Community Bancorp (CMTV) 10-K 2000 FY Annual report

                        INDEPENDENT AUDITOR'S REPORT

To the Board of Directors and Stockholders
Community Bancorp. and Subsidiaries
Derby, Vermont

We have audited the accompanying consolidated balance sheets of Community
Bancorp. and Subsidiaries as of December 31, 2000 and 1999, and the related
consolidated statements of income, stockholders' equity, and cash flows for the
years ended December 31, 2000, 1999, and 1998. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial statements
based on our audits.

We conducted our audits in accordance with U. S. generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Community Bancorp. and Subsidiaries at December 31, 2000 and 1999,
and the results of their operations and their cash flows for the years ended
December 31, 2000, 1999, and 1998 in conformity with U. S. generally
accepted accounting principles.

January 5, 2001
St. Johnsbury, Vermont
VT Reg. No. 92-0000102

COMMUNITY BANCORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 2000 and 1999
ASSETS	2000	1999
Cash and due from banks (Note 18)	$6,110,527	$9,928,586
Federal funds sold and overnight deposits	-0-	2,787,558
Cash and cash equivalents	6,110,527	12,716,144
Securities held-to-maturity (approximate fair value $42,466,587
and $29,502,766 at December 31, 2000 and 1999) (Note 2)	42,197,130	29,887,821
Securities available-for-sale (Note 2)	19,145,938	28,982,188
Restricted equity securities (Note 1)	1,141,650	1,141,650
Loans held-for-sale (Note 1)	710,991	660,423
Loans (Note 3)	176,815,408	152,618,876
Allowance for loan losses (Note 4)	( 1,796,810)	( 1,714,763)
Unearned net loan fees	( 950,937)	( 891,114)
Net loans	174,067,661	150,012,999
Bank premises and equipment, net (Note 5)	4,693,934	4,322,697
Accrued interest receivable	1,929,495	1,484,192
Other real estate owned, net (Note 6)	201,123	434,694
Other assets (Notes 7 and 12)	2,586,788	2,572,994
Total assets	$252,785,237	$232,215,802
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Demand, non-interest bearing	$ 25,640,868	$ 25,727,709
NOW and money market accounts	55,776,849	52,094,860
Savings	29,810,798	32,854,357
Time, $100,000 and over (Note 8)	17,504,358	15,894,363
Other time (Note 8)	79,651,657	75,271,591
	208,384,530	201,842,880
Repurchase agreements (Note 10)	14,371,538	2,623,282
Borrowed funds (Note 9)	5,592,000	4,055,000
Accrued interest and other liabilities (Note 17)	1,886,999	1,493,486
Subordinated debentures (Note 11)	20,000	20,000
Total liabilities	230,255,067	210,034,648
COMMITMENTS AND CONTINGENT LIABILITIES (Notes 5, 13, 14, 15, and 17)
STOCKHOLDERS' EQUITY
Common stock, $2.50 par value; 6,000,000 shares authorized,
3,478,561shares issued at December 31, 2000
and 3,388,394 shares issued at December 31, 1999	8,696,402	8,470,985
Additional paid-in capital	11,515,514	10,942,510
Retained earnings (Note 19)	3,731,098	3,462,966
Accumulated other comprehensive loss	( 23,108)	( 247,086)
Less treasury stock, at cost
(2000, 122,777 shares; 1999, 29,887 shares)	( 1,389,736)	( 448,221)
	22,530,170	22,181,154
Total liabilities and stockholders' equity	$252,785,237	$232,215,802

See accompanying notes.

COMMUNITY BANCORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31, 2000, 1999, and 1998
	2000	1999	1998
Interest income
Interest and fees on loans	$14,538,722	$13,036,041	$13,758,226
Interest and dividends on investment securities
��U.S. Treasury	1,503,302	2,192,557	2,058,981
U. S. Government agencies	1,331,431	522,774	137,074
States and political subdivisions	801,402	615,557	621,411
Dividends	89,130	79,540	74,046
Interest on federal funds sold and overnight deposits	170,783	276,322	421,972
	18,434,770	16,722,791	17,071,710
Interest expense
Interest on deposits	7,699,756	7,277,456	7,868,323
Interest on borrowed funds and securities sold
under agreements to repurchase	1,087,178	254,884	203,702
Interest on subordinated debentures	2,200	2,200	4,597
	8,789,134	7,534,540	8,076,622
Net interest income	9,645,636	9,188,251	8,995,088
Provision for loan losses (Note 4)	( 384,000)	( 497,000)	( 660,000)
Net interest income after provision for loan losses	9,261,636	8,691,251	8,335,088
Other income
Trust Department income	362,979	247,001	185,877
Service fees	808,139	704,348	676,558
Security losses (Note 2)	( 18,782)	-0-	-0-
Other (Note 24)	712,846	808,014	771,947
	1,865,182	1,759,363	1,634,382
Other expenses
Salaries and wages	2,917,665	2,839,193	2,795,987
Pension and other employee benefits (Notes 13 and 17)	936,367	792,328	744,715
Occupancy expenses	1,407,505	1,284,339	1,250,077
Other operating expenses (Note 24)	2,666,900	2,413,915	2,277,971
	7,928,437	7,329,775	7,068,750
Income before income taxes	3,198,381	3,120,839	2,900,720
Income taxes (Note 12)	775,960	786,481	710,346
Net income	$ 2,422,421	$ 2,334,358	$ 2,190,374
Earnings per common share on weighted average	$0.72	$0.71	$0.68
Weighted average number of common shares
used in computing earnings per share	3,375,196	3,309,375	3,229,702
Book value per share on shares outstanding at December 31	$6.71	$6.60	$6.74

See accompanying notes.

COMMUNITY BANCORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended December 31, 2000, 1999, and 1998
	---Common Stock---
	Shares	Amount
Balances, December 31, 1997	1,507,534	$3,842,907
Comprehensive income, net of taxes
Net income	-0-	-0-
Net unrealized holding gains on securities available-for-sale,
net of tax, ($103,889)	-0-	-0-
Total comprehensive income
Dividends paid	-0-	-0-
100% stock split effected in the form of a dividend	1,529,430	3,823,575
Issuance of stock	74,013	185,034
Purchase of treasury stock	( 17)	-0-
Balances, December 31, 1998	3,110,960	7,851,516
Comprehensive income, net of taxes
Net income	-0-	-0-
Net unrealized holding losses on securities available-for-sale,
net of tax, ($248,540)	-0-	-0-
Total comprehensive income
Dividends declared	-0-	-0-
5% stock dividend	156,633	391,582
Issuance of stock	91,155	227,887
Purchase of treasury stock	( 241)	-0-
Balances, December 31, 1999	3,358,507	8,470,985
Comprehensive income, net of taxes
Net income	-0-	-0-
Net unrealized holding gains on securities available-for-sale,
net of tax, ($115,383)	-0-	-0-
Total comprehensive income
Dividends declared	-0-	-0-
Issuance of stock	90,167	225,417
Purchase of treasury stock	( 92,890)	-0-
Balances, December 31, 2000	3,355,784	$8,696,402

See accompanying notes.

		Accumulated
Additional		other		Total
paid-in	Retained	comprehensive	Treasury	stockholders'
capital	earnings	income (loss)	stock	equity
$ 7,978,435	$ 9,070,443	$ 33,709	($ 445,137)	$20,480,357
-0-	2,190,374	-0-	-0-	2,190,374
-0-	-0-	201,666	-0-	201,666
				2,392,040
-0-	( 1,833,146)	-0-	-0-	( 1,833,146)
-0-	( 3,823,575)	-0-	-0-	-0-
778,018	-0-	-0-	-0-	963,052
-0-	-0-	-0-	( 244)	( 244)
8,756,453	5,604,096	235,375	( 445,381)	22,002,059
-0-	2,334,358	-0-	-0-	2,334,358
-0-	-0-	( 482,461)	-0-	( 482,461)
				1,851,897
-0-	( 2,624,150)	-0-	-0-	( 2,624,150)
1,459,756	( 1,851,338)	-0-	-0-	-0-
726,301	-0-	-0-	-0-	954,188
-0-	-0-	-0-	( 2,840)	( 2,840)
10,942,510	3,462,966	( 247,086)	( 448,221)	22,181,154
-0-	2,422,421	-0-	-0-	2,422,421
-0-	-0-	223,978	-0-	223,978
				2,646,399
-0-	( 2,154,289)	-0-	-0-	( 2,154,289)
573,004	-0-	-0-	-0-	798,421
-0-	-0-	-0-	( 941,515)	( 941,515)
$11,515,514	$ 3,731,098	($ 23,108)	($ 1,389,736)	$22,530,170

COMMUNITY BANCORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2000, 1999, and 1998
	2000	1999	1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 2,422,421	$ 2,334,358	$ 2,190,374
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization	599,487	516,824	407,226
Provision for possible loan losses	384,000	497,000	660,000
(Credit) provision for deferred income taxes	( 26,119)	21,068	( 75,246)
Loss on sale of securities	18,782	-0-	-0-
Gain on sale of loans	( 50,863)	( 108,389)	( 153,699)
Losses on sales of fixed assets	-0-	1,675	-0-
(Gains) losses on sales of OREO	( 58,405)	( 96,318)	4,448
OREO writedowns	23,343	19,590	26,592
Amortization of bond premium, net	174,685	270,141	48,621
Proceeds from sales of loans held for sale	3,886,000	10,790,620	18,780,207
Originations of loans held for sale	( 3,885,705)	( 10,310,457)	( 19,658,705)
Increase in interest receivable	( 445,303)	( 23,521)	( 373)
Decrease (increase) in mortgage servicing rights	22,892	( 31,114)	( 92,544)
(Increase) decrease in other assets	( 191,227)	158,157	( 261,297)
Increase (decrease) in unamortized loan fees	59,823	42,151	( 17,626)
Increase (decrease) in taxes payable	123,041	( 41,049)	20,628
Increase (decrease) in interest payable	107,381	( 38,366)	( 10,694)
(Decrease) increase in accrued expenses	( 40,418)	55,097	950
Increase in other liabilities	221,637	103,265	55,359
Net cash provided by operating activities	3,345,452	4,160,732	1,924,221
CASH FLOWS FROM INVESTING ACTIVITIES
Securities held-to-maturity
Maturities and paydowns	21,842,506	31,875,523	26,602,459
Purchases	( 34,157,564)	( 31,987,612)	( 22,365,543)
Securities available-for-sale
Sales and maturities	9,987,892	-0-	3,000,000
Purchases	-0-	( 9,291,211)	( 15,282,969)
Purchase of restricted equity securities	-0-	-0-	( 41,900)
(Increase) decrease in loans, net	( 25,025,922)	( 6,589,397)	1,758,500
Capital expenditures, net	( 947,879)	( 1,808,310)	( 108,756)
Investments in limited partnership, net	24,740	( 324,258)	12,779
Proceeds from sales of other real estate owned	659,648	908,399	864,835
Recoveries of loans charged off	136,422	108,004	202,057
Net cash used in investing activities	( 27,480,157)	( 17,108,862)	( 5,358,538)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in demand, NOW, savings, and
money market accounts	551,589	8,482,469	11,281,205
Net increase (decrease) in certificates of deposit	5,990,061	( 4,436,883)	( 1,064,312)
Net increase in short-term borrowings and repurchase
agreements	11,748,256	2,335,041	288,241
Net increase (decrease) in borrowed funds	1,537,000	( 5,000)	-0-
Payments to acquire treasury stock	( 941,515)	( 2,840)	( 244)
Dividends paid	( 1,356,303)	( 1,132,601)	( 954,095)
Net cash provided by financing activities	17,529,088	5,240,186	9,550,795
Net (decrease) increase in cash and cash equivalents	( 6,605,617)	( 7,707,944)	6,116,478
Cash and cash equivalents
Beginning	12,716,144	20,424,088	14,307,610
Ending	$ 6,110,527	$12,716,144	$20,424,088

