COMMUNITY BANCSHARES, INC.
To the Shareholders of
Community Bancshares, Inc.:
In connection with a Special Meeting of Shareholders of Community
Bancshares, Inc. (the "Company") to be held at 9:00 A.M., local time, on
Thursday, September 10, 1998, 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 Special 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 look forward to seeing you on September 10th.
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.
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COMMUNITY BANCSHARES, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
____________________________
A Special Meeting of the shareholders of Community Bancshares, Inc.
(the "Company"), will be held at the headquarters of the Company at Highway
231 South, Blountsville, Alabama, on Thursday, September 10, 1998 at 9:00 A.M.,
local time, for the following purpose:
To amend Article IV of the Certificate of Incorporation of the
Company increasing the number of shares of authorized Common Stock
of the Company, from 5,000,000 shares, with a par value of $.10 per
share, to 20,000,000 shares, with a par value of $.10 per share,
as more fully described in the accompanying Proxy Statement.
The enclosed Proxy Statement explains the proposal. 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 THE PROPOSAL PRESENTED.
By Order of the Board of Directors
Secretary
Blountsville, Alabama
September __________, 1998
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PRELIMINARY PROXY FILING
COMMUNITY BANCSHARES, INC.
Proxy Statement for Special Meeting
of Shareholders to be Held September 10, 1998
_____________________________________
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 a Special Meeting of Shareholders to be held September 10, 1998 at 9:00 a.m.
local time, and at any adjournment thereof (the "Meeting"), for the purpose of
amending Article IV of the Certificate of Incorporation of the Company to
increase the number of shares of authorized common stock of the Company,
from 5,000,000 shares, with a par value of $.10 per share, to 20,000,000
shares, with a par value of $.10 per share.
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 August 20, 1998.
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
August 10, 1998, (the "Record Date") 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 the Record Date. At the close of business on the
Record Date, there were 4,142,924 Shares issued and outstanding, and these
were held by 1304 Shareholders of record. 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
The affirmative vote of a majority of the outstanding Shares is
required for approval of the proposed Amendment to the Certificate of
Incorporation.
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
if it 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 amending Article IV of the Certificate of
Incorporation of the Company to increase the number of shares of authorized
Common Stock of the Company, from 5,000,000 shares, with a par value of
$.10 per share, to 20,000,000 shares, with a par value of $.10 per share.
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PROPOSAL
AMENDMENT TO THE CERTIFICATE
OF INCORPORATION TO INCREASE
AUTHORIZED COMMON STOCK
The Board of Directors of the Company has adopted a resolution
recommending that paragraph 4.01 of Article IV of the Certificate of
Incorporation of the Company be amended to increase the authorized number of
shares of common stock from 5,000,000 shares, par value $.10 per share, to
20,000,000 shares, par value $.10 per share. Under the Certificate of
Incorporation, the holders of the Common Stock are not entitled to preemptive
rights.
The affirmative vote of the majority of the outstanding shares of
Common Stock is required for the adoption of the proposed amendment. If the
proposed amendment is adopted , the additional authorized shares may be issued
by the Board of Directors without any further action or approval by the
stockholders of the Company.
The Company may issue the additional authorized shares of Common Stock in
connection with stock dividends or splits, employee benefit plans, or the
sale of such shares to raise additional capital for the Company or issue
shares of stock to finance acquisitions. The Company has no current plans in
that regard.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSED AMENDMENT TO THE
CERTIFICATE OF INCORPORATION TO INCREASE THE AUTHORIZED COMMON STOCK OF THE
COMPANY.
