COMMUNITY BANCSHARES INC /DE/, DEFC14A, 1999-04-15

COMMUNITY BANCSHARES INC /DE/
DEFC14A, 1999-04-15
STATE COMMERCIAL BANKS

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<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

<TABLE>
<CAPTION>
<S> <C>
Filed by the Registrant |_|
Filed by a Party other than the Registrant |X|

Check the appropriate box:
| | Preliminary Proxy Statement |_| Confidential. For use of the Commission Only
(as permitted by Rule 14a-6(e)(2))

|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

</TABLE>

Community Bancshares, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

Stockholders for Integrity and Responsibility
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on the table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.

(1) Title of each class of securities to which transaction applies:

- --------------------------------------------------------------------------------

(2) Aggregate number of securities to which transaction applies:

- --------------------------------------------------------------------------------

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 set forth the amount on which the filing fee
is calculated and state how it was determined):

- --------------------------------------------------------------------------------

(4) Proposed maximum aggregate value of transaction:

- --------------------------------------------------------------------------------

(5) Total fee paid:

- --------------------------------------------------------------------------------

<PAGE> 2

[ ] Fee paid previously with preliminary materials.

- --------------------------------------------------------------------------------

[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.

(1) Amount previously paid:
- --------------------------------------------------------------------------------

(2) Form, Schedule or Registration Statement no.:
- --------------------------------------------------------------------------------

(3) Filing Party:
- --------------------------------------------------------------------------------

(4) Date Filed:
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<PAGE> 3

STOCKHOLDERS FOR INTEGRITY AND RESPONSIBILITY
P. O. BOX 668
BLOUNTSVILLE, ALABAMA 35031
(888) 463-4419

April 14, 1999

Dear Fellow Stockholders of
Community Bancshares Inc.:

We are sending the accompanying Proxy Statement and the enclosed BLUE
proxy card to you as one of the holders of the common stock, par value $.10 per
share, of Community Bancshares, Inc. (the "Company") in order to solicit your
proxy for use at this year's Annual Meeting of Stockholders of the Company (the
"Annual Meeting"). The Annual Meeting will be held at the Administrative
Building of the headquarters of the Company, Highway 231 South, Blountsville,
Alabama, on Thursday, April 22, 1999 at 10:00 a.m., Central Time.

We believe that the Annual Meeting is critical to the future of the
Company and its stockholders, and we need your help in making sure that the
investment all of us have in the Company is protected. In this regard, there are
a number of facts concerning the Company and its management about which you
should be aware, facts that will make you, as a hard working member of your
community, as angry as we are. For example, did you know any of the following
about the Company and its management?

-- In 1996, the Company amended its employment agreement with its
Chairman of the Board, President and Chief Executive Officer,
Kennon R. Patterson, Sr. ("Mr. Patterson") to extend it
through 2008. The Company guaranteed Mr. Patterson that it
would employ him for 12 years and pay him MORE THAN $14.8
MILLION. He was paid cash compensation of $694,600 and
$778,246 during 1997 and 1998, respectively. Through the
Company, Mr. Patterson currently has the use of a leased 1996
BMW 750 iL, which has an agreed value of $63,700 for purposes
of the lease. We believe that the Company paid for Mr.
Patterson to join Old Overton Country Club, which is located
in an exclusive suburb in Birmingham, Alabama, and that the
Company is paying his monthly dues. We also believe that the
Company paid for Mr. Patterson and his son to go hunting in
Alaska last year with several of the Company's other officers,
a Director and one or more customers of Community Bank. Were
you invited to go to Alaska? We certainly weren't!

-- We believe that Mr. Patterson employs at least six other
family members at the Company - Hodge Patterson, III, Tracy
Patterson, Kim Patterson, Edward Ferguson, Francesca "Frankie"
Ferguson and Kennon R. "Chip" Patterson, Jr. Although the
Company has not disclosed how much Mr. Patterson is paying
each of his family members, it has disclosed that his brother,
Hodge, was paid cash compensation of $208,600 and $206,029 in
1997 and 1998, respectively.

-- As if seven Pattersons on the Company's payroll are not
enough, the Company and its subsidiaries paid $1,139,433 and
$666,492 during 1997 and 1998, respectively, to Mr.
Patterson's wife, Carolyn, who owns and operates Heritage
Interiors, for her interior design services and various
furnishings. It is our understanding that Heritage Interiors
has no employees or location open to the public and that the
Company and its subsidiaries are the only customers of
Heritage Interiors.

-- We believe that Mr. Patterson and various other officers and
Directors of the Company and its subsidiaries are profiting
from their control of the Company by engaging in various
related-party transactions with the Company. For example, the
Company paid Heritage Valley Farms, which is owned by Mr.
Patterson, $96,300 and $51,465 in 1997 and 1998, respectively,
for lawncare services rendered to the Company and its
subsidiaries. In February 1999, Community Bank, the Company's
principal subsidiary, entered into a new

<PAGE> 4

contract with Heritage Valley Farms in which Community Bank
agreed to pay Mr. Patterson's business $7,058 per month for
lawncare services at only 12 of Community Bank's locations.

-- And who is guarding the hen house? Doug Schauer, Mr.
Patterson's son-in-law, and his accounting firm! They perform
the "preliminary audit work" for yet another accounting firm
that actually issues audit opinions to the Company. During
1998, the Company or its subsidiaries paid Mr. Patterson's
son-in-law and his accounting firm $165,000 for their
services. How can we ever be sure that Mr. Patterson is truly
accountable to the stockholders for his actions with an
auditor that has such a serious conflict of interest?
Needless to say, we are quite concerned about the cost of Mr. Patterson
and his family to the Company. Based on the best information available to us,
all of the payments to the Patterson family totaled at least $2,236,787 and
$1,918,232 in 1997 and 1998, respectively. We believe that these payments have
had a major adverse effect on your investment in the Company. The Company's
return on average assets has decreased from 1.11% in 1993 to 0.67% in 1998. We
believe that this decline in return on average assets is attributable in large
measure to the related-party transactions and the nepotism of Mr. Patterson and
to the acquiescence by the Board of Directors in such transactions.

Mr. Patterson evidently believes that he is not required to be
accountable to the stockholders of the Company. With the help of the incumbent
Directors, he has put in place a number of provisions, such as a "poison pill"
and certain amendments to the Bylaws of the Company, which we believe have the
effect of unreasonably protecting his and his family's positions with and
compensation received from the Company. THIS MUST CHANGE! IN ORDER TO ASSURE
THAT ALL STOCKHOLDERS' INVESTMENT IN THE COMPANY IS PROTECTED, WE BELIEVE THAT
THE STOCKHOLDERS MUST ELECT AS MANY NEW DIRECTORS AND ADOPT AS MANY OF THE
STOCKHOLDER PROPOSALS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT AS POSSIBLE.
In addition, the Company's proposal to reappoint the Company's auditor must not
be allowed to pass. In our view, the election of our nominees for Director will
allow the stockholders to have meaningful input in governing the operations of
the Company and will work towards ensuring that checks and balances are in place
for the future so that we can guard against the incumbent Directors' desire to
protect their personal interests. Just imagine what your investment could be
worth if Mr. Patterson weren't getting rich at your expense!
You must act now! There may not be a group of stockholders in the
future willing to take action to challenge Mr. Patterson if he continues to run
the Company as if it were his personal kingdom. The Patterson family must not
continue to get rich at the stockholders' expense. None of us can afford for Mr.
Patterson to continue conducting his business as usual.

Vote to support our nominees and the stockholder proposals in order to
protect your investment in the Company. We are significant stockholders of the
Company, our interests are aligned with yours and we have every incentive to
increase stockholder value. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING
IN PERSON, PLEASE COMPLETE, SIGN, DATE AND MAIL THE ENCLOSED BLUE PROXY CARD
TODAY IN THE ENCLOSED POSTAGE-PAID RETURN ENVELOPE! If you need help in voting
your shares, please call us at our toll-free telephone number above. Thank you
for your support.

Sincerely,

STOCKHOLDERS FOR INTEGRITY AND RESPONSIBILITY

<TABLE>
<CAPTION>
<S> <C> <C>
Bryan A. Corr Doris J. Corr R. C. Corr, Jr.
Tina M. Corr Joan M. Currier A. Lee Hanson
Jimmy C. Smith John David Currier William S. Wittmeier, Jr.

J. R. Whitlock, Sr.

</TABLE>

<PAGE> 5

PROXY STATEMENT
OF
THE STOCKHOLDERS FOR INTEGRITY AND RESPONSIBILITY

ANNUAL MEETING OF STOCKHOLDERS
OF
COMMUNITY BANCSHARES, INC.

APRIL 22, 1999

INTRODUCTION
This proxy statement (the "Proxy Statement") and the enclosed BLUE
proxy card are being furnished to holders of the common stock, par value $.10
per share (the "Common Stock"), of Community Bancshares, Inc., a Delaware
corporation (the "Company"), by the Stockholders for Integrity and
Responsibility (the "Committee") in connection with the solicitation of proxies
from the Company's stockholders to be used at the 1999 Annual Meeting of
Stockholders of the Company, including any adjournments or postponements,
continuations or reschedulings thereof (the "Annual Meeting"). The Committee is
comprised of Bryan A. Corr, Doris J. Corr, R. C. Corr, Jr., Joan M. Currier,
John David Currier, A. Lee Hanson, Jimmy C. Smith, J. R. Whitlock, Sr. and
William S. Wittmeier, Jr. According to preliminary proxy materials filed by the
Company with the Securities and Exchange Commission (the "Commission"), the
Annual Meeting is currently scheduled to be held on Thursday, April 22, 1999, at
the Administrative Building of the headquarters of the Company, Highway 231
South, Blountsville, Alabama, at 10:00 a.m., Central Time. This Proxy Statement
and the enclosed BLUE proxy card are first being furnished to the Company's
stockholders on or about April 14, 1999.
Your Proxy will authorize the Committee to take the following actions
at the Annual Meeting:

1. Elect the Directors nominated by the Committee (the
"Stockholder Nominees");
2. Adopt an amendment to the Bylaws of the Company (the "Bylaws")
to restrict the composition of the Board of Directors
(sometimes hereinafter referred to as the "Board") of the
Company (with the exception of the President) to independent
directors;
3. Adopt an amendment to the Bylaws to provide for
declassification of the Board of Directors;
4. Adopt an amendment to the Bylaws to separate the positions
of Chairman of the Board and President of the Company;
5. Adopt an amendment to the Bylaws to appoint an advisory
committee of stockholder representatives;

6. Adopt an amendment to the Bylaws to set forth certain
requirements with respect to the independent auditor of the
Company;
7. Reject the ratification of the appointment of Dudley,
Hopton-Jones, Sims & Freeman, PLLP to serve as independent
auditor of the Company and its subsidiaries for the year
ending December 31, 1999; and

8. The transaction of such other business as may properly come
before the Annual Meeting.

<PAGE> 6

Each of items 2, 3, 4, 5 and 6 is hereinafter referred to individually as a
"Stockholder Proposal" and collectively as the "Stockholder Proposals". Item 7
is hereinafter referred to as the "Management Proposal".

YOUR VOTE IS IMPORTANT! A VOTE FOR THE STOCKHOLDER NOMINEES AND THE
STOCKHOLDER PROPOSALS AND A VOTE AGAINST THE MANAGEMENT PROPOSAL IS A VOTE FOR
CHANGE. THE COMMITTEE URGES YOU TO JOIN IT AS DESCRIBED HEREIN.
GENERAL INFORMATION

The Annual Meeting will be held at the Administrative Building of the
headquarters of the Company, Highway 231 South, Blountsville, Alabama on
Thursday, April 22, 1999, at 10:00 a.m., Central Time. The Board of Directors
has fixed the record date for determining stockholders entitled to notice of and
to vote at the Annual Meeting as March 15, 1999 (the "Record Date").
Stockholders of record at the close of business on the Record Date will be
entitled to one vote at the Annual Meeting for each share of Common Stock held
by them on the Record Date. As of March 15, 1999, the total number of shares of
Common Stock reported by the Company as being outstanding was 4,656,847. To the
knowledge of the Committee, the Common Stock is the only class of voting
securities of the Company outstanding as of the Record Date.

TO ELECT THE STOCKHOLDER NOMINEES AND TO VOTE IN FAVOR OF THE
STOCKHOLDER PROPOSALS AND AGAINST THE MANAGEMENT PROPOSAL, PROMPTLY COMPLETE,
SIGN, DATE AND MAIL THE ENCLOSED BLUE PROXY CARD IN THE ENCLOSED POSTAGE-PAID
ENVELOPE. WHETHER YOU PLAN TO ATTEND THE ANNUAL MEETING OR NOT, THE COMMITTEE
URGES YOU TO COMPLETE AND RETURN THE ENCLOSED BLUE PROXY CARD. PROPERLY VOTING
THE ENCLOSED BLUE PROXY CARD AUTOMATICALLY REVOKES ANY PROXY PREVIOUSLY SIGNED
BY YOU. REMEMBER, ONLY YOUR LATEST DATED AND SIGNED PROXY WILL BE VOTED.

