SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
- -----------------------------------
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
Commission File No. 33-31013-A
COMMUNITY NATIONAL BANCORPORATION
- -----------------------------------
(Exact name of small business issuer as specified in its charter)
Georgia 58-186963
- ----------------------- -------------------
(State of Incorporation) (I.R.S. Employer
Identification No.)
561 E. Washington Avenue, P.O. Box 2619, Ashburn, Georgia 31714
- ---------------------------------------------------------------
Address of Principal Executive Offices)
912) 567-9686
- -------------
(Issuer's Telephone Number, Including Area Code)
Not Applicable
- --------------
(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
Check whether the issuer (1) filed all reports required to be
filed by section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period
that the issuer was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of
shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date.
Common stock, no par value per share, 1,118,871 shares
outstanding as of August 10, 1998.
Transitional Small Business Disclosure Format (Check one):
Yes No X
PART I
FINANCIAL INFORMATION
COMMUNITY NATIONAL BANCORPORATION
ASHBURN, GEORGIA
Consolidated Balance Sheets
Item 1. Financial Statements
- ----------------------------
ASSETS
June 30, December 31,
1998 1997
(Unaudited) (Unaudited)
Cash and due from banks $ 2,148,050 $ 2,770,621
Federal funds sold, net 4,180,000 2,250,000
------------ -----------
Total cash and cash
Equivalents $ 6,328,050 $ 5,020,621
Securities:
Available for sale, at
fair values 6,949,469 7,077,909
Loans, net 86,945,687 75,791,059
Property and equipment, net 1,741,156 1,323,876
Other assets 2,717,880 2,380,922
------------ ----------
Total Assets $104,682,242 $91,594,387
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits
Non-interest bearing deposits $ 5,758,063 $ 7,488,707
Interest bearing dep 90,400,974 76,353,452
------------- -----------
Total deposits $ 96,159,037 $83,842,159
Other liabilities 789,213 574,556
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Total liabilities $ 96,948,250 $84,416,715
------------- ----------
Commitments and contingencies
Shareholders' Equity:
Common stock, no par value,
10,000,000 shares authorized,
1,091,751 and 1,060,251
shares issued at June 30,
1998 and December 31, 1997,
respectively; 1,084,366 and
1,054,251 shares outstanding
at June 30, 1998 and December
31, 1997, respectively $ 3,603,658 $ 3,479,988
Less: Treasury stock (53,850) (40,000)
Retained earnings 4,168,039 3,726,950
Unrealized gain on
securities, net 16,145 10,734
------------- ----------
Total Shareholders' Equity 7,733,992 $ 7,177,672
------------- -----------
Total liabilities and
shareholders' equity $ 104,682,242 $91,594,387
============= ===========
Refer to notes to the consolidated financial statements.
COMMUNITY NATIONAL BANCORPORATION
Ashburn, Georgia
Consolidated Statements of Income
for the three months ended
June 30,
1998 1997
Interest income $ 2,492,880 $ 2,046,886
Interest expense 1,201,417 986,883
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Net interest income $ 1,291,463 $ 1,060,003
Provision for possible
loan losses 150,000 186,000
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Net interest income after
Provision for possible
loan losses $ 1,141,463 $ 874,003
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Other income
Service charges $ 110,172 $ 102,711
Other fees 14,211 16,216
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Total other income $ 124,383 $ 118,927
------------- ------------
Salaries and benefits $ 350,832 $ 252,113
Advertising and business
development 25,339 22,755
Repairs and maintenance 26,706 24,023
Depreciation 39,210 41,261
Legal and professional 50,460 25,430
Data processing 36,026 30,810
Regulatory fees and assessment 12,023 11,952
Other operating expenses 188,230 115,464
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Total operating expenses $ 728,826 $ 523,808
------------- ------------
Net income before taxes $ 537,020 $ 469,122
Income taxes 280,000 230,300
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Net income $ 257,020 $ 238,822
============= ============
Basic income per share $ .23 $ .22
============= ============
Diluted income per share $ .22 $ .21
============= ============
Refer to notes to the consolidated financial statements.
