<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. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[X] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
</TABLE>
COMMUNITY BANCSHARES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(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 table below per Exchange Act Rules 14a-6(i)(4) 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:
[ ] 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:
<PAGE> 2
COMMUNITY BANCSHARES, INC.
TALKING POINTS
April 13, 1999
1. RETURN ON INVESTMENT
Shareholders who invested in the first stock offering in 1987 have
earned an average annual return of 21.5% on their investment when you factor in
appreciation and dividends. The following chart contains an analysis of
Community Bancshares' stock performance each year from 1987 through 1998:
<TABLE>
<CAPTION>
Cumulative Value Current
Market Cash To Year
Dec. 31: Value Dividends Investor Change
-------- ----- --------- -------- ------
<S> <C> <C> <C> <C>
1987 $ 2.50 $0.00 $ 2.50 --
1988 $ 2.58 $0.00 $ 2.58 3.00%
1989 $ 2.83 $0.00 $ 2.83 9.90%
1990 $ 2.92 $0.00 $ 2.92 3.00%
1991 $ 3.00 $0.00 $ 3.00 2.92%
1992 $ 4.25 $0.00 $ 4.25 41.67%
1993 $ 9.00 $0.00 $ 9.00 111.76%
1994 $12.50 $0.00 $12.50 38.89%
1995 $10.00 $0.25 $10.25 (18.00)%
1996 $11.50 $0.50 $12.00 17.07%
1997 $15.00 $0.88 $15.88 32.29%
1998 $20.00 $1.38 $21.38 34.65%
<CAPTION>
April 6:
--------
1998 $15.00 $1.38 $21.38 N/A
1999 $24.00 $1.98 $25.98 N/A
</TABLE>
The Corr family invested a little more than $2 million and today that
investment is worth more than $8 million.
2
<PAGE> 3
The following table shows the returns of an investor who invested
$100,000 in the past:
<TABLE>
<CAPTION>
Investment Total
Date of Value on Increase Avg. Return on
Investment Years 12/31/98 (%) Investment
---------- ----- -------- -------- ---------------
<S> <C> <C> <C> <C>
12/31/87 11 $855,000 755.00% 21.54%
12/31/88 10 $855,000 755.00% 23.94%
12/31/91 7 $712,500 612.50% 32.38%
12/31/93 5 $237,500 137.50% 18.89%
12/31/96 2 $167,000 67.00% 29.23%
12/31/97 1 $136,667 36.67% 36.67%
<CAPTION>
Investment
Value on
4/6/99
------
4/6/98 1 $164,000 64.00% 64.00%
</TABLE>
As of April 6, 1999, Community Bancshares' stock had a higher price to
earnings ratio than any of the big regional bank holding companies headquartered
in Alabama. The most recent trades of Community Bancshares stock have been at
$24.00 per share. At that price the P/E ratio for Community Bancshares is 26.7,
as compared to 21 for AmSouth, 18 for Regions, 19 for Colonial, 16 for
SouthTrust, 15 for Compass and 14 for Alabama National.
2. PERQUISITES
A company car and payment of country club dues is standard (not
unusual) for any chief executive officer of a company. As for my car, it's used
and it's leased. The lease is not out of line with other leases for executive
vehicles.
We did take a hunting trip to Alaska and carried customers, officers,
directors and employees. I think the funds were well spent.
3. COMPENSATION
I don't set my salary. It's set by the Board of Directors and R.C. Corr
voted on numerous occasions to increase my compensation. In fact, R.C. Corr was
a member of the Compensation Committee of the Board of Directors for a number of
years. On December 8, 1995, R.C. Corr seconded the motion to approve my contract
and to give me a bonus. Bryan Corr never once expressed a negative comment
during the board discussions of my compensation, according to Bishop K. Walker,
Jr., Vice Chairman of the Company.
3
<PAGE> 4
When I joined The Bank of Blountsville, the Company's predecessor, in
1983 it had assets of $38 million. It has grown from one bank office to 30, from
no finance offices to 12, and from no insurance company to an insurance company
that serves over 140 agencies in Alabama.
A study by SNL Securities of option-adjusted compensation for the five
most highly compensated chief executive officers at banks with total assets of
$500 million to $1 billion shows compensation of $1,199,575; $1,122,153;
$1,112,207; $956,298; and $859,986, respectively.
4. RETURN ON ASSETS
The following chart shows the Return on Average Assets for Community
Bancshares and Community Bank for each year from 1987 through 1998.
