Community Bancorp (CMTV) 10-Q 2000 Q3 Quarterly report

CONFORMED COPY

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q
 

Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934

For Nine Months Ended September 30, 2000
Commission File Number 000-16435

COMMUNITY BANCORP.

(Exact Name of Registrant as Specified in its Chapter)
 

Vermont 03-0284070
(State of Incorporation) (IRS Employer Identification Number)
 

Derby Road, Derby, Vermont 05829
(Address of Principal Executive Offices) (zip code)
 

Registrant's Telephone Number: (802) 334-7915
 

Not Applicable

Former Name, Former Address and Formal Fiscal Year

(If Changed Since Last Report)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file for such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ( X ) No ( )

At November 08, 2000 there were 3,369,991 shares outstanding of the Corporation's
common stock.

Total Pages - 24 Pages

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

The following are the consolidated financial statements for Community Bancorp.
and subsidiaries, "the Company". These statements and the other worksheets
following them help to support the opinions and information disclosed in the
"Management's Discussion and Analysis of the Results of Operations" in Part
1, Item 2.

COMMUNITY BANCORP. AND SUBSIDIARIES
Consolidated Balance Sheets
( Unaudited )	September 30	December 31
	2000	1999
Assets
Cash and due from banks	5,900,762	9,928,586
Federal funds sold and overnight deposits	4,663,905	2,787,558
Total cash and cash equivalents	10,564,667	12,716,144
Securities held-to-maturity (fair value $51,751,518
at 09/30/00 and $29,502,766 at 12/31/99)	52,094,438	29,887,821
Securities available-for-sale	19,016,875	28,982,188
Restricted equity securities	1,141,650	1,141,650
Loans held-for-sale	626,500	660,423
Loans	171,927,463	152,618,876
Allowance for loan losses	(1,761,291)	(1,714,763)
Unearned net loan fees	(927,417)	(891,114)
Net loans	169,238,755	150,012,999
Bank premises and equipment, net	4,598,838	4,322,697
Accrued interest receivable	2,079,398	1,484,192
Other real estate owned, net	297,769	434,694
Other assets	2,631,130	2,572,994
Total assets	$262,290,020	$232,215,802
Liabilities and Stockholders' Equity
Liabilities
Deposits:
Demand, non-interest bearing	27,187,479	25,727,709
NOW and money market accounts	51,769,069	52,094,860
Savings	33,097,392	32,854,357
Time deposits, $100,000 and over	16,849,480	15,894,363
Other time deposits	78,855,006	75,271,591
Total deposits	$207,758,426	$201,842,880
Borrowed funds	17,055,000	4,055,000
Repurchase agreements	13,443,825	2,623,282
Accrued interest and other liabilities	1,215,314	1,493,486
Subordinated convertible debentures	20,000	20,000
Total liabilities	$239,492,565	$210,034,648
Stockholders' Equity
Common stock - $2.50 par value;
6,000,000 shares authorized and 3,461,721 shares
issued at 09/30/00 and 3,388,394 issued at 12/31/99	8,654,303	8,470,985
Additional paid-in capital	11,389,068	10,942,510
Retained earnings	4,096,193	3,462,966
Accumulated other comprehensive income	(135,676)	(247,086)
Less: treasury stock, at cost;
105,494 shares at 09/30/00 and 29,887 shares at 12/31/99	(1,206,433)	(448,221)
Total stockholders' equity	$22,797,455	$22,181,154
Total liabilities and stockholders' equity	$262,290,020	$232,215,802

