SECURITIES AND EXCHANGE COMMISSION
                                   WASHINGTON, D.C.  20549

                                                        

                             FORM 10-Q

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

                               For Quarter Ended June 30, 1997

                                              OR

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

                                 Commission File No. 0-16461

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


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


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


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


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

Indicate  by check mark whether the registrant (1) has filed all reports 
required to be filed by  Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 12 months (or  for  such shorter period that the 
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days:

                                 Yes   X       No      


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

           Class                                   Outstanding at June 30, 1997
 Common Stock, $.10 Par Value                                1,897,623
                                         <PAGE>
 





                                            INDEX

                         COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES


PART I. FINANCIAL INFORMATION                                           PAGE


Item 1. Financial Statements (Unaudited)

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

Consolidated statements of income - Three months ended June 30,
1997  and  1996;  Six  months  ended  June  30,  1997  and  1996         4-5

Consolidated statements of cash flows - Six months ended  June 30,
1997 and 1996                                                             6

Notes  to  consolidated  financial  statements  -  June 30, 1997          8


Item 2.  Management's Discussion and Analysis of Financial Condition and
           Results of Operations                                         10



PART II.  OTHER INFORMATION

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



SIGNATURES 
                                              <PAGE>
 


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

                                                                       
                                                     June 30,    December 31, 
                                                      1997          1996        
Assets
 Cash . . . . . . . . . . . . . . . . . . . . . $    4,128,500    $ 5,096,892  
 Due from banks . . . . . . .                       17,775,953     12,515,285
 Interest-bearing deposits with banks . . . . .      2,949,058      1,773,778
 Federal funds sold . . . . . . . . . . . . . . .   19,000,000          -0-
 Securities available for sale  . . . . . . . . .   80,804,956     86,911,305
 Loans  . . . . . . . . . . . . . . . . . . . . .  325,736,116    324,571,991
  Less: Unearned income  . . . . . . . . . . . .     1,436,437      1,809,698
        Allowance for loan losses . . . . . . . .    2,534,350      2,424,847
 Net Loans  . . . . . . . . . . . . . . . . . . .  321,765,329    320,337,446

 Premises and equipment, net  . . . . . . . . . .   20,462,927     17,076,220
 Accrued interest . . . . . . . . . . . . . . . .    4,822,294      4,847,308
 Intangibles, net . . . . . . . . . . . . . . . .    3,942,179      4,101,306
 Other real estate  . . . . . . . . . . . . . . .      844,933        791,435
 Other assets . . . . . . . . . . . . . . . . . .    2,200,310      1,258,720

Total Assets . . . . . . . . . . . . . . . . . . $ 478,696,439 $  454,709,695

Liabilities and Shareholders' Equity

Deposits:
  Noninterest-bearing . . . . . . . . . . . . .  $  54,354,752 $   50,245,130
  Interest-bearing  . . . . . . . . . . . . .      375,703,343    350,092,545
 Total Deposits . . . . . . . . . . . . . . . .    430,058,095    400,337,675

 Other short-term borrowings  . . . . . . . . .      3,104,170      8,376,472
 Accrued interest . . . . . . . . . . . . . . . .    3,123,022      2,542,825
 Long-term debt . . . . . . . . . . . . . . . . .    7,841,000      8,281,449
 Other liabilities  . . . . . . . . . . . . . . . .  1,668,258      2,612,488
 Total Liabilities  . . . . . . . . . . . . . . .  445,794,545    422,150,909
Shareholders' equity
  Common stock, par value $.10 per share, 5,000,000
  shares authorized, 2,004,836 shares issued as 
  of June 30, 1997 and 2,000,000 shares issued as 
  of December 31, 1996                                 200,484       200,000
  Capital surplus . . . . . . . . . . . . . . .     17,915,958    17,819,722
 Retained earnings . . . . . . . . . . . . . . . .  17,136,899    16,812,517
 Unearned ESOP shares - 107,213 and 112,121 shares 
 unreleased at June 30, 1997 and December 31,1996 . (2,062,383)   (2,119,891)
 Unrealized losses on investment securities 
  available for sale, net of deferred taxes  . . .    (289,064)     (153,562)
                      
