UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.   20549



FORM 10-KSB



(Mark One)



(  X  )

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934



For the fiscal year ended December 31, 2004



(      )

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934



For the transition period from

to





Commission File Number  000-33157



Community National Corporation

(Exact name of registrant as specified in its charter)



Ohio            31-1724230

(State or other jurisdiction of            (I.R.S. Employer

incorporation or organization)     identification Number)



1400 East Second Street, Franklin, Ohio   45005

(Address of principal executive offices, including Zip Code)



(937) 746-1520

(Registrant's telephone number, including area code)





Securities registered pursuant to Section 12(b) of the Act:    NONE



Securities registered pursuant to 12(g) of the Act:



Common shares, without par value

(Title of Class)





Check whether issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.



Yes  X No



Page 1





Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained herein, and no disclosure will be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.   [X]



The issuer's revenues for its most recent fiscal year were $8,251,000.



The issuer's common shares are quoted on the Over The Counter Bulletin Board Service maintained by NASDAQ under the symbol CMNC. Management is aware of a sale of the issuer's shares for $27.35 per share on January 18, 2005.  Based upon such price, the aggregate market value of the issuer's shares held by non-affiliates was $12,352,819.



As of January 31, 2005, 639,660 common shares were issued and outstanding.









DOCUMENTS INCORPORATED BY REFERENCE



The following sections of the definitive Proxy Statement for the 2005 Annual Meeting of Shareholders of Community National Corporation, Inc. (the "Proxy Statement"), are incorporated by reference into Part III of this Form 10-KSB:



1.

Section 16(a) Beneficial Ownership Reporting Compliance;

2.

Compensation of Executive Officers and Directors;

3.

Voting Securities and Ownership of Certain Beneficial Owners and Management;

4.

Certain Relationships and Related Transactions; and

5.

Principal Accountant Fees and Services





Transitional Small Business Issuer Format     [  ] Yes    [X] No







Page 2



|COMMUNITY NATIONAL CORPORATION                                                                          
|--------------------------------------------------------------------------------------------------------
|For the Year Ended December 31, 2004                                                                    
|                                                                                                        
|TABLE OF CONTENTS                                                                                       
|                                                                                                        
|                                                                                                        
|PART I                                                                                                  
|                                                                                                        
|Item 1.    Description of Business                                                                      
|Item 2.    Properties                                                                                   
|Item 3.    Legal Proceedings                                                                            
|Item 4.    Submission of Matters to a Vote of Security Holders                                          
|                                                                                                        
|PART II                                                                                                 
|                                                                                                        
|Item 5.    Market for Registrant's Common Equity and Related
Stockholder Matters                        
|Item 6.    Management's Discussion and Analysis of Financial Condition
and Results of Operations        
|Item 7.    Financial Statements                                                                         
|Item 8.    Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure         
|Item 8A.  Controls and Procedures                                                                       
|Item 8B.  Other Information                                                                             
|                                                                                                        
|PART III                                                                                                
|                                                                                                        
|Item 9.    Directors and Executive Officers of the Registrant                                           
|Item 10.  Executive Compensation                                                                        
|Item 11.  Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
|Item 12.  Certain Relationships and Related Transactions                                                
|Item 13.  Exhibits and Reports on Form 8-K                                                              
|Item 14.  Principal Accountant Fees and Services                                                        
|                                                                                                        
|Signatures                                                                                              
|Exhibit Index                                                                                           
|                                                                                                        
|                                                                                                        
|                                                                                                        



Page 3





PART I





ITEM 1.  DESCRIPTION OF BUSINESS



GENERAL



Community National Corporation (the "Company" or "CNC"), an Ohio corporation, is a bank holding company which owns all of the issued and outstanding common shares of The Community National Bank (the "Bank"), chartered under the laws of the United States.  The Bank was incorporated in 1983 as a local independent bank to serve the people and businesses of the Franklin/Springboro/Carlisle area.  CNC was incorporated in 2000 and organized in 2001.  Community National Bank was reorganized into a bank holding company structure in 2001 and is now operated as the wholly owned bank subsidiary of CNC.



On June 25, 2004, the Bank acquired two branch locations and the associated deposits from First National Bank of Germantown (FNB).  The acquisition allowed the Bank to expand its presence in the Warren/Butler County area in southwestern Ohio.  CNC now operates 5 full-service banking centers.



The Bank is engaged in the commercial banking business in southwestern Ohio, providing a variety of consumer and commercial financial services.  The primary business of the Bank consists of providing such customary banking services as checking and savings accounts, various types of time deposits, safe deposit facilities, money transfers, and individual retirement accounts.  The Bank also finances consumer and commercial transactions, makes secured and unsecured loans, and provides other financial services to its customers through the Bank.  As part of its lending services, the Bank operates a loan production office in southeastern Ohio.



Because of its ownership of all the outstanding stock of the Bank, Community National Corporation is subject to regulation, examination and oversight by the Board of Governors of the Federal Reserve System (the "FRB") under the Bank Holding Company Act of 1956, as amended (the "BHCA").  The Bank, as a national bank, is subject to regulation, examination and oversight by the Office of the Comptroller of the Currency (the "OCC") and special examination by the FRB. The Bank is a member of the Federal Reserve Bank of Cleveland.  In addition, because its deposits are insured by the Federal Deposit Insurance Corporation (the "FDIC"), the Bank is also subject to regulation, oversight and special examination by the FDIC.  CNC and the Bank must file periodic financial reports with the FDIC, the OCC and the Federal Reserve Bank of Cleveland.  Examinations are conducted periodically by these federal regulators to determine whether the Company and Bank are in compliance with various regulatory requirements and are operating in a safe and sound manner.



Since its incorporation, Community National Corporation's activities have been limited to holding the common shares of the Bank.  Consequently, the following discussion focuses primarily on the business of the Bank.



The Bank functions in a highly competitive environment.  In addition to other commercial banks, savings and loans, and savings banks, the Bank must also contend with other providers of financial services including finance companies, credit unions and insurance companies.  Despite having access to less resources and smaller lending limits, the Bank remains competitive in its service area with respect to interest rates and fees charged on loans, interest rates paid on time and savings deposits, and service charges on deposit accounts.  The deposit base of the Bank is relatively stable whereby seasonal fluctuations in the amount of deposits have not been experienced. All of the Bank's deposits emanate from inside the United States.

FORWARD-LOOKING STATEMENTS



In addition to the historic financial information contained herein with respect to CNC, the following discussion contains forward-looking statements that involve risks and uncertainties.  Economic circumstances, operations and actual results could differ significantly from those discussed in the forward-looking statements.  Some of the factors that could cause or contribute to such differences are discussed herein but also include changes in the economy and interest rates in the nation and CNC's general market area.  The forward-looking statements contained herein include those with respect to the following matters:



1.

Management's expectation that it will continue to expand its commercial and consumer lending activities;

2.

Management's determination of the adequacy of the loan loss allowance;

3.

The effect of changes in interest rates;

4.

Growth in the real estate and commercial loan portfolio; and

5.

Management's belief that a substantial percentage of the certificates of deposit maturing within one year will renew with the Bank at maturity.