If the enclosed BLUE proxy card is properly executed and received by
the Committee before or at the Annual Meeting, the shares of Common Stock
represented thereby will be voted by the persons designated therein in
accordance with the directions indicated thereon. If you sign the BLUE proxy
card but do not make any specific choices, your proxy will vote your shares of
Common Stock as follows:

-- "FOR" the election of the Stockholder Nominees to the Board of
Directors.

-- "FOR" the Stockholder Proposal to amend the Bylaws to restrict
the composition of the Board of Directors (with the exception
of the President) to independent directors.

-- "FOR" the Stockholder Proposal to amend the Bylaws to provide
for declassification of the Board of Directors.

-- "FOR" the Stockholder Proposal to amend the Bylaws to separate
the position of Chairman of the Board and President of the
Company.

-- "FOR" the Stockholder Proposal to amend the Bylaws to appoint
an advisory committee of stockholder representatives.

-- "FOR" the Stockholder Proposal to amend the Bylaws to set
forth certain requirements with respect to the independent
auditor of the Company.

<PAGE> 7

-- "AGAINST" the Management Proposal to ratify the appointment of
Dudley, Hopton-Jones, Sims & Freeman, PLLP to serve as
independent auditor of the Company and its subsidiaries for
the year ending December 31, 1999.

THIS SOLICITATION IS BEING MADE BY THE COMMITTEE AND NOT ON BEHALF OF
THE BOARD OF DIRECTORS OF THE COMPANY.

THE COMMITTEE

The Committee is composed of Bryan A. Corr, Doris J. Corr, R. C. Corr,
Jr., Tina M. Corr, Joan M. Currier, John David Currier, A. Lee Hanson, Jimmy C.
Smith, J. R. Whitlock, Sr. and William S. Wittmeier, Jr. The Committee
beneficially owns 464,003 shares, representing approximately 10.0% of the shares
of Common Stock reported by the Company as being outstanding as of March 19,
1999. The Committee intends to vote the shares of Common Stock it beneficially
owns for the Stockholder Nominees and the Stockholder Proposals and against the
Management Proposal.

The members of the Committee and certain additional persons, including
the Stockholder Nominees, may be deemed "participants" in this proxy
solicitation within the meaning of Rule 14a-11(b) promulgated by the Commission
under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Certain information relating to the beneficial ownership of Common Stock by
participants in the solicitation and certain other information is contained in
Schedules I-A and I-B to this Proxy Statement and is hereby incorporated herein
by reference.

None of the participants in this proxy solicitation or any of their
respective associates (i) is, or was within the past year, a party to any
contract, arrangements or understandings with any person with respect to any
securities of the Company; (ii) owns any securities of any parent or subsidiary
of the Company; or (iii) has any arrangements or understandings with any person
or persons with respect to any future employment by the Company or its
affiliates, or with respect to any future transactions to which the Company or
any of its affiliates may be a party.

REASONS FOR THE SOLICITATION

The Committee believes that the Annual Meeting is critical to the
future of the Company and its stockholders and, accordingly, is requesting
proxies from stockholders of the Company to take certain action at the Annual
Meeting. The Committee's concerns are based upon, among other things, the fact
that the Company's return on average assets decreased from 1.11% in 1993 to
0.67% in 1998. The Committee believes that this decline in return on average
assets is attributable in large measure to the related-party transactions and
the nepotism of the Company's Chairman of the Board, President and Chief
Executive Officer, Kennon R. Patterson, Sr. ("Mr. Patterson") and to the
acquiescence by the Board of Directors in such transactions.

Over the past few years, the Board of Directors has entered into an
unusually large and costly number of transactions with Mr. Patterson and various
members of the Patterson family. Some of those transactions are described in the
Company's preliminary proxy materials. The Committee believes that these
transactions have had a detrimental effect on the operations and operating
results of the Company, and consequently on the value of each and every
stockholder's investment in the Company.

<PAGE> 8

In 1996, the Company amended its employment agreement with Mr.
Patterson to extend it through 2008. The Company agreed to employ Mr. Patterson
for 12 years and pay him more than $14.8 million. He was paid cash compensation
of $694,600 and $778,246 during 1997 and 1998, respectively. Mr. Patterson's
cash compensation is clearly excessive compared to that of executives of other
bank holding companies in Alabama and Tennessee as demonstrated by the following
graph:

COMPARISON OF CASH COMPENSATION
OF VARIOUS CHIEF EXECUTIVE OFFICERS (1)

1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>

Community Bancshares, Inc. $316,900 $620,400 $570,400 $632,400 $694,600 $778,246

Auburn National 172,100 189,048 191,248 215,000 229,000 --
Bancorporation, Inc.(3)

BankFirst Corporation(2) 207,934 234,349 272,000

Peoples Banktrust Co., Inc. 152,164 170,727 182,570 205,036 183,888 197,128
(2)(3)

South Alabama 210,000 130,000 142,500 155,000 167,500 176,000
Bancorporation(2)(3)

</TABLE>

(1) Source: Annual proxy statements. Cash compensation disclosed by such
companies in accordance with the rules of the Commission generally
includes salary, bonuses and directors' fees, except as otherwise
noted. Long-term compensation, pension benefits (including ESOP and
401(k) contributions), stock options, insurance, automobile use and
other perquisites are not included in cash compensation.
(2) Includes salary and bonus only.
(3) Data for 1998 was unavailable at the date hereof.

----------------------
In addition to his cash compensation, Mr. Patterson appears to be
receiving significant other benefits from the Company. The Committee believes
that through the Company, Mr. Patterson has the use of a leased 1996 BMW 750 iL,
which has an agreed value of $63,700 for purposes of the lease. The Committee
believes that the Company paid for Mr. Patterson to join Old Overton Country
Club, which is located in an exclusive suburb in Birmingham, Alabama, and that
the Company is paying his monthly dues. The Committee also believes that the
Company paid for Mr. Patterson and his son to go hunting in Alaska last year
with several of the Company's other officers, a Director and one or more
customers of Community Bank.

The Committee believes that Mr. Patterson employs at least six other
family members at the Company - Hodge Patterson, III, Tracy Patterson, Kim
Patterson, Edward Ferguson, Francesca "Frankie" Ferguson and Kennon R. "Chip"
Patterson, Jr. Although the Company has not disclosed in its preliminary proxy
materials how much Mr. Patterson is paying each of his family members, it has
disclosed that his brother, Hodge, was paid cash compensation of $208,600 and
$206,029 in 1997 and 1998, respectively.

<PAGE> 9

In addition to the foregoing, the Company and its subsidiaries paid
$1,139,433 and $666,492 during 1997 and 1998, respectively, to Mr. Patterson's
wife, Carolyn, who owns and operates Heritage Interiors, for her interior design
services and various furnishings. The Committee understands that Heritage
Interiors has no employees or location open to the public and that the Company
and its subsidiaries are the only customers of Heritage Interiors.

The Committee believes that Mr. Patterson and various other officers
and Directors of the Company and its subsidiaries are profiting from their
control of the Company by engaging in various related-party transactions with
the Company. For example, the Company paid Heritage Valley Farms, which is owned
by Mr. Patterson, $96,300 and $51,465 in 1997 and 1998, respectively, for
lawncare services rendered to the Company and its subsidiaries. In February
1999, Community Bank, the Company's principal subsidiary, entered into a new
contract with Heritage Valley Farms in which Community Bank agreed to pay Mr.
Patterson's business $7,058 per month for lawncare services at only 12 of
Community Bank's locations.

Mr. Patterson's son-in-law, Doug Schauer, and his accounting firm,
Schauer, Taylor, Cox & Vise, P.C., perform "preliminary audit work" for the
Company which is reviewed by another accounting firm, Dudley, Hopton- Jones,
Sims & Freeman, PLLP, which actually issues audit opinions to the Company.
During 1998, the Company paid Mr. Patterson's son-in-law and his accounting firm
$165,000 for their services. The Committee does not believe that Mr. Patterson
can be truly accountable to the stockholders for his actions with an auditor
that has such a serious conflict of interest.

Needless to say, the Committee is quite concerned about the cost of
these transactions to the Company and its stockholders. Based on information
available to the Committee, all of the payments to the Patterson family totaled
at least $2,236,787 and $1,918,232 in 1997 and 1998, respectively. The Committee
believes that these payments have had a major adverse effect on the Company's
return on average assets as demonstrated by the following graph:

PAYMENTS TO KENNON R. PATTERSON, SR. AND RELATED PARTIES
COMPARED TO RETURN ON AVERAGE ASSETS (ROAA)
OF COMMUNITY BANCSHARES, INC. (1)

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
1993 1994 1995 1996 1997 1998
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Payment to $477,650 $1,026,449 $970,546 $1,273,572 $2,236,787 $1,918,232
Kennon R.
Patterson,
Sr. and
Related
Parties (2)
- ----------------------------------------------------------------------------------------------------------------------------------
ROAA 1.107% 0.974% 0.824% 0.820% 0.742% 0.665%
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Source: Annual proxy statements and Forms 10-K, as filed with the
Commission.

(2) Payments by the Company to Mr. Patterson and his related parties
include (i) his cash compensation; (ii) the cash compensation paid to
Mr. Patterson's brother, Hodge Patterson, III; (iii) the payments to
Heritage Interiors, which is owned by Mr. Patterson's wife, Carolyn
Patterson (except that information respecting any payments made during
1993 was unavailable); (iv) the payments made to Royal Acres, which is
owned by Mr. Patterson; (v) the payments made to Heritage Farms, which
is owned by Mr. Patterson; (vi) the Directors' fees paid to Mr.
Patterson's brother-in-law, Edward Ferguson; and (viii) the accounting
fees paid to Schauer, Taylor, Cox & Vise, P.C., an accounting firm of
which Mr. Patterson's son-in-law, Doug Schauer, is a shareholder. The
cash compensation paid to Mr. Patterson and his brother, Hodge
Patterson, III, includes salary, bonuses and other cash payments
(including Directors' fees), but excludes long-term compensation,
pension benefits (including ESOP and 401(k) contributions), stock
options, insurance, automobile use, partnership distributions from
Com-Pac (a partnership of which Mr. Patterson is a partner that leased
and sold property to the Company and/or its subsidiaries) and other
perquisites.

----------------------

The Committee is seeking a change in the direction of the Company in a
positive manner, to the benefit of all stockholders. The Committee believes that
it is in the stockholders' best interests to elect the Stockholder Nominees,
adopt the Stockholder Proposals and vote against the Management Proposal. In the
Committee's view, the election of the Stockholder Nominees and the adoption of
the Stockholder Proposals will allow the stockholders to have meaningful input
in governing the operations of the Company and will work towards ensuring that
checks and balances are in place for the future.

The Committee urges you to act now! There may not be a group of
stockholders in the future willing to take action to challenge Mr. Patterson if
he continues to run the Company as if it were his personal fiefdom. The
Patterson family must not continue to get rich at the stockholders' expense. The
stockholders of the Company cannot afford for Mr. Patterson to continue
conducting his business as usual.

YOUR VOTE IS IMPORTANT! TO VOTE FOR THE STOCKHOLDER NOMINEES AND THE
STOCKHOLDER PROPOSALS AND TO VOTE AGAINST THE MANAGEMENT PROPOSAL IN ORDER TO
SAVE YOUR INVESTMENT IN THE COMPANY, COMPLETE, SIGN, DATE AND RETURN THE BLUE
PROXY CARD TODAY IN THE ENCLOSED POSTAGE-PAID ENVELOPE! IF YOU HAVE ALREADY
SUBMITTED A PROXY CARD TO THE BOARD OF DIRECTORS OF THE COMPANY, YOU MAY CHANGE
YOUR VOTE BY SIGNING, DATING AND RETURNING THE ENCLOSED BLUE PROXY CARD WHICH
WILL BE COUNTED AT THE ANNUAL MEETING.

<PAGE> 10

BACKGROUND OF THE SOLICITATION

On November 24, 1998, R. C. Corr, Jr., A. Lee Hanson, Jimmy C. Smith,
J. R. Whitlock, Sr. and William S. Wittmeier, Jr., each of whom is a member of
the Committee (collectively, the "Proponents"), submitted the Stockholder
Proposals to the Company in an effort to safeguard against the excesses of
management described above. On December 17, 1998, the Proponents, together with
Bryan A. Corr, who is a stockholder and was then a Director of the Company, met
with Mr. Patterson and Bishop K. Walker, Vice Chairman of the Company, for the
purpose of addressing the concerns underlying the Stockholder Proposals in a
serious and substantive manner in the hope that the Stockholder Proposals could
ultimately be withdrawn. Each of the Proponents expressed to management of the
Company his individual concerns, including the excessive compensation of
management and the number of related-party transactions between the Company and
various members of management and members of their families. At the conclusion
of the meeting, management indicated that it would promptly make a response to
the persons present at the meeting.

