SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   Form 10-Q/A

|X|  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 For the quarterly period ended March 31, 2002

                                       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


                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                    PROCEEDINGS DURING THE PRECEDING 5 YEARS:

     Indicate by check mark whether the  registrant  has filed all documents and
reports  required  to be filed by  Sections  12,  13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court.

                                  |_|yes |_|no


                      APPLICABLE ONLY TO CORPORATE ISSUERS:

     As of May 8, 2002, there were 4,637,855  shares of the registrant's  common
stock, $.10 par value shares, outstanding.

<PAGE>

                                   FORM 10-Q/A
                           COMMUNITY BANCSHARES, INC.
                                 MARCH 31, 2002

<TABLE>
<CAPTION>

Table of Contents                                                                                     Page No.


Part 1 - Financial Information

      Item 1 -    Consolidated Statements Financial Statements (Unaudited)

                  Consolidated Statements of Financial Condition as of
<S>                         <C> <C>               <C> <C>                                                 <C>
                      March 31, 2002 and December 31, 2001....................................           3

                  Consolidated Statements of Income for the Three Months Ended
                      March 31, 2002 and 2001.................................................          4-5

                  Consolidated Statements of Comprehensive Income for the Three Months Ended
                      March 31, 2002 and 2001.................................................           6

                  Consolidated Statements of Cash Flows for the Three Months Ended
                      March 31, 2002 and 2001.................................................          7-8

                  Notes to Consolidated Financial Statements..................................          9-16

      Item 2 -    Management's Discussion and Analysis of
                      Financial Condition and Results of Operations...........................         17-22

      Item 3 -    Quantitative and Qualitative Disclosures About Market Risk..................           23

      Item 4 -    Controls and Proceedures....................................................           24

Part 2 - Other Information

      Item 1 -    Legal Proceedings                                                                      25

      Item 6 -    Exhibits and Reports on Form 8-K                                                       25

Signatures

Certification of Periodic Financial Reports

</TABLE>

<PAGE>

PART 1
Item 1 - Financial Statements

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

                                                                            March 31, 2002       December 31, 2001
                                                                          -----------------      -----------------
Assets
<S>                                                                        <C>                   <C>
   Cash  ................................................................  $      6,619,405      $      8,312,263
   Due from banks .......................................................        11,098,037            14,724,745
   Interest-bearing deposits with banks. ................................           200,000               200,000
   Federal funds sold ...................................................        45,395,000            30,000,000
   Securities available for sale ........................................       111,383,948           121,679,303
   Loans ................................................................       465,532,536           501,583,650
   Less: Unearned income. ...............................................            57,627                63,991
      Allowance for loan losses .........................................         7,201,046             7,292,370
                                                                                -----------           -----------
      Net Loans .........................................................       458,273,863           494,227,289
   Premises and equipment, net ..........................................        37,192,064            39,626,868
   Accrued interest. ....................................................         5,730,234             7,061,043
   Intangibles, net. ....................................................         2,608,855             2,629,682
   Other real estate ....................................................         4,446,638             4,287,273
   Other assets .........................................................         7,672,507             6,751,759
                                                                                -----------           -----------
      Total Assets.......................................................  $    690,620,551      $    729,500,225
                                                                                ===========           ===========

Liabilities and Shareholders' Equity
   Deposits:
      Noninterest-bearing................................................  $     68,880,565      $     67,695,615
      Interest-bearing...................................................       508,756,203           550,010,415
                                                                                -----------           -----------
         Total Deposits .................................................       577,636,768           617,706,030
   Other short-term borrowings ..........................................         4,835,216             4,359,927
   Accrued interest. ....................................................         4,471,008             4,400,000
   FHLB borrowing .......................................................        38,000,000            38,000,000
   Capitalized lease obligations ........................................         5,735,087             5,766,076
   Long-term debt .......................................................         4,396,052             4,666,599
   Guaranteed preferred beneficial interest in the
      Company's junior subordinated deferrable interest debentures ......        10,000,000            10,000,000
   Other liabilities ....................................................         4,139,526             4,297,542
                                                                                -----------           -----------
      Total Liabilities .................................................       649,213,657           689,196,174
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, 4,826,601 and 4,808,331 shares
      issued, as of March 31, 2002 and December 31 2001, respectively. ..           482,660               480,833
   Capital surplus ......................................................        30,933,881            30,753,008
   Retained earnings ....................................................        13,261,495            12,028,982
   Treasury Stock, 20,803 shares ........................................          (396,768)             (396,768)
   Unearned ESOP shares - 167,943 and 174,267 shares
      as of March 31, 2002 and December 31, 2001, respectively ..........        (2,254,662)           (2,317,902)
   Accumulated other comprehensive loss..................................          (619,712)             (244,102)
                                                                                -----------           -----------
      Total Shareholders' Equity ........................................        41,406,894            40,304,051
                                                                                -----------           -----------
Total Liabilities and Shareholders' Equity...............................  $    690,620,551      $    729,500,225
                                                                                ===========           ===========
</TABLE>


                 See notes to consolidated financial statements

                                       3
<PAGE>

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


                                                                             For the Three Months Ended March 31,
                                                                             ------------------------------------
                                                                                    2002                 2001
                                                                                -------------        ------------
Interest Income
<S>                                                                         <C>                  <C>
   Interest and fees on loans............................................   $     10,461,514     $    12,741,059
   Interest on investment securities:
      Taxable securities.................................................          1,550,545           1,344,085
      Securities exempt from federal income taxes .......................            145,088             199,809
   Interest on federal funds sold .......................................            143,083             127,021
   Interest on deposits in other banks ..................................              6,994              17,315
                                                                                -------------        ------------
      Total Interest Income .............................................         12,307,224          14,429,289
Interest Expense
   Interest on deposits .................................................          4,585,524           7,250,361
   Interest on other short-term borrowings ..............................             18,897              36,691
   Interest on capitalized lease obligations. ...........................             68,698             569,609
   FHLB borrowings ......................................................            563,350             122,499
   Interest on long-term debt. ..........................................             53,898             116,208
   Interest on guaranteed preferred
      beneficial interest in the
      Company's junior subordinated
      deferrable interest debentures ....................................            280,303             271,875
                                                                                -------------        ------------
         Total Interest Expense. ........................................          5,570,670           8,367,243
                                                                                -------------        ------------
Net Interest Income. ....................................................          6,736,554           6,062,046
   Provision for loan losses ............................................          1,042,252             974,737
                                                                                -------------        ------------
Net Interest Income After Provision
   For Loan Losses ......................................................          5,694,302           5,087,309
Noninterest Income
   Service charges on deposits ..........................................            930,280             965,550
   Insurance commissions. ...............................................            539,605             540,021
   Bank club dues .......................................................            135,223             150,505
   Debt cancellation fees ...............................................             69,043             141,594
   Other operating income ...............................................            216,737             432,779
   Investment securities gains ..........................................             16,646             353,015
                                                                                -------------        ------------
      Total Noninterest Income...........................................          1,907,534           2,583,464
                                                                                -------------        ------------
Noninterest Expenses
   Salaries and employee benefits .......................................          3,845,927           3,968,904
   Occupancy expense ....................................................            725,178             679,986
   Furniture and equipment expense. .....................................            445,184             430,601
   Director and committee fees ..........................................            103,250             114,348
   Loss on disposal of assets............................................            395,575              13,195
   Other operating expenses .............................................          1,872,152           1,461,559
                                                                                -------------        ------------
      Total Noninterest Expenses ........................................          7,387,266           6,668,593
                                                                                -------------        ------------
Income (loss) from continuing operations before income taxes ............            214,570           1,002,180
Income tax expense (benefit).............................................            119,605             290,885
                                                                                -------------        ------------
      Income (Loss) from continuing operations...........................   $         94,965     $       711,295
                                                                                =============        ============
</TABLE>



