<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549



                                  FORM 10-Q/A-1

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

                      For Quarter Ended September 30, 1998

                                       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, 1998
----------------------------                 ----------------------------------
Common Stock, $.10 Par Value                              4,231,320


<PAGE>   2


                                      INDEX

                   COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES


<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION                                                                                 PAGE
-----------------------------                                                                                 ----

<S>                                                                                                           <C>
Item 1. Financial Statements (Unaudited)

           Consolidated balance sheets - September 30, 1998 and December 31, 1997 ........................       3

           Consolidated statements of income and consolidated statements of comprehensive income-
           Three  months ended September 30,1998 and 1997 ................................................       4

           Consolidated statements of income and consolidated statements of comprehensive income-
           Nine  months ended September 30,1998 and 1997 .................................................       6


           Consolidated statements of cash flows - Nine months ended September 30,
           1998 and 1997 .................................................................................       8

           Notes to consolidated financial statements - September 30, 1998 ...............................      10


PART II.  OTHER INFORMATION

Item 4.  Submission of Matters to a Vote of Security Holders .............................................      13

Item 6.  Exhibits and Reports on Form 8-K ................................................................      13

SIGNATURES ...............................................................................................      14

EXHIBIT 3 - Amended Certificate of Amendment to Certificate of Incorporation .............................      15

EXHIBIT 11 - Statement RE: Computation of Earnings per Share .............................................      16

</TABLE>





                                      2
<PAGE>   3


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

<TABLE>
<CAPTION>
                                                                               September 30,       December 31,
                                                                                     1998               1997
                                                                               -------------       ------------
<S>                                                                            <C>                 <C>
Assets
  Cash ..................................................................      $   7,474,109       $   6,359,331
  Due from banks ........................................................         12,164,648          13,292,647
  Interest-bearing deposits with banks ..................................            950,000           2,514,558
  Federal funds sold ....................................................                -0-          26,600,000
  Securities available for sale .........................................         91,760,138          85,092,069
  Loans .................................................................        418,197,067         327,084,688
  Less: Unearned income .................................................          1,611,552             950,205
         Allowance for loan losses ......................................          3,232,563           2,131,354
                                                                               -------------       -------------
          Net Loans .....................................................        413,352,952         324,003,129

  Premises and equipment, net ...........................................         27,125,713          22,362,432
  Accrued interest ......................................................          5,762,606           5,089,765
  Intangibles, net ......................................................          5,912,307           4,117,825
  Other real estate .....................................................            699,656             656,271
  Other assets ..........................................................          2,787,242           1,750,819
                                                                               -------------       -------------

          Total Assets ..................................................      $ 567,989,371       $ 491,838,846
                                                                               =============       =============

Liabilities and Shareholders' Equity
  Deposits:
     Noninterest-bearing ................................................      $  57,563,658       $  52,356,858
     Interest-bearing ...................................................        447,453,717         388,531,773
                                                                               -------------       -------------
          Total Deposits ................................................        505,017,375         440,888,631

  Other short-term borrowings ...........................................          7,924,053           2,630,387
  Accrued interest ......................................................          3,771,410           2,912,286
  Long-term debt ........................................................          6,726,391           7,397,612
  Other liabilities .....................................................          4,492,505           2,012,500
                                                                               -------------       -------------
          Total Liabilities .............................................        527,931,734         455,841,416

  Minority interest in consolidated subsidiary ..........................                -0-              18,382

  Shareholders' equity
     Preferred stock, par value $.10 per share, 200,000 shares
          authorized, no shares issued ..................................                -0-                 -0-
     Common stock, par value $.10 per share, 20,000,000
          shares authorized, 4,231,320 shares issued as of September 30,
          1998 and 2,031,606 shares issued as of December 31, 1997 ......            423,132             203,161
     Capital surplus ....................................................         21,054,751          18,524,301
     Retained earnings ..................................................         19,306,069          18,824,795
     Unearned ESOP shares - 189,886 and 204,610 shares
          unreleased at September 30, 1998 and December 31,1997 .........         (1,909,428)         (2,002,902)
     Accumulated comprehensive income: unrealized gains on
          investment securities available for sale, net of deferred taxes          1,183,113             429,693
                                                                               -------------       -------------