COMMUNITY NATIONAL BANCORPORATION
Ashburn, Georgia
Consolidated Statements of Income
for the six months ended
June 30,
1998 1997
Interest income $ 4,837,477 $ 3,927,961
Interest expense 2,308,236 1,893,955
------------- ------------
Net interest income $ 2,529,241 $ 2,034,006
Provision for possible
loan losses 300,000 289,500
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Net interest income after
Provision for possible
loan losses $ 2,229,241 $ 1,744,506
------------- ------------
Other income
Gain on sale of securities $ 3,728 $ - -
Service charges 230,591 207,603
Other fees 36,689 43,463
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Total other income $ 271,008 $ 251,066
------------- ------------
Salaries and benefits $ 713,114 $ 503,919
Advertising and business
development 54,688 35,354
Repairs and maintenance 48,317 43,118
Depreciation 93,272 87,898
Legal and professional 78,850 51,541
Data processing 69,479 50,868
Regulatory fees and assessments 25,646 23,661
Other operating expenses 355,864 215,014
------------- ------------
Total operating expenses $ 1,439,230 $ 1,011,373
------------- ------------
Net income before taxes $ 1,061,019 $ 984,199
Income taxes 514,505 461,675
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Net income $ 546,514 $ 522,524
============= ============
Basic income per share $ .50 $ .50
============= ============
Diluted income per share $ .44 $ .44
============= ============
Refer to notes to the consolidated financial statements.
COMMUNITY NATIONAL BANCORPORATION
Ashburn, Georgia
Consolidated Statements of Cash Flows
(Unaudited)
For the six-month period
Ended June 30,
1998 1997
Cash flows from operating
activities: $ 860,603 $ 415,270
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Cash flows from investing
activities:
Purchase of fixed assets $ (510,552) $ (73,904)
Purchase of securities, AFS (1,521,014) (1,084,688)
Maturity and paydowns, AFS 1,611,747 1,102,000
(Increase) in loans, net (11,454,628) (9,144,939)
------------- ------------
Net cash used by investing
activities $ (11,874,447) $ (9,201,531)
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Cash flows from Financing
Activities:
Gain on sale of treasury
stock $ 4,820 $ - -
Increase in deposits 12,316,878 10,275,459
Payment of cash dividends (105,425) (98,957)
Exercise of stock warrants 105,000 - -
Decrease in lease obligations - - (15,186)
------------- ------------
Net cash provided from
financing activities $ 12,321,273 $ 10,161,316
------------- ------------
Net increase in cash and
cash equivalents $ 1,307,429 $ 1,375,055
Cash and cash equivalents,
beginning of period 5,020,621 6,112,819
------------- ------------
Cash and cash equivalents,
end of period $ 6,328,05 $ 7,487,874
============= ============
Refer to notes to the financial statements.
COMMUNITY NATIONAL BANCORPORATION
ASHBURN, GEORGIA
Notes to financial statements (Unaudited)
June 30, 1998
Note 1 - Basis of Presentation
The accompanying unaudited financial statements have been
prepared in accordance with generally accepted accounting
principles for interim financial information and with the
instructions to Form 10-QSB. Accordingly, they do not include
all the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the six-month period
ended June 30, 1998 are not necessarily indicative of the results
that may be expected for the year ending December 31, 1998. For
further information, refer to the financial statements and
footnotes included in the Company's annual report on Form 10-KSB
for the year ended December 31, 1997.
Note 2 - Organization of the Business
Community National Bancorporation, Ashburn, Georgia (the
"Company") was organized in August, 1989 to serve as a holding
company for a proposed de novo bank, Community National Bank,
Ashburn, Georgia (the "Bank"). The Bank was chartered and is
currently regulated by the Office of the Comptroller of the
Currency; its deposits are each insured up to $100,000, subject
to aggregation rules, by the Federal Deposit Insurance
Corporation. The Company purchased 100 percent of the Bank's
shares by injecting $3.3 million into the Bank's capital accounts
immediately prior to commencement of banking operations (August,
1990).
Note 3 - Summary of Significant Accounting Policies
Basis of Presentation and Reclassification. The consolidated
financial statements include the accounts of the Company and the
Bank. All significant intercompany accounts and transactions
have been eliminated in consolidation. Certain prior year
amounts have been reclassified to conform to the current year
presentation. Both earnings per share and shareholders' equity
for all periods presented were reclassified to allow for the
three-for-one stock split which was effected during the fourth
quarter of 1997.