                 See notes to consolidated financial statements

                                       4
<PAGE>

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


                                                                              For the Three Months Ended March 30,
                                                                              ------------------------------------
                                                                                    2002                 2001
                                                                                -------------        ------------
Discontinued Operations (Note - 2)
   Income from operations of divested branches
<S>                                 <C>                                            <C>                   <C>
      (includes gain on disposal of $1,551,443)..........................          1,632,063             134,569
   Income tax expense....................................................            494,515              40,774
                                                                                -------------        ------------
Gain from discontinued operations........................................          1,137,548              93,795
                                                                                -------------        ------------
         Net Income (Loss)...............................................   $      1,232,513     $       805,090
                                                                                =============        ============

Earnings (loss) from continuing operations per common share - basic......   $          0.02      $          0.16
Earnings (loss) from continuing operations per common share - diluted....   $          0.02      $          0.16

Earnings (loss) from discontinued operations per common share - basic....   $          0.25      $          0.02
Earnings (loss) from discontinued operations per common share - diluted..   $          0.25      $          0.02

Earnings (loss) per common share - basic.................................   $          0.27      $          0.18
Earnings (loss) per common share - diluted...............................   $          0.27      $          0.18

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


</TABLE>

                 See notes to consolidated financial statements

                                       5

<PAGE>

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

                                                                              For the Three Months Ended March 31,
                                                                              ------------------------------------
                                                                                    2002                 2001
                                                                                -------------        ------------

<S>                                                                         <C>                  <C>
Net Income................................................................  $      1,232,513     $       805,090

Components of other comprehensive income:
   Unrealized holding gains (losses) arising during the period
      before income tax and reclassification adjustments .................          (609,370)            864,531
   Reclassification adjustments for net gains (losses) included in net income       (16,646)            (353,015)
                                                                                -------------        ------------
   Other comprehensive gains (losses), before income taxes ...............          (626,016)            511,516
   Income tax expense (benefit) related to other comprehensive income.....          (250,406)            204,607
                                                                                -------------        ------------
   Total  other comprehensive income (loss), net of income tax............          (375,610)            306,909
                                                                                -------------        ------------

Comprehensive income.....................................................   $        856,903     $     1,111,999
                                                                                =============        ============
</TABLE>

                 See notes to consolidated financial statements

                                       6
<PAGE>

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                   COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                   Three Months Ended March 31,
                                                                                ----------------------------------
                                                                                     2002                2001
                                                                                --------------       -------------
Operating Activities:
<S>                                                                           <C>                <C>
   Net income...........................................................      $     1,232,513    $        805,090
   Adjustments to reconcile net income to net cash
      provided by operating activities:
   Provision for loan losses ...........................................            1,040,419             951,118
   Provision for depreciation and amortization .........................              566,866             632,593
   Amortization of investment security premiums
      and accretion of discounts. ......................................               73,075              20,335
   Deferred tax expense (benefit) ......................................              164,908            (146,684)
   Realized investment security gains. .................................              (16,646)           (353,015)
   Gain on sale of  branches............................................           (1,551,443)                  -
   Loss on sale of premises and equipment ..............................              395,575              13,195
   Decrease in accrued interest receivable. ............................            1,133,827           1,157,456
   Increase in accrued interest payable ................................              244,834             299,310
   Other ...............................................................             (844,973)         (1,417,245)
                                                                                --------------       -------------
      Net cash provided by operating
         activities ....................................................            2,438,955           1,962,153
                                                                                --------------       -------------
Investing Activities:
   Proceeds from sales of securities available for sale ................           11,597,387           9,652,796
   Proceeds from maturity of securities
      available for sale ...............................................            2,000,000          15,692,087
   Purchase of securities available for sale  ..........................           (3,984,476)        (27,916,121)
   Net decrease in loans to customers ..................................           10,719,993           2,385,997
   Proceeds from sale of premises and equipment. .......................               60,350              87,478
   Capital expenditures ................................................             (136,100)           (959,358)
   Net proceeds from sale of other real estate .........................              177,903                   -
   Cash paid in branch sale.............................................           (8,294,497)                  -
                                                                                --------------       -------------
      Net cash provided by (used) in investing activities ..............           12,140,560          (1,057,121)
                                                                                --------------       -------------
Financing Activities:
   Net increase (decrease) in demand deposits,
      NOW accounts, savings and time open deposit accounts..............            6,614,878          (2,975,141)
   Net (decrease) increase in certificates of deposit ..................          (11,355,951)          8,731,988
   Net increase (decrease) in short-term borrowings ....................              475,289            (682,837)
   Net decrease in capitalized lease obligations .......................              (30,989)            (18,399)
   Repayment of long-term debt .........................................             (207,308)           (239,851)
   Issuance of common stock. ...........................................                    -             209,865
                                                                                --------------       -------------
         Net cash (used) provided by financing
         activities ....................................................           (4,504,081)          5,025,625
                                                                                --------------       -------------
Net increase in cash and cash equivalents ..............................           10,075,434           5,930,657
Cash and cash equivalents at beginning of year .........................           53,037,008          29,006,611
                                                                                --------------       -------------
Cash and cash equivalents at end of period..............................      $    63,112,442    $     34,937,268
                                                                                ==============       =============
</TABLE>


                 See notes to consolidated financial statements

                                       7

<PAGE>

               CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)
                   COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                   Three Months Ended March 31,
                                                                                ----------------------------------
                                                                                     2002                2001
                                                                                --------------       -------------

Supplemental disclosures of cash flow information:

Cash paid during the period for:
<S>                                                                           <C>                <C>
   Interest.............................................................      $     5,814,023    $      9,122,290
   Income taxes.........................................................                  947               3,530

Supplemental schedule of non-cash investing and financing activities:

   Real estate acquired through foreclosure.............................      $     1,246,862    $        469,994
   Assets (except cash) disposed of in branch sale......................           25,660,924                   -
   Deposit liabilities including accrued interest released in branch sale          35,502,014                   -
</TABLE>



              [The remainder of this page intentionally left blank]



                 See notes to consolidated financial statements

                                       8


<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
                                   (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, 2002 are
not  necessarily  indicative  of the results  that may be expected  for the year
ending  December 31, 2002. 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, 2001.

