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 the quarterly period ended March 31, 2003
                                       OR

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


                          Commission File No. 000-16461

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

                               Delaware 63-0868361
      (State or other jurisdiction of (I.R.S. Employer Identification No.)
                         incorporation or organization)

                                68149 Main Street
                           Blountsville, Alabama 35031
                    (Address of principal executive offices)

                                 (205) 429-1000
                         (Registrant's telephone number)


     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:

                                 |X| yes |_| no

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Exchange Act rule 12b-2):

                                  |_|yes |X| no

As of May 1, 2003, there were 4,643,740 shares of the registrant's common stock,
$.10 par value shares, outstanding.

<PAGE>
                                    FORM 10-Q
                           COMMUNITY BANCSHARES, INC.
                                 MARCH 31, 2003

<TABLE>
<CAPTION>

Table of Contents                                                                                     Page No.


Part 1 - Financial Information

      Item 1 -    Consolidated Statements Financial Statements (Unaudited)
<S>                         <C> <C>               <C> <C>                                                 <C>
                  Consolidated Statements of Condition as of
                      March 31, 2003 and December 31, 2002.......................................          3

                  Consolidated Statements of Income for the Three Months Ended
                      March 31, 2003 and 2002....................................................        4-5

                  Consolidated Statements of Cash Flows for the Three Months Ended
                      March 31, 2003 and 2002....................................................        6-7

                  Notes to Consolidated Financial Statements.....................................       8-15

      Item 2 -    Management's Discussion and Analysis of
                      Financial Condition and Results of Operations..............................      16-20

      Item 3 -    Quantitative and Qualitative Disclosures About Market Risk.....................         21

      Item 4 -    Controls and Procedures........................................................         22

Part 2 - Other Information

      Item 1 -    Legal Proceedings..............................................................         23

      Item 6 -    Exhibits and Reports on Form 8-K...............................................         23

Signatures

Certifications of Periodic Financial Reports
</TABLE>

                                       2
<PAGE>
PART 1
Item 1 - Financial Statements

                   COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CONDITION
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                            March 31, 2003       December 31, 2002
                                                                           ----------------      ----------------
Assets
<S>                                                                        <C>                   <C>
   Cash and due from banks...............................................  $     33,121,261      $     15,976,613
   Interest-bearing deposits in banks and federal funds sold.............        21,625,000            24,230,000
   Securities available for sale ........................................       122,766,974           123,901,469
   Loans (net of unearned income) .......................................       346,639,392           359,183,888
      Allowance for possible loan losses ................................       (10,123,476)           (9,784,269)
                                                                           ----------------      ----------------
      Net loans .........................................................       336,515,916           349,399,619
   Capitalized lease receivable..........................................         3,030,327             3,053,542
   Premises and equipment, net ..........................................        24,964,572            25,435,491
   Accrued interest receivable...........................................         3,822,672             4,369,748
   Goodwill and other intangible assets, net.............................         2,693,535             2,713,389
   Other real estate owned ..............................................         8,503,423             7,676,442
   Other assets .........................................................         9,199,001            10,840,086
                                                                           ----------------      ----------------
      Total Assets.......................................................  $    566,242,681      $    567,596,399
                                                                           ================      ================
Liabilities And Shareholders' Equity
   Deposits:
      Noninterest-bearing................................................  $     56,866,739      $     52,920,683
      Interest-bearing...................................................       404,876,854           406,543,121
                                                                           ----------------      ----------------
         Total deposits .................................................       461,743,593           459,463,804
   Other short-term borrowings ..........................................           201,556             1,725,133
   Accrued interest payable..............................................         3,837,386             3,622,765
   FHLB long-term debt...................................................        38,000,000            38,000,000
   Capitalized lease obligations ........................................         4,037,887             4,058,169
   Other long-term debt .................................................         3,477,457             3,577,687
   Trust preferred securities ...........................................        10,000,000            10,000,000
   Other liabilities ....................................................         5,822,863             6,837,884
                                                                           ----------------      ----------------
      Total liabilities .................................................       527,120,742           527,285,442
Shareholders' equity
   Preferred stock (par value $.01 per share, 200,000 shares
      authorized, no shares issued)......................................                 -                     -
   Common stock (par value $.10 per share, 20,000,000
      shares authorized, 4,810,089 shares issued as of
      March 31, 2003 and December 31, 2002)..............................           481,009               481,009
   Additional paid in capital............................................        30,787,584            30,806,862
   Retained earnings ....................................................        10,474,852            11,023,962
   Treasury stock (23,803 shares as of March 31, 2003 and
        December 31, 2002)...............................................          (441,768)             (441,768)
   Unearned ESOP shares (142,546 and 148,972 shares as of
      March 31, 2003 and December 31, 2002, respectively)................        (1,935,598)           (1,999,858)
   Accumulated other comprehensive income (loss), net of taxes ..........          (244,140)              440,750
                                                                           ----------------      ----------------
      Total shareholders' equity ........................................        39,121,939            40,310,957
                                                                           ----------------      ----------------
      Total Liabilities and Shareholders' Equity                           $    566,242,681       $   567,596,399
                                                                           ================      ================

</TABLE>

           See accompanying notes to consolidated financial statements

                                       3
<PAGE>
                   COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                             For the Three Months Ended March 31,
                                                                                   2003                2002
                                                                             ----------------    ----------------
 Interest Income
<S>                                                                           <C>                <C>
   Interest and fees on loans............................................     $     7,360,905    $      8,820,482
   Interest on investment securities:
   Taxable securities....................................................           1,374,647           1,550,545
   Non taxable securities...............................................               89,325             145,088
   Interest on federal funds sold........................................              82,258             143,083
   Other interest........................................................               7,110               6,994
                                                                              ---------------    ----------------
      Total interest income .............................................           8,914,245          10,666,192
                                                                              ---------------    ----------------
Interest Expense
   Interest on deposits .................................................           2,885,208           3,650,623
   Interest on short-term borrowings ....................................               1,150               4,288
   FHLB long-term debt...................................................             563,350             563,350
   Interest on capitalized lease obligations.............................              42,452              49,207
   Interest on trust preferred securities................................             314,164             280,303
   Interest on other long-term debt......................................              30,471              53,898
                                                                              ---------------    ----------------
Total interest expense...................................................           3,836,795           4,601,669
                                                                              ---------------    ----------------
Net interest income......................................................           5,077,450           6,064,523
   Provision for loan losses ............................................           1,289,439             943,611
                                                                              ---------------    ----------------
Net interest income after provision for loan losses......................           3,788,011           5,120,912
Noninterest Income
   Service charges on deposits ..........................................             610,558             761,622
   Insurance commissions. ...............................................             563,793             539,605
   Bank club dues .......................................................             106,559             105,454
   Debt cancellation fees ...............................................              30,115              60,104
   Other operating income ...............................................             225,537             226,417
   Securities gains, net.................................................             647,641              16,646
                                                                              ---------------    ----------------
      Total noninterest income...........................................           2,184,203           1,709,848
                                                                              ---------------    ----------------
Noninterest Expense
   Salaries and employee benefits .......................................           3,328,797           3,473,661
   Occupancy expense ....................................................             589,005             590,763
   Furniture and equipment expense.......................................             367,391             406,043
   Director and committee fees ..........................................             122,200              97,100
   Net loss on sale or write-down of other
      real estate owned..................................................             252,728                   -
   Net loss on disposal of assets........................................                   -             395,575
   Other operating expenses .............................................           2,348,682           1,769,212
                                                                              ---------------    ----------------
      Total noninterest expense..........................................           7,008,803           6,732,354
                                                                              ---------------    ----------------
INCOME (Loss) from continuing operations
   BEFORE INCOME TAXES...................................................          (1,036,589)             98,406
Applicable income taxes..................................................             487,480             (84,407)
                                                                              ---------------    ----------------
      INCOME (Loss) from continuing operations...........................            (549,109)             13,999
                                                                              ---------------    ----------------
</TABLE>

           See accompanying notes to consolidated financial statements

                                       4
<PAGE>
                   COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF INCOME - CONTINUED
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                              For the Three Months Ended March 31,
                                                                                     2003               2002
                                                                              ----------------   ----------------
<S>                                                                           <C>                <C>
Discontinued Operations:
   Income from operations of divested branches
      (includes gain on disposal of $1,551,443)..........................                    -          1,748,227
   Applicable income taxes...............................................                    -           (529,713)
                                                                              ----------------   ----------------
   Net Income (Loss).....................................................     $       (549,109)  $      1,232,513
                                                                              ================   ================