Basis of Accounting. The accounting and reporting policies of
the Company conform to generally accepted accounting principles
and to general practices in the banking industry. In preparing
the financial statements, management is required to make
estimates and assumptions that affect the reported amounts of
assets and liabilities as of the date of the balance sheet and
revenues and expenses for the period. Actual results could
differ significantly from those estimates. Material estimates
that are particularly susceptible to significant change in the
near term relate to the determination of the allowance for loan
losses and the valuation of real estate acquired in connection
with foreclosures or in satisfaction of loans.
Investment Securities. The Company adopted Statement of
Financial Accounting Standards No. 115, "Accounting for Certain
Investment in Debt and Equity Securities" ("SFAS 115"). SFAS 115
requires investments in equity and debt securities to be
classified into three categories:
1. Held-to-maturity securities: These are securities which
the Company has the ability and intent to hold until maturity.
These securities are stated at cost, adjusted for amortization of
premiums and the accretion of discounts. As of December 31, 1997
and June 30, 1998, the Company had no securities in this
category.
2. Trading securities: These are securities which are
bought and held principally for the purpose of selling in the
near future. Trading securities are reported at fair market
value, and related unrealized gains and losses are recognized in
the income statement. As of December 31, 1997 and June 30, 1998,
the Company had no securities in this category.
3. Available-for-sale securities: These are securities
which are not classified as either held-to-maturity or as trading
securities. These securities are reported at fair market value.
Unrealized gains and losses are reported, net of tax, as separate
components of shareholders' equity. Unrealized gains and losses
are excluded from the income statement.
A decline below cost in the fair value of any available-for sale
or held-to-maturity security that is deemed other than temporary,
results in a charge to income and the establishment of a new cost
basis for the security.
Purchase premiums and discounts on investment securities are
amortized and accreted to interest income using the level yield
method on the outstanding principal balances. In establishing
the accretion of discounts and amortization of premiums, the
Company utilizes market based prepayment assumptions. Interest
and dividend income are recognized when earned. Realized gains
and losses for securities sold are included in income and are
derived using the specific identification method for determining
the costs of securities sold.
Loans, Interest and Fee Income on Loans. Loans are stated at the
principal balance outstanding. Unearned discount, unamortized
loan fees and the allowance for possible loan losses are deducted
from total loans in the statement of condition. Interest income
is recognized over the term of the loan based on the principal
amount outstanding. Points on real estate loans are taken into
income to the extent they represent the direct cost of initiating
a loan. The amount in excess of direct costs is deferred and
amortized over the expected life of the loan.
Accrual of interest on loans is discontinued either when
reasonable doubt exists as to the full or timely collection of
interest or principal or when a loan becomes contractually past
due by 90 days or more with respect to interest or principal.
When a loan is placed on non-accrual status, all interest
previously accrued but not collected is reversed against current
period interest income. Income on such loans is then recognized
only to the extent that cash is received and where the future
collection of principal is probable. Loans are returned to
accrual status only when they are brought fully current with
respect to interest and principal and when, in the judgment of
management, the loans are estimated to be fully collectible as to
both principal and interest.
The Company adopted Statement of Financial Accounting Standards
No. 114, "Accounting by Creditors for Impairment of a Loan," as
amended by SFAS 118, "Accounting for Impairment of a Loan -
Income Recognition and Disclosure". These standards require
impaired loans to be measured based on the present value of
expected future cash flows discounted at the loan's original
effective interest rate, or at the loan's observable market
price, or the fair value of the collateral if the loan is
collateral dependent. A loan is considered impaired when, based
on current information and events, it is probable that the
Company will be unable to collect all amounts due according to
the contractual terms of the note agreement. Cash receipts on
impaired loans which are accruing interest are applied to
principal and interest under the contractual terms of the loan
agreement. Cash receipts on impaired loans for which the accrual
of interest has been discontinued are applied to reduce the
principal amount of such loans until the principal has been
recovered and are recognized as interest income thereafter.
Allowance for Possible Loan Losses. The allowance for loan
losses is established through provisions charged to operations.
Such provisions are based on management's evaluation of the loan
portfolio under current economic conditions, past loan loss
experience, adequacy of underlying collateral, changes in the
nature and volume of the loan portfolio, review of specific
problem loans, and such other factors which, in management's
judgment, deserve recognition in estimating loan losses. Loans
are charged-off when, in the opinion of management, such loans
are deemed to be uncollectible. Subsequent recoveries are added
to the allowance.