     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.


NOTE 2 - DISCONTINUED OPERATIONS


     Community  Bank closed on the sale of loans,  deposits  and property of its
two bank offices  located in Pulaski,  Tennessee on March 31, 2002.  The Company
paid cash of  $8,294,497  (includes  vault cash and cash items) in settlement of
the  sale  and  recognized  a gain on the sale of  $1,551,443  representing  the
premium  received on deposits less the discount given on loans and fixed assets.
Total assets sold in the  transaction  approximated  $25,925,000  of which loans
(including accrued interest) and fixed assets were sold totaling $23,965,982 and
$1,568,940, respectively, while deposit liabilities (including accrued interest)
of $35,502,014 were sold.

NOTE 3 - 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
elected to defer its March 2002  interest  payment  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.

     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,

                                       9
<PAGE>

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

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 4 - 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  feels that the basic financial  statements and related  footnotes
provide sufficient detail related to segment reporting.

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.  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 made a presentation  alleging that Community
Bank had been overcharged by  subcontractors  on that  construction  project and
another ongoing 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.  Upon completion of its investigation,  the joint committee
is to inform the Boards of  Directors of the Company and  Community  Bank of its
findings and recommendations.  The joint committee retained legal counsel and an
independent  accounting  firm to  assist  the  committee  in its  investigation.
Management  has also been  informed  that the  directors of  Community  Bank who
alleged the construction overcharges have contacted bank regulatory agencies and
law  enforcement  authorities.  Management  believes  that  these  agencies  and
authorities  either have  conducted or 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  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

                                       10

<PAGE>

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

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  August  2000.  The  amended
complaint also alleges that the defendants  breached their fiduciary  duties and
were 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,  nonderivative 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.  On February 25, 2002, the Company and Community Bank filed a
motion  for  limited  discovery   relating  to  its  motion  to  disqualify  the
plaintiffs'  law  firm.  As a  result  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.  Regardless of the outcome,  however,  this lawsuit could be costly,
time-consuming and a diversion of management's attention.

Towns Derivative Litigation

     On November 19, 1998,  Mr.  William  Towns,  a shareholder  of the Company,
filed a shareholder  derivative  action  against the directors of the Company in
the state  Circuit  Court of Blount  County,  Alabama.  Mr.  Towns  amended  his
complaint  on  January  14,  1999  to add  the  Company  and  Community  Bank as
defendants in the action.  On February 11, 1999, the complaint was again amended
to add Mr. Pat Bellew and Mrs.  Mary Bellew,  who are also  shareholders  of the
Company, as additional  plaintiffs.  The complaint alleged that the directors of
the Company  breached their fiduciary duty to the Company and its  shareholders,
engaged in fraud,  fraudulent  concealment,  suppression  of  material  fact and
suppression of the plaintiff shareholders,  failed to supervise management,  and
conspired to conceal wrongful acts from

                                       11

<PAGE>

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

the Company's  shareholders  and paid  themselves  excessive  director fees. The
complaint also alleged that the Board of Directors  acquiesced in  mismanagement
and  misconduct by Kennon R.  Patterson,  Sr., the Chairman of the Board,  Chief
Executive Officer and President of the Company,  including alleged self dealing,
payment of excessive  compensation,  misappropriation of corporate opportunities
and  misappropriation  of funds. The complaint  sought an unspecified  amount of
compensatory and punitive damages, removal of the current directors, appointment
of a new Board of Directors, and attorneys fees and cost.

     On December 21, 1998, the Company and its directors filed a motion with the
court seeking to have the complaint  dismissed.  On March 1, 1999, the Company's
Board of Directors appointed a special Board committee comprised of non-employee
directors of the Company,  to review the  plaintiffs'  allegations in accordance
with Delaware law. On April 6, 1999, each of the parties to the action requested
that the court stay the litigation and related discovery,  motions and hearings,
pending  completion of the special  committee's  review.  On April 30, 1999, the
court entered an order staying the litigation and related discovery, motions and
hearing in  accordance  with the  parties'  request.  On October 15,  1999,  the
special  committee  filed its final report with the court.  On October 21, 1999,
the  parties   forwarded  to  the  court  an  agreed-upon  order  governing  the
confidentiality of the special  committee's  report,  which the court entered on
January  2,  2000.  On August  3,  2000,  the  Company,  Community  Bank and the
Company's  directors filed a motion to stay the proceedings  until the Company's
and   Community   Bank's  joint   investigative   committee  had  completed  its
investigation of the alleged  construction  overcharges  discussed above. At the
request  of the  Company  and the  other  defendants  in the  action,  the court
continued a hearing on the motion to dismiss.  On February 23,  2001,  the court
indicated  that there was no reason to  continue  the stay of this  action.  The
parties are  awaiting a hearing on the  defendants'  motion to dismiss the case.
Management of the Company  believes that the  plaintiffs'  allegations are false
and that the action lacks merit.  The Company and its directors intend to defend
the action  vigorously,  and management of the Company  believes that the action
will not have a material adverse effect on the Company's  financial condition or
results of operations. Regardless of the outcome, however, this lawsuit could be
costly, time consuming and a diversion of management's attention.

Corr Family Litigation

     On September 14, 2000,  another action was filed in the state Circuit Court
of Blount  County,  Alabama,  against the  Company,  Community  Bank and certain
directors  and officers of the Company and  Community  Bank by Bryan A. Corr and
six other  related  shareholders  of the  Company  alleging  that the  directors
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.  The  Company  and its
directors  believe that this  lawsuit is without  merit and intend to defend the
action vigorously.  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.

