[TEXT] SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------------- FORM 10-QSB (Mark One) X	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES 	EXCHANGE ACT OF 1934 	For the quarterly period ended June 30, 1997. OR 	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE 	SECURITIES EXCHANGE ACT OF 1934 	For the transition period from to Commission File No. 000-22517 COMMUNITY BANCSHARES, INC. (Exact name of small business issuer as specified in its charter) North Carolina 56-1693841 (State of Incorporation) (I.R.S. Employer Identification No.) 1600 Curtis Bridge Road Wilkesboro, North Carolina 28679 (Address of Principal Executive Offices) (910) 838-4100 (Issuer's Telephone Number, Including Area Code) Not Applicable (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) 	Check whether the issuer (1) filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No 	APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common equity as of the latest practicable date. 	Common stock, $3.00 par value per share 1,296,356 shares issued and outstanding as of August 13, 1997. 	Transitional Small Business Disclosure Format (Check one): Yes No X (Page 1 of 16) PART I - FINANCIAL INFORMATION 	Item 1. Financial Statements 	COMMUNITY BANCSHARES, INC. 	Wilkesboro, North Carolina 	Consolidated Balance Sheets 	ASSETS June 30, December 31, 1997 1996 (Unaudited) (Unaudited) Cash and due from banks $ 1,680,859 $ 1,763,882 Federal funds sold 550,000 2,450,000 Total cash and cash equivalents $ 2,230,859 $ 4,213,882 Securities: Available-for-sale, at estimated market values 12,150,540 11,302,580 Held-to-maturity (Estimated market values of $4,435,098 (06-30-97) and $5,399,611 (12-31-96) 4,440,598 5,414,836 Loans, net 62,217,845 52,786,698 Property and equipment 585,222 218,857 Other assets 1,314,619 778,515 Total Assets $82,939,683 $74,715,368 	LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Deposits Non-interest bearing deposits $ 4,563,195 $ 5,090,509 Interest bearing deposits 67,686,356 59,364,668 Total deposits $72,249,551 $64,455,177 Other liabilities 942,888 924,292 Total Liabilities $73,192,439 $65,379,469 Commitments & Contingencies Shareholders' Equity: Common stock - $3.00 par value, 10 million shares authorized; 1,296,356 (06-30-97) and 1,284,386 (12-31-96) shares issued and outstanding $ 3,889,068 $ 3,853,158 Paid-in-capital 5,378,223 5,312,078 Retained earnings 476,856 163,259 Unrealized gain on securities available-for-sale 3,097 7,404 Total Shareholders' Equity $ 9,747,244 $ 9,335,899 Total Liabilities and Shareholders' Equity $82,939,683 $74,715,368 Refer to notes to the consolidated financial statements. 	COMMUNITY BANCSHARES, INC. 	Wilkesboro, North Carolina 	Income Statements 	(Unaudited) For the six months ended June 30, 1997 1996 Interest income $3,416,896 $2,343,585 Interest expense 1,693,734 1,290,621 Net interest income $1,723,162 $1,052,964 Provision for possible loan losses 275,000 82,500 Net interest income (loss) after provision for possible loan losses $1,448,162 $ 970,464 Other income: Service fees and other charges $ 72,185 $ 58,291 Gain (loss) on sale of securities (4,618) 1,089 Total Other Income $ 67,567 $ 59,380 Operating expenses: Salaries and benefits $ 492,006 $ 399,621 Legal and professional 53,849 26,530 Depreciation 25,481 31,852 Amortization 5,807 12,035 Courier and postage 28,791 31,190 Rent expense 39,416 42,108 Data processing 64,057 50,777 Regulatory assessments 25,347 35,900 Other operating expenses 183,757 193,236 Total Expenses $ 918,511 $ 823,249 Income before taxes and extraordinary item $ 597,218 $ 206,595 Income tax 283,620 76,388 Net Income $ 313,598 $ 130,207 Income per share $ .21 $ .12 	Refer to notes to the consolidated financial statements. 	COMMUNITY BANCSHARES, INC. 	Wilkesboro, North Carolina 	Income Statements 	(Unaudited) For the three months ended June 30, 1997 1996 Interest income $1,778,196 $1,217,249 Interest expense 878,419 644,153 Net interest income $ 899,777 $ 573,096 Provision for possible loan losses 150,000 45,000 Net interest income after provision for possible loan losses $ 749,777 $ 528,096 Other income: Service fees and other charges $ 36,732 $ 24,251 Gain on sale of securities (5,261) 5,586 Total other income $ 31,471 $ 29,837 Operating expenses: Salaries and benefits $ 258,976 $ 209,086 Legal and professional 35,528 12,104 Depreciation 13,061 16,447 Amortization 2,136 6,018 Courier and postage 15,246 17,425 Rent expense 19,218 20,243 Data processing 32,897 26,389 Regulatory assessments 11,674 16,925 Other operating expenses 84,067 92,172 Total Expenses $ 472,803 $ 416,809 Income before taxes $ 308,445 $ 141,124 Income tax 155,000 52,750 Net Income $ 153,445 $ 88,374 Income per share $ .10 $ .08 	Refer to notes to the consolidated financial statements. 	COMMUNITY BANCSHARES, INC. 	