SECURITIES AND EXCHANGE COMMISSION
                     WASHINGTON, D.C.  20549

                                                                 

                           FORM 10-Q

   [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
                SECURITIES EXCHANGE ACT OF 1934

               For Quarter Ended March 31, 1997

                             OR

 [  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
                    EXCHANGE ACT OF 1934

                Commission File No. 0-16461

                 COMMUNITY BANCSHARES, INC.
  (Exact name of registrant as specified in its charter)


            Delaware                               63-0868361                
    (State of Incorporation)          (I.R.S. Employer Identification No.)


Main Street, P. O. Box 1000, Blountsville, AL                35031 
(Address of principal executive office)                   (Zip Code)


 Registrant's telephone number, including area code:  (205) 429-1000


                     No Change
(Former name, former address and former fiscal year, if changed since
                    last report)

Indicate  by check mark whether the registrant (1) has 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  
registrant  was  required to file such reports), and (2) has been subject to 
such filing requirements for the past 90 days:

   Yes   X       No      


 Indicate the number of shares outstanding of the registrant's class of common 
stock, as of the latest practicable date.

        Class                                     Outstanding at March 31,1997
Common Stock, $.10 Par Value                                 1,895,169 
                                          <PAGE>
 



                                    INDEX

                COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES


PART I. FINANCIAL INFORMATION                                         PAGE

Item 1.  Financial Statements (Unaudited)

Consolidated balance sheets-March 31,1997 and December 31,1996 . . .    3

Consolidated statements of income - Three months ended March 31,
 1997 and 1996. . . . . . . . . . . .                                   4

Consolidated statements of cash flows - Three months ended March 31,
 1997 and 1996. . . . . . . . . . . .                                   5

Notes to consolidated financial statements - March 31, 1997 . . . .     7


Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations. . . . . . . . . . . .                   9

PART II. OTHER INFORMATION

Item  6. Exhibits and Reports on Form 8-K. . . . . . . . . . . .       14

SIGNATURES
                                     <PAGE>
 

                      PART I - FINANCIAL INFORMATION
                ITEM 1 - FINANCIAL STATEMENTS (UNAUDITED)
               COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
                       CONSOLIDATED BALANCE SHEETS

                                                      March 31,   December 31, 
                                                        1997          1996    
Assets
 Cash . . . . . . . . . . . . . . . . . . . . . $    3,977,970  $  5,096,892
 Due from banks  . .                                18,558,842    12,515,285
 Interest-bearing deposits with banks . . . . .      2,504,343     1,773,778
 Federal funds sold . . . . . . . . . . . . . . .    9,200,000         -0-
 Securities available for sale  . . . . . . . . .   79,301,086    86,911,305
 Loans  . . . . . . . . . . . . . . . . . . . . .  327,696,327   324,571,991
  Less: Unearned income  . . . . . . . . . . . .     1,611,915     1,809,698
        Allowance for loan losses . . . . . . . .    2,395,536     2,424,847
 Net Loans  . . . . . . . . . . . . . . . . . . .  323,688,876   320,337,446

 Premises and equipment, net  . . . . . . . . . .   18,482,057    17,076,220
 Accrued interest . . . . . . . . . . . . . . . .    4,318,044     4,847,308
 Intangibles, net . . . . . . . . . . . . . . . . .  4,021,741     4,101,306
 Other real estate  . . . . . . . . . . . . . . . .    869,504       791,435
 Other assets . . . . . . . . . . . . . . . . .      2,031,956     1,258,720

 Total Assets . . . . . . . . . . .              $ 466,954,419 $ 454,709,695

Liabilities and Shareholders' Equity
Deposits:
 Noninterest-bearing . . . . . . . . . . . .     $  55,463,146 $  50,245,130
 Interest-bearing  . . . . . . . . . . . . . . .   364,579,672   350,092,545
 Total Deposits . . . . . . . . . . . . . . . .    420,042,818   400,337,675