Auto Loan Litigation

     On June 28,  2000,  Community  Bank  filed an action in the  United  States
District  Court for the Northern  District of Alabama  against Carl Gregory Ford
L-M, Inc., an automobile  dealership located in Ft. Payne, Alabama, Carl Gregory
and Doug Broaddus,  the owners of the dealership,  several  employees and former
employees  of the  dealership  and Gerald  Scot  Parrish,  a former  employee of
Community  Bank,  with  respect  to  certain  loans  originated  during  1998 in
Community  Bank's  Wal-Mart  office  in Ft.  Payne,  Alabama.  In the  complaint
Community  Bank alleged that the defendants  willingly and knowingly  conducted,
participated  in, were employed by or  associated  with, or aided and abetted an
enterprise   within  the  meaning  of  the  Racketeer   Influenced  and  Corrupt
Organizations  Act (RICO) for the  purpose of  defrauding  Community  Bank.  The
complaint also asserted that the defendants  committed fraud,  misrepresentation
and deceit by submitting to Community  Bank and/or  approving  applications  for
automobile loans

                                       12

<PAGE>

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

which  contained  false  and/or  fraudulent   information  for  the  purpose  of
deceiving,  influencing  and  persuading  Community  Bank to  provide  loans  to
customers of the  automobile  dealership  who were  otherwise  not  qualified to
receive such loans,  and  suppressed  material  facts  regarding the veracity of
information  contained in loan  applications  and the ability of persons seeking
the loans to repay them.  Community  Bank also alleged in the complaint that the
automobile  dealership is responsible  for the acts of its officers,  agents and
employees, and that the dealership and its management failed to adequately train
and/or  supervise  its  employees.  The  complaint  stated  that the  defendants
participated in a conspiracy to violate RICO and Alabama  statutes  dealing with
fraud,  misrepresentation  and suppression of material facts, and asserted civil
liability  under  Alabama law for  violation  of federal  statutes  dealing with
financial institution fraud, mail and wire fraud and making false statements for
the  purpose of  influencing  the  actions of a  financial  institution  upon an
application or loan.

     On June 29, 2000 and August 31, 2000,  the court granted  Community  Bank's
motions to dismiss  without  prejudice  two of the  employees of the  automobile
dealership as defendants in the action. On September 13, 2000, the court granted
Mr.  Parrish's  action to dismiss the complaint,  but granted  Community Bank 15
days to amend the  complaint.  On September  27, 2000,  Community  Bank filed an
amended  complaint  which  generally  reiterated the allegations of the original
complaint and added specific  information  concerning  the allegedly  fraudulent
activity  and the use of the  United  States  mail,  telephone  and  other  wire
transmissions  in the conduct of such  activity.  On December 1, 2000, the court
dismissed  Community Bank's claims based upon mail and wire fraud in the amended
complaint but otherwise denied Mr. Parrish's motion to dismiss the complaint. On
October 10, 2001,  the court  granted a joint motion to bifurcate the trial into
separate  stages of liability and damages.  On October 23 and November 19, 2001,
the court granted  Community Bank's motion to dismiss without prejudice three of
the employees of the automobile dealership as defendants in the action.

     The defendants have filed answers to the amended  complaint which generally
deny the  material  allegations  in the  complaint  and  allege  that any injury
suffered by  Community  Bank was the result of the  contributory  negligence  of
Community Bank, its officers,  employees and agents.  In the lawsuit,  Community
Bank  seeks  damages of an  unspecified  amount to recover  losses  incurred  in
connection with the loans made at Community Bank's Wal-Mart office in Ft. Payne,
Alabama,  along with all costs associated with the lawsuit. Any amounts received
by Community Bank as a result of this  litigation  will be treated as a recovery
on loan losses.

Employee Litigation

     On November  15,  2000,  Michael W. Alred and  Michael A. Bean,  two former
directors and executive officers of Community Bank, filed suit against Community
Bank in the United States  District  Court for the Northern  District of Alabama
alleging that their employment was wrongfully terminated for allegedly providing
information  to bank  regulatory  and  law  enforcement  authorities  concerning
possible violations of laws and regulations, gross mismanagement, gross waste of
funds and abuse of authority  by Community  Bank,  its  directors,  officers and
employees.   According  to  the  complaint,  the  information  which  these  two
individuals   provided  to  authorities   concerned  certain  bank  construction
projects,  specific  loans,  charge-offs,  expenses and past due  accounts.  The
complaint  seeks  reinstatement  of the plaintiffs to their former  positions as
officers and directors of Community  Bank as well as  compensatory  and punitive
damages.  Community Bank and its directors believe this lawsuit is without merit
and intend to defend the action  vigorously.  Management of the Company 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
litigation  could be costly,  time  consuming  and a diversion  of  management's
attention.

                                       13

<PAGE>

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

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 - SUBSEQUENT EVENTS

     On May 03, 2002,  Community Bank consummated the sale of its Rainsville and
Ft.  Payne  bank  offices  and  recorded  a gain  of  approximately  $1,588,000,
representing  an 8%  premium on the 30-day  average  of core  deposits  equaling
approximately $1,645,000 less a discount on loans of approximately $57,000.

     The sale of the Bank's  Marshall County offices is expected to occur on May
31, 2002, assuming  satisfaction of customary conditions prior to closing.  This
transaction is expected to result in a gain representing an 8% premium on the 30
day average of core deposits less the agreed upon discount on loans.

NOTE 7 - RECENTLY ISSUED ACCOUNTING STANDARDS

     In June 1998, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standards  ("SFAS") No. 133,  Accounting for
Derivative  Instruments  and  Hedging  Activities.  This  statement  establishes
accounting and reporting  standards for derivative  instruments  and for hedging
activities.  It requires  that an entity  recognize  all  derivatives  as either
assets or liabilities in the statement of financial  condition and measure those
instruments  at fair value.  The  accounting  for changes in the fair value of a
derivative  is to be determined  based upon the intended use of the  derivative.
For certain hedge  designations  (cash flow and foreign  currency  exposure) the
derivative's  gain or loss is  reported as a  component  of other  comprehensive
income. Other designations require the gain or loss to be recognized in earnings
in the period of change.  This  statement,  amended as to effective date by SFAS
No. 137, is effective for financial  statements for periods beginning after June
15, 2000. In June 2000,  the Financial  Accounting  Standards  Board also issued
SFAS No. 138, Accounting for Certain Derivative  Instruments and Certain Hedging
Activities  - an  Amendment  of SFAS No. 133.  The  adoption of SFAS No. 133, as
amended  by SFAS  No.  138 did  not  have a  material  impact  on the  Company's
consolidated financial statements.

     In September  2000, the FASB issued SFAS No. 140,  Accounting for Transfers
and  Servicing  of  Financial  Assets and  Extinguishments  of  Liabilities  - a
replacement  of FASB  Statement No. 125. While SFAS No. 140 carries over most of
the  provisions  of SFAS No. 125,  Accounting  for  Transfers  and  Servicing of
Financial Assets and  Extinguishments of Liabilities,  it provides new standards
for reporting  financial assets  transferred as collateral and new standards for
the derecognition of financial assets, in particular  transactions involving the
use of  special  purpose  entities.  SFAS  No.  140 also  prescribes  additional
disclosures  for collateral  transactions  and for  securitization  transactions
accounted for as sales. The new collateral standards and disclosure requirements
are  effective  for fiscal years ending after  December 15, 2000,  while the new
standards for the  derecognition of financial assets are effective for transfers
made  after  March 31,  2001.  The  adoption  of this  statement  did not have a
material effect on the Company's consolidated financial statements.