COMMUNITY BANCORP. AND SUBSIDIARIES
Consolidated Statements of Income
( Unaudited )
For The Third Quarter Ended September 30,	2000	1999	1998
Interest income
Interest and fees on loans	3,792,690	3,294,974	3,483,609
Interest and dividends on investment securities
U.S. Treasury securities	341,881	554,450	537,196
U.S. Government agencies	380,862	133,946	42,301
States and political subdivisions	254,551	196,180	170,690
Dividends	21,468	20,556	18,162
Interest on federal funds sold and overnight deposits	23,047	47,549	72,490
Total interest income	$4,814,499	$4,247,655	$4,324,448
Interest expense
Interest on deposits	2,004,156	1,831,568	1,992,663
Interest on borrowed funds	257,465	51,495	51,124
Interest on repurchase agreements	132,335	13,647	929
Interest on subordinated debentures	550	550	229
Total interest expense	$2,394,506	$1,897,260	$2,044,945
Net interest income	2,419,993	2,350,395	2,279,503
Provision for loan losses	(63,000)	(115,000)	(150,000)
Net interest income after provision	$2,356,993	$2,235,395	$2,129,503
Other operating income
Trust department income	93,811	62,054	43,486
Service fees	210,869	176,797	170,762
Security (losses) gains	(7,275)	0	0
Other	152,869	165,765	167,946
Total other operating income	$450,274	$404,616	$382,194
Other operating expenses
Salaries and wages	778,804	724,113	708,689
Pension and other employee benefits	207,918	205,874	192,326
Occupancy expenses, net	354,521	280,158	323,744
Trust department expenses	23,168	13,080	9,389
Other	612,353	603,047	533,566
Total other operating expenses	$1,976,764	$1,826,272	$1,767,714
Income before income taxes	830,503	813,739	743,983
Applicable income taxes (credit)	198,155	209,833	181,844
Net Income	$632,348	$603,906	$562,139
Earnings per share on weighted average	$0.19	$0.18	$0.17
Weighted average number of common shares
Used in computing earnings per share	3,362,916	3,332,139	3,247,388
Dividends declared per share	$0.16	$0.16	$0.15
Per share data for 1998 restated to reflect a 5% stock dividend paid on February 1, 1999.
COMMUNITY BANCORP. AND SUBSIDIARIES
Consolidated Statements of Income
( Unaudited )
For the First Nine Months Ended September 30,	2000	1999	1998
Interest income
Interest and fees on loans	10,618,741	9,748,162	10,352,917
Interest and dividends on investment securities
U.S. Treasury securities	1,170,260	1,684,898	1,525,088
U.S. Government agencies	948,757	401,999	83,380
States and political subdivisions	560,221	447,769	462,851
Dividends	63,927	59,405	55,566
Interest on federal funds sold and overnight deposits	87,219	159,082	276,518
Total interest income	$13,449,125	$12,501,315	$12,756,320
Interest expense
Interest on deposits	5,560,791	5,483,598	5,933,489
Interest on borrowed funds	403,319	150,567	147,367
Interest on repurchase agreements	272,022	22,957	3,122
Interest on subordinated debentures	1,650	1,650	4,047
Total interest expense	$6,237,782	$5,658,772	$6,088,025
Net interest income	7,211,343	6,842,543	6,668,295
Provision for loan losses	(321,000)	(415,000)	(510,000)
Net interest income after provision	$6,890,343	$6,427,543	$6,158,295
Other operating income
Trust department income	251,314	167,563	109,326
Service fees	596,786	520,060	503,305
Security (losses) gains	(18,782)	0	0
Other	541,845	540,556	580,099
Total other operating income	1,371,163	1,228,179	1,192,730
Other operating expenses
Salaries and wages	2,231,405	2,131,401	2,117,596
Pension and other employee benefits	668,870	604,324	544,062
Occupancy expenses, net	1,080,981	923,954	967,674
Trust department expenses	73,511	41,082	36,805
Other	1,902,705	1,801,701	1,672,431
Total other operating expenses	$5,957,472	$5,502,462	$5,338,568
Income before income taxes	2,304,034	2,153,260	2,012,457
Applicable income taxes (credit)	589,397	572,069	484,698
Net Income	$1,714,637	$1,581,191	$1,527,759
Earnings per share on weighted average	$0.51	$0.48	$0.48
Weighted average number of common shares
Used in computing earnings per share	3,380,466	3,292,879	3,217,343
Book value per share on shares outstanding	$6.79	$6.73	$6.68
Dividends declared per share	$0.48	$0.48	$0.45
Per share data for 1998 restated to reflect a 5% stock dividend paid on February 1, 1999.

NOTES

Note 1 - The financial information included in this report reflect all adjustments
management deems necessary to accurately disclose the fair value of items presented.
Results for interim periods are not necessarily indicative of the results of operations
for the full year or any other interim period. The financial information disclosed is
unaudited.

COMMUNITY BANCORP. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the First Nine Months Ended September 30,	2000	1999	1998
Reconciliation of net income to net cash provided by operating activities:
Net Income	$1,714,637	$1,581,191	$1,527,759
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation	448,650	304,786	303,012
Provisions for loan losses	321,000	415,000	510,000
Provisions for deferred income taxes	(6,193)	(30,150)	(70,245)
(Gain) loss on sale of loans	(24,772)	(89,534)	(118,886)
Securities losses	18,782	0	0
(Gain) loss on sales of OREO	(56,594)	6,244	(2,712)
OREO writedowns	6,883	19,590	26,592
Amortization of bond premium, net	133,604	240,582	35,412
Proceeds from sales of loans held for sale	2,008,907	9,424,068	3,489,568
Originations of loans held for sale	(1,950,212)	(9,467,687)	(4,600,524)
Increase (decrease) in taxes payable	96,554	28,240	15,944
(Increase) decrease in interest receivable	(595,206)	(461,965)	(269,813)
Decrease (increase) in mortgage service rights	22,361	(32,119)	(63,190)
(Increase)decrease in other assets	(117,218)	201,483	(126,978)
Increase(decrease) in unamortized loan fees	36,303	36,270	(9,749)
Increase (decrease) in interest payable	89,505	(29,686)	(9,725)
(Decrease) increase in accrued expenses	(16,846)	1,229	56,345
Increase (decrease) in other liabilities	79,575	120,326	148,160
Net cash provided by operating activities	$2,209,720	$2,267,868	$840,970
Cash Flows from investing activities:
Investments - held to maturity
Sales and maturities	9,586,421	18,936,104	12,861,980
Purchases	(31,799,200)	(26,313,397)	(17,220,197)
Investments - available for sale
Sales and maturities	9,987,892	0	2,000,000
Purchases	0	(9,291,211)	(14,236,406)
Purchase of restricted equity securities	0	0	(41,900)
Investment in limited partnership	(4,078)	(14,130)	(40,312)
Increase in Loans, Net of Payments	(20,073,351)	(4,337,162)	(78,380)
Capital Expenditures	(724,791)	(1,622,280)	(81,917)
Recoveries of loans charged off	113,377	74,913	165,911
Proceeds from sales of other real estate owned	563,551	453,841	771,784
Net Cash Used in Investing Activities	($32,350,179)	($22,113,322)	($15,899,437)
Cash Flows from Financing Activities:
Net increase (decrease) in demand deposits, NOW, Money Mkt and savings	1,377,014	11,950,238	7,660,272
Net increase (decrease) in certificates of deposit	4,538,532	(1,430,512)	2,233,653
Net increase in short-term borrowings and repurchase agreements	10,820,543	1,171,117	0
Net increase in borrowed funds	13,000,000	0	0
Payments to acquire treasury stock	(758,212)	(2,831)	(197)
Dividends paid	(988,895)	(841,065)	(705,186)
Net cash provided by financing activities	$27,988,982	$10,846,947	$9,188,542
Net decrease in cash and cash equivalents	($2,151,477)	($8,998,507)	($5,869,925)
Cash and cash equivalents:
Beginning	$12,716,144	$20,424,088	$14,307,610
Ending	$10,564,667	$11,425,581	$8,437,685
Supplemental Schedule of Cash Paid During the Year
Interest paid	$6,148,277	$5,687,724	$6,096,466
Income Taxes Paid	$499,038	$573,980	$538,999
Supplemental schedule of noncash investing and financing activities:
Net change in securities valuation	$168,803	($498,281)	$455,709
OREO acquired in settlements of loans	$376,915	$589,427	$318,577
Debentures converted to common stock	$0	$0	$84,000
Stock dividends	$0	$1,851,338	$3,823,576
Dividends paid
Dividends payable	$1,618,771	$1,553,648	$1,369,090
Dividends reinvested	($629,876)	($712,583)	($663,904)
	$988,895	$841,065	$705,186