Other short-term borrowings  . . . . . . . . . .     3,217,611     8,376,472
Accrued interest . . . . . . . . . . . . . . .       2,705,759     2,542,825
Long-term debt . . . . . . . . . . . . . . . . .     8,061,164     8,281,449
Other liabilities  . . . . . . . . . . . . . . . . . 1,503,415     2,612,488
Total Liabilities  . . . . . . . . . . . . . . .   435,530,767   422,150,909
Shareholders' equity
 Common stock, par value $.10 per share, 
  5,000,000 shares authorized, 2,004,836 
  shares issued as of March 31, 1997 and 
  2,000,000 shares issued as of December 31, 1996      200,484       200,000
 Capital surplus . . . . . . . . . . . . . . . .    17,915,958    17,819,722
 Retained earnings . . . . . . . . . . . . . . .    16,134,702    16,812,517
 Unearned ESOP shares - 109,667 and 112,121 shares 
  unreleased at March 31, 1997 and December 31,1996 (2,090,958)   (2,119,891)
 Unrealized losses on investment securities 
  available for sale, net of deferred taxes  . . .    (736,534)     (153,562)
                      
Total Shareholders' Equity . . . . . . . . . . . .  31,423,652    32,558,786

Total Liabilities and Shareholders' Equity       $ 466,954,419 $ 454,709,695


                   See notes to consolidated financial statements


                                     Page 3


                 COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF INCOME
                               (UNAUDITED)
                                                       Three Months Ended
                                                           March 31,
                                                      1997          1996     
Revenue From Earning Assets
Interest and fees on loans . . . . . . . .       $  7,781,363  $   5,981,921
Interest on investment securities:
 Taxable securities  . . . . . . . . . . . . .      1,116,272      1,079,490 
 Securities exempt from federal income taxes   . .    182,877        233,800
Interest on federal funds sold . . . . . . . . . .     19,362        280,552
Interest on deposits in other banks  . . . . . . .     20,241         17,611
 Total Revenue From Earning Assets . . . . . . . .  9,120,115      7,593,374

Interest Expense
 Interest on deposits . . . . . . . . . . . . . .   4,442,298      3,979,911
 Interest on other short-term borrowings  . . . . .    44,945         36,039
 Interest on long-term debt . . . . . . . . . . . .   155,358        163,320
  Total Interest Expense  . . . . . . . . . . . . . 4,642,601      4,179,270

Net interest income                                 4,477,514      3,414,104
Provision for loan losses . . .                       197,978        127,882

Net interest income after provision 
 for loan losses . . . . . . . . . . . . . . . .    4,279,536      3,286,222

Noninterest Income
 Service charges on deposits  . . . . . . . . . . .   622,901        485,814
 Insurance commissions  . . . . . . . . . . . . . .   190,203         83,887
 Bank club dues . . . . . . . . . . . . . . . . . . . 134,784        117,746
 Other operating income . . . . . . . . . . . . . . . 229,966        241,908
 Investment securities gains  . . . . . . . . . . . .  (2,590)          -0- 
  Total Noninterest Income  . . . . . . . . . . . . 1,175,264        929,355

Noninterest Expenses
 Salaries and employee benefits . . . . . . . . . . 2,647,438      2,073,477
 Occupancy expense  . . . . . . . . . . . . . . . .   343,452        228,048
 Furniture and equipment expense  . . . . . . . . .   274,406        220,545
 Director and committee fees  . . . . . . . . . . .   152,875         70,575
 Other operating expenses . . . . . . . . . . . . .   882,539        715,391
  Total Noninterest Expenses  . . . . . . . . . . . 4,300,710      3,308,036

Income before income taxes                          1,154,090        907,541
Provision for income taxes  . .                       331,904        236,913

Net Income  . . . . . . . . . . . . . . . . . .  $     822,186  $    670,628

Earnings Per Common Share - Primary and Fully-diluted
  Net income per common share  . . . . . . . . . $         .42  $        .37
                    
  Weighted average common shares outstanding . .     1,978,063     1,826,117

                     
                 See notes to consolidated financial statements

                                            Page 4

                         COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

                            CONSOLIDATED STATEMENTS OF CASH FLOWS
                                         (UNAUDITED)

                                                           Three months Ended
                                                                 March 31,      
                                                            1997        1996    
Operating activities:
 Net income . . . . . . . . . . . . . . . . . . . . .  $  822,186 $   670,628
 Adjustments to reconcile net income to net
  cash provided by operating activities:
 Provision for loan losses  . . . . . . . . . . . . . .   197,978     127,882
 Provision for depreciation and amortization  . . . . .   351,119     276,956
 Amortization of investment security premiums and
  accretion of discounts . . . . . . . . . . . . . . .     (7,018)    (22,130)
 Realized investment security losses   . . . . . . . .       -0-         -0-   
 Increase (decrease) in accrued interest receivable . .   529,264    (348,953)
 Increase in accrued interest payable . . . . . . . . .   162,934     326,925 
 Other  . . . . . . . . . . . . . . . . . . . . . . . .  (426,489) (1,427,814)
    Net cash provided (used) by operating activities    1,629,974    (396,506)