Wilkesboro, North Carolina 	Statements of Cash Flows 	(Unaudited) Six months ended June 30, 1997 1996 Cash flows from operating activities: $ (394,176) $ 167,867 Cash flows from investing activities Purchase of equipment (391,846) (41,716) (Increase) in loans, net (9,706,147) (8,233,231) Securities, available-for-sale Sale of securities 2,051,632 1,616,300 Purchase of securities (2,918,028) (2,768,638) Maturities and pay-downs 504,875 463,106 Securities, held-to-maturity Purchase of securities - - (275,591) Maturities and pay-downs 974,238 1,908,031 Net cash used in investing activities $(9,485,276) $(7,331,739) Cash flows from financing activities Increase in repurchase agreements $ - - $ 741,666 Increase in deposits 7,794,374 4,292,881 Proceeds from sale and exercise of warrants/options 102,055 1,528,810 Net cash provided from financing activities $ 7,896,429 $ 6,563,357 Net (decrease) in cash and cash equivalents $(1,983,023) $ (600,515) Cash and cash equivalents at beginning of period 4,213,882 1,949,186 Cash and cash equivalents at end of period $ 2,230,859 $ 1,348,671 	Refer to notes to the consolidated financial statements. 	COMMUNITY BANCSHARES, INC. 	Wilkesboro, North Carolina 	Notes to Consolidated Financial Statements (Unaudited) 	June 30, 1997 Note 1 - Basis of Presentation 	The accompanying financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10- QSB. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six-month period ended June 30, 1997 are not necessarily indicative of the results that may be expected for the year ending December 31, 1997. For further information, refer to the financial statements and footnotes thereto included in Form 10- KSB for the year ended December 31, 1996. Note 2 - Summary of Organization 	Community Bancshares, Inc., Wilkesboro, North Carolina (the "Company"), was incorporated under the laws of the State of North Carolina on June 11, 1990, for the purpose of becoming a bank holding company with respect to a proposed national bank, Wilkes National Bank (the "Bank"), located in Wilkesboro, North Carolina. Upon commencement of the Bank's planned principal operations on January 17, 1992, the Company acquired 100 percent of the voting stock of the Bank by injecting $3,750,000 into the Bank's capital accounts. 	As of June 30, 1997 and December 31, 1996, there were 1,296,356 and 1,284,386 shares of common stock outstanding, respectively. 	The Company offered warrants to its organizers and to a group of initial subscribers. Each warrant, when surrendered with $5.50 to the Company, is convertible into one share of common stock. The warrants expire ten years from January 17, 1992. At June 30, 1997 and December 31, 1996, there were 383,464 and 385,114 warrants outstanding, respectively. Note 3 - Summary of Significant Accounting Policies 	Basis of Presentation and Reclassification. The consolidated financial statements include the accounts of the Company and the Bank. All significant intercompany accounts and transactions have 	COMMUNITY BANCSHARES, INC. 	Wilkesboro, North Carolina 	Notes to Consolidated Financial Statements (Unaudited) 	June 30, 1997 been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current year presentation. 	Basis of Accounting. The accounting and reporting policies of the Company conform to generally accepted accounting principles and to general practices in the banking industry. The Company uses the accrual basis of accounting by recognizing revenues when earned and expenses when incurred, without regarding the time of receipt or payment of cash. 	Investment Securities. The Company adopted Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investment in Debt and Equity Securities" ("SFAS 115") on January 1, 1994. SFAS 115 requires investments in equity and debt securities to be classified into three categories: 	1.	Held-to-maturity securities: These are securities which the Company has the ability and intent to hold until maturity. These securities are stated at cost, adjusted for amortization of premiums and the accretion of discounts. 	2.	Trading securities: These are securities which are bought and held principally for the purpose of selling in the near future. Trading securities are reported at fair market value, and related unrealized gains and losses are recognized in the income statement. 	3.	Available-for-sale securities: These are securities which are not classified as either held-to-maturity or as trading securities. These securities are reported at estimated market value. Unrealized gains and losses are reported, net of tax, as separate components of shareholders' equity. Unrealized gains and losses are excluded from the income statement. 	