COMMUNITY BANCSHARES, INC.
To the Shareholders of
Community Bancshares, Inc.:
In connection with the Annual Meeting of Shareholders of Community Bancshares,
Inc. (the "Company") to be held at 10:00 A.M., local time, on Thursday, March
28, 1996, we enclose a Notice of Meeting and Proxy Statement containing
information concerning those matters which are to be considered at the meeting.
You are cordially invited to attend the Annual Meeting in person. We will
appreciate your signing and returning the form of proxy in the enclosed
postage-prepaid envelope so that your shares can be voted in the event you are
unable to attend the meeting. Your proxy will, of course, be returned to you if
you are present at the meeting and so request.
We are enthusiastic about the future and appreciate your continued
support. We look forward to seeing you on March 28.
Sincerely yours,
Kennon R. Patterson, Sr.
Chairman and President
Please fill in, date, sign and mail promptly the accompanying Proxy in the
return envelope furnished for that purpose, whether or not you plan to attend
the meeting.
1 <PAGE>
COMMUNITY BANCSHARES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
____________________________
The Annual Meeting of the shareholders of Community Bancshares, Inc. (the
"Company"), will be held at The Heritage Club, 111 Washington Street NE,
Huntsville, Alabama, on Thursday, March 28, 1996 at 10:00 A.M., local time,
for the following purposes:
1. To amend the corporation's by-laws to provide for three classes of
directors to serve three year staggered terms after an initial transition
period;
2. To elect Kennon R. Patterson Sr., Denny Kelly, R.C. Corr, Jr., Bishop K.
Walker, Jr.,Hodge Patterson, III, C.K. Copeland, Glynn Debter, Loy
McGruder, Jon M. Owings, Merritt Robbins, Robert O. Summerford, and
Wayne Washam to serve as directors of the Company for terms in
accordance with the Amended Articles of Incorporation if Proposal 1 is
adopted and, if the proposal is not adopted, for a one year term until
their successors are elected and qualified;
3. To approve the appointment of Dudley, Hopton-Jones, Sims & Freeman,
PLLP,to serve as independent auditors for the year ending December 31,1996;
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Shareholders of record at the close of business on February 1, 1996, are
entitled to notice of and to vote at the meeting.
The enclosed Proxy Statement explains the proposals. We urge you to read these
materials carefully.
You are cordially invited to attend the meeting. WHETHER OR NOT YOU PLAN TO
ATTEND THE MEETING IN PERSON, YOU ARE REQUESTED TO COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
If you need assistance in completing your proxy, please call the Company at
telephone number (205) 429-1000.
THE CORPORATION'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
APPROVAL OF ALL THE PROPOSALS PRESENTED.
By Order of the Board of Directors
Bishop K. Walker, Jr.
Secretary
Blountsville, Alabama
March 8, 1996
2 <PAGE>
COMMUNITY BANCSHARES, INC.
Proxy Statement for the Annual Meeting
of Shareholders to be Held March 28, 1996
_____________________________________
INTRODUCTION
This Proxy Statement is furnished to shareholders of Community Bancshares,
Inc., a Delaware corporation (the "Company"), in connection with the
solicitation of proxies by the Board of Directors of the Company for use at
the Annual Meeting of Shareholders to be held March 28, 1996, and at any
adjournments thereof (the "Meeting"), for the purposes of (i) establishing a
classified board of directors to serve three year terms after an initial
transition term of one year for Class I directors and two years for Class II
directors, (ii) electing twelve directors of the Company, (iii) approving the
appointment of independent auditors, and (iv) transacting such other business as
may properly come before the Meeting.
The executive offices of the Company are located at Highway 231 South,
P.O. Box 1000, Blountsville, Alabama 35031. This Proxy Statement was mailed to
shareholders of the Company on or about March 8, 1996.
Shareholders Entitled to Vote
Each holder of record of the Company's current $.10 par value common stock
(herein sometimes referred to as "Shares") as of the close of business on
February 1, 1996, will be entitled to vote at the Meeting. Each shareholder
will be entitled to one vote on each proposal for each Company Share held as
of such date. At the close of business on that date, there were 1,821,935
Shares issued and outstanding, and these were held by approximately 1,199
persons.Notwithstanding the record date specified above, the Company's stock
transfer books will not be closed and Shares may be transferred subsequent to
the record date, although all votes must be cast in the names of shareholders
of record as of the record date.
Votes Required
All matters which may be considered and acted upon by the shareholders at
the Meeting require approval by the affirmative vote of at least a majority
of the valid votes cast except for the proposal to establish a classified board
of directors which requires approval by the affirmative vote of a majority
of shares of stock eligible to vote at the meeting.
Proxies
If the enclosed form of proxy is executed and returned, it may nevertheless be
revoked at any time before it has been exercised; but it if is not revoked,
the Shares represented thereby will be voted by the persons designated in
such proxy. Shares represented by the proxies received will be voted in
favor of (i) the establishment of a classified board of directors to serve
three year terms after an initial transition term of one year for Class I
directors and two years for Class II directors, (ii) the election of all
nominees for directors, (iii) approval of the appointment of Dudley,
Hopton-Jones, Sims & Freeman, PLLP, as independent auditors of the Company
for the year ending December 31, 1996, and (iv) in the best judgment of such
proxies as to any other matters which may come before the Meeting.
3 <PAGE>
PROPOSAL TO AMEND THE CORPORATE BY-LAWS TO PROVIDE FOR
A CLASSIFIED BOARD OF DIRECTORS (ARTICLE II AND ARTICLE III)
The Company's Board has unanimously approved and recommended that the
stockholders of the Company approve an amendment to the By-Laws to provide
for the classification of the Board of Directors into three classes of directors
with staggered terms of office.
The Company's By-Laws now provide that all directors are to be elected
annually for a term of one year. Delaware law permits provisions in a
certificate of incorporation or the by-laws approved by stockholders that
provide for a classified board of directors. The proposed classified board
amendment to the By-Laws described in Exhibit A to the Proxy Statement
would provide that directors will be classified into three classes as nearly
equal in number as possible. One class would hold office initially for a
term expiring at the 1997 Annual Meeting;another class would hold office
initially for a term expiring at the 1998 Annual Meeting; and another class
would hold office initially for a term expiring at the 1999 Annual Meeting.
At each Annual Meeting following this initial classification and election, the
successors to the class of directors whose terms expire at that meeting would
be elected for a term of office to expire at the third succeeding Annual
Meeting after their election and until their successors have been duly elected
and qualified.