Investing activities:
 Proceeds from sales of investment securities . . . . . 5,007,863       -0-
 Proceeds from maturity of investment securities  . . . 1,934,835    3,135,003
 Purchase of investment securities  . . . . . . . . . .  (299,671) (34,356,392)
 Decrease (increase) in interest-bearing deposits 
  with other banks                                       (730,565)     186,665
 Net increase in loans to customers . . . . . . . . .  (3,302,119) (12,697,634)
 Purchase of goodwill . . . . . . . . . . . . . . . .       -0-     (2,189,435)
 Capital expenditures . . . . . . . . . . . . . . . .  (1,747,519)  (1,019,121)
   Net cash used in investing activities . . . . . .      862,824  (46,940,914)

Financing activities:
 Net increase  in demand deposits, NOW accounts,
  and savings accounts  . . . . . . . . . . . . . .     6,855,618    29,331,723 
 Net increase in certificates of deposit  . . . . . . .11,435,735    14,338,889
 Net increase (decrease) in short-term borrowings . .  (5,064,884)    1,781,612 
 Issuance and sale of common stock. . . . . . . . .        96,720     1,077,260 
 Repayment of long-term debt  . . . . . . . . . . . .    (191,352)    (190,444)
 Cash dividends . . . . . . . . . . . . . . . . . . .  (1,500,000)    (908,788)
  Net cash provided by financing activities . . . .    11,631,837   45,430,252

Net increase (decrease) in cash and cash equivalents   14,124,635   (1,907,168)

Cash and cash equivalents at beginning of period  .    17,612,177   36,438,247

Cash and cash equivalents at end of period  . . .  $   31,736,812 $ 34,531,079


                  See notes to consolidated financial statements

                                    5 <PAGE>
 


                COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                               (UNAUDITED)

                                                       Three Months Ended
                                                            March 31,        
                                                        1997          1996     

Supplemental disclosures of cash flow information:
Cash paid during the period for:
 Interest  . . . . . . . . . . . . . . . . . . . $   4,113,337  $   3,852,345
 Income taxes  . . . . . . . . . . . . . . . . .       493,689         28,742

Supplemental schedule of non-cash investing and financing activities:

  Other  real estate of $87,500 and $444,500 was acquired in 1997 and 1996, 
  respectively, from employees as a result of the Company s relocation program.

  Upon  the  pledging  of  purchased  shares to obtain additional ESOP debt of 
  $137,918 on October 2, 1995, long-term debt  was  increased  and equity was 
  decreased . The debt was reduced and shares were released by $28,933 and 
  $42,840 during the three month periods ended March 31,1997 and 1996, 
  respectively, as a result of payments made by the Company's ESOP on the 
  outstanding ESOP debt.

  Unrealized  losses  on  investment  securities  available for sale increased 
  by $582,972 during the three months ended March 31, 1997.









                 See notes to consolidated financial statements





                                    6 <PAGE>
 


                     COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                     (UNAUDITED)

                                                         March 31, 1997
NOTE A -Basis of Presentation

The  accompanying  unaudited  consolidated  financial  statements  have  been  
prepared  in  accordance with generally accepted accounting  principles for 
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X.  Accordingly, they do not include all of 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 three month period 
ended March 31, 1997  are  not  necessarily  indicative  of the results that may
be expected for the year ended December 31, 1997.  For further information,  
refer  to  the consolidated financial statements and footnotes thereto included 
in the Company's Annual Report on Form 10-K for the year ended December 31,1996.

NOTE B - Income Taxes

The  effective  tax rates of approximately 28.8 percent and 26.1 percent for the
three months ended March 31, 1997 and 1996 are less than the statutory rate 
principally because of the effect of tax-exempt interest income. 