Management believes that the allowance for loan losses is
adequate. While management uses available information to
recognize losses of loans, future additions to the allowance may
be necessary based on changes in economic conditions. In
addition, various regulatory agencies, as an integral part of
their examination process, periodically review the Company's
allowance for loan losses. Such agencies may require the Company
to recognize additions to the allowance for loan losses based on
their judgments about information available to them at the time
of their examination.
Property and Equipment. Building, furniture and equipment are
stated at cost, net of accumulated depreciation. Depreciation is
computed using the straight line method over the estimated useful
lives of the related assets. Maintenance and repairs are charged
to operations, while major improvements are capitalized. Upon
retirement, sale or other disposition of property and equipment,
the cost and accumulated depreciation are eliminated from the
accounts, and gain or loss is included in income from operations.
Income Taxes. The consolidated financial statements have been
prepared on the accrual basis. When income and expenses are
recognized in different periods for financial reporting purposes
and for purposes of computing income taxes currently payable,
deferred taxes are provided on such temporary differences. The
Company files a consolidated income tax return. Taxes are
accounted for in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes"
("SFAS 109"). Under SFAS 109, deferred tax assets and
liabilities are recognized for the expected future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities
are measured using the enacted tax rates expected to apply to
taxable income in the years in which those temporary differences
are expected to be realized or settled. Under SFAS 109, the
effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the
enactment date.
Statement of Cash Flows. For purposes of reporting cash flows,
cash and cash equivalents include cash on hand, amounts due from
banks and federal funds sold. Generally, federal funds are
purchased or sold for one day periods.
Earnings Per Share ("EPS"). The Company adopted Statement of
Financial Accounting Standard No. 128, "Earnings Per Share"
("SFAS 128"). SFAS 128 establishes standards for computing and
presenting EPS. Because the Company has a complex capital
structure, it is required to report: (i) basic EPS and (ii)
diluted EPS. Basic EPS is defined as the amount of earnings
available to each share of common stock outstanding during the
reporting period. Diluted EPS is defined as the amount of
earnings available both to each share of common stock outstanding
during the reporting period and to each share that would have
been outstanding assuming the issuance of common stock for all
dilutive potential common stock outstanding during the reporting
period.
Basic EPS is computed by dividing income available to common
shareholders by the weighted average number of common shares
outstanding during the period. Diluted EPS is computed assuming
the conversion of all warrants and options. For both six-month
periods ended June 30, 1998 and 1997, basic EPS amounted to $.50;
diluted EPS amounted to $.44.
Item 2 - Management Discussion and Analysis of Financial
Condition and Results of Operation.
Liquidity and sources of capital
- --------------------------------
Community National Bancorporation (the "Company") was organized
in August, 1989 and began banking operations through its wholly
owned subsidiary, Community National Bank (the "Bank"), on August
6, 1990. During the period from April, 1989 (inception) to
August 6, 1990, the Company was in the development stage and
devoted most of its efforts to organizing, incorporating,
planning, raising capital and recruiting personnel.
The Bank obtained the necessary approvals to open both its second
and third branches. The second branch ("Ashburn Branch") will be
located in Ashburn, Georgia, near the Bank's Main Office. The
Ashburn Branch, which is expected to open in September, 1998,
will relieve the high level of activity at the Main Office and
thus improve convenience to local customers. The third branch
("St. Marys Branch") will be located in St. Marys, Georgia,
approximately 150 miles from Ashburn, Georgia. St. Marys,
Georgia is currently experiencing a level of high economic
growth, which the Bank believes will improve both loan growth and
loan mix through operation of the St. Marys branch. It is
projected that the majority of the loans in St. Marys, Georgia
will be to commercial businesses and to homeowners purchasing
primary residences. Since the Bank's current loan portfolio is
concentrated in agricultural loans, loans from the St. Marys
Branch will diversify the portfolio and reduce the relative risk
of loan losses in the event that the farming industry experiences
a downturn. The opening of the St. Marys Branch is contingent
upon the successful completion of the sale of the Company's
common stock, which is detailed below.
In order to fund the anticipated growth resulting from the above
two branches and from its current offices, the Bank will need
capital over and above the retained earnings generated
internally. Consequently, the Company is offering to sell a
minimum of 300,000 shares and a maximum of 400,000 shares of its
no par common stock at a price of $10.00 per share. At least
$2.5 million of the funds raised in the offering will be injected
into the Bank's capital accounts. As of August 11, 1998 the
Company has received subscriptions for 233,159 shares of the
Company's common stock pursuant to the offering.
