As of June 30, ~~2018~~2019 the aggregate market value of the voting stock held by non-affiliates of the registrant was ~~$82,097,082,~~$78,876,887, based on a per share trade price on June ~~29, 2018~~28, 2019 of ~~$17.25,~~$16.35, as reported on the OTC Link ATS® system maintained by the OTC Markets Group Inc. For purposes of the calculation, all directors and executive officers were deemed to be affiliates of the registrant. However, such assumption is not intended as an admission of affiliate status as to any such individual.

On March 16, 2020, Community Bancorp. (the “Company”) filed its Annual Report ~~to Shareholders~~on Form 10-K for the fiscal year ended December 31, ~~2018 (2018 Annual Report) are incorporated~~2019 (the “Original Filing”) with the Securities and Exchange Commission. At that time the Company intended to incorporate information required in Part III of Form 10-K in the Original Filing by reference to ~~Part I and Part II of this Report.~~

~~Portions of~~ the ~~Proxy Statement~~Company’s definitive proxy statement for ~~the~~its 2020 Annual Meeting of ~~Shareholders~~Shareholders. As a result of the COVID-19 public health emergency, the Company has now postponed the 2020 Annual Meeting and will file its definitive proxy statement after April 30, 2020. Accordingly, the Company is filing this Amendment No. 1 (the “Amendment”) on Form 10-K/A to ~~be held on May 14,~~ ~~2019 (2019 Annual Meeting) are incorporated~~amend and restate the Items identified below with respect to the Original Filing in order to provide the information required by ~~reference to~~ Part III of Form 10-K. In addition, as required by Rule 12b-15 of the Securities Exchange Act of 1934, as amended, this ~~report.~~Amendment contains new certifications by our principal executive officer and principal financial officer, filed as exhibits hereto.

This Amendment only amends information in Part III, Item 10 (Directors, Executive Officers and Corporate Governance), Item 11 (Executive Compensation), Item 12 (Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters), Item 13 (Certain Relationships and Related Transactions, and Director Independence), Item 14 (Principal Accounting Fees and Services) and Part IV, Item 15 (Exhibits and Financial Statement Schedules). Except for the foregoing amended and restated information, this Amendment does not amend, update or change any other information presented in the Original Filing.

~~The Company~~. The Company was organized under the laws of the State of Vermont in 1982 and became a registered bank holding company under the Bank Holding Company Act of 1956, as amended, in October 1983 when it acquired all of the voting shares of the Bank, headquartered in Derby, Vermont. The Bank is the only subsidiary of the Company and principally all of the Company's business operations are presently conducted through it. Therefore, the following narrative and the other information about the Company contained in this report are based primarily on the Bank's operations.

~~The Bank; Banking Services~~. Community National Bank was organized in 1851 as the Peoples Bank, and was subsequently reorganized as the National Bank of Derby Line in 1865. In 1975, after 110 continuous years of operation as the National Bank of Derby Line, the Bank acquired the Island Pond National Bank and changed its name to "Community National Bank." On December 31, 2007, the Company completed its acquisition of LyndonBank, a Vermont bank headquartered in Lyndonville, Vermont, in a cash merger transaction. As a result of the merger, the Company expanded its existing branch network in Caledonia and Orleans Counties and extended it into Lamoille and Franklin Counties. In addition to its main office in Derby, the Company currently maintains eleven branch offices in northeastern and central Vermont and a loan production office in Chittenden County, in northwestern Vermont.

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~~Commercial Real Estate Lending –~~ The Company provides a range of products to meet the financing needs of commercial developers and investors, residential builders and developers and community development entities. Credit products are available to facilitate the purchase of land and/or build structures for business use and for investors who are developing residential or commercial property, as well as for real estate secured financing of existing businesses. The Bank was recognized by the SBA as Vermont’s top Section 7(a) program lender for 2017, providing financing to startups and other small businesses not eligible for more traditional financing, and as one of Vermont’s top third party small business lenders under the SBA’s Section 504 loan program.

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~~Residential Real Estate Lending –~~ The Company provides products to help meet the home financing needs of consumers, including conventional permanent and construction/permanent (fixed, adjustable, or variable rate) financing arrangements, and FHA/VA loan products. The Company offers both fixed-rate and adjustable rate residential mortgage (ARM) loans and home equity loans. A portion of the first lien residential mortgage loans originated by the Company are sold into the secondary market. The Company offers these products through its network of banking offices. The Company does not originate subprime residential real estate loans.

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~~Municipal and Institutional Banking –~~ The Company provides banking services to meet the needs of state and local governments, schools, charities, membership and not-for-profit associations including deposit account services, tax-exempt loans, lines of credit and term loans. In addition, through an arrangement with the FHLBB, the Company offers a secured deposit product to its municipal customers, collateralized by FHLBB letters of credit.

The Company focuses on establishing and maintaining long-term relationships with customers and is committed to providing for the financial services needs of the communities it serves. In particular, the Company continues to emphasize its relationships with individual customers and small-to-medium-sized businesses. The Company actively evaluates the banking needs of its markets, including low- and moderate-income areas, and offers products that are responsive to the needs of its customer base. The Company’s markets provide a mix of real estate, commercial and industrial, municipal and consumer lending opportunities, as well as a stable core deposit base. Additional information about our business, including the Company’s deposit-taking activities, lending activities and credit and risk management policies, is set forth under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in the 2018 Annual Report filed as Exhibit 13 to this Report and is incorporated herein by reference.

~~Related Trust Company~~. In 2002, the Bank transferred its trust operations to a newly formed Vermont-chartered non-depository trust and investment management company, CFSG, based in Newport, Vermont. The Bank's ownership interest in CFSG is held indirectly, through CFS Partners, a Vermont limited liability company, which owns 100% of the limited liability company equity interests of CFSG. Immediately following transfer of its trust operations to CFSG, the Bank sold a two-thirds interest in CFS Partners, equally to the National Bank of Middlebury, headquartered in Middlebury, Vermont and Guaranty Bancorp Inc., the bank holding company parent of Woodsville Guaranty Savings Bank, headquartered in Woodsville, New Hampshire. CFSG offers fiduciary services throughout the market areas of the three owner financial institutions and leases space from them in some of their branch offices.

~~Statutory Business Trust~~. In 2007, the Company formed CMTV Statutory Trust I (the Trust), a Delaware statutory business trust, for the purpose of issuing $12.5 million of trust preferred securities and lending the proceeds to the Company. This funding provided a portion of the cash consideration paid by the Company in the acquisition of LyndonBank and provided additional regulatory capital. The Trust is a variable interest entity for which the Company is not the primary beneficiary, within the meaning of applicable accounting standards. Accordingly, the Trust is not consolidated with the Company for financial reporting purposes.

~~Tax Credit Entity~~. During the years 2011 through 2018, the Company was the sole owner of a LLC formed to facilitate the Company’s purchase of federal NMTCs under an investment structure designed by a local community development entity. The NMTC financing matured in the fourth quarter of 2018 and the Company exited the investment and terminated its interest in the LLC. The LLC was a variable interest entity for which, in the context of the overall NMTC structure, the Company was not the primary beneficiary, within the meaning of applicable accounting standards. Accordingly, the LLC was not consolidated with the Company for financial reporting purposes.

All of the Bank's banking offices are located in northern and central Vermont. The Bank’s main office is located in Derby, in Orleans County. In addition to its main office, the Bank has four other banking offices in Orleans County, one office in Essex County, two offices in Caledonia County, two offices in Washington County and one office each in Franklin and Lamoille Counties, as well as a loan production office in Chittenden County. (See Part I, Item 2 (Properties) of this report.)

The Bank competes in all aspects of its business with other banks and credit unions in northern and central Vermont, including three of the largest banks operating in the state, which maintain branch offices throughout the Bank's service area. Changes in the regulatory framework of the banking industry during the past decade have broadened the competition for commercial bank products, such as deposits and loans, to include not only traditional rivals such as banks, savings banks and credit unions, but also many non-traditional rivals such as insurance companies, brokerage firms, mutual funds and consumer and commercial finance and leasing companies. In addition, many out-of-market nationwide banks, nonbank lenders and other financial service firms operate in the Company’s market areas through mass marketing solicitations by mail, radio, television, the internet and email. At the same time, technological changes have facilitated remote delivery of financial services by bank and nonbank competitors outside the context of a traditional branch bank network, thereby intensifying competition from out-of-market firms.

Competition from the tax-exempt credit union industry has also intensified in recent years. A number of the Bank’s credit union competitors, including the largest state-chartered Vermont credit union, have converted from an employment based common bond to a community common bond, thereby significantly increasing their fields of membership in the Bank’s market areas. Because federal law subsidizes credit unions by giving them a general exemption from federal income taxes, they have a significant pricing advantage over commercial banks for their deposit and loan products. This pricing advantage, coupled with the relaxing of membership criteria and regulatory restrictions on product offerings, has resulted in increased competition for the Bank from this tax exempt sector of the financial services industry.

In order to compete with other bank and non-bank service providers, the Company stresses the community orientation of its banking operations and relies to a large extent upon personal relationships established by its officers, directors and employees with their customers and on their strong ties to the local community. In addition, management's knowledge of the local community assists it in tailoring the Company's products and services to meet the needs of its customer base. Although competition is strong throughout the Company's market area, management believes that the Company can continue to compete effectively, in view of its local market knowledge and community ties and its understanding of customer needs.

The Company’s earnings are affected by general economic conditions, management policies, changes in federal and state laws and regulations and actions of various regulatory authorities, including those referred to below. Banking is a highly regulated business and proposals to change the laws and regulations to which the Company and the Bank are subject are frequently introduced at both the federal and state levels. The likelihood and timing of any such changes and the impact such changes may have on the Company and the Bank is impossible to predict with any certainty.

~~Dodd–Frank Act~~. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the Dodd-Frank Act) represents a comprehensive revision and restructuring of many aspects of financial services industry regulation and impacts practically all aspects of a banking organization. Many of the provisions of the Dodd-Frank Act are designed to reduce systemic risk from large, complex “systemically significant” financial institutions, and thus do not apply to a smaller banking organization such as the Company. Nevertheless, certain of its provisions do directly apply to the Company and others will indirectly impact its operations, as the Dodd-Frank Act continues to reshape the financial services environment. Among other things, the Act:

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Established a new independent agency, the CFPB, with centralized responsibility for implementing and (with respect to large organizations) enforcing and examining compliance with federal consumer financial laws. Although the CFPB does not have enforcement or examination authority over smaller banking organizations such as the Company, many of its regulatory standards and mandates apply to them, with enforcement authority vested in other regulatory agencies such as (with respect to the Bank) the OCC;

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Requires debit card interchange transaction fees charged by large financial institutions to be reasonable and proportional to the cost incurred by the issuer for the transaction. The FRB adopted regulations in 2011 establishing such fee standards, eliminating exclusivity arrangements between issuers and networks for debit card transactions and limiting restrictions on merchant discounting for use of certain payment forms and minimum or maximum amount thresholds as a condition for acceptance of credit cards. Although smaller institutions such as the Company are not subject to the interchange fee restrictions, it is possible that, over time, competitive pricing pressures in the marketplace may operate to make the restrictions applicable to them by default;

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Provided permanent relief for non-accelerated filers, from the requirements of Section 404 of the Sarbanes-Oxley Act for auditor attestation of management’s assessment of internal controls and their effectiveness. Effective with the Company’s periodic reports filed in 2018, this relief was no longer available to the Company as it became an accelerated filer for SEC reporting purposes (see “SEC Reporting and Disclosure Requirements” below);

~~Bank Holding Company Act~~. As a registered bank holding company, the Company is subject to on-going regulation, supervision and examination by the Board of Governors of the Federal Reserve System (FRB), under the Bank Holding Company Act of 1956, as amended (the Act). A bank holding company for example, must generally obtain the prior approval of the FRB before it acquires all or substantially all of the assets of any bank, or acquires ownership or control of more than 5% of the voting shares of a bank. FRB approval is also generally required before a bank holding company may acquire more than 5% of any outstanding class of voting securities of a company other than a bank or a more than 5% interest in its property.

The Act generally limits the activity in which the Company and its subsidiaries may engage to certain specified activities, including those activities which the FRB may find, by order or regulation, to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. Some of the activities that the FRB has determined to be closely related to banking are: (1) making and servicing loans that could be made by mortgage, finance, credit card or factoring companies; (2) performing the functions of a trust company; (3) certain leasing of real or personal property; (4) providing certain financial, banking or economic data processing services; (5) except as otherwise prohibited by law, acting as an insurance agent or broker with respect to insurance that is directly related to the extension of credit or the provision of other financial services or, under certain circumstances, with respect to insurance that is sold in certain small communities in which the bank holding company system maintains banking offices; (6) acting as an underwriter for credit life insurance and credit health and accident insurance directly related to extensions of credit by the holding company system; (7) providing certain kinds of management consulting advice to unaffiliated banks and non-bank depository institutions; (8) performing real estate appraisals; (9) issuing and selling money order and similar instruments and travelers checks and selling U.S. Savings Bonds; (10) providing certain securities brokerage and related services for the account of bank customers; (11) underwriting and dealing in certain government obligations and other obligations such as bankers' acceptances and certificates of deposit; (12) providing consumer financial counseling; (13) providing tax planning and preparation services; (14) providing check guarantee services to merchants; (15) operating a collection agency; and (16) operating a credit bureau. Trust and investment management activities conducted through a non-depository trust company such as the Company's affiliate, CFSG, are also considered by the FRB to be permissible nonbanking activities that are closely related to banking.

The Company, the Bank, CFS Partners and CFSG are all considered "affiliates" of each other for the purposes of Section 18(j) of the FDIA, as amended, and Sections 23A and 23B of the Federal Reserve Act, as amended. In particular, section 23A limits loans or other extensions of credit to, asset purchases with and investments in affiliates of the Bank to 10% of the Bank’s capital and surplus. In addition, such loans and extensions of credit and certain other transactions must be collateralized in specified amounts. Section 23B requires, among other things, that certain transactions between the Bank and its affiliates must be on terms substantially the same, or at least as favorable to the Bank, as those prevailing at the time for comparable transactions with or involving non-affiliated persons. Further, the Company is prohibited from engaging in certain tie-in arrangements in connection with any extension of credit or lease or sale of any property or the furnishing of services.