		AVERAGE BALANCES AND INTEREST RATES
The table below presents the following information:
Average earning assets (including non-accrual loans)
Average interest bearing liabilities supporting earning assets
Interest income and interest expense as a rate/yield
		For the First Nine Months Ended:
			2000			1999
		Average	Income/	Rate/	Average	Income/	Rate/
		Balance	Expense	Yield	Balance	Expense	Yield
EARNING ASSETS
Loans (gross)		161,838,476	10,618,741	8.76%	148,626,379	9,748,162	8.77%
Taxable Investment Securities		48,214,804	2,119,019	5.87%	51,170,109	2,086,899	5.45%
Tax Exempt Investment
Securities (1)		15,337,669	843,786	7.35%	13,349,015	672,198	6.73%
Federal Funds Sold		709,489	32,971	6.21%	2,271,978	75,689	4.45%
Sweep Account		1,342,913	54,248	5.40%	2,271,173	83,393	4.91%
Other Securities (2)		1,226,271	67,249	7.33%	1,257,359	63,523	6.75%
TOTAL		228,669,622	13,736,014	8.02%	218,946,013	12,729,864	7.77%
INTEREST BEARING LIABILITIES
Savings Deposits		33,132,423	570,659	2.30%	32,548,493	564,046	2.32%
NOW & Money Market Funds		50,123,609	1,364,209	3.64%	50,786,777	1,225,765	3.23%
Time Deposits		91,711,292	3,625,924	5.28%	95,272,339	3,693,788	5.18%
Other Borrowed Funds		8,582,391	403,319	6.28%	4,060,000	150,567	4.96%
Repurchase Agreements		7,568,065	272,022	4.80%	774,618	22,957	3.96%
Subordinated Debentures		20,000	1,650	11.02%	20,000	1,650	11.03%
TOTAL		191,137,780	6,237,783	4.36%	183,462,227	5,658,773	4.12%
Net Interest Income			7,498,231			7,071,091
Net Interest Spread(3)				3.66%			3.65%
Interest Differential(4)				4.38%			4.32%
	(1) Income on investment securities of state and political subdivisions is stated on a fully taxable
	basis (assuming a 34 percent tax rate).
	(2) Included in other securities are taxable industrial development bonds (VIDA) with income
	of $3,322 for 2000 and $4,119 for 1999.
	(3) Net interest Spread is the difference between the yield on earning assets and the rate paid on
	interest bearing liabilities.
	(4) Interest differential is net interest income divided by average earning assets.

CHANGES IN INTEREST INCOME AND INTEREST EXPENSE
	The following table summarizes the variances in income
	for the first nine months of 2000 and 1999 resulting from
	volume changes in assets and liabilities and fluctuations
	in rates earned and paid.
		Variance	Variance
RATE / VOLUME		Due to	Due to	Total
		Rate(1)	Volume(1)	Variance
INCOME EARNING ASSETS
Loans		3,934	866,645	870,579
Taxable Investment Securities		161,990	(129,870)	32,120
Tax Exempt Investment
Securities (2)		71,486	100,102	171,588
Federal Funds Sold		29,922	(72,640)	(42,718)
Sweep Account		8,381	(37,526)	(29,145)
Other Securities		5,432	(1,706)	3,726
Total Interest Earnings		281,145	725,005	1,006,150
INTEREST BEARING LIABILITIES
Savings Deposits		(3,520)	10,133	6,613
NOW & Money Market Funds		156,516	(18,072)	138,444
Time Deposits		72,897	(140,761)	(67,864)
Other Borrowed Funds		84,980	167,772	252,752
Repurchase Agreements		47,852	201,213	249,065
Subordinated Debentures		0	0	0
Total Interest Expense		358,725	220,285	579,010
(1) Items which have shown a year-to-year increase in volume have
variances allocated as follows:
	Variance due to rate = Change in rate x new volume
	Variance due to volume = Change in volume x old rate
Items which have shown a year-to-year decrease in volume have
variances allocated as follows:
	Variance due to rate = Change in rate x old volume
	Variances due to volume = Change in volume x new rate
(2) Income on tax exempt securities is stated on a fully taxable basis.
The assumed rate is 34%.