LENDING ACTIVITIES



GENERAL

The Bank's income consists primarily of interest income generated by lending activities, including the origination of loans secured by residential and nonresidential real estate, commercial, and consumer loans.  The following table summarizes the distribution of the loan portfolio for the years indicated (dollars in thousands):



|                                 |   | At December 31,
|-------------------------------- | - | ---------------
|                                 |   | 2004           
|                                 |   |                
|                                 |   | Amount         
|                                 |   |                
|Commercial and industrial        | $ | 3,493          
|Real estate - construction       |   | 1,272          
|Real estate - mortgage           |   | 88,705         
|Installment loans to individuals |   | 4,687          
|Total loans                      | $ | 98,157         
|                                 |   |                
|Deferred net origination costs   |   | (3)            
|Allowance for loan losses        |   | (1,002)        
|Net loans                        | $ | 97,152         



The Bank's lending policy requires the application and satisfaction of certain underwriting standards prior to funding any loan, among which are documentation requirements to include credit and collateral value analysis.  Credit qualification entails evaluation of business cash flows or consumer income available to service debt payments.  Secondary sources of repayment, including collateral and guarantees, may be requested as well.  Lending opportunities typically are restricted to the market areas the Bank's branches serve.

Page 4





The Bank's lending strategy has historically focused on the origination of a mixture in its portfolio of commercial loans, one-to-four family mortgage loans and, to a lesser extent, working capital loans in the form of credit lines and term notes, personal loans, and home equity loans.  Commercial real estate loans are granted for the acquisition or improvement of real property.  Generally, commercial real estate loans do not exceed 75% of the appraised value of the property pledged to secure the transaction.  With repayment typically contingent upon successful operation of the subject real estate, this is carefully scrutinized prior to approval.



Real estate construction loans are granted for the purpose of construction improvements to real property, both commercial and residential.  Real estate loans secured by one-to-four family residential housing properties are granted subject to statutory limits regarding the maximum percentage of appraised value of the mortgaged property.  Residential loan terms are normally established based upon factors such as interest rates in general, the supply of money available to the Bank and the demand for such loans.



Consumer loans represent the extension of financing to customers for personal expenditures or household purposes.  Creditworthiness is evaluated on the basis of projected repayment capacity as well as credit history.  Such loans are granted in the form of installment or revolving transactions.



LOAN MATURITY SCHEDULE

The following table sets forth certain information at December 31, 2004, regarding the net dollar amount of commercial and industrial and real estate construction loans maturing in the Bank's portfolio, based on contractual terms to maturity.  Loans having no stated schedule of repayment and no stated maturity and overdrafts are reported as due in one year or less:



|                           | Due 0-1 | Due 1-5        | Due 5+ |       |      
|-------------------------- | ------- | -------------- | ------ | ----- | -----
|                           |         | Year           |        | Years | Years
|                           |         | (In thousands)
|                           |         |                |        |       |      
|Commercial and industrial  | $       | 1,588          |        |       | 1,287
|Real estate - construction |         | 1,272          |        |       | -    
|Total                      | $       | 2,860          |        |       | 1,287



The following table sets forth the dollar amount of certain loans, due after one year from December 31, 2004, which have predetermined interest rates and floating or adjustable interest rates:



|                           | Predetermined | Floating or      |  |      
|-------------------------- | ------------- | ---------------- |  | -----
|                           | Rate          | adjustable rates |  | Total
|                           |               | (In thousands)  
|                           |               |                  |  |      
|Commercial and industrial  | $             | 1,889            |  |      
|Real estate - construction |               | -                |  |      
|Total                      | $             | 1,889            |  |      



LOAN PROCESSING

Loan officers are authorized by the Board of Directors to approve loans up to specified limits.  Loans exceeding the loan officers' approval authority are referred to the Bank's Loan Committee.  Any loans made by the Bank in excess of the limits established for the Loan Committee must be approved by the Board of Directors.  All new loans are reported to the Board on a monthly basis.





Page 5



LOAN ORIGINATIONS, PURCHASES AND SALES

Fixed-rate and adjustable rate residential real estate loans are also originated for sale in the secondary market.



DELINQUENT LOANS, NON-PERFORMING ASSETS AND CLASSIFIED ASSETS

The Bank attempts to minimize loan delinquencies through aggressive collection efforts.  When a borrower fails to make a required payment on a loan, the Bank attempts to cause the deficiency to be cured by contacting the borrower.  In most cases, deficiencies are cured promptly.



Generally, when a real estate loan becomes delinquent more than 90 days, an evaluation of the collateral is performed.  When deemed appropriate by management, the Bank institutes action to foreclose on the real estate or to acquire the real estate by deed in lieu of foreclosure.  A decision as to whether and when to initiate foreclosure proceedings is based on such factors as the amount of the outstanding loan in relation to the original indebtedness, the extent of the delinquency and the borrower's ability and willingness to cooperate in curing delinquencies.  If a foreclosure occurs, the real estate is sold at public sale and may be purchased by the Bank.  Installment loans are generally charged off if four payments have been missed.  Generally, all other loans are placed on non-accrual status if they are 90 days or more delinquent.  A loan may remain on accrual status after it is 90 days delinquent if it is reasonably certain the account will be settled in its entirety or brought current within a 30-day period.  Cash payments received on non-accrual loans are applied against principal until the balance is repaid.  Any remaining payments are credited to earnings.  Non-performing loans include non-accrual loans and loans past due ninety days or more.



The following table sets forth certain information regarding the past due, non-accrual and renegotiated loans of the Bank at the dates indicated:



|                                                  |   | At December 31,
|------------------------------------------------- | - | ---------------
|                                                  |   | 2004           
|                                                  |   | (In thousands) 
|                                                  |   |                
|Loans accounted for on non-accrual basis          | $ | 1,252          
|Accruing loans which are past due 90 days or more |   | 20             
|Renegotiated loans                                |   | -              
|Total                                             | $ | 1,272          



If interest on non-accrual loans had been recognized during 2004, such income would have been $110,000.  Interest income recognized was $33,000 in 2004.



Real estate acquired or deemed acquired by the Bank as a result of foreclosure proceedings is classified as other real estate owned ("OREO") until it is sold.  Interest accrual, if any, ceases no later than the date

of acquisition of the real estate, and all costs incurred from such date in maintaining the property are expensed.  Costs relating to the development and improvement of the property are capitalized.  OREO is recorded by the Bank at the lower of cost or fair value less estimated costs of disposal, and any resulting write-down is charged to the allowance for loan losses.





Page 6





ALLOWANCE FOR LOAN LOSSES

Federal regulations require that the Bank establish prudent general allowances for loan losses.  Management, with oversight responsibility provided by the Board of Directors, reviews on a monthly basis the allowance for loan losses as it relates to a number of relevant factors, including, but not limited to, historical charge off trends, the volume and quality of the loan portfolio, review of specific problem loans, and current economic conditions that may affect the borrower's ability to pay.   At December 31, 2004, the Bank's allowance for loan losses totaled $1,002,000.



The following table sets forth an analysis of the Bank's allowance for losses on loans for the periods indicated:



|                                                                        |   | December 31,          
|----------------------------------------------------------------------- | - | ----------------------
|                                                                        |   | 2004                  
|                                                                        |   | (Dollars in thousands)
|                                                                        |   |                       
|Balance at beginning of period                                          | $ | 887                   
|                                                                        |   |                       
|Charge-offs:                                                            |   |                       
|Commercial and industrial                                               |   | 65                    
|Commercial real estate                                                  |   | 44                    
|Residential real estate                                                 |   | -                     
|Installment                                                             |   | 79                    
|Total charge-offs                                                       |   | 188                   
|                                                                        |   |                       
|Recoveries:                                                             |   |                       
|Commercial and residential                                              |   | 19                    
|Installment                                                             |   | 54                    
|Total recoveries                                                        |   | 73                    
|                                                                        |   |                       
|Net charge-offs                                                         |   | 115                   
|Provision for possible loan losses                                      |   | 230                   
|Balance at end of period                                                | $ | 1,002                 
|                                                                        |   |                       
|Ratio of net charge-offs to average loans
outstanding during the period |   | 0.1%                  
|Average loans outstanding                                               | $ | 97,267                



Because the loan loss allowance is based on estimates, it is monitored regularly and adjusted as necessary to provide an adequate allowance.