SUPPLEMENTAL SCHEDULE OF CASH PAID DURING THE YEAR
Interest	$ 8,681,753	$ 7,572,906	$ 8,087,316
Income taxes	$ 679,038	$ 806,462	$ 764,964
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Unrealized gain (loss) on securities available-for-sale	$ 339,361	($ 731,001)	$ 305,555
Other real estate owned acquired in settlement of loans	$ 391,015	$ 724,462	$ 348,911
Debentures converted to common stock	$ -0-	$ -0-	$ 84,000
Stock dividends	$ -0-	$ 1,851,338	$ 3,823,575
Dividends paid:
Dividends declared	$ 2,154,289	$ 2,624,150	$ 1,833,146
(Increase) in dividends payable	435	( 537,361)	-0-
Dividends reinvested	( 798,421)	( 954,188)	( 879,051)
	$ 1,356,303	$ 1,132,601	$ 954,095

See accompanying notes.

     COMMUNITY BANCORP. AND SUBSIDIARIES
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1.   Significant Accounting Policies

The accounting policies of Community Bancorp. and Subsidiaries ("Company") are
in conformity with U. S. generally accepted accounting principles and general
practices within the banking industry. The following is a description of the more
significant policies.

Basis of presentation and consolidation

The consolidated financial statements include the accounts of Community Bancorp.
and its wholly-owned subsidiaries, Community National Bank (Community) and
Liberty Savings Bank (Liberty). All significant intercompany accounts and
transactions have been eliminated.

Nature of operations

The Company provides a variety of financial services to individuals and corporate
customers through its branches in northeastern Vermont, which is primarily a
small business and agricultural area. The Company's primary deposit products
are checking and savings accounts and certificates-of-deposit. Its primary
lending products are commercial, real estate, and consumer loans.

Concentration of risk

The Company's operations are affected by various risk factors, including interest-
rate risk, credit risk, and risk from geographic concentration of lending
activities. Management attempts to manage interest rate risk through various
asset/liability management techniques designed to match maturities of assets and
liabilities. Loan policies and administration are designed to provide assurance
that loans will only be granted to credit-worthy borrowers, although credit losses
are expected to occur because of subjective factors and factors beyond the control
of the Company. Although the Company has a diversified loan portfolio and
economic conditions are stable, most of its lending activities are conducted
within the geographic area where it is located. As a result, the Company and
its borrowers may be especially vulnerable to the consequences of changes in
the local economy. In addition, a substantial portion of the Company's loans
are secured by real estate.

Use of estimates

The preparation of consolidated financial statements in conformity with U. S.
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant change relate
to the determination of the allowance for losses on loans and the valuation of
real estate acquired in connection with foreclosures or in satisfaction of loans
and deferred tax assets. In connection with the determination of the allowances
for losses on loans and foreclosed real estate, management obtains independent
appraisals for significant properties. Accordingly, the ultimate collectibility of
a substantial portion of the Company's loan portfolio and the recovery of a
substantial portion of the carrying amount of foreclosed real estate are
susceptible to changes in local market conditions.

While management uses available information to recognize losses on loans and
foreclosed real estate, future additions to the allowances may be necessary based
on changes in local economic conditions. In addition, regulatory agencies, as an
integral part of their examination process, periodically review the Company's
allowances for losses on loans and foreclosed real estate. Such agencies may
require the Company to recognize additions to the allowances based on their
judgments about information available to them at the time of their examination.

Presentation of cash flows

For purposes of presentation in the consolidated statement of cash flows, cash
and cash equivalents includes cash on hand, amounts due from banks (including
cash items in process of clearing), federal funds sold (generally purchased and
sold for one day periods), and overnight deposits.

Trust assets

Assets of the Trust Department, other than trust cash on deposit at the Company,
are not included in these consolidated financial statements because they are not
assets of the Company.

Investment securities

Investment securities purchased and held primarily for resale in the near future
are classified as trading. Trading securities are carried at fair value with
unrealized gains and losses included in earnings.

Debt securities the Company has the positive intent and ability to hold to
maturity are classified as held-to-maturity and reported at amortized cost.
Debt and equity securities not classified as either held-to-maturity or trading
are classified as available-for-sale. Investments classified as available-for-
sale are carried at fair value with unrealized gains and losses net of tax and
reclassification adjustment reported as a net amount in other comprehensive
income. The specific identification method is used to determine realized gains
and losses on sales of securities available-for-sale. Premiums and discounts
are recognized in interest income using the interest method over the period
to maturity.

Restricted equity securities

Restricted equity securities are comprised of Federal Reserve Bank stock and
Federal Home Loan Bank stock. These securities are carried at cost. As a
member of the Federal Reserve Bank (FRB), the Company is required to invest
in FRB stock in an amount equal to 3% of Community National Bank's capital
stock and surplus.

As a member of the Federal Home Loan Bank, the Company is required to
invest in $100 par value stock of the Federal Home Loan Bank. The stock is
nonmarketable, and when redeemed, the Company would receive from the
Federal Home Loan Bank an amount equal to the par value of the stock.

Loans held for sale

Loans originated and intended for sale in the secondary market are carried at
the lower of cost or estimated fair value in the aggregate. All sales are made
without recourse. Net unrealized losses are recognized through a valuation
allowance by charges to income.

Loans

Loans receivable that management has the intent and ability to hold for the
foreseeable future or until maturity or pay-off are reported at their outstanding
principal adjusted for any charge-offs, the allowance for loan losses, and any
deferred fees or costs on originated loans and unamortized premiums or
discounts on purchased loans.

Loan interest income is accrued daily on the outstanding balances. The accrual
of interest is discontinued when a loan is specifically determined to be impaired
or management believes, after considering collection efforts and other factors,
that the borrower's financial condition is such that collection of interest is
doubtful. Any unpaid interest previously accrued on those loans is reversed
from income. Interest income is generally not recognized on specific impaired
loans unless the likelihood of further loss is remote. Interest payments
received on such loans are generally applied as a reduction of the loan
principal balance. Interest income on other nonaccrual loans is recognized
only to the extent of interest payments received.

Loan origination and commitment fees and certain direct loan origination costs
are being deferred and the net amount amortized as an adjustment of the related
loan's yield. The Company is generally amortizing these amounts over the
contractual life.

Allowance for loan losses

The allowance for loan losses is maintained at a level which, in management's
judgment, is adequate to absorb credit losses inherent in the loan portfolio.
The amount of the allowance is based on management's periodic evaluation of
the collectibility of the loan portfolio, including the nature of the portfolio,
credit concentrations, trends in historical loss experience, specific impaired
loans, and economic conditions. Allowances for impaired loans are generally
determined based on collateral values or the present value of estimated cash
flows. The allowance is increased by a provision for loan losses, which is
charged to expense, and reduced by charge-offs, net of recoveries.

Bank premises and equipment

Bank premises and equipment are stated at cost less accumulated depreciation.
Depreciation is computed principally by the straight-line method over their
estimated useful lives. The cost of assets sold or otherwise disposed of, and
the related allowance for depreciation, is eliminated from the accounts and
the resulting gains or losses are reflected in the income statement.
Maintenance and repairs are charged to current expense as incurred and the
cost of major renewals and betterments are capitalized.

Other real estate owned

Real estate properties acquired through or in lieu of loan foreclosure are
initially recorded at the lower of the Company's carrying amount or fair
value less estimated selling cost at the date of foreclosure. Any write-
downs based on the asset's fair value at the date of acquisition are charged
to the allowance for loan losses. After foreclosure, these assets are carried
at the lower of their new cost basis or fair value less cost to sell. Costs of
significant property improvements are capitalized, whereas costs relating
to holding property are expensed. Valuations are periodically performed
by management, and any subsequent write-downs are recorded as a charge
to operations, if necessary, to reduce the carrying value of a property to the
lower of its cost or fair value less cost to sell.

Income taxes

The Company recognizes income taxes under the asset and liability method.
Under this method, deferred tax assets and liabilities are established for the
temporary differences between the accounting basis and the tax basis of the
Company's assets and liabilities at enacted tax rates expected to be in effect
when the amounts related to such temporary differences are realized or
settled. Adjustments to the Company's deferred tax assets are recognized as
deferred income tax expense or benefit based on management's judgments
relating to the realizability of such asset.

Foreign currency transactions

Foreign currency (principally Canadian) amounts are translated to U.S. dollars
in accordance with FASB Statement No. 52, "Foreign Currency Translation".
The U.S. dollar is the functional currency and therefore translation adjustments
are recognized in income. Total translation adjustments, including adjustments
on foreign currency transactions, are immaterial.

Mortgage servicing

Servicing assets are recognized as separate assets when rights are acquired
through purchase or through sale of financial assets. Capitalized servicing
rights are reported in other assets and are amortized into noninterest income
in proportion to, and over the period of, the estimated future net servicing
income of the underlying financial assets. Servicing rights are evaluated for
impairment based upon the fair value of the rights as compared to amortized
cost. Impairment is determined by stratifying the rights by predominant
characteristics, such as interest rates and terms. Fair value is determined
using prices for similar assets with similar characteristics, when available,
or based upon discounted cash flows using market-based assumptions.
Impairment is recognized through a valuation allowance for an individual
stratum, to the extent that fair value is less than the capitalized amount for
the stratum.

Pension costs

Pension costs are charged to salaries and employee benefits expense and are
funded as accrued.

Advertising costs

The Company expenses advertising costs as incurred.

Stock split effected in the form of a dividend

Effective June 1, 1998, the shareholders authorized a two-for-one stock split
of the Company's $2.50 par value common stock. The stock split was effected
in the form of a dividend. All references in the accompanying financial state-
ments to the number of common shares and per-share amounts have been restated
to reflect the stock split.