COMMUNITY BANCORP.
PRIMARY EARNINGS PER SHARE
For The Third Quarter Ended September 30,	2000	1999	1998
Net Income	$632,348	$603,906	$562,139
Average Number of Common Shares Outstanding.	3,362,916	3,332,139	3,247,388
Earnings Per Common Share	$0.19	$0.18	$0.17
FULLY DILUTED EARNINGS PER SHARE
For The Third Quarter Ended September 30,	2000	1999	1998
Net Income	$632,348	$603,906	$562,139
Adjustments to Net Income (Assuming Conversion
of Subordinated Convertible Debentures).	363	363	151
Adjusted Net Income	$632,711	$604,269	$562,290
Average Number of Common Shares Outstanding.	3,362,916	3,332,139	3,247,388
Increase in Shares (Assuming Conversion of
Subordinated Convertible Debentures).	8,557	8,557	9,566
Average Number of Common Shares Outstanding
(Fully Diluted).	3,371,473	3,340,696	3,256,954
Earnings Per Common Share Assuming Full Dilution.	$0.19	$0.18	$0.17
Per share data for 1998 restated to reflect a 5% stock dividend paid on February 1, 1999.
COMMUNITY BANCORP.
PRIMARY EARNINGS PER SHARE
For the First Nine Months Ended September 30,	2000	1999	1998
Net Income	$1,714,637	$1,581,191	$1,527,759
Average Number of Common Shares Outstanding.	3,380,466	3,292,879	3,217,343
Earnings Per Common Share	$0.51	$0.48	$0.48
FULLY DILUTED EARNINGS PER SHARE
For the First Nine Months Ended September 30,	2000	1999	1998
Net Income	$1,714,637	$1,581,191	$1,527,759
Adjustments to Net Income (Assuming Conversion
of Subordinated Convertible Debentures).	1,089	1,089	2,671
Adjusted Net Income	$1,715,726	$1,582,280	$1,530,430
Average Number of Common Shares Outstanding.	3,380,466	3,292,879	3,217,343
Increase in Shares (Assuming Conversion of
Subordinated Convertible Debentures).	8,557	8,557	19,422
Average Number of Common Shares Outstanding
(Fully Diluted).	3,389,023	3,301,436	3,236,765
Earnings Per Common Share Assuming Full Dilution.	$0.51	$0.48	$0.47
Per share data for 1998 restated to reflect a 5% stock dividend paid on February 1, 1999.

PART I.

Item 2

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
THE RESULTS OF OPERATIONS

For the Nine Months Ended September 30, 2000

   Community Bancorp. is a bank holding company whose subsidiaries include
Community National Bank and Liberty Savings Bank. Community National Bank
("the Bank") is a full service institution operating in the state of Vermont. The
Bank has seven offices, five of which are located in Orleans County, one in
Essex County, and one in Caledonia County. Liberty Savings Bank ("Liberty")
is a New Hampshire guaranty savings bank acquired by Community Bancorp.
on December 31, 1997. Currently this bank is inactive and shares the mailing
address of Community Bancorp. Management is working with the board of
directors to find a suitable location in the northern part of New Hampshire
to operate Liberty as a lending facility, and may expand in the future into a
full service financial institution. Most of the Bancorp's business is conducted
through the Bank, therefore, the following narrative is based primarily on the
Bank's operations.

OVERVIEW

   Net income for the third quarter ended September 30, 2000 was $632,348,
representing an increase of 4.7% and 12.5%, respectively, over the net income
figures of $603,906 for the third quarter ended September 30, 1999, and
$562,139 for the same period in 1998. Earnings per share of $0.19, $0.18,

GRAPHICS                             GRAPHICS

and $0.17 were reported for the respective third quarters. The Company declared
a cash dividend of $0.16 per share payable August 1, 2000 to shareholders of
record as of July 15, 2000. Additionally, a two-for-one stock split was declared
in 1998, payable June 1, 1998, to shareholders of record as of May 15, 1998.
As a result of the stock split, all 1998 per share data prior to that date has been
restated. Net income for the first nine months of 2000 was $1.7 million compared
to $1.6 million for the first nine months of 1999, and $1.5 million for the first
nine months of 1998, representing an increase of 8.4% compared to 1999, and
12.2% for 1998. Earnings per share for the first nine months were $0.51 for
2000 and $0.48 for 1999 and 1998. The third quarter of 2000 was better than
both the third quarter of 1999 and 1998 due in part to increases in the Bank's
investment portfolio and loan portfolio, as well as a decrease in the provision
for loan losses. The increases in the investment and loan portfolios helped to
generate more interest income, contributing to the overall increase in net
income. Net income for the nine months comparison periods followed similar
patterns with interest income accounting for the biggest increase and provisions
for loan losses noting a decrease in both comparison periods. A year to date
decrease is noted in non-performing and trouble loans resulting in a decrease
in the monthly provision for loan losses.

   Net interest income, the difference between interest income and expense,
represents the largest portion of the Company's earnings, and is affected by
the volume, mix, rate sensitivity of earning assets as well as interest bearing
liabilities, market interest rates and the amount of non-interest bearing funds
which support earning assets.

   Net interest income for the third quarter comparison period started at $2.28
million for 1998, increased to $2.35 million for 1999, and then increased to
$2.42 million for 2000, resulting in an increase of 3% for 2000 versus 1999,
and an increase of 6.2% for 2000 versus 1998. Interest on loans reported an
increase of $497,716 or 15.1%, accounting for the biggest increase for the
third quarter of 2000 compared to the same quarter in 1999. Interest on US
Government agencies increased $338,561 for the third quarter of 2000 compared
to the same quarter in 1998 accounting for the biggest increase in that period.
The Bank sold a portion of it's U.S Treasury securities and replaced them with
higher yielding Government Agencies, thereby creating more interest income.
Interest expense increased $497,246 or by 26.2% for the third quarter of 2000
compared to the same quarter in 1999, and an increase of $349,561 or 17.1%
noted for 2000 and 1998. An increase in borrowed funds and repurchase
agreements accounts for a substantial portion of the increase in interest
expense. Provisions for loan losses decreased $52,000 for 2000 compared to
1999 and $87,000 for 2000 compared to 1998. These decreases helped to offset
a portion of the overall increase in interest expense.