OTHER COMPREHENSIVE INCOME:
      Unrealized holding gains (losses) arising during period,
         net of income taxes of $197,536 and $243,748, respectively......     $      (296,305)   $       (365,622)
      Reclassification adjustment related to net realized gains, net of
         income taxes of $259,056 and $6,658, respectively...............            (388,585)             (9,988)
                                                                              ---------------    ----------------
      Other Comprehensive Income (LOSS)..................................            (684,890)           (375,610)
                                                                              ---------------    ----------------
COMPREHENSIVE INCOME (LOSS)..............................................     $    (1,233,999)   $        856,903
                                                                              ===============    ================

Earnings (loss) per common share - income (loss) from continuing operations:
      Basic..............................................................     $         (0.12)   $           0.01
      Diluted............................................................     $         (0.12)   $           0.01

Earnings (loss) per common share - net income (loss):
      Basic..............................................................     $         (0.12)   $           0.27
      Diluted............................................................     $         (0.12)   $           0.27

Average number of shares outstanding:
      Basic..............................................................           4,640,527           4,625,949
      Diluted............................................................           4,640,527           4,625,949

Dividends per share......................................................     $             -   $               -


</TABLE>
           See accompanying notes to consolidated financial statements

                                       5

<PAGE>
                   COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                              For the Three Months Ended March 31,
                                                                                    2003               2002
                                                                              ---------------   -----------------
Cash Flows From Operating Activities
<S>                                                                           <C>                <C>
   Net income (loss).......................................................   $      (549,109)   $      1,232,513
   Adjustments to reconcile net income (loss) to net cash
      provided by operating activities:
   Provision for loan losses ..............................................         1,289,439           1,040,419
   Provision for depreciation and amortization ............................           444,682             566,866
   Amortization of investment security premiums
      and accretion of discounts...........................................           169,484              73,075
   Deferred tax expense....................................................            98,168             164,908
   Realized investment security gains. ....................................          (647,641)            (16,646)
   Gain on sale of branches................................................                 -          (1,551,443)
   Loss on sale of premises and equipment .................................                 -             395,575
   Net loss or write-down on other real estate owned.......................           252,728                   -
   Decrease in accrued interest receivable.................................           547,076           1,133,827
   Increase in accrued interest payable....................................           214,621             244,834
   Other ..................................................................         1,048,936            (844,973)
                                                                              ---------------    ----------------
      Net cash provided by operating activities............................         2,868,384           2,438,955
                                                                              ---------------    ----------------
 Cash Flows From Investing Activities
   Proceeds from sales, calls and pay downs of securities
      available for sale...................................................        61,700,976          11,597,387
   Proceeds from maturity of securities
      available for sale...................................................        15,000,000           2,000,000
   Purchase of securities available for sale...............................       (76,229,805)         (3,984,476)
   Cash disbursed in settlement of branch divestitures.....................                 -          (8,294,497)
   Net decrease in loans to customers......................................        10,602,672          10,719,993
   Proceeds from sale of premises and equipment............................                 -              60,350
   Capital expenditures....................................................           (93,909)           (136,100)
   Net proceeds from sale of other real estate.............................            55,630             177,903
                                                                              ---------------    ----------------
      Net cash provided by investing activities............................        11,035,564          12,140,560
                                                                              ---------------    ----------------
Cash Flows From Financing Activities
   Net increase in demand deposits,
      NOW accounts, savings and time open deposit accounts.................         7,248,363           6,614,878
   Net decrease in certificates of deposit ................................        (4,968,574)        (11,355,951)
   Net (decrease) increase in short-term borrowings .......................        (1,523,577)            475,289
   Net decrease in capitalized lease obligations ..........................           (20,282)            (30,989)
   Repayment of long-term debt............................................           (100,230)           (207,308)
                                                                              ---------------    ----------------
      Net cash provided by (used in) financing activities .................           635,700          (4,504,081)
                                                                              ---------------    ----------------
NET INCREASE IN CASH AND CASH EQUIVALENTS..................................        14,539,648          10,075,434
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.............................        40,206,613          53,037,008
                                                                              ---------------    ----------------
CASH AND CASH EQUIVALENTS, END OF PERIOD...................................   $    54,746,261    $     63,112,442
                                                                              ===============    ================

</TABLE>

           See accompanying notes to consolidated financial statements

                                       6
<PAGE>
                   COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                             For the Three Months Ended March 31,
                                                                            --------------------------------------
                                                                                   2003                2002
                                                                            -----------------    -----------------

Supplemental cash flow disclosures:
Cash paid for:
<S>                                                                           <C>                <C>
   Interest..............................................................     $     3,622,174    $      5,814,023
   Income taxes..........................................................                   -                 947

schedule of non-cash investing and
   financing activities:
   Foreclosure of other real estate owned................................           1,256,642           1,246,862
   Loan charge-offs, net of recoveries...................................             950,232             853,546

</TABLE>

           See accompanying notes to consolidated financial statements

              [The remainder of this page intentionally left blank]

                                       7
<PAGE>


                   COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 1 - GENERAL

The  consolidated   financial  statements  include  the  accounts  of  Community
Bancshares,  Inc. and its wholly-owned subsidiaries,  collectively,  hereinafter
referred to as the "Company".  The accompanying unaudited consolidated financial
statements have been prepared in accordance with accounting principles generally
accepted in the United  States 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  accounting
principles  generally  accepted  in the  United  States 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 ending March 31, 2003 are
not  necessarily  indicative  of the results  that may be expected  for the year
ending  December 31, 2003. 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, 2002.

Certain  reclassifications  of prior years' amounts have been made to conform to
current year presentation.  These reclassifications had no effect on net income,
total assets, total liabilities, or shareholders' equity.

The  Company's  significant  accounting  policies are presented in Note 1 to the
consolidated  financial  statements in the Company's  Annual Report on Form 10-K
for the year ended December 31, 2002. These policies, along with the disclosures
presented in the other footnotes,  provide information on how significant assets
and liabilities are valued in the financial  statements and how those values are
determined.  Those  accounting  policies  involving  significant  estimates  and
assumptions by management,  which have, or could have, a material  impact on the
carrying value of certain assets and impact comprehensive income, are considered
critical accounting  policies.  The Company recognizes the following as critical
accounting policies: Accounting for Allowance for Loan Losses and Accounting for
Income Taxes.

Accounting for Allowance for Loan Losses. Management's ongoing evaluation of the
adequacy and allocation of the allowance  considers both impaired and unimpaired
loans and takes into  consideration  the  Company's  past loan loss  experience,
known and inherent risks in the portfolio,  adverse  situations  that may affect
the borrowers' ability to repay,  estimated value of any underlying  collateral,
the reviews of regulators, and an analysis of current economic conditions. While
management   believes  that  it  has  exercised  prudent  judgment  and  applied
reasonable  assumptions  which  have  resulted  in  an  allowance  presented  in
accordance  with  generally  accepted  accounting  principles,  there  can be no
assurance  that  in  the  future,   adverse   economic   conditions,   increased
nonperforming  loans,  regulatory  concerns,  or other  factors will not require
further increases in, or reallocation of the allowance.

Accounting for Income Taxes.  The Company uses the asset and liability method of
accounting for income taxes. Determination of the deferred and current provision
requires analysis by management of certain transactions and the related tax laws
and regulations.  Management  exercises  significant  judgment in evaluating the
amount and timing of  recognition of the resulting tax  liabilities  and assets.
Those  judgments  and  estimates  are  re-evaluated  on  a  continual  basis  as
regulatory and business factors change.

NOTE 2 - CAPITAL SECURITIES

In March 2000,  the Company formed a wholly-owned  Delaware  statutory  business
trust, Community (AL) Capital Trust I (the "Trust"), which issued $10,000,000 of
guaranteed preferred securities  representing  undivided beneficial interests in
the assets of the Trust ("Capital Securities").  All of the common securities of
the  Trust are owned by the  Company.  The  proceeds  from the  issuance  of the
Capital Securities  ($10,000,000) and common securities  ($310,000) were used by
the Trust to purchase  $10,310,000 of junior  subordinated  deferrable  interest
debentures of the Company which carry an annual interest rate of 10.875%.  Under
the terms of the indenture,  the Company may elect to defer payments of interest
for up to ten semiannual  payment periods.  The Company has elected to defer its
March 2002,  September 2002 and March 2003 interest payments and may elect to do
so again based on the

                                       8
<PAGE>
         COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES-CONTINUED NOTES TO
                       CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


liquidity needs of the Company when future payments become due. For the duration
of such  deferral  period,  the Company is restricted  from paying  dividends to
shareholders  or paying  debt that is junior to the  debenture.  The  debentures
represent  the sole  asset of the  Trust.  The  debentures  and  related  income
statement  effects  are  eliminated  in  the  Company's  consolidated  financial
statements. The Company is entitled to treat the aggregate liquidation amount of
the debentures as Tier I capital under Federal Reserve guidelines.

