Community Bankshares Inc.'s CEO.

Erwin said, "When 2007 started, we were optimistic about the year and our earnings prospects. As economic conditions declined during the year, it became apparent that our optimism was premature.

"Asset quality for our bank had been improving since the middle of 2006, but we needed a healthy economy to continue that improvement. The last six months of 2007 have been extremely challenging, especially on three fronts: continuing asset quality issues, deterioration in the real estate markets and declining interest rate margins. As a result of these factors, we reported net income of $2.5 million for the year, down from $5 million the prior year."

"During the fourth quarter of 2007, we made a number of key decisions in preparation for 2008, which most observers expect will be a difficult year for our industry. These decisions were focused on reducing risk and improving efficiency.

"First, we decided to sell some of our problem and potential problem assets. This $4.9 million loan sale resulted in a $1 million charge to earnings and eliminated the need to invest further management attention to the loans and eliminating the need to adjust the loans to market value. Second, we recognized an additional $1.6 million in loan loss provision to address charge-offs in our Florence and Sumter markets. Third, to ensure that asset quality improvement continues, we decided to add several positions to our bank's credit department, a risk review manager and two underwriters. Their mission will be to oversee an ongoing objective assessment of risks within our loans both before and after they are made.

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"Finally, we announced recently the restructuring of our mortgage division. The national and regional problems in the real estate market resulted in a decline in our mortgage brokerage income of $1 million in 2007. In addition, we took a one-time charge of $500,000 in the third quarter to account for losses in certain mortgage loans originated and sold through our wholesale department in 2006. After careful review, we decided to exit the wholesale brokerage business. We believe this change will enable us to focus entirely on retail mortgage lending, improve our bank's overall risk profile and reduce noninterest expense in our mortgage division by about $1 million."

"On the balance sheet, we were pleased with loan growth of $54 million or 13 percent in 2007. This growth was due mostly to strong loan growth in our Midlands region. Orangeburg also recorded very solid growth in 2007. The growth in our loan portfolio was funded with decreases in our investments, because deposits were basically unchanged during the year. With a new branch just opening on Clemson Road in Columbia, and the continued success of our remote deposit capture product, we anticipate better deposit growth in 2008."

Community Bankshares, Inc.'s common stock is traded on the American Stock Exchange under the ticker symbol SCB. Community Bankshares, Inc., based in Orangeburg, is the holding company for Community Resource Bank N.A. For more information, visit www.communitybanksharesinc.com.

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