   In the nine month comparison periods, net interest income started at $6.7 million
as of the end of the first nine months of 1998, increased $174,248 or 2.6% to
$6.8 million as of the end the first nine months of 1999, and then increased
$368,800 or 5.4% to end the first nine months of 2000 at a figure of $7.2
million. Interest on loans reported an increase of $870,579 or 8.9% for 2000
compared to 1999, and U.S. Government agencies reporting an increase in
interest income of $865,377 for 2000 compared to 1998. Interest expense
associated with repurchase agreements has shown considerable increase for
both comparison periods for reasons mentioned above, with increases of
$249,065 for 2000 compared to 1999 and $268,900 for 2000 compared to
1998. Interest on deposits reported the only decrease of $372,698 for the nine
months of 2000 compared to 1998. Provisions for loan losses reported decreases
of $94,000 for 2000 compared to 1999 and $189,000 for 1999 compared to 1998.

   Additionally, as the loan portfolio matures or reprices, increases are noted
in the rates for these earning assets. Interest bearing deposit accounts are
repricing at a lower rate creating less expense on these liabilities. The result
is a tax equivalent spread for the first nine months equaling 3.66% for 2000
versus 3.65% for 1999.

CHANGES IN FINANCIAL CONDITION

   The Company had total assets of $262 million at September 30, 2000 and $232
million at December 31, 1999. Average earning assets were $229 million for the
first nine months ended September 30, 2000, including average loans of $162
million and average investment securities of $64.5 million. Average earning
assets were $220 million for the year ended December 31, 1999 including
average loans of $150 million and average investment securities of $65 million.
The Company attributes the desire to increase the loan portfolio for the increase
in average loan volume.

   Average interest bearing liabilities at September 30, 2000 were $191 million,
with average time deposits reported totaling $92 million and NOW & money
market funds of $50 million. At December 31, 1999, average interest bearing
liabilities of $185 million were reported including average time deposits of $95
million and NOW & money market funds at an average volume of $52 million.

   Repurchase agreements have experienced a steady increase starting at an average
volume of $1.3 million at December 31, 1999, and increasing $6.3 million to end
at a nine month average balance of $7.6 million. These accounts have been well
received since they were introduced in 1998, and have been successful in
attracting new business customers, and retaining current business customers.

RISK MANAGEMENT

Liquidity Risk -Liquidity management refers to the ability of the Company to
adequately cover fluctuations in assets and liabilities. Meeting loan demand
(assets) and covering the withdrawal of deposit funds (liabilities) are two key
components of the liquidity management process. The repayment of loans and
growth in deposits are two of the major sources of liquidity. Our time deposits
greater than $100,000 increased $955,117 or 6% to end the first nine months of
2000 at a volume of $16.85 million compared to $15.89 million at the end of the
1999 calendar year. Other time deposits increased $3.6 million from December
31, 1999 to September 30, 2000. The Bank has offered a few new products in
recent months in an effort to attract long-term deposits. A total of approximately
$4.6 million in new money was recognized as a result of these various offers. A
review of time deposits, predominantly the time deposits over $100,000 indicates
that they are primarily generated locally and regionally and are established
customers of the Company. The Company has no brokered deposits. Our gross
loan portfolio increased 12.7% from $152.6 million at the end of 1999 to $171.9
million at the end of the first nine months of 2000. The Bank has purchased
approximately $4.4 million in loans from other institutions contributing to the
increase in the loan portfolio. An increase in the Company's investment portfolio
also helped to increase assets for the first nine months of 2000. As of September
30, 2000, the Company held in it's investment portfolio treasuries classified as
"Available for Sale" at a fair value of $19 million, compared to $29 million as
of December 31, 1999, a decrease of $10 million or 34.4%. Treasuries classified
as "Held to Maturity" ended the first nine months of 2000 at a book value of $52
million compared to $30 million as of the end of the 1999 calendar year, an
increase of approximately $22 million or 74.3%. Both of these types of
investments mature at monthly intervals as shown on the gap report at the end
of this section. Securities classified as "Restricted Equity Securities" are made
up of equity securities the Company is required to maintain in the form Federal
Home Loan Bank of Boston (FHLB) and Federal Reserve stock. These securities
remain at a balance totaling $1.14 million as of September 30, 2000. The Company
currently has an advance of just over $17 million against an available line of
$105.6 million, with $2 million and $4.1 million available at First Boston and
FHLB, respectively.

Credit Risk -Management follows strict underwriting guidelines, and has
established a thorough loan-by-loan review policy. These measures help to
insure the adequacy of the loan loss coverage. The Executive Officers and the
Board of Directors conduct periodic reviews of the loan portfolio. Topics
discussed include potential exposures existing within the portfolio. Factors
considered are each borrower's financial condition, the industry or sector for
the economy in which the borrower operates, and overall economic conditions.
Existing or potential problems are noted and addressed by senior management in
order to assess the risk of probable loss or delinquency. A variety of loans are
reviewed periodically by an independent firm in order to assure accuracy and
compliance with various policies and procedures set by the regulatory
authorities. The Company also employs a Credit Administration Officer whose
duties include, among others, a review of the loan portfolio including delinquent
and non-performing loans.

Allowance for loan losses and provisions -The valuation allowance for loan
losses of $1.76 million as of September 30, 2000 composed 1% of the total
gross loan portfolio. A primary concern of management is to reduce the exposure
of credit loss within the portfolio. The Company maintains a residential loan
portfolio of approximately $105 million and a commercial real estate portfolio
of approximately $33 million accounting for 61% and 19%, respectively, of the
total loan portfolio. This large loan volume together with the low historical
loan loss experience helps to support our basis for loan loss coverage.