Total Shareholders' Equity . . . . . . . . . . . .  32,901,894    32,558,786

Total Liabilities and Shareholders' Equity       $ 478,696,439 $ 454,709,695


                   See notes to consolidated financial statements


                                        3 <PAGE>
 


                          COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

                             CONSOLIDATED STATEMENTS OF INCOME
                                         (UNAUDITED)
                                                          Three Months Ended
                                                                June 30,    
                                                           1997        1996     
Revenue From Earning Assets
 Interest and fees on loans . . . . . . . . . . . .  $  7,842,209 $  6,230,532
 Interest on investment securities:
  Taxable securities  . . . . . . . . . . . . . .       1,089,642    1,292,795
  Securities exempt from federal income taxes   . . .     176,050      233,589
                     
 Interest on federal funds sold . . . . . . . . . . .     176,319      250,414
 Interest on deposits in other banks  . . . . . . . . .    29,193       31,216
   Total Revenue From Earning Assets . . . . . . . .    9,313,413    8,038,546

Interest Expense
 Interest on deposits . . . . . . . . . . . . . . . .   4,678,684    4,077,274
 Interest on other short-term borrowings  . . . . . .      35,028       29,372
 Interest on long-term debt . . . . . . . . . . . . .     168,955      170,417
  Total Interest Expense  . . . . . . . . . . . . .     4,882,667    4,277,063

Net interest income                                     4,430,746    3,761,483
Provision for loan losses . .                             296,269      149,252
Net interest income after provision for loan losses . . 4,134,477    3,612,231

Noninterest Income
 Service charges on deposits  . . . . . . . . . . . .     613,676      536,695
 Insurance commissions  . . . . . . . . . . . . . . . .   142,405      145,967
 Bank club dues . . . . . . . . . . . . . . . . . . .     142,123      123,418
 Other operating income . . . . . . . . . . . . . . .     246,514      249,351
 Investment securities gains  . . . . . . . . . . . .       -0-         (6,596)
  Total Noninterest Income  . . . . . . . . . . . .     1,144,718    1,048,835

Noninterest Expenses
 Salaries and employee benefits . . . . . . . . . . . . 2,269,724    2,185,674
 Occupancy expense  . . . . . . . . . . . . . . . . . .   353,695      236,995
 Furniture and equipment expense  . . . . . . . . . . .   294,295      249,783
 Director and committee fees  . . . . . . . . . . . . .   158,995      124,875
 Other operating expenses . . . . . . . . . . . . . . .   819,491      786,113
  Total Noninterest Expenses  . . . . . . . . . . .     3,896,200    3,583,440

Income before income taxes                              1,382,995    1,077,626
Provision for income taxes  . .                           380,827      305,029

Net Income  . . . . . . . . . . . . . . . . . . .    $  1,002,168  $   772,597

Earnings Per Common Share - Primary and Fully-diluted

 Net income per common share  . . . . . . . . . .    $       .48   $      .39

 Weighted average common shares outstanding . . . . .  2,072,847     1,995,547


                See notes to consolidated financial statements

                              Page 4

                      COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

                           CONSOLIDATED STATEMENTS OF INCOME
                                      (UNAUDITED)
                                                            Six Months Ended
                                                                June 30, 
                                                            1997       1996     
Revenue From Earning Assets
 Interest and fees on loans . . . . . . . . . . .  $  15,623,572 $ 12,212,453
 Interest on investment securities:
  Taxable securities  . . . . . . . . . . . . . .      2,205,914    2,372,285
  Securities exempt from federal income taxes   . . .    358,927      467,389
                     
 Interest on federal funds sold . . . . . . . . . . .    195,681      530,966
 Interest on deposits in other banks  . . . . . . . .     49,434       48,827
   Total Revenue From Earning Assets . . . . . . . .  18,433,528   15,631,920

Interest Expense
 Interest on deposits . . . . . . . . . . . . . . . .  9,120,982    8,057,185
 Interest on other short-term borrowings  . . . . . .     79,973       65,411
 Interest on long-term debt . . . . . . . . . . . . . .  324,313      333,737
  Total Interest Expense  . . . . . . . . . . . . .    9,525,268    8,456,333

Net interest income                                    8,908,260    7,175,587
Provision for loan losses . . .                          494,247      277,134