At a meeting of the Board of Directors on January 7, 1999, a
stockholder rights plan, i.e., a "poison pill" (the "Rights Plan"), was adopted
and it is believed that certain additional actions leading to the further
entrenchment of management were taken. For example, the Bylaws of the Company
were amended to require the vote of the holders of 80% of the Common Stock
present and voting at a meeting of stockholders to alter, amend or repeal the
Bylaws. Although the Company has not stated its reason for this latter action,
it should be noted that at the time it raised the voting requirement, the Board
of Directors was well aware of the Stockholder Proposals, each of which is a
proposed amendment to the Bylaws.

The Rights Plan permits the Board of Directors, under certain
circumstances, to declare any stockholder or group of stockholders owning 10% or
more of the Common Stock of the Company an "adverse person". Once designated as
an "adverse person", the stockholder or group of stockholders cannot acquire any
additional shares of Common Stock of the Company without triggering the rights
of the non-adverse stockholders under the Rights Plan to buy a number of
additional shares of Common Stock of the Company having a market value of twice
the exercise price of such rights, thereby diluting the percentage ownership
interest in the Company of the stockholder or group of stockholders determined
to be an "adverse person". The Company, in a public filing with the Commission
on or about March 3, 1999, disclosed that the Board had determined that the
Proponents comprised an "adverse person" and lowered the threshold for
triggering the rights under the Rights Plan to 10.5% for this group. The
Committee believes that the Board, influenced by management of the Company, is
misusing the Rights Plan in an effort to prevent the Committee from expressing
its legitimate concerns about the Company to the stockholders.

At the time the Proponents submitted their proposals to the Company,
there were three members of Mr. Patterson's family, in addition to Mr. Patterson
himself, who were Directors of the Company. The Committee understands that two
of these three Patterson family members resigned from their positions as
Directors of the Company in advance of the Board meeting held on January 7,
1999. The Committee believes such action to be an indication that the Board of
Directors and management of the Company recognize the merit of the Proponet's
concerns.

On December 22, 1998, R. C. Corr, Jr. and his wife, Doris J. Corr,
began requesting a list of the stockholders of the Company and certain related
information (the "Stocklist Materials"). Given the Company's refusal to provide
them with the Stocklist Materials, R. C. Corr, Jr. and Doris J. Corr were forced
to file an action in the Court of Chancery in Delaware (the "Stocklist Lawsuit")
to compel the Company to provide the information to which they were statutorily
entitled under Delaware law. Only after the filing of the Stocklist Lawsuit did
the Company finally provide the Stocklist Materials to R. C. Corr, Jr. and Doris
J. Corr on or about March 6, 1999 in connection with the settlement of the
Stocklist Lawsuit.

<PAGE> 11

Effective January 28, 1999, Bryan A. Corr resigned as a Director of the
Company. The letter by which Mr. Corr tendered his resignation to the Board is
set forth in full below.

BRYAN A. CORR
POST OFFICE BOX 1500
600 THIRD AVENUE, EAST
ONEONTA, ALABAMA 35121-0017
(205) 625-3581

January 28, 1999

VIA FEDERAL EXPRESS

The Board of Directors
Community Bancshares, Inc.
68149 Main Street
Blountsville, Alabama 35031

Attn: Mr. Kennon R. Patterson, Sr.,
Chairman of the Board, President
and Chief Executive Officer

RE: RESIGNATION AS A DIRECTOR OF COMMUNITY BANCSHARES, INC.

Gentlemen:

The actions of the Board of Directors (the "Board") of
Community Bancshares, Inc. (the "Company") since I became a Director in
1997, have increasingly troubled me. More importantly, the actions of
the Board and management of the Company since the beginning of this
year are both astounding and disappointing to me. Accordingly, I hereby
tender my resignation as a Director of the Company effective
immediately.

Although I tender my resignation with great regret, it is
nevertheless a resignation that has been compelled by the actions of
the Board and management. Those actions include, but are not limited
to, the following:

1. The practice of management in failing to provide the
members of the Board with a "Board Book" or similar information for
each of the Board's meetings. Such preparatory materials should include
full, complete and accurate information respecting the Company's
operations in order that the members of the Board might be fully
informed and carry out effectively their respective responsibilities
and duties.

2. The refusal by the Board, a majority of which (was until
recently) composed of members of management, to adequately examine
related-party transactions to which certain members of both the Board
and management are parties. As you know, each time that I attempted to
raise a question in connection with any related-party transaction, Ken
Patterson, who is a party to many such transactions, refused to permit
any meaningful discussion to take place concerning it.

<PAGE> 12

3. The policy of the Board in failing to place the interests
of the stockholders of the Company ahead of their own as evidenced by
the various related-party transactions referenced above as well as the
actions taken by the Board at its meeting on January 7, 1999. The
"anti-takeover" measures adopted at that Board meeting will only have
the ultimate effect of entrenching the Board and management and of
making both unresponsive to the Company's stockholders.

4. The failure of the Board and management to respond to the
proposals made by Jimmy C. Smith, J. R. Whitlock, Sr., A. Lee Hanson,
William S. Wittmeier, Jr., and R. C. Corr, Jr. As I believe you know,
these individuals and I met with Ken and B. K. Walker on December 17,
1998. At that meeting, each of the proponents voiced the concerns
giving rise to his respective proposal. At the conclusion of the
meeting, Ken assured us that he would endeavor to respond to the
concerns voiced at the meeting within a short period of time. No
response has yet been made, unless management's attempt to exclude the
proposals from the Company's proxy materials relating to the 1999
annual meeting of stockholders and the actions taken by the Board on
January 7, 1999 are to be deemed to be the intended response.

5. The numerous misrepresentations made by Ken in his letter
to the stockholders of the Company dated January 8, 1999. In that
letter, under the guise of informing the Company's stockholders of a
dividend payment, Ken made numerous misrepresentations, including
claiming that (i) the proponents are attempting to gain control of the
Company; (ii) the proponents intend to sell the Company; (iii) the
proposals are a "first step" towards such efforts; (iv) the adoption of
the proposals would somehow facilitate such efforts and are so
intended; and (v) the Board is "united" in opposition to the proposals.
There is no basis in fact for any of those representations. Nothing in
the proposals themselves or the proponents' statements in support of
the proposals, and nothing in the Schedule 13D which I have filed with
the Securities and Exchange Commission could remotely be interpreted as
supporting such claims. Ken himself is aware that the Board of the
Company is not "united" in its opposition to the proposals.

In addition to the foregoing grounds, I am compelled to tender
my resignation as a Director of the Company because there is no doubt
that I am unable to effectively function as a member of the Board due
to several ongoing practices of management in relation to the Board.
Specifically, Board meetings continue to be called without providing
any agenda for such meetings or any preparatory materials. More
importantly, it appears that Board action has been scripted in advance,
thus discouraging open discussion among Board members. Accordingly, I
believe that the discharge of my responsibilities as a Director of the
Company is now impossible.

Because of my disagreement with the Company on the matters
described above which relate to the Company's operations, policies and
practices, I hereby request that the Company file a Current Report on
Form 8-K with the Securities and Exchange Commission disclosing my
resignation from the Board of the Company and describing the reasons
therefor, and attach this letter thereto.

Sincerely,

/s/ Bryan A. Corr

Bryan A. Corr

BAC/lm
cc: Bishop K. Walker, Esq.

----------------

<PAGE> 13

The Company filed a Current Report on Form 8-K with the Commission on
February 4, 1999, in which it disclosed Mr. Corr's resignation, described his
reasons for his resignation and stated the Company's disagreements with those
reasons. However, the Company has noted some additional and different reasons
for its disagreement with Mr. Corr in the Company's preliminary proxy materials
and again in its definitive proxy materials. The Committee has no explanation
for why the Company would now be willing to tell the stockholders something in
its definitive proxy materials that it was not willing to tell the Commission
earlier in either its Current Report on Form 8-K or its preliminary proxy
materials.

Despite the Proponents' attempt to address with management of the
Company the concerns underlying the Stockholder Proposals, the Committee
believes management has refused to address the Proponents' concerns in a serious
and substantive manner, preferring instead to entrench themselves through the
adoption of the Rights Plan, amendment of the Bylaws and certain other actions.
The Committee has concluded that the Board of Directors and management of the
Company have no intention of addressing these concerns other than in a fashion
designed to promote management's own self-interest. Accordingly, the Committee
believes that the election of the Stockholder Nominees and the adoption of the
Stockholder Proposals constitute the beginning of much-needed change in the
management and governance of the Company. It is for these reasons that the
Committee recommends a vote "FOR" the Stockholder Nominees and the Stockholder
Proposals and "AGAINST" the Management Proposal.

CERTAIN DELAWARE LAW MATTERS

The Stockholder Proposals constitute proposed amendments to the Bylaws
of the Company. Under applicable provisions of the Delaware General Corporation
Law (the "DGCL"), the power to make, amend, or repeal bylaws resides in the
stockholders consideration. The Committee understands the Company's position to
be that the Stockholders Proposals improperly intrude on the authority of the
Board of Directors under the DGCL to manage the business and affairs of the
Company. While the issue is not free from doubt and no assurances can be given
with regard to the ultimate judicial determination of this issue, the Committee
believes that the DGCL does not impose any limitations on the substance of
stockholder initiated amendments to corporate bylaws, such as the Stockholder
Proposals. Accordingly, the Committee believes that the Stockholder Proposals
are proper matters for the stockholders of the Company to consider at the Annual
Meeting. In the event that any of the Stockholder Proposals is adopted, but the
Company takes the position that the adoption thereof is invalid or ineffective
under the DGCL, the Committee intends to oppose such a position vigorously,
including, if necessary, seeking injunctive and declaratory relief.

ELECTION OF STOCKHOLDER NOMINEES
AND
STOCKHOLDER PROPOSALS

The Committee is soliciting proxies in support for the Stockholder
Nominees and the Stockholder Proposals to be used at the Annual Meeting.

PROPOSAL 1 - ELECTION OF THE STOCKHOLDER NOMINEES

According to the Company's preliminary proxy materials filed with the
Commission, the Company's Board of Directors consists of 11 Directors, of which
four are to be elected at the Annual Meeting. The Board of Directors is divided
into three classes, the members of which serve staggered three-year terms. If
all of the Stockholder Nominees are elected, the Stockholder Nominees would
constitute four out of 11 Directors.

When the Bylaws were amended and restated by the Board of Directors in
January 1999, a provision was included that required stockholders who desire to
submit nominations of persons for election to the Board of Directors to provide
the Company with certain information about such nominees within a certain time
period prior to the annual meeting of stockholders. This requirement, which had
not been present in prior years, is described in the Company's preliminary proxy
materials. However, at the time of the adoption of such provision, the required
time period with respect to the Annual Meeting had already expired, thereby
rendering the provision impossible to be complied with by any stockholder.
Accordingly, on March 9, 1999, Bryan A. Corr wrote a letter to the Company and
the attention of Mr. Patterson requesting the Company's concurrence that the
advance notice provision was only intended to apply to future annual meetings,
and not to the Annual Meeting. The Company has chosen not to respond to Mr.
Corr's inquiry. The Committee believes that fundamental fairness requires the
notice provision to be viewed prospectively only and, upon the advice of
counsel, that any attempt by the Company to enforce such notice provision for
the Annual Meeting would be prohibited under Delaware law. Accordingly, the
Committee is soliciting proxies for the election of the Stockholder Nominees
described herein. Should the Company take the position that the notice
requirement is effective for the Annual Meeting, the Committee intends to oppose
such a determination vigorously, including, if necessary, seeking injunctive and
declaratory relief.

<PAGE> 14

The Committee proposes that the Company's stockholders elect the
Stockholder Nominees as Directors of the Company at the Annual Meeting. The
Stockholder Nominees are listed below and have furnished the following
information concerning their principal occupations or employment and certain
other matters. Provided the Stockholder Proposal relating to the
declassification of the Board of Directors is approved by the stockholders and
the Management Proposal relating to an Amended and Restated Certificate of
Incorporation of the Company is rejected by the stockholders, each of the
Stockholder Nominees, if elected, would hold office until the 2000 Annual
Meeting of Stockholders and until a successor has been elected and qualified or
until his earlier death, resignation or removal. If, however, the Stockholder
Proposal relating to declassification is not approved by the stockholders and
the Management Proposal relating to an Amended and Restated Certificate of the
Company is not rejected by the stockholders, the Stockholder Nominees would hold
office as Class III Directors until the 2002 Annual Meeting.

Each of the Stockholder Nominees identified below has agreed to serve
as a Director of the Company if elected. Although the Committee has no reason to
believe that any of the Stockholder Nominees will be unable to serve as
Directors, if any one or more of the Stockholder Nominees is not available for
election, the persons named on the BLUE proxy card will vote for the election of
such other nominees as may be proposed by the Committee. Should the Company's
proxy statement indicate that the Company intends to increase the number of
Directors to be elected at the Annual Meeting, or should the Board of Directors
nominate additional persons for election as Directors, the Committee currently
intends to propose additional nominees for such Directorships. If this happens,
the persons named on the BLUE proxy card will use your proxy to vote for the
additional nominees named to fill these Directorships, subject to the proxy
solicitation rules of the Commission.