The Capital  Securities accrue and pay  distributions  semiannually at a rate of
10.875%  per  annum of the  stated  liquidation  value  of  $1,000  per  capital
security.   The  Company  has  entered  into  an   agreement   which  fully  and
unconditionally  guarantees  payment of: (i)  accrued  and unpaid  distributions
required to be paid on the Capital  Securities;  (ii) the redemption  price with
respect to any Capital  Securities called for redemption by the Trust; and (iii)
payments  due  upon  a  voluntary  or  involuntary  liquidation,  winding  up or
termination of the Trust.

The Capital  Securities  are  mandatorily  redeemable  upon the  maturity of the
debentures  on March 8, 2030,  or upon  earlier  redemption  as  provided in the
indenture  pursuant to which the  debentures  were  issued.  The Company has the
right to redeem the debentures  purchased by the Trust: (i) in whole or in part,
on or after  March  8,  2010;  and  (ii) in whole  (but not in part) at any time
within 90 days  following the occurrence  and during the  continuation  of a tax
event,  capital treatment event or investment  company event (each as defined in
the  indenture).  As specified in the indenture,  if the debentures are redeemed
prior to maturity,  the  redemption  price will be a percentage of the principal
amount, ranging from 105.438% in 2010 to 100.00% in and after 2020, plus accrued
but unpaid interest.

NOTE 3 - SEGMENT REPORTING

All of the Company's offices offer similar products and services, are located in
the same geographic  region and serve the same customer  segments of the market.
As a  result,  management  considers  all  units as one  operating  segment  and
therefore  beleives that the basic  financial  statements and related  footnotes
provide sufficient detail related to segment reporting.

NOTE 4 - STOCK BASED COMPENSATION

SFAS No. 123,  "Accounting for Stock-Based  Compensation,"  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 those plans using the  intrinsic  value based  method of
accounting  prescribed  by 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 its stock option plans under the provisions in APB Opinion
25 and has calculated the fair value of outstanding  options for purposes of pro
forma disclosure utilizing the Black-Scholes method.

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded  options  that have no vesting  restrictions  and are fully
transferable.  In addition,  option valuation models require the input of highly
subjective  assumptions  including the expected stock price volatility.  Because
the  Company's  employee  stock  options  have   characteristics   significantly
different from those of traded  options,  and because  changes in the subjective
input  assumptions can materially  affect the fair value estimate,  the existing
models do not necessarily provide a reliable single measure of the fair value of
its employee stock options.

The  Company's  options  granted  during  the  first  three  months of 2003 vest
immediately;  therefore, for purposes of pro forma disclosure,  the compensation
expense related to these options has been  recognized  when granted.  No options
were granted during the first three months of 2002.

                                       9
<PAGE>
         COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES-CONTINUED NOTES TO
                        CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

The Company's actual pro forma information follows:

<TABLE>
<CAPTION>
                                                                           For the Three Months Ended March 31,
                                                                        -------------------------------------------
                                                                              2003                       2002
                                                                        ----------------           ----------------
Net income (loss):
<S>                                                                     <C>                        <C>
     As reported                                                        $      (549,109)           $      1,232,513
Deducts:
     Total stock-based employee compensation expense
     determined under fair value based method for all
     awards, net of tax                                                          139,590                          -
                                                                        ----------------           ----------------

Pro forma net income (loss)                                             $       (688,699)          $      1,232,513
                                                                        ================           ================

Basic earnings (loss) per share:
     As reported                                                                   (0.12)                      0.27
     Pro forma                                                                     (0.15)                      0.27
Diluted earnings (loss) per share:
     As reported                                                                   (0.12)                      0.27
     Pro forma                                                                     (0.15)                      0.27
</TABLE>

The fair value of each option  grant is estimated on the date of the grant using
the  Black-Scholes  option-pricing  model  with the  following  weighted-average
assumptions  used for the options  granted in 2003:  dividend yield 0%; expected
volatility of .283;  risk-free  interest rates of 3.10%; and expected lives of 5
years.

NOTE 5 - CONTINGENCIES

Background

At a meeting of Community Bank's Board of Directors on June 20, 2000, a director
brought to the attention of the Board the total amount of money  Community  Bank
had paid  subcontractors  in connection with the construction of a new Community
Bank office in  Guntersville,  Alabama.  Management of the Company  commenced an
investigation of the expenditures.  At the request of management, the architects
and  subcontractors  involved in the construction  project made presentations to
the Boards of  Directors of the Company and  Community  Bank on July 15 and July
18, 2000,  respectively.  At the July 18, 2000 meeting of the Board of Directors
of  Community  Bank,  another  director  alleged  that  Community  Bank had been
overcharged by subcontractors  on that construction  project and another current
construction  project.  On July 18, 2000, the Boards of Directors of the Company
and  Community  Bank  appointed  a  joint  committee  comprised  of  independent
directors  of the  Company  and of  Community  Bank to  investigate  the alleged
overcharges.  The joint  committee  retained  independent  legal  counsel and an
independent accounting firm to assist the committee in its investigation and has
made its report to the Boards of Directors.  The directors of Community Bank who
alleged  the  construction   overcharges  have  made  similar  charges  to  bank
regulatory  agencies and law enforcement  authorities.  Management believes that
these agencies and authorities are currently conducting investigations regarding
this matter.

Benson Litigation

On July 21, 2000, three shareholders of the Company,  M. Lewis Benson,  Doris E.
Benson and John M. Packard,  Jr.,  filed a lawsuit in the state Circuit Court of
Marshall County, Alabama against the Company,  Community Bank, certain directors
and officers of the Company and Community  Bank,  an employee of Community  Bank
and two  construction  subcontractors.  The  plaintiffs  purported  to file  the
lawsuit  as a  shareholder  derivative  action,  which  relates  to the  alleged

                                       10
<PAGE>
         COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES-CONTINUED NOTES TO
                        CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

construction overcharges being investigated by the joint committee of the Boards
of Directors of the Company and Community  Bank. The complaint  alleges that the
directors,  officers and employee named as defendants in the complaint  breached
their fiduciary duties,  failed to properly supervise officers and agents of the
Company and Community Bank, and permitted waste of corporate assets by allegedly
permitting  the  subcontractor   defendants  to  overcharge  Community  Bank  in
connection  with the  construction  of two new Community  Bank  offices,  and to
perform the construction work without written  contracts,  budgets,  performance
guarantees and assurances of indemnification. In addition, the complaint alleges
that Kennon R.  Patterson,  Sr., the  Chairman,  President  and Chief  Executive
Officer of the Company,  breached his fiduciary  duties by allegedly  permitting
the two  named  subcontractors  to  overcharge  for  work  performed  on the two
construction  projects in exchange  for  allegedly  discounted  charges for work
these  subcontractors  performed  in  connection  with the  construction  of Mr.
Patterson's   residence.   The  complaint  further  alleges  that  the  director
defendants  knew or should have known of this  alleged  arrangement  between Mr.
Patterson and the subcontractors. The complaint also alleges that Mr. Patterson,
the Community  Bank  employee and the two  subcontractor  defendants  made false
representations  and suppressed  information  about the alleged  overcharges and
arrangement between Mr. Patterson and the subcontractors.

On August 15, 2000, the  plaintiffs  filed an amended  complaint  adding Andy C.
Mann, a shareholder of the Company,  as a plaintiff and adding a former director
of the  Company  and  Community  Bank  as a  defendant.  The  amended  complaint
generally reiterates the allegations of the original complaint. In addition, the
amended   complaint   alleges  that  Community  Bank  was   overcharged  on  all
construction  projects from January 1997 to the present.  The amended  complaint
also alleges that the defendants  breached their fiduciary duties and are guilty
of gross financial mismanagement, including allegations concerning the making or
approval of certain loans and taking  allegedly  improper actions to conceal the
fact that certain loans were uncollectible. On September 18, 2000 the plaintiffs
filed a  second  amended  complaint.  The  second  amended  complaint  generally
reiterates  the  allegations  of the original and first amended  complaints.  In
addition,  the  second  amended  complaint  alleges  that  the  plaintiffs  were
improperly  denied  their  rights to  inspect  and copy  certain  records of the
Company and Community  Bank. The second amended  complaint also alleges that the
directors of the Company  abdicated  their roles as directors  either by express
agreement or as a result of wantonness and gross negligence.  The second amended
complaint asserts that the counts involving  inspection of corporate records and
director  abdication are individual,  non-derivative  claims. The second amended
complaint seeks, on behalf of the Company, an unspecified amount of compensatory
damages in excess of $1 million,  punitive  damages,  disgorgement  of allegedly
improperly paid profits and  appropriate  equitable  relief.  Upon motion of the
defendants,  the case was  transferred  to the  state  Circuit  Court in  Blount
County,  Alabama by order dated  September  21, 2000,  as amended on October 12,
2000.