Net interest income after provision for loan losses .  8,414,013    6,898,453

Noninterest Income
 Service charges on deposits  . . . . . . . . . . . .  1,236,577    1,022,509
 Insurance commissions  . . . . . . . . . . . . . . .    332,608      229,854
 Bank club dues . . . . . . . . . . . . . . . . . . .    276,907      241,164
 Other operating income . . . . . . . . . . . . . . .    476,480      491,259
 Investment securities gains  . . . . . . . . . . . .     (2,590)      (6,596)
  Total Noninterest Income  . . . . . . . . . . . .    2,319,982    1,978,190

Noninterest Expenses
 Salaries and employee benefits . . . . . . . . . .    4,917,162    4,259,151
 Occupancy expense  . . . . . . . . . . . . . . . .      697,147      465,043
 Furniture and equipment expense  . . . . . . . . .      568,701      470,328
 Director and committee fees  . . . . . . . . . . . .    311,870      195,450
 Other operating expenses . . . . . . . . . . . . . .  1,702,030    1,501,504
  Total Noninterest Expenses  . . . . . . . . . . .    8,196,910    6,891,476

Income before income taxes . . . . . . . . . . . . .   2,537,085    1,985,167
Provision for income taxes  . .                          712,731      541,942

Net Income  . . . . . . . . . . . . . . . . . .    $   1,824,354 $  1,443,225

Earnings Per Common Share - Primary and Fully-diluted

 Net income per common share  . . . . . . . .      $        .89  $        .75

 Weighted average common shares outstanding . . .     2,050,596     1,911,617
 
                     
                  See notes to consolidated financial statements

                                   5 <PAGE>
 

                    COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)


                                                            Six Months Ended
                                                                June 30,        
                                                          1997          1996    
Operating activities:
 Net income . . . . . . . . . . . . . . . . . . . .  $  1,824,384 $ 1,443,225
  Adjustments to reconcile net income to net
   cash provided by operating activities:
  Provision for loan losses  . . . . . . . . . . . .      494,247     277,134
  Provision for depreciation and amortization  . . . . .  724,213     582,277
  Amortization of investment security premiums and
   accretion of discounts . . . . . . . . . . . . . . . .  19,333     (33,843)
  Realized investment security losses   . . . . . . . . .   2,590       6,596 
  Increase (decrease) in accrued interest receivable . .   25,014    (700,681)
  Increase in accrued interest payable . . . . . . . . .  580,197     376,384 
  Other  . . . . . . . . . . . . . . . . . . . . . . . (1,269,224) (1,770,453)
    Net cash provided by operating activities . . .     2,400,754     180,639 

Investing activities:
  Proceeds from sales of investment securities . . .    5,007,863     999,999
  Proceeds from maturity of investment securities  . .  3,137,430   6,604,645 
  Purchase of investment securities  . . . . . . . . . (2,286,703)(40,195,649)
  Increase in interest-bearing deposits with 
   other banks                                         (1,175,280) (2,235,263)
  Net increase in loans to customers . . . . . . . .   (1,295,886) (8,464,439)
  Cash acquired - purchase of Haleyville location  . .      -0-    18,811,140 
  Proceeds from sale of premises and equipment . . . .    104,855      92,130  
  Capital expenditures . . . . . . . . . . . . . . . . (4,056,647) (1,868,866)
    Net cash used in investing activities . . . . . .    (564,368)(26,256,303)

Financing activities:
 Net increase in demand deposits, NOW accounts,
  and savings accounts  . . . . . . . . . . . . . . .   5,299,475  17,937,561 
 Net increase in certificates of deposit  . . . . . . .23,007,155   3,830,233
 Net increase (decrease) in short-term borrowings . .  (5,064,519)  1,459,322 
 Issuance and sale of common stock. . . . . . . . . .      96,720   3,013,493 
 Repayment of long-term debt  . . . . . . . . . . . .    (382,941)   (381,108)
 Cash dividends . . . . . . . . . . . . . . . . . . .  (1,500,000)   (908,788)
  Net cash provided by financing activities . .        21,455,890  24,950,713

Net increase (decrease) in cash and cash equivalents   23,292,276  (1,124,951)

