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CUSIP NO. 20343H 10 6 SCHEDULE 13D Page 1 of 15
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)
COMMUNITY BANCSHARES, INC.
(Name of Issuer)
COMMON STOCK
(Title of Class of Securities)
20343H 10 6
(CUSIP Number)
Mr. Joseph Stilwell
26 Broadway, 23rd Floor
New York, New York 10004
Telephone: (212) 269-5800
with a copy to:
Spencer L. Schneider, Esq.
70 Lafayette Street
New York, New York 10013
Telephone: (212) 233-7400
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
December 2, 2005
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss.240.13d-1(e), 240.13d-(f) or 240.13d-1(g), check the
following box. [ ]
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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CUSIP NO. 20343H 10 6 SCHEDULE 13D Page 2 of 15
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1. Names of Reporting Persons. I.R.S. Identification Nos. of above
persons (entities only).
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Stilwell Value Partners IV, L.P.
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2. Check the Appropriate Box if a Member of a Group (See Instructions)
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(a) [X]
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(b)
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3. SEC Use Only
...................................................................
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4. Source of Funds (See Instructions) WC
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5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e) [ ]
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6. Citizenship or Place of Organization: Delaware
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Number of 7. Sole Voting Power: 0
Shares -----------------------------------------------------------------
Beneficially 8. Shared Voting Power: 715,831
Owned by -----------------------------------------------------------------
Each 9. Sole Dispositive Power: 0
Reporting -----------------------------------------------------------------
Person With 10. Shared Dispositive Power: 715,831
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11. Aggregate Amount Beneficially Owned by Each Reporting Person:
715,831
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12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions) [ ]
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13. Percent of Class Represented by Amount in Row (11): 8.2%
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14. Type of Reporting Person (See Instructions) PN
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CUSIP NO. 20343H 10 6 SCHEDULE 13D Page 3 of 15
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1. Names of Reporting Persons. I.R.S. Identification Nos. of above
persons (entities only).
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Stilwell Associates, L.P.
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2. Check the Appropriate Box if a Member of a Group (See Instructions)
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(a) [X]
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(b)
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3. SEC Use Only
........................................................................
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4. Source of Funds (See Instructions) WC
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5. Check if Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [ ]
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6. Citizenship or Place of Organization: Delaware
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Number of 7. Sole Voting Power: 0
Shares -----------------------------------------------------------------
Beneficially 8. Shared Voting Power: 715,831
Owned by -----------------------------------------------------------------
Each 9. Sole Dispositive Power: 0
Reporting -----------------------------------------------------------------
Person With 10. Shared Dispositive Power: 715,831
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11. Aggregate Amount Beneficially Owned by Each Reporting Person:
715,831
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12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions) [ ]
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13. Percent of Class Represented by Amount in Row (11): 8.2%
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14. Type of Reporting Person (See Instructions) PN
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CUSIP NO. 20343H 10 6 SCHEDULE 13D Page 4 of 15
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1. Names of Reporting Persons. I.R.S. Identification Nos. of above persons
(entities only).
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Stilwell Value LLC
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2. Check the Appropriate Box if a Member of a Group (See Instructions)
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(a) [X]
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(b)
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3. SEC Use Only
........................................................................
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4. Source of Funds (See Instructions) N/A
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5. Check if Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [ ]
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6. Citizenship or Place of Organization: Delaware
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Number of 7. Sole Voting Power: 0
Shares -----------------------------------------------------------------
Beneficially 8. Shared Voting Power: 715,831
Owned by -----------------------------------------------------------------
Each 9. Sole Dispositive Power: 0
Reporting -----------------------------------------------------------------
Person With 10. Shared Dispositive Power: 715,831
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11. Aggregate Amount Beneficially Owned by Each Reporting Person:
715,831
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12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions) [ ]
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13. Percent of Class Represented by Amount in Row (11): 8.2%
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14. Type of Reporting Person (See Instructions) OO
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CUSIP NO. 20343H 10 6 SCHEDULE 13D Page 5 of 15
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1. Names of Reporting Persons. I.R.S. Identification Nos. of above persons
(entities only).
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Joseph Stilwell
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2. Check the Appropriate Box if a Member of a Group (See Instructions)
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(a) [X]
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(b)
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3. SEC Use Only
........................................................................