~~Capital Adequacy Requirements.~~ Revised regulatory capital rules were adopted in July 2013 by the federal banking regulators to implement the Basel III capital standards and certain capital requirements of the Dodd-Frank Act. The effect of the rules was to impose higher minimum capital requirements for bank holding companies and banks. The rules apply to all national and state banks and savings associations regardless of size and bank holding companies and savings and loan holding companies with $500 million or more in total consolidated assets. More stringent requirements apply to certain larger banking organizations. The requirements in the rule began to phase in on January 1, 2015, for the Company and the Bank and was fully phased in on January 1, 2019.

Under the rules, Tier 1 capital is redefined to include two components: Common Equity Tier 1 capital and additional Tier 1 capital. The new and highest form of capital, Common Equity Tier 1 capital, consists solely of common stock (plus related surplus), retained earnings, accumulated other comprehensive income, and limited amounts of minority interests that are in the form of common stock. Additional Tier 1 capital includes other perpetual instruments historically included in Tier 1 capital, such as noncumulative perpetual preferred stock. Tier 2 capital consists of instruments that currently qualify in Tier 2 capital plus instruments that the rule has disqualified from Tier 1 capital treatment. Cumulative perpetual preferred stock, formerly includable in Tier 1 capital, is now included only in Tier 2 capital. Although AOCI is presumptively included in Common Equity Tier 1 capital, the rule provided a one-time opportunity at the end of the first quarter of 2015 for covered banking organizations to opt out of much of this treatment of AOCI. The Company and Bank made this opt-out election and, as a result, will retain the pre-existing regulatory capital treatment for AOCI.

In addition, in order to avoid restrictions on capital distributions or discretionary bonus payments to executives, a covered banking organization must maintain a “capital conservation buffer” on top of its minimum risk-based capital requirements. This buffer must consist solely of Tier 1 Common Equity, but the buffer applies to all three measurements (Common Equity Tier 1, Tier 1 capital and total capital). The capital conservation buffer was phased in incrementally over time and became fully effective on January 1, 2019, consisting of an additional amount of common equity equal to 2.5% of risk-weighted assets. The Company and the Bank satisfied this fully-phased in capital conservation buffer. Failure to maintain the required buffer would result in limitations on permissible shareholder distributions and discretionary bonus payments.

The 2018 Regulatory Relief Act provides relief from the foregoing Basel III capital standards for qualifying community banks (generally, well-capitalized banks under $10 billion in assets). The Act authorizes the federal banking agencies to establish a new community bank leverage ratio (CBLR) of tangible equity capital to average consolidated assets, of between 8% and 10%. A qualifying community bank that exceeds the CBLR percentage established by the federal banking regulators will be deemed well capitalized for purposes of capital adequacy requirements and the FDIC’s Prompt Corrective Action framework, and would not be subject to risk based capital and other leverage requirements. As of the date of this report, the federal banking regulators had proposed a CBLR of 9% but not yet adopted final rules establishing the CBLR percentage.

~~Sarbanes-Oxley Act~~. SOX was enacted to increase corporate responsibility, to provide for enhanced penalties for accounting and auditing improprieties at publicly traded companies and to protect investors by improving the accuracy and reliability of corporate disclosures pursuant to the securities laws. SOX and the SEC’s implementing regulations include provisions addressing, among other matters, the duties, functions and qualifications of audit committees for all public companies; certification of financial statements by the chief executive officer and the chief financial officer; the forfeiture of bonuses or other incentive-based compensation and profits from the sale of an issuer’s securities by directors and senior officers in the twelve month period following initial publication of any financial statements that later require restatement; disclosure of off-balance sheet transactions; a prohibition on personal loans to directors and officers, except (in the case of banking companies) loans in the normal course of business; expedited filing requirements for reports of beneficial ownership of company stock by insiders; disclosure of a code of ethics for senior officers, and of any change or waiver of such code; the formation of a public accounting oversight board; auditor independence; disclosure of fees paid to the company's auditors for non-audit services and limitations on the provision of such services; attestation requirements for company management and external auditors, relating to internal controls and procedures; and various increased criminal penalties for violations of federal securities laws.

Since 2007 Section 404 of SOX has required management of the Company to undertake a periodic assessment of the adequacy and effectiveness of the Company’s internal control over financial reporting. Management's report on internal control over financial reporting for 2017 is contained in Item 9A of this Report. The Company has incurred, and expects to continue to incur, costs in connection with its on-going compliance with Section 404.

~~SEC Reporting and Disclosure Requirements~~. Under current SEC reporting and disclosure rules, as amended in 2018, the Company is considered to be both an accelerated filer and a smaller reporting company. As an accelerated filer, the Company is subject to SOX section 404(b) for external auditor attestation of management’s assessment of the Company’s internal controls and their effectiveness and is required to file its periodic reports with the SEC on a more accelerated timetable than applies to non-accelerated filers. As a smaller reporting company, the Company is permitted to make certain reduced (or scaled) financial and other disclosures in its periodic reports and proxy statements filed with the SEC.

~~Dividends~~. The Company derives funds for payment of dividends to its shareholders primarily from dividends received from its subsidiary, Community National Bank. Under the National Bank Act, prior approval from the OCC is required if the total of all dividends declared by a national bank in any calendar year will exceed the sum of such bank's net profits for that last year and its retained net profits for the preceding two calendar years, less any required transfers to surplus. Federal law also prohibits national banks from paying dividends greater than the bank's undivided profits after deducting statutory bad debt in excess of the bank's ALL.

The Company and the Bank are also subject to various general regulatory policies and requirements relating to the payment of dividends, including requirements to maintain adequate capital above regulatory minimums. The appropriate federal or state banking agency is authorized to determine under certain circumstances relating to the financial condition of a bank or bank holding company that the payment of dividends would be an unsafe or unsound practice and to prohibit such payment. In addition, under the Basel III capital requirements, failure to maintain the required capital conservation buffer would result in additional limitations on permissible shareholder distributions.

The FRB has issued supervisory guidance on the payment of dividends and redemption and repurchases of stock by bank holding companies reflecting the expectation that a bank holding company will inform and consult with FRB supervisory staff in advance of declaring and paying any dividend that could raise safety and soundness concerns. Examples of actions that might raise such concerns include declaration of a dividend exceeding current period earnings; redeeming or repurchasing regulatory capital instruments when the bank holding company is experiencing financial weaknesses; or redeeming or repurchasing common stock or perpetual preferred stock that would result in a net reduction in the amount of such equity instruments outstanding compared with the beginning of the quarter in which the redemption or repurchase occurred. The guidance provides that a bank holding company should eliminate, defer or severely limit dividends if net income for the past four quarters is not sufficient to fully fund dividends; the prospective rate of earnings retention is not consistent with the holding company’s capital needs and overall current and prospective financial condition; or the holding company will not meet, or is in danger of not meeting, its minimum regulatory capital ratios.

~~OCC Supervision~~. As a national banking association, the Bank is subject to the provisions of the National Bank Act and federal and state statutes and rules and regulations applicable to national banks. The primary supervisory authority for the Bank is the OCC. The Bank is subject to periodic examination by the OCC and must file periodic reports with the OCC containing a complete statement of its financial condition and results of operations. The OCC's examinations are designed for the protection of the Bank's depositors and not the Company’s shareholders.

The CFPB created by the Dodd-Frank Act took over responsibility for enforcing the principal federal consumer protection laws, such as the Truth in Lending Act, the Equal Credit Opportunity Act, the Real Estate Settlement Procedures Act and the Truth in Saving Act, among others, in 2011. Institutions that have assets of $10 billion or less, such as our Bank subsidiary, will continue to be supervised and examined in this area by their primary federal regulators (in the case of our Bank subsidiary, the OCC). However, the Dodd-Frank Act gives the CFPB expanded data collecting powers for fair lending purposes for both small business and mortgage loans, as well as expanded authority to prevent unfair, deceptive and abusive practices.

~~Prompt Corrective Action~~. The Bank is subject to regulatory capital requirements established under FDICIA. Among other things, FDICIA identifies five capital categories for insured depository institutions (well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized) and requires the respective U.S. federal regulatory agencies to implement systems for "prompt corrective action" for insured depository institutions that do not meet minimum capital requirements within such categories. FDICIA imposes progressively more restrictive constraints on operations, management and capital distributions, depending on the category in which an institution is classified. Failure to meet the capital guidelines could also subject a banking institution to capital raising requirements. An "undercapitalized" bank must develop a capital restoration plan and its parent holding company must guarantee that bank's compliance with the plan. The liability of the parent holding company under any such guarantee is limited to the lesser of 5% of the bank's assets at the time it became undercapitalized or the amount needed to comply with the plan. Furthermore, in the event of the bankruptcy of the parent holding company, such guarantee would take priority over the parent's general unsecured creditors. In addition, FDICIA requires the various regulatory agencies to prescribe certain non-capital standards for safety and soundness related generally to operations and management, asset quality and executive compensation and permits regulatory action against a financial institution that does not meet such standards.

The federal bank regulatory agencies, including the OCC, have adopted substantially similar regulations that define the five capital categories identified by FDICIA. These regulations establish various degrees of corrective action to be taken when an FDIC-insured depository institution is considered undercapitalized. Effective January 1, 2015, the FDIC’s Prompt Corrective Action regulations were revised in accordance with the Basel III capital standards. The enhanced requirements (i) introduce a Common Equity Tier 1 ratio requirement at each capital category (other than critically undercapitalized), and set the required Common Equity Tier 1 ratio at 6.5% for well-capitalized status; (ii) increase the minimum Tier 1 capital ratio requirement for each category (other than critically undercapitalized), and set the minimum Tier 1 capital ratio for well-capitalized status at 8.0% (as compared to 6.0% under the prior rule); and (iii) eliminate the provision that permitted a bank with a composite supervisory rating of 1 to have a 3% leverage ratio and still be considered adequately capitalized. The Basel III capital standards do not change the total risk-based capital requirement for any prompt corrective action category.

~~As discussed above under “Capital Adequacy Requirements~~,” the 2018 Regulatory Relief Act provides relief from the foregoing Prompt Corrective Action requirements for qualifying community banks that satisfy a specified community bank leverage ratio of tangible equity capital to average consolidated assets, of between 8% and 10%. However, as of the date of this report, the federal banking agencies had not yet established the CBLR percentage.

~~Deposit Insurance~~. The deposits of the Bank are insured by the Deposit Insurance Fund (DIF) of the FDIC up to the limits set forth under applicable law and are subject to the deposit insurance premium assessments of the DIF. The FDIC imposes a risk-based deposit premium assessments system, which was amended pursuant to the Federal Deposit Insurance Reform Act of 2005 and further amended by the Dodd-Frank Act. Under this system, as amended, the assessment rates for an insured depository institution vary according to the level of risk incurred in its activities. To arrive at an assessment rate for a banking institution, the FDIC places it in one of four risk categories determined by reference to its capital levels and supervisory ratings. In addition, in the case of those institutions in the lowest risk category, the FDIC further determines its assessment rate based on certain specified financial ratios or, if applicable, its long-term debt ratings. The assessment rate schedule can change from time to time, at the discretion of the FDIC, subject to certain limits. In addition, all FDIC insured depository institutions are required to pay a pro rata portion of the interest due on the obligations issued by the FICO to fund the closing and disposal of failed thrift institutions by the Resolution Trust Corporation.

The Dodd-Frank Act changed the assessment formula for determining deposit insurance premiums and modified certain insurance coverage provisions of the FDIA. The FDIC’s implementing rules, which redefined the base for FDIC insurance assessments from the amount of insured deposits to average consolidated total assets less average tangible equity, became effective April 1, 2011. The Bank’s total FDIC insurance assessment for 2018 was $274,772.

~~Brokered Deposits~~. Under FDICIA, an FDIC-insured bank is prohibited from accepting brokered deposits without prior approval of the FDIC unless it is well capitalized under the FDICIA's prompt corrective actions guidelines. The Company participates in the CDARS of the Promontory Interfinancial Network, which uses a deposit-matching engine to match CDARS deposits in other participating banks, dollar-for-dollar. This product, also known as reciprocal deposits, is designed to provide deposit insurance in excess of FDIC limits and thereby enhance customer attraction and retention, build deposits and improve net interest margins. Until recently reciprocal deposits were considered a form of brokered deposits, which are treated less favorably than other deposits for certain purposes; however, a provision of the 2018 Regulatory Relief Act provides that reciprocal deposits held by a well-capitalized and well managed bank are no longer classified as brokered deposits. CDARS also permits the “one-way” purchase of deposits, which the Company utilizes from time to time for liquidity management purposes. CDARS one-way deposits are considered brokered deposits for certain purposes under the Federal Deposit Insurance Act and FDIC regulations. As of December 31, 2018 the Company had CDARS deposits totaling $3.5 million in exchanged funds and $723,774 in one-way funds. The Company also relies from time to time on purchased wholesale deposit funding, which is a form of brokered deposits. The Company had $35.3 million in purchased wholesale deposits outstanding at December 31, 2018. The Company’s Asset, Liability and Funds Management Policy limits the use of brokered deposits to 5% of total assets.

~~USA Patriot Act~~. The USA PATRIOT Act is intended to strengthen the ability of U.S. law enforcement and the intelligence community to work cooperatively to combat terrorism on a variety of fronts. The Act contains extensive anti-money laundering and financial transparency provisions and imposes various requirements, including standards for verifying client identification at account opening, and rules to promote cooperation among financial institutions, regulators and law enforcement entities in identifying parties that may be involved in terrorism or money laundering. The Secretary of the Treasury and federal banking regulators have adopted several regulations to implement these provisions. The Act also amended the federal Bank Holding Company Act and the Bank Merger Act to require the federal banking regulatory authorities to consider the effectiveness of a bank holding company or a financial institution’s anti-money laundering activities when reviewing an application to expand operations. As required by law, the Bank has in place a Bank Secrecy Act and Anti-Money Laundering compliance program, as well as a customer identification program. (See “BSA/AML Requirements” below.)