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

Cash and cash equivalents at end of period  . . . . .$ 40,904,453 $ 35,313,296


                 See notes to consolidated financial statements



                                    6 <PAGE>
 

                        COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

                         CONSOLIDATED STATEMENTS OF CASH FLOWS
                                     (UNAUDITED)

                                                             Six Months Ended
                                                                June  30,      
                                                             1997       1996 

Supplemental disclosures of cash flow information:
 Cash paid during the period for:
   Interest  . . . . . . . . . . . . . . . . .       $  8,945,041 $ 7,906,020
   Income taxes  . . . . . . . . . . . . . . . . . . .  1,290,777     258,690

Supplemental schedule of non-cash investing and financing activities:

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

  Upon  the pledging of purchased shares to obtain additional ESOP debt of 
  $1,126,007 on May 17, 1996 and of $137,918  on  October  2,  1995,  long-term 
  debt  was  increased and equity was decreased . The debt was reduced and 
  shares  were  released  by  $57,508 and $80,088 , respectively, during each of
  the six month periods ended June 30, 1997 and 1996 as a result of payments 
  made by the Company's ESOP on the outstanding ESOP debt.

  Unrealized  gains  losses on investment securities available for sale 
  increased by $135,502 during the six months ended June 30, 1997, from an 
  unrealized loss of $153,562 at December 31, 1996, to a loss of $289,064 at 
  June 30, 1997 (both net of the effect of deferred taxes).
                     
  On  January  16,  1996,  the  Company  acquired  the assets and assumed the 
  liabilities of the Haleyville, Alabama branch of a regional bank .The 
  liabilities assumed in the transaction totaled $33,366,553 and  non-cash 
  assets acquired totaled $12,227,125 . Accordingly, the  resultant cash receipt
  by the Company, net of the premium of $2,328,288 paid for the branchs 
  deposits, was $18,811,140.

                     
                      









                     See notes to consolidated financial statements

                                      7 <PAGE>
 


                  COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)

                                 June 30, 1997



NOTE A - Basis of Presentation

The  accompanying  unaudited  consolidated  financial  statements  have  been  
prepared  in  accordance with generally accepted accounting  principles for 
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X.   Accordingly, they do not include all of the information 
and footnotes required by generally accepted accounting principles for  complete
financial  statements.   In the opinion of management, all adjustments 
(consisting of normal recurring accruals) considered  necessary  for  a  fair 
presentation have been included.  Operating results for the six month period 
ended June 30, 1997  are  not  necessarily  indicative  of the results that may 
be expected for the year ended December 31, 1997.  For further information,  
refer to the consolidated financial statements and footnotes thereto included in
the Company's Annual Report on Form 10-K for the year ended December 31, 1996.


NOTE B - Income Taxes

The  effective  tax  rates  of  approximately 28.1 percent and 27.3 percent for 
the six months ended June 30, 1997 and 1996 are less than the statutory rate 
principally because of the effect of tax-exempt interest income.

NOTE C - Investment Securities

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

At June 30,1997,the Company had net unrealized losses of $481,774 in 
available-for-sale securities which are reflected in the  presented  assets  and
resulted  in a decrease in stockholders' equity of $289,064,  net of deferred 
tax liability. There were  no  trading securities. The net decrease in 
stockholders  equity as a result of the SFAS 115 adjustment from December 31,
1996 to June 30, 1997 was $135,502. 


NOTE D - Shareholders' Equity

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

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


                            Page 8


NOTE D - Shareholders' Equity (continued)

On March 27, 1997 and  March  28, 1996, the Company issued 41,500 and 135,000
options, respectively, to purchase its common shares  to  its  directors.  The  
options  were  distributed  among  the  directors based upon their years of 
service and their positions of  leadership  with  the Company. Each of the stock
option agreements contained an option price of $25.00 per share (1997  issuance)
or  $20.00 per share (1996 issuance), the market value of the shares at the time
of issuance. The options are exercisable between  April  1,  1996  and March 31,
2002, and are treated as non-qualified options under the provisions of the 
Internal  Revenue  Code.  The agreements also contain a provision whereby the 
Company shall compensate the optionee in cash for any federal or state tax 
liability incurred upon the exercise of the options.