If the proposal is approved by the shareholders,the Board of Directors
will, for purposes of initial implementation, designate three classes of
directors. Class I, consisting of Dr. Jon M. Owings, C.K. Copeland, Bobby
Summerford and Hodge Patterson, III, will be elected initially for a
one-year term expiring at the next Annual Meeting of Shareholders; Class II,
consisting of Bishop K. Walker, Jr., Glynn Debter, R. C. Corr, Jr., and Loy
McGruder, will be elected initially for a two-year term expiring at the 1998
Annual Meeting of Shareholders; and Class III, consisting of Kennon R.
Patterson, Sr., Denny Kelly, Wayne Washam, and Merritt Robbins, will be
elected for a three-year term expiring at the 1999 Annual Meeting of
Shareholders; and, in each case, until their successors are duly elected and
qualified. Information concerning the current nominees for election as
directors at the Annual Meeting is set forth below under "Election of
Directors." Commencing with the Annual Meeting of Shareholders scheduled
to occur in March 1996, directors elected to each class would serve for a
three-year term and until their successors are duly elected and qualified.
If the proposal to adopt a classified board is not approved and implemented,
all of the Directors elected at the Annual meeting will serve for a one-year
term.
The proposed classified board amendment will significantly extend the time
required to effect a change in control of the Board of Directors and may
discourage hostile takeover bids for the Company. Currently, a change in
control of the Board of Directors can be made by stockholders holding a
plurality of the votes cast at a single Annual Meeting. If the Company
implements a classified board of directors, it will take at least two
Annual Meetings for even a majority of stockholders to make a change in
control of the Board of Directors, because only a minority of the directors will
be elected at each meeting.
4 <PAGE>
Under Delaware law, directors chosen to fill vacancies on a classified
board shall hold office until the next election of the Class for which such
directors shall have been chosen, and until their successors are elected
and qualified. Delaware law also provides that, unless the certificate of
incorporation provides otherwise, directors serving on a classified board
of directors may be removed only for cause. The Company's Certificate of
Incorporation does not provide otherwise. Accordingly, if the classified
board proposal is approved by the stockholders, conforming By-Law
provisions, substantially in the form attached as Exhibit A to this
Proxy Statement, will be implemented. Presently, all directors of the
Company are elected annually and all of the directors may be removed, with or
without cause, by a majority vote of the outstanding shares of the
Common Stock. Cumulative voting is not authorized by the Certificate of
Incorporation.
Advantages. The classified board proposal is designed to assure continuity
and stability in the Board of Directors' leadership and policies. While
management has not experienced any problems with such continuity in the past,
it wishes to ensure that this experience will continue. The Board of
Directors also believes that the classified board proposal will assist the
Board of Directors in protecting the interests of the Company's stockholders in
the event of an unsolicited offer for the Company.
Disadvantages. Because of the additional time required to change control of
the Board of directors, the classified board proposal will tend to
perpetuate present management. Without the ability to obtain immediate control
of the Board of Directors, a takeover bidder will not be able to take
action to remove other impediments to its acquisition of the Company. While
the proposal is not intended as a takeover-resistive measure in response to
a specific threat, it may discourage the acquisition of large blocks of the
Company's shares by causing it to take longer for a person or group of
persons who acquire such a block of shares to effect a change in management.
The classified board proposal will also make it more difficult for the
stockholders to change the composition of the Board of Directors even if the
stockholders believe such a change would be desirable.
Required Vote
In order to be adopted, this proposal must receive the affirmative
vote of holders holding a majority of the shares of stock eligible to vote at
the meeting.
The Board of Directors recommends a vote FOR the Proposal To Amend the
Corporate By-Laws to Provide for a Classified Board of Directors (Article II
and Article III).
5 <PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of February 1, 1996, certain information
with respect to all those known by the Company to be beneficial owners of
more than 5% of the Company's outstanding common stock, all Company
directors, all nominees for directors, and all directors, nominees for
directors and officers of the Company as a group.
Number of
Shares of
Common Stock Percent of
Beneficially Outstanding
Name and Address Owned (1) Common Stock
R. C. Corr, Jr. 136,143(2) 7.47%
Oneonta, AL
Denny Kelly 26,504(3) 1.45%
Oneonta, AL
Hodge Patterson, III 23,284(4) 1.28%
Pulaski, TN
Kennon R. Patterson, Sr. 202,589(5) 11.12%
Blountsville, AL
Bishop K. Walker, Jr. 118,388(6) 6.50%
Arab, AL
C. K. Copeland 9,000 0.49%
Trafford, AL
Glynn Debter 2,050 0.11%
Horton, AL
Loy McGruder 8,797 (7) 0.48%
Blountsville, AL
Jon M.Owings 15,250 0.84%
Pulaski, TN
Merritt Robbins 70,232 (8) 3.85%
New Hope, AL
Robert O. Summerford 25,000 (9) 1.37%
Falkville, AL
Wayne Washam 1,000 0.05%
Arab, AL
6 <PAGE>
Compass Bank as Trustee of 191,025(10) 10.48%
the Community Bancshares,
Inc. Employee Stock Ownership
Plan ("ESOP")
All Company directors, nominees 641,348 35.20%
for directors, and officers as
a group
(13 persons)
_________________________
(1) The Company, in the event of sale, has a right of first refusal with
respect to (i) substantially all Shares held by Company directors,
executive officers and principal shareholders, (ii) substantially all
Shares held by directors, advisory directors, and executive officers of
subsidiaries of the Company, and (iii) all Shares distributed to ESOP
participants.
(2) Includes 60,000 Shares held by Oneonta Telephone Co., Inc., of which
Mr. Corr is Chairman, President and a controlling shareholder.
(3) Includes shares held by Community Investments, a general partnership of
which Mr. Kelly is a partner. Also includes 4,881 shares allocated to
Mr.Kelly's ESOP account through December 31, 1994.
(4) Includes shares held by Community Investments, a general partnership of
which Mr. Patterson is a partner. Also includes 3,314 shares allocated to
Mr. Patterson's ESOP account through December 31, 1994.
(5) Includes shares held by Community Investments, a general partnership of
which Mr.Patterson is a partner. Also includes 13,767 shares allocated
to Mr. Patterson's ESOP account through December 31, 1994.
(6) Includes shares held by Community Investments, a general partnership of
which Mr. Walker is a partner. Also includes 4,244 shares allocated
to Mr. Walker's ESOP account through December 31, 1994.