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4. Source of Funds (See Instructions) N/A
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5. Check if Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [ ]
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6. Citizenship or Place of Organization: United States
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Number of 7. Sole Voting Power: 0
Shares -----------------------------------------------------------------
Beneficially 8. Shared Voting Power: 715,831
Owned by -----------------------------------------------------------------
Each 9. Sole Dispositive Power: 0
Reporting -----------------------------------------------------------------
Person With 10. Shared Dispositive Power: 715,831
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11. Aggregate Amount Beneficially Owned by Each Reporting Person:
715,831
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12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions) [ ]
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13. Percent of Class Represented by Amount in Row (11): 8.2%
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14. Type of Reporting Person (See Instructions) IN
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CUSIP NO. 20343H 10 6 SCHEDULE 13D Page 6 of 15
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Item 1. Security and Issuer
This is the second amendment to the original Schedule 13D, which was filed
on March 29, 2004 (the "Original Schedule 13D"), and amended on November 21,
2005 (the "First Amendment"). This Second Amendment is filed jointly by Stilwell
Value Partners IV, L.P., a Delaware limited partnership ("Stilwell Value
Partners IV"), Stilwell Associates, L.P., a Delaware limited partnership
("Stilwell Associates"), Stilwell Value LLC, a Delaware limited liability
company ("Stilwell Value LLC") and the general partner of Stilwell Value
Partners IV and Stilwell Associates, and Joseph Stilwell, managing and sole
member of Stilwell Value LLC. All of the filers of this Schedule 13D are
collectively referred to as the "Group".
This statement relates to the common stock ("Common Stock") of Community
Bancshares, Inc. (the "Issuer"). The address of the principal executive offices
of the Issuer is 68149 Main Street, Blountsville, Alabama 35031. The joint
filing agreement of the members of the Group is attached to the Original
Schedule 13D as Exhibit 1.
Item 2. Identity and Background
(a)-(c) This statement is filed by Joseph Stilwell, with respect to the
shares of Common Stock held in the names of Stilwell Value Partners IV and
Stilwell Associates, in Mr. Stilwell's capacity as the managing and sole member
of Stilwell Value LLC, which is the general partner of Stilwell Value Partners
IV and Stilwell Associates.
The business address of the Group is 26 Broadway, 23rd Floor, New York, New
York 10004.
The principal employment of Mr. Stilwell is investment management. Stilwell
Value Partners IV and Stilwell Associates are private investment partnerships
engaged in the purchase and sale of securities for their own accounts. Stilwell
Value LLC is in the business of serving as the general partner of Stilwell Value
Partners IV and Stilwell Associates.
(d) During the past five years, no member of the Group has been convicted
in a criminal proceeding (excluding traffic violations or similar misdemeanors).
(e) During the past five years, no member of the Group has been a party to
a civil proceeding of a judicial or administrative body of competent
jurisdiction and, as a result of such proceeding, was, or is subject to, a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, Federal or State securities laws or finding
any violation with respect to such laws.
(f) Mr. Stilwell is a citizen of the United States.
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CUSIP NO. 20343H 10 6 SCHEDULE 13D Page 7 of 15
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Item 3. Source and Amount of Funds or Other Consideration
No member of the Group has purchased any shares of Common Stock since the
filing of the Original Schedule 13D.
Item 4. Purpose of Transaction
The purpose of the acquisition of Common Stock of the Issuer by members of
the Group is to profit from the appreciation in the market price of the Common
Stock through the assertion of shareholder rights. The members of the Group do
not believe the value of the Issuer's assets is adequately reflected in the
current market price of the Issuer's Common Stock.
Members of the Group are filing this Second Amendment to report that, on
December 2, 2005, the Group sent a letter to the Issuer demanding that the
Issuer confirm whether it interprets its bylaws to prohibit shareholders to
nominate an alternate slate of directors and, if so, stating that the Group will
sue the Issuer to nullify the Issuer's bylaws to enable the Group to nominate an
alternate slate. A copy of the letter is attached as Exhibit 2. If the Issuer
does not provide a satisfactory response within five days, members of the Group
intend to file a lawsuit to obtain relief.
Members of the Group believe that the Issuer's management has made good
progress in resolving the Issuer's regulatory issues, lawsuits, problem loans,
and non-performing assets. However, members of the Group believe that the
Issuer's return on equity is substantially below average, and that its return on
equity is likely to remain below average for the foreseeable future. As
previously reported on November 21, 2005, members of the Group therefore believe
that the Issuer should be sold. On November 21, 2005, members of the Group also
disclosed that, if the Issuer does not announce a sale transaction before the
time that the Group must begin the proxy solicitation process for the 2006
annual shareholders meeting, the Group intends to nominate an alternate slate of
directors for election at that meeting and to solicit proxies to elect them.