2<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of January 31, 1998, 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 Common Stock
Bryan A. Corr 151,586 (1) 3.6
Oneonta, AL
Glynn Debter 6,936 0.1
Horton, AL
Edward Ferguson 8,952 0.2
Blountsville, AL
Denny Kelly 56,729 (2)(3) 1.3
Blountsville, AL
John J. Lewis, Jr. 9,044 0.2
Blountsville, AL
Stacey W. Mann 23,845 (2)(4) 0.5
Oneonta, AL
Loy McGruder 25,283 (2)(5) 0.60
Huntsville, AL
Hodge Patterson, III 49,635 (2)(6) 1.1
Hartselle, AL
Kennon R. Patterson, Sr. 442,381 (2)(7) 10.6
BLountsville, AL
Kennon R. (Chip) Patterson, Jr. 34,289 (2)(8) 0.8
Blountsville, AL
Merritt Robbins 142,000 3.4
New Hope, AL
Robert O. Summerford 70,200 (9) 1.6
Falkville, AL
Henry Sims 2,100 0.01
Pulaski, TN
3<PAGE>
Bishop K. Walker, 247,889 (2)(10) 5.9
Union Grove, AL
R.Wayne Washam 10,402 0.2
Arab, AL
First National Bank of Commerce 498,222 (11) 12.0
as Trustee of the Community
Bancshares, Inc. Employee
Stock Ownership Plan ("ESOP")
All Company directors 1,281,271 30.9
and officers as
a group
_________________________
(1) Includes 120,000 shares held by Oneonta Telephone Co. Inc., Mr. Corr
is President and a controlling shareholder.
(2) Includes 5,323 shares as a fractional portion of shares held
by Community Investments, a partnership composed of ten individuals,
of which the director is a partner
(3) Includes 11,736 shares allocated to Mr. Kelly's ESOP account through
December 31, 1996.
(4) Includes 10,276 shares allocated to Mr. Mann's ESOP account through
December 31, 1996.
(5) Includes 6,910 shares allocated to Mr. McGruder's ESOP account through
December 31,1996.
(6) Includes 8,308 shares allocated to Mr. Patterson's ESOP account through
December 31,1996.
(7) Includes 30,344 shares allocated to Mr. Patterson's ESOP account
through December 31, 1996.
(8) Includes 4,046 shares allocated to Mr. Patterson's ESOP account through
December 31, 1996.
(9) Includes 42,200 shares held by Summerford Nursing Home and 14,000
shares held by Summerford Drugs of which Mr. Summerford is Chairman,
President and a controlling shareholder.
(10) Includes 10,400 shares allocated to Mr. Walker's ESOP account through
December 31, 1996.
(11) Voting power for shares allocated to participants in the ESOP is
exercised by the participants. The ESOP Committee directs the voting
of unallocated shares.
4<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
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. (56) 1983 Chairman,Chief Executive Officer &
Chairman, President, and Chief Executive President of the Company since 1983;
Officer of the Company; Chairman and Chief Executive Officer & President
Chief Executive Officer of Community Community Bank since 1983; Chairman
Bank; Director of Community of Community Bank since 1984;
Appraisals, Inc.; Director of Community Chairman of Community Bank
Insurance Corp.; Director of 1st since 1993 - 1997.
1st Community Credit Corporation;
Director of Southern Select Insurance
Inc.
Denny Kelly (58) 1986 Director of Community Bank
Director of the Company; Director, since 1985: President of Community
Vice Chairman and President of Bank since 1993; Executive
Community Bank; Director of Vice President of Community Bank
1st Community Credit Corporation; 1985 - 1993.
Director of Community Appraisal, Inc;
Director of Community Insurance, Corp.
Bishop K. Walker, Jr. (67) 1983 Director of the Co since 1983;
Director, Vice Chairman, Secretary, Director of Community Bank since
Executive Vice President, General 1984; Vice President and General
Counsel of the Company; Director, Counsel of the Company since 1987;
Sr. Executive Vice President and Senior Vice President and General
Secretary of Community Bank; Director Counsel of Community Bnk;1987-1993;
of Community Insurance Corp; President and Director of Community
Director of Southern Select Insurance Corp; 1987-1997.
Insurance, Inc.
Hodge Patterson,III (42) 1993 Director of the Co since 1993; Sr.