(7) Includes 2,797 shares allocated to Mr. McGruder's ESOP account through
December 31,1994.
(8) Includes 20,000 shares held by Piggly Wiggly of New Hope, Inc. of which
Mr. Robbins is Chairman, President and a controlling shareholder.
(9) Includes 17,000 shares held by Summerford Nursing Home and 3,000
shares held by Summerford Drugs of which Mr. Summerford is Chairman,
President and a controlling shareholder.
7 <PAGE>
ELECTION OF DIRECTORS
Management proposes to nominate Kennon R. Patterson, Sr., Denny Kelly,
R. C. Corr, Jr., Bishop K. Walker, Jr., Hodge Patterson, III, C. K.
Copeland, Glynn Debter, Loy McGruder, Jon M. Owings, Merritt Robbins, Robert
O. Summerford and Wayne Washam for election as directors to hold office
until expiration and until their successors shall have been elected and
qualified. It is intended that the persons named in the proxy will vote for the
election of these person. Management believes that all of the nominees will
be available and able to serve as directors, but if for any reason any of
these persons should not be available or able to serve, the proxies may
exercise discretionary authority to vote for substitutes proposed by the
Company's Board of Directors. Kennon R. Patterson, Sr., Denny Kelly, R. C.
Corr, Jr., Bishop K. Walker, Jr., and Hodge Patterson, III were elected by the
shareholders at the last Annual Meeting. Nominees Kennon R. Patterson,
Sr. and Hodge Patterson, III are brothers.
The directors and nominees for directors and the executive officers of the
Company, their ages, length of tenure as directors and as officers, positions
held in the Company and its Subsidiaries and their principal occupation or
employment during the last five years are as follows:
Director
Name, Age and Position Held in of Company Principal Experience
the Company and Its Subsidiaries Since During Past Five Years (1)
Kennon R. Patterson, Sr. (53) 1983 Chairman,Chief Executive Officer and
Chairman, President,and Chief Executive President of the Company since 1983;
Officer of the Company; Chairman and Chief Executive Officer and President
Chief Executive Officer of Community Community Bank(Alabama) since 1983;
Bank (Alabama); Chairman of Community Chairman of Community Bank (Alabama)
Bank (Tennessee); Director of Community since 1984; Chairman of Community Bank
Appraisals, Inc.; Director of Community (Tennessee) since 1993.
Insurance Corp.; Director of 1st Community
Credit Corporation
Denny Kelly (56) 1986 Director of Community Bank (Alabama)
Director of the Company, Director, since 1985:President of Community
Vice Chairman and President of Community Bank (Alabama) since 1993; Executive
Bank (Alabama),Director of 1st Community Vice President ofCommunity Bank
Credit Corporation (Alabama) 1985 -1993.
R.C. Corr, Jr. (70) 1988 Chairman and President of Oneonta
Director of the Company; Director of Telephone Co.;Director of the Company
Community Bank (Alabama) since 1988;Director of Community Bank
(Alabama) since 1988.
8 <PAGE>
Bishop K. Walker, Jr. (64) 1983 Director of the Company since 1983;
Director, Vice Chairman and Secretary Director of Community Bank(Alabama)
and General Counsel of the Company: since 1984;Senior Vice President and
Director, Secretary of Community Bank General Counsel of Community Bank,
(Alabama);Director and President of (Alabama) 1987 - 1993; President
Community Insurance Corp.;Director and and Director of Community Insurance
Secretary of Community Appraisals, Inc.; Corp. since 1987.
Director of 1st Community Credit
Corporation
Hodge Patterson, III (40) 1993 Director of the Company since 1993;
Director of the Company; Director, Vice Sr.Vice President of Community Bank
Chairman, Chief Executive Officer and (Alabama) 1988-1993; Vice-Chairman,
President of Community Bank (Tennessee); Chief Executive Officer and President
Director and Executive Vice President of of Community Bank(Tennessee) since
Community Bank (Alabama) 1993.
C. K. Copeland (72) ---- Self-employed agriculture operations.
Director of Community Bank Director of Community Bank (Alabama)
(Alabama) since 1993.
Glynn Debter (61) ---- Owner-Operator Debter Farms.
City Director of Community Bank
(Alabama)
Loy McGruder (55) ---- Director of Community Bank (Alabama)
Director and Executive Vice President since1995; Executive Vice President of
of Community Bank (Alabama); Bank(Alabama)since 1994;Sr.Vice Pres.
Director of 1st Community Credit of Community Bank(Alabama) 1993-94,
City President of Community Bank --
New Hope,(1987 -1993).
Jon M. Owings (58) ---- Physician; Director of Community Bank
Director of Community Bank (Tennessee) since 1993.
(Tennessee)
Merritt Robbins (57) ---- Owner-Operator of Piggly Wiggly Stores.
Director of Community Bank
(Alabama)
Robert O. Summerford (65) ---- Owner-operator of Summerford Nursing
City Director of Community Bank Home;Owner-operator of Summerford Drugs
(Alabama) - Falkville
Wayne Washam (59) ---- Assistant Superintendent of Arab City
Director of Community Bank Schools since 1992; Arab High School
(Alabama) Band director prior to 1992; Director
of Community Bank (Alabama) since 1993.
____________________________________
9 <PAGE>
The individuals listed above have been employed during the past five
years either in the principal occupations shown or in other executive
positions with the Company or one of its Subsidiaries.
All directors of the Company hold office until the next annual
meeting of the Company's shareholders unless they sooner resign, become
disqualified, or are removed. The officers of the Company are elected
annually by the directors and serve until their successors are elected
and qualified or until their earlier resignation, removal or
disqualification.
Messrs. Kennon R. Patterson, Sr. and Bishop K. Walker, Jr. are executive
officers of the Company.
In 1995,the Board of Directors held twelve regular meetings and one
special meeting. All incumbent directors of the Company attended 75% or more of
the meetings of the Board and the committees on which they served.
The Company's Board of Directors has four committees, but no standing
nominating committee. The Executive Committee consists of all the members
of the Board of Directors. The Executive Committee reviews the personnel and
policies of the Company. This Committee held two meetings in 1995.
The ESOP Administrative Committee is comprised of Messrs. Patterson and
Walker and Mrs. Dicey Childers.The committee is scheduled to meet annually,
and manages the Company's Employee stock ownership plan. This committee held
four meetings in 1995. See "Executive Compensation - ESOP".