<TABLE>
<CAPTION>
Community Community
Bancshares, Inc. Bank
---------------- ----
<S> <C> <C>
1998 0.67% 0.93%
1997 0.74% 0.96%
1996 0.82% 1.11%
1995 0.82% 1.18%
1994 0.97% 1.27%
1993 1.11% 1.33%
1992 1.29% 1.50%
1991 0.84% 1.14%
1990 0.87% 1.08%
1989 0.70% 1.14%
1988 0.70% 1.18%
1987 0.15% 0.73%
</TABLE>
The decrease in the ROA for 1998 was due to our expansion, not only in
opening five bank offices but in adding five finance company offices and
acquiring two insurance agencies and completing the acquisition of a third.
Our policy has always been to provide the utmost in competitive banking
to our communities. When we invest in expansion, that affects ROA. The board,
including Bryan Corr, voted for the 1998 expansion and anticipated that ROA
would drop this year. In fact, on December 9, 1997, Bryan Corr seconded the
motion approving these expansion plans.
The key is knowing how to bring ROA up, and we've done that. In 1987 we
acquired four bank offices, bringing our company to a total of seven bank
offices. But after those acquisitions the ROA of Community Bancshares was 0.15.
By the next year it was 0.70
4
<PAGE> 5
SNL Securities has prepared the following information showing how
Community Bancshares compared with a selected peer group of southeastern banks,
and with public banks throughout the country having assets of $500 million to $1
billion, in the areas of return on average assets and return on average equity
for the past five years, as well as 1998 annual growth and annual growth for the
past five years.
<TABLE>
<CAPTION>
Total
ROAA ROAE Return*
----------------------------------- ------------------------------------ --------
1994 1995 1996 1997 1998 1994 1995 1996 1997 1998 1998
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
------------------------------------ ------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Community Bancshares 0.97 0.82 0.82 0.74 0.67 11.86 10.88 11.50 10.51 9.59 37.77
Median (Custom Peer
Group) 1.22 1.27 1.29 1.38 1.21 13.66 13.46 13.19 12.76 12.61 1.36
Median (Public Banks
$500M - $1B) 1.16 1.19 1.22 1.25 1.16 12.85 13.29 13.11 13.40 12.93 (1.68)
</TABLE>
- ----------------
* Total return figures are for market-weighted indices, not medians.
<TABLE>
<CAPTION>
1998 ANNUAL GROWTH % 1994-1998 CAGR (%)
---------------------------------------- ------------------------------------------
NON NON
INTEREST GROSS TOTAL INTEREST GROSS TOTAL
INCOME LOANS DEPOSITS ASSETS INCOME LOANS DEPOSITS ASSETS
------ ----- -------- ------ ------ ----- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Community Bancshares 65.65% 33.03% 22.16% 22.65% 26.25% 20.40% 19.58% 30.29%
Median (Custom Peer
Group) 24.37 14.87 14.07 14.13 21.47 20.40 15.28 16.74
Median (Public Banks
($500M-$1B) 20.94 11.52 11.33 12.92 16.63 13.28 12.22 12.95
</TABLE>
5
<PAGE> 6
The peer group used by SNL Securities is as follows:
<TABLE>
<CAPTION>
Total Assets
at 12/31/98
Ticker City State Region Exchange (000's)
------ ---- ----- ------ -------- -------
<S> <C> <C> <C> <C> <C> <C>
FNB Financial Services Corporation FNBF Reidsville NC SE NASDAQ $421,709
Commercial Bankshares, Inc. CLBK Miami FL SE NASDAQ 432,601
Virginia Financial Corporation VFNL Staunton VA SE Pinks 434,140
National Bankshares, Incorporated NKSH Blacksburg VA SE OTC 445,166
United Security Bancshares,
Incorporated USBI Thomasville AL SE OTC 450,073
American Bancshares, Inc. ABAN Bradenton FL SE NASDAQ 456,396
American National Bankshares
Incorporated AMNB Danville VA SE OTC 460,383
FNB Corp. FNBP Christiansburg VA SE NASDAQ 461,916
First Bancorp FBNC Troy NC SE NASDAQ 491,838
PAB Bankshares, Inc. PAB Valdosta GA SE AMSE 513,742
Bank of Granite Corporation GRAN Granite Falls NC SE NASDAQ 606,175
Bank of the Ozarks, Inc. OZRK Little Rock AR SE NASDAQ 612,431
First National Corporation FNC Orangeburg SC SE AMSE 642,905
LSB Bancshares, Inc. LXBK Lexington NC SE NASDAQ 679,006
First M & F Corporation FMFC Kosciusko MS SE NASQAQ 702,006
Fidelity National Corporation LION Atlanta GA SE NASDAQ 712,878
ABC Bancorp ABCB Moultrie GA SE NASDAQ 724,011
Carolina First BancShares, Inc. CAFP Lincolnton NC SE Pinks 731,626
Union Bankshares Corporation UBSH Bowling Green VA SE NASDAQ 733,947
NBC Capital Corporation NBCA Starkville MS SE OTC 777,032
</TABLE>
5. PATTERSON FAMILY MEMBERS
All of the members of my family working for Community Bank are experienced
professionals. The six members of my family make up less than 1.4% of the 431
employees in our company.
