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 September 30, 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 September 30, 1997
Common Stock, $.10 Par Value                             1,914,847 

                                        <PAGE>
 





                                     INDEX

               COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES


PART I. FINANCIAL INFORMATION
                                                                        PAGE


Item 1. Financial Statements (Unaudited)

Consolidated  balance  sheets  -  September  30,  1997  and  
December  31,  1996 . . . . . . . . . . . .                               3

Consolidated statements of income - Three months ended 
September 30, 1997 and 1996;  Nine  months  ended  
September  30,  1997  and  1996 . . . . . . . . . .                      4-5

Consolidated statements of cash flows - Nine months ended 
September 30, 1997  and  1996. . . . . . . . . . . .                      6

Notes to consolidated financial statements -September 30,1997. . . . . .  8


Item 2.Management's Discussion and Analysis of Financial 
       Condition and Results of Operations. . . . . . . . . . . .        11



PART II.  OTHER INFORMATION

Item 6.Exhibits and Reports on Form 8-K. . . . . . . . . . . .           16



SIGNATURES
                                         <PAGE>
 


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

                                                   September 30,  December 31, 
                                                       1997          1996    
Assets
 Cash . . . . . . . . . . . . . . . . . . . . $     5,525,490  $  5,096,892  
 Due from banks  . .                               15,483,726    12,515,285
 Interest-bearing deposits with banks . . . . .     2,503,456     1,773,778
 Federal funds sold . . . . . . . . . . . . . . .  18,400,000        -0-
 Securities available for sale  . . . . . . . . .  81,001,163    86,911,305
 Loans  . . . . . . . . . . . . . . . . . . . . . 326,802,792   324,571,991
 Less: Unearned income  . . . . . . . . . . . . .   1,221,584     1,809,698
 Allowance for loan losses . . . . . . . . . . . .  2,629,640     2,424,847
 Net Loans  . . . . . . . . . . . . . . . . . . . 322,951,568   320,337,446

 Premises and equipment, net  . . . . . . . . .    21,659,035    17,076,220
 Accrued interest . . . . . . . . . . . . . . .     4,809,157     4,847,308
 Intangibles, net . . . . . . . . . . . . . . . .   4,203,238     4,101,306
 Other real estate  . . . . . . . . . . . . . . .     646,901       791,435
 Other assets . . . . . . . . . . . . . . . . . .   1,895,052     1,258,720

 Total Assets . . . . . . . . . . . . . . . . . $ 479,078,786 $ 454,709,695

Liabilities and Shareholders' Equity
Deposits:
 Noninterest-bearing . . . . . . . . . . . . .  $  53,203,470 $  50,245,130
 Interest-bearing  . . . . . . . . . . . . . .    375,761,040   350,092,545
 Total Deposits . . . . . . . . . . . . . . . .   428,964,510   400,337,675

 Other short-term borrowings  . . . . . . . . . .   3,071,741     8,376,472
 Accrued interest . . . . . . . . . . . . . . . .   3,260,095     2,542,825
 Long-term debt . . . . . . . . . . . . . . . . .   7,619,723     8,281,449
 Other liabilities  . . . . . . . . . . . . . . .   1,936,722     2,612,488
 Total Liabilities  . . . . . . . . . . . . . .   444,852,791   422,150,909

 Minority interest in consolidated subsidiary . .      39,526        -0-

 Shareholders' equity
  Common stock, par value $.10 per share,
   5,000,000 shares authorized, 2,019,606 shares 
   issued as of September 30,  1997 and 2,000,000 
   shares issued as of December 31, 1996              201,961      200,000
  Capital surplus . . . . . . . . . . . . . . . .  18,280,501   17,819,722
  Retained earnings . . . . . . . . . . . . . . .  17,842,303   16,812,517
  Unearned ESOP shares - 104,759 and 112,121 
   shares unreleased at September 30, 1997 and 
    December 31,1996  .                            (2,032,937)  (2,119,891)
  Unrealized losses on investment securities 
   available for sale, net of deferred taxes  . .    (105,359)    (153,562)
                      