          Total Shareholders' Equity ....................................         40,057,637          35,979,048
                                                                               -------------       -------------

          Total Liabilities and Shareholders' Equity ....................      $ 567,989,371       $ 491,838,846
                                                                               =============       =============
</TABLE>

                 See notes to consolidated financial statements


                                        3
<PAGE>   4


                   COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                    Three Months Ended
                                                                        September 30,     
                                                                ---------------------------
                                                                    1998            1997   
                                                                -----------      ----------  
<S>                                                             <C>              <C>
Revenue From Earning Assets
    Interest and fees on loans ...........................      $10,315,562      $8,039,900
    Interest on investment securities:
    Taxable securities ...................................        1,129,264       1,084,307
      Securities exempt from federal income taxes ........          188,420         175,950

    Interest on federal funds sold .......................           27,779         289,332
    Interest on deposits in other banks ..................           15,594          36,437
                                                                -----------      ----------
                  Total Revenue From Earning Assets ......       11,676,619       9,625,926
                                                                -----------      ----------

Interest Expense
    Interest on deposits .................................        5,701,346       4,867,064
    Interest on other short-term borrowings ..............           35,152          34,055
    Interest on long-term debt ...........................           14,525         151,957
                                                                -----------      ----------
                  Total Interest Expense .................        5,751,023       5,053,076
                                                                -----------      ----------

Net interest income ......................................        5,925,596       4,572,850
Provision for loan losses ................................          225,653         302,477
                                                                -----------      ----------

Net interest income after provision for loan losses ......        5,699,943       4,270,373

Noninterest Income
    Service charges on deposits ..........................          794,519         621,825
    Insurance commissions ................................          536,124         208,489
    Bank club dues .......................................          159,146         144,795
    Other operating income ...............................          546,512         231,650
    Investment securities gains ..........................            7,200             -0-
                                                                -----------      ----------

                  Total Noninterest Income ...............        2,043,501       1,206,759
                                                                -----------      ----------

Noninterest Expenses
    Salaries and employee benefits .......................        3,806,813       2,621,206
    Occupancy expense ....................................          572,625         396,445
    Furniture and equipment expense ......................          380,424         311,086
    Director and committee fees ..........................          189,300         162,450
    Other operating expenses .............................        1,469,459       1,021,819
                                                                -----------      ----------
                  Total Noninterest Expenses .............        6,418,621       4,513,006
                                                                -----------      ----------

Income before income taxes ...............................        1,324,823         964,126
Provision for income taxes ...............................          400,940         255,890
                                                                -----------      ----------
                  Net Income before Minority Interest ....      $   923,883      $  708,236
Minority Interest in consolidated subsidiaries ...........      $       -0-      $    2,802
                                                                -----------      ----------

                  Net Income .............................      $   923,883      $  705,434
                                                                ===========      ==========
Earnings Per Common Share
    Net income ...........................................      $       .24      $      .19
Earnings Per Common Share-assuming dilution
    Net income ...........................................      $       .23      $      .18
</TABLE>

                 See notes to consolidated financial statements


                                        4
<PAGE>   5



                   COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                   (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                                      Three Months Ended
                                                                         September 30,
                                                                ----------------------------     
                                                                    1998             1997  
                                                                -----------       ----------   

<S>                                                             <C>               <C>      
Net income ...............................................      $   923,883       $ 705,434

Other comprehensive income, net of tax:
    Realized investment security gains ...................            7,200             -0-
    Unrealized gains (losses) on securities ..............        1,130,885         306,276
      Less income tax effect .............................         (455,235)       (122,571)
                                                                -----------       ---------
                  Total other comprehensive income .......          682,850         183,705
                                                                -----------       ---------


Comprehensive income .....................................      $ 1,606,733       $ 889,139
                                                                ===========       =========
</TABLE>


                 See notes to consolidated financial statements


                                        5
<PAGE>   6



                   COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                     Nine Months Ended
                                                                        September 30, 
                                                                -----------------------------    
                                                                    1998              1997   
                                                                -----------      ------------  
<S>                                                             <C>              <C>
Revenue From Earning Assets
    Interest and fees on loans ...........................      $27,761,457      $ 23,663,472
    Interest on investment securities:
      Taxable securities .................................        3,277,780         3,290,221
      Securities exempt from federal income taxes ........          542,436           534,877