Frankly, I think it fair to characterize both the Corrs and the Pattersons as
good families. Bryan worked for his daddy at their telephone company, along with
other family members. That company sold and now I think they may be looking for
a good place to light. But my family and the employees of Community Bank aren't
ready to give up our jobs.
My wife Carolyn provides a valid service for our company and other customers.
She's saved us thousands of dollars by buying wholesale and shopping for good
values. We've been open about her contract and have included information about
it in the annual report for 5 years. Let me add that on April 15, 1997, R.C.
Corr seconded the motion for the company to continue a business relationship
with Carolyn. In fact, the Corrs hired Carolyn in 1994 to provide services at
their business and commented that she saved them money.
For the years 1995, 1996 and 1997, our company paid Heritage Interiors a total
of $1,767,833. Of that amount, approximately $77,255 were fees for services and
the remaining $1,690,578 were for furnishings and merchandise. It cost Heritage
Interiors approximately $1,392,009 to purchase those furnishings and
merchandise, so the gross profit on the furnishings and merchandise was
6
<PAGE> 7
$298,569, which represents 17.7% gross profit margin. According to Financial
Studies of the Small Business by Financial Research Associates (19th Edition)
the industry average gross profit margin of retail furniture and appliance sales
firms is 37.37%.
I own a business which provides lawn care and maintenance for certain locations
of the bank. This has also been disclosed in our annual report for a number of
years. Community Bank saves money by using this lawn care service. For example,
we solicited bids for the bank locations in Blount County, and my business,
Heritage Farms, submitted a bid which was $2,032 per month less than the other
bid.
My son-in-law does auditing work for the bank. He was doing this before I came
to the bank and before he married my daughter. After he became my son-in-law, he
hired an independent accounting firm to review all of his work and issue the
audit opinion. In 1998 the bank paid my son-in-law's firm $165,000. We solicited
a bid from another accounting firm to do the same work and the bid was $296,000.
Again, we use these people not because they are related to me but because they
save the bank money. It's in the best interests of the shareholders for us to do
so.
6. NO NEED FOR CHANGE
To Bryan's claim that a change is in the best interests of the company, I have
to tell you that I don't believe that's true. I don't think what they're doing
is in the best interests of the company. In order for the bank to be successful
we must pay attention to our return to shareholders and we've done that while
also taking into account our responsibility to our customers, employees and
communities.
7. NASDAQ LISTING
I'm aware that Bryan said in the American Banker that taking the company to the
NASDAQ is his goal. I'm completely open to that and he knows it since the board
has discussed it. I'm just surprised he's presenting that as his idea.
CERTAIN ADDITIONAL INFORMATION REQUIRED BY THE SECURITIES AND EXCHANGE
COMMISSION: Community Bancshares, Inc. (the "Company") will be soliciting
proxies for the upcoming Annual Meeting of Stockholders of the Company to vote
for election of the Board of Directors' nominees to serve as directors of the
Company and for approval of the Company's proposals. Such proxies will be voted
against proposals that may be presented at the Annual Meeting by certain members
of the so-called Stockholders for Integrity and Responsibility. The following
individuals, each of whom is a member of the Board of Directors of the Company,
may be deemed to be participants in the solicitation of such proxies and, as of
March 1, 1999, beneficially owned the number of shares of the Company's common
stock indicated: Glynn Debter, 37,067 shares; Roy B. Jackson, 5,000 shares;
Denny G. Kelly, 370,000 shares; John J. Lewis, Jr., 43,667 shares; Loy McGruder,
58,022 shares; Hodge Patterson, III, 80,077 shares; Kennon R. Patterson, Sr.,
863,456 shares; Merrit M. Robbins, 184,908 shares; Robert O. Summerford, 116,867
shares; Bishop K. Walker, Jr., 569,479 shares; and R. Wayne Washam, 39,069
shares.
7