On August 6, 1990 the subsidiary Bank was capitalized with a $3.3
million injection from the Company. By June 30, 1998, the Bank's
capital had increased to $7.5 million through retained earnings.
This level of capitalization, as measured by the Bank's primary
regulator, the OCC, is adequate based on the following capital
ratios and guidelines.
Bank's Minimum required
June 30, 1998 by regulator
Leverage ratio 7.5% 4.0%
Risk weighted ratio 10.1% 8.0%
Total assets increased by $13.1 million to $104.7 million during
the six-month period ended June 30, 1998. The increase was
generated from higher deposits and profits. The additional funds
that were generated through growth were utilized primarily to
expand the loan portfolio by $11.3 million, increase cash and
cash equivalents by $1.3 million and acquire $.5 million in
property and equipment.
Liquidity is the Company's ability to meet all deposit
withdrawals immediately, while also providing for the credit
needs of customers. The June 30, 1998 financial statements
evidence a satisfactory liquidity position as total cash and cash
equivalents amounted to $6.3 million, representing 6.0% of total
assets. Investment securities amounted to $6.9 million,
representing 6.6% of total assets; these securities provide a
secondary source of liquidity since they can be converted into
cash in a timely manner. The subsidiary Bank is a member of the
Federal Reserve System and is maintaining relationships with
several correspondent banks and, thus, could obtain funds on
short notice. The Company's management closely monitors and
maintains appropriate levels of interest earning assets and
interest bearing liabilities, so that maturities of assets are
such that adequate funds are provided to meet customer
withdrawals and loan demand. There are no trends, demands,
commitments, events or uncertainties that will result in or are
reasonably likely to result in the Company's liquidity increasing
or decreasing in any material way.
Results of Operations
- ---------------------
Net income for the three months ended June 30, 1998 amounted to
$257,020 or $.22 per diluted share. For the three-month period
ended June 30, 1997, net income amounted to $238,822 or $.21 per
diluted share. Basic earnings per share for the three-month
periods ended June 30, 1998 and 1997 amounted to $.23 and $.22,
respectively. The primary reason for the increase in net income
for the three-month period ended June 30, 1998 as compared to the
three-month period ended June 30, 1997 is the $231,460 increase
in net interest income. This increase was due to a higher level
of earning assets. Other operating expenses increased by
$205,018 for the three-month period ended June 30, 1998 as
compared to the three-month period ended June 30, 1997. The
majority of the increase is due to (i) the Cordele Branch's
operating expenses, which are reflected only in 1998 quarters and
(ii) expenses associated with the Company's secondary stock
offering, which are reflected only in 1998 quarters as well.
For the six-month periods ended June 30, 1998 and 1997, net
income amounted to $546,514 and $522,524, respectively. Despite
the higher income in the first six-months of 1998, earnings per
share for both periods, 1998 and 1997 were identical. For both
six-month periods ended June 30, 1998 and 1997, diluted earnings
per share amounted to $.44, and basic earnings per share amounted
to $.50. Below is a more detailed discussion concerning results
of operations for the six-month periods ended June 30, 1998 and
1997.
a. Earning assets have increased from $84.0 million
at June 30, 1997 to $98.1 million at June 30, 1998. As a
consequence, net interest income, which represents the difference
between interest received on interest earning assets and interest
paid on interest bearing liabilities, has increased from
$2,034,006 to $2,529,241 for the same period one year later,
representing an increase of $495,235, or 24.3%.
b. Other income increased from $251,066 for the six-
month period ended June 30, 1997 to $271,008 for the six-month
period ended June 30, 1998. The above increase of $19,942
represents a 7.9% improvement. This increase is primarily due to
increased activity in transactional accounts due to a higher
deposit base.
c. Other operating expenses increased from
$1,011,373 for the six-month period ended June 30, 1997 to
$1,439,230 for the six-month period ended June 31, 1998. The
above increase amounting to $427,857 represents an increase of
42.3%. The primary reasons for the increase are as follows:
(i) The branch in Cordele, Georgia was not
operational during the first six months of 1997. Therefore, the
Cordele Branch's operating expenses, including salaries,
advertising, etc., are included only in the six-month and three-
month periods ended June 30, 1998.
(ii) During the first six-months of 1998,
the Company incurred significant expenses with respect to
obtaining approval to establish a branch in St. Marys, Georgia,
and for the filing of a Registration Statement requesting
permission to sell a minimum of 300,000 Company shares. These
expenses did not exist in 1997.