Loans, Interest and Fee Income on Loans. Loans are stated at the principal balance outstanding. Unearned discount, unamortized loan fees and the allowance for possible loan losses are deducted from total loans in the statement of condition. Interest income is recognized over the term of the loan based on the principal amount outstanding. Points on real estate loans are taken into income to the extent they represent the direct cost of initiating a loan. The amount in excess of direct costs is deferred and amortized over the expected life of the loan. 	COMMUNITY BANCSHARES, INC. 	Wilkesboro, North Carolina 	Notes to Consolidated Financial Statements (Unaudited) 	June 30, 1997 	Loans are generally placed on non-accrual status when principal or interest becomes ninety days past due, or when payment in full is not anticipated. When a loan is placed on non-accrual status, interest accrued but not received is generally reversed against interest income. If collectibility is in doubt, cash receipts on non-accrual loans are not recorded as interest income, but are used to reduce principal. 	Allowance for Possible Loan Losses. The provisions for loan losses charged to operating expense reflect the amount deemed appropriate by management to establish an adequate reserve to meet the present and foreseeable risk characteristics of the current loan portfolio. Management's judgement is based on periodic and regular evaluation of individual loans, the overall risk characteristics of the various portfolio segments, past experience with losses and prevailing and anticipated economic conditions. Loans which are determined to be uncollectible are charged against the allowance. Provisions for loan losses and recoveries on loans previously charged-off are added to the allowance. 	The Company adopted Statement of Financial Accounting Standards No. 114, "Accounting by Creditors for Impairment of a Loan," ("SFAS 114") on January 1, 1995. Under the new standard, a loan is considered impaired, based on current information and events, if it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. The measurement of impaired loans is generally based on the present value of expected future cash flows discounted at the historical effective interest rate, except that all collateral-dependent loans are measured for impairment based on the fair value of the collateral. The adoption of SFAS 114 resulted in no change to the allowance for credit losses at January 1, 1995. 	In October, 1994, FASB issued Statement of Financial Accounting Standards No. 118, "Accounting by Creditors for Impairment of a Loan - Income Recognition and Disclosure" ("SFAS 118"). SFAS 118 amends SFAS 114 to allow a creditor to use existing methods for recognizing interest income on an impaired loan, rather than the methods prescribed in SFAS 114. 	Property and Equipment. Furniture, equipment and leasehold improvements are stated at cost, net of accumulated depreciation. Depreciation is computed using the straight line method over the 	COMMUNITY BANCSHARES, INC. 	Wilkesboro, North Carolina 	Notes to Consolidated Financial Statements (Unaudited) 	June 30, 1997 estimated useful lives of the related assets. Maintenance and repairs are charged to operations, while major improvements are capitalized. Upon retirement, sale or other disposition of property and equipment, the cost and accumulated depreciation are eliminated from the accounts, and gains or losses are included in income from operations. 	Income Taxes. The consolidated financial statements have been prepared on the accrual basis. When income and expenses are recognized in different periods for financial reporting purposes and for purposes of computing income taxes currently payable, deferred taxes are provided on such temporary differences. 	Effective January 1, 1993, the Company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"). Under SFAS 109, deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been recognized in the financial statements or tax return. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be realized or settled. 	Statement of Cash Flows. For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks and federal funds sold. Generally, federal funds are purchased or sold for one-day periods. 	Income Per Share. The weighted average number of shares outstanding as well as all common stock equivalents must be considered for purposes of computing earnings per share. Note that common stock equivalents are securities that enable their holders to obtain additional shares of common stock. Options and warrants are common stock equivalents. They are used in the computation of earnings per share only if, upon exercise, they dilute earnings per share by 3% or more. To compute earnings per share, adjusted net income is divided by the sum of weighted average common stock outstanding and common stock equivalents. For the six-month periods ended June 30, 1997 and 1996, net income per share amounted to $.21 and $.12, respectively. ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The Company commenced its principal operations on January 17, 1992 when its subsidiary Bank opened for business. During the period from February 1, 1990 to January 17, 1992, the Company was in the development stage as it devoted most of its efforts to organizing, incorporating, planning, raising capital and recruiting personnel. During the development stage, the Company funded its operations principally through borrowings. However, by December 31, 1991, all outstanding loans were paid-off with funds raised through the sale of the Company's common stock. Total assets increased by $8.2 million to $82.9 million during the six-month period ended June 30, 1997. The increase was generated primarily through a $7.8 million increase in deposits and a $.4 million increase in equity. These funds were utilized to expand the loan portfolio. Liquidity and Sources of Capital Liquidity is the Company's ability to meet all deposit withdrawals immediately, while also providing for the credit needs of customers. The June 30, 1997 financial statements evidence a satisfactory liquidity position as total cash and cash equivalents amounted to $2.2 million, representing 2.7% of total assets. Investment securities amounted to $16.6 million, representing 20.0% of total assets. These securities provide a secondary source of liquidity because they can be converted into cash in a timely manner. The subsidiary Bank is a member of the Federal Reserve System and is maintaining relationships with several correspondent banks and, thus, could obtain funds on short notice. The Company's management closely monitors and maintains appropriate levels of interest earning assets and interest bearing liabilities, so that maturities of assets are such that adequate funds are provided to meet customer withdrawals and loan demand. There are no trends, demands, commitments, events or uncertainties that will result in or are reasonably likely to result in the Company's liquidity increasing or decreasing in any material way. The Bank maintains an adequate level of capitalization as measured by the following capital ratios and the respective minimum capital requirements by the Bank's primary regulator, the Office of the Comptroller of the Currency ("OCC"). Bank's Minimum required June 30, 1997 by regulator Leverage ratio 8.4% 4.0% Risk weighted ratio 11.9% 8.0% With respect to the leverage ratio, the regulator expects a minimum of 5.0 percent to 6.0 percent ratio for banks that are not rated CAMEL 1. Although the Bank is not rated CAMEL 1, its leverage ratio of 8.4% is above the required minimum. Results of Operations For the three-month periods ended June 30, 1997 and 1996, net income amounted to $153,445 and $88,374, respectively. On a per- share basis, net income for the three-month periods ended June 30, 1997 and 1996 amounted to $.10 and $.08, respectively. As discussed below, the improvement in net income is primarily due to an increase in net interest income. Net income for the six-month period ended June 30, 1997 amounted to $313,598. These results compare favorably with the June 30, 1996 net income of $130,207. On a per share basis, net income for the periods ended June 30, 1997 and 1996 amounted to $.21 and $.12, respectively. The primary reasons for the increase in net income for the six months ended June 30, 1997 from the same period in the prior year are as follows: a.	Net interest income, which represents the difference between interest received on interest earning assets and interest paid on interest bearing liabilities, has increased from $1,052,964 for the six-month period ended June 30, 1996 to $1,723,162 for the same period one year later, representing an increase of $670,198, or 63.6%. This increase was attained primarily because of a $22.8 million increase in earning assets, from $53.4 million at June 30, 1996 to $76.2 million at June 30, 1997. For the three-month periods ended June 30, 1996 and 1997, net interest income rose from $573,096 to $899,777 representing an increase of $326,681, or 57.0%. b.	The net interest yield, defined as net interest income divided by average interest earning assets, has increased from 3.94% for the six-month period ended June 30, 1996 to 4.52% for the six-month period ended June 30, 1997. The increase in the yield is due to both the significant increase in the yield on investment securities and the material decline in the interest rates paid on certificates of deposit. The following table presents the pertinent information concerning the yield on earning assets and the cost of funds as of June 30, 1997. Avg. Assets/ Interest Yield/ Description Liabilities Income/Expense Cost Federal funds $ 1,012,782 $ 26,644 5.26% Securities 16,307,182 522,400 6.41% Loans 58,868,361 2,867,852 9.74% Total $76,188,325 $3,416,896 8.97% Transactional accounts $11,724,171 $ 209,935 3.58% Savings 2,225,698 36,273 3.26% CD's 51,079,267 1,439,140 5.63% Reverse repos 354,652 8,386 4.73% Total $65,383,788 $1,693,734 5.18% Net interest income $1,723,162 Net yield on earning assets 4.52% 	For the three-month period ended June 30, 1996, net interest yield rose from 3.94% to 4.58% c.	