The Committee's Nominees for Directors

The table set forth below identifies the four Stockholder Nominees for
election as Directors of the Company and provides certain information concerning
each of these nominees.

Name and Principal Business Principal Occupation and Business Experience During
Address Age Last Five Years and Current Directorships
------------------------------ ----------- ------------------------------------------------------------
<S> <C> <C>
Bryan A. Corr 38 Corr, Inc. - Chief Executive Officer, President, Director
CorrComm, L.L.C. and a principal shareholder; CorrComm, L.L.C.- Employee;
Post Office Box 1500 Community Bancshares, Inc. - Director (1997-1999);
600 Third Avenue East Community Bank - Director (1997-1998);
Oneonta, Alabama 35121 Community Insurance Corp. - Director (1997-1998);
Wireless One, Inc. - Treasurer and a Director (1994-1995)

Jimmy C. Smith 49 Jimmy Smith Chevrolet-Olds, Inc. - President
Post Office Box 1135 and a Director
1630 2nd Avenue East
Oneonta, Alabama 35121

J. R. Whitlock, Sr. 60 Austin Powder Company - Alabama Location Manager; EZ
3410 Rocky Hollow Road Credit Motors - Consultant (1995 - present)
Blountsville, Alabama 35031

William S. Wittmeier, Jr. 42 Wittmeier Real Estate Services, Inc. - President
1 Creek Side Way, S.W. and a Director
Rome, Georgia 30165
</TABLE>

- ----------------

<PAGE> 15

Bryan A. Corr, age 38, is the Chief Executive Officer, President,
Director and a principal shareholder of Corr, Inc., the parent company of
CorrComm, L.L.C. Mr. Corr is also an employee of CorrComm, L.L.C., which is
engaged in operating, acquiring, constructing and disposing of cellular
telephone systems in north Alabama. Mr. Corr previously served as a Director of
Community Bancshares, Inc. from 1997 until his resignation on January 28, 1999,
and as a Director of two of its subsidiaries, Community Bank and Community
Insurance Corp., from 1997 through November 30, 1998. During 1994 and 1995, Mr.
Corr was Treasurer and a Director of Wireless One, Inc.

Jimmy C. Smith, age 49, is the President, Director and the sole
shareholder of Jimmy Smith Chevrolet-Olds, Inc., which was founded by Mr. Smith
in 1981. From 1985 until 1998, Mr. Smith served as a "City Director" of a local
advisory board for the Oneonta branch of Community Bank.

J. R. Whitlock, Sr., age 60, has held the position of Alabama Location
Manager of Austin Powder Company for nine years. Since 1995, Mr. Whitlock has
been a consultant to EZ Credit Motors, a previously-owned vehicle dealership
owned by his wife. For several years ending in 1997, Mr. Whitlock served as a
"City Director" of a local advisory board for the Oneonta branch of Community
Bank.

William S. Wittmeier, Jr.,age 42, is the President, Director and a
principal shareholder of Wittmeier Real Estate Services, Inc., which was founded
by Mr. Wittmeier in 1994. Mr. Wittmeier is a certified real property appraiser.

----------------

There are no arrangements or understandings between the Stockholder
Nominees and any other person pursuant to which they were selected as nominees.
It is anticipated that each of the Stockholder Nominees, upon his election as a
Director of the Company, will receive Director's fees consistent with the
Company's practices as set forth in the Company's preliminary proxy materials.

None of the Stockholder Nominees or any of their respective associates
(i) has any arrangements or understandings with any person or persons with
respect to any future employment by the Company or its affiliates, or with
respect to any future transactions to which the Company or any of its affiliates
may be a party; or (ii) has carried on any occupation or employment with the
Company or any corporation or organization which is or was a parent, subsidiary
or other affiliate of the Company. No family relationships exist among the
Stockholder Nominees or between any of the Stockholder Nominees and any Director
or executive officer of the Company.

Certain additional information relating to, among other things, the
ownership, purchase and sale of securities of the Company by the Stockholder
Nominees and their respective associates, or arrangements with respect thereto,
is set forth in Schedules I-A and I-B to this Proxy Statement and is hereby
incorporated herein by reference.

In accordance with applicable rules of the Commission, the BLUE proxy
card delivered with this Proxy Statement provides each stockholder with the
opportunity to designate the names of any of the Stockholder Nominees whom such
stockholder does not desire to elect to the Board of Directors.

THE COMMITTEE RECOMMENDS A VOTE "FOR" ALL OF THE STOCKHOLDER NOMINEES.

PROPOSAL 2 - INDEPENDENT DIRECTORS

One of the Proponents proposed that the Bylaws of the Company be
amended to restrict the composition of the Board of Directors of the Company
(with the exception of President) to independent Directors. The full text of
this Stockholder Proposal is set forth in Schedule II-A to this Proxy Statement
and is incorporated herein by reference.

<PAGE> 16

The Company's recent governance practices raise serious questions about
the Board's loyalty to the stockholders and its ability to make independent
decisions. The Board consists of 11 Directors, five of whom are executive
officers or employees of the Company and its subsidiaries and two of whom are
members of the Patterson family. The Committee believes that, given the critical
importance of the Board of Directors in formulating corporate policies and
monitoring the activities of management, it is in the best interests of the
stockholders of the Company to restrict the composition of the Board to
independent Directors, with the exception of one management representative who
will be the President of the Company. In the Committee's view, Board members
should be independent and certainly not members of the same family.

An independent Director should be someone without ties to management or
the Company that could interfere or appear to interfere with the Director's
loyalty to the stockholders or ability to exercise independent judgment in the
stockholders' best interest. The Committee believes that an independent Board is
an essential component of any effective governance system because such a Board
does not have even the appearance of conflicts of interest and is best able to
represent the stockholders and inspire stockholder confidence in the
impartiality of its decisions. While the Committee acknowledges the importance
of input from people with intimate knowledge of the Company in Board or
committee deliberations, the Committee believes that key management executives
can take an active part in Board discussions without being Board members.
However, it is necessary for the Company to have impartial and independent Board
members when making decisions that are critical to the future of this Company,
such as management changes and executive compensation.

Requiring that the Board of Directors be composed of a majority of
Directors who are not employed by the Company or from the same family will serve
to prevent members of the Board from (i) unreasonably guaranteeing themselves
employment for numerous years, (ii) paying themselves huge salaries and bonuses
with large payments if their employment is terminated for any reason, (iii)
providing luxury vehicles for personal use, and (iv) granting service contracts
to members of the Board and their family members, all at the expense of the
stockholders.

The Committee believes that adoption of this Stockholder Proposal is
necessary to assure stockholders that the Board's loyalties are not divided in
any respect. It is of paramount importance that the Board be able to make
impartial decisions in order to achieve the Company's goals and to enhance its
long-term value and thus your investment. This Stockholder Proposal would, if
adopted, be effective commencing with the election of the Directors of the
Company at the 2000 annual meeting of stockholders of the Company.

For a discussion of certain issues concerning the effect of the DGCL
on this Stockholder Proposal, see "Certain Delaware Law Matters".

THE COMMITTEE RECOMMENDS A VOTE "FOR" APPROVAL OF THE STOCKHOLDER
PROPOSAL TO ADOPT AN AMENDMENT TO THE BYLAWS OF THE COMPANY TO RESTRICT THE
COMPOSITION OF THE BOARD OF DIRECTORS OF THE COMPANY (WITH THE EXCEPTION OF THE
PRESIDENT) TO INDEPENDENT DIRECTORS.

PROPOSAL 3 - DECLASSIFICATION

One of the Proponents proposed that the Bylaws of the Company be
amended to effect the declassification of the Board of Directors of the Company
by repealing Article II, Section 2 and Article III, Sections 1 and 2 of the
Bylaws and replacing those sections with the predecessor provisions as they
existed prior to the 1996 annual meeting of stockholders of the Company, except
that the number of Directors is to be fixed at nine. The full text of this
Stockholder Proposal is set forth in Schedule II-B to this Proxy Statement and
is hereby incorporated herein by reference.

Until three years ago, the stockholders of the Company elected all the
Directors annually. At the annual meeting of stockholders of the Company held on
March 26, 1996, the stockholders approved an amendment to the Bylaws of the
Company providing for a "classified" Board of Directors, whereby Directors are
elected to one of three different classes, with each class serving a term of
three years each. The effect of this provision of the Bylaws is that

<PAGE> 17

anyone wishing to change the management of the Company would have to replace the
management slate of Directors in two successive elections over a two-year
period.

The Bylaws of the Company also provide that the number of directors of
the Company is to be fixed from time to time by the Board of Directors.
According to the Company's preliminary proxy materials filed with the
Commission, the number of Directors which has been fixed by the Board of
Directors of the Company is 11 Directors. Of such number, five are executive
officers or employees of the Company or its subsidiaries and two are members of
the Patterson family.

According to the Company's 1996 proxy statement, one of the purposes of
the Company's changing to a classified Board was "to assure continuity and
stability in the Board of Directors' leadership and policies". However, at the
time the Company made that statement there was no problem whatsoever with
continuity and stability in leadership: the incumbent Directors of the Company
included Kennon R. Patterson, Sr., who had been Chairman, Chief Executive
Officer, President and a Director of the Company since 1983; Denny G. Kelly, who
had been an executive officer of the Company since 1985 and a Director since
1986; Bishop K. Walker, Jr., who had been an executive officer of the Company
since 1987 and a Director since 1983; and Hodge Patterson, III, who had been an
executive officer of the Company since 1988 and a Director since 1993. As of the
1998 annual meeting of stockholders, before two members of Mr. Patterson's
family resigned from their positions as Directors of the Company in advance of
the Board meeting on January 7, 1999, the members of the Board of Directors who
are also employees of the Company or its subsidiaries had over 75 years of
combined experience with the Company or its affiliates! In other words, the
classified Board system maintained by the Company since 1996 has only served to
protect the incumbency of the current Board of Directors, particularly those
Directors who are also employees of the Company or its subsidiaries. In fact,
the Company's preliminary proxy materials for the Annual Meeting admit that
"Management continuity and stability has [sic] not been a problem for the
Company". Such a system is not, in the Committee's view, in the best interests
of the Company or its stockholders. The Committee believes that, by frustrating
the ability of the stockholders of the Company to elect all of the Directors
annually, the Company has attempted to immunize the incumbent majority of the
Board from any accountability to the stockholders. The stockholders of the
Company deserve the opportunity to vote on the election of each Director
annually, not just once every three years. Since the Board of Directors has the
responsibility, among other things, to oversee the management of the Company, it
is important that the stockholders have the ability effectively to participate
in the selection of Directors by registering annually their approval or
disapproval of the job that the Directors are doing.

In the event that a third party were dissatisfied with the way the
Company is being run and wanted to take over - even if such an outside party
were to own or be willing to buy a majority interest in the Company - it would
take two elections to replace the Board; this would have a chilling effect on
the willingness of any outside party to attempt to increase stockholder value.
The Committee is not proposing any kind of takeover, contrary to what the
Company has said about the Committee, and the Committee is not aware of any
party who is. While declassifying the Board of Directors would enable an
insurgent to acquire control of the Board through a single election of
Directors, the Committee believes that any concerns arising therefrom are
outweighed by the beneficial consideration that electing all Directors to the
Board annually will promote a culture of responsiveness and dynamism at the
Company - qualities necessary to meet the challenge of increasing stockholder
value.

In addition to the declassification of the Board of Directors, the
Committee's proposed Bylaw amendment would fix the number of Directors at nine.
The purpose of this part of the Stockholder Proposal is to prevent the incumbent
Board of Directors from frustrating the ability of the stockholders to elect the
entire Board of Directors by unilaterally expanding the size of the Board and
"packing" it with hand-picked allies.

For a discussion of certain issues concerning the effect of the DGCL
on this Stockholder Proposal, see "Certain Delaware Law Matters".

<PAGE> 18

This Stockholder Proposal would, if adopted, be effective commencing
with the election of the Directors of the Company at the 2000 Annual Meeting of
stockholders of the Company.

THE COMMITTEE RECOMMENDS A VOTE "FOR" APPROVAL OF THE STOCKHOLDER
PROPOSAL TO ADOPT AN AMENDMENT TO THE BYLAWS OF THE COMPANY TO PROVIDE FOR
DECLASSIFICATION OF THE BOARD OF DIRECTORS.

PROPOSAL 4 - SEPARATION OF POSITIONS

One of the Proponents proposed that the Bylaws of the Company be
amended to provide that the positions of Chairman of the Board and President of
the Company will not be simultaneously held by the same person, and that the
position of Chairman of the Board will be held by a director who is independent.
The full text of this Stockholder Proposal is set forth in Schedule II-C to this
Proxy Statement.