~~BSA/AML Requirements.~~ The Company is subject to a number of AML and regulations as a result of being a U.S.-based financial institution. AML requirements are primarily derived from the BSA, as amended by the USA Patriot Act. These laws and regulations are designed to prevent the financial system from being used by criminals to hide illicit proceeds and to impede terrorists’ ability to access and move funds used in support of terrorist activities. Among other things, BSA/AML laws and regulations require financial institutions to establish AML programs that meet certain standards, including, in some instances, expanded reporting, particularly in the area of suspicious transactions, and enhanced information gathering and recordkeeping requirements. The Company maintains an AML program designed to ensure that it is in compliance with all applicable laws, rules and regulations related to AML and anti-terrorist financing initiatives. The AML program provides for a system of internal controls to ensure that appropriate due diligence and, when necessary, enhanced due diligence, including obtaining and maintaining appropriate documentation, is conducted at account opening and updated, as necessary, through the course of the client relationship. The AML program is also designed to ensure there are appropriate methods of monitoring transactions and account relationships to identify potentially suspicious activity and report suspicious activity to governmental authorities in accordance with applicable laws, rules and regulations. In addition, the AML program requires the training of appropriate personnel with regard to AML and anti-terrorist financing issues and provides for independent testing to ensure that the AML program is in compliance with all applicable laws and regulations. Non-compliance with BSA/AML laws or failure to maintain adequate policies and procedures can lead to significant monetary penalties and reputational damage, and federal regulators evaluate the effectiveness of an applicant in combating money laundering when determining whether to approve a bank merger, bank holding company acquisition or other certain other activities.

The U.S. Treasury's OFAC rules prohibit U.S. persons from engaging in financial transactions with certain individuals, entities, or countries, identified as “Specially Designated Nationals,” such as terrorists and narcotics traffickers. These rules require the blocking of assets held by, and prohibit transfers of property to such individuals, entities or countries. Blocked assets, such as property or bank deposits, cannot be paid out, withdrawn, set off or transferred in any manner without a license from OFAC. The Company maintains an OFAC program designed to ensure compliance with OFAC requirements.

~~Financial Privacy~~. Under the federal Gramm-Leach-Bliley Financial Modernization Act of 1999 all financial institutions, including the Company, are required to adopt privacy policies, restrict the sharing of nonpublic consumer customer data with nonaffiliated parties, and establish procedures and practices to protect customer data from unauthorized access. The Company is also subject to similar, but more stringent, requirements under state law, including the Vermont Financial Privacy Act. In addition, the Company is subject to the federal Fair Credit Reporting Act, including the amendments adopted in the federal Fair and Accurate Credit Transactions Act of 2003 (FACT Act). The FACT Act includes many provisions concerning national credit reporting standards and permits consumers to opt out of information sharing among affiliated companies for marketing purposes. It also requires financial institutions to notify their customers if they report negative information about them to a credit bureau or if they are granted credit terms less favorable than those generally available. The FRB and the OCC have extensive rulemaking authority under the FACT Act and have promulgated rules implementing the Act, including rules limiting information sharing for affiliate marketing and rules requiring programs to identify, detect and mitigate certain identity theft red flags. The Company is also subject to the requirements of the Vermont Fair Credit Reporting Act, which generally requires an individual's consent in order to obtain a credit report.

~~Qualified Mortgage Rules~~. Pursuant to the Dodd-Frank Act, the CFPB adopted significant amendments to the regulations that implement the Truth in Lending Act. These amendments, which became effective January 10, 2014, address mortgage origination practices by certain housing creditors, including the Bank, and generally require mortgage lenders to determine consumers’ ability to repay in one of two ways. The first alternative requires the mortgage lender to consider eight underwriting factors when making the credit decision. Alternatively, the mortgage lender can originate so-called "qualified mortgages (QMs)," which are entitled to a presumption that the creditor making the loan satisfied the ability-to-repay requirements. In general, a qualified mortgage is a residential mortgage loan that does not have certain high risk features, such as negative amortization, interest-only payments, balloon payments, or a term exceeding 30 years. In addition, to be a qualified mortgage, the points and fees paid by a consumer cannot exceed 3% of the total loan amount and the borrower’s total debt-to-income ratio must be no higher than 43% (subject to certain limited exceptions for loans eligible for purchase, guarantee or insurance by a government sponsored entity or a federal agency).

A lender originating a QM is protected against a legal claim that the lender failed to comply with the ability-to-repay requirement. A lender originating a mortgage that is not a QM is exposed to the risk of a potential claim that the lender did not comply with the ability-to-repay rules, which could require the lender to pay damages to the borrower, and could impair the lender’s ability to enforce the loan terms or foreclose on the real estate collateral. The ability-to-repay requirement creates a new basis for after-the-fact challenge of QM status by regulators and by consumers and its future interpretation by the courts may create substantial legal uncertainty. The CFPB’s mission is consumer protection, not lender safety and soundness, and for that reason the CFPB wrote the ability-to-repay rule with the goal of preventing consumers from being steered by lenders into expensive and unsustainable borrowing, rather than with the goal of assuring loan repayment. Accordingly, typical credit-quality features such as loan-to-value standards are not elements of the ability-to-repay rule, and it will not necessarily be the case that QMs have a higher probability or history of repayment than other mortgages.

~~Integrated TILA/RESPA (TRID) Disclosures.~~ As required by the Dodd-Frank Act, the CFPB issued final rules in 2013 revising and integrating previously separate disclosures required under the RESPA and TILA in connection with certain closed-end consumer mortgage loans. These final rules became effective in October 2015 and require lenders to provide a new Loan Estimate (which combines content from the former Good Faith Estimate required under RESPA and the initial disclosures required under TILA) not later than the third business day after submission of a loan application, and a new Closing Disclosure (which combines content of the former HUD-1 Settlement Statement required under RESPA and the final disclosures required under TILA) at least three days prior to the loan closing. Other significant changes included in the TRID rules include: (1) expansion of the scope of loans that require RESPA early disclosures, including bridge loans, vacant land loans, and construction loans; (2) changes and additions to “waiting period” requirements to close a loan; (3) reduced tolerances for estimated fees and (4) the lender, rather than the closing agent, is responsible for providing final disclosures. As with the CFPB’s ability-to-repay/QM rules, compliance with the TRID rules has increased the Company’s compliance costs and may adversely affect the profitability of our routine residential mortgage lending operations.

~~Community Reinvestment Act~~. The Federal CRA requires banks to define the communities they serve, identify the credit needs of those communities, collect and maintain data for each small business or small farm loan originated or purchased by the Bank, and maintain a Public File at each location. The federal banking regulators examine the institutions they regulate for compliance with the CRA and assign one of the following four ratings: “outstanding,” “satisfactory,” “needs to improve” or “substantial noncompliance”. The rating assigned reflects the bank’s record of helping to meet the credit needs of its entire community, including low- and moderate-income neighborhoods, consistent with the safe and sound operation of the bank. As of the Bank’s last CRA examination, completed during 2017, it received a rating of “Outstanding”.

~~Home Mortgage Disclosure Act~~. The federal HMDA, which is implemented by CFPB’s Regulation C, requires mortgage lenders that maintain offices within MSAs to report and make available to the public specified information regarding their residential mortgage lending activities, such as the pricing of home mortgage loans, including the “rate spread” between the interest rate on loans and certain treasury securities and other benchmarks. The Bank became subject to HMDA reporting requirements as a result of its merger with LyndonBank in 2007, as the former LyndonBank branch in Enosburg Falls in Franklin County is included within the Burlington, Vermont MSA. In July 2015, the CFPB implemented and expanded new HMDA rules. The final rule adopts a dwelling-secured standard for all loans or lines of credit that are for personal, family, or household purposes. Thus, many consumer-purpose transactions, including closed-end home-equity loans, home-equity lines of credit, and reverse mortgages, are subject to the regulation. Most commercial-purpose transactions (i.e., loans or lines of credit not for personal, family, or household purposes) are subject to the regulation only if they are for the purpose of home purchase, home improvement, or refinancing. The final rule excludes from coverage home improvement loans that are not secured by a dwelling (i.e., home improvement loans that are unsecured or that are secured by some other type of collateral) and all agricultural-purpose loans and lines of credit. New HMDA rules that became effective January 1, 2018 significantly increased the overall amount of data required to be collected and submitted, including additional data points about the applicable loans and expanded data about the borrowers. However, the 2018 Regulatory Relief Act provided an exemption from the requirement to collect these additional data fields for banks that have at least a “Satisfactory” CRA rating that originate fewer than five hundred closed-end mortgage loans or fewer than five hundred open-end lines of credit per year. The Bank qualifies for this relief.

~~Flood Insurance Reform~~. The Biggert-Waters Flood Insurance Reform Act of 2012 (Biggert-Waters Act), as amended by the Homeowner Flood Insurance Affordability Act of 2014, modified the National Flood Insurance Program by: (i) increasing the maximum civil penalty for Flood Disaster Protection Act violations to $2,000 and eliminating the annual penalty cap; (ii) requiring certain lenders to escrow premiums and fees for flood insurance on residential improved real estate; (iii) directing lenders to accept private flood insurance and to notify borrowers of its availability; (iv) amending the force placement requirement provisions; and (v) permitting lenders to charge borrowers costs for lapses in or insufficient coverage. The civil penalty and force placed insurance provisions were effective immediately.

In July 2015, certain federal agencies issued a joint final rule exempting: (1) detached structures that are not used as a residence from the mandatory flood insurance purchase requirements and (2) HELOCs, business purpose loans, nonperforming loans, loans with terms of less than one year, loans for co-ops and condominiums, and subordinate loans on the same property from the mandatory escrow of flood insurance premium requirements. Additionally, the final rule requires certain lenders to escrow flood insurance payments and offer the option to escrow flood insurance premiums on residential improved real estate securing a loan, effective January 1, 2016. New rules, which take effect July 1, 2019, will require banks and other regulated financial institutions to accept certain private insurance policies in addition to National Flood Insurance Program policies.

~~Reserve Requirements~~. FRB Regulation D requires all depository institutions to maintain reserves against their transaction accounts (generally, demand deposits, NOW accounts and certain other types of accounts that permit payments or transfers to third parties) and non-personal time deposits (generally, money market deposit accounts or other savings deposits held by corporations or other depositors that are not natural persons, and certain other types of time deposits), subject to certain exemptions. Because required reserves must be maintained in the form of either vault cash, a non-interest bearing account at the FRBB or a pass through account (as defined by the FRB), the effect of these reserve requirements is to reduce the amount of the Company's interest-bearing assets.

~~Federal Home Loan Bank System~~. The Bank is a member of the FHLB System, which consists of 12 regional Federal Home Loan Banks. The FHLB provides a central credit facility primarily for member institutions. Member institutions are required to purchase and hold shares of capital stock in the applicable regional FHLB (the FHLBB, in the case of the Bank), in an amount at least equal to the sum of 0.35% of the aggregate principal amount of its unpaid residential mortgage loans and similar obligations at the beginning of each year and 4.5% of its advances (borrowings) from the FHLBB. The Bank was in compliance with this requirement with an investment in FHLBB stock at December 31, 2018 of approximately $1.1 million. During 2009, the FHLBB experienced significant net operating losses, and as a result temporarily ceased paying dividends on its stock and instituted a moratorium on stock repurchases and redemptions. In 2011, the FHLBB resumed paying dividends, but at a more modest rate than previous years and in February 2012 it lifted the moratorium on stock redemptions. As a member, the Bank is subject to future capital calls by the FHLBB in order to maintain compliance with its capital plan.

~~FRB Executive Compensation Guidelines~~. In 2009, the FRB issued comprehensive guidance on executive compensation policies, intended to ensure that the incentive compensation practices of banking organizations do not undermine their safety and soundness by encouraging excessive risk-taking. The guidance covers all employees that have the ability to affect materially an institution's risk profile, either individually or as part of a group, and establishes that incentive compensation arrangements should (1) provide incentives that do not encourage risk-taking beyond the institution's ability to identify and manage effectively; (2) be compatible with effective internal controls and risk management; and (3) be supported by strong corporate governance, including active and effective oversight by the board of directors. The guidance instructed institutions to begin an immediate review of their incentive compensation policies to ensure that they do not encourage excessive risk-taking and implement corrective programs as needed. Where deficiencies in incentive compensation arrangements exist, they must be immediately addressed. For institutions such as the Company that are not "large, complex banking organizations" as defined in the guidance, the FRB will review the incentive compensation arrangements as part of its regular, risk-focused examination process and not in a separate examination. These examinations will be tailored to the scope and complexity of the institution's activity and compensation arrangements. The findings will be included in the FRB's examination report and deficiencies will be incorporated into the institution's supervisory ratings. Enforcement actions may be taken against an institution if its incentive compensation arrangements, or related risk management control or governance processes, pose a risk to the institution's safety and soundness and the institution fails to take prompt and effective measures to correct the deficiencies.

~~Other Legislative and Regulatory Initiatives.~~ In addition to the statutes, regulations and regulatory initiatives described above, new legislation and regulations affecting financial institutions are frequently proposed. If enacted or adopted, these measures could change banking statutes and the Company's operating environment in substantial and unpredictable ways and could further increase reporting and compliance requirements, governance structures and costs of doing business. The Company cannot predict whether any such additional legislation or other regulatory initiatives will be adopted or the effect they may have on the Company's business, results of operations or financial condition.

~~Tax Cuts and Jobs Act.~~ The 2017 Tax Act significantly changed corporate income tax law by reducing the corporate income tax rate from 35% to 21%, effective January 1, 2018, creating a territorial tax system, allowing for immediate capital expensing of certain qualified property, and eliminating the deductibility of DIF assessments. These tax laws were generally effective for the 2018 tax year. However, as permitted under the 2017 Tax Act, the Company recognized certain effects of the changes in the tax laws in its 2017 consolidated financial statements

The earnings of the Company are affected by general and local economic conditions and by the policies of various governmental regulatory authorities. In particular, the FRB regulates money supply, credit conditions and interest rates in order to influence general economic conditions, primarily through open market operations in United States Government Securities, varying the discount rate on member bank borrowings, setting reserve requirements against member and nonmember bank deposits, regulating interest rates payable by member banks on time and savings deposits and expanding or contracting the money supply. FRB monetary policies have had a significant effect on the operating results of commercial banks, including the Company, in the past and are expected to continue to do so in the future.