Comprehensive income

The Company adopted SFAS No. 130,Reporting Comprehensive Income, as of
January 1, 1998. Accounting principles generally require that recognized revenue,
expenses, gains, and losses be included in net income. Although certain changes
in assets and liabilities, such as unrealized gains and losses on available-for-
sale securities, are reported as a separate component of the equity section of
the balance sheet, such items, along with net income, are components of
comprehensive income. The adoption of SFAS No. 130 had no effect on the
Company's net income or shareholders' equity.

The components of other comprehensive income and related tax effects at December
31 are as follows:

	2000	1999	1998
Unrealized holding gains (losses)
on available-for-sale securities	$358,143	($731,001)	$305,555
Reclassification adjustment for losses
realized in income	( 18,782)	-0-	-0-
Net unrealized gains (losses)	339,361	( 731,001)	305,555
Tax effect	115,383	248,540	( 103,889)
Net of tax amount	$223,978	($482,461)	$201,666

Earnings per common share

Earnings per common share amounts are computed based on the weighted average
number of shares of common stock outstanding during the period (retroactively
adjusted for stock splits and stock dividends) and reduced for shares held in
treasury. The assumed conversion of subordinated debentures does not result in
material dilution.

Off-balance-sheet financial instruments

In the ordinary course of business, the Company has entered into off-balance-sheet
financial instruments consisting of commitments to extend credit, commitments
under credit card arrangements, commercial letters of credit and standby letters
of credit. Such financial instruments are recorded in the financial statements
when they become payable.

Fair values of financial instruments

The following methods and assumptions were used by the Company in estimating
its fair value disclosures for financial instruments:

Cash and cash equivalents: The carrying amounts reported in the balance sheet
for cash and cash equivalents approximate those assets' fair values.

Investment securities: Fair values for investment securities are based on
quoted market prices, where available. If quoted market prices are not available,
fair values are based on quoted market prices of comparable instruments.

Restricted equity securities: The carrying amounts of these securities approxi-
mate their fair values.

Loans and loans held for sale: For variable-rate loans that reprice frequently
and with no significant change in credit risk, fair values are based on carrying
amounts. The fair values for other loans (for example, fixed rate residential,
commercial real estate, and rental property mortgage loans, and commercial and
industrial loans) are estimated using discounted cash flow analysis, based on
interest rates currently being offered for loans with similar terms to borrowers
of similar credit quality. Loan fair value estimates include judgments regarding
future expected loss experience and risk characteristics. The carrying amounts
reported in the balance sheet for loans that are held for sale approximate their
market values. Fair values for impaired loans are estimated using discounted
cash flow analyses or underlying collateral values, where applicable.

Deposits and borrowed funds: The fair values disclosed for demand deposits
(for example, checking and savings accounts) are, by definition, equal to the
amount payable on demand at the reporting date (that is, their carrying amounts).
The fair values for certificates of deposit and debt are estimated using a
discounted cash flow calculation that applies interest rates currently being
offered on certificates and debt to a schedule of aggregated contractual
maturities on such time deposits and debt.

Short-term borrowings: The carrying amounts reported in the balance sheets for
federal funds purchased approximate their fair values. These borrowings are short-
term and due on demand.

Other liabilities: Commitments to extend credit were evaluated and fair value
was estimated using the fees currently charged to enter into similar agreements,
taking into account the remaining terms of the agreements and the present credit-
worthiness of the counterparties. For fixed-rate loan commitments, fair value
also considers the difference between current levels of interest rates and the
committed rates.

Accrued interest: The carrying amounts of accrued interest approximates their
fair values.

Transfers of financial assets

Transfers of financial assets are accounted for as sales when control over the
assets has been surrendered. Control over transferred assets is deemed to be
surrendered when (1) the assets have been isolated from the Company, (2) the
transferee obtains the right (free of conditions that constrain it from taking
advantage of that right) to pledge or exchange the transferred assets, and (3)
the Company does not maintain effective control over the transferred assets
through an agreement to repurchase them before their maturity.

Business segments

In 1998, the FASB issued SFAS No. 131,Disclosures about Segments of an
Enterprise and Related Information, which establishes standards relative to
public companies for the reporting of certain information about operating
segments within their financial statements. This Statement is effective for
fiscal years beginning after December 15, 1997. Management has determined
that the Company does not have reportable segments as defined within the
Statement.

Recent accounting pronouncements

The FASB issued Statement No. 133,Accounting for Derivative Instruments and
Hedging Activities, as amended by FAS No. 137, which becomes effective for
years beginning after June 15, 2000. This Statement establishes new accounting
and reporting standards for derivative instruments and hedging activities. It
requires that an entity recognize all derivatives as either assets or liabilities
in the balance sheet and measure those derivatives at fair value. The accounting
for the gains or losses resulting in the changes of value of those derivatives will
depend on the intended use of the derivatives and whether it qualifies for hedge
accounting. Management is currently evaluating the impact of this Statement on
the Company's financial statements but does not anticipate it will have a
material impact.

Reclassification

Certain amounts in the 1998 financial statements have been reclassified to
conform to the current year presentation.

Note 2.  Investment Securities

Securities available-for-sale (AFS) and held-to-maturity (HTM) consist of the following:

		Gross	Gross
	Amortized	Unrealized	Unrealized	Fair
Securities AFS	Cost	Gains	Losses	Value
December 31, 2000
U. S. Government and agency securities	$19,180,950	$ 1,606	$ 36,618	$19,145,938
December 31, 1999
U. S. Government and agency securities	$29,356,560	$ 7,065	$ 381,437	$28,982,188
Securities HTM
December 31, 2000
U. S. Government and agency securities	$28,676,667	$ 373,580	$ 104,123	$28,946,124
States and political subdivisions	13,520,463	-0-	-0-	13,520,463
	$42,197,130	$ 373,580	$ 104,123	$42,466,587
December 31, 1999
U. S. Government and agency securities	$17,777,541	$ 4,108	$ 389,163	$17,392,486
States and political subdivision	12,110,280	-0-	-0-	12,110,280
	$29,887,821	$ 4,108	$ 389,163	$29,502,766

Investment securities with a carrying amount of $28,021,023 and $8,133,750 and
a fair value of $28,296,137 and $7,949,063 at December 31, 2000 and 1999,
respectively, were pledged as collateral on public deposits and for other purposes
as required or permitted by law.

Proceeds from the sale of securities available-for-sale amounted to $9,987,892
in 2000 and $-0- in 1999 and 1998. Realized gains from sales of investments
available-for-sale were $1,391 in 2000 and $-0- in 1999 and 1998. Realized
losses were $20,173 in 2000 and $-0- in 1999 and 1998.

The carrying amount and estimated fair value of securities by contractual
maturity are shown below. Expected maturities will differ from contractual
maturities because borrowers may have the right to call or prepay obligations
with or without call or prepayment penalties.

The scheduled maturities of securities available-for-sale at December 31, 2000
were as follows:

	Amortized	Fair
	Cost	Value
Due in one year or less	$ 9,035,675	$ 9,028,128
Due from one to five years	10,145,275	10,117,810
	$19,180,950	$19,145,938

The maturities of securities held-to-maturity at December 31, 2000 were as
follows:

	Amortized	Fair
	Cost	Value
Due in one year or less	$16,540,934	$16,521,524
Due from one to five years	13,057,015	13,071,993
Due from five to ten years	11,399,203	11,673,092
Due after ten years	1,199,978	1,199,978
	$42,197,130	$42,466,587

Included in the caption "States and Political Subdivisions" are securities of
local municipalities carried at $13,459,837 and $12,017,452 at December
31, 2000 and 1999, respectively, which are attributable to private financing
transactions arranged by the Company. There is no established trading market
for these securities and, accordingly, the carrying amount of these securities
has been reflected as their fair value. The Company anticipates no losses on
these securities and expects to hold them until their maturity.

Note 3.  Loans

The composition of net loans at December 31 is as follows:

	2000	1999
Commercial	$ 14,635,161	$ 12,187,872
Real estate - Construction	1,021,113	1,619,793
Real estate - Mortgage	138,771,429	122,230,995
Installment and other	22,387,705	16,580,216
	176,815,408	152,618,876
Deduct:
Allowance for loan losses	1,796,810	1,714,763
Unearned net loan fees	950,937	891,114
	2,747,747	2,605,877
	$174,067,661	$150,012,999

Total unamortized premiums on purchased loans totaled $71,082 and $-0- at
December 31, 2000 and 1999, respectively, and are included in the "Installment
and other" caption.

Commercial and mortgage loans serviced for others are not included in the
accompanying balance sheets. The unpaid principal balances of commercial
and mortgage loans serviced for others were $51,351,638, $50,638,724, and
$44,821,268 at December 31, 2000, 1999, and 1998, respectively. Mortgage
servicing rights of $25,672, $77,926, and $122,533 were capitalized in 2000,
1999, and 1998, respectively. Amortization of mortgage servicing rights was
$48,564, $46,762, and $29,142 in 2000, 1999, and 1998, respectively.

The total recorded investment in impaired loans as determined in accordance
with FASB Statements No. 114 and No. 118 approximated $399,450 and $717,801
at December 31, 2000 and 1999, respectively. These loans were subject to
allowances for loan losses of approximately $8,732 and $56,372 which represented
the total allowance for loan losses related to impaired loans at December 31,
2000 and 1999, respectively. The average recorded investment in impaired loans
amounted to approximately $470,107, $895,365, and $1,065,049 for the years
ended December 31, 2000, 1999, and 1998, respectively. Cash receipts on
impaired loans amounted to $151,110, $444,327, and $173,694 in 2000, 1999, and
1998, respectively, of which $125,268, $384,860, and $148,703 were applied to
the principal balances of the loans.

In addition, the Company had other nonaccrual loans of approximately $1,015,433
and $1,040,747 at December 31, 2000 and 1999, respectively, for which impairment
had not been recognized. If interest on these loans had been recognized at the
original interest rates, interest income would have increased approximately
$117,954, $102,900, and $91,458 for the years ended December 31, 2000, 1999,
and 1998, respectively.

The Company is not committed to lend additional funds to debtors with impaired,
nonaccrual or modified loans.

Note 4.   Allowance for Loan Losses

Changes in the allowance for loan losses for the years ended December 31 are
as follows:

	2000	1999	1998
Balance, beginning	$1,714,763	$1,658,967	$1,502,202
Provision for loan losses	384,000	497,000	660,000
Recoveries of amounts charged off	136,422	108,004	202,057
	2,235,185	2,263,971	2,364,259
Amounts charged off	( 438,375)	( 549,208)	( 705,292)
Balance, ending	$1,796,810	$1,714,763	$1,658,967

Note 5.   Bank Premises and Equipment

The major classes of bank premises and equipment and accumulated depreciation
at December 31 are as follows:

	2000	1999
Land	$ 80,747	$ 80,747
Buildings and improvements	3,794,658	3,470,089
Furniture and equipment	5,453,261	4,832,027
Leasehold improvements	418,916	416,840
	9,747,582	8,799,703
Less accumulated depreciation	( 5,053,648)	( 4,477,006)
	$4,693,934	$4,322,697

Depreciation included in occupancy and equipment expense amounted to $576,642,
$493,979, and $384,376 for the years ended December 31, 2000, 1999, and 1998,
respectively.