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

These  options have been treated as common stock equivalents and have been 
included in the calculation of average common shares outstanding  in  Exhibit  
11, causing the equivalent average number of shares outstanding for the first 
two quarters of 1997 to rise  by  156,781  shares.  There  was  no dilutative 
effect on  book value per share at either June 30, 1997 or June 30, 1996. 
Earnings per average share outstanding were diluted by $ 0.07 per share and 
$ 0.03 per share, respectively, for the six months ended June 30, 1997 and 1996.


NOTE E - Employee Stock Ownership Plan

The  Company  adopted  an  Employee  Stock  Ownership Plan(the "ESOP") effective
as of January 1, 1985, which enables eligible employees  of  the Company and its
subsidiaries to own Company common stock.  Employees who work 1,000 hours in any
consecutive twelve  month  period become participants in the ESOP on December 31
of that year, and remain eligible in every subsequent year in  which  1,000  
hours of work are completed.  Employer contributions, which are made at the 
discretion of the Company's Board of  Directors,  are allocated to eligible 
participants in proportion to their eligible pay, which equals W-2 wages plus 
pre-tax reductions  for  the  Company's cafeteria plan.  The Internal Revenue 
Service imposes a limit ($150,000 in 1997) on the maximum amount of eligible pay
under the plan.

On  November  3,  1993, the ESOP's Trustees executed a promissory note of 
$1,200,000 in order to purchase common stock from the Company's  public offering
of new common stock. The note was originally secured by 80,000 shares of 
purchased stock. On October  2,  1995,  the  ESOP acquired 7,455 additional 
shares with the proceeds of a second promissory note, collateralized by the  
acquired  shares.  On May 17, 1996, these two notes were refinanced and an 
additional 58,000 shares of stock were obtained by  the  ESOP. These shares were
funded with the same promissory note which provided funds to refinance the 
previously executed notes.  This  new note was originally secured by 117,847 
shares of the Company s common stock. The shares securing the note are released 
proratably  by  the  lender  as  monthly  payments  of principal and interest 
are made. The note is guaranteed by the Company.  As  of  March  31,  1997,  
there were 107,213 unreleased shares with a fair value of approximately 
$2,788,000.  These shares are subtracted from outstanding shares for earnings 
per share calculations.

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


                                    Page 9

NOTE E - Employee Stock Ownership (continued)


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

At  June  30,  1997,  the Company's financial statements reflect long term debt 
and a corresponding contra-equity account, as a result of the ESOP debt, of 
$2,062,383.






                                       10 <PAGE>
 


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


This  discussion is intended to assist an understanding of the Company and its 
Subsidiaries' financial condition and results of operations.    Unless  the  
context  otherwise  indicates,  "the Company" shall include the Company and its 
Subsidiaries. This analysis should  be  read  in  conjunction with the financial
statements and related notes appearing in Item 1 of the June 30, 1997 Form 10-Q 
and  Management's  Discussion  and Analysis of Financial Condition and Results 
of Operations appearing in the Company's Annual Report on Form 10-K for the year
ended December 31, 1996.


FINANCIAL CONDITION

June 30, 1997 compared to December 31, 1996


Loans

Loans  comprised  the  largest single category of the Company's earning assets 
on June 30, 1997.  Loans, net of unearned income and  reserve  for  loan losses,
were  67.2%  of total assets at June 30, 1997 and 70.4% of total assets at 
December 31, 1996. Total  net  loans  were  $321,765,329  at  June  30,  1997,
representing  a  0.5% increase from the December 31, 1996 total of $320,337,446.
This  increase  of  approximately $1.43 million was relatively modest, as 
management has made deposit growth a priority over loan growth over the last 
several months.


Investment Securities and Other Earning Assets

Investment  securities  and  federal  funds sold increased $12,893,651 or 148.4%
from December 31, 1996 to June 30, 1997.  This increase  was  due  primarily  to
deposit growth in excess of loan growth .The investment securities portfolio is 
used to make various  term  investments,  to provide a source of liquidity and 
to serve as collateral to secure certain government deposits. Investment  
securities  at  June  30,  1997 were $80,804,956 compared with  $86,911,305 at 
December 31, 1996, reflecting a 7.0% decrease  of  $6,106,349.    Short-term 
investments in the form of interest-bearing deposits with banks were $2,949,058 
at June 30, 1997 and $1,773,778 at December 31, 1996.