On August  24,  2000,  the Board of  Directors  of the  Company  designated  the
directors  of the Company who serve on the joint  investigative  committee  as a
special  litigation  committee to investigate  and evaluate the  allegations and
issues  raised in this  lawsuit  and to arrive at such  decisions  and take such
action as the special litigation  committee deems appropriate.  On June 8, 2001,
the special litigation  committee filed its report under seal with the court. On
June 18, 2001, the court entered an order affirming the  confidentiality  of the
special  committee's  report. On June 28, 2001, the Company,  Community Bank and
various  other  defendants  filed a motion with the court to adopt the report of
the special  committee,  for partial summary judgment and to realign the Company
and Community Bank as plaintiffs in the lawsuit.

Following  a hearing on August  29,  2001,  the court  denied  these  motions on
November  8, 2001.  The court also ruled that the  plaintiffs  were  entitled to
conduct  discovery except as it related to one of the  subcontractor  defendants
and  granted  the  plaintiffs'  motion  to  unseal  the  report  of the  special
litigation committee. On November 14, 2001, the directors of the Company filed a
motion for the court to alter, amend, or vacate its November 8, 2001 rulings. On
February 7, 2002,  the Company and  Community  Bank filed a motion to disqualify
Maynard,  Cooper & Gale, P.C., the law firm representing the plaintiffs,  due to
conflicts of interest. The court held a hearing on these motions on February 22,
2002 and the  parties  are  awaiting a ruling.  A  tentative  settlement  of the
lawsuit was  announced in November,  2002,  but was not  finalized.  On or about
April  21,  2003  the  plaintiffs  filed  a  motion  to  enforce  the  tentative
settlement.  One of the  subcontractors  named as a  defendant  in this  action,
Morgan City Construction,  Inc., and its principals, Mr. and

                                       11
<PAGE>
         COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES-CONTINUED NOTES TO
                        CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

Mrs. Dewey Hamaker,  have been tried and convicted in the United States District
Court for the Northern District of Alabama.

Because of the inherent  uncertainties of the litigation process, the Company is
unable at this time to predict the outcome of this lawsuit and its effect on the
Company's financial condition and results of operations.

Packard Derivative Litigation

On April 4, 2003, a group composed of the same  plaintiffs as in the Benson case
filed another derivative action against Sheffield Electrical Contractors,  Inc.,
Steve Sheffield, Jay Bolden, Dudley,  Hopton-Jones,  Sims & Freeman, PLLP, Glynn
Debter,  Kennon R. Patterson,  Jr., Robert O. Summerford,  Jimmie Trotter,  John
Lewis, Jr., Merritt Robbins,  Stacy Mann, B. K. Walker, Jr., Denny Kelly, Roy B.
Jackson, Loy McGruder, and Hodge Patterson. The complaint in this new derivative
lawsuit,  besides  adding  defendants  known  during but not named in the Benson
lawsuit,  is based upon the same allegations as in the Benson case but bases its
claims against the  director-defendants  not "for what they did (and did not do)
before learning of the over billing [sic.] allegations against Patterson [Kennon
R.  Patterson,  Sr., the Company's  former  Chairman and CEO] in July 2000" but,
instead "only for what they have done (and failed to do) after the filing of the
Benson  lawsuit--  that  is,  after  they  learned  of the  allegations  against
Patterson in July 2000." [Emphasis in the original.] On May 8, 2003 the Company,
Community Bank and most of the individual  defendants filed a motion to transfer
the suit to the Circuit Court of Blount County, Alabama, or, in the alternative,
to dismiss the suit.

Because of the inherent  uncertainties of the litigation process, the Company is
unable at this time to predict the outcome of this lawsuit and its effect on the
Company's financial condition and results of operations.

Corr Family Litigation

On September 14, 2000,  Bryan A. Corr and six other  shareholders of the Company
related  to Mr.  Corr  filed an action in the  Circuit  Court of Blount  County,
Alabama, against the Company, Community Bank, and certain directors and officers
of the  Company  and  Community  Bank.  The  plaintiffs  have  alleged  that the
directors   of  the  Company   actively   participated   in  or   ratified   the
misappropriation of corporate income. The action was not styled as a shareholder
derivative action. On January 3, 2001, the defendants filed a motion for summary
judgment on the basis that these claims are  derivative  in nature and cannot be
brought  on behalf of  individual  shareholders.  The court has not ruled on the
motion.  Although management currently believes that this action will not have a
material  adverse  effect on the  Company's  financial  condition  or results of
operations,  regardless  of the  outcome,  the  action  could  be  costly,  time
consuming, and a diversion of management's attention.

                                       12
<PAGE>
         COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES-CONTINUED NOTES TO
                        CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

Lending Acts Litigation

On October 11, 2002,  William Alston,  Murphy Howard,  and Jason Tittle filed an
action against Community Bank, Community  Bancshares,  Inc.,  Holsombeck Motors,
Inc.,  Lee Brown d/b/a Alabama Bond &  Investigation  a/k/a ABI Recovery,  Chris
Holmes d/b/a Alabama Bond & Investigation a/k/a ABI Recovery, Regina Holsombeck,
Kennon "Ken" Patterson,  Sr., Hodge Patterson,  James Timothy "Tim" Hodge, Ernie
Stephens, and the State of Alabama Department of Revenue. The plaintiffs in this
class  action  allege  that  Community   Bank  and  others   conspired  or  used
extortionate methods to effect a lending scheme of "churning phantom loans", and
that profits from the scheme were used to secure an interest in and/or to invest
in an enterprise that affects  interstate  commerce.  The allegations state that
Community  Bank used various  methods to get  uneducated  customers with fair to
poor credit to sign numerous "phantom loans" when the customers only intended to
sign for one loan.  Claims include  racketeering  activity within the meaning of
the Racketeer  Influenced  and Corrupt  Organizations  Act of 1970,  conspiracy,
spoliation, conversion, negligence, wantonness, outrage, and civil conspiracy.

The  Company  and  Community  Bank  intend to defend the action  vigorously  and
currently are conducting discovery to ascertain what substance, if any, there is
to the claims.  Although management currently believes that this action will not
have a material adverse effect on the Company's  financial  condition or results
of  operations,  regardless  of the outcome,  the action  could be costly,  time
consuming, and a diversion of management's attention.

Patterson Litigation

On April 9, 2003 Kennon R. Patterson, Sr., former Chairman,  President and Chief
Executive  Officer of the Company,  filed an adversary  proceeding in the United
States  Bankruptcy Court for the Northern District of Alabama in connection with
his petition for  protection  under Chapter 11 of the United  States  Bankruptcy
Code.  Defendants of the adversary  proceeding are the Company,  Community Bank,
five  directors  of the Company and  Community  Bank and the law firm of Powell,
Goldstein,  Frazer and  Murphy,  LLP which  represents  Community  Bank's  Audit
Committee.  The  complaint  alleges  that the Company  breached  its  employment
agreement with Mr.  Patterson by terminating  his employment on January 27, 2003
and failed to pay him for compensation and benefits which had allegedly  accrued
prior to his  termination.  The  complaint  also  alleges that  Community  Bank,
members of Community Bank's Audit Committee,  the Audit Committee's  independent
counsel  and the  Company's  current  Chairman,  President  and Chief  Executive
Officer  conspired  to  interfere  with Mr.  Patterson's  contract  and business
relationship with the Company.  The suit seeks damages in excess of $150 million
for, among other things,  lost  compensation and benefits,  mental anguish,  and
damage to Mr. Patterson's reputation.  The Company believes that this lawsuit is
without  merit and intends to defend the action  vigorously.  On May 9, 2003 the
defendants  filed a motion to dismiss the suit.  Although  management  currently
believes  that  this  action  will not have a  material  adverse  effect  on the
Company's  financial  condition  or results  of  operations,  regardless  of the
outcome,  the  action  could  be  costly,  time  consuming  and a  diversion  of
management's attention.

Employee Litigation

On May 5, 2003 two former  executive  officers of the Company and Community Bank
filed separate suits in the Circuit Court of Blount County, Alabama, against the
Company,  Community Bank,  Kennon R.  Patterson,  Sr., former Chairman and Chief
Executive  Officer of the Company and Community Bank, and a number of fictitious
defendants.  Bishop K. Walker,  Jr., former Senior  Executive Vice President and
General  Counsel  of the  Company,  and  Denny G.  Kelly,  former  President  of
Community   Bank,   allege   that  they  were   induced   to  retire   based  on
misrepresentations  made by Kennon R.  Patterson,  Sr. who was allegedly  acting
within the scope of his duties as an agent of the  Company and  Community  Bank.
Plaintiffs  claim  that  these  actions  constituted  fraud,  promissory  fraud,
fraudulent  suppression,  fraud in the inducement,  deceit,  fraudulent  deceit,
negligence, recklessness,  wantonness and breach of contract. The complaints ask
for an  unspecified  amount  of  compensatory  and  punitive  damages.  Although

                                       13
<PAGE>
         COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES-CONTINUED NOTES TO
                        CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

management  currently believes that this action will not have a material adverse
effect on the Company's financial condition or results of operations, regardless
of the outcome,  the action could be costly,  time  consuming and a diversion of
management's attention.