The Pension Plan Committee consists of Messrs. Patterson and Walker and Ms.
Dicey Childers. The Pension Plan Committee reviews the Company's pension
benefits, and met two times in 1995. See "Executive Compensation - Pension
Plan".
10 <PAGE>
EXECUTIVE COMPENSATION
The table shows the cash compensation paid by the Company and its
Subsidiaries during 1995 to the Chief Executive Officer and the other most
highly compensated executive officers receiving $100,000 or more in cash
compensation.
Annual Compensation
Name and Other Annual All Other
Principal Position Year Salary Bonus Compensation(1) Compensation (2)
Kennon R.Patterson,Sr. 1995 $450,000 $150,000 $20,400 $ 7,500
Chief Executive Officer 1994 450,000 100,000 20,400 7,500
1993 150,000 150,000 16,900 7,500
Bishop K. Walker, Jr. 1995 150,000 50,000 18,000 1,839
General Counsel 1994 150,000 50,000 18,000 1,293
1993 95,000 40,000 16,500 2,000
Denny Kelly 1995 110,000 50,000 18,000 1,800
President Community Bank1994 100,000 50,000 18,000 1,800
(Alabama) 1993 90,000 35,000 16,500 1,800
Hodge Patterson, III 1995 100,000 45,000 12,150 1,800
President Community Bank1994 82,000 25,000 9,150 1,800
(Tennessee) 1993 75,750 25,000 1,800
Loy McGruder 1995 85,000 25,000 6,000 1,800
Executive Vice President1994 76,967 7,697 - 0 - 1,800
Community Bank (Alabama)1993 68,000 8,160 - 0 - 1,800
_________________________________________
(1) Director's fees of $750 per month paid as director of the Company and
$750 per month paid as director of Community Bank, an Alabama subsidiary
of the Company. Messrs. Patterson each received director's fees of
$200 per month paid as director of Community Bank, a Tennessee
subsidiary of the Company. Prior to April, 1993, director's fees were
$500 per month for the Company and for the Alabama subsidiary,
respectively.
(2) The amounts appearing in this column represent premiums paid by the
Company or its subsidiaries for a life insurance policy or payments in
lieu thereof. Mr. Kennon R. Patterson, Sr. receives a cash payment
for the purchase of a policy in lieu of payment of premiums by the
Company. Mr.Bishop K. Walker, Jr. receives cash payments in lieu of
premiums.
11 <PAGE>
Directors of the Company received monthly fees of $750 from the Company and
monthly fees of $750 from its Alabama subsidiary, Community Bank, and monthly
fees of $200 from its Tennessee bank subsidiary, Community Bank, for such
service as directors. Director R. C. Corr received additional director fees
of $20,000. Directors receive no fees for attending committee meetings.
Directors receive monthly fees regardless of their attendance at meetings,
provided that they attend at least 75% of the meetings of the boards and of
all committees on which they serve during the year. Total fees of $106,550
were paid to all Company directors in 1995, including fees received by such
persons from Subsidiaries.
On December 7, 1993, Community Bancshares' Board of Directors authorized and
entered into a ten-year employment contract with Kennon R. Patterson,
Sr. and a five year employment contract with Bishop K. Walker, Jr. On
March 1, 1990, the Community Bank (Alabama) Board of Directors also entered
nto five-year employment contract with Denny Kelly. These contracts provide each
employee with three weeks of paid vacation annually, a suitable automobile,
reimbursement of reasonable business and professional expenses, including
normal and customary professional and educational meetings, and memberships
in such civic and social clubs determined to be in the best interest of the
employer and such employees; the aggregate amount of these items does not
exceed the lesser of $50,000 or ten percent of the total annual salary and
bonus reported for any of the named officers. The Board of Directors
authorized and entered into a new ten-year employment contract with Kennon
R. Patterson, Sr. and a five year employment contract with Bishop K. Walker,
Jr. on December 9, 1995, effective January 1, 1996.
12 <PAGE>
BOARD COMPENSATION COMMITTEE
The Company does not have a Board Compensation Committee but the entire
Board of Directors consisting of Messrs. Patterson, Walker, Kelly, Corr and
Patterson sets executive compensation including bonuses.The Board Compensation
Committee's policies are to evaluate the Company's performance as to growth,
asset composition, rate of return, and profitability on a peer group basis and
on an internal year-to-year basis comparing the Company's current year
performance to prior years' performance.
In determining Chairman Patterson's compensation for 1995, the Board
Compensation Committee considered the factors set forth in its policies.
During 1995, the Company expanded its geographical market through acquisitions
and new locations. In addition to the expansion of the area served, Mr.
Patterson's management leadership in the development of new business products
and service were a key factor in the continued growth in assets and
profitability of the Company.
By The Board of Directors
Kennon R. Patterson, Sr. Hodge Patterson, III Denny Kelly
B. K. Walker, Jr. R. C. Corr, Jr.
Year Ended December 31:
1990 1991 1992 1993 1994 1995
Community Bancshares, Inc 100.00 106.06 154.55 272.73 454.55 372.73
American Stock Exchange 100.00 128.22 129.57 154.26 140.75 177.93
NASDAQ Bank Index 100.00 137.52 209.07 270.46 273.46 395.99
The graph compares the cumulative shareholder return on the Common
Stock of the Company for the previous five fiscal years with the cumulative
total return of the NASDAQ Bank Index and the American Stock Exchange Index as
published in "The Wall Street Journal".
13 <PAGE>
Stock Option and Other Employee Benefit Plans
At present, the Company has no stock option or other employee benefit plans
except its pension plan, the informal bonus policy plan, and its employee
stock ownership plan ("ESOP") and the Benefit Restoration Plan. The ESOP
was established in late 1985 for purposes of providing an additional benefit
to employees, increasing their ownership interest in the Company and
raising capital to provide for the Company's future growth and debt service.
The Company contributed $254,687 to the ESOP in 1995, which was used to apply
to the indebtedness incurred by the ESOP and to make payment to certain
participants in the ESOP who received cash payments under the provisions of the
ESOP.
