SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported): January 23, 2003
COMMUNITY BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State of Incorporation)
000-16461
(Commission File No.)
63-0868361
(IRS Employer I.D. No.)
68149 Main Street
Blountsville, Alabama 35031
(Address of Principal Executive Office) (Zip code)
Registrant's telephone number, including area code: 205-429-1000
Item 9. Regulation FD Disclosure
The Registrant hereby furnishes, as Regulation F-D Disclosure, supplemental
information regarding the filing by Kennon R. Patterson, Sr., former Chairman,
Chief Executive Officer and President of the Registrant, for protection under
Chapter 11 of the U.S. Bankruptcy code ("Chapter 11"):
Mr. Patterson filed for protection under Chapter 11 on January 20, 2003 in the
United States Bankruptcy Court for the Northern District of Alabama. Pursuant to
the Bank's policies and procedures, the bankruptcy filing required that the
Bank's loan to Mr. Patterson (the "Loan", described in the Registrant's Annual
Report on Form 10-K for 2001) be placed on "non-accrual" status. This action
means that the Bank will not record interest income on the Loan during the
pendency of the bankruptcy proceedings.
Currently the Loan has an aggregate principal balance of approximately $5.1
million. Annual interest income on the Loan is approximately $225,000. At
September 30, 2002, the Company had total interest income of approximately $41.0
million on an annualized basis. Nevertheless, under generally accepted
accounting principles, the loss of income from the Loans may be considered
material to the Company's earnings.
The Loan is secured, in whole or in part, by real estate owned by Mr. Patterson,
including his personal residence (the "Property"). Mr. Patterson's personal
residence has an appraised value in excess of $6.0 million. Nevertheless,
bankruptcy proceedings may create general risks to creditors of the bankruptcy
estate. These risks include lien competition among secured creditors such as the
Bank, reduction of assets available to creditors resulting from preferential
payment of the costs of administration of the bankruptcy estate, diminution in
the value of collateral such as the Property realizable in forced sales, as
opposed to conventional market transactions and unforeseeable effects of the
bankruptcy court's exercise of its broad equitable powers. The Bank is presently
conferring with counsel to evaluate its rights in the bankruptcy proceedings and
plans to pursue vigorously its interests in such proceedings.
As reported in a Report on Form 8-K filed January 30, 2003, Kennon R. Patterson,
Sr. was replaced by Patrick M. Frawley as Chairman, Chief Executive Officer and
President of the Registrant on January 27, 2003.
WARNING REGARDING FORWARD LOOKING STATEMENTS
This Current Report on Form 8-K contain "forward-looking statements" within the
meaning of the federal securities laws. The forward-looking statements in this
release are subject to risks and uncertainties that could cause actual results
to differ materially from those expressed or implied by the statements. Factors
that may cause actual results to differ materially from those contemplated by
such forward-looking statements include, among other things, the following
possibilities: (i) an inability of the company to realize elements of its
strategic plans for 2003 and beyond; (ii) increases in competitive pressure in
the banking industry; (iii) general economic conditions, either nationally or
regionally, that are less favorable than expected; (iv) expected cost savings
from recent branch dispositions are not fully realized; (v) changes in the
interest rate environment which may reduce margins; (vi) management's
assumptions regarding allowance for loan losses may not be borne out of
subsequent events; (vii) an unfavorable outcome in one or more of previously
reported civil litigations filed against the company; (viii) the uncertain
outcome of the bankruptcy proceedings reported herein; (ix) the possibility of
future litigation or regulatory action against the Registrant or the Bank; and
(x) changes which may occur in the regulatory environment. When used in this
Report, the words "believes," "estimates," "plans," "expects," "should," "may,"
"might," "outlook," and "anticipates" and similar expressions as they relate to
Community Bancshares, Inc. (including its subsidiaries) or its management are
intended to identify forward-looking statements. Forward-looking statements
speak only as to the date they are made. Community Bancshares, Inc. does not
undertake to update forward-looking statements to reflect circumstances or
events that occur after the date the forward-looking statements are made.
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 hereunto duly authorized, in the city of Blountsville, State of
Alabama.
COMMUNITY BANCSHARES, INC.
--------------------------
(Registrant)
Date: Febuary 3, 2003 /s/ PATRICK M. FRAWLEY
-------------------- ---------------------------------------
BY: Patrick M. Frawley
ITS: Chairman, Chief Executive Officer and
President