This annual report on Form 10-K is on file with SEC. The Company also files with the SEC quarterly reports on Form 10-Q and current reports on Form 8-K, as well as proxy materials for its annual meetings of shareholders. These reports and proxy materials are available without charge on the SEC’s website at ~~http://www.sec.gov.~~ ~~The Company's SEC-filed reports and proxy statements are also available without charge through a link on the Company's website at~~ ~~www.communitybancorpvt.com.~~ The Company has also posted on its website the Company’s Code of Ethics for Senior Financial Officers and the Principal Executive Officer, the Insider Trading Policy and the charters of the Audit, Compensation and Nominating Committees. The information and documents contained on the Company's website do not constitute part of this report. Copies of the Company's reports filed with the SEC (other than exhibits) and proxy materials can also be obtained by contacting Melissa Tinker, Assistant Corporate Secretary, at our principal offices, which are located at 4811 U.S. Route 5, Derby, Vermont 05829 or by calling (802) 334-7915.

Before deciding to invest in the Company or to maintain or increase an investment, investors should carefully consider the material risks described below, in addition to the other information contained in this report and in the Company’s other filings with the SEC. The risks and uncertainties described below and in the Company’s other filings are not the only ones the Company faces. Additional risks and uncertainties not presently known to management or that are currently deemed immaterial may emerge or evolve and also affect the Company’s business. If any of these known or unknown risks or uncertainties actually occurs, the Company’s business, financial condition and results of operations could be adversely affected, which in turn could result in a decline in the value of the Company’s capital stock.

Our common stock is included in the OTC QX market tier maintained by the OTC Markets Group, Inc. under the trading symbol CMTV, but is not traded on any securities exchange. Bid and ask quotations and trades in our stock made by certain brokerage firms are reported through the OTC Link®Alternative Trading System (ATS) maintained by a subsidiary of the OTC Markets Group, Inc. However, trading in our stock is sporadic. A public trading market for a particular class of stock having the desired characteristics of depth, liquidity and orderliness depends on the presence in the marketplace of numerous buyers and sellers of that stock at any given time, which in turn depends on the individual decisions of investors and general economic and market conditions over which issuers have no control. The trading market in our stock does not exhibit these characteristics. The trading history of our common stock has been characterized by relatively low trading volume. This lack of an active public market means that the value of a shareholder’s investment in our common stock may be subject to sudden fluctuations, as individual trades have a greater effect on our reported trading price than would be the case in a broad public market with significant daily trading volume.

The market price of our common stock may also be subject to fluctuations in response to numerous other factors, including the factors discussed below, regardless of our actual operating performance. The possibility of such fluctuations occurring is increased due to the illiquid nature of the trading market in our common stock. Therefore, a shareholder may be unable to sell our common stock at or above the price at which it was purchased, or at or above the current market price or at the time of his or her choosing.

~~As a holding company, our cash flow typically comes from dividends that our bank subsidiary, Community National Bank, pays to us.~~ Therefore, our ability to pay dividends on our common and preferred stock and to service our subordinated debentures, depends on the dividends we receive from the Bank. Dividend payments from the Bank are subject to federal statutory and regulatory limitations, generally based on net profits and retained earnings and may be subject to additional prudential considerations, such as capital planning needs. In addition, FRB policy, which applies to us as a registered bank holding company, provides that dividends by bank holding companies should generally be paid out of current earnings looking back over a one-year period and should not be paid if regulatory capital levels are deemed insufficient. Further, regulatory capital requirements could curtail our ability to pay dividends in some cases if we do not maintain a required capital conservation buffer. Our failure to pay dividends on our common or preferred stock or our failure to service our debt could have a material adverse effect on the market price of our common stock. Moreover, if sufficient dividend funding from the Bank is not available to cover all our requirements, we would be obligated first to pay interest and, if applicable, principal on our debentures and then to pay dividends on our preferred stock before making any dividend payments on our common stock.

Our results of operations depend substantially on our net interest income, which is the difference between the interest earned on loans, securities and other interest-earning assets and the interest paid on deposits and borrowings. These rates are highly sensitive to many factors beyond our control, including general economic conditions, inflation, recession, unemployment, money supply and the monetary policies of the FRB. If the interest rate we pay on deposits and other borrowings increases at a faster rate than the interest rate we earn on loans and other investments, our net interest income and therefore earnings, could be adversely affected. Conversely, our earnings could be adversely affected if the interest rate we earn on loans and other investments falls more quickly than the interest rate we pay on deposits and borrowings. While we have taken measures intended to manage the risks of operating in a changing interest rate environment, we cannot provide assurance that these measures will be effective in avoiding undue interest rate risk.

Increases in interest rates also can affect the value of loans and other assets, such as investment securities, and may affect our ability to realize gains on the sale of assets. For example, we originate loans for sale to secondary market investors, and increasing interest rates may reduce the volume of loans originated for sale, resulting in a reduction in the fee income we earn on such sales. Further, increasing interest rates may adversely affect the ability of borrowers to pay the principal or interest on loans, resulting in an increase in our non-performing assets and a reduction in our income.

In addition, increases in interest rates will increase the dividend rate on our Series A preferred stock, which is tied to the prime rate, and the interest rate on our debentures, which is tied to LIBOR. Furthermore, there is uncertainty about the continued availability of LIBOR beyond 2021, due to changes proposed by the United Kingdom regulatory entity that regulates LIBOR. Higher preferred stock dividend payments and debenture interest costs would decrease the amount of funds available for payment of dividends on our common stock.

Our primary source of liquidity is through the growth of deposits, which provide low cost funding for our operations. If we are unable to attract enough deposits in our market area to fund loan growth and our other funding needs, then we may be forced to purchase deposits or to borrow through the FHLBB or in the capital markets. Purchased deposits and borrowings would tend to be more expensive than funding through core deposits and therefore could have a negative impact on our results of operations, cash flow, liquidity and regulatory capital levels.

We are exposed to the risk that our borrowers may default on their obligations. A borrower's default on its obligations under one or more loans may result in lost principal and interest income and increased operating expenses as a result of the allocation of management time and resources to the collection and work-out of the credit. In certain situations, where collection efforts are unsuccessful or acceptable work-out arrangements cannot be reached, we may have to write off the loan in whole or in part. In loan default situations, we may acquire real estate or other assets, if any, that secure the loan, through foreclosure or other similar available remedies, and the amount owed under the defaulted loan could exceed the value of the collateral acquired.

We periodically make a determination of the adequacy of our ALL based on available information, including, but not limited to, the quality of the loan portfolio as indicated by loan risk ratings, economic conditions, the value of the underlying collateral and the level of non-accruing and criticized loans. Management relies on its loan officers and credit quality reviews, its experience and its evaluation of economic conditions, among other factors, in determining the amount of the provision required for the allowance. Provisions to this allowance result in an expense for the period. If, as a result of general economic conditions, previously incorrect assumptions, an increase in defaulted loans, or other pertinent factors, we determine that additional increases in the ALL are necessary, additional expenses may be incurred.

Determining the amount of the ALL inherently involves a high degree of subjectivity and requires us to make significant estimates of current credit risks and trends, all of which may undergo material changes. At any time, we are likely to have loans in our portfolio that will result in losses but that have not been identified as nonperforming or potential problem credits. We cannot be certain that we will be able to identify deteriorating credits before they become nonperforming assets or that we will be able to limit or correctly estimate losses on those loans that are identified. The OCC, our subsidiary Bank’s primary federal regulator, reviews the loan portfolio from time to time as part of its regulatory examination and may request that we increase the ALL. Changes in economic conditions or individual business or personal circumstances affecting borrowers, new information regarding existing loans, identification of additional problem loans and other factors, both within and outside of our control, may require an increase in the allowance. In addition, if charge-offs in future periods exceed the ALL, we will need to make additional provisions to restore the allowance. Any provisions to increase or restore the ALL would decrease our net income and, possibly, our capital, and could have an adverse effect on our results of operations and financial condition.

~~In June 2016, the FASB issued ASU No. 2016-13,Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments~~. Under the new guidance, which will replace the existing incurred loss model for recognizing credit losses, banks and other lending institutions will be required to recognize the full amount of expectedcredit losses. The new guidance, which is referred to as the CECL model, requires that expected credit losses for financial assets held at the reporting date that are accounted for at amortized cost be measured and recognized based on historical experience and current and reasonably supportable forecasted conditions to reflect the full amount of expected credit losses. Implementation of CECL could have a material impact on the Company’s results of operations and consolidated financial statements upon adoption as it may result in the recording of an increased ALL amount, with a related adverse impact on the calculation of the Company’s regulatory capital ratios. For more information on this ASU, see Note 1 of the Company’s audited consolidated financial statements contained in the 2018 Annual Report filed as Exhibit 13 to this report.

Generally, our customers may prepay the principal amount of their outstanding loans at any time. The speeds at which such prepayments occur, as well as the size of such prepayments, are within our customers’ discretion and may be affected by many factors beyond our control, including changes in prevailing interest rates. If customers prepay the principal amount of their loans, and we are unable to lend those funds to other borrowers or invest the funds at the same or higher interest rates, our interest income will be reduced. A significant reduction in interest income could have a negative impact on our results of operations and financial condition.

Unlike many larger banking institutions, our banking operations are not geographically diversified. Substantially all of our loans, deposits and fee income are generated in northeastern and central Vermont. As a result, poor economic conditions in northeastern and central Vermont could adversely impact the demand for loans and our other financial products and services and may cause us to incur losses associated with higher default rates and decreased collateral values in our loan portfolio. Much of our market area is located in the poorest region of the state. Economic conditions in northeastern and central Vermont are subject to various uncertainties, to a greater degree than other regions of the state. If economic conditions in our market area decline, we expect that our level of problem assets would increase and our prospects for growth would be impaired.

We are subject to regulation and supervision by the FRB, and the Bank is subject to regulation and supervision by the OCC and the FDIC. Federal laws and regulations govern numerous matters affecting us, including changes in the ownership or control of banks and bank holding companies, maintenance of adequate capital, the permissible types, amounts and terms of loans and investments, permissible nonbanking activities, the level of reserves against deposits and restrictions on dividend payments. The OCC possesses the power to issue cease and desist orders to prevent or remedy unsafe or unsound practices or violations of law by banks subject to their regulation, and the FRB possesses similar powers with respect to bank holding companies. We are also subject to certain state laws, including certain Vermont laws designed to protect consumers of banking products and services. These and other federal and state laws and restrictions limit the manner in which we may conduct business and obtain financing.

Our business is highly regulated and the various federal and state laws, rules, regulations, and supervisory guidance, policies and interpretations applicable to us are subject to regular modification and change. It is impossible to predict the nature of such changes or their competitive impact on the banking and financial services industry in general or on our banking operations in particular. Such changes may, among other things, increase our cost of doing business, limit our permissible activities, or affect the competitive balance between banks and other financial institutions. In addition, failure to comply with applicable laws, regulations, policies or supervisory guidance could result in enforcement and other legal actions by federal or state authorities, including criminal and civil penalties, the loss of FDIC insurance, revocation of a banking charter, other sanctions by regulatory agencies, civil money penalties, litigation by private parties, and/or reputational damage, which could have a material adverse effect on our business, results of operations and financial condition.

We report certain assets, including investment securities, at fair value. Generally, for assets that are reported at fair value we use quoted market prices or valuation models that utilize market data inputs to estimate fair value. Because we carry these assets on our books at their estimated fair value, we may incur losses even if the asset in question presents minimal credit risk. For example, we could be required to recognize OTTI in future periods with respect to investment securities in our portfolio. The amount and timing of any impairment recognized will depend on the severity and duration of the decline in fair value of our investment securities and our estimation of the anticipated recovery period.

Channels for delivering financial products and services to our customers are evolving rapidly, with less reliance on traditional branch facilities and more use of online and mobile banking. We compete with larger providers that have significant resources to dedicate to improved technology and delivery channels. We periodically evaluate the profitability of our branch system and other office and operational facilities to improve efficiencies. However, identification and closure of unprofitable operations and facilities can lead to restructuring charges and introduce the risk of disruptions to revenues and customer relationships.

Banking is a highly competitive business. We compete actively for loan, deposit, and other financial services business in northeastern and central Vermont. Our competitors include a number of state and national banks and tax-advantaged credit unions, as well as financial and nonfinancial firms that offer services similar to those that we offer. Some of our competitors are community or regional banks that have strong local market positions. Our large bank competitors, in particular, have substantial capital, technology and marketing resources that are well in excess of ours. These larger financial institutions may have greater access to capital at a lower cost and have a higher per-borrower lending limit than our Company, which may adversely affect our ability to compete with them effectively.

In addition, technology and other changes increasingly allow parties to complete financial transactions electronically, without the need for a physical presence in a market area. We are therefore likely to face increasing competition from out-of-market competitors, including national firms. Moreover, in many cases transactions may now be completed without the involvement of banks. For example, consumers can pay bills and transfer funds over the Internet and by telephone without banks. Many non-bank financial service providers have lower overhead costs and are subject to fewer regulatory constraints. If consumers do not use banks to complete their financial transactions, we could potentially lose fee income, deposits and income generated from those deposits.

We depend upon data processing, software, communication, and information access and exchange on a variety of computing platforms and networks and over the internet, and we rely on the services of a variety of third party vendors to meet our data processing and communication needs. Consequently, we are subject to certain related operational risks, both in our operations and through those of our service providers. These risks include, but are not limited to, data processing system failures and errors, inadequate or failed internal processes, customer or employee fraud, cyberattacks and catastrophic failures resulting from terrorist acts or natural disasters. Despite the safeguards we maintain, we cannot be certain that all of our systems are entirely free from vulnerability to attack or other technological difficulties or failures. Information security risks have increased significantly due to the use of online, telephone and mobile banking channels by customers and the increased sophistication and activities of organized crime, hackers, terrorists and other external parties. Our technologies, systems and networks and those of certain of our service providers as well as our customers’ devices, may be the target of cyberattacks, computer viruses, malicious code, phishing attacks or information security breaches that could result in the unauthorized release, gathering, monitoring, misuse, loss or destruction of our or our customers’ confidential, proprietary and other information, the theft of customer assets through fraudulent transactions or disruption of our or our customers’ or other third parties’ business operations. If information security is breached or other technology difficulties or failures occur, information may be lost or misappropriated, services and operations may be interrupted and we could be exposed to claims from customers. While we have instituted safeguards and controls, we cannot provide assurance that they will be effective in all cases, and their failure in some circumstances could have a material adverse effect on our business, financial condition or results of operations.