PENSION PLAN
Summary of Plan Coverage
Community Bank's Revised Pension Plan (the "Pension Plan") is a
noncontributory defined benefit pension plan that may provide retirement,
disability and death benefits for eligible employees of Community Bank and
other employees of a participating employer. Employees who are expected to
work 1,000 hours in the calendar year for a participating employer become
participants in the Pension Plan on January 1 following their date of
employment. As described below, benefits under the Pension Plan depend upon a
participant's years of credited service with the employer and his highest
average monthly earnings for the five consecutive year period out the 10-year
period prior to his retirement or termination of employment. An employee who
completes 10 years of service and attains age 55 is eligible for early
retirement benefits. During 1995, the Plan was amended to provide
that participants in the Pension Plan prior to November 1, 1995, would
receive a 20 percent vested right after two years of service, 40 percent after
three years, 60 percent after four years, and 100 percent after five years.
Participants entering the Plan on or after November 1, 1995, receive no
vested benefit prior to five years of credited service but are 100 percent
vested after five years of credited service.
Community Bank and other participating employers provide all funds necessary
to pay the costs of the Pension Plan, which are determined by independent
actuaries for the Pension Plan. The benefits have been funded through a trust
which was established with Central Bank of the South, as trustee, to accept and
administer pension trusts.
Criteria for Determining Amounts Payable
The monthly retirement income available to a participant who lives to
the normal retirement date (the first day of the month coincident with or
following a participant's 65th birthday) is one and one half percent
(1.5%) of the participant's average monthly earnings multiplied by his years
of credited service. Monthly earnings are based upon a participant's pay
including bonuses, overtime or other forms of extraordinary compensation. A
participant's average monthly earnings is based on the highest average of
his or her earnings in the five consecutive calendar years out of the
last 10 years preceding his retirement or termination of employment. A
participant receives one year of credited service for each plan year (i.e.,
a calendar year) during which he performs 1,000 hours or more with Community
Bank or its participating affiliates.
14 <PAGE>
There is a minimum benefit available to a participant equal to the lesser
of (a) 2% of Top Heavy Compensation multiplied by the participant's
number of years of Top Heavy Service or (b) 20% of Top Heavy Compensation.
A participant may elect early retirement if he or she is age 55 or
more and is credited with 10 or more years of service. In such event, the
monthly retirement income benefit is reduced 1/180 for each of the first 60
months and 1/360 for each of the next 60 months by which his early retirement
precedes his normal retirement date.
A participant electing late retirement continues to receive credit for
his or her additional years of service and monthly earnings up to his or
her actual retirement.The participant will receive the greater of the amount
just described or the actuarial value of the benefit earned at normal retirement
date.
Death benefits are payable to a surviving spouse in the event a
participant (or former participant) with 2 or more years of credited service
dies prior to the commencement of benefits. Generally, the benefit is based
on the participant's earned vested benefit at death and equals the amount the
spouse would have received (under the joint and 50% survivor option) on the
earliest retirement date upon which the participant could have received
benefits and is payable at the time the participant would have commenced such
benefits.
Form of Benefits
The normal form of benefit for a married participant is a joint and 50%
survivor annuity, and for an unmarried participant is a life annuity. The
consent of the spouse of a married participant is needed to elect an
alternative form of payment. Alternative forms of benefit include a life
annuity with a guarantee of 240 monthly payments, a guaranteed number of
payments up to 240 with no lifetime guarantee, and a joint and survivor annuity
with the survivor annuity payable to a designated beneficiary in a fractionally
smaller amount.
Estimated Payment Schedules
Average Amount of Estimated Annual Pension for Representative
Compensation for Years of Credited Service(2)
Last 5 Years 10 20 30 40
Before Retirement (1) Years Years Years Years
$ 25,000 $ 5,000 $ 7,500 $11,250 $ 15,000
50,000 10,000 15,000 22,500 30,000
75,000 15,000 22,500 33,750 45,000
100,000 20,000 30,000 45,000 60,000
250,000 50,000 75,000 112,500 150,000
500,000 100,000 150,000 225,000 300,000
750,000 150,000 225,000 337,500 450,000
__________________________________________
(1) It has been assumed that compensation is equal to Top Heavy Compensation
(i.e., base pay equal to W-2 earnings). These calculations do not reflect
any maximum benefits imposed by the Internal Revenue Service under IRS
Section 415.
(2) Total Credited Service as of January 1, 1996 was 13 years for Kennon R.
Patterson, Sr., 9 years for B.K. Walker, Jr., 10 years for Denny Kelly,
9 years for Hodge Patterson, III, and 9 years for Loy McGruder.
15 <PAGE>
The Pension Plan has been amended effective January 1, 1989, and in order to
comply with the Tax Reform Act of 1986.
ESOP
The ESOP was established on December 20, 1985, effective as of January 1,
1985, and is qualified as an "employee stock ownership plan" within the
meaning of Section 407(d)(6) of the Employee Retirement Income Security
Act of 1974 ("ERISA"). The purposes of the ESOP include providing an
additional benefit to employees, giving participants an ownership interest
in the Company, and supporting the Company's growth and debt service.
The principal investment of the Trust established under the ESOP is Company
common stock. The ESOP consists of both an employee stock ownership plan
within the meaning of Section 4975(e) of the Internal Revenue Code of 1986,
as amended ( the"Code") and, prior to 1987, a taxcredit (employee stock
ownership plan ("PAYSOP") under Section 409 of the Code.
Each employee of the Company and its Subsidiaries is eligible to participate
in the ESOP on December 31 following the completion of one year of service. A
year of service is a Plan Year (i.e., the calendar year) in which the
employee is credited with 1,000 hours of service.An hour of service is generally
an hour for which an employee is paid or entitled to payment. An employee who
fails to meet this requirement by December 31 shall be eligible to participate
in the ESOP on the first day after he completes a year of service in either
the 12-month period following his employment commencement date, or thereafter
the Plan Year following his employment commencement date. The amount to be
contributed to the ESOP each year is determined by the Company's Board of
Directors from profits. Contributions can be made in either cash or stock.
Participants are not required to contribute to the ESOP nor are they permitted
to make voluntary contributions.
The ESOP is managed by an ESOP Administrative Committee appointed by the
Company's Board of Directors.Messrs.Kennon R. Patterson, Sr., and J. K.
Cornelius served as trustees of the ESOP but resigned in July 1986 and were
succeeded by Central Bank of the South (the "Trustee"). The Trustee is
directed to invest contributions in Company stock or temporarily in cash.
The Trustee is also authorized to incur loans to finance purchases of Company
Shares and to use such stock as collateral for such financing.At the direction
of the ESOP Administrative Committee, the Trustee entered into an ESOP loan
from an unrelated bank on November 3, 1993 and borrowed $1,200,000 to purchase
80,000 Shares from the Company at $15.00 per Share. ESOP contributions by the
Company during 1995 were applied to the service of this debt and to make
payment to certain plan participants entitled to distributions from the
ESOP. At the end of 1995, the amount of the indebtedness was $995,197.50.