The Company occupies leased quarters at four branch office locations under
operating leases expiring in various years through 2013 with options to renew.

Minimum future rental payments under non-cancelable operating leases having
original terms in excess of one year as of December 31, 2000 for each of the
next five years and in aggregate are:

2001	$102,028
2002	102,028
2003	102,028
2004	102,028
2005	77,973
Subsequent to 2005	302,637
	$788,722

Total rental expense amounted to $102,327, $150,865, and $293,784 for the
years ended December 31, 2000, 1999, and 1998, respectively.

Note 6.   Other Real Estate Owned

A summary of foreclosed real estate at December 31 is as follows:

	2000	1999
Other real estate owned	$464,129	$686,240
Less allowance for losses on OREO	( 263,006)	( 251,546)
Other real estate owned, net	$201,123	$434,694

Changes in the allowance for losses on OREO for the years ended December
31 were as follows:

	2000	1999	1998
Balance, beginning	$251,546	$251,546	$302,726
Provision for losses	23,343	19,590	26,592
Charge-offs, net	( 11,883)	( 19,590)	( 77,772)
Balance, ending	$263,006	$251,546	$251,546

Note 7.   Investments Carried at Equity

The Company purchased various partnership interests in limited partnerships.
These partnerships were established to acquire, own and rent residential housing
for low and moderate income Vermonters located in northeastern Vermont. The
investments are accounted for under the equity method of accounting. These
equity investments, which are included in other assets, are recorded at cost and
adjusted for the Company's proportionate share of the partnership's undistributed
earnings or losses. The carrying values of these investments were $601,454
and $626,194 at December 31, 2000 and 1999, respectively. The provision for
undistributed net losses of the partnerships charged to earnings were $86,141,
$28,992, and $74,779 for 2000, 1999, and 1998, respectively.

Note 8.   Deposits

The following is a maturity distribution of time certificates of deposit at
December 31, 2000:

Maturing in 2001	$77,615,065
Maturing in 2002	13,791,395
Maturing in 2003	5,039,129
Maturing in 2004	317,977
Maturing in 2005 and thereafter	392,449
	$97,156,015

A maturity distribution of time certificates of deposit in denominations of
$100,000 or more at December 31, 2000 is as follows:

Three months or less	$ 1,531,225
Over three months through six months	7,989,096
Over six months through twelve months	4,194,080
Over twelve months	3,789,957
	$17,504,358

Note 9.   Borrowed Funds

Borrowings from the Federal Home Loan Bank of Boston (FHLB) for the years
ended December 31 were as follows:

	2000	1999
FHLB term borrowing, 5.39% fixed
rate, payable November 24,2009	$ -0-	$4,000,000
FHLB term borrowing, 6.69% fixed
rate, payable March 1, 2001	5,000,000	-0-
Community Investment Program
borrowings, fixed rate (vary 7.16%
to 7.67%), payable at various
maturities through November, 2012	55,000	55,000
	$5,055,000	$4,055,000

Note 9.   Borrowed Funds (Continued)

Principal maturities of borrowed funds as of December 31, 2000 are as follows:

2001	$5,000,000
2002	15,000
2003	-0-
2004	-0-
2005	-0-
Thereafter	40,000
	$5,055,000

The Company also maintains a $4,301,000 IDEAL Way Line of Credit with the
Federal Home Loan Bank of Boston. Outstanding advances under this line were
$537,000 and $-0- at December 31, 2000 and 1999, respectively. Interest on
these borrowings is chargeable at a rate determined daily by the Federal Home
Loan Bank and payable monthly. The rate was 6.77% on the outstanding amount
at December 31, 2000.

Collateral on these borrowings consists of Federal Home Loan Bank stock
purchased by the Company, all funds placed in deposit with the Federal Home
Loan Bank, qualified first mortgages held by the Company, and any additional
holdings which may be pledged as security.

Note 10.   Securities Sold Under Agreements to Repurchase

Securities sold under agreements to repurchase amounted to $14,371,538 and
$2,623,282 as of December 31, 2000 and 1999, respectively. These agreements
are collateralized by U. S. Treasury notes with a carrying value of $21,998,106
and $4,095,514 and a fair value of $22,227,651 and $3,967,812 at December 31,
2000 and 1999, respectively. These securities pay interest at rates between
5.20% and 8.07% and mature at varying dates through 2010.

The average daily balance of this repurchase agreement approximated $9,956,407
and $1,304,828 during 2000 and 1999, respectively. The maximum borrowings
outstanding on this agreement at any month-end reporting period of the Bank was
$19,754,560 and $3,000,471 in 2000 and 1999, respectively. These repurchase
agreements mature daily. The securities underlying these agreements are held in
safekeeping by the Institution.

Note 11.   Subordinated Debentures

On September 1, 1984, the Company issued $750,000 of 11% convertible debentures
due August 1, 2004. The notes are subordinated to all other indebtedness of the
Company. At December 31, 2000 and 1999, $20,000 remained outstanding.

These debentures are convertible prior to maturity in whole or in part, at the
option of the holder, into common stock of the Company at a conversion price
of $2.34 per share.

The debentures are redeemable, in whole or in any part, at the option of the
Company at any time after July 31, 1996, and prior to maturity, on not less
than 30 days prior notice to holders. The redemption price shall be equal to
the percentage set forth below:

August 1, 2000 - July 31, 2002	102%
August 1, 2002 - July 31, 2004	101%

Note 12.   Income Taxes

The Company prepares its federal income tax return on a consolidated basis (see
Note 1). Federal income taxes are allocated to members of the consolidated
group based on taxable income.

Federal income tax expense for the years ended December 31 was as follows:

	2000	1999	1998
Currently paid or payable	$802,079	$765,413	$785,592
Deferred	( 26,119)	21,068	( 75,246)
	$775,960	$786,481	$710,346

Total income tax expense differed from the amounts computed at the statutory
federal income tax rate of 34 percent primarily due to the following at
December 31:

	2000	1999	1998
Computed "expected" tax expense	$1,087,449	$1,061,085	$ 986,245
Tax exempt interest	( 270,988)	( 207,439)	( 208,713)
Disallowed interest	40,229	30,736	32,786
Partnership tax credits	( 93,169)	( 109,749)	( 64,405)
Other	12,439	11,848	( 35,567)
	$ 775,960	$ 786,481	$ 710,346
The deferred income tax provision consisted of the following items for the
years ended December 31:
	2000	1999	1998
Depreciation	$ 4,026	($23,241)	($16,003)
Loan fees	14,573	25,175	30,689
Mortgage servicing	( 7,783)	10,579	31,465
Deferred compensation	( 45,489)	( 42,985)	( 23,984)
Bad debts	( 19,629)	4,566	( 53,300)
Limited partnerships	32,649	47,344	42,958
Nonaccrual loan interest	9,680	( 11,660)	( 49,960)
OREO	( 3,896)	-0-	17,401
Other	( 10,250)	11,290	( 54,512)
	($26,119)	$21,068	($75,246)

Listed below are the significant components of the net deferred tax asset at
December 31:

	2000	1999
Components of the deferred tax asset:
Bad debts	$ 441,945	$ 422,316
Unearned loan fees	62,706	77,279
Nonaccrual loan interest	125,642	135,322
OREO writedowns	89,422	85,526
Deferred compensation	163,206	117,717
Other	23,156	44,691
Unrealized loss on securities available-for-sale	11,904	127,286
Total deferred tax asset	917,981	1,010,137
Valuation allowance	-0-	-0-
Total deferred tax asset, net of valuation allowance	917,981	1,010,137
Components of the deferred tax liability:
Depreciation	138,013	133,987
Limited partnerships	204,199	171,550
Mortgage servicing rights	66,396	74,179
Total deferred tax liability	408,608	379,716
Net deferred tax asset	$ 509,373	$ 630,421

FASB Statement No. 109 allows for recognition and measurement of deductible
temporary differences (including general valuation allowances) to the extent
that it is more likely than not that the deferred tax asset will be realized.

Net deferred tax assets are included in the caption "Other assets" on the
balance sheets at December 31, 2000 and 1999, respectively.

Note 13. Pension Plan

The Company has a discretionary defined contribution plan covering all
employees who meet certain age and service requirements. Due to the nature
of the plan, defined contribution, there is no unfunded past service liability.
The provisions for pension expense were $284,596, $280,650, and $287,788
for 2000, 1999, and 1998, respectively.

Note 14. Financial Instruments with Off-Balance-Sheet Risk

The Company is a party to financial instruments with off-balance-sheet risk in
the normal course of business to meet the financing needs of its customers and
to reduce its own exposure to fluctuations in interest rates. These financial
instruments include commitments to extend credit, standby letters of credit and
financial guarantees, interest rate caps and floors written on adjustable rate
loans, and commitments to sell loans. Such instruments involve, to varying
degrees, elements of credit and interest rate risk in excess of the amount
recognized in the balance sheet. The contract or notional amounts of those
instruments reflect the extent of involvement the Company has in particular
classes of financial instruments.

The Company's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit and
standby letters of credit and financial guarantees written is represented by the
contractual notional amount of those instruments. The Company uses the same
credit policies in making commitments and conditional obligations as it does for
on-balance-sheet instruments. For interest rate caps and floors written on
adjustable rate loans, the contract or notional amounts do not represent exposure
to credit loss. The Company controls the credit risk of their interest rate cap
agreements through credit approvals, limits, and monitoring procedures.

The Company generally requires collateral or other security to support financial
instruments with credit risk.

	Contract or
	----Notional Amount----
	2000	1999
Financial instruments whose contract amount represent credit risk:
Commitments to extend credit	$16,600,962	$18,748,555
Standby letters of credit and commercial letters of credit	$ 51,362	$ 316,000
Credit card arrangements	$ 4,063,844	$ 3,268,057

Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee. Since many of the commitments are expected to expire
without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. The Company evaluates each customer's
credit worthiness on a case-by-case basis. The amount of collateral obtained
if deemed necessary by the Company upon extension of credit is based on
management's credit evaluation of the counter-party. Collateral held varies
but may include real estate, accounts receivable, inventory, property, plant
and equipment, and income-producing commercial properties.