General

The Company  and its  subsidiaries  are from time to time also  parties to other
legal  proceedings  arising  in the  ordinary  course  of  business.  Management
believes,  after consultation with legal counsel,  that no such proceedings,  if
resulting in an outcome unfavorable to the Company, will, individually or in the
aggregate,  have a material adverse effect on the Company's  financial condition
or results of operations.

The  Company's   Certificate   of   Incorporation   provides  that,  in  certain
circumstances,  the Company will indemnify and advance expenses to its directors
and officers for judgments,  settlements and legal expenses incurred as a result
of their  service as officers and  directors of the  Company.  Community  Bank's
Bylaws contain a similar provision for indemnification of directors and officers
of Community Bank.

NOTE 6 - DISCONTINUED OPERATIONS

During 2002, Community Bank consummated the sale of the following branches:  two
Pulaski,  Tennessee  locations on March 31,  2002,  two DeKalb  County,  Alabama
locations on May 3, 2002, and six Marshall County,  Alabama locations on May 31,
2002.   Income  and  expenses   related  to  these  locations  are  included  in
discontinued   operations  for  the  three  months  ended  March  31,  2002  for
comparative purposes.

NOTE 7 - INTANGIBLE ASSETS

In June 2001, the FASB issued  Statement No. 142,  Goodwill and Other Intangible
Assets.  The statement  requires that goodwill and other intangible  assets with
indefinite  useful  lives no longer be  amortized,  but  instead an entity  must
perform an  assessment  of whether  these  assets are impaired as of the date of
adoption  and test for  impairment  at least  annually  in  accordance  with the
provisions of the statement.  The statement also required that intangible assets
with determinable  lives be amortized.  The Company adopted Statement No. 142 on
January 1, 2002.

Acquired goodwill and other intangible assets at March 31, 2003, are detailed as
follows:

<TABLE>
<CAPTION>

                                                                                As of March 31, 2003
                                                                  -------------------------------------------------
                                                                       Gross                               Net
                                                                     Carrying        Accumulated        Carrying
                                                                      Amount        Amortization         Amount
                                                                  --------------   ---------------   --------------
<S>                                                               <C>              <C>               <C>
Identifiable amortizing assets.................................   $    2,173,861   $     1,273,133   $      900,728
Nonamortizing goodwill.........................................        2,851,372         1,058,565        1,792,807
                                                                  --------------   ---------------   --------------
Total acquired intangible asset................................   $    5,025,233   $     2,331,698   $    2,693,535
                                                                  ==============   ===============   ==============
</TABLE>

Aggregate  amortization expense for the period ended March 31, 2003 was $19,854.
Aggregate  amortization  expense of $79,417 is  estimated  for the years  ending
December 31, 2003 and 2004.

Note 8 - Recently Issued Accounting Standards

In January  2003,  the FASB issued FIN 46, which  clarifies the  application  of
Accounting Research Bulletin ("ARB") 51, Consolidated  Financial Statements,  to
certain entities (called variable  interest  entities) in which equity investors
do not have the  characteristics  of a controlling  financial interest or do not
have sufficient equity at risk for the entity to finance its

                                       14
<PAGE>
         COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES-CONTINUED NOTES TO
                        CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

activities without additional subordinated financial support from other parties.
The  disclosure  requirements  of  this  Interpretation  are  effective  for all
financial   statements   issued  after  January  31,  2003.  The   consolidation
requirements  apply to all variable  interest entities created after January 31,
2003. In addition, public companies must apply the consolidation requirements to
variable  interest entities that existed prior to February 1, 2003 and remain in
existence as of the beginning of annual or interim periods  beginning after June
15, 2003.  Management is currently  assessing the impact of FIN 46, and does not
expect  this  Interpretation  to  have a  material  impact  to the  Consolidated
Financial Statements.

On April 30, 2003,  the FASB issued SFAS No. 149,  Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. SFAS No. 149 amends and clarifies
financial accounting and reporting for derivative instruments, including certain
derivative  instruments  embedded in other contracts and for hedging  activities
under  SFAS  No.  133,   Accounting  for  Derivative   Instruments  and  Hedging
Activities.  The  provisions of SFAS No. 149 are  effective for fiscal  quarters
beginning  after June 15, 2003.  Management  does not believe the  provisions of
this standard will have a material impact on results of future operations.

                                       15
<PAGE>

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

This  discussion  is intended  to assist in an  understanding  of the  financial
condition and results of operations of Community Bancshares, Inc. (the "Company)
and its subsidiaries.  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 this Report 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, 2002.

Forward looking information

Certain  statements in this Report are  "forward-looking  statements" within the
meaning of Section 27A of the  Securities  Act of 1933, as amended,  and Section
21E of the Securities  Exchange Act of 1934, as amended.  These  forward-looking
statements  are not based on  historical  facts and may be  identified  by their
reference to a future period or by the use of forward-looking terminology,  such
as "anticipate," "estimate," "expect," "may" and "should." These forward-looking
statements include,  without limitation,  those relating to the Company's future
growth and profitability, economic prospects of market areas, dividends, pending
litigation, branch office divestitures, non-compliant or impaired loans, capital
requirements,  operating strategy,  deposits,  consumer base, allowance for loan
losses, non-performing assets, interest rate sensitivity, market risk and impact
of   inflation.   We  caution  you  not  to  place   undue   reliance  on  these
forward-looking  statements.  Actual results could differ  materially from those
indicated in such forward-looking  statements due to a variety of factors. These
factors  include,  but are not limited to,  changes in economic  conditions  and
government fiscal and monetary  policies,  changes in prevailing  interest rates
and effectiveness of the Company's interest rate strategies,  laws,  regulations
and regulatory  authorities  affecting  financial  institutions,  changes in and
effectiveness  of the Company's  operating or expansion  strategies,  geographic
concentration  of the Company's  assets and operations,  competition  from other
financial services companies,  unexpected financial results or outcomes of legal
proceedings,  and other risks detailed from time to time in the Company's  press
releases and filings with the Securities and Exchange  Commission.  We undertake
no obligation to update these  forward-looking  statements to reflect  events or
circumstances occurring after the date of this Report.

FINANCIAL CONDITION

March 31, 2003 compared to December 31, 2002

Summary

Total  assets at March 31, 2003 were  $566,243,000,  down from  $567,596,000  at
December 31, 2002.  Although total assets remained stable, the Company continued
to experience  declines in loans. As this occurred,  asset balances shifted from
loans to cash and due from banks.

Earning Assets

The earning assets of the Company are mainly composed of investment  securities,
federal funds sold and loans.  Investment  securities decreased  $1,134,000,  or
0.9%, to $122,767,000 at March 31, 2003 from  $123,901,000 at December 31, 2002.
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.  Short-term  investments  in the form of  interest-bearing
deposits  with banks were  $260,000  at March 31,  2003  compared to $200,000 at
December 31, 2002.  The Company had  $21,365,000  in federal funds sold at March
31, 2003, compared to $24,030,000 at December 31, 2002,  representing a decrease
of $2,665,000, or 11.1%.

Cash and due from banks increased  $17,145,000 during the first quarter of 2003.
Earnings   credit  rates  are  applied  to  balances   held  in  the   Company's
correspondent bank accounts held with other banks. The Company is given a credit
based on its  balance  and the credit is used to offset  service  charges to the
Company. These earnings credit rates are currently higher than the federal funds
sold rates. The Company increased its balances in its main correspondent account
during 2003 to take  advantage of the better rate;  therefore,  earning a larger
credit against

                                       16
<PAGE>

service  charges it would have paid than the interest  income it otherwise would
have received had the funds been in federal funds sold.

Loans  comprise the largest  single  category of the Company's  earning  assets.
Loans,  net of  unearned  income,  were  $346,639,000  at March  31,  2003  down
$12,545,000,  or 3.5%,  from  $359,184,000  at December  31,  2002.  The Company
continues to experience a decline in total loans because of economic  downturns,
the tightening of the Company's credit standards,  and increased  charge-offs of
loans made in previous years.