Page 7





INVESTMENT ACTIVITIES



The following table presents the amortized cost of securities for the years indicated:



|                                    |   | At December 31,
|----------------------------------- | - | ---------------
|                                    |   | 2004           
|                                    |   | (In thousands) 
|Securities available-for-sale:      |   |                
|U.S. Treasury and Agency Securities | $ | 16,342         
|Mortgage Backed Securities          |   | 7,433          
|Total securities available-for-sale |   | 23,775         
|                                    |   |                
|Federal Reserve Bank                |   | 53             
|Federal Home Loan Bank              |   | 369            
|Total securities                    | $ | 24,197         



Contractual maturities of debt securities at December 31, 2004, were as follows.  Actual maturities may differ from contractual maturities when issuers have the right to call or prepay obligations.



|                                          | Amortized |                        | Market |  |        | 
|----------------------------------------- | --------- | ---------------------- | ------ |  | ------ | 
|                                          |           | Cost                   |        |  | Value  | 
|                                          |           | (Dollars in thousands)
|U.S. Treasury and Agency Securities:      |           |                        |        |  |        | 
|Within one year                           | $         | 15,942                 |        |  | 15,847 | 
|One to five years                         |           | 400                    |        |  | 396    | 
|Total U.S. Treasury and
Agency Securities |           | 16,342                 |        |  | 16,243 | 
|                                          |           |                        |        |  |        | 
|Mortgage Backed Securities                |           | 7,433                  |        |  | 7,361  | 
|                                          | $         | 23,775                 |        |  | 23,604 | 





DEPOSITS AND BORROWINGS



GENERAL

Deposits have traditionally been the primary source of the Bank's funds for use in lending and other investment activities.  In addition to deposits, the Bank derives funds from interest payments and principal repayments on loans and income on earning assets.  Loan payments are a relatively stable source of funds, while deposit inflows and outflows fluctuate more in response to general interest rates and money market conditions.





Page 8





DEPOSITS

Community National Bank offers a full range of interest-bearing and non-interest-bearing accounts, including commercial and retail checking accounts, money market accounts, individual retirement accounts, regular interest-bearing statement savings accounts and certificates of deposit with fixed and variable rates and a range of maturity date options.  The sources of deposits are residents, businesses and employees of businesses within the Bank's market area, obtained through the personal solicitation of its officers and directors, direct mail solicitation and advertisements published in the local media.  The Bank pays competitive interest rates on time and savings deposits up to the maximum permitted by law or regulation.  In addition, the Bank has implemented a service charge fee schedule competitive with other financial institutions in the market area, covering such matters as maintenance fees on checking accounts, per item processing fees on checking accounts, returned check charges, etc.



The following table sets forth the dollar amount of deposits in the various types of products offered by the Bank as of December 31:



|                          |   | Percent of             |       | Percent of
|------------------------- | - | ---------------------- | ----- | ----------
|                          |   | 2004                   | Total | 2003      
|                          |   | (Dollars in thousands)
|                          |   |                        |       |           
|Demand                    | $ | 17,011                 |       | 14.0%     
|NOW                       |   | 25,567                 |       | 21.0%     
|Savings                   |   | 19,701                 |       | 16.2%     
|Money market deposit      |   | 1,053                  |       | 0.8%      
|CDs less than $100,000    |   | 33,705                 |       | 27.7%     
|CDs greater than $100,000 |   | 24,782                 |       | 20.3%     
|Total deposits            | $ | 121,819                |       | 100.0%    



The following table sets forth the dollar amount of time deposits greater than $100,000 maturing in the periods indicated:



|Maturity                   | At December 31, 2004
|-------------------------- | --------------------
|                           | (In thousands)      
|                           |                     
|Three month or less        | $                   
|Over 3 months to 6 months  |                     
|Over 6 months to 12 months |                     
|Over twelve months         |                     
|Total                      | $                   





Page 9





ASSET AND LIABILITY MANAGEMENT



The Bank manages its assets and liabilities to provide an optimum and stable net interest margin, a profitable after-tax return on assets and return on equity, and adequate liquidity.  These management functions are conducted within the framework of written loan and investment policies adopted by the Bank.  The Bank attempts to maintain a balanced position between rate sensitive assets and rate sensitive liabilities.  Specifically, it charts assets and liabilities on a matrix by maturity, effective duration, and interest adjustment period, and endeavors to manage any gaps in maturity ranges.





AVERAGE BALANCE SHEETS



The following table presents, for the years indicated, the total dollar amounts of interest from average interest-earning assets and the resultant yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and rates.  The table does not reflect any effect of income taxes and includes non-performing loans in the calculations.