Asset Quality

Between  December 31, 1996 and June 30, 1997, the Company experienced a slight 
decline in the quality of its assets as measured by  three  key  ratios. The 
ratio of loan loss allowance to total nonperforming assets(defined as nonaccrual
loans, loans past due  90  days  or  greater,  restructured loans, nonaccruing 
securities, and other real estate) declined from 1.33 to 1.09. The ratio  of  
total  nonperforming  assets to total assets rose from 0.004 to 0.005, and the 
ratio of nonperforming loans to total loans  increased  to  0.005  from 0.003 at
12/31/96. These ratios declined due to an increase in past due and nonaccrual 
loans, and  an  increase  in other real estate due to the purchase of employees 
homes who were relocated by the Company. All three of these  ratios  remain  
within  an acceptable  range, as compared with industry averages, and management
is aware of no factors which would suggest that they are prone to erosion in 
future periods.


Deposits

Total  deposits  of $430,058,095 at June 30, 1997 increased $29,720,420 (7.4%) 
over total deposits of  $400,337,675 at year-end 1996. Deposits  are  the  
Company's primary  source  of  funds  with  which to support its earning assets.
Noninterest-bearing deposits  increased $4,109,622 or 8.2% from year-end 1996 to
June 30, 1997, and interest-bearing deposits increased $25,610,798 (7.3%) from 
year-end 1996.  Certificates of deposit of $100,000 or more increased $6,044,162
(7.5%).



                                   11 <PAGE>
 

Other Short-term Borrowings

ther  short-term  borrowings  totaled  $3,104,170 at June 301, 1997, a 
$5,272,302 decrease from the December 31, 1996 total of $8,376,472.


Long-term Debt

At June 30, 1997 and December 31, 1996, the Company had notes payable totaling 
$7,841,000, and $8,281,449, respectively. 

On December 17, 1992, the Company entered into a loan agreement with a regional 
bank  for amounts up to $6,500,000. At June 30, 1997 and December 31, 1996, the 
amounts outstanding were $3,913,260 and  $4,269,010, respectively, due December 
17, 2002, bearing  interest  at  a  floating  prime,  and  collateralized  by 
100% of the common stock of the subsidiary banks.  The note agreement  contains 
provisions  which  limit  the  Company's  right  to  transfer  or issue shares 
of subsidiary banks' stock. Principal  payments  of  $59,292  are  due monthly; 
however, the Company has the option of postponing up to twenty-four monthly 
principal payments, provided that no more than six consecutively scheduled 
installments are deferred. On  November  3,  1993, the ESOP's Trustees executed
a promissory note of $1,200,000 in order to purchase common stock from the 
Company's  public  offering  of  new  common  stock.    The note was originally 
secured by 80,000 shares of purchased stock. On October  2,  1995,  the  ESOP 
acquired 7,455 additional shares with the proceeds of a second promissory note, 
collateralized by the  acquired  shares.  On May 17, 1996, these two notes were 
refinanced and an additional 58,000 shares of stock were obtained by  the  ESOP 
with  a promissory note with a beginning balance of $2,183,805. The Company has 
guaranteed this debt; accounting and  reporting  guidelines  mandate  that  the 
debt  be recognized on the Company's statement of condition, with an offsetting
charge  against  equity. As principal payments are made by the ESOP, the debt 
and offsetting charge against equity are reduced. This  note  was originally 
secured by 117,847 shares of the Company s common stock. The note bears interest
at a floating rate, with  principal  and  interest payments of $23,948 due 
monthly through June 17, 2018, with all remaining principal, if any, due upon  
that  date.  The  shares  securing  the  note  are released proratably by the 
lender as monthly payments of principal and interest are made. The outstanding 
balance  of this note was $2,062,383 at June 30, 1997, secured by 107,213 of 
unreleased shares of Company stock .

On  October  4, 1994, the Company entered into a twenty year, subordinated 
installment capital note due October 1, 2014 for the purchase  of  treasury  
stock. Monthly principal and interest payments of $15,506 are made on the note, 
which bears interest at the  fixed  rate of 7 %. The Company maintains the right
to prepay the note at its sole discretion.The balance of the note was $1,865,357
at June 30, 1997.