Director of the Company; Vice President of Community Bank
Director and Executive 1988-1993; Vice-Chairman, Chief
Vice President of Community Bank; Executive Officer and President
Director of Community Appraisals, Inc. of Community Bank(Tennessee) 1993
Director of Southern Select -1997; Executive Vice President of
Insurance, Inc. Community Bank 1997 to present.
Glynn Debter (63) 1996 Owner-Operator Debter Farms.
Director of the Company;
Director of Community Bank;
Director of Community
Appraisals, Inc; Director of
Community Insurance Corp.
5<PAGE>
Loy McGruder (58) 1996 Director of Community Bank since 1995;
Director of the Company; Executive Vice President of Community
Director and Executive Vice Bank since 1994; Sr.Vice President
President of Community Bank; of Community Bank 1993-94, City
Director of Community Insurance President of Community Bank - New Hope,
Corp. 1987 - 1993.
Merritt Robbins (60) 1996 Owner-Operator of Piggly Wiggly Stores.
Director of the Company; Director
of Community Bank; Director
of 1st Community Credit Corporation
Robert O. Summerford (67) 1996 Owner-operator,Summerford Nursing Home;
Director of the Company; Director Owner-operator of Summerford Drugs.
of Community Bank; Director
of Community Appraisals, Inc.
Wayne Washam (62) 1996 Retired;Asst Superintendent of Arab City
Director of the Company; Director Schools 1992-1996;Director of Community
Community Bank; Director of Bank since 1993.
1st Community Credit Corporation
Bryan A. Corr (38) 1997 Director and President Oneonta Telephone
Director of the Company; Director Company, 1987 - present; Director and
Community Bank; Director of President of North Alabama Cellular,
Community Insurance Corporation 1992 - present.
Edward Ferguson (55) 1997 President of 1st Community Credit Corp.
Director of the Company; Director since 1995; Vice President of Security
of Community Bank; Chairman Mutual Financial Services,Inc.1993-1995;
and President of 1st Community Senior Manager of Security Mutual Finance
Credit Corporation Corp., Inc., 1976 - 1993.
John J. Lewis, Jr. (51) 1997 Various positions with Tyson Foods,
Director of the Company; Director Inc., 1986 - present
of Community Bank; Director
of Community Appraisals, Inc.
Stacey W.Mann (45) 1997 Sr.Vice President of Community Bank
Director of the Company; Director 1986 -1996; Executive Vice
and Executive Vice President of President of Community Bank
Community Bank; Director 1997-present
of 1st Community Credit Corporation
6<PAGE>
Kennon R. (Chip) Patterson, Jr. (32) 1997 Sr.Vice President of Community Bank
Director of the Company; Director 1996 - 1997; Executive
and Executive Vice President of Vice President of Community Bank
of Community Bank; Director 1997-present
of 1st Community Credit Corporation
Henry Sims (75) 1997 Retired, Director of Tennessee
Director of the Company; Director Technology Center, Pulaski,TN
of Community Bank 1982-1997; Director of Community
Bank (Tennessee) 1993 - 1997.
________________________________________________
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 for three year terms 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., Bishop K. Walker, Jr., and Denny
Kelly are executive officers of the Company.
7<PAGE>
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accounting firm selected by the shareholders for the
calendar year 1998 is Dudley, Hopton-Jones, Sims & Freeman ("Dudley").
SHAREHOLDER PROPOSALS
Any proposal which a shareholder of the Company intends to be presented at
the annual meeting of shareholders to be held in 1999 must be received by
the Company on or before November 25, 1998. Only proper proposals which are
timely received will be included in the proxy statement and form of proxy.
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.
FINANCIAL AND OTHER INFORMATION
Information required by this item is incorporated by reference from
the Annual Report and Form 10-K for the year ended December 31, 1997 and
Form 10-Q for the six month period ended June 30, 1998, copies of which may
be obtained without charge from the Company by any shareholder, by writing
Mr. Bishop K. Walker, Jr., Community Bancshares, Inc., P.O. Box 1000,
Blountsville, Alabama 35031, or calling (205) 429-1000.
8<PAGE>