Page 10



|                                                                 |             |                          |          |      |         |             |         |          |  |         |         |  |  |         |  |   |       | 
|---------------------------------------------------------------- | ----------- | ------------------------ | -------- | ---- | ------- | ----------- | ------- | -------- |  | ------- | ------- |  |  | ------- |  | - | ----- | 
|                                                                 |             | Years ended December 31,
|                                                                 |             | (Dollars in thousands)  
|                                                                 |             | 2004                     |          | 2003
|                                                                 | Average     | Average                  | Interest |      | Average |             | Average | Interest
|                                                                 | Outstanding |                          | Yield/   |      | Earned/ | Outstanding |         | Yield/   |  | Earned/
|                                                                 |             | Balance                  |          |      | Rate    |             |         | Paid     |  |         | Balance |  |  | Rate    |  |   | Paid  | 
|                                                                 |             |                          |          |      |         |             |         |          |  |         |         |  |  |         |  |   |       | 
|Loans                                                            | $           | 97,267                   |          |      | 6.50%   |             | $       | 6,327    |  | $       | 86,528  |  |  | 7.13%   |  | $ | 6,172 | 
|Federal funds sold                                               |             | 3,964                    |          |      | 1.46%   |             |         | 58       |  |         | 1,705   |  |  | 1.11%   |  |   | 19    | 
|Deposits in bank                                                 |             | 102                      |          |      | 1.96%   |             |         | 2        |  |         | 102     |  |  | 1.96%   |  |   | 2     | 
|Investments securities:                                          |             |                          |          |      |         |             |         |          |  |         |         |  |  |         |  |   |       | 
|Taxable                                                          |             | 22,078                   |          |      | 2.86%   |             |         | 631      |  |         | 21,924  |  |  | 2.74%   |  |   | 600   | 
|Other securities                                                 |             | 413                      |          |      | 5.57%   |             |         | 23       |  |         | 399     |  |  | 4.26%   |  |   | 17    | 
|Total earning assets                                             |             | 123,824                  |          |      | 5.69%   |             |         | 7,041    |  |         | 110,658 |  |  | 6.15%   |  |   | 6,810 | 
|                                                                 |             |                          |          |      |         |             |         |          |  |         |         |  |  |         |  |   |       | 
|Non-earning assets                                               |             | 10,503                   |          |      |         |             |         |          |  |         | 10,259  |  |  |         |  |   |       | 
|Allowance for loan losses                                        |             | (962)                    |          |      |         |             |         |          |  |         | (840)   |  |  |         |  |   |       | 
|Total assets                                                     | $           | 133,365                  |          |      |         |             |         |          |  | $       | 120,077 |  |  |         |  |   |       | 
|                                                                 |             |                          |          |      |         |             |         |          |  |         |         |  |  |         |  |   |       | 
|Savings deposits                                                 | $           | 19,511                   |          |      | 0.69%   |             |         | 135      |  | $       | 16,567  |  |  | 0.85%   |  |   | 140   | 
|NOW and money fund                                               |             | 26,093                   |          |      | 2.29%   |             |         | 598      |  |         | 25,555  |  |  | 1.85%   |  |   | 473   | 
|IRA and time certificates                                        |             | 58,175                   |          |      | 2.27%   |             |         | 1,321    |  |         | 52,346  |  |  | 2.59%   |  |   | 1,357 | 
|Short-term borrowings                                            |             | 1,176                    |          |      | 1.28%   |             |         | 15       |  |         | 823     |  |  | 1.46%   |  |   | 12    | 
|Total interest-bearing liabilities                               |             | 104,955                  |          |      | 1.97%   |             |         | 2,069    |  |         | 95,291  |  |  | 2.08%   |  |   | 1,982 | 
|                                                                 |             |                          |          |      |         |             |         |          |  |         |         |  |  |         |  |   |       | 
|Demand deposits                                                  |             | 15,749                   |          |      |         |             |         |          |  |         | 12,930  |  |  |         |  |   |       | 
|Total deposits                                                   |             | 120,704                  |          |      |         |             |         |          |  |         | 108,221 |  |  |         |  |   |       | 
|                                                                 |             |                          |          |      |         |             |         |          |  |         |         |  |  |         |  |   |       | 
|Other liabilities                                                |             | 527                      |          |      |         |             |         |          |  |         | 562     |  |  |         |  |   |       | 
|Capital                                                          |             | 12,134                   |          |      |         |             |         |          |  |         | 11,294  |  |  |         |  |   |       | 
|Total liabilities and capital                                    | $           | 133,365                  |          |      |         |             |         |          |  | $       | 120,077 |  |  |         |  |   |       | 
|                                                                 |             |                          |          |      |         |             |         |          |  |         |         |  |  |         |  |   |       | 
|Net interest rate spread                                         |             |                          |          |      | 3.72%   |             | $       | 4,972    |  |         |         |  |  | 4.07%   |  | $ | 4,828 | 
|                                                                 |             |                          |          |      |         |             |         |          |  |         |         |  |  |         |  |   |       | 
|Net interest margin on a tax
equivalent basis                    |             |                          |          |      | 4.02%   |             |         |          |  |         |         |  |  | 4.36%   |  |   |       | 
|Ratio of interest-earning assets to
interest-bearing liabilities |             |                          |          |      | 117.98% |             |         |          |  |         |         |  |  | 116.13% |  |   |       | 
|                                                                 |             |                          |          |      |         |             |         |          |  |         |         |  |  |         |  |   |       | 
|                                                                

Page 11





The following table describes the extent to which the changes in interest rates and changes in volume of interest-related assets and liabilities have affected the Bank's interest income and expense during the periods indicated.  For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (i) changes in volume (the difference between the average volume for the periods compared, multiplied by the prior year's yield or rate paid), (ii) changes in rate (the difference between the weighted average yield or rate paid for the periods compared, multiplied by the prior year's average volume) and (iii) changes not solely attributable to either volume or rate.



|                                   | Years ended December 31,  
|---------------------------------- | --------------------------
|                                   | 2004 vs. 2003             
|                                   | Increase (decrease) due to
|                                   |                           
|                                   | Volume                    
|                                   |                           
|Interest income attributable to:   |                           
|Loans                              | $                         
|Federal funds sold                 |                           
|Deposits in banks                  |                           
|Investment securities              |                           
|Other securities                   |                           
|Total interest-earning assets      |                           
|                                   |                           
|Interest expense attributable to:  |                           
|Savings deposits                   |                           
|NOW and MMDA                       |                           
|Time deposits                      |                           
|Short-term borrowings              |                           
|Long-term debt                     |                           
|Total interest-bearing liabilities |                           
|Net interest income                | $                         





COMPETITION



The Bank functions in a highly competitive environment.  In addition to other commercial banks, savings and loans, and savings banks, the Bank must also contend with other providers of financial services, including finance companies, credit unions and insurance companies.  Despite having access to fewer resources and smaller lending limits, the Bank remains competitive in its service area with respect to interest rates and fees charged on loans, interest rates paid on time and savings deposits, and service charges on deposit accounts.  The deposit base of the Bank is relatively stable whereby seasonal fluctuations in the amount of deposits have not been experienced.  All of the Bank's deposits emanate from inside the United States.





Page 12





EMPLOYEES



At December 31, 2004, the Company employed 43 full-time employees and 4 part-time employees.  The Company considers its relationship with its employees to be good.





REGULATION



GENERAL

Because of its ownership of all the outstanding stock of the Bank, CNC is also subject to regulation, examination and oversight by the FRB as a bank holding company under the BHCA.  The Bank, as a national bank, is subject to regulation, examination and oversight by the OCC and special examination by the FRB.  The Bank is a member of the Federal Reserve Bank of Cleveland.  In addition, since its deposits are insured by the FDIC, the Bank is also subject to some regulation, oversight and special examination by the FDIC.  The Bank must file periodic financial reports with the FDIC, the OCC and the Federal Reserve Bank of Cleveland.



BANK HOLDING COMPANY REGULATION

As a bank holding company, CNC may be subject to restrictions on share repurchases.



The FRB has also adopted capital adequacy guidelines for bank holding companies, pursuant to which, on a consolidated basis, Community National Bank must maintain total capital of at least 8% of risk-weighted assets.  Risk-weighted assets consist of all assets, plus credit equivalent amounts of certain off-balance sheet items, which are weighted at percentage levels ranging from 0% to 100%, based on the relative credit risk of the asset.  At least half of the total capital to meet this risk-based requirement must consist of core or "Tier 1" capital, which includes common stockholders' equity, qualifying perpetual preferred stock (up to 25% of Tier 1 capital) and minority interests in the equity accounts of consolidated subsidiaries, less goodwill.  The remainder of total capital may consist of supplementary or "Tier 2" capital.  In addition to this risk-based capital requirement, the FRB requires bank holding companies to meet a leverage ratio of a minimum level of Tier 1 capital to average total consolidated assets of 3%, if they have the highest regulatory examination rating, well-diversified risk and minimal anticipated growth or expansion.  All other bank holding companies are expected to maintain a leverage ratio of at least 4% of average total consolidated assets.  Community National Bank was in compliance with these capital requirements at December 31, 2004.  For Community National Bank's capital ratios, see Note 13 to the Consolidated Financial Statements in Item 7.



The BHCA restricts CNC's ownership or control of the outstanding shares of any class of voting stock of any company engaged in a non-banking business, other than companies engaged in certain activities determined by the FRB to be closely related to banking.  In addition, the FRB has the authority to require a bank holding company to terminate any activity or relinquish control of any non-bank subsidiary (other than a non-bank subsidiary of a bank) upon the determination by the FRB that such activity or control constitutes a serious risk to the financial soundness and stability of any bank subsidiary of the bank holding company.  CNC currently does not have any non-bank subsidiaries.  The ownership of subsidiaries of the Bank is regulated by the OCC, rather than the FRB.