Total Shareholders' Equity . . . . . . . . . .     34,186,469   32,558,786

Total Liabilities and Shareholders' Equity . . .$ 479,078,786 $ 454,709,695


                  See notes to consolidated financial statements


                                    Page 3

                         COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

                              CONSOLIDATED STATEMENTS OF INCOME
                                         (UNAUDITED)
                                                         Three Months Ended
                                                            September 30,    
                                                        1997            1996 
Revenue From Earning Assets
 Interest and fees on loans . . . . . . . . . . . . $  8,039,900 $  7,318,760
 Interest on investment securities:
  Taxable securities  . . . . . . . . . . . . . . .    1,084,307    1,199,881
  Securities exempt from federal income taxes   . .      175,950      224,993
 Interest on federal funds sold . . . . . . . . . . .   289,332       56,705
 Interest on deposits in other banks  . . . . . . . .     36,437       48,166
   Total Revenue From Earning Assets . . . . . . . .   9,625,926    8,848,505

Interest Expense
 Interest on deposits . . . . . . . . . . . . . . . .  4,867,064    4,250,340
 Interest on other short-term borrowings  . . . . . .     34,085       38,614
 Interest on long-term debt . . . . . . . . . . . . .    151,957      171,447
  Total Interest Expense  . . . . . . . . . . . . .    5,053,106    4,460,401

Net interest income                                    4,572,820    4,388,104
Provision for loan losses . . .                          302,477      205,453

Net interest income after provision for loan losses .  4,270,343    4,182,651

Noninterest Income
 Service charges on deposits  . . . . . . . . . . . .    621,825      580,252
 Insurance commissions  . . . . . . . . . . . . . . . .  208,489      214,676
 Bank club dues . . . . . . . . . . . . . . . . . . .    144,795      125,803
 Other operating income . . . . . . . . . . . . . . . .  231,650      292,999
 Investment securities gains  . . . . . . . . . . . . .    -0-         25,710 
  Total Noninterest Income  . . . . . . . . . . . .    1,206,759    1,239,440

Noninterest Expenses
 Salaries and employee benefits . . . . . . . . . . .  2,621,206    2,301,617
 Occupancy expense  . . . . . . . . . . . . . . . . .    396,445      266,267
 Furniture and equipment expense  . . . . . . . . . .    311,086      249,261
 Director and committee fees  . . . . . . . . . . . .    162,450      137,175
 Other operating expenses . . . . . . . . . . . . .    1,021,819      816,420
  Total Noninterest Expenses  . . . . . . . . . . .    4,513,006    3,770,740

Income before income taxes and minority interest . .     964,096    1,651,351
Provision for income taxes  . .                          255,890      517,132
Net Income before Minority Interest . . . . . . .        708,206    1,134,219

Minority Interest in consolidated subsidiaries  . . . .    2,802        -0-
Net Income  . . . . . . . . . . . . . . . . . . .    $   705,404 $  1,134,219

Earnings Per Common Share - Primary and Fully-diluted

 Net income per common share  . . . . . . . . . . . .$       .34 $        .58

 Weighted average common shares outstanding . . . .    2,081,247    1,971,671


                   See notes to consolidated financial statements

                                         Page 4


                       COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

                            CONSOLIDATED STATEMENTS OF INCOME
                                       (UNAUDITED)
                                                          Nine Months Ended
                                                             September 30,     
                                                         1997         1996     
Revenue From Earning Assets
 Interest and fees on loans . . . . . . . . . . . . $ 23,663,472 $ 19,531,213
 Interest on investment securities:
  Taxable securities  . . . . . . . . . . . . . . .    3,290,221    3,572,166
  Securities exempt from federal income taxes   . .      534,877      692,382
 Interest on federal funds sold . . . . . . . . . . .    485,013      587,671
 Interest on deposits in other banks  . . . . . . .       85,871       96,993
Total Revenue From Earning Assets . . . . . . . .     28,059,454   24,480,425

Interest Expense
 Interest on deposits . . . . . . . . . . . .         13,988,046   12,307,525
 Interest on other short-term borrowings  . . . . . .    114,028      104,025
 Interest on long-term debt . . . . . . . . . . . . .    476,270      505,184
  Total Interest Expense  . . . . . . . . . . . . .   14,578,344   12,916,734

Net interest income                                   13,481,110   11,563.691
Provision for loan losses . . .                          796,724      482,587

Net interest income after provision for loan losses .  12,684,386  11,081,104

Noninterest Income
 Service charges on deposits  . . . . . . . . . . . .   1,858,402   1,602,761
 Insurance commissions  . . . . . . . . . . . . . . .     541,097     444,530
 Bank club dues . . . . . . . . . . . . . . . . . . . .   421,702     366,967
 Other operating income . . . . . . . . . . . . . . . .   708,130     784,258
 Investment securities gains (losses) . . . . . . . . .    (2,590)     19,114
  Total Noninterest Income  . . . . . . . . . . . .     3,526,741   3,217,630