   The Company's non-performing assets are made up of $331,776 in loans 90
days or more past due, $1,137,549 in non-accruing loans, and $297,769 in other
real estate owned (OREO). A comparison of these non-performing assets revealed
decrease in all portfolios starting with a decrease of $300,683 or 47.5% in loans
90 days or more past due, a decrease in non-accruing loans of $621,000 or 35.3%,
and the OREO portfolio decreased $136,925 or by 31.5%. The Company employs
personnel whose main duties are to manage the non-performing assets. Their
efforts speak for themselves when reviewing these substantial decreases in all
three portfolios. The portfolio of non-accruing loans makes up the biggest
portion of the non-performing assets and consists of just over $1 million of
real estate secured mortgage loans at the end of the first nine months of 2000,
thereby reducing the exposure to loss.

Non-performing assets as of September 30, 2000 and December 31, 1999 were
as follows:

	09/30/2000	12/31/1999
Loans past due 90 day or more and still accruing	331,776	632,458
Non-Accruing loans	$1,137,549	$1,758,549
Other real estate owned	297,769	434,694
Total	$1,767,094	$2,825,701

   Other real estate owned is made up of property that the Company owns in lieu
of foreclosure or through normal foreclosure proceedings, and property that the
Company does not hold title to but is in actual control of, known as in-substance
foreclosure. The value of the property is determined prior to transferring the
balance to other real estate owned. The balance transferred to OREO is the lesser
of the appraised value of the property, or book value of the loan. A write-down
may be deemed necessary to bring the book value of the loan equal to the
appraised value. Appraisals are then done periodically thereafter charging any
additional write-downs to the appropriate expense account.

Market Risk and Asset and Liability Management -Market risk is the risk of
loss in a financial instrument arising from adverse changes in market prices and
rates, foreign currency exchange rates, commodity prices and equity prices. The
Company's market risk arises primarily from interest rate risk inherent in its
lending and deposit taking activities. To that end, management actively monitors
and manages its interest rate risk exposure. The Company does not have any
market risk sensitive instruments acquired for trading purposes. The Company
attempts to structure its balance sheet to maximize net interest income while
controlling its exposure to interest rate risk. The Company's Asset/Liability
Committee formulates strategies to manage interest rate risk by evaluating the
impact on earnings and capital of such factors as current interest rate forecasts
and economic indicators, potential changes in such forecasts and indicators,
liquidity, and various business strategies. The Asset/Liability Committee's
methods for evaluating interest rate risk include an analysis of the Company's
interest rate sensitivity "gap", which provides a static analysis of the maturity
and repricing characteristics of the entire balance sheet, and a simulation
analysis which calculates projected net interest income based on alternative
balance sheet and interest rate scenarios, including "rate shock" scenarios
involving immediate substantial increases or decreases in market rates of
interest.

Interest Rate Sensitivity "Gap" Analysis -An interest rate sensitivity "gap"
is defined as the difference between the interest-earning assets and interest-
bearing liabilities maturing or repricing within a given time period. A gap
is considered positive when the amount of interest rate sensitive assets
exceeds the amount of interest rate sensitive liabilities. A gap is considered
negative when the amount of interest rate sensitive liabilities exceeds the
amount of interest rate sensitive assets. During a period of rising interest
rates, a negative gap would tend to adversely affect net interest income,
while a positive gap would tend to result in an increase in net interest
income. During a period of falling interest rates, a negative gap would tend
to result in an increase in net interest income, while a positive gap would
tend to affect net interest income adversely. Because different types of assets
and liabilities with the same or similar maturities may react differently to
changes in overall market interest rates or conditions, changes in interest
rates may affect net interest income positively or negatively even if an
institution were perfectly matched in each maturity category.

   The following tables set forth the estimated maturity or repricing of the
Company's interest-earning assets and interest-bearing liabilities at September
30, 2000, and December 31, 1999. The Company prepares its interest rate
sensitivity "gap" analysis by scheduling assets and liabilities into periods
based upon the next date on which such assets and liabilities could mature
or reprice. The amounts of assets and liabilities shown within a particular
period were determined in accordance with the contractual term of the assets
and liabilities, except that:

*   Adjustable-rate loans and certificates of deposit are included in the
    period when they are first scheduled to adjust and not in the period in
    which they mature;

*   Fixed-rate loans reflect scheduled contractual amortization, with no
    estimated prepayments;

    and

*   NOW, money markets, and savings deposits, which do not have contractual
    maturities, reflect estimated levels of attrition, which are based on detailed
    studies by the Company of the sensitivity of each such category of deposit,
    to changes in interest rates.

   Management believes that these assumptions approximate actual experience
and considers them reasonable. However, the interest rate sensitivity of the
Company's assets and liabilities in the tables could vary substantially if
different assumptions were used or actual experience differs from the
historical experiences on which the assumptions are based.

GAP ANALYSYS
Community Bancorp. & Subsidiaries
September 30, 2000
Cumulative repriced within

Dollars in thousands,	3 Months	4 to 12	1 to 3	3 to 5	Over 5
by repricing date	or less	Months	Years	Years	Years	Total
Interest sensitive assets:
Federal funds sold	2,050	0	0	0	0	2,050
Overnight deposits	2,614	0	0	0	0	2,614
Investments						0
Available for Sale(1)	0	9,007	10,010	0	0	19,017
Held to Maturity	9,902	10,646	14,335	2,518	14,693	52,094
Restricted equity securities	0	0	0	0	1,142	1,142
Loans(2)	26,589	51,692	45,196	12,009	35,930	171,416
Total interest sensitive assets	41,155	71,345	69,541	14,527	51,765	248,333
Interest sensitive liabilities:
Certificates of deposit	16,159	70,258	8,124	1,164	0	95,705
Money markets	33,016	0	0	0	0	33,016
Regular savings	0	3,097	0	0	30,000	33,097
Now and super accounts	0	0	0	0	18,753	18,753
Borrowed funds	12,000	5,000	15	0	40	17,055
Repurchase agreements	13,444	0	0	0	0	13,444
Subordinated debentures	0	0	0	20	0	20
Total interest sensitive liabilities	74,619	78,355	8,139	1,184	48,793	211,090
Net interest rate sensitivity gap	(33,464)	(7,010)	61,402	13,343	2,972
Cumulative net interest rate
sensitivity gap	(33,464)	(40,474)	20,928	34,271	37,243
Cumulative net interest rate
sensitivity gap as a
percentage of total assets	-12.76%	-15.43%	7.98%	13.07%	14.20%
Cumulative interest sensitivity
gap as a percentage of total
interest-earning assets	-13.48%	-16.30%	8.43%	13.80%	15.00%
Cumulative interest earning assets
as a percentage of cumulative
interest-bearing liabilities	55.15%	73.54%	112.99%	121.12%	117.64%
(1) The Company may sell investments available for sale with a fair value of $19,016,875 at any time.
(2) Loan totals exclude non-accruing loans amounting to $1,137,549.