Members of the Group reserve the right, in the future, without limitation:
(a) to communicate and discuss their views with other shareholders and make
proposals to the Issuer's Board and management regarding (i) representation on
the Issuer's Board, or (ii) a sale or merger of the Issuer; or (b) to solicit
proxies or written consents from other shareholders of the Issuer with respect
to Board representation or other proposals for shareholder action.
On May 1, 2000, certain members of the Group (the "Stilwell SPN Group")
filed a Schedule 13D in connection with the common stock of Security of
Pennsylvania Financial Corp. ("SPN"). Thereafter, the Stilwell SPN Group
communicated with management of SPN and scheduled a meeting with senior
management in order to discuss maximizing short and long-term value of SPN's
assets. On June 2, 2000, prior to the scheduled meeting, SPN and Northeast
Pennsylvania Financial Corp. announced the signing of a definitive agreement
under which Northeast Pennsylvania Financial Corp. agreed to acquire SPN and the
Stilwell SPN Group disposed of its shares of SPN on the open market.
On July 7, 2000, certain members of the Group (the "Stilwell CMRN Group")
filed a Schedule 13D in connection with the common stock of Cameron Financial
Corporation ("Cameron"). Thereafter the Stilwell CMRN Group exercised its
shareholder rights by, among other things, requesting that Cameron management
hire an investment banker, demanding Cameron's list of shareholders, meeting
with Cameron's management, demanding that Cameron invite the Stilwell CMRN
Group's representatives to join the Board, writing to other Cameron shareholders
to express their dismay with management's inability to maximize shareholder
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CUSIP NO. 20343H 10 6 SCHEDULE 13D Page 8 of 15
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value and publishing that letter in the local press. On October 6, 2000, Cameron
announced that it had entered into an agreement to be acquired by Dickinson
Financial Corp. and the Stilwell CMRN Group disposed of its shares of Cameron on
the open market.
On January 4, 2001, certain members of the Group (the "Stilwell CFIC
Group") filed a Schedule 13D in connection with the common stock of Community
Financial Corp. ("CFIC"). The Stilwell CFIC Group reported that it acquired the
stock of CFIC for investment purposes after CFIC announced the sale of two of
its four subsidiary banks and its intention to sell one or more of its remaining
subsidiaries. On January 25, 2001, CFIC announced the sale of one of its
remaining subsidiaries. The Stilwell CFIC Group then announced its intention to
run an alternate slate of directors at the 2001 annual meeting if CFIC did not
sell the remaining subsidiary by then. On March 27, 2001, members of the
Stilwell CFIC Group wrote to CFIC confirming that CFIC had agreed to meet with
one of the Stilwell CFIC Group's proposed nominees to the Board. On March 30,
2001, before the meeting took place, CFIC announced that it had agreed to be
merged with First Financial Corporation. The Stilwell CFIC Group, having
accomplished its purpose of maximizing shareholder value, announced that it
would not seek representation on the Board or solicit proxies for use at the
annual meeting.
On February 23, 2001, certain members of the Group (the "Stilwell MONT
Group") filed a Schedule 13D in connection with the common stock of Montgomery
Financial Corporation ("Montgomery"). In its Schedule 13D, the Stilwell MONT
Group stated that it acquired the stock of Montgomery for investment purposes
and that it believed the value of Montgomery's assets exceeded its current
market price. On April 20, 2001, members of the Stilwell MONT Group met with
Montgomery's management, suggested to management that it should maximize
shareholder value by selling the institution and notified management that it
would run an alternate slate of directors at the 2001 annual meeting unless
Montgomery entered into a transaction. Eleven days after the Schedule 13D was
filed, Montgomery's Board amended its bylaws to require that nominees to its
Board must: (a) reside locally, (b) have a loan or deposit relationship with
Montgomery's subsidiary bank for at least twelve months prior to nomination, (c)
have served as a member of a local civic or community organization for at least
twelve months during the five years prior to the nomination to the Board, and
(d) own 100 shares of Montgomery's stock. Additionally, the amended bylaws
shortened the time for shareholders to notice their intention to nominate
alternate directors at the 2001 annual meeting. On June 5, 2001, Montgomery
announced that it had hired an investment banking firm, to "help evaluate
available alternatives to improve financial performance and maximize shareholder
value. . . . [including] a potential acquisition or merger." On June 13, 2001,
the Stilwell MONT Group timely noticed its intention to nominate to Montgomery's
Board two persons who qualified under the amended bylaws. On July 24, 2001,
Montgomery announced that it signed a definitive agreement with Union Community
Bancorp ("Union") providing for the merger of Montgomery into Union.