Noninterest Expenses
 Salaries and employee benefits . . . . . . . . . . . . 7,538,368   6,560,768
 Occupancy expense  . . . . . . . . . . . . . . . . . . 1,093,592     731,310
 Furniture and equipment expense  . . . . . . . . . .     879,787     719,589
 Director and committee fees  . . . . . . . . . . . .     474,320     332,625
 Other operating expenses . . . . . . . . . . . . . .   2,723,849   2,317,924
  Total Noninterest Expenses  . . . . . . . . . . .    12,709,916  10,662,216

Income before income taxes before minority interest.   3,501,211    3,636,518
Provision for income taxes  . .                          968,621    1,059,074
Net Income before Minority Interest . . . . . . .      2,532,590    2,577,444

Minority Interest in consolidated subsidiaries  . . .      2,802        -0-
Net Income  . . . . . . . . . . . . . . . . . . .   $  2,529,788 $  2,577,444

Earnings Per Common Share - Primary and Fully-diluted

Net income per common share  . . . . . . . . . . .  $       1.23 $       1.35

Weighted average common shares outstanding . . . .     2,060,925    1,915,476
 
                     
                 See notes to consolidated financial statements

                                       Page 5
                                       
                  COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)


                                                          Nine Months Ended
                                                             September 30,    
                                                         1997          1996     
Operating activities:
 Net income . . . . . . . . . . . . . . . . . . . . .$  2,529,788 $ 2,577,444
 Adjustments to reconcile net income to net
  cash provided by operating activities:
 Provision for loan losses  . . . . . . . . . . . .       796,724     482,587
 Provision for depreciation and amortization  . . . . . 1,143,347     901,003
 Amortization of investment security premiums and
  accretion of discounts . . . . . . . . . . . . . . .     48,191     (41,809)
 Realized investment security gains(losses)  . . . . . .    2,590     (19,114) 
 Decrease in accrued interest receivable  . . . . . . . .  38,151    (538,702)
 Increase in accrued interest payable . . . . . . . . . . 717,270     581,393 
 Other  . . . . . . . . . . . . . . . . . . . . . . .  (1,105,465) (1,376,098)
Net cash provided (used) by operating activities        4,170,596   2,566,704 

Investing activities:
 Proceeds from sales of investment securities . .       5,007,863  11,715,007
 Proceeds from maturity of investment securities  . .   5,588,513  11,504,067 
 Purchase of investment securities  . . . . . . . . . .(4,656,676)(42,904,154)
 Decrease (increase) in interest-bearing deposits   
  with other banks                                       (729,678)   (853,909)
 Net increase in loans to customers . . . . . . . . . .(2,577,415)(27,834,797)
 Cash acquired - purchase of branches . . . . . . . . .     -0-     1,289,197
 Proceeds from sale of premises and equipment . . . . .   312,900      92,130  
 Capital expenditures . . . . . . . . . . . . . . . . .(5,673,721) (3,435,645)
Net cash used in investing activities . . . . . .      (2,728,214)(50,428,104)

Financing activities:
 Net increase (decrease) in demand deposits, NOW 
  accounts,and savings accounts  . . . . . . . . .      3,821,677  20,443,389 
 Net increase in certificates of deposit  . . . . . .  23,391,368   7,896,125
 Net increase in short-term borrowings  . . . . . . .  (5,246,356)  2,210,079 
 Issuance and sale of common stock. . . . . . . . . .     462,740   3,013,493 
 Repayment of long-term debt  . . . . . . . . . . . . .  (574,772)   (571,998)
 Cash dividends . . . . . . . . . . . . . . . . . . . .(1,500,000)   (908,788)
Net cash provided by financing activities . . . .      20,354,657  32,082,300

Net increase (decrease) in cash and cash equivalents   21,797,039 (15,779,100)

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

Cash and cash equivalents at end of period  . . . .  $ 39,409,216 $20,659,147


                 See notes to consolidated financial statements

                                     6 <PAGE>
 


                        COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                                         (UNAUDITED)


                                                          Nine Months Ended
                                                            September 30,      
                                                          1997         1996     