In deciding whether to extend credit or enter into other transactions with customers and counterparties, we may rely on information furnished by or on behalf of customers and counterparties, including financial statements and other financial information. We also may rely on representations of clients and counterparties as to the accuracy and completeness of that information and, with respect to financial statements, on reports of independent auditors if made available. If this information is inaccurate, we may suffer financial or reputational harm or other adverse effects with respect to the operation of our business, our financial condition and our results of operations.

We consistently attempt to offer new products and services to our customers to remain competitive. There can be risks and uncertainties associated with these new products and services especially if they are dependent on new technologies. We may spend significant time and resources in development of new products and services to market to customers. Through our development and implementation process we may incur risks associated with delivery timetables, pricing and profitability, compliance with regulations, technology failures and shifting customer preferences. Failure to successfully manage these risks could have a material effect on our financial condition, result of operations and business.

From time to time FASB and the SEC change the financial accounting and reporting standards that govern the preparation of our financial statements and applicable disclosures in our SEC filings. These changes can be very difficult to predict and can materially affect how we record and report our financial condition and results of operations. In some cases, we could be required to apply a new or revised standard retroactively, resulting in our restating prior period financial statements. Implementation of accounting changes, with associated professional consultation and advice, can be costly, even if the change will not have any material effect on our financial statements.

Management periodically reviews and updates our internal controls, disclosure controls and procedures, and corporate governance policies and procedures. However, any system of controls, no matter how well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurance that the objectives of the system are met. Any failure or circumvention of our controls and procedures, or failure to comply with regulations related to controls and procedures, could have a material adverse effect on our business, results of operations and financial condition.

Our future effective tax rates and tax liabilities could be unfavorably affected by increases in applicable tax rates and by other changes in federal or state tax laws, regulations and agency interpretations. Our effective tax rates could also be affected by changes in the valuation of our deferred tax assets and liabilities or by the outcomes of any examinations of our income tax returns by the IRS or our state income, franchise, sales and use or other tax returns by the Vermont Department of Taxes. Our results of operations and financial condition could also be adversely affected in the short-term by decreases in applicable tax rates that require us to revalue our deferred tax asset, as occurred in 2017 as a result of passage of the 2017 Tax Act.

Our success depends, in large part, on our ability to attract and retain key personnel, including executives. Any of our current employees, including our senior management, may terminate their employment with us at any time. Competition for qualified personnel in our industry can be intense and our geographic market area might not be favorably perceived by potential executive management candidates. We may not be successful in attracting and retaining sufficient qualified personnel. We may also incur increased expenses and be required to divert the attention of other senior executives to recruit replacements for the loss of any key personnel.

In the course of business, we may acquire, through foreclosure, properties securing loans originated or purchased that are in default. Particularly in commercial real estate lending, there is a risk that material environmental violations could be discovered on these properties. In this event, we might be required to remedy these violations at the affected properties at our sole cost and expense. The cost of remedial action could substantially exceed the value of affected properties. We may not have adequate remedies against the prior owner or other responsible parties and could find it difficult or impossible to sell the affected properties. These events could have an adverse effect on our results of operations and financial condition.

As of January 1, 2015, we were required to comply with new capital rules issued by the federal banking agencies that implemented the Basel III capital standards and established the minimum capital levels required under the Dodd-Frank Act. These new capital rules require banks and bank holding companies to maintain a minimum common equity Tier I capital ratio of 4.5% of risk-weighted assets, a minimum Tier I capital ratio of 6.0% of risk-weighted assets, a minimum total capital ratio of 8.0% of risk-weighted assets, and a minimum leverage ratio of 4.0%. Subject to a transition period, the new capital rules require banks and bank holding companies to maintain a 2.5% common equity Tier I capital conservation buffer above the minimum risk-based capital requirements for adequately capitalized institutions to avoid restrictions on the ability to pay dividends, discretionary bonuses, and to engage in share repurchases. The Company and the Bank met these requirements as of December 31, 2018. The new rules permanently grandfathered trust preferred securities issued before May 19, 2010 for institutions with less than $15.0 billion in total assets as of December 31, 2009, subject to a limit of 25% of Tier I capital. Our trust preferred securities qualify for this grandfather treatment. The new rules increased the required capital for certain categories of assets, including high volatility construction real estate loans and certain exposures related to securitizations, but retained the previous capital treatment of residential mortgages. Under the new rules, we were permitted to make, and did make, a one-time, permanent election to continue to exclude accumulated other comprehensive income from capital.

When we acquire a business, a portion of the purchase price of the acquisition may be allocated to goodwill and other identifiable intangible assets. The excess of the purchase price over the fair value of the net identifiable tangible and intangible assets acquired determines the amount of the purchase price that is allocated to goodwill acquired. At December 31, 2018, our goodwill totaled approximately $11.6 million, created in connection with the LyndonBank acquisition in 2007. Under current accounting standards, if we determine goodwill is impaired, we would be required to write down the value of these assets to fair value. We conduct a review each year, or more frequently if events or circumstances warrant such, to determine whether goodwill is impaired. We last completed a goodwill impairment analysis as of December 31, 2018, and concluded goodwill was not impaired. We cannot provide assurance that we will not be required to take an impairment charge in the future. Any impairment charge would have a negative effect on our shareholders’ equity and financial results and may cause a decline in our stock price.

Banks, securities firms, and insurance companies can now combine under a “financial holding company” umbrella. Financial holding companies can offer virtually any type of financial service, including banking, securities underwriting, insurance (both agency and underwriting), and merchant banking. Some of our competitors have elected to become financial holding companies. We offer only traditional banking products and, trust and investment management services indirectly through, our affiliate, CFSG.

Our Amended and Restated Articles of Association and By-Laws contain provisions, including a staggered board of directors and a supermajority vote requirement, that make it more difficult for a third party to gain control or acquire us without the consent of the board of directors. These provisions could also discourage proxy contests and may make it more difficult for dissident shareholders to elect representatives as directors and take other corporate actions.

The Company's administrative offices are located at the main offices of the Bank on U.S. Route 5 in Derby, Vermont, with total office space of approximately 34,000 square feet, including retail banking offices, an operations center as well as a community room used by the Bank for meetings and various functions. This community room has a secure outside access making it possible for the Bank to offer it to non-profit organizations after banking hours free of charge. This office is equipped with a remote drive-up facility and a drive-up ATM as well as an inside lobby ATM.

~~Office Location~~1	~~Owned~~	~~Leased~~	~~CFSG Office~~2

~~Caledonia County~~
~~St. Johnsbury (Railroad Street)~~3		X
~~St. Johnsbury (Route 5)~~		X
~~Lyndon (Memorial Drive)~~		X	X

~~Chittenden County~~
~~Burlington (Shelburne Road)~~4		X

~~Franklin County~~
~~Enosburg Falls (Sampsonville Road)~~	X

~~Lamoille County~~
~~Morrisville (Route 15 West)~~		X

~~Orleans County~~
~~Barton (Church Street)~~	X
~~Derby Line (Main Street)~~	X
~~Island Pond (Route 105)~~		X
~~Newport (Main Street)~~	X
~~Troy (Route 101)~~	X

~~Washington County~~
~~Barre (North Main Street)~~	X		X
~~Montpelier (State Street)~~		X

Information on the trading market in, market price of, and dividends paid on, the Company's common stock is incorporated by reference to the section of the 2018 Annual Report under the caption “Common Stock Performance by Quarter” immediately following the “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, filed as Exhibit 13 to this report. The balance of the information required by item 201 of Regulation S-K is omitted in accordance with the regulatory relief available to smaller reporting companies under applicable SEC disclosure rules, as amended in 2018 Release Nos. 33-10513 and 34-83550 (effective September 10, 2018).

Management is responsible for establishing and maintaining effective disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the Exchange Act). As of December 31, 2018, an evaluation was performed under the supervision and with the participation of management, including the principal executive officer and principal financial officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on that evaluation, management concluded that its disclosure controls and procedures as of December 31, 2018 were effective in ensuring that material information required to be disclosed in the reports it files with the Commission under the Exchange Act was recorded, processed, summarized, and reported on a timely basis.

Management is responsible for establishing and maintaining effective internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act. As of December 31, 2018, an evaluation was performed under the supervision and with the participation of management, including the principal executive officer and principal financial officer, of the effectiveness of the design and operation of the Company’s internal control over financial reporting. Management assessed the Company’s system of internal control over financial reporting as of December 31, 2018, in relation to criteria for effective internal control over financial reporting as described in “Internal Control – Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management believes that, as of December 31, 2018, its system of internal control over financial reporting met those criteria and is effective.

Our Amended and Restated Articles of Association and our bylaws provide for a Board of no fewer than nine and no more than twenty-five directors, to be divided into three classes, as nearly equal in number as possible, each class serving for a period of three years. The ~~following is incorporated by reference~~Board of Directors currently consists of thirteen members. The table below contains certain information concerning each of the thirteen incumbent directors. Additional biographical and background information about each of them follows the table, under the caption “Incumbent Director and Nominee Qualifications.”

		Director of Community
Name and Age	Positions with the Company	Bancorp. Since (1)

Incumbent Directors serving until 2020 annual meeting:
Thomas E. Adams, 73	Director	1986
Jacques R. Couture, 69	Director	1992
Emma L. Marvin, 39 (2)	Director	2020
Dorothy R. Mitchell, 75	Director	2006
James G. Wheeler Jr., 71	Director	2011
Incumbent Directors serving until 2021 annual meeting:
Kathryn M. Austin, 62	Director	2013
David M. Bouffard, 62	Director	2014
Aminta K. Conant, 66	Director	2006
Rosemary M. Lalime, 73	Director	1985
Incumbent Directors serving until 2022 annual meeting:
David P. Laforce, 47	Director	2018
Jeffrey L. Moore, 59	Director	2019
Stephen P. Marsh, 72	Board Chair	1998
Fredric Oeschger, 73	Director	2009

As a community banking organization operating in a heavily regulated industry, we rely on our Board of Directors for knowledge of our local markets, business acumen and strategic vision. Each incumbent director and nominee lives or works (unless retired) in the markets we serve, and brings a unique background, perspective and set of skills to our Board. This provides our Board as a whole with a thorough understanding of our local markets, and significant competence and experience in a wide variety of areas, including corporate governance, real estate, insurance, building trades, real estate development, agriculture, energy and commodities, the law and business management. In addition, many of our directors are long-serving members of our Company and Bank Boards, whose past contributions and industry knowledge, judgment and leadership capabilities have benefited our Company over the years and through multiple economic cycles.

Thomas Adams – Tom has served as a director since 1986. At the time of his initial election, he was the President and Chief Executive Officer (CEO) of Newport Plastics, where he had also served as the Chief Financial Officer (CFO) for many years. He is the owner of NPC Realty and until his retirement in November 2010, was a real estate agent at Coldwell Banker All Seasons Realty (now Re/Max All Seasons Realty). In addition to his business interests, Tom served for several years on the board of North Country Hospital in Newport, Vermont, including as its Chairman and Treasurer. He also served for several years as a trustee of the Haskell Free Library and Opera House in Derby Line, Vermont. Tom holds an accounting degree from the University of Vermont. He brings to the Board extensive business experience, familiarity with accounting procedures, and broad knowledge of the community. He chairs the Company’s Audit Committee and also serves on the Compensation/Human Resources Committee. He lives in Holland, Vermont.

Kathryn Austin – Kathy has served as President of the Bank and Company since January 2016 and as CEO of both entities since January 2017. From January 2014 until her appointment as CEO she also served as the Bank’s Chief Operating Officer. Kathy was appointed to the Bank’s Board of Directors in January 2012 and was first elected to the Company’s Board at the 2013 annual meeting. She joined the Bank in 1980 and over the years has held many management positions. Kathy served as Executive Vice President of both the Company and the Bank from 2011 to 2016, and as Vice President of the Company and Senior Vice President of the Bank from 2004 to 2011, responsible for the ~~2019 Annual Meeting.~~Bank’s Retail Banking, Human Resources and Marketing departments. Kathy also serves on the Board of Managers of our trust company affiliate, Community Financial Services Group, LLC (CFSG). Her many years of service to the Company in a variety of positions provide her with valuable insights into the Bank’s day-to-day operations, adding further depth and community banking expertise to the Board. Kathy is a graduate of the New England School of Banking at Williams College and the Stonier Graduate School of Banking at Georgetown University. She currently serves as a Trustee and Secretary of the Northwoods Stewardship Center, as a Board Member of the Northeast Kingdom Collaborative, and of Northeast Kingdom LLC, and as a Board Member of the Vermont Community Foundation. She is a past Chairman of the Vermont Bankers Association and serves on the ABA’s Community Bankers Council. She serves on the Company’s Corporate Governance/Nominating and Compensation/Human Resources Committees and on the Bank’s Risk Management Committee. She lives in Morgan, Vermont.

~~Listing~~David Bouffard –Dave joined the Boards of the Company and the Bank in 2014 and is a life-long resident of the area. He and his wife Beth have owned the Derby Village Store in Derby, Vermont since 2000. Prior to purchasing the store, Dave acquired retail management experience as the Manager of the Grand Union grocery store in Newport. Dave has served on various local boards, and is a past Board Chair of North Country Hospital and also served on its finance committee. His perspective as a small business owner and knowledge of our Orleans County market area add further depth to our Board. Dave serves on the Company’s Audit and Compensation/Human Resources Committees. He lives in Newport, Vermont.

Aminta Conant – Minty is a successful business woman with experience running manufacturing facilities in Vermont, New Hampshire and North Carolina. After several years of business consulting to companies across the United States and Europe, she is currently CFO and part owner of the Vermont distillery, Barr Hill. Previously, she served as the director of Lean Six Sigma programs for Lydall, Inc., an international manufacturing company listed on the New York Stock Exchange. Minty is a CPA and has an MBA degree, and brings to the Board not only her experience and knowledge of accounting, finance, and good business practices, but also her experience in working in a public company much larger than Community Bancorp. That perspective is a rarity for community bank directors and a real asset to the Board. She serves on the Company’s Audit and Compensation/Human Resources Committees. She has been a director since 2006, and prior to that served on our St. Johnsbury Advisory Board. She lives in Barnet, Vermont.