                                       14

<PAGE>

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

     In June 2001,  the FASB issued SFAS No. 141,  Business  Combinations.  This
statement addresses financial accounting and reporting for business combinations
and  supersedes  ABP Opinion  No. 16,  Business  Combinations,  and SFAS No. 38,
Accounting  for  Preacquisition  Contingencies  of  Purchased  Enterprises.  All
business combinations in the scope of SFAS No. 141 are to be accounted for using
one method,  the  purchase  method.  Prior to the  issuance  of this  statement,
subject to certain criteria,  business combinations were accounted for using one
of two methods, the pooling-of-interests  method or the purchase method. The two
methods  produce  different  financial  statement  results.   The  single-method
approach  used in SFAS No.  141  reflects  the  conclusion  that  virtually  all
business  combinations are acquisitions and therefore should be accounted for in
the same manner as other asset acquisitions based on the values exchanged.  This
statement  provides  expanded and revised  guidance related to the allocation of
the purchase price to goodwill and other  intangibles  arising from the business
combination.  The provisions of SFAS No. 141 apply to all business  combinations
initiated  after  June 30,  2001.  The  adoption  of SFAS No.  141 has not had a
material effect on the Company's consolidated financial statements.

     In June 2001, the FASB issued SFAS No. 142,  Goodwill and Other  Intangible
Assets, which addresses financial accounting and reporting for acquired goodwill
and other  intangible  assets and  supersedes  APB  Opinion  No. 17,  Intangible
Assets.  SFAS  No.  142  provides  new  standards  for  accounting  relating  to
intangible assets after initial  recognition in the financial  statements.  This
statement   proscribes  the  accounting  practice  of  amortizing  or  expensing
intangibles  ratably over a  prescribed  period of time and imposes new guidance
requiring  that goodwill and certain other  intangibles be tested for impairment
at least  annually by comparing  fair values of those assets with their recorded
amounts. Additional disclosure requirements also are provided. The provisions of
SFAS No. 142 are required to be applied in fiscal years beginning after December
15,  2001.  The  adoption of this  statement  is not expected to have a material
effect on the Company's consolidated financial statements.

     In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations.  This statement  requires that the fair value of a liability for an
asset retirement  obligation be recognized in the period in which it is incurred
if a  reasonable  estimate  of fair  value  can be made.  The  associated  asset
retirement  costs  are  capitalized  as  part  of  the  carrying  amount  of the
long-lived  asset.  This statement is effective for financial  statements issued
for fiscal years  beginning  after June 15, 2002. The adoption of this statement
is not  expected  to  have a  material  effect  on  the  Company's  consolidated
financial statements.

     In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long-lived Assets. This statement addresses financial  accounting
and  reporting  for the  impairment  or  disposal  of  long-lived  assets.  This
statement  supersedes  FASB Statement No. 121,  Accounting for the Impairment of
Long-Lived  Assets  and  for  Long-Lived  Assets  to Be  Disposed  Of,  and  the
accounting and reporting provisions of APB Opinion No. 30, Reporting the Results
of  Operations  - Reporting  the Effects of Disposal of a Segment of a Business,
and Extraordinary,  Unusual and Infrequently  Occurring Events and Transactions,
for the  disposal  of a segment of a  business  (as  previously  defined in that
opinion).  This  statement  also amends  Accounting  Research  Bulletin  No. 51,
Consolidated  Financial Statements,  to eliminate the exception to consolidation
for a subsidiary for which control is likely to be temporary.  The major changes
resulting from this statement relate to the establishment of a single method for
the  recognition of impairment  losses on long-lived  assets to be held and used
whether from  discontinuance of a business segment or otherwise.  This statement
is effective for financial  statements  issued for fiscal years  beginning after
December 15, 2001. The adoption of this statement has not had a material  effect
on the Company's consolidated financial statements.

                                       15


<PAGE>

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


NOTE 7 - PRIOR PERIOD ADJUSTMENT

     During the quarter ended September 30, 2002, it was determined that certain
items related to the fourth  quarter of the year ended December 31, 2001 had not
been  properly  recorded  in  that  period.  The  items  related  to  unrecorded
liabilities,   valuation  of   repossessed   assets  and  accounts   receivable.
Accordingly, the December 31, 2001 Consolidated Statement of Financial Condition
has been adjusted and restated as follows:

<TABLE>
<S>                                  <C> <C>                                            <C>
         Retained Earnings, December 31, 2001, as previously reported...............    $    12,390,300
         Adjustments:
              Unrecorded liabilities................................................           (227,985)
              Valuation of repossessed assets.......................................            (85,986)
              Accounts Receivable...................................................            (47,347)
                                                                                           -------------
         Retained Earnings, December 31, 2001, as restated..........................    $    12,028,982
                                                                                           =============
</TABLE>


                                       16

<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, 2001.

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, 2002 compared to December 31, 2001

Summary


     Total assets at March 31, 2002 were approximately  $690,602,000,  down from
approximately  $729,500,000  at December 31, 2001.  The decrease in total assets
was mainly attributable to both the sale of Community Bank's Pulaski,  Tennessee
branches  as well as an  overall  decrease  in loan  volume.  Refer to "Notes to
Consolidated Financial Statements,  Note 2 - Discontinued Operations" throughout
the discussion of financial condition.


Earning Assets

     The  earning  assets of the  Company  are  mainly  composed  of  investment
securities,  federal  funds  sold and  loans.  Investment  securities  decreased
$10,295,000,  or 8.5%,  to  approximately  $111,384,000  at March 31,  2002 from
approximately  $121,679,000  at December 31,  2001.  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
$200,000  at both  March  31,  2002 and  December  31,  2001.  The  Company  had
$45,395,000 in federal funds sold at March 31, 2002,  compared to $30,000,000 at
December  31,  2001,  representing  an increase of  $15,395,000,  or 51.3%.  The
increase in federal funds sold was  primarily due to the decline in  outstanding
loans during the first quarter of 2002.  Management  has also kept federal funds
sold balances at high levels in anticipation of funding  necessary to consummate
the sale of its branch offices.

                                       17

<PAGE>

     Loans comprise the largest single category of the Company's earning assets.
Loans, net of unearned income, were approximately $465,475,000 at March 31, 2002
down $36,045,000, or 7.2%, from $501,520,000 at December 31, 2001. This decrease
is  partly  attributable  to the  sale of the  loan  portfolio  in the  Pulaski,
Tennessee  branches sale,  but 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, 2001 and March 31, 2002,  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 58.37% at year-end 2001 to 55.19% at March
31, 2002. The ratio of total  nonperforming  assets to total assets increased to
1.89% at March  31,  2002  from  1.71% at  year-end  2001,  while  the  ratio of
nonperforming  loans to total loans, net of unearned income,  increased to 1.85%
at March 31, 2002 from 1.64% at December 31, 2001.  These changes were primarily
due to an increase in nonaccruing loans of $764,000,  or 13.0%, to approximately
$6,623,000  at March 31,  2002  from  $5,859,000  at  December  31,  2001 and an
increase in other real estate of $160,000, or 3.7%, to approximately  $4,447,000
at March 31, 2002 from  approximately  $4,287,000  at December 31,  2001.  These
increases were  partially  offset by a decline in loans past due 90 days or more
of  $368,000,  or 15.7%,  to  approximately  $1,978,000  at March 31,  2002 from
approximately  $2,346,000  at December  31,  2001.  Total  nonperforming  assets
increased $556,000, or 4.5%, to approximately $13,048,000 at March 31, 2002 from
approximately  $12,492,000 at December 31, 2001. In their efforts to improve the
asset  quality and credit  standards  of the  Company,  management  continues to
recognize  problem  credits in a more  timely  manner  through  the loan  review
process implemented in 2001.