    Interest on federal funds sold .......................          553,080           485,013
    Interest on deposits in other banks ..................           51,020            85,871
                                                                -----------      ------------
                  Total Revenue From Earning Assets ......       32,185,773        28,059,454
                                                                -----------      ------------

Interest Expense
    Interest on deposits .................................       16,114,086        13,988,046
    Interest on other short-term borrowings ..............           88,091           114,028
    Interest on long-term debt ...........................          307,358           476,270
                                                                -----------      ------------
                  Total Interest Expense .................       16,509,535        14,578,344
                                                                -----------      ------------

Net interest income ......................................       15,676,238        13,481,110
Provision for loan losses ................................          622,397           796,724
                                                                -----------      ------------

Net interest income after provision for loan losses ......       15,053,841        12,684,386

Noninterest Income
    Service charges on deposits ..........................        2,217,292         1,858,402
    Insurance commissions ................................        1,623,448           541,097
    Bank club dues .......................................          459,671           421,702
    Other operating income ...............................        1,367,636           708,130
    Investment securities gains ..........................           18,708            (2,590)
                                                                -----------      ------------

                  Total Noninterest Income ...............        5,686,755         3,526,741
                                                                -----------      ------------

Noninterest Expenses
    Salaries and employee benefits .......................       10,334,033         7,538,368
    Occupancy expense ....................................        1,497,160         1,093,592
    Furniture and equipment expense ......................        1,071,217           879,787
    Director and committee fees ..........................          514,858           474,320
    Other operating expenses .............................        3,782,656         2,723,849
                                                                -----------      ------------
                  Total Noninterest Expenses .............       17,199,924        12,709,916
                                                                -----------      ------------

Income before income taxes ...............................        3,540,672         3,501,211
Provision for income taxes ...............................        1,023,623           968,621
                                                                -----------      ------------
                  Net Income before Minority Interest ....        2,517,049         2,532,590
Minority interest in consolidated subsidiary .............            4,167             2,802
                                                                -----------      ------------

                  Net Income .............................      $ 2,512,882      $  2,529,788
                                                                ===========      ============
Earnings Per Common Share
    Net income ...........................................      $       .65      $        .67
Earnings Per Common Share-assuming dilution
    Net income ...........................................      $       .64      $        .66
</TABLE>


                 See notes to consolidated financial statements


                                        6
<PAGE>   7


                   COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                      Nine Months Ended
                                                                         September 30,
                                                                -----------------------------      
                                                                    1998              1997   
                                                                -----------       -----------  

<S>                                                             <C>               <C>        
Net income ...............................................      $ 2,512,882       $ 2,529,788

Other comprehensive income, net of tax:
    Realized investment security gains ...................           18,708            (2,590)
    Unrealized gains on securities .......................        1,236,993            83,029
      Less income tax effect .............................         (502,281)          (32,236)
                                                                -----------       -----------
                  Total other comprehensive income .......          753,420       $    48,203
                                                                -----------       -----------
Comprehensive income .....................................      $ 3,266,302       $ 2,577,991
                                                                ===========       ===========
</TABLE>


                 See notes to consolidated financial statements


                                        7
<PAGE>   8



                   COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                                       Nine Months Ended
                                                                                           September 30,
                                                                                -------------------------------    
                                                                                    1998                1997 
                                                                                ------------       ------------    
<S>                                                                             <C>                <C>
Operating activities:
    Net income ...........................................................      $  2,512,882       $  2,529,788
    Adjustments to reconcile net income to net
      cash provided by operating activities:
         Provision for loan losses .......................................           622,397            796,724
         Provision for depreciation and amortization .....................           967,446          1,143,347
         Amortization of investment security premiums and
          accretion of discounts .........................................           114,790             48,191
         Deferred tax expense ............................................           156,409             62,452
         Loss on sale of premises and equipment ..........................             4,607              1,058
         Realized investment security losses (gains) .....................           (18,708)             2,590
         Increase (decrease) in accrued interest receivable ..............          (672,841)            38,151
         Increase in accrued interest payable ............................           859,124            717,270
         Other ...........................................................           101,010         (1,168,975)
                                                                                ------------       ------------
                 Net cash provided by operating activities ...............         4,647,116          4,170,596
                                                                                ------------       ------------