NOTE C - Investment Securities

Effective  January  1, 1994, the Company applied the accounting and reporting 
requirements of Statement of Financial Accounting Standards  No.115, Accounting 
for Certain Investments in Debt and Equity Securities ("SFAS 115"). This 
pronouncement requires that  all  investments  in debt securities be classified
as either held-to-maturity securities, which are reported at amortized cost;  
trading  securities,  which  are  reported  at  fair  value,  with  unrealized 
gains and losses included in earnings; or available-for-sale  securities,  which
are reported at fair value, with unrealized gains and losses excluded from 
earnings and reported in a separate component of stockholders' equity (net of 
deferred tax effect).

At  March 31, 1997, the Company had net unrealized losses of $1,227,557 in 
available-for-sale securities which are reflected in the  presented  assets  and
resulted  in a decrease in stockholders' equity of $736,534,  net of deferred 
tax liability. There were no trading securities.The net decrease in stockholders
equity as a result of the SFAS 115 adjustment from December 31, 1996 to 
March 31, 1997 was $582,972.  

NOTE D - Shareholders' Equity

On  January  9,  1996, the Board of Directors of the Company declared a dividend
of $.50 per share to shareholders of record as of  January  12,  1996,  and 
another dividend of $.75 per share was declared in January of 1997 to 
shareholders of record as of January  8,  1997.  The  payment  of dividends on 
common stock is subject to the prior payment of principal and interest on the
Company's long-term debt, maintenance of sufficient earnings and capital of 
the subsidiaries and to regulatory restrictions.

Also on January  9, 1995, the Board of Directors passed a resolution authorizing
the preparation of a Registration Statement for  the  proposed sale of  312,161
shares of the Company's $.10 par value common stock, consisting of the Company's
115,978 shares  of  treasury stock and 196,183 newly issued shares. On June 13,
1996, the offering was closed upon full subscription of all shares offered for 
sale, raising $6,175,898 of  capital after reduction for offering costs.


                                          Page 7


NOTE D - Shareholders' Equity (continued)

On March  27, 1997  and  March  28,1996,  the Company issued  41,500 and 87,500
options, respectively, to purchase its common shares  to  its  directors.  The  
options  were  distributed  among  the  directors based upon their years of 
service and their positions  of  leadership  with  the Company.Each of the stock
option agreements contained an option price of $25.00 per share (1997  issuance)
or $20.00 per share (1996 issuance), the market value of the shares at the time 
of issuance. The options are exercisable  between  April  1, 1996 and March 31, 
2002, and are treated as non-qualified options under the provisions of the 
Internal  Revenue  Code.  The agreements also contain a provision whereby the 
Company shall compensate the optionee in cash for any federal or state tax 
liability incurred upon the exercise of the options.

These  options have been treated as common stock equivalents and have been 
included in the calculation of average common shares outstanding in Exhibit  11,
causing the equivalent average number of shares outstanding for the first 
quarter of 1997 to rise by  86,808 shares. Earnings per share for the period 
ended March 31, 1997 were diluted by $ 0.01 per share due to the existence of  
the  options.  There  was no dilutative effect on book value per share at March 
31, 1997. There was no dilutative effect on earnings  per  share  for  the  
quarter ended March 31, 1996, nor on the book value of the Company s common 
shares at March 31, 1996.


NOTE E - Employee Stock Ownership Plan


The  Company  adopted  an  Employee Stock Ownership Plan (the "ESOP") effective
as of January 1, 1985, which enables eligible employees  of  the Company and its
subsidiaries to own Company common stock.  Employees who work 1,000 hours in any
consecutive twelve  month  period become participants in the ESOP on December 31
of that year, and remain eligible in every subsequent year in  which  1,000  
hours of work are completed.  Employer contributions, which are made at the 
discretion of the Company's Board of  Directors,  are allocated to eligible 
participants in proportion to their eligible pay, which equals W-2 wages plus 
pre-tax reductions  for  the  Company's cafeteria plan.  The Internal Revenue 
Service imposes a limit ($150,000 in 1996) on the maximum amount of eligible 
pay under the plan.