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  approximately  $577,637,000  at March 31,  2002  reflected a
decrease of $40,069,000,  or 6.5%, from  approximately  $617,706,000 at year-end
2001. Deposits are Community Bank's primary source of funds. Noninterest-bearing
deposits increased  $1,185,000,  or 1.8%, to approximately  $68,881,000 at March
31,  2002  from   approximately   $67,696,000   at  December  31,  2001,   while
interest-bearing  deposits  decreased  $41,254,000,  or 7.5%,  to  approximately
$508,756,000 at March 31, 2002 from  approximately  $550,010,000 at December 31,
2001.  Certificates  of deposit of $100,000 or more  decreased  $12,299,000,  or
10.3%,  to  approximately  $107,237,000  at March 31,  2002 from,  approximately
$119,536,000 at December 31, 2001. The sale of the Pulaski,  Tennessee  branches
attributed to approximately $35,328,000 of the decrease in total deposits.

     Total short-term liabilities increased approximately $475,000, or 10.9%, to
approximately  $4,835,000  at March 31, 2002 from  approximately  $4,360,000  at
December 31, 2001.  FHLB  borrowings  remained  constant at $38,000,000 for both
March 31, 2002 and December 31, 2001 while long-term debt decreased $271,000, or
5.8%,  to  approximately   $4,396,000  at  March  31,  2002  from  approximately
$4,667,000 at December 31, 2001.

     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
elected to defer its March 2002  interest  payment  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  $10,075,000  increase in cash and cash equivalents during the first
three months of 2002.  Cash provided by operating  activities was  approximately
$2,439,000.   Investing   activities   provided  an  increase  of  approximately
$12,141,000  despite a cash payment of  approximately  $8,294,000 in the sale of
Community  Bank's  Pulaski,  Tennessee  branches.  This  payment  was  offset by
increases in cash from other investing activities such as proceeds from the sale
or calls of securities and decreases in loans to customers. Financing activities
used approximately $4,504,000 of cash and cash equivalents for the first quarter
of 2002. Certificates of deposits decreased approximately  $11,356,000 excluding
any decreases for the Pulaski,  Tennessee branches,  but was partially offset by
increases in cash from the growth of demand  deposits,  NOW deposits,  and other
savings deposits totaling approximately  $6,615,000 also excluding any decreases
due to the sale of the Pulaski, Tennessee branches.

     In addition to the sale of the Pulaski, Tennessee branches,  Community Bank
has entered  into  agreements  to sell eight more of its banking  offices in the
second  quarter of 2002.  Under each  agreement the  purchaser  will receive the
assets of each banking  office  mostly  consisting of loans and fixed assets and
will assume the  liabilities,  most of which are deposits.  The cash transaction
will be based upon the assets,  liabilities and premium due to Community Bank at
the time of each closing.  Since the remaining  offices,  as a whole, carry more
deposits than loans and other assets,  Community  Bank will disburse  funds as a
result of the transactions.  The DeKalb County sale closed on May 3, 2002. After
all  settlements  are  finalized,  the  cash  paid  out  in  the  sale  will  be
approximately $9.0 million. The Marshall County sale is expected to close on May
31, 2002 and although  settlement  amounts can not be determined  until closing,
management  expects  to pay as much as $12 to $13  million  cash at  settlement.
Management  expects  the  federal  funds sold  balance to remain at levels  high
enough to provide  the  funding of any cash  disbursements  upon the  closing of
these branch sales;  however,  these transactions will decrease the availability
of liquid funds.

     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  Community  Bank in the form of  management  fee income and  generally
retains  cash  for  its  portion  of tax  benefit  on  intercompany  income  tax
settlements. Without dividends or management fee income from Community Bank, the
Company would not be able to pay expenses or service debt.  Management  fees for
the  first  quarter  of 2002  were  $75,000.  Community  Bank is unable to pay a
dividend to the Company without prior approval of the regulatory authorities nor
is the Company able to increase  the  management  fee charged to Community  Bank
without the prior written approval of the Federal Reserve.

                                       19

<PAGE>

Capital Resources


     Total  shareholders'  equity at March 31, 2002 was 6.00% of total assets as
compared to 5.52% at December 31,  2001.  The  increase  experienced  during the
first three months of 2002 is primarily a result of increased  retained earnings
from net income of  approximately  $1,233,000  offset  slightly by a decrease in
accumulated  other  comprehensive  income coupled with a decline in total assets
attributable to the sale of the Pulaski, Tennessee branches.

     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 approximately  $48,994,000 at March 31, 2002,
compared to  approximately  $49,118,000  at December 31,  2001.  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
approximately  $56,293,000  at March 31,  2002 as  compared  to  $56,833,000  at
year-end 2001. The percentage  ratios,  as calculated under the guidelines,  for
Tier I and Total  Risk-based  capital were 10.69% and 12.29%,  respectively,  at
March 31, 2002, compared to 10.02% and 11.59%,  respectively,  at year-end 2001.
At March 31,  2002,  both Tier I and Total  Risk-based  capital  of the  Company
exceeded the regulatory minimum ratios of 4% and 8%, respectively.

     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  6.78% and 6.70% at March 31,  2002 and
December 31, 2001, respectively, exceeding the regulatory minimum requirement of
4%.



RESULTS OF OPERATIONS

Three months ended March 31, 2002 and 2001

Summary


     The  Company's  net income for the three  months  ended  March 31, 2002 was
approximately  $1,233,000,  an increase of $428,000, or 53.2%, from $805,000 for
the same  period in 2001.  Both basic and diluted net income per share was $0.27
for the three  months  ended March 31,  2002,  as compared to $0.18 for the same
period in 2001.  This increase  during the first quarter of 2002 compared to the
same period of 2001 resulted from an increase of approximately $675,000 or 11.1%
in net  interest  income,  before  provision  for loan  losses,  a  decrease  of
$675,000,  or 26.1%,  in  noninterest  income and an increase  of  approximately
$718,000,  or 10.8%,  in  noninterest  expense  during the first quarter of 2002
compared to the first quarter of 2001.  The provision for loan losses  increased
$67,000,  or 6.9%,  to  approximately  $1,042,000  during the three months ended
March  31,  2002,  from  approximately  $975,000  in the  same  period  of 2001.
Discontinued operations of the Company's Pulaski, Tennessee locations had net of
tax gains of $1,137,548  and $93,795 for the three month periods ended March 31,
2002 and 2001, respectively.  The gain of $1,137,548 in 2002 includes the before
tax gain on the divestiture of $1,551,443.