Page 13





On November 12, 1999, the Gramm-Leach-Bliley Act (also known as the Financial Services Modernization Act of 1999) was signed into law.  The Financial Services Modernization Act permits, since March 11, 2000, bank holding companies to become financial holding companies and thereby affiliate with securities firms and insurance companies and engage in other activities that are financial in nature.  A bank holding company may become a financial holding company if each of its subsidiary banks is well-capitalized under the Federal Deposit Insurance Corporation Act of 1991, prompt corrective action provisions are well managed, and the company has at least a satisfactory rating under the Community Reinvestment Act.  The company must file a declaration that the bank holding company wishes to become a financial holding company.  No regulatory approval will be required for a financial holding company to acquire a company, other than a bank or savings association, engaged in activities that are financial in nature or incidental to activities that are financial in nature, as determined by the Federal Reserve Board.



The Financial Services Modernization Act defines "financial in nature" to include:



·

securities underwriting, dealing and market making;

·

sponsoring mutual funds and investment companies;

·

insurance underwriting and agency;

·

merchant banking; and

·

activities that the Federal Reserve Board has determined to be closely related to banking.



A national bank also may engage, subject to limitations on investment, in activities that are financial in nature, other than insurance underwriting, insurance company portfolio investment, real estate development and real estate investment, through a financial subsidiary of the bank, if the bank is well-capitalized, well-managed and has at least a satisfactory Community Reinvestment Act rating.  Subsidiary banks of a financial holding company or national banks with financial subsidiaries must continue to be well-capitalized and well-managed in order to continue to engage in activities that are financial in nature without regulatory actions or restrictions, which could include divestiture of the financial in nature subsidiary or subsidiaries.  In addition, a financial holding company or a bank may not acquire a company that is engaged in activities that are financial in nature unless each of the subsidiary banks of the financial holding company or the bank has a Community Reinvestment Act rating of satisfactory or better.



CNC has not elected to become a financial holding company nor has the Bank elected to form a financial subsidiary.



Transactions between CNC and the Bank are subject to statutory limits in Sections 23A and 23B of the Federal Reserve Act (the "FRA").  See National Bank Regulation -- "Office of the Comptroller of the Currency."



The FRB must approve the application of a bank holding company to acquire any bank or savings association.





Page 14





NATIONAL BANK REGULATION



OFFICE OF THE COMPTROLLER OF THE CURRENCY.  The OCC is an office in the Department of the Treasury and is subject to the general oversight of the Secretary of the Treasury.  The OCC is responsible for the regulation and supervision of all national banks, including the Bank.  The OCC issues regulations governing the operation of national banks and, in accordance with federal law, prescribes the permissible investments and activities of national banks.  National banks are subject to regulatory oversight under various consumer protection and fair lending laws.  These laws govern, among other things, truth-in-lending disclosure, equal credit opportunity, fair credit reporting and community reinvestment.



The Bank is required to meet certain minimum capital requirements set by the OCC.  These requirements consist of risk-based capital guidelines and a leverage ratio, which are substantially the same as the capital requirements imposed on the Company.  The Bank was in compliance with those capital requirements at December 31, 2004.  For the Bank capital ratios, see Note 13 to the Consolidated Financial Statements in Item 7.  The OCC may adjust the risk-based capital requirement of a national bank on an individualized basis to take into account risks due to concentrations of credit or nontraditional activities.



The OCC has adopted regulations governing prompt corrective action to resolve the problems of capital deficient and otherwise troubled national banks.  At each successively lower defined capital category, a national bank is subject to more restrictive and numerous mandatory or discretionary regulatory actions or limits, and the OCC has less flexibility in determining how to resolve the problems of the institution.  In addition, the OCC generally can downgrade a national bank's capital category, notwithstanding its capital level, if, after notice and opportunity for hearing, the national bank is deemed to be engaging in an unsafe or unsound practice, because it has not corrected deficiencies that resulted in it receiving a less than satisfactory examination rating on matters other than capital or it is deemed to be in an unsafe or unsound condition.  The Bank's capital at December 31, 2004, met the standards for the highest capital category, a well-capitalized bank.



A national bank is subject to restrictions on the payment of dividends, including dividends to a holding company.  A dividend may not be paid if it would cause the bank to fail to meet its capital requirements.  In addition, the dividends that a Bank subsidiary can pay to its holding company without prior approval of regulatory agencies is limited to net income plus its retained net income for the preceding two years.  Based on the current financial condition of the Bank, these provisions are not expected to affect the current ability of the Bank to pay dividends to CNC in an amount customary for the Bank.



OCC regulations generally limit the aggregate amount that a national bank can lend to one borrower or aggregated groups of related borrowers to an amount equal to 15% of the bank's unimpaired capital and surplus.  A national bank may loan to one borrower an additional amount not to exceed 10% of the association's unimpaired capital and surplus, if the additional amount is fully secured by certain forms of "readily marketable collateral."  Loans to executive officers, directors and principal shareholders and their related interests must conform to the OCC lending limits.  All transactions between national banks and their affiliates, including Community National Bank, must comply with Sections 23A and 23B of the FRA, which limit the amounts of such transactions and require that the terms of the transactions be at least as favorable to the Bank as the terms would be of a similar transaction between the Bank and an unrelated party.  The Bank was in compliance with these requirements and restrictions at December 31, 2004.



Page 15





FEDERAL DEPOSIT INSURANCE CORPORATION.  The FDIC is an independent federal agency that insures the deposits, up to prescribed statutory limits, of federally insured banks and thrifts and safeguards the safety and soundness of the banking and thrift industries.  The FDIC administers two separate insurance funds, the Bank Insurance Fund (BIF) for commercial banks and state savings banks and the Savings Association Insurance Fund (SAIF) for savings associations and for banks that have acquired SAIF deposits.  The FDIC is required to maintain designated levels of reserves in each fund.



The FDIC is authorized to establish separate annual assessment rates for deposit insurance for members of the BIF and the SAIF.  The FDIC may increase assessment rates for either fund if necessary to restore the fund's ratio of reserves to insured deposits to its target level within a reasonable time and may decrease such rates if such target level has been met.  The FDIC has established a risk-based assessment system for both SAIF and BIF members.  Under this system, assessments vary based on the risk the institution poses to its deposit insurance fund.  The risk level is determined based on the institution's capital level and the FDIC's level of supervisory concern about the institution.  Insurance of deposits may be terminated by the FDIC if it finds that the institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule, order or condition enacted or imposed by the institution's regulatory agency.



FEDERAL RESERVE BOARD.  The FRB requires national banks to maintain reserves against their net transaction accounts (primarily checking and NOW accounts).  The amounts are subject to adjustment by the FRB.  At December 31, 2004, the Bank was in compliance with its reserve requirements.





ITEM 2.  PROPERTIES



The Company conducts its banking operations at five banking centers in southwestern Ohio.  The executive offices of the Company and the Bank are onsite at the main banking center at 1400 East Second Street, Franklin, Ohio.  The other banking center locations are:  655 Central Avenue in Carlisle, Ohio; 95 Edgebrook Avenue in Springboro, Ohio; 50 West Spring Valley Road in Centerville, Ohio; and 316 South Breiel Boulevard in Middletown, Ohio.  The Bank owns all properties.  The Bank also owns property at 112-118 Mill Street, Springboro, Ohio, which is currently unoccupied.



The Company believes these facilities are adequate for its current operations.  Management asserts that for insurance purposes all facilities and equipment are subject to periodic appraisal and all properties are adequately insured.



The Company is restricted by the bank holding company regulations in its power to hold real estate property for investment.  The Company and the Bank  presently do not invest in real estate other than real estate acquired for purposes of operations and mortgage interests in real estate securing loans made by the Bank in the ordinary course of business.



Page 16





ITEM 3.  LEGAL PROCEEDINGS



The Bank is party to various claims and proceedings arising in the normal course of business which, in the opinion of management, will not result in a material liability to the Bank.





ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS



Not applicable.





Page 17





PART II





ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED

STOCKHOLDERS MATTERS



The Company's common shares are quoted on the Over-the-Counter Bulletin Board Service maintained by NASDAQ under the symbol CMNC.  The active trading market for the Company's shares has been light.  There were 633,014 shares of the Company outstanding on December 31, 2004 held of record by approximately 235 shareholders.



The following table identifies the range of high and low bid information for the Company's common stock in each quarter in the past two fiscal years.  The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.



|2004           |  | High  |  | Low  
|-------------- |  | ----- |  | -----
|               |  |       |  |      
|First Quarter  |  | 30.00 |  | 26.00
|Second Quarter |  | 35.00 |  | 26.00
|Third Quarter  |  | 30.00 |  | 27.75
|Fourth Quarter |  | 31.00 |  | 26.00
|               |  |       |  |      
|2003           |  | High  |  | Low  
|First Quarter  |  | 22.00 |  | 19.65
|Second Quarter |  | 25.00 |  | 21.50
|Third Quarter  |  | 26.00 |  | 23.55
|Fourth Quarter |  | 26.00 |  | 25.25



The declaration and payment of dividends by the Company are subject to the discretion of the Board of Directors and to the earnings and financial condition of the Company and applicable laws and regulations.  Annual dividends per share declared were $0.50 in 2004 and $0.42 in 2003.  The dividend payout ratio (dividends per share divided by earnings by share) was 25.5% and 19.5% for 2004 and 2003, respectively.  Average equity to average assets was 9.1% and 9.4% for 2004 and 2003, respectively.



The Community National Corporation serves as transfer agent and dividend disbursing agent for the Company's shares.  Communication regarding change of address, transfer of shares, lost certificates and dividends should be sent to:



|Community National Corporation
|------------------------------
|President                     
|P.O. Box 577                  
|Franklin, Ohio  45005         



A copy of the Company's Annual Report on Form 10-KSB, as filed with the Securities and Exchange Commission, will be available at no charge to shareholders upon request to:



|Community National Corporation
|------------------------------
|President                     
|P.O. Box 577                  
|Franklin, Ohio  45005         



Page 18





The annual meeting of the shareholders of Community National Corporation will be held on Tuesday, April 19, 2005, at the Community National Bank, Springboro Office, Second Floor, 95 Edgebrook Drive, Springboro, Ohio at 1:00 PM.





ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS





RESULTS OF OPERATIONS



NET INCOME

CNC earned $1,242,000, or $1.96 per share, in 2004 compared to $1,351,000, or $2.15 per share, in 2003.  Performance ratios for 2004 include a return on average assets of 0.93% and a return on average equity of 10.24% compared to a return on average assets of 1.13% and a return on average equity of 11.96% for 2003.  Lending activity continues to drive earnings through increased net interest income and fees earned for loan activity in the mortgage brokerage area.  The Company recognized $203,000 in gain on sales of investment securities in 2003 whereas no gains were realized in 2004.



NET INTEREST INCOME

Total interest income amounted to $7.0 million for the year 2004, an increase of $231,000, or 3.4%, from 2003.  The increase was primarily a result of a larger earning asset base.  Average earning assets were $13,166,000 higher in 2004 as compared to 2003, representing an 11.9% increase.  The increase was attributable to the average loan balances increasing 12.4%, funded by increased retail deposits.  The yield on average earning assets decreased 46 basis points (bps) because of the low market rates through the first half of the year as the fed funds rate was at 1%.



Interest expense on funding sources totaled $2.1 million for 2004, an increase of $0.1 million, or 4.4%, from 2003.  The increase was primarily a result of a larger deposit base.  Average interest bearing deposits increased $9.3 million, or 9.9%, over the average for 2003.  Increases were realized in all deposit categories.  The average balance for savings accounts increased $2.9 million; time certificates increased $5.8 million; and NOW/money fund accounts increased $0.6 million.  The growth was a result of increased deposits from the retail sector as well as the acquisition of deposits from FNB.  The decrease in the cost of funds was due to low market rates.  The Company also utilized short-term borrowings to a larger extent in 2004 in order to meet short-term liquidity needs in the first half of the year.  The cost of interest-bearing liabilities declined to 1.97% in 2004 from 2.08% in 2003.



As a result of the foregoing changes in interest income and interest expense, net interest income increased $144,000, or 3.0%, from 2003 to 2004.  The interest rate spread decreased by 35 basis points, from 4.07% for 2003 to 3.72% for 2004.  The net interest margin amounted to 4.02% in 2004, compared to 4.36% in 2003.  Net interest margin measures the net interest income in relation to average earning assets.



OTHER OPERATING INCOME

Total other operating income, excluding gain on sales of securities of $203,000, increased $98,000, or 8.8%, from $1,112,000 in 2003 to $1,210,000 in 2004.  The major components of the increase consist of fee income for mortgage brokerage activity growing $66,000, or 16.6%, and fee income from other banking services increasing $22,000, or 22.4%.



The Company recognized $203,000 in gain on sales of securities in 2003, resulting in an after-tax effect on earnings of $134,000. The Company did not sell any securities in 2004.



OPERATING EXPENSES

Operating expenses increased $288,000, or 7.6%, in 2004 compared to 2003.  The additional expense was primarily due to higher costs for operations particularly in the areas of advertising, facilities, insurance and technology.  Increases in salaries and employee benefits were results of regular salary increases and incentive programs.



INCOME TAXES

The effective tax rate was 34% in 2004 and 2003.





FINANCIAL CONDITION



TOTAL ASSETS

Total assets increased $12.1 million, or 9.8%, from December 31, 2003 to December 31, 2004.  The most significant changes were a $3.3 million, or 3.5%, increase in loans; a $3.8 million, or 18.7%, increase in investment securities; and an increase in cash and cash equivalents of $4.5 million, or 142.4%.  Cash and cash equivalents of $6.8 million were received in the branch acquisition.



LOANS

Loan demand was stable as interest rates remained at record lows early in the year, then gradually increased throughout the rest of the year.  Net loans increased $3.3 million, or 3.5%, from $93.8 million at December 31, 2003 to $97.1 million at December 31, 2004.  The individual loan categories were relatively consistent with the prior year.



SECURITIES

Securities available for sale increased to $23.6 million at December 31, 2004, as the Company invested its excess liquidity into government-issued securities in order to increase yields.  The securities, reported at market value on the financial statements, have a book value of $23.8 million.



The Bank is a member of the Federal Home Loan Bank and Federal Reserve Bank, both requiring ownership of stock that are equity interests carried at cost.  The stock may only be sold at cost, or par value, to the issuer or to another member institution.  CNB acquired 182 additional shares of FHLB stock in 2004, with cost basis of $18,200, as a result of stock dividends.



ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is $1,002,000 or 1.02% of total loans at December 31, 2004, compared to $887,000 or 0.94% of total loans at December 31, 2003.  No significant loan losses were incurred during the past two years.  The Bank had provisions of $230,000 to the allowance during the year as compared to $311,000 in 2003.  The amount of loans on non-accrual status amounted to $1,252,000 and $305,000 at December 31, 2004 and 2003, respectively.  Loans 90 days or more past due and still accruing interest were $20,000 as of December 31, 2004, as compared to $754,000 as of December 31, 2003.  During 2004 the Company sold all its Other Real Estate Owned (OREO) and did not hold any such property at December 31, 2004.  The Company had held OREO with a book value of $821,000 at December 31, 2003.