On  November  3,  1993, the ESOP's Trustees executed a promissory note of 
$1,200,000 in order to purchase common stock from the Company's  public offering
of  new  common  stock. The note was originally secured by 80,000 shares of 
purchased stock. On October  2,  1995,  the  ESOP acquired 7,455 additional 
shares with the proceeds of a second promissory note, collateralized by the  
acquired  shares.  On May 17, 1996, these two notes were refinanced and an 
additional 58,000 shares of stock were obtained by  the  ESOP. These shares 
were funded with the same promissory note which provided funds to refinance the 
previously executed notes.  This  new note was originally secured by 117,847 
shares of the Company s common stock. The shares securing the note are released 
proratably  by  the  lender  as  monthly  payments  of principal and interest 
are made. The note is guaranteed by the Company.  As  of  March  31,  1997,  
there were 109,667 unreleased shares with a fair value of approximately 
$2,740,000.  These shares are subtracted from outstanding shares for earnings 
per share calculations.

Effective  January  1,  1994,  the Company applied the accounting and reporting 
requirements of Statement of Position No. 93-6, Employers' Accounting  for  
Employee  Stock  Ownership Plans ("SOP 93-6"). Under the provisions of SOP 93-6,
the employer must recognize  the  indebtedness of its sponsored ESOP on its 
financial statement and reduce its stockholder's equity for shares of stock  
which  have  not  been  released  by  a lender to the ESOP for allocation to 
its participating employees. The portion of payments made by the Company to the 
ESOP on behalf of its participating employees which are used to pay interest on 
the ESOP debt  is classified as interest expense on the Company s income 
statement.

Dividends  paid  on  released  ESOP  shares  are credited to the accounts of the
participants to whom the shares are allocated. Dividends on unreleased shares 
are treated as other income of the ESOP. 

At  March 31, 1997, the Company's financial statements reflect long term and a 
corresponding contra-equity account,as a result of the ESOP debt,of $2,090,958.



                                                   8 <PAGE>
 


                                      Item 2.
             MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS

This  discussion is intended to assist an understanding of the Company and its 
Subsidiaries' financial condition and results of operations.  Unless  the  
context  otherwise  indicates, "the Company" shall include the Company and its 
Subsidiaries. This analysis should  be  read  in conjunction with the financial 
statements and related notes appearing in Item 1 of the March 31, 1997 Form 10-Q
and Management's Discussion and Analysis of Financial Condition and Results of 
Operations appearing in the Company's Annual Report on Form 10-K for the year 
ended December 31, 1996.

FINANCIAL CONDITION

March 31, 1997 compared to December 31, 1996

Loans

Loans  comprised  the largest single category of the Company's earning assets on
March 31, 1997.  Loans, net of unearned income and  reserve  for  loan  losses, 
were  69.3% of total assets at March 31, 1997 and 70.4% of total assets at 
December 31, 1996. Total  net  loans  were  $323,688,876  at  March  31,  1997, 
representing  a 1.0% increase from the December 31, 1996 total of $320,337,446. 
This  increase  of approximately $ 3.35 million was relatively modest, as 
management has placed an emphasis on growing deposits in excess of loans over 
the last several months.


Investment Securities and Other Earning Assets

Investment  securities  and  federal  funds  sold  increased $1,589,781 or 1.8% 
from December 31, 1996 to March 31, 1997.  This increase  was  due  primarily to
deposit growth in excess of loan growth .  The investment securities portfolio 
is used to make various  term  investments,  to provide a source of liquidity 
and to serve as collateral to secure certain government deposits. Investment  
securities  at  March  31, 1997 were $79,301,086 compared with $86,911,305 at 
December 31, 1996, reflecting an 9.6% decrease  of  $7,610,219.   Short-term 
investments in the form of interest-bearing deposits with banks were $2,504,343 
at March 31, 1997 and $1,773,778 at December 31, 1996.


Asset Quality

Between  December  31,  1996  and  March  31,  1997,  the  Company experienced a
slight decline in the quality of its assets as measured  by  three  key  ratios.
The ratio of loan loss allowance to total nonperforming assets (defined as 
nonaccrual loans, loans  past  due  90  days or greater, restructured loans, 
nonaccruing securities, and other real estate) declined from 1.33 to 1.16.  The 
ratio of total nonperforming assets to total assets remained constant at 0.004, 
and the ratio of nonperforming loans to  total  loans increased to 0.004 from 
0.003 at  12/31/96.These ratios declined due to an increase in past due and 
nonaccrual loans . All  three of these ratios remain favorable as compared with
industry averages, and management is aware of no factors which would suggest 
that they are prone to erosion in future periods.