Standby letters of credit and financial guarantees written are conditional
commitments issued by the Company to guarantee the performance of a customer
to a third party. Those guarantees are primarily issued to support private
borrowing arrangements. The credit risk involved in issuing letters of credit
is essentially the same as that involved in extending loans to customers.

The Company enters into a variety of interest rate contracts, including interest
rate caps and floors written on adjustable rate loans in managing its interest
rate exposure. Interest rate caps and floors on loans written by the Company
enable customers to transfer, modify, or reduce their interest rate risk.

Note 15.   Commitments and Contingencies

In the normal course of business, the Company is involved in various claims
and legal proceedings. In the opinion of the Company's management, after
consulting with the Company's legal counsel, any liabilities resulting from
such proceedings would not have a material adverse effect on the Company's
financial statements.

Note 16.   Transactions with Related Parties

The Company has had, and may be expected to have in the future, banking
transactions in the ordinary course of business with directors, principal
officers, their immediate families and affiliated companies in which they are
principal stockholders (commonly referred to as related parties), all of which
have been, in the opinion of management, on the same terms, including interest
rates and collateral, as those prevailing at the time for comparable transactions
with others.

Aggregate loan transactions with related parties as of December 31 were as
follows:

	2000	1999
Balance, beginning	$396,339	$544,764
New loans	335,386	292,671
Repayments	( 316,060)	( 441,096)
Balance, ending	$415,665	$396,339

Total deposits with related parties approximated $745,476 and $678,697 at
December 31, 2000 and 1999, respectively.

Note 17.   Deferred Compensation Plans

The Company has a deferred compensation and retirement program for directors
and key employees of the Company. These employees and directors are general
creditors of the Company with respect to these benefits. The benefits accrued
under these plans aggregated $480,016 and $346,227 at December 31, 2000 and
1999, respectively. The expense associated with these deferred compensation
plans was $142,093, $131,426, and $76,592 for the years ended December 31,
2000, 1999, and 1998, respectively.

Note 18.   Restrictions on Cash and Due From Banks

The Company is required to maintain reserve balances in cash with Federal
Reserve Banks. The totals of those reserve balances were approximately
$1,052,000 and $1,043,000 at December 31, 2000 and 1999, respectively.

The nature of the Bank's business requires that it maintain amounts due from
banks which, at times, may exceed federally insured limits. The balance in
these accounts at December 31 is as follows:

	2000	1999
Noninterest-bearing accounts	$ 408,026	$ 262,578
Federal Reserve Bank	4,365,530	6,813,899
Federal funds sold	-0-	2,787,558

No losses have been experienced in these accounts. In addition, the Company
was required to maintain contracted clearing balances of $275,000 at December
31, 2000 and 1999.

Note 19.   Regulatory Matters

The Bank (Community National Bank) is subject to various regulatory capital
requirements administered by the federal banking agencies. Failure to meet
minimum capital requirements can initiate certain mandatory - and possibly
additional discretionary - actions by regulators that, if undertaken, could have
a direct material effect on the Bank's financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt corrective
action, the Bank must meet specific capital guidelines that involve quantitative
measures of the Bank's assets, liabilities, and certain off-balance-sheet items
as calculated under regulatory accounting practices. The Bank's capital amounts
and classification are also subject to qualitative judgments by the regulators
about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the
table below) of total and Tier 1 capital (as defined in the regulations) to risk-
weighted assets (as defined), and of Tier 1 capital (as defined) to average
assets (as defined). Management believes, as of December 31, 2000, that
the Bank meets all capital adequacy requirements to which it is subject.

As of December 31, 2000, the most recent notification from the OCC
categorized the Bank as well capitalized under the regulatory framework for
prompt corrective action. To be categorized as well capitalized, the Bank
must maintain minimum total risk-based, Tier 1 risk-based, and Tier 1 leverage
ratios as set forth in the table. There are no conditions or events since that
notification that management believes have changed the Bank's category.

The Bank (Community National Bank) is subject to various regulatory capital
requirements administered by the federal banking agencies. Failure to meet
minimum capital requirements can initiate certain mandatory - and possibly
additional discretionary - actions by regulators that, if undertaken, could have
a direct material effect on the Bank's financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt corrective action,
the Bank must meet specific capital guidelines that involve quantitative
measures of the Bank's assets, liabilities, and certain off-balance-sheet items
as calculated under regulatory accounting practices. The Bank's capital amounts
and classification are also subject to qualitative judgments by the regulators
about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the
table below) of total and Tier 1 capital (as defined in the regulations) to risk-
weighted assets (as defined), and of Tier 1 capital (as defined) to average
assets (as defined). Management believes, as of December 31, 2000, that the
Bank meets all capital adequacy requirements to which it is subject.

As of December 31, 2000, the most recent notification from the OCC categorized
the Bank as well capitalized under the regulatory framework for prompt corrective
action. To be categorized as well capitalized, the Bank must maintain minimum
total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the
table. There are no conditions or events since that notification that management
believes have changed the Bank's category.

The Bank's actual capital amounts and ratios (000's omitted) are also presented
in the table.

					Minimum
				Minimum	To be Well
				For Capital	Capitalized Under
				Adequacy	Prompt Corrective
				Purposes:	Action Provisions:
		Actual
	Amount	Ratio	Amount	Ratio	Amount	Ratio
As of December 31, 2000:
Total capital (to risk
weighted assets)	$22,513	17.08%	$10,543	8.0%	$13,178	10.0%
Tier I capital (to risk
weighted assets)	$20,864	15.83%	$ 5,272	4.0%	$ 7,907	6.0%
Tier I capital ( to
average assets)	$20,864	8.06%	$10,359	4.0%	$12,949	5.0%
As of December 31, 1999:
Total capital to risk
weighted assets)	$22,466	20.12%	$ 8,935	8.0%	$11,168	10.0%
Tier I capital to risk
weighted assets)	$21,066	18.86%	$ 4,467	4.0%	$ 6,701	6.0%
Tier I capital to
average assets)	$21,066	8.98%	$ 9,382	4.0%	$11,727	5.0%

The Bank is restricted as to the amount of dividends which can be paid.
Dividends declared by national banks that exceed net income for the current
and preceding two years must be approved by the OCC. Regardless of formal
regulatory restrictions, the Bank may not pay dividends that would result in
its capital levels being reduced below the minimum requirements shown above.

Note 20.   Fair Value of Financial Instruments

The estimated fair values of the Company's financial instruments are as follows:

	December 31, 2000
	Carrying	Fair
	Amount	Value
Financial assets:
Cash and cash equivalents	$ 6,110,527	$ 6,110,527
Securities held-to-maturity	42,197,130	42,466,587
Securities available-for-sale	19,145,938	19,145,938
Restricted equity securities	1,141,650	1,141,650
Loans and loans held-for-sale, net	174,778,652	173,969,010
Accrued interest receivable	1,929,495	1,929,495
Financial liabilities:
Deposits	208,384,530	208,910,182
Repurchase agreements	14,371,538	14,371,538
Borrowed funds	5,612,000	5,612,000
Accrued interest payable	394,138	394,138
	December 31, 1999
	Carrying	Fair
	Amount	Value
Financial assets:
Cash and cash equivalents	$ 12,716,144	$ 12,716,144
Securities held-to-maturity	29,887,821	29,502,766
Securities available-for-sale	28,982,188	28,982,188
Restricted equity securities	1,141,650	1,141,650
Loans and loans held-for-sale, net	150,673,422	150,174,039
Accrued interest receivable	1,484,192	1,484,192
Financial liabilities:
Deposits	201,842,880	202,091,623
Repurchase agreements	2,623,282	2,623,282
Borrowed funds	4,075,000	3,754,291
Accrued interest payable	286,757	286,757

The estimated fair values of deferred fees on commitments to extend credit and
letters of credit were immaterial at December 31, 2000 and 1999.

The carrying amounts in the preceding table are included in the balance sheet
under the applicable captions, except for long-term debt which consists of
borrowed funds and subordinated debentures.

Note 21.   Acquisition

On December 31, 1997, the Company purchased 100% of the stock of Liberty
Savings Bank, a New Hampshire guaranty savings bank, for $1,746,538. The
assets of the Bank, principally a U. S. government security, have been included
in the consolidated financial statements. The excess of the purchase price over
the assets of the Bank is being amortized on a straight-line basis over 15 years.
Unamortized goodwill amounted to $274,130 and $296,972 as of December 31,
2000 and 1999, respectively, and is included in "Other Assets" on the balance
sheet. Amortization expense was $22,845 for the years ended December 31,
2000 and 1999.

Liberty Savings Bank does not currently maintain any branches and does not have
authority to take bank deposits. The Company is planning to acquire full deposit
taking capabilities for Liberty Savings Bank.

Note 22.   Condensed financial Information (Parent Company Only)

The following financial statements are for Community Bancorp. (Parent Company
Only), and should be read in conjunction with the consolidated financial statements
of Community Bancorp. and Subsidiaries.

COMMUNITY BANCORP. (PARENT COMPANY ONLY)
CONDENSED BALANCE SHEETS
DECEMBER 31, 2000 AND 1999
ASSETS	2000	1999
Cash	$ 334,696	$ 55,122
Investment in Subsidiary - Community National Bank	20,860,217	20,840,821
Investment in Subsidiary - Liberty Savings Bank	1,860,860	1,825,340
Other assets	31,690	17,599
Total assets	$23,087,463	$22,738,882
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Other liabilities	$ 367	$ 367
Dividends payable	536,926	537,361
Subordinated convertible debentures	20,000	20,000
Total liabilities	557,293	557,728
Stockholders' equity
Common stock, $2.50 par value;
6,000,000 shares authorized, 3,478,561 shares issued at December
31, 2000 and 3,388,394 shares issued at December 31, 1999	8,696,402	8,470,985
Additional paid-in capital	11,515,514	10,942,510
Retained earnings (Note 19)	3,731,098	3,462,966
Accumulated other comprehensive loss	( 23,108)	( 247,086)
Less treasury stock, at cost (2000, 122,777 shares; 1999, 29,887 shares)	( 1,389,736)	( 448,221)
Total stockholders' equity	22,530,170	22,181,154
Total liabilities and stockholders' equity	$23,087,463	$22,738,882

The investment in the subsidiary banks is carried under the equity method of
accounting. The investment and cash, which is on deposit with the Bank, has
been eliminated in consolidation.