Nonperforming Assets and Past Due Loans

Between  December 31, 2002 and March 31, 2003,  the ratio of the  allowance  for
loan losses to total  nonperforming  assets (defined as nonaccruing loans, loans
past due 90 days or greater,  restructured loans,  nonaccruing  securities,  and
other real estate)  declined from 43.95% at year-end 2002 to 34.98% at March 31,
2003. The ratio of total nonperforming assets to total assets increased to 5.11%
at March 31, 2003 from 3.92% at year-end 2002,  while the ratio of nonperforming
loans to total loans,  net of unearned  income,  increased to 5.90% at March 31,
2003 from 4.06% at December 31, 2002.  These  changes were  primarily  due to an
increase in  nonaccruing  loans of $7,552,000 or 74.8%,  to $17,651,000 at March
31, 2003 from  $10,099,000  at  December  31, 2002 and an increase in other real
estate of $827,000, or 10.8%, to $8,503,000 at March 31, 2003 from $7,676,000 at
December 31, 2002.  These increases were partially  offset by a decline in loans
past due 90 days or more of  $885,000,  or 71.3%,  to $356,000 at March 31, 2003
from  $1,241,000  at December 31, 2002.  Total  nonperforming  assets  increased
$6,683,000,  or 30.0%,  to  $28,943,000  at March 31, 2003 from  $22,260,000  at
December 31, 2002. The significant  increase in nonaccrual  loans was mostly due
to a  $5,150,000  real estate loan to the  Company's  former  Chairman and Chief
Executive  Officer who filed  bankruptcy  in January,  2003. It is the Company's
policy to place loans on nonaccrual status when a borrower files bankruptcy.

Funding

The Company's primary sources of funding are from deposits from the customers of
Community  Bank  and from  other  short-term  and  long-term  borrowings.  Total
deposits of  $461,744,000 at March 31, 2003 reflected an increase of $2,280,000,
or 0.5%,  from  $459,464,000  at year-end  2002.  Deposits are Community  Bank's
primary source of funds.  Noninterest-bearing  deposits increased $3,946,000, or
7.5%, to  $56,867,000  at March 31, 2003 from  $52,921,000 at December 31, 2002,
while interest-bearing  deposits decreased $1,666,000,  or 0.4%, to $404,877,000
at March 31,  2003 from  $406,543,000  at December  31,  2002.  Certificates  of
deposit of $100,000 or more increased  $13,985,000,  or 19.8%, to $84,612,000 at
March 31, 2003 from $70,627,000 at December 31, 2002.

Total short-term borrowings decreased $1,523,000, or 88.3%, to $202,000 at March
31, 2003 from  $1,725,000  at December 31, 2002.  FHLB  long-term  debt remained
constant  at  $38,000,000  for both March 31, 2003 and  December  31, 2002 while
other  long-term  debt decreased  $101,000,  or 2.8%, to $3,477,000 at March 31,
2003 from $3,578,000 at December 31, 2002.

In March 2000,  the Company formed a wholly-owned  Delaware  statutory  business
trust, Community (AL) Capital Trust I (the "Trust"), which issued $10,000,000 of
guaranteed preferred securities  representing  undivided beneficial interests in
the assets of the Trust ("Capital Securities").  All of the common securities of
the  Trust are owned by the  Company.  The  proceeds  from the  issuance  of the
Capital Securities  ($10,000,000) and common securities  ($310,000) were used by
the Trust to purchase  $10,310,000 of junior  subordinated  deferrable  interest
debentures of the Company which carry an annual interest rate of 10.875%.  Under
the terms of the indenture,  the Company may elect to defer payments of interest
for up to ten semiannual  payment periods.  The Company has elected to defer its
March 2002,  September 2002 and March 2003 interest payments and may elect to do
so again based on the liquidity needs of the Company when future payments become
due. For the duration of such deferral  period,  the Company is restricted  from
paying dividends to shareholders or paying debt that is junior to the debenture.
The debentures represent the sole asset of the Trust. The debentures and related
income statement effects are eliminated in the Company's  consolidated financial
statements. The Company is entitled to treat the aggregate liquidation amount of
the debentures as Tier I capital under Federal Reserve guidelines.

                                       18

<PAGE>

The Capital  Securities accrue and pay  distributions  semiannually at a rate of
10.875%  per  annum of the  stated  liquidation  value  of  $1,000  per  capital
security.   The  Company  has  entered  into  an   agreement   which  fully  and
unconditionally  guarantees  payment of: (i)  accrued  and unpaid  distributions
required to be paid on the Capital  Securities;  (ii) the redemption  price with
respect to any Capital  Securities called for redemption by the Trust; and (iii)
payments  due  upon  a  voluntary  or  involuntary  liquidation,  winding  up or
termination of the Trust.

The Capital  Securities  are  mandatorily  redeemable  upon the  maturity of the
debentures  on March 8, 2030,  or upon  earlier  redemption  as  provided in the
indenture  pursuant to which the  debentures  were  issued.  The Company has the
right to redeem the debentures  purchased by the Trust: (i) in whole or in part,
on or after  March  8,  2010;  and  (ii) in whole  (but not in part) at any time
within 90 days  following the occurrence  and during the  continuation  of a tax
event,  capital treatment event or investment  company event (each as defined in
the  indenture).  As specified in the indenture,  if the debentures are redeemed
prior to maturity,  the  redemption  price will be a percentage of the principal
amount, ranging from 105.438% in 2010 to 100.00% in and after 2020, plus accrued
but unpaid interest.

Liquidity

The  following  is a  discussion  of cash  flows.  The  Company  experienced  an
approximate  $14,540,000  increase in cash and cash equivalents during the first
three months of 2003.  Cash  provided by operating  activities  was  $2,868,000.
Investing  activities  provided  an increase  of  $11,036,000,  mostly from loan
payments from customers. Financing activities provided $636,000 of cash and cash
equivalents for the first quarter of 2003.  Certificates  of deposits  decreased
$4,969,000,  but was more than  offset by  increases  in cash from the growth of
demand deposits, NOW deposits, and other savings deposits totaling $7,248,000.

Dividends paid by Community  Bank are the primary  source of funds  available to
the Company. The Company relies on dividends from Community Bank in order to pay
expenses,  service debt and pay dividends to shareholders.  Certain restrictions
exist  regarding the ability of Community  Bank to transfer funds to the Company
in the  form of cash  dividends,  loans or  advances.  Although  dividends  from
Community Bank are the primary source of funding, the Company also receives cash
from its subsidiaries for its portion of tax benefit on intercompany  income tax
settlements.  Community Bank discontinued paying the Company a management fee in
2003. The Company's primary cash outflow is now debt service.  Community Bank is
unable to pay a dividend to the Company without prior approval of the regulatory
authorities.  The  Company  could  become  unable to  service  its debt  without
dividends from Community Bank.

Capital Resources

Total  shareholders'  equity  at March  31,  2003 was  6.91% of total  assets as
compared to 7.10% at December 31,  2002.  The  decrease  experienced  during the
first three months of 2003 is primarily a result of net losses of $549,000.

Bank regulatory  authorities have issued risk-based capital guidelines that take
into  consideration  risk factors  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
includes common stock,  retained  earnings and guaranteed  preferred  beneficial
interest in the Company's junior  subordinate  deferrable  interest  debentures,
amounted to $46,313,000  at March 31, 2003,  compared to $46,817,000 at December
31, 2002. 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  are  referred  to as total
risk-based  capital,  which was  $50,828,000  at March 31,  2003 as  compared to
$52,897,000 at year-end 2002. The  percentage  ratios,  as calculated  under the
guidelines,  for tier I and total  risk-based  capital  were  13.03% and 14.29%,
respectively, at March 31, 2003, compared to 12.95% and 14.63%, respectively, at
year-end 2002. At March 31, 2003,  both tier I and total  risk-based  capital of
the Company exceeded the regulatory minimum ratios of 4% and 8%, respectively.

                                       18

<PAGE>

Another  important  indicator of capital adequacy in the banking industry is the
leverage  ratio.  The tier I  leverage  ratio is  defined  as the ratio that the
Company's  tier I capital  bears to total  average  assets minus  goodwill.  The
Company's  tier I leverage  ratios  were  8.25% and 8.20% at March 31,  2003 and
December 31, 2002, respectively, exceeding the regulatory minimum requirement of
4%.

RESULTS OF OPERATIONS

Three months ended March 31, 2002 and 2001

Summary

The Company's net loss for the three months ended March 31, 2003 was $549,000, a
decrease  of  $1,782,000  from net income of  $1,233,000  for the same period in
2002.  Both basic and diluted net loss per share was $0.12 for the three  months
ended March 31, 2003,  as compared to net income per share of $0.27 for the same
period in 2002.

The following discussion is on results of operations from continuing  operations
of the  Company.  Refer  to  Note  6 of  the  Notes  to  Consolidated  Financial
Statements for a description of the presentation for discontinued operations.