Deposits

Total  deposits  of $420,042,818 at March 31, 1997 increased $19,705,143 (4.9%) 
over total deposits of $400,337,675 at year-end 1996. Deposits  are  the  
Company's  primary  source of funds with which to support its earning assets.  
Noninterest-bearing deposits  increased  $5,218,016  or  10.4%  from  year-end  
1996  to  March  31,  1997, and interest-bearing deposits increased $14,487,127 
(4.1%) from year-end 1996. Certificates of deposit of $100,000 or more increased
$5,043,215 (6.3%).


                                          9 <PAGE>
 


Other Short-term Borrowings

Other  short-term  borrowings  totaled  $3,217,611 at March 31, 1997, a 
$5,158,861 decrease from the December 31, 1996 total of $8,376,472.


Long-term Debt

At March 31, 1997 and December 31, 1996, the Company had notes payable totaling 
$8,061,164, and $8,281,449, respectively.  

On December 17, 1992, the Company entered into a loan agreement with a regional
bank  for amounts up to $6,500,000. At March 31,  1997  and December 31, 1996, 
the amounts outstanding were $4,091,135 and  $4,269,010, respectively, due 
December 17, 2002, bearing  interest  at  a  floating  prime, and collateralized
by 100% of the common stock of the subsidiary banks.  The note agreement  
contains  provisions  which  limit  the  Company's  right  to  transfer or issue
shares of subsidiary banks' stock. Principal  payments  of  $59,292  are  due 
monthly; however, the Company has the option of postponing up to twenty-four 
monthly principal payments, provided that no more than six consecutively 
scheduled installments are deferred.

On  November  3,  1993, the Trustees of the Company s ESOP executed a promissory
note of $1,200,000 in order to purchase common stock  from the Company's public
offering of new common stock.  The note was originally secured by 80,000 shares
of purchased stock.  On  October  2,  1995,  the  ESOP  acquired  7,455  
additional  shares with the proceeds of a second promissory note, collateralized
by the acquired  shares.  On May 17, 1996, these two notes were refinanced and 
an additional 58,000 shares of stock  were obtained by the ESOP with a 
promissory note with a beginning balance of $2,183,805. The Company has 
guaranteed this debt;  accounting and reporting guidelines mandate that the debt
be recognized on the Company's statement of condition, with an offsetting charge
against  equity.  As principal payments are made by the ESOP, the debt and 
offsetting charge against equity are  reduced.  This  note  was originally 
secured by 117,847 shares of the Company s common stock. The note bears interest
at a floating  rate,  with  principal  and  interest  payments  of  $23,948  due
monthly  through June 17, 2018, with all remaining principal,  if  any, due upon
that date. The shares securing the note are released proratably by the lender as
monthly payments of  principal  and interest are made. The outstanding balance 
of this note was $2,090,958 at March 31, 1997, secured by 109,667 of unreleased
shares of Company stock .

On  October  4, 1994, the Company entered into a twenty year, subordinated 
installment capital note due October 1, 2014 for the purchase  of  treasury  
stock. Monthly principal and interest payments of $15,506 are made on the note,
which bears interest at the  fixed  rate of 7 %. The Company maintains the right
to prepay the note at its sole discretion. The balance of the note was 
$1,879,071 at March 31, 1997.

Maturities of long-term debt for the years ending December 31 are as follows:

            1997  . . . . . . . . .    $     653,996
            1998  . . . . . . . . .          885,017
            1999  . . . . . . . . .          900,047
            2000  . . . . . . . . .          915,900
            2001  . . . . . . . . .          933,952
            Thereafter  . . . . . .        3,772,252
 
                                       $   8,061,164



Shareholders' Equity

Company  shareholders' equity decreased $1,135,134 from December 31, 1996 to 
March 31, 1997, due to:  net earnings of $822,186, the  payment  of  a  cash  
dividend of $1,500,000, the reduction of unearned ESOP shares by $28,932, the 
issuance of additional common  stock  of  $96,720,  and  the  increase of 
unrealized losses on securities available for sale totaling $582,972, net of
deferred tax liability.



                                                10 <PAGE>
 


Capital Resources


A  strong  capital  position  is vital to the continued profitability of the 
Company because it promotes depositor and investor confidence  and  provides  
a  solid foundation for future growth of the organization.  The Company has 
provided the majority of its capital requirements through the retention of 
earnings.

