Item 2.06 Material Impairments.

On September 10, 2008, American Community Bancshares, Inc. (the "Company") concluded that it will record other-than-temporary impairment and take a non-cash charge to earnings for its investments in perpetual preferred securities issued by the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac"). This conclusion was made in connection with the action taken by the United States Treasury Department and the Federal Housing Finance Agency with respect to Fannie Mae and Freddie Mac. The Company's perpetual preferred investments in Fannie Mae and Freddie Mac are included in securities available for sale at a cost of $1.4 million and $1.5 million, respectively. These securities currently trade at five to ten percent of par value. The Company does not hold any common or any other equity securities issued by Fannie Mae or Freddie Mac. As of the market close on September 10, 2008, the total market value of these securities was $284,000 and the resulting unrealized loss, on a pre-tax basis, to the Company on these securities was $2.6 million. The market value of these securities is likely to fluctuate between now and September 30, 2008 and, as a result, the amount of the charge to earnings as of September 30 may be different than the unrealized loss as of the date of this Current Report.

The loss will not affect the Company's "well-capitalized" status for all regulatory capital ratios and will not reduce the Company's quarterly dividend payment.

This Current Report on Form 8-K (including information included or incorporated by reference herein) may contain, among other things, certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, (i) statements regarding certain of Registrant's goals and expectations with respect to earnings, income per share, revenue, expenses and the growth rate in such items, as well as other measures of economic performance, including statements relating to estimates of credit quality trends, and (ii) statements preceded by, followed by or that include the words "may," "could," "should," "would," "believe," "anticipate," "estimate," "expect," "intend," "plan," "projects," "outlook" or similar expressions. These statements are based upon the current belief and expectations of Registrant's management and are subject to significant risks and uncertainties that are subject to change based on various factors (many of which are beyond Registrant's control).

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