On June 14, 2001, certain members of the Group (the "Stilwell HCBB Group")
filed a Schedule 13D in connection with the common stock of HCB Bancshares, Inc.
("HCBB"). On or about September 4, 2001, the Stilwell HCBB Group reported that
it had entered into a standstill agreement with HCBB whereby, among other
things, HCBB would appoint a director selected by the Stilwell HCBB Group. HCBB
also agreed to consider conducting a Dutch tender auction. Additionally, HCBB
agreed to adopt annual financial targets. HCBB also agreed that if it did not
achieve the financial targets, it would retain an investment banking firm to
help it to explore available alternatives to maximizing shareholder value. On
October 22, 2001, the Stilwell HCBB
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CUSIP NO. 20343H 10 6 SCHEDULE 13D Page 9 of 15
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Group reported that HCBB had named its nominee, John G. Rich, Esq., as a
director. On January 31, 2002, HCBB announced a modified Dutch tender auction to
repurchase 20% of its shares. Subsequent to the standstill agreement, HCBB
announced and completed a number of 5% share repurchase programs, and, between
the filing of the Stilwell HCBB Group's Schedule 13D and up until August 31,
2003, HCBB's outstanding share count decreased by 33%. HCBB did not achieve the
financial target enumerated in the standstill agreement for the fiscal year
ended June 30, 2003. Pursuant to the terms of the standstill agreement, on
August 12, 2003, HCBB announced that it retained Gerrish & McCreary PC (a
regional investment banking firm) to assist HCBB in exploring available
alternatives for maximizing shareholder value, including a sale of HCBB. On
January 14, 2004, HCBB announced that it had agreed to be acquired by Rock
Bancshares Inc. and, having accomplished its objective of maximizing shareholder
value, the Stilwell HCBB Group disposed of its shares of HCBB on the open
market.
On December 15, 2000, certain members of the Group (the "Stilwell OTFC
Group") filed a Schedule 13D in connection with the common stock of Oregon Trail
Financial Corp. ("OTFC"). In January 2001, members of the Stilwell OTFC Group
met with the management of OTFC to discuss its concerns that management was not
maximizing shareholder value and it proposed that OTFC voluntarily place its
nominees on the Board. OTFC rejected the Stilwell OTFC Group's proposal, and the
Stilwell OTFC Group immediately announced its intention to solicit proxies to
elect a Board nominee. OTFC refused to produce its complete shareholder list to
the Stilwell OTFC Group, which sued OTFC in Baker County, Oregon. The court
ultimately ordered OTFC to produce the complete list and to pay $10,000 in
attorneys' fees to the Stilwell OTFC Group. The Stilwell OTFC Group also
initiated lawsuits against two OTFC directors, alleging that one director had
allegedly violated OTFC's residency requirement and that the other director had
allegedly committed perjury while testifying about his co-director in the first
suit. Both suits were dismissed pre-trial but the Stilwell OTFC Group filed an
appeal in one suit and was permitted to re-file the other suit in state court.
On or about August 16, 2001, the Stilwell OTFC Group began to solicit proxies
from shareholders to elect Kevin D. Padrick, Esq. to the Board of OTFC. On
September 12, 2001, OTFC filed suit against the Manhattan-based Stilwell OTFC
Group in Portland, Oregon's federal district court and moved to invalidate the
Stilwell OTFC Group's proxies, but the court denied the motion and the election
proceeded. During the election, OTFC announced the hiring of an investment
banking firm. The Stilwell OTFC Group argued in its proxy materials that OTFC
should have used its excess capital to repurchase its shares at prices below
book value. In the five months after the filing of the Stilwell OTFC Group's
first proxy statement (i.e., from August 1, 2001 through December 31, 2001),
OTFC repurchased approximately 15% of its shares.