Net Interest Income

Net interest  income,  the difference  between interest earned on assets and the
cost of interest-bearing  liabilities, was $5,077,000 for the three months ended
March 31, 2003. Net interest income, before provision for loan losses, decreased
$988,000,  or 16.3%, from $6,065,000 for the same period of 2002.  Revenues from
interest  earning  assets of the  Company  decreased  $1,752,000,  or 16.4%,  to
$8,914,000  for the three months ended March 31, 2003 from  $10,666,000  for the
same  period in 2002.  This  decrease  was due to lower  yields on and volume of
interest  earning assets.  Average earning assets  outstanding  during the first
quarter of 2003 were  $503,928,000,  which represents a decrease of $37,849,000,
or 7.0%, from $541,777,000 for the first quarter of 2002. The Company's yield on
its average  earning  assets  decreased  81 basis  points to 7.17% for the first
three  months  of 2003,  compared  to 7.98% for the same  period  of 2002.  This
decrease  is somewhat  reflective  of the  overall  decrease  in interest  rates
experienced  during the year 2002.  Interest  expense for the three months ended
March 31, 2003 decreased  $765,000,  or 16.6%, to $3,837,000 from $4,602,000 for
the  corresponding  period of 2002.  This decrease  occurred due to a decline in
rates   paid   on  and   volume   of   interest-bearing   liabilities.   Average
interest-bearing liabilities during the first quarter of 2003 were $460,854,000,
which  represents a decrease of $7,938,000,  or 1.7%, from  $468,792,000 for the
same  period of 2002.  The rate  paid on  average  interest-bearing  liabilities
decreased  60 basis  points to 3.38% for the three month  period ended March 31,
2003,  compared to 3.98% for the first three  months of 2002.  This  decrease is
also attributable to the overall decline in interest rates during the year 2002.

The  Company's  net  interest  margin for the three  months ended March 31, 2003
decreased 45 basis points to 4.09%,  from 4.54% for the three months ended March
31, 2002,  due to the decrease in net interest  income.  Net interest  margin is
computed by dividing net interest  income by average  interest  earning  assets.
This ratio  represents  the  difference  between the average  yield  returned on
average  interest  earning  assets  and the  average  rate paid on funds used to
support those  interest  earning  assets,  including both  interest-bearing  and
noninterest-bearing sources.

The  Company's  net  interest  spread for the three  months ended March 31, 2003
decreased 21 basis points to 3.79%,  from 4.00% for the three months ended March
31, 2002, as the average cost of interest-bearing  sources of funds decreased 60
basis points while the average  yield on interest  earning  assets  decreased 81
basis points.  Net interest spread  measures the difference  between the average
yield on interest  earning assets and the average rate paid on  interest-bearing
sources of funds.

                                       19

<PAGE>

Provision for Loan Losses and Allowance for Loan Losses

At  March  31,  2003,  the  allowance  for loan  losses  was  $10,123,000  which
represented an increase of $339,000,  or 3.5%, from the December 31, 2002 amount
of $9,784,000. The provision for loan losses was $1,289,000 and $944,000 for the
three months ended March 31, 2003 and 2002, respectively.  The increase resulted
from  management's  decision to make  provisions  for current losses in the loan
portfolio as it continues  its effort to improve the overall  credit  quality of
the Company.  In this effort,  management  has  increased the allowance for loan
losses account as a percent of loans to reserve for potential losses in the loan
portfolio by  recognizing  additional  provisions  for loan loss  expense.  As a
percentage of total loans, net of unearned income, the allowance for loan losses
increased  to 2.92% at March 31,  2003,  compared to 2.72% at December 31, 2002.
Loan charge-offs  exceeded  recoveries by $950,000 during the first three months
of 2003, which  represented an increase of $96,000,  or 11.2%, from $854,000 for
the same period  during 2002.  Management  believes  that the allowance for loan
losses at March 31, 2003 is adequate;  however,  no assurance  can be given that
additional  losses may not occur or that additional  provisions to the allowance
for loan losses will not be necessary.

Noninterest Income

Noninterest income for the three months ended March 31, 2003 increased $474,000,
or 27.7%, to $2,184,000,  from  $1,710,000 for the same period of 2002.  Service
charges on deposit accounts  decreased  $151,000,  or 19.8%, to $611,000 for the
first  quarter  of 2003  from  $762,000  in the  first  quarter  of  2002.  Debt
cancellation fees decreased during the first quarter of 2003, as compared to the
first  quarter  of 2002,  $30,000,  or 50.0%,  due to  decreased  volume in debt
cancellation  coverage  associated  with  the  decline  in  the  Company's  loan
portfolio.  Other  operating  income  remained  stable at $226,000.  The Company
recorded net gains on the sale of investment  securities of $648,000  during the
three  months  ended  March  31,  2003,  compared  to net  gains  on the sale of
investment securities of $17,000 for the same period of 2002. The net securities
gains were the primary reason for the increase in noninterest  income,  although
the  Company  also   experienced  a  4.4%,  or  $24,000  increase  in  insurance
commissions  attributable to increased  revenues from the Company's  subsidiary,
Community Insurance Corp.

Noninterest Expenses

Noninterest  expenses for the three months ended March 31, 2003 were $7,009,000,
representing a $277,000,  or 4.1%,  increase from $6,732,000 for the same period
of 2002.  The primary  components  of  noninterest  expenses  are  salaries  and
employee  benefits,  which  decreased  $145,000,  or 4.2%, to $3,329,000 for the
three months ended March 31, 2003 from  $3,474,000  for the same period of 2002.
Occupancy costs decreased  $2,000, or 0.3%, to $589,000 for the first quarter of
2003 from $591,000 for the same period of 2002. Furniture and equipment expenses
for the three month periods ended March 31, 2003 decreased $39,000,  or 9.6%, to
$367,000 from $406,000 for the same period of 2002.  Director and committee fees
increased  $25,000,  or 25.8%,  to $122,000  for the first  quarter of 2003 from
$97,000 for the first quarter of 2002.  This increase is the result of increased
Board  meetings due to the many changes the Company has  experienced  during the
first quarter of 2003.  Other operating  expenses were $2,349,000 and $1,769,000
for the three month  periods ended March 31, 2003 and 2002,  respectively.  This
increase  of  $580,000,  or 32.8%,  was  primarily  due to  increased  expenses,
especially legal fees,  related to the continued  litigation against the Company
and even  more so  related  to the  agreement  with the  Alabama  State  Banking
Department  and  the  investigation   into  payments  made  in  connection  with
construction projects of the Bank.

Income Taxes

The Company attempts to maximize its net income through active tax planning. Tax
benefits were  $487,000 for the three month period ended March 31,2003  compared
to tax expense of $614,000 for the same period in 2002.

                                       20
<PAGE>

Item 3 - Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Sensitivity

Community  Bank's  net  interest  income,  and the fair  value of its  financial
instruments, are influenced by changes in the level of interest rates. Community
Bank manages its exposure to  fluctuations  in interest  rates through  policies
established  by  its  Asset/Liability   Committee   ("ALCO").   The  ALCO  meets
periodically to monitor its interest rate risk exposure and implement strategies
that might improve its balance sheet  positioning  and/or  earnings.  Management
utilizes an Interest Rate  Simulation  model to estimate the  sensitivity of the
Bank's net  interest  income and net income to changes in interest  rates.  Such
estimates are based upon a number of assumptions  for each  scenario,  including
balance sheet growth, deposit repricing characteristics and prepayment rates.

The estimated impact on Community Bank's net interest income  sensitivity over a
one year time horizon at March 31, 2003 is shown below. Such analysis assumes an
immediate and  nonparallel  shift in interest rates and the Bank's  estimates of
how interest-bearing transaction accounts will reprice.

                               RATE SHOCK ANALYSIS
<TABLE>
<CAPTION>

                                                                          -100                          +100
                                                                          Basis                         Basis
                                                                         Points           Level        Points
                                                                                 (Dollars in thousands)
<S>                                                                        <C>            <C>            <C>
Prime Rate....................................................              3.25%          4.25%          5.25%

Interest Income...............................................       $    32,868    $    34,501    $    35,883
Interest Expense..............................................            11,698         12,674         13,969
                                                                     -----------    -----------    -----------
     Net Interest Income......................................       $    21,170    $    21,827    $    21,914
                                                                     ===========    ===========    ===========

Dollar change from Level......................................       $      (657)                  $        87

Percentage change from Level..................................             (3.01)%                        0.40%
</TABLE>

As shown above, in a 100 basis point rising rate  environment,  the net interest
margin is  projected  to increase  0.40% and in a 100 basis point  falling  rate
environment,  the net  interest  margin is projected  to decrease  3.01%.  These
percent  changes from a level rate scenario fall  comfortably  within  Community
Bank's ALCO policy limit of +/-7.00%.

                                       21

<PAGE>

Item 4 - Controls and Procedures

(a)  Evaluation of disclosure controls and procedures.