Bank regulatory authorities  are  placing increased emphasis on the maintenance
of adequate capital.  In 1990, new risk-based capital  requirements  became  
effective.  The  guidelines  take  into  consideration risk factors, as defined 
by regulators, associated  with  various  categories  of assets, both on and off
the balance sheet.  Under the guidelines, capital strength is measured  in two 
tiers which are used in conjunction with risk-adjusted assets to determine the 
risk-based capital ratios.  The Company's  Tier I capital, which consists of 
common equity less goodwill, amounted to $29.4 million at March 31, 1997.  
Tier II capital  components  include  supplemental  capital  components  such  
as  qualifying  allowance for loan losses and qualifying subordinated  debt.    
Tier  I capital plus the Tier II capital components is referred to as Total 
Risk-Based capital and was $ 33.5 million at March 31, 1997.

The  Company's  current capital positions exceed the new guidelines. Management 
has reviewed and will continue to monitor the Company's  asset  mix  and product
pricing, and the loan loss allowance, which are the areas determined to be most 
affected by these new requirements.




















                                              11 <PAGE>
 



RESULTS OF OPERATIONS

Three months ended March 31, 1997 and 1996


Summary

Net  earnings  of  the Company for the three months ended March 31, 1997 were 
$822,186 compared to $670,628 for the same period in  1996,  representing  a 
22.6% increase.  This increase was due principally to the increase of interest 
margin resulting from the  growth  in  average  earning  assets . This is a 
direct result of the Company's expansion activity, with three new banking 
facilities  being  opened  in  1994,  two  new  locations opening in 1995, five 
new locations in 1996, plus the purchase of the assets  and  assumption  of  
liabilities  of the Haleyville, Alabama and Uniontown, Alabama branches  of a 
regional bank during 1996.  This  growth  in  net interest income is partially 
offset by an increase in noninterest expense in excess of noninterest income,  
as  the  Company  is  absorbing  the  direct  costs  of  operating these new 
facilities; additionally, the Company has increased  its staffing levels within 
its support functions to a level which not only allows quality service to 
current banking customers  but which also anticipates continued growth in the 
future. Net interest income increased $1,063,410 during the first quarter  of  
1997,  as  compared  to the same period in 1996; noninterest expenses increased 
$992,674 during same period, while noninterest income increased by $245,909. 


Net Interest Income

Net  interest  income,  the  difference  between interest earned on assets and 
the cost of interest-bearing liabilities, is the largest  component of the 
Company's net income.  Revenue from earning assets of the Company during the 
three months ended March 31,  1997  increased  $1,526,741  (20.1%)  from the 
same period in 1996.  This increase was due to  higher average  outstanding
balances  of  earning  assets. Average earning assets outstanding during the 
first quarter of 1997 were $53,134,651 higher than during  the  first quarter of
1996. Interest expense for the three months ended March 31, 1997 increased 
$463,331 or 11.1% over the  corresponding  period  of  1996.  As a result of 
these factors, net interest income increased $1,063,410, or 31.2%, in the three
months ended March 31, 1997, compared to the same period of 1996.



Provision for Loan Losses

The  provision for loan losses represents the charge against current earnings 
necessary to maintain the reserve for loan losses at  a  level which  management
 considers appropriate.  This level is determined based upon Community Bank's 
historical charge-offs,  management's  assessment  of  current  economic  
conditions,  the  composition  of  the loan portfolio and the levels of 
nonaccruing  and past due loans.  The provision for loan losses was $197,978 for
 the three months ended March 31, 1997 compared to  $127,882  for  the  same  
period of 1996. Charge-offs exceeded recoveries by $227,289 for the three months
ended March 31, 1997. The  reserve  for loan losses as a percent of outstanding 
loans, net of unearned income, was .74% at March 31, 1997 compared to .75% at 
year-end 1996.



Noninterest Income

Noninterest  income  for the three months ended March 31, 1997 was $1,175,264 
compared to $929,355 for the same period of 1996. This  26.5%  increase  was 
primarily due to an increase in service charges on deposit accounts of $137,087 
in the first quarter of  1997  as  compared  to the same period of 1996, and the
recognition of insurance commissions over that of the quarter ended March  31,  
1996  of  $106,316 . Significant  components  of  noninterest income are as 
follows:  Service charges on deposits increased  $137,087  (28.2%),  insurance 
commissions increased $106,316 (126.7%),  security  losses of $2,590 were 
realized, as opposed  to  no  gains  or  losses  in  the first quarter of 1995,
and other operating income, primarily dues for the bank club account, fees on 
debt cancellation contracts, and appraisal fees, decreased $11,942 (-4.9%) to 
$229,966.