GAP ANALYSYS

Community Bancorp. & Subsidiaries

December 31, 1999

Cumulative repriced within:

Dollars in thousands,	3 Months	4 to 12	1 to 3	3 to 5	Over 5
by repricing date	Or less	Months	Years	Years	Years	Total
Interest sensitive assets:
Federal funds sold	600	0	0	0	0	600
Overnight deposits	2,188	0	0	0	0	2,188
Investments -
Available for Sale(1)	0	9,993	18,989	0	0	28,982
Held to Maturity	3,057	6,680	14,910	1,426	3,814	29,887
Restricted equity securities	0	0	0	0	1,142	1,142
Loans(2)	23,254	51,250	41,673	8,317	27,027	151,521
Total interest sensitive assets	29,099	67,923	75,572	9,743	31,983	214,320
Interest sensitive liabilities:
Certificates of deposit	13,405	65,237	11,072	1,452	0	91,166
Money markets	32,299	0	0	0	0	32,299
Regular savings	0	2,854	0	0	30,000	32,854
Now accounts	0	0	0	0	19,796	19,796
Borrowed funds	0	0	15	0	4,040	4,055
Repurchase agreements	2,623	0	0	0	0	2,623
Subordinated debentures	0	0	0	20	0	20
Total interest sensitive liabilities	48,327	68,091	11,087	1,472	53,836	182,813
Net interest rate sensitivity gap	(19,228)	(168)	64,485	8,271	(21,853)
Cumulative net interest rate
sensitivity gap	(19,228)	(19,396)	45,089	53,360	31,507
Cumulative net interest rate
Sensitivity gap as a
Percentage of total assets	-8.28%	-8.35%	19.42%	22.98%	13.57%
Cumulative interest sensitivity
Gap as a percentage of total
Interest-earning assets	-8.97%	-9.05%	21.04%	24.90%	14.70%
Cumulative interest earning assets
as a percentage of cumulative
Interest-bearing liabilities	60.21%	83.34%	135.36%	141.37%	117.23%

(1) The Company may sell investments available for sale with a fair value of
$28,982,188 at any time.
(2) Loan totals exclude non-accruing loans amounting to $1,758,549.
 

OTHER OPERATING INCOME AND EXPENSES

   Total other operating income for the third quarter of 2000 was $450,274
compared to $404,616 for the third quarter of 1999, an increase of $45,658 or
11.3%. Service fees reports the biggest increase for the third quarter comparison
period while a decrease of $12,896 is noted in other income. The increase in
volume for repurchase agreements and the increase in usage of our VISA check
cards have generated more fee income for the reporting period. In an effort to
increase our loan portfolio, fewer loans are being sold on the secondary
market generating less income.

   Total other operating income for the first nine months of 2000 ended at
$1.37 million compared to $1.23 million a year ago. Trust department income
notes the biggest increase of $83,751 or almost 50%. Our trust department
continues to build its customer base resulting in more income over the last
few years. A loss of $18,782 was taken during the first nine months of 2000 as
the result of the sale of some low yielding treasuries. These treasuries were
replaced with higher yielding agencies, anticipating that the higher yield
would soon make up for the loss on the sale of the treasuries.

   Total other operating expenses increased for the third quarter comparison
with figures of $1.98 million for 2000, an increase of $150,492 or 8.2% over
the 1999 figure of $1.83 million. Occupancy expense notes the biggest increase
for the third quarter of 2000 versus 1999, due to significant increases in
depreciation, taxes on bank properties, and service contracts.

   Total other operating expense for the nine month comparison periods
increased from $5.5 million for 1999 to just under $6 million for 2000,
resulting in increases of $455,010 or 8.3%. Occupancy expense tops the
increase at $157,027 for the first nine months reporting a figure of $1.1
million compared to $0.9 million a year ago.

   All components of other operating expenses are monitored by management,
however, a quarterly review is performed on crucial components to assure that
the accruals for these expenses are accurate. This helps alleviate the need to
make drastic adjustments to these accounts that in turn effect the net income
of the Company.

APPLICABLE INCOME TAXES

   Income before taxes increased from $813,739 for the third quarter of 1999
to $830,503 for the same quarter of 2000. Due in part to this moderate increase,
together with an increase in tax exempt income, provisions for income taxes
decreased $11,678 or by 5.6%. Income before taxes for the first nine months
increased from $2.15 million for 1999 to $2.30 million as of September 30,
2000, with income taxes calculated at $572,069 and $589,397, respectively.

EFFECTS OF INFLATION

   Rates of inflation affect the reported financial condition and results of
operations of all industries, including the banking industry. The effect of
monetary inflation is generally magnified in bank financial and operating
statements. As costs and prices rise during periods of monetary inflation,
cash and credit demands of individuals and businesses increase, and the
purchasing power of net monetary assets declines. The Company depends
primarily on a strong net interest income to enable their purchasing power
to remain aggressive.
 