Investing activities:
    Proceeds from sales of investment securities .........................         6,773,700          5,007,863
    Proceeds from maturity of investment securities ......................         7,121,562          5,588,513
    Purchase of investment securities ....................................       (19,403,712)        (4,656,676)
    Decrease (increase) in interest-bearing deposits with other banks ....         1,564,558           (729,678)
    Cash disbursed in acquisition of finance offices .....................        (6,543,108)               -0-
    Cash disbursed in acquisition of insurance operations ................          (930,219)               -0-
    Cash received in acquisition of branch office ........................         2,763,393                -0-
    Net increase in loans to customers ...................................       (82,111,874)        (2,577,415)
    Proceeds from sale of premises and equipment .........................           237,544            312,900
    Net proceeds from sale of other real estate ..........................            42,500                -0-
    Capital expenditures .................................................        (5,304,696)        (5,673,721)
                                                                                ------------       ------------
                  Net cash provided (used) by investing activities .......       (95,790,352)        (2,728,214)
                                                                                ------------       ------------

Financing activities:
    Net increase in demand deposits, NOW accounts,
      and savings accounts ...............................................        19,920,413          3,821,677
    Net increase in certificates of deposit ..............................        38,564,181         23,391,368
    Net increase/(decrease) in short-term borrowings .....................         5,904,355         (5,246,356)
    Issuance and sale of common stock ....................................         2,750,421            462,740
    Repayment of long-term debt ..........................................          (577,747)          (574,772)
    Cash dividends .......................................................        (2,031,608)        (1,500,000)
                                                                                ------------       ------------
                  Net cash provided by financing activities ..............        64,530,015         20,354,657
                                                                                ------------       ------------

Net increase in cash and cash equivalents ................................       (26,613,221)        21,797,039


Cash and cash equivalents at beginning of period .........................        46,251,978         17,612,177
                                                                                ------------       ------------

Cash and cash equivalents at end of period ...............................      $ 19,638,757       $ 39,409,216
                                                                                ============       ============
</TABLE>


                 See notes to consolidated financial statements


                                        8
<PAGE>   9


                   COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                                          Nine Months Ended
                                                                                             September 30,
                                                                                    ----------------------------
                                                                                       1998              1997
                                                                                    -----------      -----------

<S>                                                                                 <C>              <C>
Supplemental disclosures of cash flow information:
    Cash paid during the period for:
      Interest ...............................................................      $16,573,210      $13,861,074
      Income taxes ...........................................................          569,986        1,623,340

Supplemental schedule of non-cash investing and financing activities:

     Other real estate of $374,000 and $87,500 was acquired in 1998 and 1997, 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
     $93,474 and $86,954 during the nine month periods ended September 30, 1998 and 1997, respectively, as a
     result of payments made by the Company's ESOP on the outstanding ESOP debt.

     Unrealized gains on investment securities available for sale increased by  $1,255,701 during the nine months
ended ..............................................September 30, 1998.
</TABLE>


                 See notes to consolidated financial statements


                                        9
<PAGE>   10



                   COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

                               September 30, 1998



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 nine month and three month periods
ended September 30, 1998 are not necessarily indicative of the results that may
be expected for the year ended December 31, 1998. 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, 1997.


NOTE B - Income Taxes

The effective tax rates of approximately 28.9 percent and 27.7 percent for the
nine months ended September 30, 1998 and 1997 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 September 30, 1998, the Company had net unrealized gains of $1,971,856 in
available-for-sale securities which are reflected in the presented assets and
resulted in a increase in stockholders' equity of $1,183,113, 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,
1997 to September 30, 1998 was $753,420.


NOTE D - Shareholders' Equity

In January of 1997, the Board of Directors of the Company declared a dividend of
$.75 per share to shareholders of record as of January 8, 1997, and another
dividend of $1.00 per share was declared in January of 1998 to shareholders of
record as of January 26, 1998. Additionally, a one-for-one stock dividend was
declared and distributed to stockholders of record as of the same date. 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.