Jacques Couture – Jacques is a dairy farmer and maple sugar maker, who runs a successful family farm and bed and breakfast in Westfield. He has served on numerous governmental, non-profit and industry-related boards, including the Westfield Select Board, the Vermont Maple Association and the Cooperative Insurance Companies, among others. He brings relevant board experience and an agricultural sector perspective to our Board, where he chairs the Corporate Governance/Nominating Committee and also serves on the Bank’s Risk Management Committee. He has been a director since 1992, and prior to that served on our Troy Advisory Board. He lives in Westfield, Vermont.

David Laforce – Dave was appointed to the Boards of the Company and the Bank in 2018. He owns and operates Built by Newport Corporation, a wood furniture and component manufacturing company that has been family owned since the 1960s. Dave’s experience as a small business owner and familiarity with the local woods products industry, which is so important to our regional economy, provides valuable perspectives and insight to our Board. He is a lifelong resident of the Newport-Derby area and over the years has served on several local boards. He serves on the Company’s Corporate Governance/Nominating Committee and on the Bank’s Risk Management Committee. He lives in Derby, Vermont.

Rosemary Lalime – Rosemary is our longest serving director, having been first elected to the Board in 1985. She has been designated as our “outside” vice president (a tradition we have had at the Company for many years) and as our lead independent director to convene and run board meetings in the absence of management. A long time realtor in the area, and the owner and partner of Re/Max All Seasons Realty, Rosemary brings to the Board her extensive experience in real estate matters and her knowledge of properties and residents throughout our service area. She chairs the Company’s Compensation Committee and also serves on the Company Audit Committee and the Bank’s Human Resources Audit Committee. She lives in Derby, Vermont.

Stephen Marsh – Steve has served as Chair of the Boards of Directors of the Company and the Bank since 2011 and was first appointed to the Board in 1998. He served as CEO of the Company and the Bank from 2008, until his retirement at the end of 2016 and previously served as President of both entities from 2004 through the end of 2015. He began his employment with the Bank in 1973, serving over the years in various managerial capacities, including as CFO and Chief Operating Officer of the Company and the Bank prior to becoming President and CEO. Steve currently serves on the Orleans County Child Advocacy Board and has previously served on a number of other nonprofit and community development boards. Steve brings depth and strength to our Board, with his comprehensive knowledge of our banking operations and markets, his years of experience as a community banker and his valuable leadership skills. Steve serves on the Company’s Compensation/Human Resources and Corporate Governance/Nominating Committees, and also serves on the Bank’s Risk Management Committee. He lives in Newport Center, Vermont.

Emma Marvin – Emma is our newest director, appointed to the Boards of the Company and the Bank effective January 1, 2020. She is the co-owner and Vice President of Sales and Marketing at the Vermont Maple Sugar Company, Inc. d/b/a Butternut Mountain Farm in Morrisville, Vermont. She graduated from Cornell University with a degree in Natural Resource Management. Since 2004, Emma has worked for the second generation, family owned business and has been part of its senior leadership team since 2010, helping to promote the business’s growth from a family farm operation to a business that employs 100 people, purchases maple syrup from over 300 Vermont farms and operates a 75,000 square foot production and distribution facility. In 2014, she was recognized as Vermont Maple Person of the Year and in 2018 received the President’s Award from the International Maple Syrup Institute. She serves on the Vermont Maple Sugar Association Board, the Laraway Youth and Family Services Board and the Friends of Green River Reservoir Board. She is also a steering committee member of the Federal Reserve Bank of Boston’s Working Communities Challenge for Vermont. Emma brings to our Board knowledge of our central Vermont market area and significant experience in the maple products business, an important business segment throughout our market areas. Emma serves on the Company’s Corporate Governance/Nominating Committee and the Bank’s Risk Management Committee. Emma lives in Hyde Park, Vermont.

Dorothy Mitchell – Dodie has been a director since 2006, prior to which she served as a member of our Central Vermont Advisory Board. She brings to our Board a variety of governance experience, primarily as a board member of several non-profit organizations, including serving as Chair of the Vermont Student Assistance Corporation. Dodie also previously served on local and international boards of higher education, as the President of the Vermont Historical Society and as Co-Chair of the Vermont Historical Society Capital Campaign. As an active member of the community, she has extensive familiarity with the people and businesses in our central Vermont market area. Dodie serves on the Company’s Corporate Governance/Nominating Committee and the Bank’s Risk Management Committee. She lives in Worcester, Vermont.

Jeffrey Moore – First elected to the Board in 2019, he is the owner and president of Quest Industries, Inc., a freight logistics company based in St. Johnsbury, Vermont. Jeff is a lifelong resident of St. Johnsbury and currently serves on the St. Johnsbury Select Board, and the St. Johnsbury-Lyndonville Industrial Park Board; he is also a member of the Catamount Arts Advisory Council. Jeff’s knowledge of our Caledonia County market and experience as a small business owner add valuable insights and perspective to our Board. Jeff serves on the Company’s Corporate Governance/Nominating Committee and the Bank’s Risk Management Committee. He lives in St. Johnsbury, Vermont

Fredric Oeschger – First elected to the Board in 2009, Fred is a prominent local businessman, with diverse business interests, including plumbing and heating, propane and fuel oil distribution and commercial real estate. He is President and a principal of Fred’s Plumbing and Heating, Inc. and Fred’s Propane, Inc. based in Derby, Vermont and D&C Transportation, Inc., based in Orleans, Vermont. Fred is a longtime customer of the Bank and has extensive experience with commercial lending practices both here and elsewhere and possesses valuable insights into our small business market segment. He serves on the Company’s Corporate Governance/Nominating Committee and on the Bank’s Risk Management Committee. He lives in Newport, Vermont and Lady Lake, Florida.

James Wheeler – Jake joined the Board in 2011. In addition to his service on our Board, he has been a guiding force with the Company’s trust company affiliate, CFSG, for many years, having served on its Board of Managers since its formation in 2002. Jake has practiced law in St. Johnsbury since 1974 with the state’s largest law firm, Downs Rachlin Martin PLLC, and has been a member of the firm since 1978. His practice focuses principally in the areas of corporate governance, transactions and financing; complex real estate acquisitions and financing; and trusts and estates. Jake received his undergraduate degree from Harvard University and his law degree from Boston University School of Law. He serves on the Board of Directors of Kingdom Trail Association, Inc. and previously served on the Board of the Vermont Community Foundation, where he continues to serve on its nominating committee. Jake’s judgment and insight as a seasoned attorney provide a valuable addition to our Board. Jake serves on the Company’s Audit and Compensation/Human Resources Committees. He lives in East Burke, Vermont.

Additional information about Ms. Austin’s background, qualifications and years of service with the Company and the Bank is set forth above in this Item 10 under the caption “Incumbent Director and Nominee Qualifications.” Set forth below is additional information about the background and qualifications of the ~~incumbent directors and nominees under the caption "PROPOSAL I - ELECTION OF DIRECTORS."~~Company’s other executive officer:

Louise Bonvechio – Louise became an executive officer of the ~~names, ages, titles~~Company in 2008 when she was appointed as its Treasurer. She served as a Senior Vice President from 2011 until she was named Executive Vice President in 2019. She has served as CFO since 2008. In 2016, she was also appointed as Corporate Secretary of the Company and the Bank. During her 27 years with the Bank, she has held a number of other positions, including serving as the Bank’s Vice President and Cashier from 2004 to 2008 and as the Bank’s Controller from 2003 – 2008. Louise holds an Associate Degree in Accounting and has received diplomas in banking and finance, including from the New England School of Financial Studies at Babson College. In 2019 she completed the American Bankers Association Stonier Graduate School of Banking and earned a certificate of leadership from the Wharton School of Business.

Except as otherwise disclosed in this paragraph, none of our directors currently holds, or has held during the past five years, any directorship in any company (other than Community Bancorp.) with a class of securities registered pursuant to Section ~~16(a)~~12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or subject to Section 15(d) of the Exchange Act, or in any company registered as an investment company under the ~~caption "SHARE OWNERSHIP INFORMATION -Section 16(a) Beneficial Ownership Reporting Compliance."~~Investment Company Act of 1940, as amended. Director Fred Oeschger served as a director of Genethera, Inc., a corporation with common stock registered under Section 12 of the Exchange Act, from March, 2018 to his resignation in December, 2018.

Except as otherwise disclosed in this paragraph, to the best of our knowledge, none of our directors or executive officers has been involved during the past ten years in any legal proceedings required to be disclosed pursuant to Item 401(f) of Regulation S-K. In 2017, Director Fred Oeschger organized FOGT, LLC, a Vermont limited liability company, for the sole purpose of investing in the capital stock of Genethera, Inc., a corporation based in Colorado. Following a dispute with the management of Genethera, Inc., FOGT, LLC ceased any further investment in Genethera, Inc. and filed a voluntary petition under Chapter 7 of the bankruptcy code in March, 2019. A final decree closing the case was issued by the bankruptcy court in June, 2019.

The Audit Committee, which operates under a written charter, oversees the Company’s ~~procedures~~accounting and financial reporting process, internal controls and audits. The Audit Committee consults with management, the internal auditors and the independent auditors on, among other items, matters related to the annual audit, the published financial statements and the accounting principles applied. As part of its duties, the Committee appoints, evaluates and retains the Company’s independent auditors. It has responsibility for ~~submission~~the compensation, termination and oversight of ~~director nominations~~the Company’s independent auditors and evaluates the independent auditors’ qualifications, performance and independence. The Committee has similar authority regarding selection and oversight of the Company’s internal auditor. In addition, the Audit Committee pre-approves all services provided by ~~shareholders~~the independent auditors, including both audit and permitted non-audit services. Those services and fees are described below in Part III, Item 14. “Principal Accounting Fees and Services” of this Amendment. The Committee is also involved in the review of the Company’s periodic reports filed with the SEC, including participation by one of its members in the meetings of the Company’s Disclosure Control Committee.

The members of the Audit Committee are Thomas Adams (Chair), David Bouffard, Aminta Conant, Rosemary Lalime and James Wheeler. All members of the Audit Committee are considered independent directors under the ~~caption “SHAREHOLDER NOMINATIONS AND OTHER PROPOSALS.”~~applicable NASDAQ standard as well as under the standards applicable to FDIC-insured depository institutions and their holding companies with assets of $500 million or more. During 2019, the Committee met four times.

Under SEC rules, companies must disclose whether aat least one member of the Audit Committee qualifies as ~~an audit committee~~a “financial expert.” As defined by the SEC, the concept of financial expert is heavily focused on individuals who have prepared or audited public company financial statements or have had similar management experience or responsibility for others performing those or comparable functions. Given the Company’s rural market area and the limited number of public companies in it, the Board has not deemed it advisable to require that the Audit Committee include a person qualifying as a financial expert under ~~applicable SEC rules,~~this definition. The Board has considered the business experience, past performance as a Board and/or Audit Committee member and other qualifications of each of the members of the Audit Committee and has concluded that each of them has demonstrated that he or she is capable of (i) understanding GAAP and financial statements, (ii) assessing the general application of GAAP principles in connection with the accounting for estimates, accruals and reserves, (iii) analyzing and evaluating the Company’s financial statements, (iv) understanding internal controls and procedures for financial reporting, and (v) understanding audit committee functions. Given the business experience and acumen of each of the members of the Audit Committee, the Board believes that each of such persons, although not a “financial expert” under the ~~caption "CORPORATE GOVERNANCE - Board Committees."~~SEC definition, is nevertheless qualified to carry out all of the duties and responsibilities of a member of the Company’s Audit Committee.

No material changes to the procedures for nominating directors by our shareholders were made during 2019. However, due to the postponement of the annual meeting, certain deadlines for submitting director nominations and other business at the 2020 annual meeting of shareholders, previously disclosed in the proxy statement for the 2019 annual meeting of shareholders, will be adjusted and publicly announced after a new meeting date is set.

Section 16(a) of the Exchange Act requires the Company’s executive officers and directors to file reports of ownership and changes in ownership with the SEC electronically. The Company has reviewed the copies of the Section 16 reports filed electronically by the directors and executive officers, or written representations from them that no Form 5’s were required to be filed for 2019. Based solely on such review, the Company believes that all Section 16 filing requirements applicable to its executive officers and directors for 2019 were timely complied with.

The directors may choose to defer current receipt of some or all of their Company or Bank director fees under the Company’s Deferred Compensation Plan for Directors. Deferrals are credited to a cash account that bears interest at the rate the Bank pays on a three-year certificate of deposit, as adjusted from time to time. Payments are deferred until the director’s retirement, death or disability, or at an earlier or later date elected by the director. The director may choose to receive his or her deferrals and accumulated interest in a lump sum or monthly installments. Deferred fees and accumulated interest represent a general unsecured obligation of the Company. No assets of the Company or the Bank have been segregated to satisfy the Company’s obligations under the Plan.

Prior to 2005, the Company maintained a non-qualified retirement plan for the Company’s outside directors. Non-employee directors who served on the Board of the Company or the Bank for at least five years between 1994 and 2004 are entitled to receive upon retirement a lump sum payment of $1,000 for each year of Board service. For this purpose, service as a director of the Company and of the Bank during the same year is not counted separately. Following a re-evaluation of the Company’s benefit plans affected by IRC Section 409A, the Company terminated any further accruals under the plan for years after 2004 and Board fees were increased to compensate for the loss of this retirement benefit.

As of December 31, 2019, the total remaining accrued and unpaid benefit for all directors covered by the plan was $33,000. The participating directors are fully vested in their accrued benefits and would be entitled to payout of the full benefit upon retirement from the Board for any reason, regardless of age. Directors Adams, Couture, and Lalime each have an accumulated lump sum retirement benefit of $11,000. Accrued benefits do not earn interest, are not adjusted for inflation and will be paid out to participants when they retire from the Board. All benefit accruals under the plan represent a general unsecured obligation of the Company. No assets of the Company or the Bank have been segregated to satisfy the Company’s obligations under the plan.


(1)	Does not include (i) earnings on directors’ fees deferred under the Directors’ Deferred Compensation Plan because interest on those amounts is not accrued at a preferential (above market) rate; or (ii) certain expense reimbursements related to board service such as for mileage and expenses related to attendance at director educational conferences.
(2)	Mr. Bucknam retired from the Boards of the Company and the Bank at the 2019 annual meeting of shareholders on May 14th.