During the three-month and six-month periods ended June 30, 1997 compared to the same periods one year earlier, management was better able to control expenses. For the six-month period ended June 30, 1997, operating expenses amounted to $918,511, representing an annualized 2.44% of average assets. By comparison, for the six-month period ended June 30, 1996, operating expenses amounted to $823,249, representing an annualized 2.98% of average assets. For the three-month periods ended June 30, 1997 and 1996, operating expenses amounted to $472,803 and 416,809, respectively. As a percent of average total assets, operating expenses declined from 3.02% for the three-month period ended June 30, 1996 to 2.51% for the same period one year later. d.	Total non-interest income has increased from $59,380 for the six-month period ended June 30, 1996 to $67,567 for the six- month period ended June 30, 1997. For the three-month periods ended June 30, 1996 and 1997, non-interest income increased 5.5% from $29,837 to $31,471. These increases are attributed to higher volume in transactional accounts. The following table presents information with respect to loans and the allocations to the allowance for loan losses as of June 30, 1997: Percent of Allocation to Loan category Amount total allowance Commercial, financial agricultural $35,316,774 56.0% $540,000 Real est. - construction 6,011,728 9.5% 103,000 Real est. - mortgage 12,001,739 19.0% 143,000 Consumer loans 9,779,408 15.5% 89,000 Total $63,109,649 100.0% $865,000 Unallocated portion of allowance $16,804 As of June 30, 1997, loans aggregating $83,000 were accounted for on a non-accrual basis. Additionally, all loans that were contractually past due 90 days or more as to principal and/or interest were accounted for as non-accruing loans. There were no loans defined as "troubled debt restructuring". During the six-month period ended June 30, 1997, the allowance for loan losses has grown from $619,133 to $891,804. The allowance for loan losses as a percentage of gross loans, increased from 1.16% at December 31, 1996 to 1.41% at June 30, 1997. For the six-month period ended June 30, 1997, the allowance for loan losses increased $275,000 through provisions and $4,662 through recoveries; the allowance decreased $6,991 due to charge-offs. The ratio of net charge-off to average loans outstanding at June 30, 1997 was .004%. Management considers the allowance for loan losses to be adequate and sufficient to absorb possible future losses; however, there can be no assurance that charge-offs in future periods will not exceed the allowance for loan losses or that additional provisions to the allowance will not be required. The Company is not aware of any current recommendation by the regulatory authorities which, if they were to be implemented, would have a material effect on the Company's liquidity, capital resources, or results of operations. 	PART II. OTHER INFORMATION Item 2. Changes in Securities 	Pursuant to the exercise of stock options awarded under the Company's incentive stock option plan, the Company issued an aggregate of 8,620 shares of common stock to a total of 10 employees of the Company during the three-month period ended June 30, 1997 in the following transactions: (i) on April 22, 1997, 100 shares of common stock were issued to one employee who exercised options to purchase shares of common stock at an exercise price of $10.00 per share; (ii) on May 9, 1997, 2,668 shares of common stock were issued to one employee who exercised options to purchase shares of common stock at an exercise price of $9.00 per share; (iii) on May 13, 1997, 734 shares of common stock were issued to one employee who exercised options to purchase shares of common stock at an exercise price of $9.00 per share; (iv) on May 14, 1997, an aggregate 650 shares of common stock were issued to two employees who exercised options to purchase shares of common stock at an exercise price of $9.00 per share; (v) on June 13, 1997, an aggregate 1,534 shares of common stock were issued to two employees who exercised options to purchase shares of common stock at an exercise price of $9.00 per share; (vi) on June 18, 1997, an aggregate 934 shares of common stock were issued to two employees who exercised options to purchase shares of common stock at an exercise price of $9.00 per share; and (vii) on June 27, 1997, 2,000 shares of common stock were issued to one employee who exercised options to purchase shares of common stock at an exercise price of $9.00 per share. 	