At June 30, 1998, the allowance for loan losses amounted to
$1,857,902, or 2.09% of gross loans, slightly higher than year-
end 1997. At December 31, 1997, the allowance amounted to
$1,565,923, or 2.02% of gross loans. Management considers the
allowance for loan losses to be adequate and sufficient to absorb
possible future losses; however, there can be no assurance that
charge-offs in future periods will not exceed the allowance for
loan losses or that additional provisions to the allowance will
not be required.
The Company is not aware of any current recommendation by the
regulatory authorities which, if they were to be implemented,
would have a material effect on the Company's liquidity, capital
resources, or results of operations.
Year 2000
- ---------
A critical issue affecting companies that rely extensively on
electronic data processing systems, such as the Company, is the
Year 2000 issue. The Year 2000 issue has arisen due to the
widespread use of computer programs that rely on two-digit date
codes to perform computations or decision making functions. Many
of these programs may fail as a result of their inability to
properly interpret date codes beginning January 1, 2000. For
example, such programs may misinterpret "00" as the year 1900
rather than the year 2000. In addition, some equipment being
controlled by microprocessor chips may not deal appropriately
with the year "00". This could result in a system failure or
miscalculations causing disruptions of operations, including
among other things, a temporary inability to process transactions
or engage in similar, normal business activities.
The Bank primarily uses a third-party vendor for processing its
primary banking applications. During 1997, the Bank formed an
internal task force to address the Year 2000 issue, conduct a
comprehensive review of the Bank's systems and ensure that the
Bank takes any necessary measures. The following items have been
assessed as of June 30, 1998: Computer hardware, security
systems, software applications, vault, ATM machine, telephone
banking and teller machines. All third-party vendors have been
contacted to provide assurances that their data processing
programs and systems are Year 2000 compliant now or will be well
in advance of the year 2000. The Company believes that its
systems and those of its data processing vendors are currently
Year 2000 compliant and does not believe that material
expenditures will be necessary to implement any further
modifications. However, there can be no assurances that
unforseen difficulties or costs will not arise. In addition,
there can be no assurance that systems of other companies on
which the Company's systems rely, such as the Bank's data
processing vendor, will be modified on a timely basis, or that
the failure by another company to properly modify its systems
will not negatively impact the Company's systems or operations.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
There are no material pending legal proceedings to
which the Company or the Bank is a party or of which any of their
property is the subject.
Item 2. Changes in Securities.
(a) None.
(b) None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
Registrant filed a Registration Statement on Form SB-2
with the Securities and Exchange Commission which Registration
Statement became effective May 11, 1998. Pursuant to the
Registration Statement, 400,000 shares of no par common stock
were registered for sale at an offering price of $10.00 per
share. As of August 10, 1998, registrant has continued to
solicit subscriptions for the common stock pursuant to the
offering.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
27 Financial Data Schedule
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter ended
June 30, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
COMMUNITY NATIONAL BANCORPORATION, INC.
(Registrant)
Date: August 12, 1998
BY: /s/
T. Brinson Brock
President and Chief Executive Officer
(Principal Executive, Financial and Accounting Officer)
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<FISCAL-YEAR-END> DEC-30-1998
<PERIOD-END> JUN-30-1998
<CASH> 2,148,050
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 4,180,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 6,949,469
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<INTEREST-LOAN> 4,552,840
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<INTEREST-OTHER> 0
<INTEREST-TOTAL> 4,837,477
<INTEREST-DEPOSIT> 2,308,236
<INTEREST-EXPENSE> 2,308,236
<INTEREST-INCOME-NET> 2,529,241
<LOAN-LOSSES> 300,000
<SECURITIES-GAINS> 3,728
<EXPENSE-OTHER> 1,439,230
<INCOME-PRETAX> 1,061,019
<INCOME-PRE-EXTRAORDINARY> 1,061,019
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 546,514
<EPS-PRIMARY> .50
<EPS-DILUTED> .44
<YIELD-ACTUAL> 5.3
<LOANS-NON> 16,257
<LOANS-PAST> 3,328
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 407,155
<ALLOWANCE-OPEN> 1,565,923
<CHARGE-OFFS> 55,687
<RECOVERIES> 47,666
<ALLOWANCE-CLOSE> 1,857,902
<ALLOWANCE-DOMESTIC> 1,840,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 17,902
</TABLE>