In addition to historic charge-off percentages, to determine an adequate allowance for loan losses at December 31, 2004, the Company took into consideration such factors as changes in the nature and volume of the loan portfolio, overall portfolio quality, review of specific problem loans, and current economic conditions that may affect the borrowers' ability to pay.  Eight borrowers make up the non-accrual amount at December 31, 2004.  All non-accrual loans are in the process of being foreclosed.  For the rest of the loan portfolio, the Company also considered loans past due 90 days or more at December 31, 2004, compared to a year ago, in determining the adequacy of the loan loss reserve.  Although some losses may be realized, all loans have been considered in the loan loss analysis and are considered to be adequately reserved.



DEPOSITS

Deposits increased $14.9 million, or 14.0%, to $121.8 million at December 31, 2004, from $106.9 million at December 31, 2003.  Of this increase, $7.8 million is attributable to the acquisition of two branches during 2004.  Interest-bearing deposits increased $10.9 million, or 11.6%.  Non-interest bearing deposits increased $4.0 million, or 30.7%, at December 31, 2004 as compared to December 31, 2003.  The Companys strategy is to competitively price deposit products in the markets served with an emphasis on growing its lower-priced core deposit products.



LIQUIDITY

Liquidity is the ability to have funds available at all times to meet the commitments of the Company.  Asset liquidity is provided by cash and assets which are readily marketable, pledgeable or which will mature in the near future.  Liquid assets include cash and deposits in banks, and federal funds sold.  Liquidity is also provided by access to core funding sources that are primarily core depositors in the Companys trade area.  The Company does not actively solicit brokered deposits as a funding source.  Total brokered deposits as of December 31, 2004 were $7.1 million.  The liquidity of the Company is enhanced by the fact that 68.7% of total deposits at December 31, 2004 were "core" deposits.  Core deposits, for this purpose, are defined as total deposits less public funds and certificates of deposit greater than $100,000.



At December 31, 2004, the Companys liquid assets were $7.6 million, or 5.6% of total assets, as compared to $3.1 million, or 2.5%, at December 31, 2003.  Secondary sources of liquidity include the Companys ability to purchase federal funds, and maintain its lines of credit with the Federal Home Loan Bank of Cincinnati and a regional bank for short-term funding needs.  The lines of credit are $10 million and $2 million, respectively.  Management closely monitors the level of liquid assets available to meet ongoing funding needs.  It is management's intent to maintain adequate liquidity so that sufficient funds are readily available at a reasonable cost.  Loans to deposits decreased from 88.6%, at December 31, 2003 to 80.6% at December 31, 2004 due to the increase of the deposit base.  The Company has not experienced liquidity or operational problems as a result of the current liquidity levels.



CAPITAL RESOURCES

As of December 31, 2004, commitments to extend credit amounted to $6.6 million and are more fully described in Note 11 to the Financial Statements.  Since many of the commitments to extend credit may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.  Scheduled repayments of existing loans and maturities of investment securities are expected to provide the necessary funds for loan commitments.  Commitments for capital expenditures were minimal.



The Company is required by banking regulators to meet certain minimum levels of capital adequacy.  These are expressed in the form of certain ratios.  Capital is separated into Tier I capital (essentially shareholders' equity less goodwill and other intangibles) and Tier II capital (essentially the allowance for loan losses limited to 1.25% of risk-weighted assets).  The first two ratios, which are based on the degrees of credit risk in the Companys assets, provide for weighting assets based on assigned risk factors and include off-balance sheet items such as loan commitments and stand-by letters of credit.  The ratio of Tier I capital to risk-weighted assets must be at least 4.0% and the ratio of Total capital (Tier 1 capital plus Tier 2 capital) to risk-weighted assets must be at least 8.0%.  The capital leverage ratio supplements the risk-based capital guidelines. Banks are required to maintain a minimum ratio of Tier 1 capital to adjusted quarterly average total assets of 4.0%.  To be considered at the well-capitalized level the ratios must be at least 6%, 10% and 5%, respectively.  As of December 31, 2004, the Company was considered well-capitalized with total risk-based capital of 15.0%, Tier 1 risk-based of 13.9%, and leverage capital of 8.6%.  These ratios as of December 31, 2003 were 15.8%, 14.7% and 9.3%, respectively.









Page 19





ITEM 7.  FINANCIAL STATEMENTS





- I N D E X -





|                                                        |  | PAGE   
|------------------------------------------------------- |  | -------
|                                                        |  |        
|REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |  | 25     
|                                                        |  |        
|FINANCIAL STATEMENTS                                    |  |        
|                                                        |  |        
|Consolidated Balances Sheets                            |  | 26     
|                                                        |  |        
|Consolidated Statements of Income                       |  | 27     
|                                                        |  |        
|Consolidated Statements of Shareholders' Equity         |  | 28     
|                                                        |  |        
|Consolidated Statements of Cash Flows                   |  | 29     
|                                                        |  |        
|Notes to Consolidated Financial Statements              |  | 30 - 44
|                                                        |  |        
|                                                        |  |        
|                                                       



Page 20







REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM









To the Shareholders and Board of Directors

Community National Corporation and Subsidiary

Franklin, Ohio





We have audited the accompanying consolidated balance sheets of Community National Corporation and Subsidiary as of December 31, 2004 and 2003, and the related consolidated statements of income, shareholders equity and cash flows for the years then ended.  These financial statements are the responsibility of the Companys management.  Our responsibility is to express an opinion on these financial statements based on our audits.



We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit 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 financial position of Community National Corporation and Subsidiary as of December 31, 2004 and 2003, and the results of its operations and its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.











/s/ J.D. Cloud & Co. L.L.P.



J.D. Cloud & Co. L.L.P.

Certified Public Accountants



Cincinnati, Ohio

January 7, 2005



Page 21





|COMMUNITY NATIONAL CORPORATION                                                                                         
|-----------------------------------------------------------------------------------------------------------------------
|CONSOLIDATED BALANCE SHEETS                                                                                            
|At December 31,                                                                                                        
|(Dollars in thousands)                                                                                                 
|                                                                                                                       
|                                                                                                                       
|ASSETS:                                                                                                                
|Cash and due from banks                                                                                                
|Federal funds sold                                                                                                     
|Total cash and cash equivalents                                                                                        
|                                                                                                                       
|Interest-bearing deposits in banks                                                                                     
|Securities available for sale                                                                                          
|Other securities                                                                                                       
|Loans-net                                                                                                              
|Premises and equipment-net                                                                                             
|Other real estate owned-net                                                                                            
|Intangible assets-net                                                                                                  
|Other assets                                                                                                           
|TOTAL ASSETS                                                                                                           
|                                                                                                                       
|LIABILITIES:                                                                                                           
|Deposits                                                                                                              
|Demand                                                                                                                 
|NOW accounts, interest  bearing                                                                                        
|Savings                                                                                                                
|Certificates  $100,000 and over                                                                                       
|Other time certificates                                                                                                
|Total deposits                                                                                                         
|Advances from Federal Home Loan Bank                                                                                   
|Accrued interest and other liabilities                                                                                 
|TOTAL LIABILITIES                                                                                                      
|                                                                                                                       
|SHAREHOLDERS EQUITY:                                                                                                  
|Common stock, no par value; authorized  1,500,000 shares; issued and outstanding 2004 - 633,014; 2003  627,805 shares
|Surplus                                                                                                                
|Retained earnings                                                                                                      
|Accumulated other comprehensive income (loss), net of tax                                                              
|TOTAL SHAREHOLDERS EQUITY                                                                                             
|                                                                                                                       
|TOTAL LIABILITES AND
SHAREHOLDERS' EQUITY                                                                              
|                                                                                                                       
|The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.    