On October 12, 2001, at OTFC's Annual Meeting, OTFC's shareholders elected
the Stilwell OTFC Group's candidate to the Board by a 2-1 margin. On March 12,
2002, OTFC and members of the Stilwell OTFC Group entered into a standstill
agreement pursuant to which, among other things, OTFC agreed to achieve annual
targets for its return on equity, to reduce its current capital ratio, to obtain
advice from its investment banker regarding annual 10% stock repurchases, to
re-elect the Stilwell OTFC Group's director to the Board at the end of his
current term, to maintain a seat for the Stilwell OTFC Group's director, or a
replacement director, for five years, to reimburse a portion of the Stilwell
OTFC Group's expenses incurred in the proxy contest, and to withdraw, with
prejudice, the pending lawsuit against members of the Stilwell OTFC Group. In
exchange, members of the Stilwell OTFC Group agreed, among other things, to
refrain from seeking additional seats on OTFC's Board and to support OTFC. On or
about February 24, 2003, OTFC and FirstBank NW Corp. ("FBNW") announced the
signing of a definitive agreement
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whereby OTFC and FBNW would be merged, and the Stilwell OTFC Group subsequently
announced that, having accomplished its objective of maximizing shareholder
value, it had disposed of substantially all of its shares on the open market.
On November 25, 2002, certain members of the Group (the "Stilwell ACAP
Group") filed a Schedule 13D in connection with the common stock of American
Physicians Capital, Inc. ("ACAP"). The Schedule 13D reported that on January 18,
2002, the Michigan Insurance Department approved the Stilwell ACAP Group's
petition for permission to solicit proxies to elect two directors to ACAP's
Board. On January 29, 2002, Stilwell Associates noticed its intention to
nominate two directors at the 2002 annual meeting. On February 20, 2002, the
Stilwell ACAP Group entered into a three-year standstill agreement with ACAP
wherein, among other things, ACAP added the Stilwell ACAP Group's nominee,
Spencer L. Schneider, Esq., to its Board. Additionally, ACAP agreed, subject to
its Board's fiduciary duties and regulatory approval, to consider using a
portion of its excess capital to repurchase ACAP's shares in each of the fiscal
years 2002 and 2003 so that its outstanding share count would decrease by 15%
for each of those years. In its 2002 fiscal year, ACAP repurchased 15% of its
outstanding shares. Such repurchases were highly accretive to ACAP's per share
book value. Since the filing of the Schedule 13D: (a) on November 6, 2003, ACAP
announced a reserve charge and that it would explore its options to maximize
shareholder value -- it subsequently announced it had retained Sandler O'Neill &
Partners, L.P. to assist the Board in this regard; (b) on November 6, 2003, ACAP
also announced that it would exit from the healthcare and workers compensation
insurance businesses; (c) on December 2, 2003, ACAP announced that its President
and Chief Executive Officer, William Cheeseman, would take early retirement on
December 31, 2003; (d) on December 23, 2003, ACAP named R. Kevin Clinton as its
new President and Chief Executive Officer; and (e) on June 24, 2004, ACAP
announced that, after a diligent and thorough review and examination, the Board
determined that the best means to maximize shareholder value is to continue to
execute ACAP's current business strategy of shedding non-core businesses and
focusing on its core business line in its core markets. On August 19, 2004, the
Stilwell ACAP Group disclosed that it intended to seek additional representation
on the Board and exercise its shareholder rights upon the expiration of the
standstill agreement. On November 10, 2004, at ACAP's invitation, Joseph
Stilwell joined ACAP's Board of Directors and the parties entered into a new
standstill agreement providing for Mr. Stilwell and Mr. Schneider to remain on
the Board through the annual meeting in 2008.
On June 30, 2003, certain members of the Group (the "Stilwell FPIC Group")
filed a Schedule 13D in connection with the common stock of FPIC Insurance
Group, Inc. ("FPIC"). The Stilwell FPIC Group also reported that at such times
as the market price of FPIC stock more adequately reflects the value of its
assets, the Stilwell FPIC Group reserved its right to make additional
dispositions of its holdings of FPIC stock irrespective of FPIC having taken
steps to maximize shareholder value. On August 12, 2003, the Florida Office of
Insurance Regulation approved the Stilwell FPIC Group's application to acquire
more than 5% of FPIC's shares of common stock and to hold board seats and
exercise its shareholder rights. On November 10, 2003, pursuant to the Group's
request to FPIC, the Group's nominee, John G. Rich, Esq., became a director of
FPIC. In connection with Mr. Rich's appointment to the Board, FPIC and members
of the Group entered into a confidentiality agreement. On June 7, 2004, the
Stilwell FPIC Group reported that, inasmuch as FPIC's shares were somewhat less
undervalued because of the substantial increase in the market price of the
stock, it had decreased its holdings of FPIC to below 5%.