Supplemental disclosures of cash flow information:
 Cash paid during the period for:
  Interest  . . . . . . . . . . . . . . . . . . . .$ 13,861,074  $ 12,009,740
  Income taxes  . . . . . . . . . . . . . . . . . .   1,623,340       406,207

Supplemental schedule of non-cash investing and financing activities:

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

 Upon  the pledging of purchased shares to obtain additional ESOP debt of 
 $1,126,007 on May 17, 1996 and 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 $86,954 and $108,461 , respectively, during each of the nine 
 month periods ended September  30,  1997  and  1996 as a result of payments 
 made by the Company's ESOP on the outstanding ESOP debt.

 Unrealized  losses on investment securities available for sale decreased by 
 $48,203 during the nine months ended September 30, 1997, from  an unrealized
 loss of $153,562 at December 31, 1996, to a loss of $105,359 at September 30,
 1997 (both net of the effect of deferred taxes).
                     
 On January 16,1996, the Company acquired the assets and assumed the liabilities
 of the Haleyville, Alabama branch of a regional bank .The liabilities assumed 
 in the transaction totaled $33,366,553 and  non-cash assets acquired totaled 
 $12,227,125  .  Accordingly,  the  resultant cash receipt by the Company, net 
 of the premium of $2,328,288 paid for the branch s deposits, was $18,811,140.

 On July 12,1996, the Company acquired the assets and assumed the liabilities of
 the Uniontown, Alabama branch of a regional bank .The liabilities assumed in 
 the transaction totaled $12,320,393 and  non-cash assets acquired totaled     
 $29,580,944  .  Accordingly,  the  resultant cash disbursement by the Company, 
 including of the premium of $261,392 paid for the branch s deposits, was 
 $17,521,943.

                        See notes to consolidated financial statements.
                    
                                                   7 <PAGE>
 


                          COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

                          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                          (UNAUDITED)

                                     September 30, 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 (consist-
ing of normal recurring accruals) considered  necessary  for a fair presentation
have been included.  Operating results for the nine month period ended September
30,  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 27.7 percent and 28.1 percent for 
the nine months ended September 30, 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 requiresthat  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  September  30, 1997, the Company had net unrealized losses of $175,498 in 
available-for-sale securities which are reflected in  the  presented assets and 
resulted in a decrease in stockholders' equity of $105,359,  net of deferred tax
liability. There were  no  trading securities. The net increase in stockholders 
equity as a result of the SFAS 115 adjustment from December 31,1996 to September
30, 1997 was $48,203. 


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 share-
holders 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.

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. 

                                        8 <PAGE>
 


NOTE D - Shareholders' Equity (continued)


On March 27, 1997  and  March  28, 1996, the Company issued 41,500 and 135,000
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.

The  Company  adopted SFAS No. 123, Accounting for Stock-Based Compensation , on
January 1, 1996. This statement defines a fair value  based method of accounting
for an employee stock option or similar equity instrument. However, SFAS No. 123
allows an entity  to  continue  to measure compensation costs for these plans 
using the intrinsic value method based method of accounting prescribed  in APB 
Opinion No. 25, Accounting for Stock Issued to Employees. Entities electing to 
remain with the accounting in Opinion No. 25 must  make  pro  forma  disclosures
of net income and earnings per share as if the fair value based method of 
accounting  defined  in  SFAS No. 123 had been applied. Under the fair value 
based method, compensation cost is measured at the grant  date  based  on  the  
value of the award and is recognized over the service period, which is usually 
the vesting period. Under the  intrinsic  value  based method, compensation cost
is the excess, if any, of the quoted market price of the stock at the  grant 
date or other measurement date over the amount an employee must pay to acquire 
the stock. The Company has elected to continue to measure compensation cost for 
their stock option plan under the provisions in APB Opinion 25.

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 three 
quarters of 1997 to rise  by  163,426 shares. There was no dilutative effect on 
book value per share at either September 30, 1997 or September 30, 1996.  
Earnings per average share outstanding were diluted by $ 0.10 per share and 
$ 0.04 per share, respectively, for the nine months ended September 30, 1997 and
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 1997) 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 September 30, 1997, 
there were 104,759 unreleased shares with a fair value of approximately 
$3,137,000. 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.

                                   Page 9

NOTE E - Employee Stock Ownership (continued)


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  September 30, 1997, the Company's financial statements reflect long term 
debt and a corresponding contra-equity account, as a result of the ESOP debt, of
$2,032,937.