All per share disclosures have been adjusted to reflect the impact of the
one-for-one stock dividend in the first quarter of 1998.


                                       10
<PAGE>   11


NOTE D - Shareholders' Equity (continued)

On March 26, 1998, March 27, 1997, and March 28, 1996, the Company issued
203,331, 103,000, and 270,000 options, respectively, to purchase its common
shares to its directors and or senior managers.The options were distributed
among the directors and or senior managers 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 $15.00 per share (1998 issuance), $12.50
per share (1997 issuance) or $10.00 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, 2003, 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, for the
purpose of calculating diluted earnings per share, in Exhibit 11, causing the
equivalent average number of shares outstanding for the first three quarters to
rise by 55,083 shares and 17,352 shares, respectively, in 1998 and 1997. There
was no dilutive effect on book value per share at September 30, 1998, nor on the
book value of the Company's common shares at September 30, 1997.

In October 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 123, Accounting and Disclosure
of Stock-Based Compensation ("SFAS 123"). SFAS 123 is effective for years
beginning after December 15, 1995, and allows for the option of continuing to
follow Accounting Principles Board Opinion No. 25, Accounting for Stock Issued
to Employees, and the related Interpretations or selecting the minimum value
method of expense recognition as described in SFAS 123. The Company has elected
to apply APB Opinion No. 25 in accounting for its incentive stock options;
accordingly, no compensation expense cost has been recognized by the Company.
The Company's net income, earnings per share - basic, and earnings per share -
diluted would have been reduced by $ 236,677, $ 0.06, and $ 0.06, respectively,
for the nine months ended September 30, 1998, had compensation cost for the
Company's stock option plan been determined based on the fair value ("minimum
value method") at the grant date for options under the plan. The effect would
have been $ 129,162, $ 0.04, and $ 0.03, respectively, for the same period in
1997.

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
($160,000 in 1998) 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, 1998, there were 189,886
unreleased shares with a fair value of approximately $3,600,000. 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


                                       11
<PAGE>   12


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.

Note E - Employee Stock Ownership Plan (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, 1998, the Company's financial statements reflect long term debt
and a corresponding contra-equity account, as a result of the ESOP debt, of
$1,909,428.


                                       12
<PAGE>   13


                           Part II - Other Information



          Item 4 - Submission of Matters to a Vote of Security Holders

A special meeting of stockholders of the Company was held on Thursday, September
10, 1998, at which an amendment to the Company's certificate of incorporation
was voted upon and approved by the stockholders of the Company. The amendment
increased the number of authorized shares of common stock of the Company to
20,000,000 from 5,000,000. The vote with respect to such amendment was as
follows:

<TABLE>
<CAPTION>
                                                                     Votes cast                                    Abstentions
                            Votes cast                               Against or                                     Or Broker
                             In Favor                                 Withheld                                      Non-Votes
                            ----------                               ----------                                    -----------

                            <S>                                      <C>                                           <C>
                            2,835,909                                  2,490                                           100
</TABLE>



                    Item 6 - Exhibits and Reports on Form 8-K

(a) Exhibits:

<TABLE>
<CAPTION>
    Exhibit Number        Description of Exhibit               Page Number
    --------------        ----------------------               -----------

    <S>                   <C>                                  <C>
          3               Amended Certificate of Amendment     
                          to Certificate of Incorporation          15

         11               Computation of Earnings                  16
                            Per Share

         27               Financial Data Schedule              Previously Filed
                            (for the SEC use only)
                            
</TABLE>


(b) Reports on Form 8-K

    The Company did not file any reports on Form 8-K during the quarter ended
September 30, 1998.


                                       13
<PAGE>   14


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 25, 1998                            /s/ Kennon R. Patterson, Sr.     
-----------------                            ----------------------------------
Date                                         Kennon R. Patterson, Sr., as its
                                             President and Chief Executive
                                             Officer



November 25, 1998                            /s/ Michael A. Bean
-----------------                            ----------------------------------
Date                                         Michael A. Bean, as its Executive
                                             Vice President and Chief Financial
                                             Officer


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