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On June 20, 2005, certain members of the Group (the "Stilwell PBIP Group")
filed a Schedule 13D in connection with the common stock of Prudential Bancorp,
Inc. of Pennsylvania ("PBIP"), disclosing that the Group intended to seek a seat
on PBIP's board of directors. PBIP is majority owned by a mutual holding company
("MHC") controlled by PBIP's management and has the ability to outvote public
shareholders on most corporate actions except, pursuant to federal regulations,
on approval of its stock benefit plans. PBIP's prospectus distributed in January
2005 indicated its intention to seek shareholder approval of its stock benefit
plans. In July 2005, Joseph Stilwell asked to be placed on PBIP's board, but
PBIP declined to do so. On August 5, 2005, the Stilwell PBIP Group filed
preliminary proxy materials with the SEC to solicit proxies to oppose approval
of PBIP's stock benefit plans in order to send a message to PBIP that it should
appoint public shareholders with substantial share holdings to its board. On
October 20, 2005, PBIP disclosed that it would not seek approval of its stock
benefit plans at its upcoming annual meeting. On November 17, 2005, the Stilwell
PBIP Group filed preliminary proxy materials with the SEC to solicit proxies
from PBIP's shareholders to withhold their votes on the election of directors as
a referendum that PBIP should appoint public shareholders with substantial share
holdings to its board. If PBIP decides at a later date to seek shareholder
approval of its stock benefit plans, the Stilwell PBIP Group will solicit
proxies to oppose them.
Members of the Group may make further purchases of shares of Common Stock.
Members of the Group may dispose of any or all the shares of Common Stock held
by them, although they have no current plans to do so. Except as noted in this
Schedule 13D, no member of the Group has any plans or proposals which relate to,
or could result in, any of the matters referred to in paragraphs (a) through
(j), inclusive, of Item 4 of Schedule 13D. Members of the Group may, at any time
and from time to time, review or reconsider their positions and formulate plans
or proposals with respect thereto.
Item 5. Interest in Securities of the Issuer
The percentages used in this Second Amendment are calculated based upon the
number of outstanding shares of Common Stock, 8,680,415, reported as of October
19, 2005, in the Issuer's Form 10-Q dated November 10, 2005. The March 19, 2004
purchase of shares of Common Stock by Stilwell Value Partners IV was made in an
open market transaction on the Over the Counter Bulletin Board. The March 2,
2004 purchases of shares of Common Stock by members of the Group were made in a
private placement transaction with the Issuer. The March 3, 2005, sale of 8,000
shares of Common Stock by Stilwell Value Partners IV was made in an open market
transaction on the Over the Counter Bulletin Board.
(A) Stilwell Value Partners IV
(a) Aggregate number of shares beneficially owned: 715,831
Percentage: 8.2%
(b) 1. Sole power to vote or to direct vote: 0
2. Shared power to vote or to direct vote: 715,831
3. Sole power to dispose or to direct the disposition: 0
4. Shared power to dispose or to direct disposition: 715,831
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(c) Stilwell Value Partners IV has not purchased or sold any shares of
Common Stock within the past 60 days.
(d) Because he is the managing and sole member of Stilwell Value LLC, which
is the general partner of Stilwell Value Partners IV, Mr. Stilwell has the power
to direct the affairs of Stilwell Value Partners IV, including the voting and
disposition of shares of Common Stock held in the name of Stilwell Value
Partners IV. Therefore, Mr. Stilwell is deemed to share voting and disposition
power with Stilwell Value Partners IV with regard to those shares of Common
Stock.
(B) Stilwell Associates
(a) Aggregate number of shares beneficially owned: 715,831
Percentage: 8.2%
(b) 1. Sole power to vote or to direct vote: 0
2. Shared power to vote or to direct vote: 715,831
3. Sole power to dispose or to direct the disposition: 0
4. Shared power to dispose or to direct disposition: 715,831
(c) Stilwell Associates has not purchased or sold any shares of Common
Stock within the past 60 days.
(d) Because he is the managing and sole member of Stilwell Value LLC, which
is the general partner of Stilwell Associates, Mr. Stilwell has the power to
direct the affairs of Stilwell Associates, including the voting and disposition
of shares of Common Stock held in the name of Stilwell Associates. Therefore,
Mr. Stilwell is deemed to share voting and disposition power with Stilwell
Associates with regard to those shares of Common Stock.