ESOP shares pledged as collateral are released by the unrelated bank monthly
as the debt is serviced by the Company.
Accounts are maintained for each ESOP participant. Contributions by the
Company are allocated to the accounts of the participants based on
their relative amounts of compensation for the year. Forfeitures under
the ESOP are allocated in the same manner as contributions. Participants must
be credited with 1,000 hours of service and be employed on the last day of the
Plan Year to share in contributions and forfeitures, except in the event of
retirement, death or disability.
As to Shares allocated to each ESOP participant's account, the participant is
entitled to direct the Trustee as to voting such Shares. Otherwise, all
Shares held by the ESOP shall be voted in the manner determined by the ESOP
Administrative Committee to be in the best interests of participants and
beneficiaries.
16 <PAGE>
A participant becomes entitled to the full amount in his ESOP account if he
attains the normal retirement age of 65, dies or becomes disabled. If
termination is due to other reasons, a participant is entitled to the
vested portion of his account in the ESOP determined in accordance with
a vesting schedule. During 1995, the ESOP was amended to provide that
participants prior to November 1, 1995, would receive a 20 percent vested right
after two years of service, 40 percent after three years, 60 percent after
four years, and 100 percent after five years. Participants entering the ESOP
on or after November 1, 1995, receive no vested benefit prior to five years of
credited service but are 100 percent vested after five years of credited
service. A participant receives a year of credited service for each Plan Year
in which he has at least 1,000 hours of service. Years of service before the
effective date of the ESOP are recognized for vesting service. A participant
is always 100% vested as to amounts contributed previously under the PAYSOP.
After a participant's retirement, disability or death, distribution of his
account normally will be made in a lump sum. Distribution will be in stock
or cash or both, but if it is cash, the participant will be informed of his
right to demand stock. In the event of termination for reasons other than
retirement, death or disability, distribution occurs after a break in service
and will be a lump sum. A break in service is a Plan Year in which the
participant is credited with less than 500 hours of service. The Company
Shares to be distributed are subject to a right of first refusal. Before the
stock can be sold, it must first be offered to the Trustee at its fair market
value. The Trustee must also offer put options to participants who receive
distributions of shares from the ESOP Trust.
BENEFIT RESTORATION PLAN
On April 12, 1995, the Board of Directors authorized the establishment of the
Community Bancshares, Inc. Benefit Restoration Plan (the "Benefit Restoration
Plan"). Section 401 of the Internal Revenue Code of 1987 imposes maximum
limitations on the amount of employee compensation that can be taken into
account for determining qualified retirement plan benefits. Section 415
of the Internal Revenue Code of 1987 imposes maximum benefits that can be
paid from a qualified retirement plan. The Company's Pension Plan is a
qualified retirement plan under the Internal Revenue Code.
The Benefit Restoration Plan provides retirement benefits to participants
whose compensation or benefit payment exceeds the maximum amounts allowed for
qualified retirement plans.Payments under the Benefit Restoration Plan are
payable to the recipient in the same manner as they would be paid under the
Pension plan disregarding the applicable limitations of the Internal Revenue
Code of 1987. If any lump sum actuarial equivalent of any benefits payable to
a recipient is $10,000 or less, the plan administrative committee may direct
payment to the appropriate recipient in a lump sum. Vesting is in
accordance with the vesting schedule under the provisions of the Pension Plan.
The Benefit Restoration Plan is effective January 1, 1995, and presently has
four named participants although not all participants have reached either
the compensation limit or benefit limit imposed by the Internal Revenue Code
of 1987 for qualified retirement plans. The named participants are Kennon R.
Patterson, Sr., Bishop K. Walker, Jr., Denny Kelly and Hodge Patterson, III.
The Company accrued $93,992 to fund the Benefit Restoration Plan during 1995.
17 <PAGE>
CERTAIN TRANSACTIONS
Some Company and Subsidiary directors, officers and principal shareholders
and their associates were customers of, or had transactions with, the Company
or its Subsidiaries in the ordinary course of business during 1995. Some of
the directors of the Company or its Subsidiaries are directors, officers,
trustees or principal securities holders of corporations or other organizations
which also were customers of, or had transactions with, the Company or its
Subsidiaries in the ordinary course of business during 1995.
Except as noted below, all outstanding loans and other transactions with
Company or Subsidiary directors, officers and principal shareholders,
including, without limit, those discussed herein, were made in the ordinary
course of business on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions
with other persons and, when made, did not involve more than the normal risk
of collectability or present other unfavorable features. In addition to banking
and financial transactions, the Company or its Subsidiaries may have
had additional transactions with, or used products or services of,
various organizations of which directors of the Company or its Subsidiaries
are associated. Except as noted in the following paragraphs, the amounts
involved in such noncredit transactions have in no case been material
in relation to the business of the Company, it Subsidiaries or such
other organizations. It is expected that the Company and its Subsidiaries
will continue to have similar transactions in the ordinary course of its
business with such individuals and their associates in the future.
The aggregate amount of credit outstanding to all Company and Subsidiary
directors, nominees for directors, executive officers and principal
shareholders who were indebted to the Company or any if its Subsidiaries
in an amount in excess of $60,000 totalled approximately $6,873,999 at
December 31, 1995. This amount represented approximately 23.7% of the Company's
total shareholders' equity on that date.
On February 17, 1989 after receiving approval from the Board of Governors
of the Federal Reserve System and pursuant to a Stock Purchase Agreement,
the Company purchased 22,792 Company Shares at a price of approximately
$47.95 per share held by Jack Cornelius, the former Chairman of the Board
of the Company's principal subsidiary, Community Bank. (After adjusting for
a three-for-one stock split, in terms of current shares the purchase was
68,376 shares at a price of approximately $15.98 per share). The Company
purchased the Shares to maintain the Company's current successful policies
and to preserve goodwill and harmonious relations in the communities, and
among the customers, served by the Company. These Shares represented
approximately 5.375% of the Company's outstanding Common Stock and all of Mr.
Cornelius' holdings from cash on hand with the balance of $895,432 to be paid
over a period of 10 years pursuant to a subordinated capital note from the
Company to Mr. Cornelius. On November 23, 1993, the Company fully
retired the indebtedness to Mr. Cornelius.