Net Interest Income


     The  following  discussion  is on a fully  taxable  equivalent  basis.  Net
interest income,  the difference  between interest earned on assets and the cost
of  interest-bearing  liabilities,  was  approximately  $6,854,000 for the three
months ended March 31, 2002.  Net interest  income,  before  provision  for loan
losses, increased $639,000, or 10.3%, from approximately $6,215,000 for the same
period of 2001.  Revenues from interest earning assets of the Company  decreased
$2,156,000,  or 14.8%, to  approximately  $12,425,000 for the three months ended
March 31, 2002 from approximately  $14,581,000 for the same period in 2001. This
decrease was due to lower yields on interest  earning  assets.  Average  earning
assets   outstanding  during  the  first  quarter  of  2002


                                       20

<PAGE>


were approximately  $623,142,000,  which represents an increase of approximately
$11,206,000,  or 1.8%, from approximately  $611,936,000 for the first quarter of
2001. The Company's fully taxable equivalent yield on its average earning assets
decreased 157 basis points to 8.09% for the first three months of 2002, compared
to 9.66% for the same period of 2001. This decrease is reflective of the overall
decrease in interest rates  experienced  during the year 2001.  Interest expense
for the three months ended March 31, 2002 decreased approximately $2,795,000, or
33.4%, to $5,571,000 from $8,366,000 for the corresponding  period of 2001. This
decrease occurred due to a decline in rates paid on interest-bearing liabilities
and more than offset the decline in income on interest-bearing  assets.  Average
interest-bearing liabilities during the first quarter of 2002 were approximately
$574,127,000,  which  represents  an  increase  of  $6,937,000,  or  1.2%,  from
approximately $567,190,000 for the same period of 2002. The rate paid on average
interest-bearing  liabilities  decreased 204 basis points to 3.94% for the three
month period ended March 31, 2002,  compared to 5.98% for the first three months
of 2001.  This decrease is also  attributable to the overall decline in interest
rates during the year 2001.

     The Company's net interest margin, on a fully taxable equivalent basis, for
the three months ended March 31, 2002  increased 34 basis points to 4.46%,  from
4.12% for the three  months  ended March 31,  2001,  due to the  increase in net
interest  income,  on a fully taxable  equivalent  basis. Net interest margin is
computed by dividing net interest income,  on a fully taxable  equivalent basis,
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, on a fully taxable equivalent basis, for
the three months ended March 31, 2002  increased 47 basis points to 4.15%,  from
3.68%  for the three  months  ended  March  31,  2001,  as the  average  cost of
interest-bearing  sources of funds  decreased  204 basis  points while the fully
taxable  equivalent average yield on interest earning assets decreased 157 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.


Provision for Loan Losses and Allowance for Loan Losses


     At March 31,  2002,  the  allowance  for loan losses was  $7,201,000  which
represented a decrease of $91,000, or 1.2%, from the December 31, 2001 amount of
$7,292,000.  This decrease  includes a decrease of  approximately  $278,000 as a
result of the sale of the Pulaski,  Tennessee  branches.  The provision for loan
losses was $1,042,000 and $975,000 for the three months ended March 31, 2002 and
2001,  respectively.  This 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 1.55% at March 31,
2002,  compared  to  1.45% at  December  31,  2001.  Loan  charge-offs  exceeded
recoveries by $854,000 during the first three months of 2002, which  represented
an increase of $289,000,  or 51.2%,  from  $565,000  for the same period  during
2001.  Management  believes that the allowance for loan losses at March 31, 2002
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,  2002  decreased
$675,000, or 26.1%, to approximately  $1,908,000,  from approximately $2,583,000
for the same  period of 2001.  Service  charges  on deposit  accounts  decreased
$36,000,  or 3.7%, to approximately  $930,000 for the first quarter of 2002 from
approximately  $966,000 in the first  quarter of 2001.  Debt  cancellation  fees
decreased  during the first quarter of 2002, as compared to the first quarter of
2001,  approximately  $73,000,  or  51.4%,  due  to  decreased  volume  in  debt
cancellation  coverage  associated  with  the  decline  in  the  Company's  loan
portfolio. Other operating income decreased $216,000, or 49.9%, to approximately
$217,000 for the first quarter of 2002 from approximately  $433,000 for the same
period  of 2001.  The  Company  recorded  net  gains  on the sale of  investment
securities  of


                                       21

<PAGE>


approximately  $17,000 during the three months ended March 31, 2002, compared to
net gains on the sale of investment securities of approximately $353,000 for the
same period of 2001.


Noninterest Expenses


     Noninterest  expenses  for the  three  months  ended  March  31,  2002 were
approximately  $7,387,000,  representing  a $718,000,  or 10.8%,  increase  from
$6,669,000  for the same period of 2001.  This increase is in most part due to a
loss  recognized on the disposal of one building  located in Uniontown,  Alabama
and one  building  located  in New Hope,  Alabama.  The  primary  components  of
noninterest  expenses  are  salaries  and  employee  benefits,  which  decreased
$123,000, or 3.1%, to approximately  $3,846,000 for the three months ended March
31, 2002 from approximately $3,969,000 for the same period of 2001. The decrease
in salaries and  employee  benefits is  attributable  to  managements  continued
effort  to  lower  staff  costs  by  increasing  efficiencies.  Occupancy  costs
increased $45,000,  or 6.6%, to approximately  $725,000 for the first quarter of
2002 from  approximately  $680,000  for the same period of 2001.  Furniture  and
equipment  expenses for the three month periods  ended March 31, 2002  increased
$14,000, or 3.2%, to approximately  $445,000 from approximately $431,000 for the
same period of 2001.  Director and committee fees decreased $11,000, or 9.6%, to
approximately $103,000 for the first quarter of 2002 from approximately $114,000
for the first  quarter of 2001.  Other  operating  expenses  were  approximately
$1,872,000  and  $1,462,000 for the three month periods ended March 31, 2002 and
2001,  respectively.  This increase of  approximately  $410,000,  or 28.0%,  was
primarily  due to  increased  expenses,  especially  legal fees,  related to the
continued litigation against the Company.


Income Taxes

     The  Company  attempts  to  maximize  its net  income  through  active  tax
planning.  The  provision  for income taxes  increased  $282,000,  or 84.9%,  to
approximately   $614,000  for  the  three  months  ended  March  31,  2002  from
approximately  $332,000 for the same period of 2001.  The  effective tax rate of
approximately  33.3% for the first  quarter of 2002  represents an increase from
the effective tax rate of approximately 29.2% for the same period of 2001.