COMMUNITY BANCORP. (PARENT COMPANY ONLY)
CONDENSED STATEMENTS OF INCOME
Years Ended December 31, 2000, 1999, and 1998
	2000	1999	1998
Revenues
Dividends
Bank subsidiaries	$2,653,000	$ 942,200	$ 903,000
Total revenues	2,653,000	942,200	903,000
Expenses
Interest on long-term debt	2,200	2,200	4,597
Administrative and other	91,007	49,560	64,490
Total expenses	93,207	51,760	69,087
Income before applicable income tax and equity
in undistributed net income of subsidiaries	2,559,793	890,440	833,913
Applicable income tax (benefit)	( 31,690)	( 17,599)	( 23,489)
Income before equity (deficit) in undistributed
net income of subsidiaries	2,591,483	908,039	857,402
(Deficit) equity in undistributed net
income - Subsidiaries	( 169,062)	1,426,319	1,332,972
Net income	$2,422,421	$2,334,358	$2,190,374

COMMUNITY BANCORP. (PARENT COMPANY ONLY)
CONDENSED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2000, 1999, and 1998
	2000	1999	1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$2,422,421	$2,334,358	$2,190,374
Adjustments to reconcile net income to net cash
provided by operating activities
Deficit (equity) in undistributed net income of subsidiaries	169,062	( 1,426,319)	( 1,332,972)
(Increase) decrease in income taxes receivable	( 14,091)	5,890	( 11,423)
Decrease in other liabilities	-0-	-0-	( 1,283)
Net cash provided by operating activities	2,577,392	913,929	844,696
CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of treasury stock	( 941,515)	( 2,840)	( 244)
Dividends paid	( 1,356,303)	( 1,132,601)	( 954,095)
Net cash used for financing activities	( 2,297,818)	( 1,135,441)	( 954,339)
Net increase (decrease) in cash	279,574	( 221,512)	( 109,643)
Cash
Beginning	55,122	276,634	386,277
Ending	$ 334,696	$ 55,122	$ 276,634
SUPPLEMENTAL SCHEDULE OF CASH PAID (RECEIVED) DURING THE YEAR
Interest	$ 2,200	$ 2,200	$ 5,880
Income taxes	($ 17,599)	($ 23,489)	($ 12,066)
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Unrealized gain (loss) on securities available-for-sale	$ 339,361	($ 731,001)	$ 305,555
Debentures converted to common stock	$ -0-	$ -0-	$ 84,000
Stock dividends	$ -0-	$1,851,338	$3,823,575
Dividends paid
Dividends declared	$2,154,289	$2,624,150	$1,833,146
Increase in dividends payable	435	( 537,361)	-0-
Dividends reinvested	( 798,421)	( 954,188)	( 879,051)
	$1,356,303	$1,132,601	$ 954,095

Note 23.   Quarterly Financial Data (Unaudited)

A summary of financial data for the four quarters of 2000, 1999, and 1998 is
presented below:

COMMUNITY BANCORP. AND SUBSIDIARIES
	------------------------Quarters in 2000 ended----------------------
	March 31,	June 30,	Sept. 30,	Dec. 31,
Interest income	$4,177,223	$4,457,402	$4,814,499	$4,985,646
Interest expense	1,830,627	2,012,649	2,394,506	2,551,352
Provision for loan losses	162,000	96,000	63,000	63,000
Securities gains (loss)	( 11,507)	-0-	( 7,275)	-0-
Other operating expenses	2,008,774	1,971,934	1,976,764	1,970,965
Net income	433,625	648,664	632,348	707,784
Earnings per common share	$0.13	$0.19	$0.19	$0.21
	----------------------Quarters in 1999 ended------------------------
	March 31,	June 30,	Sept. 30,	Dec. 31,
Interest income	$4,050,380	$4,203,280	$4,247,655	$4,221,476
Interest expense	1,872,028	1,889,484	1,897,260	1,875,768
Provision for loan losses	150,000	150,000	115,000	82,000
Securities gains (loss)	-0-	-0-	-0-	-0-
Other operating expenses	1,847,475	1,828,715	1,826,272	1,827,313
Net income	410,797	566,489	603,906	753,166
Earnings per common share	$0.13	$0.17	$0.18	$0.23
	----------------------Quarters in 1998 ended------------------------
	March 31,	June 30,	Sept. 30,	Dec. 31,
Interest income	$4,224,450	$4,207,422	$4,324,448	$4,315,390
Interest expense	1,990,049	2,053,030	2,044,945	1,988,598
Provision for loan losses	200,000	160,000	150,000	150,000
Securities gains (loss)	-0-	-0-	-0-	-0-
Other operating expenses	1,809,612	1,761,241	1,767,714	1,730,183
Net income	407,679	557,942	562,139	662,614
Earnings per common share	$0.13	$0.17	$0.17	$0.21

Note 24.   Other Income and Other Expenses

The components of other income and other expenses which are in excess of one
percent of total revenues in any of the three years disclosed are as follows:

	2000	1999	1998
Income
Other	$ 712,846	$ 808,014	$ 771,947
Expenses
Printing and supplies	$ 216,966	$ 204,707	$ 198,008
State deposit tax	243,333	230,000	205,354
Other	2,206,601	1,979,208	1,874,609
	$2,666,900	$2,413,915	$2,277,971

                 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                         THE RESULTS OF OPERATIONS

                       For the Year Ended December 31, 2000

   Community Bancorp. is a holding company whose subsidiaries include Community
National Bank ("The Bank") and Liberty Savings Bank ("Liberty"). Community
National Bank is a full service institution operating in the state of Vermont,
with seven branch offices located throughout three counties in northern Vermont.
Liberty Savings Bank is a New Hampshire guaranty savings bank acquired by
Community Bancorp. on December 31, 1997. Acquired were the assets; primarily
a U.S. Treasury Strip with a fair value of approximately $1.7 million, and all of
the outstanding stock of Liberty Savings Bank. Presently, since no building
was involved in the transaction, the address for Liberty Savings Bank is C/O
Community Bancorp., Derby, Vermont. The following discussion refers primarily
to the operations of the Bank, with consolidated balance sheets and income
statement figures for the Company.

FINANCIAL SUMMARY

   The calendar year of 2000 ended with a 3.8% increase in earnings over the
calendar year of 1999, and a 10.6% increase over the calendar year of 1998.
Total earnings of $2.4 million were reported for 2000 compared to $2.3 million
in 1999, and $2.2 million for 1998. The results of these figures are earnings
per share of $0.72, $0.71, and $0.68, respectively. A cash dividend of $0.16
per share was paid in each of the four quarters of 2000 with the most recent
paid on November 1, 2000 to shareholders of record as of October 15, 2000.
This dividend of $0.16 per share is equal to the cash dividends paid in 1999
and represents a 6% increase over the cash dividends paid in 1998. A 5%
stock dividend was declared in 1999, payable on February 1, 1999 to share-
holders of record as of the same date. In 1998, a two for one stock split was
announced on March 13, 1998, payable on June 1, 1998, to shareholders of
record as of May 15, 1998. This was accomplished through a 100% stock
dividend. In order for this to occur, the Company's shareholders needed to
approve a proposal to increase the number of shares the Company may issue.
This was voted on and approved at the annual shareholders meeting held on May
5, 1998. As a result of both of these stock dividends, per share data for the
applicable comparison periods have been restated to reflect these dividends.

CHANGES IN FINANCIAL CONDITION

   The financial condition of the Company should be examined in light of its
sources and uses of funds. The table entitled "Average Balances and Interest
Rates" is a comparison of daily average balances and is indicative of how
sources and uses of funds have been managed.

   The average volume of earning assets grew from $211.7 million at the end of
1998, to $220.2 million at December 31, 1999, and then increased to $233.8
million as of December 31, 2000. The average volume of loans started at $150.3
million at year-end 1998 and decreased $614 thousand to $149.7 million at year-
end 1999, and then increased $15.5 million to end the 2000 calendar year at
$165.2 million. Taxable investment securities increased from $38.8 million to
$49.8 million, and then decreased to just over $48 million for the respective
year end comparisons. The Bank successfully increased its loan portfolio
during the 2000 calendar year resulting in an increase in the average volume
of loans as well as the decrease in the other interest earning assets.

   Average interest-bearing liabilities began the comparison period at an average
volume of $178.1 million for 1998, increasing to $184.7 million as of the end
of 1999, and then increased to an average volume of $196 million as of December
31, 2000. Time deposits account for the biggest portion of interest bearing
liabilities with volumes reported at $98.2 million, $94.7 million and $92.7
million respectively, for the years ended 1998, 1999, and 2000. Unfavorable
interest rates led to the decline in volume as customers look to other sources
during this period. Other borrowed funds increased during the 2000 calendar
year as a result of the increase in loan volume versus the decrease in volume
on most interest bearing deposit accounts.

   Repurchase agreements have grown substantially since their introduction in
1998 attracting more business customers to the Bank and retaining bank customers
who might have gone elsewhere in an effort to earn more money on their short
term deposits. The average volume started at $93 thousand as of year-end 1998,
increased to $1.3 million as of year-end 1999, and ended the year 2000 at an
average volume of approximately $10 million.

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 from just under $16 million at the end of 1999
to $17.5 million at the end of 2000, an increase of $1.6 million or 10.13%.
Other time deposits increased from $75.3 million to $79.7 million for the same
time period, an increase of 5.82%. The Bank, in an effort to both keep and
attract more long-term deposits, offered very competitive rates during the last
part of 2000, resulting in these increases. A review of these deposits indicates
that changes are generated locally and regionally by established customers of
the Company. The Company has no brokered deposits. Savings deposits
decreased just over $3 million for the comparison period, while NOW and
money market accounts increased $3.7 million for the same period.

   Our gross loan portfolio increased $24.2 million or by 15.9% to end the
2000 calendar year at $176.8 million compared to $152.6 million a year ago.
As mention above, more fixed rate "in-house" loans were generated this year in
an effort to increase our loan portfolio. The Bank also purchased approximately
$4.4 million in loans from other institutions, contributing to the increase.
The Bank sold a portion of the Available for Sale treasuries and replaced them
with higher yielding Held to Maturity Agencies, resulting in an increase of
$12.3 million in the Company's investment portfolio of "Held to Maturity"
securities and a decrease of almost $10 million in the portfolio of "Available
for Sale" securities. As of year-end 2000, the Company held in its investment
portfolio treasuries classified as "Held to Maturity" with a book value of
$42.2 million and investments classified as "Available for Sale" with a fair
value just over $19 million compared to $30 million and $29 million,
respectively, a year ago. Both of these types of investments mature at
monthly intervals as shown on the gap report enclosed in this discussion.
Securities classified as "Restricted Equity Securities" are made up of equity
securities the Company is required to maintain in the form of Federal Home
Loan Bank of Boston (FHLB) and Federal Reserve Bank stock. These securities
remain at a balance totaling $1.14 million as of December 31, 2000.

   The Company has two credit lines with available balances totaling $6.3
million and additional borrowing capacity of approximately $108 million
through the Federal Home Loan Bank of Boston, which is secured by the
Company's qualifying loan and treasuries portfolio. As of December 31,
2000, the Company had an advance of just over $5 million against the $108
million line at FHLB.