On October 2,1994, the Company purchased 115,978.384 shares held by
Jeffrey K. Cornelius, a former director of the Company.The Company purchased
the Shares to maintain the Company's current successful policies and to
preserve goodwill and harmonious relations in the communities, and among
the customers, served by the Company. These Shares represented
approximately 6.43% of the Company's outstanding Common Stock. Payment to Mr.
Cornelius was made from cash on hand with the balance of $2,000,000 to be paid
over a period of 20 years pursuant to a subordinated capital note from the
Company to Mr. Cornelius. Such note bears interest on the outstanding
principal amount at a rate of 7.0% per annum, is payable in 240 equal monthly
installments of principal and interest, and may be prepaid in whole or in
part at any time without penalty. As of December 31, 1994, the principal
indebtedness to Mr. Cornelius was $1,992.299.
18 <PAGE>
The Company had previously issued 11,692 shares of its Series 1984-1 8%
Cumulative Preferred Stock. The Company redeemed all the Preferred Shares
effective December 31, 1993, by establishment of an escrow account. Preferred
shareholders receive payment of the stated value of $69.44 upon surrender of
their stock certificate to the Company. All certificates have been surrendered
to the Company.
During 1995, Community Bank (Alabama) entered into a service contract with
Royal Acres,a partnership composed of Kennon R. Patterson, Sr. and Bishop K.
Walker, Jr., both of whom are directors and officers of the Company, for the
upkeep and maintenance of the external grounds of the Company's seventeen
locations at an average monthly cost of $394 per location. Maintenance
expense under this contract amounted to $80,347 for the year ended December 31,
1995.
During 1995, Community Bank (Alabama) and Community Bank (Tennessee) paid
Heritage Interiors, a decorating and design firm owned and operated by
the wife of Kennon R. Patterson, Sr., a director and officer of the Company,
for the interior design, furniture, appliances, fixtures, carpets,
wallcoverings, drapes, and accessories for Community Bank (Alabama) new bank
facilities at Elkmont and Snead; appraisal and marketing offices at Snead;
headquarters annex and other facilities and Community Bank (Tennessee)
banking facilities at Pulaski (Downtown) and Pulaski (West College) totalling
$203,649.
20 <PAGE>
Com-Pac, a partnership composed of Kennon R. Patterson, Sr., Birl Bryson and
Bishop K. Walker, Jr., all of whom are shareholders, directors and officers
of Community Bancshares, Inc. and its banking subsidiary, Community Bank
(Alabama) and as a group control more than 5% of the common stock, entered
into a lease agreement with Community Bank (Alabama) to lease 1.2 acres of
land and a building of approximately 3,300 square feet located in
Meridianville, Madison County, Alabama. The building consists of an
approved vault, security equipment, a drive-in window, two remote drive-in
facilities, lobby, three private offices, six teller stations storage room and
restroom facilities with appropriate exterior paving, landscaping and parking.
Community Bank (Alabama) commenced paying monthly rental payments of $5,373
per month on September 1, 1990. The lease to Community Bank (Alabama) provided
an option to purchase the facility at any time during the five-year lease at
cost. In addition to lease payments, Community Bank (Alabama) provides
insurance coverage and is responsible for payments of ad valorem taxes and
maintenance. In accordance with the lease agreement, Community Bank(Alabama)
purchased the property from Com-Pac during 1995 for $500,630.
The Company during 1990 conveyed a lot and assigned leases on two additional
lots in the City of Hartselle, Morgan County, Alabama, to Com-Pac.The sales
price of the lot was $75,000.00 (the cost of the lot) and the two leases which
Com-Pac assumed presently call for monthly rentals of $400.00 and $600.00.
Com-Pac subsequently constructed a building and entered into a lease agreement
with Community Bank (Alabama) to lease the three lots and the building. The
building is approximately 3,300 square feet and consists of an approved
vault, security equipment, a drive-in window, two remote drive-in facilities,
lobby, three private offices, six teller stations, storage room and restroom
facilities with appropriate paving, landscaping and parking. Community Bank
(Alabama) commenced paying monthly rentals of $6,573 per month on September 1,
1990. The lease to Community Bank (Alabama) provides an option to purchase
the facility at any time during the five year lease plus the assumption of the
two leases on the leased lots, or, in the event of purchase of said lots, plus
their cost (which is fixed under an agreement to purchase and/or option to
purchase at $75,000 for each lot upon certain happenings). In addition to
the lease payments, Community Bank (Alabama) provides insurance coverage and is
responsible for payment of ad valorem taxes and maintenance. In accordance with
the lease agreement, Community Bank (Alabama) purchased the property from
Com-Pac during 1995 for $592,476 and assumed the two leases on the leased
lots.
Both the Meridianville and Hartselle leases, with options to purchase between
Community Bank (Alabama) and Com-Pac were approved by the Board of Directors
with the abstention of Birl Bryson, Jeffrey K. Cornelius, Kennon R.
Patterson, Sr., and B. K. Walker, Jr. The leases by Com-Pac to Community Bank
(Alabama) were considerably more favorable to Community Bank (Alabama) than
proposals received by Community Bank (Alabama) from outside sources. The
purchases of the Meridianville and Hartselle properties were approved by the
Board of Directors with the abstention of Kennon R. Patterson, Sr. and B.K.
Walker, Jr.
The Company has entered into agreements with substantially all directors,
advisory directors and officers of the Company and its Subsidiaries granting
the Company a right of first refusal on any proposed sale of Company
Shares by such persons. See "Principal Shareholders."
20 <PAGE>
APPROVAL OF APPOINTMENT OF AUDITORS
At the annual shareholder meeting held on March 30, 1995, the shareholders
elected Dudley, Hopton-Jones, Sims & Freeman, PLLP, ("Dudley") to be
the independent public accountants to audit the financial statements of the
Company and its subsidiaries for 1995.
A representative of Dudley is expected to be present at the annual meeting
and will have an opportunity to make a statement if he desires and to
respond to appropriate questions.
The Board of Directors recommends a vote FOR approval of the appointment of
Dudley as independent public accountants for 1996.
SHAREHOLDER PROPOSALS
Any proposal which a shareholder of the Company intends to be presented at
the annual meeting of shareholders to be held in 1997 must be received by
the Company on or before November 15, 1996. Only proper proposals which are
timely received will be included in the proxy statement and form of proxy.
OTHER MATTERS
Management does not know of any matters to be brought before the Meeting
other than as described in this proxy statement. Should other matters
properly come before the Meeting, the persons designated as proxies will vote
in accordance with their best judgment on such matters.