                                               12 <PAGE>
 






Noninterest Expenses

Noninterest  expenses  for  the  three  months  ended March 31, 1997 were 
$4,300,710, reflecting a 30.0% increase over the same period  of  1996. The  
primary  components of noninterest  expenses are salaries and employee benefits,
which increased to $2,647,438  for the three months ended March 31, 1997, 27.7% 
higher than in the same period of 1996.  The increases in salaries and  employee
benefits are  due  to  staffing  for  new banking locations and future expansion
as well as merit increases and incentive  payments.  Occupancy costs increased 
$115,404 (50.6%), furniture and equipment expenses rose by $53,861 (24.4%), and
director and committee fees increased by $82,300 (116.6%).  Other operating 
expenses rose by 23.4% to $882,539.

The  majority  of  these  expenses  should  continue  at  or  above the levels 
for the three months ended March 31, 1997, since management intends to continue 
its growth policies.  

The Company remains dependent upon the earnings of its principal subsidiary, 
Community Bank (Alabama), for its earnings.

The  substantial  increase  in the Company's size has necessitated increased 
expenditures for data processing and other support activities and personnel, 
which will continue.

The  Company's strategy is to make each office of its subsidiary banks a vital 
part of the community it serves. Each office has management  and personnel as 
similar to a full service, stand-alone bank as possible.Although more expensive,
we believe this strategy  has  been successful for Community Bank, and will best
serve our communities, customers and shareholders. The Company will  remain  
dependent  upon  Community  Bank  for the bulk of its earnings.  Management will
strive to build Community Bank's business  in  a  profitable  manner and to 
minimize any losses and adverse effects on the Company's earnings.  Our strategy
for long-term success in these areas will not be sacrificed for immediate gain.


Income Taxes

The  Company  attempts  to maximize its net income through active tax planning. 
The provision for income taxes of $331,904 for the  three months ended March 31,
1997 increased  $94,991 compared to the same period of 1996, due primarily to 
the increase in income  before  tax. Taxes  as a percent of earnings increased 
from 26.1% to 28.8%.  The effective tax rate of approximately 28.8% is less than
the statutory rate principally because of the effect of tax-exempt interest 
income.






                                             13 <PAGE>
 


                            Part II - Other Information

                      Item 6 - Exhibits and Reports on Form 8-K


(a)                  Exhibits:

           Exhibit Number          Description of Exhibit          Page Number

               11                 Computation of Earnings             15     
                                            Per Share               

               27                 Financial Data Schedule
                                      (for the SEC use only)

(b) Reports on Form 8-K

    The Company did not file any reports on Form 8-K during the quarter ended 
    March 31, 1997.



                                            14 <PAGE>
 


EXHIBIT 11 -- STATEMENT RE:  COMPUTATION OF EARNINGS PER SHARE

COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES


The following tabulation  presents the calculation of primary and fully diluted
earnings per common share for the three-month periods ended March 31, 1997 and 
1996.

                                                        Three Months Ended      
                                                             March 31,         
                                                       1997             1996   

Reported net income . . . . . . . . . . . .    $     822,186    $     670,628

Earnings on common shares . . . . . . . . . .  $     822,186    $     670,628

Weighted average common shares outstanding         1,978,063        1,826,117


Earnings per common share - primary and 
 fully diluted 
  Income from continuing operations . . . . . . $         .42    $        .37

  Net income  . . . . . . . . . . . . . . . .   $         .42    $        .37







                                       15 <PAGE>
 


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.



April 25, 1997                        /s/ Kennon R. Patterson, Sr.     
Date                                  Kennon R. Patterson, Sr., as its  
                                      President and Chief Executive   
                                      Officer                          



April 25, 1997                        /s/ Paul W. Williams, CPA            
Date                                  Paul W. Williams, CPA, as its Senior 
                                      Vice President and Chief        
                                      Accounting Officer              
                      

                                             16 <PAGE>