                                       22

<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  Banks net interest  income  sensitivity
over a one year time  horizon at March 31, 2002 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.
<TABLE>
<CAPTION>

                                                RATE SHOCK ANALYSIS
                                                                          -100                          +100
                                                                          Basis                         Basis
                                                                         Points           Level        Points
                                                                                 (Dollars in thousands)

<S>                                                                       <C>            <C>             <C>
Prime Rate....................................................            3.75%          4.75%           5.75%

Interest Income...............................................       $    44,345    $    46,711    $    48,948
Interest Expense..............................................            16,463         18,416         20,297
                                                                         -------        -------        -------
     Net Interest Income......................................       $    27,882    $    28,295    $    28,651
                                                                         =======        =======        =======

Dollar change from Level......................................       $      (413)                  $       356

Percentage change from Level..................................             -1.46%                         1.26%
</TABLE>

     As shown  above,  in a 100 basis  point  rising rate  environment,  the net
interest  margin  should  increase  1.26% and in a 100 basis point  falling rate
environment,  the net interest  margin  should  decrease  1.46%.  These  percent
changes from a level rate scenario fall comfortably within Community Bank's ALCO
policy limit of +/-7.00%.

                                       23

<PAGE>

Item 4 - Controls and Procedures


     The  Company  maintains  disclosure  controls  and  procedures,  which  are
designed to ensure that  information  required to be disclosed by the Company in
the reports it files or submits  under the  Securities  Exchange Act of 1934, as
amended (the "Exchange  Act"), is recorded,  processed,  summarized and reported
within the time periods  specified in the Securities  and Exchange  Commission's
rules and forms,  and that such  information is accumulated and  communicated to
the  Company's  management,  including  its Chief  Executive  Officer  and Chief
Financial Officer,  as appropriate to allow timely decisions  regarding required
disclosure.

     In November  2002,  an  evaluation  of the  effectiveness  of the Company's
disclosure  controls and procedures was conducted  under the supervision of, and
reviewed by, the Company's Chief Executive Officer and Chief Financial  Officer.
Based on that  evaluation,  the  Company's  Chief  Executive  Officer  and Chief
Financial  Officer have  concluded  that the Company's  disclosure  controls and
procedures  were  adequate  and  designed  to ensure that  material  information
relating to the Company would be made known to the Chief  Executive  Officer and
Chief Financial Officer by others within those entities, particularly during the
periods  when  periodic  reports  under the  Exchange  Act are  being  prepared.
Furthermore,  there have been no significant  changes in the Company's  internal
controls or in other factors  (including any  corrective  actions with regard to
significant  deficiencies  or  material  weaknesses  in the  Company's  internal
controls)  that could  significantly  affect those  controls  subsequent  to the
November 2002  evaluation.  Refer to the  Certifications  by the Company's Chief
Executive  Officer and Chief Financial  Officer  following the signature page of
this report.


                                       24

<PAGE>

                            PART II OTHER INFORMATION

PART II OTHER INFORMATION

Item 1 - Legal Proceedings

No reportable events or material  developments have occurred since the filing of
the Company's  Annual Report on Form 10-K,  for the year ended December 31, 2001
and filed on April 16, 2002.

Item 6 - Exhibits and Reports on Form 8-K
<TABLE>

(a)  Exhibits

<S>  <C>                                                                                                        <C>
     11   Statement of computation of per share earnings...............................                          26

     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.........................................................................                          27

     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.........................................................................                          28

(b)  Reports on Form 8-K

     The Company  did not file any reports on Form 8-K during the first  quarter
     ended March 31, 2002.

</TABLE>

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                                       25

<PAGE>

Exhibit 11 - Statements Re:  Computation of Per Share Earnings

                           Community Bancshares, Inc.

                   Computation of Net Income 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, 2002 and 2001.

<TABLE>
<CAPTION>

                                                                                 For the Three  Months Ended March 31,
                                                                                ---------------------------------------
                                                                                        2002                2001
                                                                                   -------------       -------------

<S>                                                                              <C>               <C>
Reported income from continuing operations....................................   $        94,965   $        711,295
                                                                                   -------------       -------------
Reported income (loss) from discontinued operations...........................   $     1,137,548   $         93,795
                                                                                   =============       =============
Earnings (losses) on common shares............................................   $     1,232,513   $        805,090
                                                                                   =============       =============

Weighted average common shares outstanding - basic............................         4,625,949          4,501,415
                                                                                   =============       =============

Earnings per common share- basic
   Income from continuing operations..........................................   $          0.02   $           0.16
                                                                                   =============       =============
   Income (loss) from discontinued operations.................................   $          0.25   $           0.02
                                                                                   =============       =============
   Net income.................................................................   $          0.27   $           0.18
                                                                                   =============       =============


Weighted average common shares outstanding - diluted..........................         4,625,949          4,531,516
                                                                                   =============       =============

Earnings per common share- diluted
   Income from continuing operations..........................................   $          0.02   $           0.16
                                                                                   =============       =============
   Income (loss) from discontinued operations.................................   $          0.25   $           0.02
                                                                                   =============       =============
   Net income.................................................................   $          0.27   $           0.18
                                                                                   =============       =============

</TABLE>

              [The remainder of this page intentionally left blank]

                                       26
<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/A for the period  ended  March 31,  2002  ("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:  December 17, 2002       By:  /s/ Kennon R. Patterson, Sr.
     --------------------         ----------------------------------------------
                                 Kennon R. Patterson, Sr.
                                 Chairman, Chief Executive Officer and President


                                       27

<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/A for the period  ended  March 31,  2002  ("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:  December 17, 2002       By:   /s/ Kerri C. Newton
     --------------------        -----------------------------------------------
                                 Kerri C. Newton
                                 Chief Financial Officer


                                       28

<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, in the city of Blountsville, State of Alabama, on
December 17, 2002.



                                                      COMMUNITY BANCSHARES, INC.


                                 By:  /s/ Kennon R. Patterson, Sr.
                                 -----------------------------------------------
                                 Kennon R. Patterson, Sr.
                                 Chairman, Chief Executive Officer and President


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


                                       29

<PAGE>

CERTIFICATIONS

I, Kennon R. Patterson, Sr., certify that:

1.   I  have  reviewed  this  quarterly  report  on  Form  10-Q/A  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/    Kennon R. Patterson, Sr.
  -------------------------------------
 [GRAPHIC OMITTED]
  Kennon R. Patterson, Sr.
  Chairman, Chief Executive Officer and
  President


Date:  December 17, 2002
     -------------------


                                       30

<PAGE>

CERTIFICATIONS

I, Kerri C. Newton, certify that:

1.   I  have  reviewed  this  quarterly  report  on  Form  10-Q/A  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. Newton
  -------------------------------------
 [GRAPHIC OMITTED]
  Kerri C. Newton
  Chief Financial Officer


Date:  December 17, 2002
     -------------------


                                       31