According to the Statement of Corporate Governance Principles adopted
by the California Public Employees' Retirement System ("CalPERS"), "independence
is the cornerstone of accountability". CalPERS believes, and the Committee
agrees, that the time has come to re-examine the traditional combination of the
positions of chairman and chief executive officer. The Committee believes that
the interests of the Company and its stockholders would be better served by
electing Directors who are able to evaluate the performance of the Company's
management from an objective perspective. This means that the person who serves
as Chairman of the Board should not also be a member of the management of the
Company. The Committee believes that one of the most important functions of the
Board of Directors is its evaluation of management. Where the positions of the
Chairman of the Board and President are filled by the same person, the ability
of the entire Board of Directors effectively to undertake such evaluation is
compromised.

Although the Company has engaged Mr. Patterson as Chairman of the
Board, Chief Executive Officer and President pursuant to the terms of an
employment agreement which terminates on March 31, 2008, the Committee believes
that an amendment to the Bylaws to separate the positions of Chairman of the
Board and President is an appropriate matter for stockholder consideration
inasmuch as his employment agreement is unenforceable. The Company takes the
contrary position. Because the Chairman of the Board is to be elected by the
stockholders, the Committee believes the Company exceeded its corporate legal
authority by providing that Mr. Patterson should serve as Chairman of the Board
throughout the term of his employment agreement. In fact, the Company states in
its definitive proxy materials that the officers of the Company, which includes
the Chairman of the Board, are elected annually and serve until their
successors are elected and qualified or until their earlier resignation,
removal or disqualification. In addition, it is not clear whether Mr.
Patterson's termination as Chairman of the Board is a constructive breach of
his employment under applicable state law. In the event the Company challenges
the validity of this Stockholder Proposal, the Committee intends to oppose such
a position vigorously, including, if necessary, seeking injunctive and
declaratory relief.

For a discussion of certain issues concerning the effect of the DGCL on
this Stockholder Proposal, see "Certain Delaware Law Matters".

The Committee's Stockholder Proposal would, if adopted, be effective
commencing with the election of the officers of the Company at the meeting of
the Board of Directors immediately following the Annual Meeting.

THE COMMITTEE RECOMMENDS A VOTE "FOR" APPROVAL OF THE STOCKHOLDER
PROPOSAL TO ADOPT AN AMENDMENT TO THE BYLAWS OF THE COMPANY TO SEPARATE THE
POSITIONS OF CHAIRMAN OF THE BOARD AND PRESIDENT OF THE COMPANY.

THE COMPANY HAS NOT INCLUDED THIS STOCKHOLDER PROPOSAL IN THE PROXY
STATEMENT IT IS REQUIRED TO SEND TO STOCKHOLDERS. IF YOU EXECUTE THE PROXY SENT
TO YOU BY THE BOARD OF DIRECTORS OF THE COMPANY, THE COMPANY WILL CLAIM THAT
SUCH PROXY WILL GIVE IT DISCRETION TO VOTE AGAINST THIS STOCKHOLDER PROPOSAL.

PROPOSAL 5 - STOCKHOLDER COMMITTEE

One of the Proponents proposed that the Bylaws be amended to establish
a three-member advisory committee of stockholder representatives (the
"Stockholder Committee") to review the actions of the Board of Directors and
management of the Corporation. The full text of this Stockholder Proposal is set
forth in Schedule II-D to this Proxy Statement and is hereby incorporated herein
by reference.

<PAGE> 19

The Stockholder Committee will serve a representative function as well
as an advisory function. The Stockholder Committee will serve a representative
function given that it will ensure that all stockholders may relay thoughts
concerning the Company's management to the Board of Directors. In essence, it
will open a line of communication between stockholders and the Board, regardless
of how many shares of Common Stock the stockholder may own. Although the Company
may attempt to argue that the Stockholder Committee is too costly and is
unnecessary because communication between stockholders and management is not a
problem, the Stockholder Committee nevertheless represents a low-cost method by
which to provide a channel of communication between stockholders and the Board
of Directors.

Not only will the Stockholder Committee serve a representative
function, it will also serve an advisory function by reporting to the
stockholders of the Company on an annual basis whether the interests of the
Board and management, on the one hand, and the interests of the stockholders, on
the other hand, have truly been aligned during the preceding year. To address
the problems encountered with management of the Company, the system of checks
and balances between the stockholders and Board of Directors of the Company must
be strengthened by amending the Bylaws to establish the Stockholder Committee.
Once constituted, the Stockholder Committee will review the Board's performance
from the perspective of the stockholders. Each year, the Stockholder Committee
will be permitted to include in the proxy statement used in the annual election
of Directors a report which evaluates the performance of the Board of Directors
and management of the Company. If the Stockholder Committee believes that the
Board is not managing the Company properly, it will be able to relay this
information to the stockholders of the Company in its report. In this fashion,
the stockholders of the Company will be empowered to make the best and most
informed decision when electing Directors.

The Company has taken the position that the creation of the Stockholder
Committee as a result of the adoption of this Stockholder Proposal would
constitute an improper intrusion into the right of the Board of Directors,
pursuant to Section 141(a) of the DGCL, to manage the business and affairs of
the Company. The Company further believes that the provision in this Stockholder
Proposal, whereby the expenditure of corporate funds would be authorized without
concurring action by the Board of Directors, is improper under DGCL. While the
issue is not free from doubt and no assurances can be given with regard to the
ultimate judicial determination of this issue, the Committee believes that this
Stockholder Proposal is a proper matter for stockholder consideration at the
Annual Meeting.

For a discussion of certain issues, concerning the effect of the DGCL
on this Stockholder Proposal, see "Certain Delaware Law Matters".

This Stockholder Proposal, if adopted, be effective commencing
with the election of the Directors of the Company at the 2000 Annual Meeting of
stockholders of the Company.

THE COMMITTEE RECOMMENDS A VOTE "FOR" APPROVAL OF THE STOCKHOLDER
PROPOSAL TO ADOPT AN AMENDMENT TO THE BYLAWS TO APPOINT AN ADVISORY COMMITTEE OF
STOCKHOLDER REPRESENTATIVES.

PROPOSAL 6 - INDEPENDENT AUDITOR

One of the Proponents proposed that the Bylaws of the Company be
amended to require that the independent auditor of the Company be a regional or
national certified public accounting firm, and that the selection of that firm
be made by the Audit Committee of the Board, which will be composed of
independent directors. The full text of this Stockholder Proposal is set forth
in Schedule II-E to this Proxy Statement and is hereby incorporated herein by
reference.

The Company's independent auditor plays a key role in ensuring the
accountability of the Board of Directors and management of the Company to the
stockholders. The audit performed by the Company's independent auditor is
intended to provide reasonable assurance about whether the financial statements
are free of material misstatements and to evaluate the overall financial
statement presentation utilized by the Company.

In addition, the independent auditor of the Company must be truly
independent. This can be accomplished only if the persons responsible for
selecting the Company's independent auditor are sufficiently independent

<PAGE> 20

themselves. Accordingly, the election of the independent auditor of the Company
should be made by a committee of independent members of the Board of Directors,
rather than by any members of the Board who are also members of management of
the Company or persons related to management of the Company. If the Company's
independent auditor is chosen by those whose actions and performance are to be
audited, there cannot be sufficient independence to ensure that the Board of
Directors and management are truly accountable to the stockholders of the
Company.

THE COMMITTEE RECOMMENDS A VOTE "FOR" APPROVAL OF THE STOCKHOLDER
PROPOSAL TO ADOPT AN AMENDMENT TO THE BYLAWS OF THE COMPANY TO SET FORTH CERTAIN
REQUIREMENTS WITH RESPECT TO THE INDEPENDENT AUDITOR OF THE COMPANY.

MANAGEMENT PROPOSAL

The Committee is soliciting proxies "AGAINST" the Management Proposal
to be used at the Annual Meeting.

PROPOSAL 7 - APPOINTMENT OF INDEPENDENT AUDITOR

The Committee recommends that the stockholders of the Company reject
the ratification of the appointment of Dudley, Hopton-Jones, Sims & Freeman,
PLLP to serve as independent auditors of the Company and its subsidiaries for
the year ending December 31, 1999.

As discussed in more detail in "Election of Stockholder Nominees and
Stockholder Proposals - Proposal 6 - Independent Auditor", the Committee
recommends that the independent auditor of the Company possess certain
qualifications. In particular, the Committee recommends that the independent
auditor of the Company be a regional or national certified public accounting
firm. The Committee believes that Dudley, Hopton-Jones, Sims & Freeman, PLLP
does not qualify as such, and that the Company would be better served by the
appointment of a new independent auditor which meets the qualifications
specified herein.

In addition, it is vital that the independent auditor of the Company be
truly independent to ensure that the Board of Directors and management of the
Company are accountable to the stockholders. The Committee believes that the
conflict of interest arising from the relationship between the Company and Mr.
Patterson's son-in-law, Doug Schauer, and his accounting firm, Schauer, Taylor,
Cox & Vise, P.C., in the performance of "preliminary audit work" for Dudley,
Hopton-Jones, Sims & Freeman, PLLP, jeopardizes the independence of the entire
audit and thus the accountability of the Board of Directors and management to
the stockholders of the Company.

THE COMMITTEE RECOMMENDS A VOTE "AGAINST" THE RATIFICATION OF THE
APPOINTMENT OF DUDLEY, HOPTON-JONES, SIMS & FREEMAN, PLLP TO SERVE AS THE
INDEPENDENT AUDITOR OF THE COMPANY AND ITS SUBSIDIARIES FOR THE YEAR ENDING
DECEMBER 31, 1999.

<PAGE> 21

REQUIRED VOTES

According to the Company's Bylaws and Delaware law, Directors will be
elected by a plurality of the votes cast. Abstentions and broker non-votes will
have no effect on the outcome of the election of Directors.

With respect to the Stockholder Proposals, the Committee notes that the
Company's Bylaws, as amended by the Board of Directors on January 7, 1999,
require the affirmative vote of the holders of 80% of the Common Stock present
and eligible to vote with respect to any proposed amendment to the Bylaws.
Although the issue is not free from doubt, inasmuch as the Company has given no
indication in its preliminary proxy materials of how it would treat such votes,
it is believed that abstentions would have the same effect as votes against such
proposals, and that broker non-votes would have no effect on the outcome of the
vote with respect to such matters.

The holders of a majority of the Common Stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, will
constitute a quorum for purposes of the Annual Meeting. According to the
Company's preliminary proxy materials, abstentions and broker non-votes are
counted for purposes of determining a quorum.

PROXY PROCEDURES

Stockholders are urged to complete, sign and date the enclosed BLUE
proxy card and return it to Committee, P.O. Box 668, Blountsville, Alabama
35031, in the enclosed postage-paid envelope in time to be voted at the Annual
Meeting. Execution of the BLUE proxy card will not affect your right to attend
the Annual Meeting and to vote in person. According to the Company's preliminary
proxy materials, any proxy may be revoked at any time prior to the Annual
Meeting by delivering a written notice of revocation or a later dated proxy to
the Committee or to the Secretary of the Company or by voting in person at the
Annual Meeting. Only your latest dated proxy for the Annual Meeting will count.

Only holders of record as of the close of business on the Record Date
will be entitled to vote. If you were a stockholder of record on the Record
Date, you may vote your shares of Common Stock at the Annual Meeting even if you
have sold your shares before or after the Record Date. Accordingly, please vote
the shares of Common Stock held by you on the Record Date, or grant a proxy to
vote such shares, on the BLUE proxy card, even if you have sold your shares
before or after the Record Date.

If any of your shares of Common Stock are held in the name of a
brokerage firm, bank nominee or other institution on the Record Date, only it
can vote such shares and only upon receipt of your specific instructions.
Accordingly, please contact the person responsible for your account and instruct
that person to execute on your behalf the BLUE proxy card.

Where you indicate a choice on your BLUE proxy card, your shares of
Common Stock will be voted as specified. If you indicate no choice, your shares
will be voted "FOR" the Stockholder Nominees and the Stockholder Proposals and
"AGAINST" the Management Proposals, provided that you have signed and dated the
BLUE proxy card.

SOLICITATION OF PROXIES

Proxies may be solicited by mail, facsimile, telephone, telegraph, in
person and by advertisement. Solicitations may be made by any of the
participants disclosed herein, including the members of the Committee and the
Stockholder Nominees. In addition, certain employees of the participants and
their associates may assist in the solicitation of proxies in the course of
their regular employment, although none of such employees nor the Committee
admits that any of such persons are a "participant" within the meaning of Rule
14a-11(b) promulgated by the Commission under the Exchange Act.

Banks, brokerage houses and other custodians, nominees and fiduciaries
will be requested to forward the soliciting material of the Committee to their
customers for whom they hold shares and the Committee will reimburse them for
their reasonable out-of-pocket expenses.