                                         10 <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 September 30, 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

September 30, 1997 compared to December 31, 1996


Loans

Loans  comprised  the  largest  single  category of the Company's earning assets
on September 30, 1997.  Loans, net of unearned income  and reserve for loan 
losses, were 67.4% of total assets at September 30, 1997 and 70.4% of total 
assets at December 31, 1996. Total net loans were $322,951,568 at September 30,
1997, representing a 0.8% increase from the December 31, 1996 total of  
$320,337,446. This increase of approximately $2.6 million was relatively modest,
as management has made deposit growth a priority over loan growth over the last 
several months.


Investment Securities and Other Earning Assets

Investment  securities  and  federal  funds sold increased $12,489,858 or 14.3% 
from December 31,1996 to September 30, 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  September  30,  1997 were $81,001,163 compared with  $86,911,305
at December 31, 1996, reflecting  a  6.8%  decrease  of  $5,910,142. Short-term
investments in the form of interest-bearing deposits with banks were $2,503,456 
at September 30, 1997 and $1,773,778 at December 31, 1996.


Asset Quality

Between  December  31,  1996  and  December  30, 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 1.08.  The 
ratio  of total nonperforming assets to total assets rose from 0.004 to 0.005, 
and the ratio of nonperforming loans to  total  loans increased to 0.006 from 
0.003 at 12/31/96. These ratios declined due to an increase in past due and n
nonaccrual loans,  and  an  increase  in  other real estate due to the purchase 
of employees  homes who were relocated by the Company. All three  of  these  
ratios  remain  within an acceptable range, 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  $428,964,510  at  September  30, 1997 increased $28,626,835
(7.2%) 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  $2,958,340  or  5.9%  from  year-end  
1996 to September 30, 1997, and interest-bearing deposits increased $25,668,495
(7.3%) from year-end 1996.Certificates of deposit of $100,000 or more increased
$2,047,309 (2.8%). 


                                        Page 11

Other Short-term Borrowings

Other  short-term  borrowings  totaled $3,071,741 at September 30, 1997, a 
$5,304,731 decrease from the December 31, 1996 total of $8,376,472.


Long-term Debt

At September 30, 1997 and December 31, 1996, the Company had notes payable 
totaling $7,619,723, 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 September  30,  1997 and December
31, 1996, the amounts outstanding were $3,735,384 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 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  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 $2,032,937 at September 30, 1997, secured by 104,759 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 $1,851,402
at September 30, 1997. 

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

                 1997  . . . . . . . . .      $     217,533
                 1998  . . . . . . . . .            892,430
                 1999  . . . . . . . . .            907,467
                 2000  . . . . . . . . .            923,328
                 2001  . . . . . . . . .            941,388
                 Thereafter  . . . . . .          3,737,577

                                              $   7,619,723



Shareholders' Equity

Company  shareholders'  equity  increased  $1,627,683  from  December  31, 1996 
to September 30, 1997, due to:  net earnings of $2,529,788,  the  payment  of a 
cash dividend of  $1,500,000, the reduction of unearned ESOP shares by $86,953, 
the issuance of additional  common  stock  for  $462,740    and  the  decrease  
of unrealized  losses on securities available for sale totaling $48,202, net of 
deferred tax liability.


                                   Page 12

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 $31.3 million at September 30, 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 $35.6 million at September 30, 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.
































                                      13 <PAGE>
 


RESULTS OF OPERATIONS

Nine months ended September 30, 1997 and 1996


Summary

Net  earnings  of  the Company for the nine months ended September 30, 1997 were
$2,529,788 compared to $2,577,444 for the same period  in  1996,  representing  
a  1.7% decrease.  This increase was due principally to the increase of 
noninterest expense in excess  of noninterest revenue, which 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, four new locations opening 
in 1996, plus the purchase of the assets and  assumption  of  liabilities  of  
the  Haleyville and Uniontown, Alabama branches of a regional bank during 1996. 
Of all of these  new banking locations, only the acquired mature offices of 
Haleyville and Uniontown are of an adequate size and maturity to provide  profit
consistently.  Management has made a conscious decision to provide for future 
earnings by developing these new  markets,  even  at  the  sacrifice  of  some 
current earnings stream. 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 $1,917,418 during the 
first nine months of 1997,  as  compared  to  the  same  period  in  1996;  
noninterest  expenses increased $2,047,700 during the same period, while 
noninterest income increased by $309,111. 