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

                   1997  . . . . . . . . .  $     440,216
                   1998  . . . . . . . . .        892,430
                   1999  . . . . . . . . .        907,467
                   2000  . . . . . . . . .        923,328
                   2001  . . . . . . . . .        941,388
                   Thereafter  . . . . . .      3,736,171

                                            $   7,841,000



Shareholders' Equity

Company  shareholders'  equity increased $343,108 from December 31, 1996 to June
30, 1997, due to:  net earnings of $1,824,384, the  payment  of a cash dividend 
of  $1,500,000, the reduction of unearned ESOP shares by $57,508, the issuance 
of additional common  stock  for  $96,720,  and the increase of unrealized  
losses on securities available for sale totaling $135,504, net of deferred tax 
liability.




                                  12 <PAGE>
 


Capital Resources

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

Bank regulatory  authorities  are  placing increased emphasis on the maintenance
of adequate capital.  In 1990, new risk-based capital  requirements  became  
effective. The  guidelines  take  into  consideration risk factors, as defined
by regulators, associated  with  various  categories  of assets, both on and off
the balance sheet.  Under the guidelines, capital strength is measured  in two 
tiers which are used in conjunction with risk-adjusted assets to determine the 
risk-based capital ratios.  The Company's  Tier  I capital, which consists of 
common equity less goodwill, amounted to $29.0 million at June 30, 1997. Tier II
capital  components  include  supplemental  capital  components  such  as  
qualifying  allowance for loan losses and qualifying subordinated  debt.Tier I
capital plus the Tier II capital components is referred to as Total Risk-Based 
capital and was $ 33.2 million at June 30, 1997.

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

                                13 <PAGE>
 



RESULTS OF OPERATIONS

Six months ended June 30, 1997 and 1996


Summary

Net  earnings  of the Company for the six months ended June 30, 1997 were 
$1,824,384 compared to $1,443,225 for the same period in  1996,  representing 
a 26.4% increase.  This increase was due principally to the increase of interest
margin resulting from the growth  in  average  earning  assets. This is a direct
result of the Company's expansion activity, with three new banking facilities  
being  opened  in 1994, two new locations opening in 1995, four new locations 
opening in 1996, plus the purchase of the  assets and  assumption of liabilities
of the Haleyville and Uniontown,Alabama branches of a regional bank during 1996.
This  growth  in net interest income is partially offset by an increase in 
noninterest expense in excess of noninterest income, as  the  Company  is  
absorbing the direct costs of operating these new facilities; additionally, the
Company has increased its staffing  levels within its support functions to a 
level which not only allows quality service to current banking customers but 
which  also anticipates continued growth in the future. Net interest income 
increased $1,732,703 during the first half of 1997, as  compared to the same 
period in 1996; noninterest expenses increased $1,305,434 during same period, 
while noninterest income increased by $341,792. 


Net Interest Income

Net  interest  income,  the  difference  between interest earned on assets and 
the cost of interest-bearing liabilities, is the largest  component  of  the  
Company's net income.  Revenue from earning assets of the Company during the six
months ended June 30,  1997  increased  $2,801,608  (17.9%)  from  the same 
period in 1996.  This increase was due to higher average  outstanding balances  
of earning assets. Average  earning  assets outstanding during the first half of
1997 were $50,621,384 higher than during  the  first  two quarters of 1996. 
Interest expense for the six months ended June 30, 1997 increased $1,068,905 or 
12.6% over  the  corresponding  period  of 1996.  As a result of these factors, 
net interest income increased $1,732,703 or 24.2%, in the six months ended June 
30, 1997, compared to the same period of 1996.



Provision for Loan Losses

The  provision for loan losses represents the charge against current earnings 
necessary to maintain the reserve for loan losses at a level  which  management
considers appropriate.  This level is determined based upon Community Bank's 
historical charge-offs,  management's  assessment  of  current  economic  
conditions,  the  composition  of  the loan portfolio and the levels of 
nonaccruing  and past due loans.  The provision for loan losses was $494,247 
for the six months ended June 30, 1997 compared to $277,134  for  the  same  
period  of 1996.  Charge-offs exceeded recoveries by $384,744 for the six months
ended June 30, 1997. The  reserve  for  loan losses as a percent of outstanding
loans, net of unearned income, was .78% at June 30, 1997 compared to .75% at 
year-end 1996.