The key objectives of the Company’s executive compensation programs are: to support and drive business objectives and strategies; to reward competent stewardship of the enterprise; to provide a cost-effective, competitive total compensation package that enables the Company to attract and retain qualified executives for leadership roles; and to motivate and reward these executives for creating value for the Company and its shareholders. The cash incentive bonus program, in particular, is intended to reward exceptional financial performance of the Company, while at the same time ensuring consequences for below-average performance. In making compensation decisions about the executive officers, the Compensation Committee and the Board have traditionally placed emphasis on the overall performance of the Company rather than on individual performance targets, in order to foster an attitude of team spirit and shared goals among our executives.

In establishing the overall compensation program for employees, including the executive officers, the Compensation Committee and the Board are mindful of the potential implications for enterprise risk management. The Committee and Board believe that the Company’s compensation practices, which for executives are heavily weighted to fixed salary, do not create any material adverse risks to the Company. In addition, the short-term incentive program is focused largely on Bank-wide performance, which encourages overall achievement of annual goals rather than individual or business line performance, and includes a recoupment provision which discourages inappropriate risk-taking that might lead to improper financial reporting.

			Non-Equity
			Incentive Plan	All Other
Name and Principal Position	Year	Salary (1)	Compensation (2)	Compensation (3)	Total


Kathryn M. Austin,	2019	$305,000	$101,413	$53,430	$459,843
President, Chief Executive Officer	2018	$282,500	$101,935	$52,858	$437,293
and Director, Community Bancorp.
and Community National Bank

Louise M. Bonvechio,	2019	$187,500	$61,799	$36,123	$285,422
Corporate Secretary and Treasurer,	2018	$176,000	$63,270	$34,486	$273,756
Community Bancorp., Executive Vice
President, Chief Financial Officer and
Cashier, Community National Bank

(1)	Amounts shown include voluntary salary deferrals under the Company’s Retirement Savings (401(k)) Plan.
(2)	Represents cash bonuses earned under the Officer Incentive Plan, described below, with respect to the 2019 and 2018 annual performance periods, respectively, and paid in February of the following year.
(3)	Amounts shown include discretionary profit-sharing contributions under the Retirement Savings Plan as follows: For 2019: Ms. Austin, $30,000 and Ms. Bonvechio, $27,152 and 2018: Ms. Austin, $29,625 and Ms. Bonvechio, $26,042. Also includes (i) matching employer 401(k) contributions under the Plan as follows: For 2019: Ms. Austin, $7,000 and Ms. Bonvechio, $6,335 and 2018: Ms. Austin, $6,875; Ms. Bonvechio, $5,982.; (ii) the taxable portion of employer-provided term life insurance benefits in excess of $50,000; (iii) for Ms. Austin, includes the taxable fringe benefit for personal use of a bank-owned automobile.

The Bank maintains an Officer Incentive Plan for designated executive officers and for other officers and exempt employees, including employees whose compensation is commission-based. Each executive officer, non-executive officer and qualifying exempt employee having at least one year of service is eligible to participate in the plan. There are two separate incentive payment components under the plan, one for designated executive officers and another for all other officers and participating exempt employees.

Executive Officers. Under the executive officers portion of the plan, designated executive officers are eligible to earn a cash bonus equal to a percentage of salary based on attainment of annual weighted performance criteria approved by the Board upon recommendation of the Compensation Committee. Cash bonus awards for the 2019 ~~Annual Meeting:~~performance period were based on a combination of (1) the Bank’s September 30 rating issued by IDC Financial Publishing, Inc. (IDC), an industry-wide recognized ranking service, (2) return on average assets, (3) the ratio of non-performing loans as percentage of average loans, (4) the ratio of overhead expense as a percentage of average assets, and (5) a subjective individual performance evaluation by the Board of Directors of the Company. The plan includes threshold, target and “stretch” benchmarks for each performance measure, and those measures are assigned percentage weights in the overall bonus calculation.

Criteria/Weight	Threshold	Target	Stretch	Actual	Earned	Multiplier

Return on Average Assets	≥ to 1.28%	≥ 1.33%	≥ 1.38%	1.35%	120.00%	36.00%
Percentage reward-30%	40.00%	100.00%	150.00%

I.D.C Rating Superior (200-249)		Superior (250-299)	Superior (300+)	Superior	136.67%	34.17%
Percentage reward-25%	40.00%	100.00%	150.00%	252

Board Subjective Evaluation/20%	3.00	4.00	5.00	4.25	112.50%	22.50%
Percentage reward-20%	40.00%	100.00%	150.00%

Overhead Expense as a % of
Average Assets	2.98%	2.90%	2.82%	2.74%	150.00%	22.50%
Percentage reward-15%	40.00%	100.00%	150.00%

Non-Performing Loans as a % of
Average Loans	1.50%	1.00%	0.50%	.84%	116.00%	11.60%
Percentage reward-10%	40.00%	100.00%	150.00%

Totals = 100.00%						126.77%

The IDC rating, which constitutes one of the performance criteria, takes into account the Bank’s financial performance and risk profile in areas of asset quality, capital, margins, earnings and liquidity. For the twelve months ended September 30, 2019, the Bank earned the IDC rating of “Superior.” Use of a September 30 rating rather than a year-end rating permits the Company to calculate and pay out the executive officer bonuses consistent with the short-term deferral exception under Internal Revenue Code Section 409A, added by the American Jobs Creation Act of 2004, pursuant to which bonuses must be paid out no later than 2-1/2 months following the end of the calendar year in which the bonus was earned.

For 2019, the fixed percentage of salary defining the target award for each of the two executive officers was 25% and the multiplier applied to that salary percentage, based on achievement of 2019 performance targets, was 126.77%, resulting in a bonus of 31.69% of base salary for the two executive officers. The following table shows the bonuses paid under the plan to the two executive officers named in the Summary Compensation Table for services rendered in 2019.

For the 2018 performance period, the target award for each of the two executive officers was 25% of salary and the applicable multiplier, based on actual attainment of the applicable weighted performance criteria, was 140.60%, resulting in the following bonuses: Ms. Austin, $101,935 and Ms. Bonvechio, $63,270. Incentive bonuses paid to the two executive officers named in the Summary Compensation Table for services rendered in 2019 and 2018 are included in the “Non-Equity Incentive Plan Compensation” column of the Table.

The Compensation Committee periodically reviews the allocation percentages, performance tiers, performance criteria and weightings, and may recommend changes for approval by the Bank’s Board of Directors. The Company’s Board of Directors, in its discretion and in consultation with the Compensation Committee, designates participating executive officers and establishes annually minimum performance targets as well as performance criteria used to determine the incentive bonus pool.

The Plan includes a recoupment provision, which provides that if the Company restates its financial statements, any current or former executive officer who received bonus compensation under the Plan may be required to reimburse the Company with respect to any bonus compensation paid within the preceding three years. Any such reimbursement shall not exceed the amount by which the bonus compensation paid to the executive officer exceeds the amount of bonus compensation (if any) that would have been paid if it had been based upon the financial statements as restated.

Other Officers and Exempt Employees. The Company creates a separate incentive bonus pool under the plan for officers (other than executive officers) and qualifying exempt employees using performance criteria similar to those for executive officers. The target amount of the bonus pool is based on a percentage of the Bank’s net income (1.90% in 2019 and 2.19% for 2018), with a multiplier applied to the target amount, based on the extent to which the specified performance measures were actually achieved during the annual performance period. The resulting bonus pool is generally allocated among participants based on job title and responsibilities. Several officers (but not the executive officers) are eligible to receive individual incentive awards based upon the attainment of specific performance goals. These individual incentives are accounted for in the allotment of shares in the incentive pools and are paid in addition to incentive payouts described above.

Employees who are age 21 or over and who have completed at least one year of service (as defined in the plan) are eligible to participate in the Community Bancorp. and Designated Subsidiaries’ Retirement Savings Plan. The plan contains features of a so-called 401(k) plan which permit participants to make voluntary compensation deferrals on a tax-deferred and/or after-tax (ROTH) basis. The 401(k) plan maximum per participant contribution limit for 2019 was $19,000 ($25,500 for participants age 50 and older) and is $19,500 ($26,000 for participants age 50 and older) for 2020. During 2019 the Company matched 50 cents for each dollar of compensation deferred, up to 5% of compensation. This same matching contribution percentage is in effect for 2020. The plan also provides for discretionary profit sharing contributions by the Company. During 2019 and 2018, the two executive officers named in the Summary Compensation Table made voluntary salary deferrals and received matching employer contributions. These amounts are reflected in the Table.

Participants are at all times fully vested in their own compensation deferrals and in any rollover contributions from other plans. Vesting in any matching employer contribution begins after one year of service, with full vesting after six years of service. Vesting in any discretionary profit sharing employer contribution begins in the first year of service, with full vesting after six years of service. Participants may direct the investment of their plan account among several funds maintained by the plan trustee, including a Community Bancorp. stock fund. Distributions of accounts are generally deferred until the participant’s death, disability or retirement, except in cases of financial hardship (as defined in the plan). Benefits are subject to income tax upon distribution and certain early withdrawals may be subject to an additional 10% penalty tax. Distribution of plan benefits may be in the form of an annuity, a lump sum in cash, or in certain circumstances, common stock of the Company.

In addition to 401(k) compensation deferrals and matching employer contributions, the plan permits the Company to make a discretionary profit sharing contribution in any year for the account of all participants, including the two executive officers named in the Summary Compensation Table. The amount of the contribution for any year is determined annually based on a calculation of the maximum allowable deductible contribution that the Company is permitted to make on behalf of the executives, but subject to the annual contribution limitations of the Internal Revenue Code. The profit sharing contributions made for 2019 and 2018 to the account of the two executive officers named in the Summary Compensation Table are included in the “All Other Compensation” column of the Table.

The Company does not generally provide its executive officers with perquisites or other personal benefits such as club memberships, financial planning assistance, tax preparation, living allowances, commuting expenses, or similar benefits not described in this Amendment. However, the Company does provide a Company-owned vehicle to Ms. Austin and pays related gas and maintenance charges. The Company also pays the expenses of the executive officers and their spouses in connection with attendance at certain banking-related functions, such as bankers’ association conventions.

In 2015, the Company entered into change in control agreements with each of our two executive officers named in the 2019 cash compensation table (Kathryn Austin and Louise Bonvechio). As described below, the agreements may require the Company (or a successor company) to make payments to the covered executive officers in the event of the termination of their employment in specified circumstances, either in anticipation of or following a change in control of the Company.

The change in control agreements provide that the executive officer will be entitled to a specified severance payment if her employment is terminated by the Company (or its successor) without “cause” (as defined in the agreement), or the executive terminates her employment with the Company for “good reason” (as defined in the agreement), during the three-year period following a “change in control” (as defined in the agreement). The executive is also entitled to receive the specified severance benefit if her employment is terminated by the Company without cause or by the executive with good reason after public announcement of a proposed change in control and within 120 days prior to occurrence of the change in control. The severance benefit is equal to two times the executive’s highest total annual cash compensation (salary plus cash bonus, if any) in any of the three years immediately preceding the termination and is payable in a lump sum, subject to execution by the executive of a release of claims. The severance benefit is the only benefit payable under the change in control agreements and is in addition to any other compensation and benefits to which the executive is otherwise entitled, including accrued and unpaid salary and vested benefits under any employee compensation plan.

For purposes of the agreements, “cause” means (i) personal dishonesty; (ii) willful misconduct; (ii) incompetence; (iv) breach of fiduciary duty involving personal profit; (v) intentional failure to perform the executive’s stated duties; (vi) willful violation of law; (vii) conviction of, or plea of nolo contendere to a felony; or (viii) material breach of the agreement by the executive. Good reason” means (i) a reduction in the executive’s total annual cash compensation in an amount equal to 15% or more of the executive’s highest total annual cash compensation in any of the preceding three (3) calendar years, unless the reduction is part of a general, non-discriminatory reduction in base salary and/or bonus applicable to all similarly situated officers; (ii) a material reduction in the executive’s authority, duties or responsibilities; (iii) a relocation of the executive’s principal place of employment by more than 75 miles from the Bank’s main office in Derby; or (iv) failure by the Bank or the Company to obtain a written assumption of the agreement from any successor entity.

A “change in control” is defined in the agreements to include (i) a merger, consolidation or plan of share exchange which results in the shareholders of the Company owning less than a majority of the surviving company; (ii) the acquisition by any person or group of more than 50% of the Company’s voting stock; (iii) a sale of substantially all the assets of the Company or the Bank; (iv) liquidation or dissolution of the Company; and (v) a turnover during any two year period of a majority of the members of the Board, other than nominees approved by two-thirds vote of the directors in office at the beginning of the two year period.

~~Information regarding management interlocks and certain transactions under the caption "CORPORATE GOVERNANCE -~~ Compensation Committee ~~Interlocks~~are Rosemary Lalime (Chair), Thomas Adams, Kathryn Austin, David Bouffard, Aminta Conant, Stephen Marsh and ~~Insider Participation."~~James Wheeler. During 2019, the Committee met three times. The Committee’s charter is available on the Company’s website at www.communitybancorpvt.com.

The following ~~is incorporated~~table shows the amount of our common stock beneficially owned by ~~reference~~all of our incumbent directors, nominees and executive officers, individually and as a group, as of April 21, 2020. None of our directors or executive officers owns any shares of the Company’s Series A preferred stock. Except as otherwise indicated in the footnotes to the ~~Company's Proxy Statement for~~table, the ~~2019 Annual Meeting:~~named individuals possess sole voting and investment power over the common shares listed.