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
nine months ended September  30,  1997  increased  $3,579,028  (14.6%) from the
same period in 1996.  This increase was primarily due to higher average  
outstanding  balances  of earning assets. Average earning assets outstanding 
during the first three quarters of 1997 were  $46,269,481 higher than during 
the first three quarters of 1996. Interest expense for the nine months ended 
September 30, 1997  increased  $1,661,610  or 12.9% over the corresponding 
period of 1996.  As a result of these factors, net interest income increased 
$1,917,418 or 16.6%, in the nine months ended September 30, 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 $796,724 
for the nine months ended September 30, 1997 compared  to  $482,587  for  the  
same  period  of 1996.  Charge-offs exceeded recoveries by $600,706 for the nine
months ended September  30,  1997.  The  reserve  for  loan  losses as a percent
of outstanding loans, net of unearned income, was .81% at September 30, 1997 
compared to .75% at year-end 1996.



Noninterest Income

Noninterest  income  for  the nine months ended September 30,1997 was $3,526,741
compared to $3,217,630 for the same period of 1996. This  9.6%  increase was 
primarily due to an increase in  service charges on deposit accounts of $255,641
in the firstnine  months  of  1997  as  compared  to the same period of 1996. 
Significant components of noninterest income are as follows: Service  charges  
on  deposits  increased  $255,641  (16.0%),  insurance commissions increased 
$96,567 (21.7%), security losses totaled  $2,590 as opposed to gains of $19,114
in 1996, and other operating income, primarily dues for the bank club account,
fees on debt cancellation contracts,and appraisal fees, decreased $76,128 (9.7%)
to $708,130.




                                        14 <PAGE>
 





Noninterest Expenses

Noninterest  expenses  for the nine months ended September 30, 1997 were 
$12,709,916, reflecting a 19.2% increase over the same period  of  1996.   The 
primary  components of noninterest  expenses are salaries and employee benefits,
which increased to $7,538,368  for  the  nine months ended  September  30, 1997,
14.9% 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 $362,282 (49.5%), furniture and equipment expenses rose by $160,198 
(22.3%), and  director  and committee fees increased by $141,695 (42.6%). The 
increase in director and committee fees is a reflection of the  expansion of the
boards of directors of both the parent company and the Alabama subsidiary bank. 
Other operating expenses rose by 17.5% to $2,723,849.

The  majority  of  these  expenses  should  continue  at or near the levels for 
the nine months ended September 30, 1997, since management intends to continue 
its growth policies.  

The Company remains dependent upon the earnings of its principal subsidiary, 
Community Bank , 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 $968,621 for the  nine months ended September 
30, 1997 decreased  $90,453 compared to the same period of 1996, due primarily 
to the decrease in  income  before  tax.    Taxes  as  a  percent  of pretax 
earnings decreased from 29.1% to 27.7%.  The effective tax rate of approximately
27.7% is less than the statutory rate principally because of the effect of 
tax-exempt interest income.


                                            15 <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             17     
                                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 
    September 30, 1997.



                                          16 <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 nine-month and three-month periods 
ended September 30, 1997 and 1996.

                                 Nine Months Ended       Three Months Ended  
                                    September 30,           September 30,   
                                  1997       1996         1997        1996    

Reported net income . . . .$ 2,529,788  $  2,577,444 $  705,404  $  1,134,219


Earnings on common shares .$ 2,529,788  $  2,577,444 $  705,404  $  1,134,219


Weighted average common 
 shares outstanding  . . .   2,060,925     1,915,476  2,081,247     1,971,671

Earnings per common share-
  primary and fully-diluted:
  Income from continuing 
   operations . . . . . . .$     1.23   $       1.35 $      .34  $        .58

  Net income  . . . . . .  $     1.23   $       1.35 $      .34  $        .58





                                       17 <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.



 November 10, 1997                    /s/ Kennon R. Patterson, Sr.     
 Date                                 Kennon R. Patterson, Sr., as its  
                                      President and Chief Executive   
                                      Officer                          



 November 10, 1997                    /s/ Paul W. Williams, CPA            
 Date                                 Paul W. Williams, CPA, as its Senior 
                                      Vice President and Chief        
                                      Accounting Officer              
                      


                                            18 <PAGE>