Credit Risk -Management believes that the policies and procedures established
for the underwriting of its loan portfolio are both accurate and up-to-date
helping to alleviate many of the problems that could exist within the portfolio
in a changing environment. Loans are typically reviewed on a loan-by-loan
basis with more emphasis placed on larger loans and loans that have the
potential for a higher level of risk. These measures also help to ensure the
adequacy of the allowance. The Executive Officers and Board of Directors
perform periodic reviews of the loan portfolio. Among the topics discussed
during their review are potential exposures that exist within the loan portfolio.
Factors considered include, but are not limited to, historical loss ratios, each
borrower's financial condition, the industry or sector of the economy in which
the borrower operates, and overall economic conditions. Existing or potential
problems are noted and reviewed by senior management to ensure that adequate
loan-to-value ratios exist to help cover any cost associated with these loans.
The Company employs a full-time loan review and credit administration officer
staffed with a department whose duties include, but are not limited to, a review
of the loan portfolio including delinquent and non-accrual loans. Also on staff
are personnel whose primary duties are to monitor non-performing loans.
Included in the duties of this department are the tracking of payments by
delinquent loan customers, and management of the Company's OREO portfolio.
A quick review of the OREO portfolio, as well as the portfolio of loans past
due 90 days or more, shows positive results since the establishment of this
department. Results from both departments mentioned are reported to senior
management for further review and additional action if necessary.

  Specific allocations are made in situations management feels are at a greater
risk for loss. A quarterly review of certain qualitative factors, which include
"Levels of, and Trends in, Delinquencies and Non-Accruals" and "National
and Local Economic Trends and Conditions", helps to ensure that areas with
potential risk are noted and coverage adjusted to reflect current trends in
delinquencies and non-accruals. First mortgage loans make up the largest
part of the loan portfolio and have the lowest historical loss ratio helping
to alleviate overall risk.

Allowance for Loan Losses and Provisions - The valuation allowance for loan
losses as of December 31, 2000 of $1.8 million constitutes 1.01% of the total
loan portfolio compared to $1.7 million or 1.12% a year ago. In management's
opinion, this is both adequate and reasonable in view of the fact that $140.5
million of the total loan portfolio, or 79.2% consists of real estate mortgage
loans. Of this total for 2000, $107.4 million or 60.5% are loans secured by
1-4 family residences. A primary concern of management is to reduce the
exposure of credit loss within the portfolio. This volume of home loans,
together with the low historic loan loss experience, helps to support our
basis for loan loss coverage. Additionally, in management's opinion, a loan
portfolio consisting of 79.2% in residential and commercial real estate
secured mortgage loans is more stable and less vulnerable than a portfolio
with a higher concentration of unsecured commercial and industrial loans
or personal loans.

   A comparison of non-performing assets for 2000 and 1999 reveals a decrease
of $904,332 or 35.3% from a figure of $2.56 million to $1.66 million. Non-
accruing loans decreased $343,666 or by 19.5%, loans past due 90 days or more
decreased $327,095 or by 88.4% and the Company's OREO portfolio decreased
$233,571 or by 53.7%, to end at figures of $1,414,883, $43,122, and $201,123,
respectively as of December 31, 2000. Of the total non-accrual loan portfolio
of $1.4 million, approximately $1.3 million, or 92%, are real estate secured
mortgage loans on which the Company has suffered relatively few losses.

   Non-performing assets as of December 31, 2000 and 1999 were made up of
the following:

	2000	1999
Non-accruing loans	$1,414,883	$1,758,549
Loans past due 90 days or more and still accruing	43,122	370,217
Other real estate owned	201,123	434,694
Total	$1,659,128	$2,563,460

   Management continues to monitor the allowance for loan losses very carefully
and maintains the reserve at a level of approximately one percent of total
eligible loans. The Northeast Kingdom is known for being on the lower end of
the economic scale, and as such suffers greatly in times of economic uncertainty.
In view of this, the Company will always maintain its conservative approach to
the review process for reserve requirements and adjust accordingly for any
changes.

   Other Real Estate Owned consists of properties that the Company has acquired
in lieu of foreclosure or through normal foreclosure proceedings. The policy
of the Company is to value property in other real estate owned at the lesser
of appraised value or book value. An appraisal is necessary to determine the
value of the property. If the book value of the property is less than the
appraised value, a "write-down" is necessary to bring the loan balance to a
level equal to the appraised value prior to including it in OREO. Any such
write-down is charged to the reserve for loan losses. Once the property is
in OREO, any additional write-downs are charged to earnings.

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 December
31, 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

December 31, 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	0	0	0	0	0	0
Overnight deposits	0	0	0	0	0	0
Investments -
Available for Sale(1)	2,998	6,030	10,118	0	0	19,146
Held to Maturity	2,145	14,395	9,540	3,517	12,599	42,196
Restricted equity securities	0	0	0	0	1,142	1,142
Loans(2)	22,657	51,985	48,031	17,286	36,152	176,111
Total interest sensitive assets	27,800	72,410	67,689	20,803	49,893	238,595
Interest sensitive liabilities:
Certificates of deposit	15,066	75,095	6,369	626	0	97,156
Money markets	31,710	0	0	0	0	31,710
Regular savings	0	4,811	0	0	25,000	29,811
Now and super now accounts	0	0	0	0	24,067	24,067
Borrowed funds	5,537	0	15	0	40	5,592
Repurchase agreements	14,372	0	0	0	0	14,372
Subordinated debentures	0	0	0	20	0	20
Total interest sensitive liabilities	66,685	79,906	6,384	646	49,107	202,728
Net interest rate sensitivity gap	(38,885)	(7,496)	61,305	20,157	786
Cumulative net interest rate
sensitivity gap	(38,885)	(46,381)	14,924	35,081	35,867
Cumulative net interest rate
sensitivity gap as a
percentage of total assets	-15.38%	-18.35%	5.90%	13.88%	14.19%
Cumulative interest sensitivity
gap as a percentage of total
interest-earning assets	-16.30%	-19.44%	6.25%	14.70%	15.03%
Cumulative interest earning assets
as a percentage of cumulative
interest-bearing liabilities	41.69%	68.36%	109.76%	122.84%	117.69%
(1) The Company may sell investments available for sale with a fair value of $19,145,937 at any time.
(2) Loan totals exclude non-accruing loans amounting to $1,414,883.

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 and super 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.

INVESTMENT SECURITIES

   The adoption of FASB No. 115, "Accounting for Certain Investments in Debt
and Equity Securities", has had an impact on our investment portfolio. This
accounting standard requires banks to recognize all appreciation or depreciation
of the investment portfolio either on the balance sheet or through the income
statement even though a gain or loss had not been realized. These changes
require securities classified as "trading securities" to be marked to market
with any gain or loss charged to income. Securities classified as "available-
for-sale" are marked to market with any gain or loss after taxes charged to
the equity portion of the balance sheet. Securities classified as "held-to-
maturity" are to be held at book value.

   The Company does not own any trading securities as our investment policy
prohibits active trading in our investment account. The Company had $1.14
million in equity securities classified as available-for-sale for both the 2000
and 1999 comparison periods. In addition, at December 31, 2000, the
Company had $19.15 million in U.S. Government securities classified as
available-for-sale, compared to $28.98 million at December 31, 1999.
These securities have been marked to market, with a resulting unrealized
loss after taxes of $23,108 for 2000 compared to an unrealized loss of
$247,086 for 1999. These figures are presented in the equity section of our
financial statement as "accumulated other comprehensive income". As adjusted
for this item, our investment portfolios at the respective years' ends were
as follows:

December 31, 2000:	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains	Losses	Value
U.S. Government & agency securities
Available-for-sale	$19,180,950	$ 1,606	$ 36,618	$19,145,938
Held-to-maturity(1)	28,676,667	373,580	104,123	28,946,124
States & political subdivisions
Held-to-maturity	13,520,463	0	0	13,520,463
Restricted equity securities
Available-for-sale	1,141,650	0	0	1,141,650
	$62,519,730	$375,186	$140,741	$62,754,175
December 31, 1999:	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains	Losses	Value
U.S. Government & agency securities
Available-for-sale	$29,356,560	$ 7,065	$381,437	$28,982,188
Held-to-maturity(1)	17,777,541	4,108	389,163	17,392,486
States & political subdivisions
Held-to-Maturity	12,110,280	0	0	12,110,280
Restricted equity securities
Available-for-Sale	1,141,650	0	0	1,141,650
	$60,386,031	$ 11,173	$770,600	$59,626,604

(1)  Included in this portfolio is the U.S. Treasury Strip for Liberty Savings
    Bank with an amortized cost of $1,657,625 and fair value of $1,655,298 as
    of December 31, 2000; and an amortized cost of $1,569,196 and a fair value
    of $1,546,319 as of December 31, 1999.

Gross realized gains and gross realized losses on actual sales of securities
were:

Gross realized gains:	2000	1999	1998
U.S. Government & agency securities	$ 1,391	$ 0	$ 0
Other Securities	0	0	0
	$ 1,391	$ 0	$ 0
Gross realized losses:	2000	1999	1998
U.S. Government & agency securities	$20,173	$ 0	$ 0
Other Securities	0	0	0
	$20,173	$ 0	$ 0

BANK PREMISES AND EQUIPMENT

   Major classes of bank premises and equipment and the total accumulated
depreciation are as follows:

	December 31,
	2000	1999
Land	$ 80,747	$ 80,747
Buildings and improvements	3,794,658	3,470,089
Furniture and equipment	5,453,261	4,832,027
Leasehold improvements	418,916	416,840
	9,747,582	8,799,703
Less accumulated depreciation	-5,053,648	-4,477,006
	$ 4,693,934	$ 4,322,697

   Depreciation included in occupancy and equipment expense amounted to
$576,642, $493,979, and $384,376 for the years ended December 31, 2000,
1999 and 1998, respectively.

   The Company currently leases four of the seven offices it occupies. These
leased offices are in Island Pond, Newport, Barton, and St. Johnsbury, Vermont.
During the first part of 1999, the Company moved it's Newport office to a
condominium space of approximately 3,084 square feet in the new state office
building at the opposite end of Main Street from the Company's former office.
The operating leases for the three other locations expire in various years
through 2013 with options to renew.

   Minimum future rental payments under non-cancelable operating leases having
remaining terms in excess of one year, as of December 31, 2000, for each of
the next five years and in aggregate are:

2001	$102,028
2002	102,028
2003	102,028
2004	102,028
2005	77,973
Subsequent to 2005	302,637
Total	$788,722

EFFECTS OF INFLATION

   Rates of inflation effect 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 because, as costs and prices rise, cash and credit demands of
individuals and businesses increase, and the purchasing power of net
monetary assets declines.

   The Company's ability to preserve its purchasing power depends primarily
on its ability to manage net interest income. The Company's net interest
income improved during the last three years, in light of the fact that the
spread has decreased from 1998 to 2000. The volume of loans increased more
than the volume of interest bearing deposit accounts forcing the Company to
borrow funds in order to fund the loan volume, thereby having a direct impact
on the spread for the year 2000.