~~Information regarding~~

	Number of	Percent of
	Shares	Class
Directors and Nominees
Thomas E. Adams (1)	27,734	0.53%
Kathryn M. Austin (2)	57,786	1.10%
David M. Bouffard	1,189	0.02%
Aminta K. Conant (3)	2,565	0.05%
Jacques R. Couture (4)	26,141	0.50%
David Laforce (5)	400	0.01%
Rosemary M. Lalime	62,528	1.19%
Stephen P. Marsh (6)	116,721	2.23%
Emma Marvin (7)	389	0.01%
Dorothy Mitchell	6,766	0.13%
Jeffrey L. Moore (8)	730	0.01%
Fredric Oeschger	87,047	1.66%
James G. Wheeler, Jr.	1,769	0.03%

Non-Director/Nominee Executive Officers
Louise M. Bonvechio (9)	7,051	0.13%

All Directors, Nominees & Executive Officers
as a Group (14 in number) (10)	398,816	7.61%

(1)	Includes 11,545 shares held in an IRA for Mr. Adams’ benefit.
(2)	Includes 13,136 shares as to which voting and investment power is shared and 44,650 shares held indirectly, through participation in the Community Bancorp. stock fund under the Company’s Retirement Savings Plan (the “401(k) Plan”).
(3)	Includes 250 shares held in a family trust as to which voting and investment power is shared.
(4)	Includes (i) 14,357 shares held by Mr. Couture jointly with his wife, as to which voting and investment power is shared; (ii) 3,437 shares held in an IRA for Mr. Couture’s benefit; and (iii) 3,448 shares held in an IRA for the benefit of Mr. Couture’s wife.
(5)	Includes 400 shares held by Mr. Laforce jointly with his wife, as to which voting and investment power is shared.
(6)	Includes (i) 28,556 shares held by Mr. Marsh jointly with his wife, as to which voting and investment power is shared; and (ii) 87,263 shares indirectly owned by Mr. Marsh through his participation in the Community Bancorp. stock fund under the 401(k) Plan. Of the shares listed, 29,058 are pledged as collateral for a loan with a nonaffiliated bank.
(7)	Mrs. Marvin was elected to the board in January 2020.
(8)	Includes 200 shares to which voting and investment power is shared with his partner.
(9)	All such shares are held indirectly through participation in the Community Bancorp. stock fund under the 401(k) Plan.
(10)	Includes 56,899 shares as to which voting and investment power is shared and 138,964 shares held indirectly, through participation in the Community Bancorp. stock fund under the 401(k) Plan.

In addition, as of April 21, 2020, 511,627 shares (10.11%) of the ~~share ownership~~Company’s issued and outstanding common stock were held in fiduciary or custodial capacity by the Company’s affiliated trust and investment management company, CFSG for various beneficial owners, including 488,644 shares, or 10.59%, held on behalf of ~~management~~the 401(k) Plan Trustees and ~~principal shareholders~~participants. Participants in the Company stock fund under the ~~caption "SHARE OWNERSHIP INFORMATION."~~401(k) Plan, including the Company’s four executive officers, have the right to vote their proportionate share of the stock held in the fund. The 401(k) Plan Trustees do not generally vote shares of the Company’s common stock unless instructions are received from the participants. Similarly, CFSG does not vote shares of the Company’s common stock held in fiduciary capacity unless voting instructions are received from the beneficial owner.

Except as set forth above, the Company is not aware of any individual, group, corporation or other entity owning beneficially more than 5% of the Company’s outstanding common stock, its only class of voting securities. The Company has no other authorized class of voting securities. The Company has outstanding 15 shares of Series A preferred stock, which are nonvoting except in very limited circumstances affecting the rights of the holders of such shares.

Some of the Company’s directors and executive officers, and some of the corporations and firms with which these individuals are associated, are deposit customers of Community National Bank in the ordinary course of business, or have loans outstanding from the Bank, and it is anticipated that they will continue to be customers of and indebted to the ~~Company's Proxy Statement~~Bank in the future. All such loans were made in the ordinary course of business, and except as disclosed below, do not involve more than normal risk of collectability or present other unfavorable features, and were made on substantially the same terms, including interest rates and collateral, as those prevailing at the same time for comparable Bank transactions with unaffiliated persons, although directors were generally allowed the ~~2019 Annual Meeting:~~lowest interest rate given to others on comparable loans.

~~Information regarding~~applicable NASDAQ standard. Based on the ~~independence~~information available to it, the Company’s Board of Directors has determined that each of the incumbent directors ~~under~~is independent within the ~~caption “CORPORATE GOVERNANCE – Director Independence.”~~meaning of the listing standards of NASDAQ, except for President and CEO Kathryn Austin, and director Jacques Couture, who is the brother of the Company’s Corporate Secretary and Treasurer and the Bank’s Executive Vice President and CFO, Louise Bonvechio.

The ~~following is incorporated by reference~~Audit Committee of the Board has appointed BerryDunn as the Company’s independent registered public accounting firm to ~~the Company's Proxy Statement~~audit Community Bancorp.’s consolidated financial statements for the year ending December 31, 2020. BerryDunn served as the Company’s independent auditors for 2019 ~~Annual Meeting~~and 2018 and also provided certain tax and other audit-related services in both years. As they have done in previous years, the Audit Committee and Board of Directors will seek a vote of the shareholders to ratify the selection of BerryDunn as the Company’s external auditors for 2020, at the annual meeting of shareholders to be held later this year.

As part of its duties, the Audit Committee is required to pre-approve audit and non-audit services performed by the Company’s independent auditors, in order to ensure that the provision of such services does not impair the auditors’ independence. Under applicable law, certain services may not be performed by the auditors under any circumstances. Consistent with these legal requirements, the Audit Committee’s charter provides that all permitted services must be approved by the Audit Committee in advance. However, the Audit Committee may delegate this authority to a member of the Committee, who is required to inform the entire Committee of any approval taken pursuant to that delegated authority. The Audit Committee does not delegate to management its responsibilities to pre-approve services performed by the independent auditors. Each of the services performed by BerryDunn described under the ~~caption "PROPOSAL 4 - RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS -~~ captions below was pre-approved by the Audit Committee.

~~Exhibit 101~~--The following materials from the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 formatted in eXtensible Business Reporting Language (XBRL): (i) the audited consolidated balance sheets, (ii) the audited consolidated statements of income, (iii) the audited consolidated statements of comprehensive income; (iv) the audited consolidated statements of changes in shareholders’ equity, (v) the audited consolidated statements of cash flows and (vi) related notes, for the years ended December 31, 2018 and 2017.

~~/s/Kathryn M. Austin~~		~~Date: March 15, 2019~~
~~Kathryn M. Austin, President and Chief~~
~~Executive Officer (Principal Executive Officer)~~

~~/s/Louise M. Bonvechio~~		~~Date: March 15, 2019~~
~~Louise M. Bonvechio, Corporate Secretary and~~
~~Treasurer (Principal Financial Officer)~~

~~/s/Candace A. Patenaude~~		~~Date: March 15, 2019~~
~~Candace A. Patenaude~~
~~(Principal Accounting Officer)~~
~~COMMUNITY BANCORP. DIRECTORS~~
~~/s/Thomas E. Adams~~		~~Date: March 15, 2019~~
~~Thomas E. Adams~~

~~/s/Kathryn M. Austin~~		~~Date: March 15, 2019~~
~~Kathryn M. Austin~~

~~/s/David M. Bouffard~~		~~Date: March 15, 2019~~
~~David M. Bouffard~~

~~/s/Charles W. Bucknam, Jr.~~		~~Date: March 15, 2019~~
~~Charles W. Bucknam, Jr.~~

~~/s/Aminta K. Conant~~		~~Date: March 15, 2019~~
~~Aminta K. Conant~~

~~/s/Jacques R. Couture~~		~~Date: March 15, 2019~~
~~Jacques R. Couture~~

		~~Date: March 15, 2019~~
~~David P. Laforce~~

~~/s/Rosemary M. Lalime~~		~~Date: March 15, 2019~~
~~Rosemary M. Lalime~~

~~/s/Stephen P. Marsh~~		~~Date: March 15, 2019~~
~~Stephen P. Marsh, Board Chair~~

~~/s/Jeffrey L. Moore~~		~~Date: March 15, 2019~~
~~Jeffrey L. Moore~~

~~/s/Dorothy R. Mitchell~~		~~Date: March 15, 2019~~
~~Dorothy R. Mitchell~~

~~/s/Fredric Oeschger~~		~~Date: March 15, 2019~~
~~Fredric Oeschger~~

~~/s/James G. Wheeler, Jr.~~		~~Date: March 15, 2019~~
~~James G. Wheeler, Jr.~~

~~Exhibit 13~~	~~Portions of the 2018 Annual Report, specifically incorporated by reference into this report.~~

~~Exhibit 21~~	~~Subsidiaries of Community Bancorp.~~

~~Exhibit 23~~	~~Consent of Berry Dunn McNeil & Parker, LLC~~

Exhibit 31.1	Certification from the Chief Executive Officer (Principal Executive Officer) of the Company pursuant to section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 31.2	Certification from the Treasurer (Principal Financial Officer) of the Company pursuant to section 302 of the Sarbanes-Oxley Act of 2002

~~Exhibit 32.1~~	Certification from the Chief Executive Officer (Principal Executive Officer) of the Company pursuant to 18 U.S.C., Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002**

~~Exhibit 32.2~~	Certification from the Treasurer (Principal Financial Officer) of the Company pursuant to 18 U.S.C., Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002**


~~Exhibit 101~~	The following materials from the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 formatted in eXtensible Business Reporting Language (XBRL): (i) the audited consolidated balance sheets, (ii) the audited consolidated statements of income, (iii) the audited consolidated statements of comprehensive income; (iv) the audited consolidated statements of changes in shareholders’ equity, (v) the audited consolidated statements of cash flows and (vi) related notes, for the years ended December 31, 2018 and 2017.

Vermont	03-0284070
(State of Incorporation)	(IRS Employer Identification Number)
Address of Principal Executive Offices: 4811 US Route 5, Derby, Vermont 05829

Title of Each Class	Trading Symbol(s)	Name of each exchange on which registered
~~NONE~~	~~NONE~~(Not Applicable)

Large accelerated filer ( )		Accelerated filer ~~(X)~~( )
Non-accelerated filer ~~( )~~(X)		Smaller reporting company (X)
Emerging growth company ( )

FORM 10-K ANNUAL REPORT
Table of Contents

~~PART I~~		~~Page~~

	~~Definitions, Acronyms and Abbreviations~~	4
~~Item 1~~	~~Business~~	4
~~Item 1A~~	~~Risk Factors~~	15
~~Item 1B~~	~~Unresolved Staff Comments~~	20
~~Item 2~~	~~Properties~~	21
~~Item 3~~	~~Legal Proceedings~~	21
~~Item 4~~	~~Mine Safety Disclosures~~	22

~~PART II~~

~~Item 5~~	~~Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities~~	22
~~Item 6~~	~~Selected Financial Data~~	22
~~Item 7~~	~~Management's Discussion and Analysis of Financial Condition and Results of Operations~~	22
~~Item 7A~~	~~Quantitative and Qualitative Disclosures About Market Risk~~	22
~~Item 8~~	~~Financial Statements and Supplementary Data~~	22
~~Item 9~~	~~Changes in and Disagreements with Accountants on Accounting and Financial Disclosure~~	23
~~Item 9A~~	~~Controls and Procedures~~	23
~~Item 9B~~	~~Other Information~~	23

PART III

Item 10	Directors, Executive Officers and Corporate Governance	235
Item 11	Executive Compensation	2410
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	2416
Item 13	Certain Relationships and Related Transactions, and Director Independence	2417
Item 14	Principal Accounting Fees and Services	2418

PART IV

Item 15	Exhibits and Financial Statement Schedules	2519
	Signatures	2620
	Exhibit Index	2721

	Total Number	Average
	of Shares	Price Paid
For the period:	Purchased(1)(2)	Per Share

October 1 - October 31	0	$0.00
November 1 - November 30	3,291	16.90
December 1 - December 31	0	0.00
Total	3,291	$16.90

●	~~a new common equity Tier 1 risk-based capital ratio of 4.5%;~~
●	~~a Tier 1 risk-based capital ratio of 6% (increased from the former 4% requirement);~~
●	~~a total risk-based capital ratio of 8% (unchanged from the former requirement); and~~
●	~~a leverage ratio of 4% (also unchanged from the former requirement).~~

(1)	Each person named in the table is also a director of Community National Bank.
(2)	Appointed to the Boards of Directors of the Company and Community National Bank effective January 1, 2020.

Name and Age	Current Position(s) with the Company and the Bank

Kathryn M. Austin, 62	President, CEO and Director, Community Bancorp. and Community National Bank

Louise M. Bonvechio, 59	Corporate Secretary and Treasurer, Community Bancorp. and Executive Vice President,
	CFO and Cashier, Community National Bank

Company Director Fees		Bank Director Fees

Annual Retainer	$8,500	Annual Retainer	$8,500
Board Meeting Fee	500	Board Meeting Fee	550
Board Committee Meeting Fee	550	Board Committee Meeting Fee	550
Disclosure Control Committee Meeting Fee (1)	550	Local Advisory Board Meeting Fee (2)	500

(1)	At least one member of the Audit Committee attends the quarterly meetings of the Company’s Disclosure Control Committee, which reviews the Company’s periodic reports prior to filing with the SEC.
(2)	During 2019, Bank directors who attended meetings of the Bank’s local advisory boards received a per meeting fee for such attendance. Employee-directors do not receive any fees for attending local advisory board meetings.

2019 Director Compensation(1)

Name	Fees Earned

Thomas E. Adams	$29,450
David M. Bouffard	29,450
Charles W. Bucknam, Jr. (2)	9,650
Aminta K. Conant	27,800
Jacques R. Couture	29,450
David P. Laforce	30,500
Rosemary M. Lalime	29,950
Stephen P. Marsh	31,100
Dorothy R. Mitchell	30,500
Jeffrey L. Moore	30,000
Fredric Oeschger	30,000
James G. Wheeler, Jr.	28,850

Name	Target Award (1)	Multiplier	Bonus (2)

Kathryn M. Austin	$80,000	126.77%	$101,413
Louise M. Bonvechio	$48,750	126.77%	61,799

Total			$163,212

(1)	25% of base salary at the rate in effect on December 31, 2019.
(2)	Earned for 2019 services and paid in February, 2020.

Executive Officer	Severance Payment(1)
Kathryn M. Austin	$812,826
Louise M. Bonvechio	$498,598

	December 31,	December 31,
Fees	2019	2018

Audit Fees	$184,501	$180,609
Audit-Related Fees	3,592	4,003
Tax Fees	13,322	28,428
Total	$201,415	$213,040

COMMUNITY BANCORP.
/s/Kathryn M. Austin		Date: ~~March 15, 2019~~April 27, 2020
Kathryn M. Austin, President and Chief
Executive Officer (Principal Executive Officer)