CAPITAL RESOURCES

   The Company reported a figure for stockholders' equity of $22,181,154
as of December 31, 1999. This figure increased through earnings of $1,714,637,
sales of common stock of $629,875 through dividend reinvestment, and
adjustments totaling $111,410 for valuation allowance for securities. It was
decreased by dividends totaling $1,618,771, the purchase of treasury stock of
$1,040, and the purchase of stock through the Stock Buyback Plan of $757,171.
As of September 30, 2000 stockholders' equity was reported at $22,797,455 with
a book value of $6.79 per share. On April 11, 2000, the Company issued a press
release announcing plans to buy up to 6% or 205,000 shares of its outstanding
common stock at current market prices. Total shares bought back through the end
of September totaled 75,497 and the repurchase price paid for these shares ranged
from $9.25 to $10.75 per share. Additionally, the Company declared a dividend
in December of 1999, payable in February of 2000. As a result, the Company had
to accrue the dividend, decreasing stockholders' equity by $537,361 as of
December 31, 1999. All stockholders' equity is unrestricted. A review of the
valuation allowance for securities shows that the net unrealized loss has
decreased since the beginning of the year. In reviewing this activity, it is
evident that as the maturity date of the investments gets closer, the market
price becomes favorably better, therefore, material loss is greatly reduced.

   The Company is required to maintain minimum amounts of capital to "risk
weighted" assets, as defined by the banking regulators. The minimum
requirements for Tier I and Total Capital are 4% and 8%, respectively.
As of September 30, 2000, the Company continued to maintain ratios far
above the minimum requirements with reported ratios of approximately 17%
for Tier I and 18.5% for Total Capital.

   The Company intends to continue maintaining a strong capital resource
position to support its asset size and level of operations. Consistent with
that policy, management will continue to anticipate the Company's future
capital needs.

   From time to time the Company may make contributions to the capital of its
subsidiaries, Community National Bank and Liberty Savings Bank. At present,
regulatory authorities have made no demand on the Company to make additional
capital contributions to either Bank's capital.

FORWARD-LOOKING STATEMENTS

   The Company's Management's Discussion and Analysis of Results of
Operations, Cash Flow and Financial Condition contains certain forward-
looking statements about the results of operations, financial condition and
business of the Company and its subsidiaries. When used therein, the words
"believes," "expects," "anticipates," "intends," "estimates," "plans,"
"predicts," or similar expressions, indicate that management of the Company
is making forward-looking statements.

   Forward-looking statements are not guarantees of future performance. They
necessarily involve risks, uncertainties and assumptions. Future results of the
Company may differ materially from those expressed in these forward-looking
statements. Although these statements are based on management's current
expectations and estimates, many of the factors that could influence or
determine actual results are unpredictable and not within the Company's
control. In addition, the Company does not undertake to, and disclaims any
obligation to, publicly release the result of any revisions which may be made
to any forward-looking statements to reflect the occurrence or anticipated
occurrence of events or circumstances after the date of this Report. The
Company claims the protection of the safe harbor for forward-looking statements
provided in the Private Securities Litigation Reform Act of 1995.

   Factors that may cause actual results to differ materially from those
contemplated by these forward-looking statements include, among others, the
following possibilities: (1) competitive pressures increase among financial
services providers in the Company's northern New England market area or
in the financial services industry generally, including competitive pressures
from nonbank financial service providers, from increasing consolidation and
integration of financial service providers, and from changes in technology and
delivery systems; (2) interest rates change in such a way as to reduce the
Company's margins; (3) general economic or monetary conditions, either
nationally or regionally, are less favorable than expected, resulting in a
deterioration in credit quality or a diminished demand for the Company's
products and services; and (4) changes in laws or government rules, or the
way in which courts interpret those laws or rules, adversely affect the
Company's business.

PART II.

Item 1

Legal Proceedings

   Community National Bank is currently involved in a
lawsuit filed on March 23, 1998, in the Orleans Superior Court against the
State of Vermont. The issue involves OREO property that is on "filled land"
on the shores of Lake Memphremagog in the City of Newport. According to a
so-called "public trust doctrine", the State of Vermont might have ownership
of any lands created by filling any portion of the navigable waters of the
state. The result of this is that the Bank has been unable to sell these
properties for fair value because some attorneys will not clear title to
the property. The suit filed is an attempt
to clear title to said properties by seeking judicial clarification of the public
trust doctrine. The Bank received documents in mid April pertaining to the
ruling of the lawsuit. The judgement was not in the Bank's favor. On June 23,
2000, The Bank filed an appeal to the Vermont Supreme Court, but it may take
up to six months to have it set for oral arguments. Regardless of the outcome of
the suit, is not likely to have a material impact on the financial statements of
the Bank or consolidated Company.

   There are no other pending legal proceedings to which
the Company is a party or of which any of its property is the subject,
other than routine
litigation incidental to its banking business.

Item 2 - Changes in Securities

     NONE

Item 3 - Defaults upon Senior Securities

     NONE

Item 4 - Submission of Matters to a Vote of Security Holders

     NONE

Item 5 - Other Information

     NONE

Item 6 - Exhibits and Reports on Form 8-K

The following exhibits are filed as part of this report:
Exhibit 3 (ii) - Revised Section 2.01 of the By-Laws for Community Bancorp.

Exhibit 27 - Financial Data Schedule

Reports on Form 8-K

     NONE

SIGNATURES

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

COMMUNITY BANCORP.

DATED: November 09, 2000	By: /s/ Richard C. White
	Richard C. White, President
DATED: November 09, 2000	By: /s/ Stephen P. Marsh
	Stephen P. Marsh,
	Vice President & Treasurer