In connection with the exercise of warrants to purchase common stock of the Company, on June 30, 1997 the Company issued 850 shares of common stock to one individual. The warrant was exercised at a price of $5.50 per share and was originally issued in connection with the Company's initial public offering to its organizers and a group of the Company's initial shareholders. 	All issuances of securities described above were made in reliance on the exemption from registration provided by Section 4(2) of the Securities Act of 1933 as transactions by an issuer not involving a public offering. No underwriter was involved in the transactions and no commissions were paid. Item 4. Submission of Matters to a Vote of Security Holders. 	The 1997 Annual Meeting of Shareholders of the Company was held on May 30, 1997. At the meeting, the following persons were elected as directors to serve on the Company's Board of Directors for a term of three years and until their successors are elected and have qualified: Rebecca W. Lowe, Dwight E. Pardue, Joe D. Severt and R. Colin Shoemaker. 	The number of votes cast for and against the election of each nominee for director was as follows: Votes Votes 	Director For Against 	Rebecca W. Lowe 1,127,554 3,500 	Dwight E. Pardue 1,130,554 500 	Joe D. Severt 1,131,054 0 	R. Colin Shoemaker 1,131,054 0 	No other matters were presented or voted for at the Annual Meeting of Shareholders. 	The following persons did not stand for reelection to the Board at the 1997 Annual Meeting of Shareholders as their term of office continued after the Annual Meeting: Brent F. Eller, Jack R. Ferguson, Edward F. Greene, Stephen B. Greene, Gilbert R. Miller, Robert F. Ricketts, Rebecca Ann Sebastian and Ronald S. Shoemaker. Item 6. Exhibits and Reports on Form 8-K. 	(a) Exhibits. The following exhibit is filed with this report. 	27.1 Financial Data Schedule (for SEC use only) 	(b) Reports on Form 8-K. No reports on Form 8-K were filed during the quarter ended June 30, 1997. 	SIGNATURES 	Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. COMMUNITY BANCSHARES, INC. Dated: August 12, 1997 By: /s/Ronald S. Shoemaker Ronald S. Shoemaker, President and Chief Executive Officer (Principal Executive, Financial and Accounting Officer) Financial Data Schedule Submitted Under Item 601(a)(27) of Regulation S-B This schedule contains summary financial information extracted from Community Bancshares, Inc. unaudited consolidated financial statements for the period ended June 30, 1997 and is qualified in its entirety by reference to such financial statements. Item Number Item Description Amount 9-03(1) Cash and due from banks $ 1,680,859 9-03(2) Interest bearing deposits 0 9-03(3) Federal funds sold - purchased securities for sale 550,000 9-03(4) Trading account assets 0 9-03(6) Investment and mortgage backed securities held for sale 12,150,540 9-03(6) Investment and mortgage backed securities held to maturity - carrying value 4,440,598 9-03(6) Investment and mortgage backed securities held to maturity - market value 4,435,098 9-03(7) Loans 63,109,649 9-03(7)(2) Allowance for losses 891,804 9-03(11) Total assets 82,939,683 9-03(12) Deposits 72,249,551 9-03(13) Short-term borrowings 0 9-03(15) Other liabilities 942,888 9-03(16) Long-term debt 0 9-03(19) Preferred stock - mandatory redemption 0 9-03(20) Preferred stock - no mandatory redemption 0 9-03(21) Common stock 3,889,068 9-03(22) Other stockholders' equity 5,858,176 9-03(23) Total liabilities and stockholders' equity 82,939,683 9-04(1) Interest and fees on loans 2,867,852 9-04(2) Interest and dividends on investments 549,044 9-04(4) Other interest income 0 9-04(5) Total interest income 3,416,896 9-04(6) Interest on deposits 1,685,348 9-04(9) Total interest expense 1,693,734 9-04(10) Net interest income 1,723,162 9-04(11) Provision for loan losses 275,000 9-04(13)(h) Investment securities gains/losses (4,618) 9-04(14) Other expenses 918,511 9-04(15) Income/loss before income tax 597,218 Item Number Item Description Amount 9-04(17) Income/loss before extraordinary items 597,218 9-04(18) Extraordinary items, less tax 0 9-04(19) Cumulative change in accounting principles 0 9-04(20) Net income or loss 313,598 9-04(21) Earnings per share - primary .21 9-04(21) Earnings per share - fully diluted .21 I.B.5. Net yield - interest earning assets - actual 4.52% III.C.1(a) Loans on non-accrual 83,000 III.C.1(b) Accruing loans past due 90 days or more 16,222 III.C.1(c) Troubled debt restructuring 0 III.C.2. Potential problem loans 83,000 IV.A.1 Allowance for loan losses - beginning of period 619,133 IV.A.2 Total chargeoffs 6,991 IV.A.3 Total recoveries 4,662 IV.A.4 Allowance for loan losses - end of period 891,804 IV.B.1 Loan loss allowance allocated to domestic loans 870,000 IV.B.2 Loan loss allowance allocated to foreign loans 0 IV.B.3 Loan loss allowance - unallocated 11,804