<PAGE> 22

We anticipate that the Committee's total expenditures relating to the
solicitation will be approximately $350,000. Total expenditures to date have
been approximately $157,750. The entire expense of preparing, assembling,
printing and mailing this Proxy Statement and related materials and the cost of
soliciting proxies for the Stockholder Proposals will be borne by Bryan A. Corr,
R. C. Corr, Jr. and/or their affiliates who intend to seek reimbursement from
the Company for those expenses. The Committee does not intend to seek
stockholder approval for such reimbursement at a subsequent meeting unless
stockholder approval is required under Delaware law.

STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING

In order to be included in the Company's proxy statement for the 2000
Annual Meeting of Stockholders, any stockholder proposal to be presented at the
2000 Annual Meeting must be received in the office of the Secretary of the
Company at its principal executive offices by the date specified in the
Company's proxy statement for this year's Annual Meeting.

Notice of nominations of persons for the election to the Board of
Directors of the Company and the proposal of other business to be considered by
the stockholders must be provided in writing to the Secretary of the Company at
the principal executive offices of the Company no later than the 90th day nor
earlier than the 120th day prior to the first anniversary of the preceding
year's annual meeting of the stockholders. The principal executive offices of
the Company are located at Highway 231 South, Blountsville, Alabama 35031.

OTHER MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING

The Committee is not aware of any proposals other than those set forth
above to be brought before the Annual Meeting. Should any other proposal be
brought before the Annual Meeting, the vote required for approval of such
proposal would be as prescribed by the Company's Certificate of Incorporation or
Bylaws or by applicable law. Generally, approval of a proposal would require a
majority of the votes represented at the Annual Meeting and entitled to vote on
the matter. Shares voted as abstentions would have the same effect as a negative
vote. Shares with respect to which a broker submits a "broker non-vote" on a
matter would not be counted in calculating the number of shares entitled to vote
on a matter.

Should other proposals be brought before the Annual Meeting, the
persons named on the BLUE proxy card will vote on such proposals in a manner
they consider to be in the best interests of the Company and the stockholders of
the Company, unless the BLUE proxy card is marked against authority to cast such
discretionary votes.

OTHER INFORMATION

Certain information regarding shares of the Common Stock held by the
Company's Directors, nominees for Director, management and other 5% beneficial
stockholders is contained in Schedule III to this Proxy Statement.

Reference is made to the Company's proxy statement relating to the
Annual Meeting for certain information such proxy statement is required to
include concerning the Company, the Common Stock, other information concerning
the Company's management, and other matters regarding the Annual Meeting. The
Company also is required to provide to its stockholders its Annual Report for
the year ended December 31, 1999, which contains information as to the Company's
financial condition and other matters. In addition, the Company is required to
file reports that are publicly available. Copies of all such documents filed by
the Company and by the Committee are available at the Commission's web site
(www.sec.gov).

<PAGE> 23

Except as otherwise noted herein, the information concerning the
Company has been taken from or is based on the Company's public filings with the
Commission. The Committee disclaims any responsibility for the accuracy or
completeness of any such information contained herein or for any failure by the
Company to disclose events that may affect the significance or accuracy of such
information. Furthermore, information with respect to each participant is given
solely by such participant, and no participant assumes responsibility for the
accuracy or completeness of information furnished by another participant.

Stockholders will have no appraisal or similar rights of dissenters
with respect to any of the proposals to be considered and voted upon at the
annual meeting.

If you have any questions concerning this Proxy Statement or need assistance
in voting your shares, please call the Committee at
1-888-463-4419

<PAGE> 24

SCHEDULE I-A

SECURITY OWNERSHIP OF THE PARTICIPANTS AND THEIR
AFFILIATES AND ASSOCIATES, INCLUDING THE STOCKHOLDER NOMINEES

Number of Shares of Common
Name Stock Beneficially Owned Percentage (1)
----------------------- --------------------------- --------------
<S> <C> <C>
R. C. Corr, Jr. 280,356 (2)(3) 6.0%

Doris J. Corr 322,172 (3)(4) 6.9%

Bryan A. Corr 190,205 (5) 4.1%

Tina M. Corr 32,176 (6) *

Joan M. Currier 138,334 (7) 3.0%

John David Currier 7,880 (8) *

Corr, Inc. (9) 120,000 2.6%

A. Lee Hanson 73,648 1.6%

Jimmy C. Smith 4,850 *

J. R. Whitlock, Sr. 6,230 *

Shirley A. Whitlock 1,650 *

William S. Wittmeier, Jr. 1,260 *

R. C. Corr, Jr., Doris J. Corr, 456,533 9.8%
Bryan A. Corr, Tina M. Corr,
Joan M. Currier, John David
Currier, Corr, Inc., A. Lee
Hanson, Jimmy C. Smith, J. R.
Whitlock, Sr., Shirley A.
Whitlock and William S.
Wittmeier, Jr. as a Group

</TABLE>

- -------------------------

(1) Percentages are determined on the basis of 4,656,847 shares of Common
Stock reported by the Company as being outstanding on March 15, 1999.

(2) Includes (i) 160,356 shares held with Doris J. Corr as a joint tenant
with right of survivorship and (ii) 120,000 shares held by Corr, Inc.

<PAGE> 25

(3) Does not include 100,000 shares of Common Stock purchased by R. C.
Corr, Jr. in a privately negotiated transaction from H. Don Camp for
an aggregate purchase price of $1,900,000, or $19 per share. Mr. Camp
subsequently attempted to rescind this transaction and R. C. Corr, Jr.
is pursuing of legal action to enforce his purchase of such shares of
Common Stock. All of the shares of Common Stock purchased in this
transaction were to have been held of record by R. C. Corr, Jr. and
Doris J. Corr as joint tenants with right of survivorship, but neither
of them are claiming beneficial ownership of any such shares of Common
Stock presently.

(4) Includes (i) 160,356 shares held with R.C. Corr, Jr. as a joint tenant
with right of survivorship, (ii) 10,454 shares held as Co-Custodian
with Bryan A. Corr for her minor granddaughter, Lauren M. Corr, (iii)
10,454 shares held as Co-Custodian with Bryan A. Corr for her minor
granddaughter, Kelly B. Corr, (iv) 10,454 shares held as Co-Custodian
with Bryan A. Corr for her minor grandson, Bryan A. Corr, Jr., (v)
10,454 shares held as Co-Custodian with Joan M. Currier for her minor
grandson, John D. Currier, Jr., and (vi) 120,000 shares held by Corr,
Inc.

(5) Includes (i) 32,176 shares held with Tina M. Corr as a joint tenant
with right of survivorship, (ii) 10,454 shares held as Co-Custodian
with Doris J. Corr for his minor daughter, Lauren M. Corr, (iii) 10,454
shares held as Co-Custodian with Doris J. Corr for his minor daughter,
Kelly B. Corr, (iv) 10,454 shares held as Co-Custodian with Doris J.
Corr for his minor son, Bryan A. Corr, Jr., (v) 6,667 shares subject to
currently exercisable stock options, and (vi) 120,000 shares held by
Corr, Inc.

(6) Held with Bryan A. Corr as a joint tenant with right of survivorship.

(7) Includes (i) 7,880 shares held with John David Currier as a joint
tenant with right of survivorship, (ii) 10,454 shares held as
Co-Custodian with Doris J. Corr for her minor son, John D. Currier,
Jr., and (iii) 120,000 shares held by Corr, Inc.

(8) Held with Joan M. Currier as a joint tenant with right of survivorship.

(9) Corr, Inc. was formerly known as Oneonta Telephone Company, Inc. Its
address is 600 Third Avenue East, Oneonta, Alabama 35121.

* Less than 1%.

I-A-2

<PAGE> 26

SCHEDULE I-B

OTHER INFORMATION REGARDING
THE PARTICIPANTS AND THEIR ASSOCIATES AND AFFILIATES
INCLUDING THE STOCKHOLDER NOMINEES

GENERAL INFORMATION REGARDING THE PARTICIPANTS

The following table sets forth certain additional information regarding
certain participants in this proxy solicitation which is not otherwise disclosed
herein:

Principal Business Address
of Corporation
or Organization in
Present Principal Which Principal
Name and Business Address Occupation of Occupation of
of Participant Participant Participant is Conducted
- ------------------------- ---------------------------------- --------------------------------
<S> <C> <C>
R.C. Corr, Jr. (1) Chairman of the Board 600 Third Avenue East
600 Third Avenue East - Corr, Inc. (2) Oneonta, Alabama 35121
Oneonta, Alabama 35121

Employee - CorrComm, L.L.C.(2)

Doris J. Corr (1) Vice President, Secretary, 600 Third Avenue East
600 Third Avenue East Treasurer and Director Oneonta, Alabama 35121
Oneonta, Alabama 35121 - Corr, Inc. (2)

Employee - CorrComm, L.L.C.(2) 600 Third Avenue East
Tina M. Corr Oneonta, Alabama 35121
600 Third Avenue East
Oneonta, Alabama 35121
100 Fourth Avenue West
President, Secretary, Treasurer, Oneonta, Alabama 35121
Joan M. Currier (1) (3) Director and Employee - Comfort
600 Third Avenue East Lifestyles, Inc. (4)
Oneonta, Alabama 35121 1712-A Second Avenue East
President, Secretary, Treasurer, Oneonta, Alabama 35121
John David Currier (3) Director and Employee - Quality
600 Third Avenue East Transit Sales, Inc. (5)
Oneonta, Alabama 35121 600 Third Avenue East
(2) Oneonta, Alabama 35121
Corr, Inc. No. 5 Greenbriar Lane
600 Third Avenue East Oneonta, Alabama 35121
Oneonta, Alabama 35121
Private Investor
A. Lee Hanson
No. 5 Greenbriar Lane
Oneonta, Alabama 35121

- -------------------------
</TABLE>

<PAGE> 27

(1) R. C. Corr, Jr. and Doris J. Corr are spouses. Bryan A. Corr and Joan
M. Currier are the children of R. C. Corr, Jr. and Doris J. Corr.

(2) Corr, Inc. is the holding company for CorrComm, L.L.C. The principal
business of CorrComm, L.L.C. is operating, acquiring, constructing and
disposing of cellular telephone systems in north Alabama.

(3) Joan M. Currier and John David Currier are spouses.

(4) The principal business of Comfort Lifestyles, Inc. is the operation of
a domiciliary in Oneonta, Alabama.

(5) The principal business of Quality Transit Sales, Inc. is the sale of
medium- to heavy-duty trucks in Oneonta, Alabama.

-------------------------------

INDEBTEDNESS

The following table sets forth certain information regarding
indebtedness to the Company or any of its subsidiaries during 1998 of (i) the
Stockholder Nominees, (ii) members of the Stockholder Nominees' immediate
families, and (iii) corporations or other organizations of which any of the
Stockholder Nominees is a principal owner or an executive officer:

Largest
Aggregate Outstanding Amount Nature of
Indebtedness of Indebtedness as of Indebtedness and
Outstanding the Last Practicable Transaction in which
Name During 1998 Date Incurred Interest Rate
---- ----------- ------ ---------- -------------

<S> <C> <C> <C> <C> <C>
Bryan A. Corr (1) $1,750,000 -- (2) Consumer Line of 7.75 - 8.5%
Credit; Real Estate
Loan; Commercial
Line of Credit

Jimmy C. Smith(3) $505,962 $310,205(4) Commercial Loans; 6.25 - 8.75%
Real Estate Loans

J. R. Whitlock, Sr. (5) (5) Commercial Line of 7.15 - 9.5%
Credit; Commercial
Loans; Real Estate
Loans

Shirley A. Whitlock (6) (6) Commercial Line of 5.65 - 10%
Credit; Commercial
Loans
</TABLE>

- -------------------------
(1) Includes (i) a commercial line of credit of Corr, Inc. of which Bryan
A. Corr is a principal shareholder and an executive officer, and (ii) a
real estate loan in respect of which Mr. Corr's spouse, Tina M. Corr,
is a co-borrower.

(2) Balance is as of March 24, 1999.

(3) Mr. Smith's spouse, Sheila L. Smith, is a co-borrower with respect to
certain included loans.

(4) Balance is as of March 19, 1999.

I-B-2

<PAGE> 28

(5) The information required to make this disclosure is unavailable. Mr.
Whitlock attempted to obtain such information from Community Bank;
however, Community Bank was uncooperative in providing the necessary
information. Mr. Whitlock currently has the following outstanding loans
with Community Bank:

Original Loan Date Original Loan Amount Balance as of March 8, 1999
------------------ -------------------- ---------------------------

<S> <C> <C>
03-14-98 $ 5,485.00 $ 5,485.00
04-20-98 90,050.00 61,179.41
07-29-98* 112,975.00 111,471.24
02-12-99* 109,545.00 109,545.00
------------

Total $ 287,680.65
============
</TABLE>

----------------

* Mr. Whitlock's spouse, Shirley A. Whitlock, is a co-borrower
with respect to the indicated loan.