     The Company has evaluated the effectiveness of its disclosure  controls and
     procedures  pursuant to Securities Exchange Act Rule 13a-14. The evaluation
     was  performed  under  the  supervision  and  with  the   participation  of
     management,  including the chief executive  officer and the chief financial
     officer,  within 90 days  prior to the date of the  filing  of this  annual
     report.  Based on this  evaluation,  the chief executive  officer and chief
     financial   officer  have  concluded  that  the  disclosure   controls  and
     procedures are effective in ensuring that all material information required
     to be disclosed in this annual  report has been  communicated  to them in a
     manner appropriate to allow timely decisions regarding required disclosure.

(b)  Changes in internal controls.

     Subsequent  to the  date of their  evaluation,  there  were no  significant
     changes in internal  controls  or other  factors  that could  significantly
     affect internal  controls,  including any corrective actions with regard to
     significant deficiencies and material weaknesses.

                                       22
<PAGE>

                            PART II OTHER INFORMATION

Item 1 - Legal Proceedings

On or about April 21, 2003 the  plaintiffs in the lawsuit styled Benson et al v.
Community  Bancshares,  Inc.  et al.  filed a motion to  enforce  the  tentative
settlement announced in November, 2002.

On May 5, 2003 two former  executive  officers of the Company and Community Bank
filed separate suits in the Circuit Court of Blount County, Alabama, against the
Company,  Community Bank,  Kennon R.  Patterson,  Sr., former Chairman and Chief
Executive  Officer of the Company and Community Bank, and a number of fictitious
defendants.  Bishop K. Walker,  Jr., former Senior  Executive Vice President and
General  Counsel  of the  Company,  and  Denny G.  Kelly,  former  President  of
Community   Bank,   allege   that  they  were   induced   to  retire   based  on
misrepresentations  made by Kennon R.  Patterson,  Sr. who was allegedly  acting
within the scope of his duties as an agent of the  Company and  Community  Bank.
Plaintiffs  claim  that  these  actions  constituted  fraud,  promissory  fraud,
fraudulent  suppression,  fraud in the inducement,  deceit,  fraudulent  deceit,
negligence, recklessness,  wantonness and breach of contract. The complaints ask
for an  unspecified  amount  of  compensatory  and  punitive  damages.  Although
management  currently believes that this action will not have a material adverse
effect on the Company's financial condition or results of operations, regardless
of the outcome,  the action could be costly,  time  consuming and a diversion of
management's attention.

On May 8, 2003 the Company, Community Bank and most of the individual defendants
filed a motion to  transfer  the  lawsuit  styled  Packard  et al. v.  Sheffield
Electrical Contractors,  Inc. et al. from the Circuit Court of Jefferson County,
Alabama, to the Circuit Court of Blount County, Alabama, or, in the alternative,
to dismiss the suit.

On May 9, 2003 the  defendants  in the lawsuit  styled  Patterson  v.  Community
Bancshares, Inc. et al. filed a motion to dismiss the suit.

Except as noted  above,  no  reportable  events or  material  developments  have
occurred since the filing of the Company's Annual Report on Form 10-K (the "Form
10-K"),  for the year ended  December 31, 2002 and filed on April 15,  2003.  In
connection  with the  settlement  of the  lawsuit  brought by Michael  Alred and
Michael  Bean against  Community  Bank,  as disclosed in the Form 10-K,  Messrs.
Alred and Bean were  dismissed as  defendants  in the lawsuit  styled  Community
Bancshares, Inc. et al. v. Corr et al.

Item 6 - Exhibits and Reports on Form 8-K

(a)  Exhibits

11   Statement of computation of per share earnings

99.1 Chief Executive Officer - Certification pursuant to 18 U.S.C. Section 1350,
     as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

99.2 Chief Financial Officer - Certification pursuant to 18 U.S.C. Section 1350,
     as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b)  Reports on Form 8-K

     January 27, 2003 - Disclosure of Patrick Frawley replacing Kennon Patterson
     as Chairman, CEO and President of Community Bancshares.

     January 23, 2003 -  Disclosure  of Kennon R.  Patterson,  Sr.'s  filing for
     protection under Chapter 11 of the U.S. Bankruptcy code.

                                       23
<PAGE>

     February 8, 2003 - Disclosure  of removal of Kennon R.  Patterson,  Sr. and
     Kennon R.  Patterson,  Jr. from the  Community  Bank Board of Directors and
     appointment of Stacey Mann as Acting President of Community Bank.

     March 4, 2003 - Disclosure of the  stipulation  and consent to the issuance
     of an  order  to cease  and  desist  with  the  Federal  Deposit  Insurance
     Corporation.

                                       24
<PAGE>

                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf  by  the  undersigned,   hereunto  duly   authorized,   in  the  city  of
Blountsville, State of Alabama, on May 15, 2003.


                                                      COMMUNITY BANCSHARES, INC.

                             By:  /s/ Patrick M. Frawley
                                ------------------------------------------------
                                Patrick M. Frawley
                                Chairman, Chief Executive Officer, and President

                             By:  /s/ Kerri C. Kinney
                                ------------------------------------------------
                                Kerri C. Kinney
                                Chief Financial Officer

                                       25
<PAGE>


CERTIFICATIONS
--------------

I, Patrick M. Frawley, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Community Bancshares,
     Inc.;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

     b)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     c)   presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent function):

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal  controls;  and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officers and I have indicated in this
     quarterly  report  whether  there  were  significant  changes  in  internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

By:   /s/ Patrick M. Frawley
   -----------------------------------------
   Patrick M. Frawley
   Chairman, Chief Executive Officer and
   President


May 15, 2003

                                       26
<PAGE>

CERTIFICATIONS
--------------

I, Kerri C. Kinney, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Community Bancshares,
     Inc.;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

     b)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     c)   presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent function):

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officers and I have indicated in this
     quarterly  report  whether  there  were  significant  changes  in  internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

By:  /s/ Kerri C. Kinney
   -----------------------------------------
   Kerri C. Kinney
   Chief Financial Officer


May 15, 2003

<PAGE>

Exhibit 11 - Statements Re:  Computation of Per Share Earnings

                           Community Bancshares, Inc.
                Computation of Net Income (Loss) per Common Share

The following tabulation presents the calculation of basic and fully diluted
earnings per common share for the three months ended March 31, 2003 and 2002.

<TABLE>
<CAPTION>

                                                                                 For the Three Months Ended March 31,
                                                                                 ----------------------------------
                                                                                      2003               2002
                                                                                 ---------------   ----------------
<S>                                                                              <C>               <C>
Reported income (loss) from continuing operations.............................   $      (549,109)  $         13,999
                                                                                 ===============   ================
Reported income from discontinued operations..................................   $             -   $      1,218,514
                                                                                 ===============   ================
Earnings (losses) on common shares............................................   $      (549,109)  $      1,232,513
                                                                                 ===============   ================


Weighted average common shares outstanding - basic............................         4,640,527          4,625,949
                                                                                 ===============   ================

Earnings per common share - basic
   Income (loss) from continuing operations...................................   $         (0.12)  $           0.01
                                                                                 ===============   ================
   Income from discontinued operations........................................   $             -   $           0.26
                                                                                 ===============   ================
   Net income (loss)..........................................................   $         (0.12)  $           0.27
                                                                                 ===============   ================


Weighted average common shares outstanding - diluted..........................         4,640,527          4,625,949
                                                                                 ===============   ================

Earnings per common share - diluted
   Income (loss) from continuing operations...................................   $         (0.12)  $           0.01
                                                                                 ===============   ================
   Income from discontinued operations........................................   $             -   $           0.26
                                                                                 ===============   ================
   Net income (loss)..........................................................   $         (0.12)  $           0.27
                                                                                 ===============   ================

</TABLE>

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                                       28
<PAGE>

Exhibit  99.1
                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with Community  Bancshares,  Inc. ("Company")  Quarterly Report on
Form  10-Q  for  the  period  ended  March  31,  2003  ("Report"),  each  of the
undersigned certify that:

     1.   The Report fully  complies with the  requirements  of Section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     2.   The  information  contained  in the  Report  fairly  presents,  in all
          material respects,  the financial  condition and results of operations
          of the Company.


Date: May 15, 2003            By: /s/ Patrick M. Frawley
     -------------               -----------------------------------------------
                                 Patrick M. Frawley
                                 Chairman, Chief Executive Officer and President


                                       29
<PAGE>

Exhibit  99.2
                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with Community Bancshares, Inc. ("Company") Quarterly Report on
Form 10-Q for the period ended March 31, 2003 ("Report"), each of the
undersigned certify that:

     1.   The Report fully  complies with the  requirements  of Section 13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     2.   The  information  contained  in the  Report  fairly  presents,  in all
          material respects,  the financial  condition and results of operations
          of the Company.


Date: May 15, 2003            By: /s/ Kerri C. Kinney
     -------------               -----------------------------------------------
                                 Kerri C. Kinney
                                 Chief Financial Officer


                                       30