Noninterest Income

Noninterest  income  for  the six months ended June 30, 1997 was $2,319,982 
compared to $1,978,190 for the same period of 1996. This  17.3%  increase  was 
primarily due to an increase in service charges on deposit accounts of $214,068 
in the first half of 1997  as  compared  to  the same period of 1996, and the 
recognition of fees from debt cancellation contracts, a relatively new program, 
of  $111,212  .  Significant  components of noninterest income are as follows:  
Service charges on deposits increased $214,068  (20.9%),  insurance  commissions
increased $102,754 (44.7%), security  losses totaled $2,590 as opposed to losses
of $6,596  in 1996, and other operating income, primarily dues for the bank club
account, fees on debt cancellation contracts, and appraisal fees, decreased 
$14,774 (3.0%) to $476,480.




                                                14 <PAGE>
 




Noninterest Expenses

Noninterest  expenses for the six months ended June 30, 1997 were $8,196,910, 
reflecting an 18.9% increase over the same period of  1996.  The primary 
components of noninterest expenses are salaries and employee benefits, which 
increased to $4,917,162 for the  six  months  ended  June  30,  1997, 15.5% 
higher than in the same period of 1996.  The increases in salaries and employee
benefits  are due to staffing for new banking locations and future expansion as 
well as merit increases and incentive payments. Occupancy  costs  increased  
$232,104  (49.9%),  furniture  and  equipment  expenses  rose by $98,373(20.9%),
and director and committee fees increased by $116,420 (59.6%).  Other operating
expenses rose by 13.4% to $1,702,030.

The  majority  of  these  expenses  should  continue to grow at or above the 
rate for the six months ended June 30, 1997, since management intends to 
continue its growth policies.  

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

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

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


Income Taxes

The  Company  attempts  to maximize its net income through active tax planning.
The provision for income taxes of $712,731 for the  six  months  ended  June 30,
1997 increased $170,789 compared to the same period of 1996, due primarily to 
the increase in income  before  tax.    Taxes  as  a  percent  of  pre-tax  
earnings increased from 27.3% to 28.1%. The effective tax rate of approximately
28.1% is less than the statutory rate principally because of the effect of 
tax-exempt interest income.




                                   15 <PAGE>
 


                            Part II - Other Information

                     Item 6 - Exhibits and Reports on Form 8-K


(a) Exhibits:

       Exhibit Number          Description of Exhibit          Page Number

            11                 Computation of Earnings             17     
                                  Per Share               

            27                 Financial Data Schedule
                                (for the SEC use only)

(b) Reports on Form 8-K

    The Company did not file any reports on Form 8-K during the quarter ended 
    June 30, 1997.








                                       16 <PAGE>
 


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

COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES



The  following tabulation presents the calculation of primary and fully diluted 
earnings per common share for the six-month and three-month periods ended June 
30, 1997 and 1996.

                                  Six Months Ended      Three Months Ended    
                                      June 30,               June 30,      
                                 1997         1996      1997          1996    

Reported net income . . . .$  1,824,354  $ 1,443,225 $ 1,002,168 $   772,597


Earnings on common shares  $  1,824,354  $ 1,443,225 $ 1,002,168 $   772,597


Weighted average common 
  shares outstanding  . . .   2,050,596    1,911,617   2,072,847   1.995,547  

Earnings per common share-
   primary and fully-diluted:
 Income from continuing 
    operations . . . . . .  $       .89  $       .75  $     .48  $       .39

  Net income  . . . . . .   $       .89  $       .75  $     .48  $       .39



                                        17 <PAGE>
 



SIGNATURES

Pursuant  to  the  requirements of the Securities Exchange Act of 1934, the 
registrant has duly caused this report to be signed on its behalf by the 
undersigned thereunto duly authorized.


                    COMMUNITY BANCSHARES, INC.



August 7, 1997                        /s/ Kennon R. Patterson, Sr.     
Date                                      Kennon R. Patterson, Sr., as its
                                          President and Chief Executive   
                                          Officer                          



August 7, 1997                        /s/ Paul W. Williams, CPA            
Date                                      Paul W. Williams, CPA, as its Senior
                                          Vice President and Chief        
                                          Accounting Officer              
                      

                                 18 <PAGE>