-------------------------------

I-B-3

<PAGE> 29

(6) The information required to make this disclosure is unavailable. Mrs.
Whitlock's husband attempted to obtain such information from Community
Bank; however, Community Bank was uncooperative in providing the
necessary information. Mrs. Whitlock currently has the following
outstanding loans with Community Bank:

Original Loan Date Original Loan Amount Balance as of March 8, 1999
------------------ -------------------- ---------------------------
<S> <C> <C>
04-23-98* $ 4,000.00 $ 2,995.80
04-23-98 6,000.00 6,000.00
04-23-98 10,000.00 4,559.00
05-22-98 15,075.00 15,075.00
06-04-98 25,046.50 19,811.66
06-09-98 75,050.00 50,464.85
06-25-98 25,366.95 25,366.95
12-16-98 25,000.00 25,000.00
----------

Total $149,273.26
===========

</TABLE>

-----------------------

* Mrs. Whitlock is a co-signor with respect to the indicated
loan.

-------------------------------

PURCHASES AND SALES OF SHARES OF COMMON STOCK OF THE COMPANY

The participants in this proxy solicitation have purchased or sold the
following shares of Common Stock within the last two years:

Shares of
Transaction Common Stock
Participant Date Purchased (1) (2)
----------- ---- -----------------
<S> <C> <C>
Bryan A. Corr 09-14-98 5,000
09-25-98 26,952

Doris J. Corr (3) (4) 10-09-98 3,000

R. C. Corr. Jr. (3) (4) 10-09-98 3,000

A. Lee Hanson 10-16-97 10,000
09-28-98 10,648
</TABLE>

- -----------------------

(1) For a description of shares of Common Stock of the Company received by
Jimmy C. Smith as compensation for his services rendered as a "City
Director" of a local advisory board for the Oneonta branch of Community
Bank, see "Compensation" below.

(2) Information disclosed does not include the transfer of 800 shares of
Common Stock from Jimmy Smith Chevrolet-Olds, Inc. to Jimmy C. Smith.

(3) Shares were purchased by Doris J. Corr and R. C. Corr, Jr., as tenants
in common.

I-B-4

<PAGE> 30

(4) Does not include 100,000 shares of Common Stock purchased by R. C.
Corr, Jr. in a privately negotiated transaction from H. Don Camp for an
aggregate purchase price of $1,900,000, or $19 per share. Mr. Camp
subsequently attempted to rescind this transaction and R. C. Corr, Jr.
is pursuing legal action to enforce his purchase of such shares of
Common Stock. All of the shares of Common Stock purchased in this
transaction were to have been held of record by R. C. Corr, Jr. and
Doris J. Corr as joint tenants with right of survivorship, but neither
of them are claiming beneficial ownership of any such shares of Common
Stock presently.

-----------------------

COMPENSATION

In his capacity as a Director of the Company, Community Bank and
Community Insurance Corp., Bryan A. Corr received $29,900 of Directors' fees for
the year 1998.

In his capacity as a "City Director" of a local advisory board for the
Oneonta branch of Community Bank, Jimmy C. Smith received 79 shares of Common
Stock as Directors' fees for 1998.

TRANSACTIONS WITH MANAGEMENT AND OTHERS

Corr, Inc. (f/k/a Oneonta Telephone Company, Inc.) and CorrComm, L.L.C.
(f/k/a North Alabama Cellular, L.L.C.) provided telephone services to the
Company and its subsidiaries during 1998 in the ordinary course of business. The
aggregate amount of payments for such services made by the Company to Corr, Inc.
and CorrComm, L.L.C. was $16,314 and $9,577, respectively. Corr, Inc. and
CorrComm, L.L.C. are currently not providing any such services to the Company or
its subsidiaries.

Jimmy Smith Chevrolet-Olds, Inc. sold three automobiles and provided
repair and maintenance services to the Company and its subsidiaries during 1998
in the ordinary course of business. The aggregate amount of payments made by the
Company and its subsidiaries to Jimmy Smith Chevrolet-Olds, Inc. was
$132,258.01.

I-B-5

<PAGE> 31

SCHEDULE II-A

PROPOSAL 2 - INDEPENDENT DIRECTORS

WHEREAS, the Board of Directors (the "Board") of Community Bancshares,
Inc. (the "Corporation") is intended to be an independent body elected by the
Corporation's stockholders and is charged with the duty, authority and
responsibility to formulate and direct corporate policies which are in the best
interests of such stockholders;

WHEREAS, the Board should monitor management of the Corporation in the
implementation of those policies; and

WHEREAS, the Corporation's interests can best be served by having
Directors who are independent of management and who possess a breadth of
business experience;

NOW, THEREFORE, BE IT RESOLVED, by the stockholders of the Corporation,
as follows:

Section 1. Article III, Section 1 of the Bylaws of the Corporation
shall be amended to insert at the conclusion thereof the following:

The Board of Directors shall consist of Directors who are independent,
with the exception of one management representative who shall be the
President of the Corporation. A Director shall be deemed to be
independent for the purposes hereof if he or she (i) has not been
employed by the Corporation, or a subsidiary or an affiliate thereof,
within the preceding five years; (ii) is not a member of the "immediate
family" of any person who has been so employed (as such term is defined
in Item 404(a) of Regulation S-K promulgated by the U.S. Securities and
Exchange Commission ("Regulation S-K")); and (iii) has not had any
business relationship that would be required to be disclosed by Item
404(b) of Regulation S-K. The preceding two sentences shall not be
altered or repealed without approval by the stockholders of the
Corporation.

Section 2. Such amendment of the Bylaws of the Corporation shall be
effective with respect to nominees for Director to be elected subsequent to the
1999 annual meeting of stockholders of the Corporation.

SUPPORTING STATEMENT

The Board of Directors (the "Board") of Community Bancshares, Inc. (the
"Corporation") is comprised of 15 Directors [now 11 Directors], eight [now five]
of whom are officers of the Corporation or its subsidiaries and three [now two]
of whom are members of the same family. The Corporation's management, which
includes these eight [now five] "inside" Directors, is responsible for the
day-to-day operations of the Corporation. The Board, on the other hand, is
responsible for setting corporate policy, evaluating the performance of
management in implementing that policy and establishing executive compensation.
This system of checks and balances is compromised when a majority or even a
significant number of the members of the Board is comprised of management
"insiders". Members of management lack the independence and true objectivity
necessary to act in the best interests of the Corporation's stockholders.
Accordingly, it is important that members of the Board be "independent" of
management in order to help ensure that the interests of all, and not just a
few, stockholders are protected and advanced by improving the accountability of
management.

<PAGE> 32

SCHEDULE II-B

PROPOSAL 3 - DECLASSIFICATION

WHEREAS, the Board of Directors (the "Board") of Community Bancshares,
Inc. (the "Corporation") is classified;

WHEREAS, the classification of the Board maintains the incumbency of
the current Board and management of the Corporation and thus limits the
accountability of both to the Corporation's stockholders; and

WHEREAS, the declassification of the Board would allow the
Corporation's stockholders the opportunity to register annually their respective
views of the performance of the Board and its members;

NOW, THEREFORE, BE IT RESOLVED, by the stockholders of the Corporation,
as follows:

Section 1. The Board shall be declassified in order that all Directors
of the Corporation may be elected annually.

Section 2. The Bylaws of the Corporation shall be amended to effect the
foregoing by deleting Article II, Section 2 and Article III, Sections 1 and 2
thereof in their entirety and re-inserting their respective predecessor sections
as they existed prior to the 1996 annual meeting of stockholders, except that
the number of Directors which may compose the Board shall be nine.

Section 3. Such amendment of the Bylaws of the Corporation shall be
effected in a manner that does not affect the unexpired terms of the
Corporation's Directors previously elected.

SUPPORTING STATEMENT

The Board of Directors (the "Board") of Community Bancshares, Inc. (the
"Corporation") is divided into three classes serving staggered three-year terms.
This arrangement, which is commonly referred to as a "classified" board of
directors, is not in the best interests of the Corporation or its stockholders.

The classification of the Board serves to protect the incumbency of the
current Board and management and thus limits the accountability of both to the
Corporation's stockholders. Concerns that the "declassification" of the Board
could lead to inexperienced members of the Board if no incumbents were returned
to their respective directorships are unfounded.

The stockholders of the Corporation deserve the opportunity to vote on
each Director annually, rather than once every three years. The declassification
of the Board would allow the Corporation's stockholders the opportunity to
register annually their respective views of the performance of the Board and its
members.

<PAGE> 33

SCHEDULE II-C

PROPOSAL 4 - SEPARATION OF POSITIONS

NOW, THEREFORE, BE IT RESOLVED, by the stockholders of the Community
Bancshares, Inc. (the "Corporation"), as follows:

Section 1. Article V, Section 2 of the Bylaws of the Corporation shall
be amended to delete the clause ", and shall be the Corporation's chief
executive officer" contained in the first sentence thereof, and shall be further
amended to include the following at the conclusion thereof:

The position of Chairman of the Board of the Corporation and the
position of President of the Corporation shall not be simultaneously
held by the same person and the position of Chairman of the Board of
the Corporation shall be held by a Director who is independent. A
Director shall be independent for the purposes hereof if he or she (i)
is not employed by the Corporation, or a subsidiary or an affiliate
thereof, within the preceding five years; (ii) is not a member of the
"immediate family" of any person who has been so employed (as such term
is defined in Item 404(a) of Regulation S-K promulgated by the U.S.
Securities and Exchange Commission ("Regulation S-K")); and (iii) has
not had any business relationship that would be required to be
disclosed by Item 404(b) of Regulation S-K. The preceding two sentences
shall not be altered or repealed without approval by the stockholders
of the Corporation.

Section 2. Such amendment of the Bylaws of the Corporation to effect
the foregoing and such amendment shall be effective commencing with the election
of the Corporation's officers in the annual meeting of Directors immediately
following the 1999 annual meeting of the stockholders of the Corporation.

SUPPORTING STATEMENT

The stockholders of Community Bancshares, Inc. (the "Corporation") are
best served by a Chairman of the Board who is chosen from among the independent
outside Directors of the Corporation. Such a person would bring objectivity and
a unique perspective to the deliberations of the Corporation's Board of
Directors (the "Board").

Among the Board's functions are evaluating the performance of
management and setting executive compensation, including that of the President.
Where the Chairman of the Board and the President are the same person, the
Board's ability to evaluate and oversee management effectively may be
compromised.

Stockholders of the Corporation, by law, have no role to play in the
day-to-day operations of the Corporation conducted by management. The
stockholders must accordingly rely on the Board to oversee management. This
system of checks and balances is compromised when one person who is President of
the Corporation also serves as Chairman of the Board.

<PAGE> 34

SCHEDULE II-D

PROPOSAL 5 - STOCKHOLDER COMMITTEE

NOW, THEREFORE, BE IT RESOLVED, by the stockholders of Community
Bancshares, Inc. (the "Corporation"), that the Bylaws of the Corporation shall
be amended to include a new Section 2.13 as follows:

Section 2.13. Committee of Stockholder Representatives.

The Corporation shall have a committee of stockholder
representatives consisting of three members. The committee shall review
the management of the business and affairs of the Corporation by the
Board of Directors and management, and shall advise the Board of its
views and the views of stockholders which are expressed to the
committee. The committee may, at the expense of the Corporation, engage
expert assistance and incur other expenses in a reasonable amount not
to exceed $100,000 in any fiscal year. The committee shall be given the
opportunity to have included in the Corporation's proxy statement used
in the annual election of Directors a report on the committee's
activities during the year and its evaluation of the Board of Directors
and management.

The members of the committee shall be elected by the
stockholders by plurality vote at their annual meeting. Any stockholder
or group of stockholders (other than a fiduciary appointed by or under
authority of the Directors) which has owned beneficially, within the
meaning of Section 13(d) of the Securities Exchange Act of 1934, at
least $10,000 in market value of Common Stock of the Corporation
continuously for the one-year period prior to nomination, but excluding
any such stockholder or group that is not independent, may nominate to
be a member of the Committee one individual, who need not be a
stockholder. A person shall be independent for the purposes hereof if
he or she is (i) not employed by the Corporation, or a subsidiary or an
affiliate thereof, within the preceding five years; (ii) is not a
member of the "immediate family" of any person who has been so employed
(as such term is defined in Item 404(a) of Regulation S-K promulgated
by the U.S. Securities and Exchange Commission ("Regulation S-K")); and
(iii) has not had any business relationship that would be required to
be disclosed by Item 404(b) of Regulation S-K. Nominations must be
received by the Corporation not less than 90 nor more than 180 days
before the annual meeting of stockholders.

Each member shall be reimbursed for reasonable travel and
other out-of-pocket expenses incurred in serving as a member, and shall
be entitled to indemnification and advancement of expenses.

This Section 2.13 shall not be altered or repealed without
approval by the stockholders of the Corporation.

SUPPORTING STATEMENT

The proposed By-Law would establish a three-member committee of
stockholder representatives to review the actions of the Board of Directors and
management of the Corporation. A committee of stockholder representatives would
be an effective mechanism for stockholders to communicate their views to the
Board and would serve a useful advisory function at relatively little cost.