(C) Stilwell Value LLC
(a) Aggregate number of shares beneficially owned: 715,831
Percentage: 8.2%
(b) 1. Sole power to vote or to direct vote: 0
2. Shared power to vote or to direct vote: 715,831
3. Sole power to dispose or to direct the disposition: 0
4. Shared power to dispose or to direct disposition: 715,831
(c) Stilwell Value LLC has made no purchases of Common Stock.
(d) Because he is the managing and sole member of Stilwell Value LLC, Mr.
Stilwell has the power to direct the affairs of Stilwell Value LLC. Stilwell
Value LLC is the general partner of Stilwell Value Partners IV and Stilwell
Associates. Therefore, Stilwell Value LLC may be deemed to share with Mr.
Stilwell voting and disposition power with regard to the shares of Common Stock
held by Stilwell Value Partners IV and Stilwell Associates.
(D) Mr. Joseph Stilwell
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(a) Aggregate number of shares beneficially owned: 715,831
Percentage: 8.2%
(b) 1. Sole power to vote or to direct vote: 0
2. Shared power to vote or to direct vote: 715,831
3. Sole power to dispose or to direct the disposition: 0
4. Shared power to dispose or to direct disposition: 715,831
(c) Mr. Stilwell has made no purchases of shares of Common Stock.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
Other than the Joint Filing Agreement filed as Exhibit 1 to this filing,
and as otherwise described below, there are no contracts, arrangements,
understandings or relationships among the persons named in Item 2 hereof and
between such persons and any person with respect to any securities of the
Issuer, including but not limited to transfer or voting of any of the
securities, finders' fees, joint ventures, loan or option arrangements, puts or
calls, guarantees of profits, divisions of profits or losses, or the giving or
withholding of proxies, except for sharing of profits. Stilwell Value LLC and
Mr. Joseph Stilwell, in their capacities, respectively, as a general partner and
as a managing and sole member, as described in this Schedule 13D, are entitled
to an allocation of a portion of profits.
See Items 1 and 2 above regarding disclosure of the relationships between
members of the Group, which disclosure is incorporated herein by reference.
Item 7. Material to be Filed as Exhibits
Exhibit No. Description
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1 Joint Filing Agreement, filed with Original Schedule 13D
2 Letter to Issuer, dated December 2, 2005
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CUSIP NO. 20343H 10 6 SCHEDULE 13D Page 14 of 15
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SIGNATURES
After reasonable inquiry and to the best of our knowledge and belief, we
certify that the information set forth in this statement is true, complete and
correct.
Date: December 5, 2005
STILWELL VALUE PARTNERS IV, L.P.
By: STILWELL VALUE LLC
General Partner
/s/ Joseph Stilwell
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By: Joseph Stilwell
Managing and Sole Member
STILWELL ASSOCIATES, L.P.
By: STILWELL VALUE LLC
General Partner
/s/ Joseph Stilwell
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By: Joseph Stilwell
Managing and Sole Member
STILWELL VALUE LLC
/s/ Joseph Stilwell
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By: Joseph Stilwell
Managing and Sole Member
JOSEPH STILWELL
/s/ Joseph Stilwell
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Joseph Stilwell
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CUSIP NO. 20343H 10 6 SCHEDULE 13D Page 15 of 15
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EXHIBIT 2
LETTER TO ISSUER, DATED DECEMBER 2, 2005
Stilwell Value Partners
26 Broadway, 23rd Floor
New York, NY 10004
(212) 269-5600
December 2, 2005
By Federal Express
Patrick M. Frawley
Chairman, President and Chief Executive Officer
Community Bancshares, Inc.
68149 Highway 231 South
Blountsville, Alabama 35031
RE: Nomination of Directors
Dear Pat:
I believe the Company's bylaws could be interpreted to allow shareholders
to merely "recommend" nominees to the board thus barring shareholders from duly
nominating an alternate slate. If the Company is interpreting its bylaws in this
manner, the Company would be violating Delaware law which holds that it is a
shareholder's right to nominate an alternate slate.
Would you be so kind as to advise me within five (5) days whether this is
your interpretation, because if it is I will need to commence a lawsuit to
nullify your bylaws to permit me to nominate an alternate slate.
Very truly yours,
/s/ Joseph Stilwell