INTEREST INCOME VERSUS INTEREST EXPENSE
      (NET INTEREST INCOME)

   Net interest income represents the difference between interest earned on
loans and investments versus the interest paid on deposits and other sources
of funds (i.e. other borrowings). Changes in net interest income result from
changes in the level and mix of earning assets and sources of funds (volume)
and from changes in the yield earned and costs paid (rate). The table labeled
"Average Balances and Interest Rates" provides the visual analysis for the
comparison of interest income versus interest expense. These figures, which
include earnings on tax-exempt investment securities, are stated on a tax
equivalent basis with an assumed rate of 34%.

   Net interest income was $10.1 million, $9.5 million and $9.3 million,
respectively for the years ended 2000, 1999, and 1998. Net interest spread,
the difference between the yield on interest earning assets versus interest
bearing liabilities, at the end of 2000 was 3.58% versus 3.66% for 1999 and
3.68% for 1998. Interest differential, defined as net interest income divided
by average earning assets, for the years ended 2000, 1999 and 1998, was
reported at 4.30%, 4.32%, and 4.40% respectively.

   Interest income decreased from $17.39 million at the end of 1998, to
$17.04 million for 1999, and then increased to $18.85 million for the year
ended 2000, a decrease of 2% and an increase of 10.6%, respectively.
Interest expense decreased from $8.1 million at the end of 1998 to $7.5
million as of year-end 1999, and then increased to $8.8 million as of
December 31, 2000. This translates to a decrease of 6.7% for 1998 versus
1999 and an increase of 16.7% for 1999 versus 2000.

   Income from loans accounts for the biggest portion of interest income
reporting $13.76 million for 1998, $13.04 million for 1999, and $14.54
million for 2000, with average yields of 9.15%, 8.71%, and 8.80%,
respectively. Income on federal funds sold and overnight deposit has
decreased throughout the comparison period to reflect the decrease in volume
for both of these earning assets. As mentioned earlier, the growth in loan
volume was not funded by a growth in interest bearing deposit accounts,
therefore leading to the decrease in federal funds sold and overnight deposits.

   Interest expense on time deposits accounts for the biggest portion of
interest expense with figures for the comparison period totaling $5.5 million
for 1998, $4.9 million for 1999 and $5.0 million for 2000, with average
yields of 5.6%, 5.14%, and 5.43%, respectively.

   Interest expense for other borrowed funds tripled, resulting in a 145 basis
points increase in the yield from year-end 1999 to year-end 2000. These
increases support the 130% increase in volume for other borrowed funds
ending the comparison period at $9.3 million compared to $4.1 million a year
ago. These funds, as mentioned earlier, are mostly short term to cover
funding for the increase in the loan portfolio.

OTHER OPERATING INCOME AND EXPENSES

   Other operating income for the fourth quarter was reported at $494,018 for
2000, $531,184 for 1999, and $441,652 for 1998. Other income supports the
decrease for 2000 compared to 1999 as well as the increase for 1999 compared
to 1998, with income of $171,001 for 2000 versus $267,458 for 1999 and
$191,848 for 1998. A gain of $108,605 on the sale of an OREO property helped
to boost other income for the fourth quarter of 1999. Other operating income
of $1.87 million for the 12 months of 2000 is an increase of 6% over the 1999
figure of $1.76 million, which is an increase of 7.7% over the 1998 figure of
$1.63 million. Trust department income reported the biggest increase for
both periods with figures of $362,979 for 2000 versus $247,001 for 1999 and
$185,877 for 1998. In addition to tremendous growth, the trust department
acquired the assets of Northfield Savings Bank during the 2000 calendar year,
contributing to the increase in income.

   Other operating expenses for the fourth quarter of 2000 was reported at
$1.97 million, an increase of 7.9% over the 1999 figure of $1.83 million,
which increased 5.6% over the 1998 fourth quarter figure of $1.73 million.
Occupancy expense for the fourth quarter of 1999 was higher than both the
2000 and 1998 fourth quarters due to expenses for furniture and equipment
that were greater than anticipated, resulting in an increase in depreciation
on these assets. An increase of $39,348 is noted in the fourth quarter
comparisons for loss on limited partnerships due to a $17,107 reversal of an
anticipated loss in 1999 and the booked loss of $22,241 during the same
quarter of 2000. Total other operating expenses ended the 2000 fiscal year
at $7.93 million, an increase of $598,662 or 8.2% over the 1999 fiscal year
of $7.33 million, which increased $261,026 or by 3.7% over the 1998 fiscal
year of $7.07 million. Other expenses tallied the biggest increase for 2000
versus 1999 with an increase of $210,414 or 8.9%. Pension and other employee
benefits followed with an increase of $144,039 or 18.2% for the same period.
Additional pension expenses related to SERP accounts were incurred during
2000 as well as an increase in medical insurance payments supporting the
increase.

   Many of the components of other operating expenses are estimated on a yearly
basis and accrued in monthly installments. In an attempt to present accurate
figures on the statement of income for any interim period, these expenses are
reviewed quarterly by senior management to ensure that monthly accruals are
accurate, and any necessary adjustments are made at that time.

APPLICABLE INCOME TAXES

   Income before taxes of $894,344 are reported for the fourth quarter of
2000 compared to $967,578 for the fourth quarter of 1999 and $888,262 for
the fourth quarter of 1998. This translates to a decrease of $73,235 or 7.6%
for 2000 versus 1999 and an increase of $79,317 or 8.9% for 1999 versus
1998. As a result, provisions for income taxes for the fourth quarters ended
2000, 1999, and 1998 are reported at $186,562, $214,412, and $225,647,
respectively. The figure presented at year-end 2000 of $3.2 million for
income before taxes shows an increase of $77,541 or 2.5% for 2000
versus the 1999 figure of $3.1 million, and an increase of $220,119 or 7.6%
for 1999 versus the 1998 figure of $2.9 million. Provisions for income taxes
for each fiscal year are reported at $775,959, $786,481, and $710,346,
respectively 2000, 1999, and 1998.

   Return on average assets (ROA), which measures how effectively a
corporation uses its assets to produce earnings, ended the fiscal years at
1.00% for 2000 compared to 1.02% for 1999 and 1.00% for 1998. Return on
average equity (ROE), which is the ratio of income earned to average share-
holders' equity was 10.70% for 2000, 10.54% for 1999, and 10.35% for 1998.

CAPITAL RESOURCES

   Stockholders' equity at December 31, 1999, was $22,181,154, with a book
value of $6.60 per share. It increased through earnings of $2,422,421, the
sale of common stock of $798,421 through our dividend reinvestment program
and $223,977 through adjustments for the valuation allowance of securities.
It decreased through purchases of treasury stock of $1,063, dividends paid
totaling $2,154,723, and the repurchase of stock through the Stock Buyback
Plan of $940,452. Additionally, the Company declared a dividend in December
of 2000, payable in February of 2001. As a result, an accrual for the dividend
was necessary, decreasing stockholders' equity by $536,925 as of December 31,
2000. The same event occurred in December of 1999 announcing a dividend of
$537,361 payable in February of 2000. As of December 31, 2000, stockholders'
equity was $22,530,171 with a book value of $6.71 per share. All stockholders'
equity is unrestricted. Additionally, it is noted that as the maturity date on
securities classified as available for sale draws near, the market price on
these securities becomes more favorable, thereby greatly reducing the material
loss associated with these investments through the valuation allowance.

   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 year 2000 totaled
92,778 and the repurchase price paid for these shares ranged from $9.75 to
$11.00 per share.

   The Bank, as a National Bank, is subject to the dividend restrictions set
forth by the Comptroller of the Currency. Under such restrictions, the Bank
may not, without the prior approval of the Comptroller of the Currency,
declare dividends in excess of the sum of the current year's earnings (as
defined) plus the retained earnings (as defined) from the prior two years.

   The Bank is required to maintain minimum amounts of capital to total
"risk weighted" assets, as defined by the banking regulators. At December
31, 2000, the Bank is required to have minimum Tier I and Total Capital
ratios of 4.00% and 8.00%, respectively. The Company's consolidated risk
weighted assets were reported at $132 million with reported ratios, at
December 31, 2000, of approximately 17% for Tier I capital and 18% for Total
capital. The report labeled "Capital Ratios" provides a better understanding
of the components of each the Tier I and Tier II capital ratios as well as a
three-year comparison of the growth of these ratios.

   The Company intends to continue the past policy of 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
either of its subsidiaries, Community National Bank or Liberty Savings Bank.
At present, regulatory authorities have made no demand on the Company to
make additional capital contributions to either the Bank's or Liberty's capital.

COMMON STOCK PERFORMANCE BY QUARTER

		2000
	First	Second	Third	Fourth
Trade price
High	$9.25	$10.50	$10.75	$12.00
Low	$8.63	$ 8.13	$ 9.00	$ 9.75
Cash Dividends
Declared	$0.16	$0.16	$0.16	$0.16
		1999
	First	Second	Third	Fourth
Trade price
High	$13.00	$12.50	$11.00	$10.88
Low	$11.88	$12.00	$ 9.25	$ 8.63
Cash Dividends
Declared	$0.16	$0.16	$0.16	$0.16

Form 10-K

A copy of the Form 10-K Report filed with the Securities and Exchange
Commission may be obtained without charge upon written request to:

     Stephen P. Marsh, Vice President & Treasurer
     Community Bancorp.
     P.O. Box 259
     Derby, Vermont 05829

The report for the year 2000 is expected to be available about April 1, 2000.

Shareholder Services
For shareholder services or information contact:
     Chris Bumps, Corporate Secretary
     Community National Bank
     P.O. Box 259
     Derby, Vermont 05829
     (802) 334-7915

Annual Shareholders Meeting
The 2001 Annual Shareholders Meeting will be held at 5:30 p.m., May 8, 2001,
at the Haskell Opera House in Derby Line. We hope to see many of our
shareholders there.

Community Bancorp. Stock
As of February 1, 2001, the Corporation's common stock ($2.50 par value) was
owned by approximately 850 shareholders of record. Although there is no
established public trading market in the Corporation's common stock, several
brokerage firms follow the stock and maintain a minor market in it. Trading
in the Corporation's stock, however, is not active. You can contact these
firms at the following addresses:

First Albany Corp.	A.G. Edwards
P.O. Box 387	1184 Main Street, Suite 1
Burlington, Vermont 05402	St. Johnsbury, Vermont 05819
(800) 451-3249	(800) 457-1002
Salomon Smith Barney	Winslow, Evans & Crocker
P.O. Box 1095	33 Broad Street
Burlington, Vermont 05402	Boston, Massachusetts 02109
(800) 446-0193	(800) 556-8600