EXPENSES OF SOLICITATION
The cost of soliciting proxies in the accompanying form will be borne by the
Company. In addition to the use of the mails, proxies may be solicited by
directors, officers or other employees of the Company or its subsidiaries
personally, by telephone or by telegraph. The Company does not expect to pay
any compensation for the solicitation of proxies, but may reimburse brokers,
custodians or other persons holding stock in their names or in the names of
nominees for their expenses in sending proxy materials to principals and
obtaining their instructions.
AVAILABILITY OF ANNUAL REPORT
A copy of the Annual Report and Form 10-K for the year ended December 31,
1995 will be mailed to each shareholder on March 8, 1996 and will be
provided with no charge to each Shareholder upon request at the annual
Stockholder's Meeting on March 28, 1996. Requests for such copies should
be directed to: Mr. Kennon R. Patterson, Sr., Chairman, Community Bancshares,
Inc., P.O. Box 1000, Blountsville, Alabama, 35031.
21 <PAGE>
EXHIBIT "A"
BY-LAWS AMENDMENTS
In the event that the stockholders of the Company approve Proposal 1
(Approval of a Classified Board of Directors), the following By-Laws
provisions will be implemented and, Article II, Section 2, and Article III,
Section 1 and Section 2 will be as follows:
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 2. Annual Meetings. Annual meetings of stockholders shall be held at
such date and time as shall be designated from time to time by the Board of
Directors and stated in the notice of meeting. At the annual meeting the
stockholders shall elect by a plurality vote the number of Directors equal
to the number of Directors of the class whose term expires at such meetings
(or, if fewer, the number of Directors properly nominated and qualified for
election) to hold office until the third succeeding annual meeting of
stockholders after their election.
ARTICLE III
BOARD OF DIRECTORS
Section 1. General Powers; Number, Tenure and Qualifications. The
Corporation's business, properties and affairs shall be managed by its Board of
Directors, composed of not less than nine nor more than thirteen persons (the
number of directors to be determined by resolution of the Board of Directors
from time to time). The Board of Directors shall be divided into three
classes, designated Class I, Class II, and Class III, as nearly equal in number
as possible, and the term of office of Directors of one class shall expire at
each annual meeting of stockholders, and in all cases as to each Director
until his successor shall be elected and shall qualify or until his earlier
resignation, removal from office, death or incapacity. Additional
directorships resulting from an increase in number of Directors shall be
apportioned among the classes as equally as possible. The initial term of
office of Directors of Class I shall expire at the annual meeting of
stockholders in 1997; that of Class II shall expire at the annual meeting
in 1998; and that of Class III shall expire at the annual meting in 1999;
and in all cases as to each Director until his successor shall be elected and
shall qualify or until his earlier resignation, removal from office, death or
incapacity. At each annual meeting of stockholders the number of Directors
equal to the number of Directors of the class whose term expires at the time of
such meeting (or, if less, the number of Directors properly nominated and
qualified for election) shall be elected to hold office until the third
succeeding annual meeting of stockholders after their election.
Section 2. Vacancies and Additional Directorships. If any vacancy shall
occur among the directors by reason of death, resignation, or removal, or
as the result of an increase in the number of directorships, the directors
then in office shall continue to act and may fill any such vacancy by a vote
of the majority of directors then in office, though less than a quorum, and
each director so chosen shall hold office until the next annual election at
which the term of the class to which he or she has been elected expires and
until his or her successor shall be duly elected and shall qualify, or
until his or her earlier death, resignation or removal.
22 <PAGE>
____________________________________________
PROXY
COMMUNITY BANCSHARES, INC.
BLOUNTSVILLE, ALABAMA
ANNUAL MEETING OF SHAREHOLDERS
_____________________________________________
The undersigned shareholder of Community Bancshares, Inc. (the "Company"),
Blountsville, Alabama, hereby constitutes and appoints Dicey Childers or Mark
O. South with full power of substitution to vote the number of shares of
Company common stock which the undersigned would be entitled to vote if
personally present at the Annual Meeting of Shareholders to be held at The
Heritage Club, Huntsville, Alabama on March 28, 1996 at 10:00 A.M., local time,
or at any adjournments thereof (the "Meeting") upon the proposals described
in the Proxy Statement and Notice of Annual Meeting of Shareholders,
the receipt of which is acknowledged, in the manner specified below.
1. To amend the corporation's by-laws to provide for three classes of
directors to serve three year staggered terms after an initial transition
period;
For_______ Against_______
Abstain_______
2. To elect Kennon R. Patterson Sr., Denny Kelly, R.C. Corr, Jr., Bishop K.
Walker, Jr., Hodge Patterson, III, C.K. Copeland, Glynn Debter, Loy
McGruder, Jon M. Owings, Merritt Robbins, Robert O. Summerford, and Wayne
Washam to serve as directors of the Company for terms in accordance
with the Amended By-Laws if Proposal 1 is adopted and, if the proposal
is not adopted, for a one year term until their successors are elected and
qualified;
For_______
TO WITHHOLD AUTHORITY FOR ANY NOMINEE(S)
FOR DIRECTOR, WRITE THEIR NAME(S) IN THE SPACE
PROVIDED BELOW
_____________________________________________________
_____________________________________________________
3. To ratify the selection of Dudley, Hopton-Jones, Sims & Freeman,
PLLP, as independent auditors of the Company for the year ending
December 31, 1996.
For_______ Against_______
Abstain_______
4. In their sole discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting or any
adjournment thereof.
Authorized__________ Withhold Authority__________
This Proxy, when properly executed, will be voted in the manner directed by
the undersigned shareholder. If no direction is made, this Proxy will be
voted for Proposals 1, 2 and 3 with discretionary authority on all other matters
that may properly come before the Meeting or any adjournment thereof.
Please sign exactly as your name appears on your stock certificate
and date. Where shares are held jointly, each shareholder should sign. When
signing as executor, administrator, trustee or guardian, please give full title
as such. If a corporation, please sign in full corporate name by
president or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
________________________________________________________
Signature of Shareholder
________________________________________________________
Signature of Other Shareholder (if held
jointly)
Dated:______________________________________________1996
Month Day
THIS PROXY IS SOLICITED ON BEHALF OF COMMUNITY BANCSHARES, INC.'S BOARD OF
DIRECTORS AND MAY BE REVOKED BY THE SHAREHOLDER PRIOR TO ITS EXERCISE.
