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EXHIBIT 99
NEWS RELEASE Community Bancshares, Inc.
P.O. Box 1000
Blountsville, Alabama 35031
FOR IMMEDIATE RELEASE
Contact: Charles Carr (205) 429-1000
Blountsville, Alabama, August 4, 2000... The Boards of Directors of
Community Bancshares, Inc., and Community Bank have appointed a joint committee
to review allegations that Community Bank has been overcharged for construction
projects at Albertville and Guntersville, Alabama.
Merritt Robbins, a Community Bancshares director since 1996, has been
named chairman of the joint committee. Employees have been asked to cooperate
fully with the investigation. Community Bancshares' Chairman, President and
Chief Executive Officer Kennon R. Patterson, Sr., says he welcomes the review of
the construction projects and looks forward to a resolution.
The joint committee has retained Ernst & Young, LLP, an
internationally-recognized, independent accounting firm and the renowned
corporate law firm of Morris, Nichols, Arsht, & Tunnell of Wilmington, Delaware,
in order to assist the joint committee in the conduct of a thorough
investigation.
The allegations relate to expenditures in Community Bank's operating
funds related to certain construction projects and do not involve depositors'
money. Customers can be assured that their deposits are safe and that Community
Bank will continue to offer the same friendly, efficient service that fueled the
company's growth from one bank with $38 million in assets to a $697 million
holding company.
Shareholders M. Lewis Benson, Doris E. Benson, and John M. Packard,
Jr., all Marshall County residents, filed a lawsuit against Community
Bancshares, Community Bank, certain directors and officers of the Company and
Community Bank, Morgan City Construction and J&M Materials, two subcontractors
who have performed construction work for Community Bank. The plaintiffs purport
to bring the suit as a derivative action, alleging that the Boards of Directors
and an officer of Community Bank breached their fiduciary duties by, inter alia,
knowingly approving and paying fraudulent invoices submitted by the
subcontractors, permitting construction work to be performed without written
contracts, budgets, performance guarantees, assurances of indemnification or
otherwise, permitting corporate waste and allowing excessive fees to be paid to
the subcontractors. The complaint further alleges that Kennon R. Patterson, Sr.,
Chairman, President and Chief Executive Officer of the Company, has improperly
benefitted from the payments made by Community
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Bank to the subcontractors by receiving discounted services on the construction
of his personal residence, and that the directors knew of this arrangement and
authorized it.
Board members take the allegations seriously and believe they should be
quickly and thoroughly explored for the sake of the customers of Community Bank
and the shareholders of Community Bancshares. Management of Community Bank and
Community Bancshares expects that, by hiring highly respected accounting and law
firms to independently investigate, the allegations will be objectively
analyzed, paving the way for a satisfactory resolution.
Community Bancshares, Inc., is a bank holding company headquartered in
Blountsville, Alabama. Community Bancshares, through its subsidiaries, operates
30 banking offices and 12 finance company offices in Alabama and Tennessee. For
more information about Community Bancshares, please consult its public filings
at www.sec.gov.