<PAGE> 35

SCHEDULE II-E

PROPOSAL 6 - INDEPENDENT AUDITOR

NOW, THEREFORE, BE IT RESOLVED, by the stockholders of Community
Bancshares, Inc. (the "Corporation"), as follows:

Section 1. The Bylaws of the Corporation shall be amended to include a
new Article XIV as follows:

ARTICLE XIV

AUDITOR

The independent auditor of the Corporation shall be a regional
or national certified public accounting firm. The selection of such
firm shall be made by the Audit Committee of the Board of Directors,
which shall be composed of Directors who are independent. A Director
shall be deemed to be independent for the purposes hereof if he or she
(i) is not employed by the Corporation, or a subsidiary or an affiliate
thereof, within the preceding five years; (ii) is not a member of the
"immediate family" of any person who has been so employed (as such term
is defined in Item 404(a) of Regulation S-K promulgated by the U.S.
Securities and Exchange Commission ("Regulation S-K")); and (iii) has
not had any business relationship that would be required to be
disclosed by Item 404(b) of Regulation S-K. This Article XIV shall not
be altered or repealed without approval by the stockholders of the
Corporation.

Section 2. Such amendment of the Bylaws of the Corporation shall be
effective with respect to the Corporation's fiscal year ended December 31, 2000.

SUPPORTING STATEMENT

Community Bancshares, Inc. (the "Corporation") is now a bank holding
company with assets in excess of $500 million. It is unusual for bank holding
companies of comparable size to utilize the services of a local certified public
accounting firm as an independent auditor. Usually, such bank holding companies
utilize the services of regional or national certified public accounting firms
with expertise in the banking industry.

The time and effort required for such a new certified public accounting
firm to acquaint itself with the Corporation's operations, system and personnel
would no doubt involve additional costs for the Corporation and would require
the Corporation's employees to devote time in familiarizing the new certified
public accounting firm with the Corporation and its subsidiaries. Nevertheless,
the Corporation would benefit from a long-term association with a regional or
national certified public accounting firm.

<PAGE> 36

SCHEDULE III

OWNERSHIP OF COMMON STOCK BY DIRECTORS, NOMINEES FOR DIRECTOR
AND OFFICERS OF THE COMPANY AND CERTAIN BENEFICIAL OWNERS

The following table sets forth certain information regarding the
beneficial ownership of the Common Stock of the Company as of March 1, 1999 by
(i) each of the Directors, management's nominees for election as Director at the
Annual Meeting, and executive officers of the Company, (ii) all Directors,
executive officers as a group and (iii) each person or group known by the
Company to own beneficially more than 5% of the outstanding shares of Common
Stock. Such information has been taken from or is based on the Company's
preliminary proxy materials.

Shares of Common Stock Beneficially Owned(1)

Percentage
of Total
Shares
Person, Group or Entity Sole Power(2) Shared Power(3) Aggregate Outstanding
- ----------------------- ------------- --------------- --------- -----------
I. Directors, Nominees and
Executive Officers
<S> <C> <C> <C> <C>
Glynn Debter 26,867 (4) 10,200 37,067 *
Roy B. Jackson 1,400 3,600 5,000 *
Denny G. Kelly 86,842 (5) 283,158 370,000 7.96%
John J. Lewis, Jr. 42,467 (6) 1,200 43,667 *
Loy McGruder 34,650 (7) 23,372 58,022 1.25%
Hodge Patterson, III 74,755 (8) 5,322 80,077 1.72%
Kennon R. Patterson, Sr. 105,874 (9) 757,582 863,456 18.58%
Merritt M. Robbins 180,276 (10) 4,632 184,908 3.98%
Robert O. Summerford 40,667 (11) 76,200 116,867(12) 2.51%
Bishop K. Walker, Jr. 244,784 (13) 324,695 569,479 12.25%
R. Wayne Washam 35,069 (14) 4,000 39,069 *
All Directors and executive officers 873,651 960,921 1,834,572 39.47%
as a group (12 persons)

II. Others

Bank One as Trustee of the _ 554,904 (16) 554,904 (16) 11.94%
Community Bancshares, Inc.
Employee Stock Ownership Plan
("ESOP") (15)

R. C. Corr, Jr., Doris J. Corr, 101,775 362,228 464,003 9.98%
Bryan A. Corr, Tina M. Corr, Joan
M. Currier, John David Currier,
Christina M. Currier, Corr, Inc.,
A. Lee Hanson, Jimmy C. Smith, J.R.
Whitlock, Sr. and William S.
Wittmeier, Jr. as a group (17)

</TABLE>

<PAGE> 37

(1) The number of shares reflected are shares which, under applicable
Commission regulations, are deemed to be beneficially owned, including
shares as to which, directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise, either voting
power or investment power is held or shared. In addition, in computing
the number of shares beneficially owned by a person and the percentage
ownership of that person, shares of Common Stock subject to options
held by that person which are currently exercisable, or which will
become exercisable within 60 days following March 1, 1999, are deemed
to be outstanding. Such shares, however, are not deemed outstanding for
the purposes of computing the percentage ownership of any other person.
The total number of shares beneficially owned is divided, where
applicable, into two categories: (i) shares as to which
voting/investment power is held solely, and (ii) shares as to which
voting/investment power is shared.

(2) Unless otherwise specified in the following footnotes, if a beneficial
owner is shown as having sole power, the owner has sole voting as well
as sole investment power, and if a beneficial owner is shown as having
shared power, the owner has shared voting power as well as shared
investment power. Some individuals are shown as beneficial owners of
shares held by the Community Bancshares, Inc. Employee Stock Ownership
Plan (the "ESOP"). The individual has sole power to direct the ESOP
trustee as to the manner in which shares allocated to the individual's
account under the ESOP are to be voted. The individual has no direct
power of disposition with respect to shares allocated to the
individual's account, except to request a distribution under the terms
of ESOP.

(3) This column may include shares held in the name of, among others, a
spouse, minor children or certain other relatives sharing the same home
as the director, nominee, executive officer or 5% shareholder. In the
cases of Messrs. Kennon R. Patterson, Sr., Bishop K. Walker, Jr. and
Denny G. Kelly, this column includes 267,836 shares which are held by
the ESOP and which have not been allocated to any participant account.
These individuals serve as members of the Administrative Committee of
the ESOP and have voting and investment authority over the unallocated
shares, but each individual disclaims any beneficial ownership with
respect to such unallocated shares. In the case of Messrs. Kennon R.
Patterson, Sr., Bishop K. Walker, Jr., Denny G. Kelly, Loy McGruder and
Hodge Patterson, III, this column includes 5,322 shares held by
Community Investments, a partnership composed of eight individuals, of
which each such individual is a partner. The number of shares shown is
each partner's individual interest in the 42,578 shares of Common Stock
held by the partnership.

(4) Includes 26,667 shares which could be acquired within 60 days following
March 1, 1999 pursuant to stock options.

(5) Includes 34,000 shares which could be acquired within 60 days following
March 1, 1999 pursuant to stock options and 13,172 shares allocated to
Mr. Kelly's ESOP account as of December 31, 1997.

6) Includes 28,667 shares which could be acquired within 60 days following
March 1, 1999 pursuant to stock options.

(7) Includes 26,667 shares which could be acquired within 60 days following
March 1, 1999, pursuant to stock options and 7,983 shares allocated to
Mr. McGruder's ESOP account as of December 31, 1997.

(8) Includes 28,667 shares which could be acquired within 60 days following
March 1, 1999 pursuant to stock options and 9,484 shares allocated to
Mr. Patterson's ESOP account as of December 31, 1997.

(9) Includes 72,667 shares which could be acquired within 60 days following
March 1, 1999 pursuant to stock options and 33,207 shares allocated to
Mr. Patterson's ESOP account as of December 31, 1997.

(10) Includes 26,667 shares which could be acquired within 60 days following
March 1, 1999 pursuant to stock options.

(11) Includes 26,667 shares which could be acquired within 60 days following
March 1, 1999 pursuant to stock options.

III-2

<PAGE> 38

(12) Includes 62,200 shares held by Summerford Nursing Home and 14,000
shares held by Summerford Drug. Mr. Summerford is a controlling
shareholder of both companies.

(13) Includes 52,333 shares which could be acquired within 60 days following
March 1, 1999 pursuant to stock options and 11,747 shares allocated to
Mr. Walker's ESOP account as of December 31, 1997.

(14) Includes 28,667 shares which could be acquired within 60 days following
March 1, 1999 pursuant to stock options.

(15) The address of Bank One is P. O. Box 60279, New Orleans, Louisiana
70160.

(16) Participants in the ESOP have the power to direct the ESOP trustee how
to vote shares allocated to their individual accounts. Any unallocated
shares, and any allocated shares with respect to which voting
instructions are not received from a participant, will be voted by the
appropriate ESOP fiduciary in its discretion.

(17) The address of the members of the Corr and Currier families and Corr,
Inc. (f/k/a Oneonta Telephone Company, Inc.) is 600 Third Avenue East,
Oneonta, Alabama 35121. Mr. Hanson's address is No. 5 Greenbriar Lane,
Oneonta, Alabama 35121. Mr. Smith's address is 1630 2nd Avenue East,
Oneonta, Alabama 35121. Mr. Whitlock's address is 3410 Rocky Hollow
Road, Blountsville, Alabama 35031. Mr. Wittmeier's address is 1 Creek
Side Way, S.W., Rome, Georgia 30165.

* Less than 1%.

III-3

<PAGE> 39

COMMUNITY BANCSHARES, INC.

1999 ANNUAL MEETING OF STOCKHOLDERS

THIS PROXY IS SOLICITED ON BEHALF OF THE STOCKHOLDERS FOR INTEGRITY AND
RESPONSIBILITY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby appoints Bryan
A. Corr, Jimmy C. Smith, and J.R. Whitlock, Sr., or any of them, proxies of the
undersigned, with full power of substitution, to represent and to vote all
shares of common stock of Community Bancshares, Inc. (the "Company") which the
undersigned would be entitled to vote at the annual meeting of stockholders of
the Company, to be held at the Administrative Building of the headquarters of
the Company, Highway 231 South, Blountsville, Alabama, on Thursday, April 22,
1999, at 10:00 a.m., Central Time, and at any adjournments or postponements,
continuations or reschedulings thereof, in the following manner:
(Please mark each proposal with an "X" in the appropriate box.)

1. Election of Directors

<TABLE>
<S> <C>
[ ] FOR all nominees listed below (except as otherwise [ ] AUTHORITY WITHHELD to vote for all
instructed below) nominees
</TABLE>

Bryan A. Corr, Jimmy C. Smith, J. R. Whitlock, Sr. and William S. Wittmeier, Jr.

TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, WRITE THAT NOMINEE'S NAME IN THE
SPACE PROVIDED BELOW.

- --------------------------------------------------------------------------------

THE COMMITTEE STRONGLY RECOMMENDS THAT YOU VOTE "FOR" THE STOCKHOLDER NOMINEES.

2. Stockholder Proposal to adopt an amendment to the Bylaws of the Company to
restrict the composition of the Board of Directors (with the exception of the
President) to independent directors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE COMMITTEE STRONGLY RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL 2.

3. Stockholder Proposal to adopt an amendment to the Bylaws of the Company to
provide for declassification of the Board of Directors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE COMMITTEE STRONGLY RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL 3.

4. Stockholder Proposal to adopt an amendment to the Bylaws of the Company to
separate the positions of Chairman of the Board and President of the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE COMMITTEE STRONGLY RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL 4.

5. Stockholder Proposal to adopt an amendment to the Bylaws of the Company to
appoint an advisory committee of stockholder representatives.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE COMMITTEE STRONGLY RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL 5.

6. Stockholder Proposal to adopt an amendment to the Bylaws of the Company to
set forth certain requirements with respect to the independent auditor of the
Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE COMPANY STRONGLY RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL 6.

7. Management Proposal to ratify the appointment of Dudley, Hopton-Jones, Sims &
Freeman, PLLP to serve as the independent auditor of the Company and its
subsidiaries for the year ending December 31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE COMMITTEE STRONGLY RECOMMENDS THAT YOU VOTE "AGAINST" PROPOSAL 7.

8. In their discretion, upon such other matters as may properly come before the
meeting.

WHERE A CHOICE IS INDICATED, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED
AS SPECIFIED. IF NO CHOICE IS INDICATED, THE SHARES REPRESENTED BY THIS PROXY
WILL BE VOTED FOR PROPOSALS 1, 2, 3, 4, 5, AND 6; AGAINST PROPOSAL 7 AND IN THE
DISCRETION SPECIFIED IN ITEM 8.

Dated: ---------------
-------------------
Signature
-------------------
Signature

Please sign this proxy exactly as
your name appears hereon. When
signing as executor, administrator,
trustee, corporate officer, etc.,
please give full title. In the case
of joint owners, each joint owner
should sign.

PLEASE SIGN, DATE AND RETURN THIS
PROXY CARD TODAY IN THE
ENCLOSED ENVELOPE.
NO POSTAGE REQUIRED IF
MAILED IN THE UNITED STATES.