Page 22



|COMMUNITY NATIONAL CORPORATION                                                                                     
|-------------------------------------------------------------------------------------------------------------------
|CONSOLIDATED STATEMENTS OF INCOME                                                                                  
|For the years ended December 31,                                                                                   
|($000's, except per share amounts)                                                                                 
|                                                                                                                   
|                                                                                                                   
|INTEREST INCOME:                                                                                                   
|Interest and fees on loans                                                                                         
|Interest on investment securities                                                                                  
|Interest on federal funds sold and other investments                                                               
|TOTAL INTEREST INCOME                                                                                              
|                                                                                                                   
|INTEREST EXPENSE:                                                                                                  
|Interest on deposits-                                                                                              
|Savings and NOW accounts                                                                                           
|Time deposits                                                                                                      
|Interest on federal funds purchased                                                                                
|TOTAL INTEREST EXPENSE                                                                                             
|                                                                                                                   
|NET INTEREST INCOME                                                                                                
|                                                                                                                   
|PROVISION FOR LOAN LOSSES                                                                                          
|                                                                                                                   
|NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES                                                                
|                                                                                                                   
|OTHER OPERATING INCOME:                                                                                            
|Service charges and fees-                                                                                          
|Loan brokerage fees                                                                                                
|Other operating income                                                                                             
|Rental income                                                                                                      
|Net gain on sales of securities                                                                                    
|TOTAL OTHER OPERATING INCOME                                                                                       
|                                                                                                                   
|OPERATING EXPENSES:                                                                                                
|Salaries, wages and employee benefits                                                                              
|Equipment and occupancy expense                                                                                    
|State franchise tax                                                                                                
|Loss on other real estate owned                                                                                    
|Advertising                                                                                                        
|Directors fees                                                                                                     
|Other operating expenses                                                                                           
|TOTAL OPERATING EXPENSES                                                                                           
|                                                                                                                   
|INCOME BEFORE TAXES                                                                                                
|                                                                                                                   
|PROVISION FOR INCOME TAXES                                                                                         
|                                                                                                                   
|NET INCOME                                                                                                         
|                                                                                                                   
|Dividends declared per common share                                                                                
|                                                                                                                   
|Net income per common share                                                                                        
|                                                                                                                   
|The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

Page 23





|COMMUNITY NATIONAL CORPORATION                         
|-------------------------------------------------------
|STATEMENTS OF CASH FLOWS                               
|For the years ended December 31,                       
|($000's)                                               
|                                                       
|                                                       
|CASH FLOWS FROM OPERATING ACTIVITIES:                  
|Interest received                                      
|Fees and commissions received                          
|Interest paid                                          
|Cash paid to employees and for other operating expenses
|Income taxes paid                                      
|NET CASH PROVIDED BY OPERATING ACTIVITIES              
|                                                       
|CASH FLOWS FROM INVESTING ACTIVITIES:                  
|Proceeds from maturing investment activities           
|Purchase of investment securities                      
|Proceeds from the sale of investment securities        
|Net (increase) decrease in loans                       
|Proceeds from sale of other real estate owned          
|Cash acquired in acquisition of business               
|Purchase of premises, equipment and other assets       
|NET CASH FLOWS FROM INVESTING ACTIVITIES               
|                                                       
|CASH FLOWS FROM FINANCING ACTIVITIES:                  
|Net increase in deposits                               
|Proceeds from Federal Home Loan Bank advances          
|Repayment of Federal Home Loan Bank advances           
|Cash dividends paid                                    
|NET CASH FLOWS FROM FINANCING ACTIVITIES               
|                                                       
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS   
|                                                       
|CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR         
|                                                       
|CASH AND CASH EQUIVALENTS AT END OF YEAR               
|                                                       

Page 24





|RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:                                          |     |       |     |      
|------------------------------------------------------------------------------------------------------------------- | --- | ----- | --- | -----
|Net income                                                                                                          | $   | 1,242 |     | 1,351
|                                                                                                                    |     |       |     |      
|Adjustments to reconcile net income to net cash provided by operating activities:                                   |     |       |     |      
|Depreciation and amortization                                                                                       |     | 328   |     | 275  
|Amortization of premiums and discounts on investment securities - net                                               | 232 |       | 232
|Provision for loan losses                                                                                           |     | 230   |     | 311  
|(Gain) loss on disposal of other real estate owned                                                                  |     | (3)   |     | 140  
|(Gain) on sale of securities available-for-sale                                                                     |     | -     |     | (203)
|FHLB stock dividend                                                                                                 |     | (18)  |     | (13) 
|Provision for deferred taxes                                                                                        |     | 72    |     | 28   
|(Increase) decrease in interest receivable                                                                          |     | (18)  |     | 184  
|(Increase) decrease in prepaid expense and other assets                                                             |     | (14)  |     | (8)  
|Increase (decrease) in interest payable                                                                             |     | 27    |     | (157)
|Increase (decrease in income taxes payable and refundable                                                           |     | 16    |     | (43) 
|Increase (decrease) in other accrued expenses                                                                       |     | (95)  |     | 38   
|TOTAL ADJUSTMENTS                                                                                                   |     | 757   |     | 784  
|                                                                                                                    |     |       |     |      
|NET CASH PROVIDED BY OPERATING ACTIVITIES                                                                           | $   | 1,999 |     | 2,135
|                                                                                                                    |     |       |     |      
|The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

Page 25





|COMMUNITY NATIONAL CORPORATION                                                                       
|-----------------------------------------------------------------------------------------------------
|CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY                                                      
|For the years ended December 31,                                                                     
|($000's)                                                                                             
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|BALANCE - January 1, 2003                                                                            
|                                                                                                     
|Comprehensive income:                                                                                
|Net income                                                                                           
|                                                                                                     
|Net unrealized loss on available-for-
sale securities (net of taxes of $20)                          
|                                                                                                     
|Total comprehensive income                                                                           
|                                                                                                     
|Stock dividend                                                                                       
|                                                                                                     
|Dividend declared $0.42 per share                                                                    
|                                                                                                     
|BALANCE - December 31, 2003                                                                          
|                                                                                                     
|Comprehensive income:                                                                                
|Net income                                                                                           
|                                                                                                     
|Net unrealized loss on available-for-
sale securities (net of taxes of $38)                          
|                                                                                                     
|Total comprehensive income                                                                           
|                                                                                                     
|Stock dividend                                                                                       
|                                                                                                     
|Deduct - Dividend declared $0.50 per share                                                           
|                                                                                                     
|BALANCE - December 31, 2004                                                                          
|                                                                                                     
|The accompanying notes to consolidated financial statements are an integral part of these statements.

Page 26



COMMUNITY NATIONAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





December 31, 2004

(Continued)







NOTE  1 -

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



Community National Corporation (CNC) is a bank holding company formed July 2, 2001, whose principal activity is the ownership and management of its wholly-owned subsidiary Community National Bank (the Bank) formed February 7, 1983.



The Bank generates mortgage, commercial and consumer loans and receives deposits from customers within its market areas which are generally Franklin, Springboro, Centerville,  Carlisle, and Middletown, Ohio, and adjacent communities.



The accounting and reporting policies of the CNC conform with U.S. generally accepted accounting principles (GAAP) and with general practices within the banking industry.  Following is a summary of the significant accounting policies:



ACCOUNTING ESTIMATES-

The preparation of financial statements in conformity with GAAP 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.



CONSOLIDATION-

The accompanying consolidated financial statements consist of the accounts of Community National Corporation and its wholly-owned subsidiary, Community National Bank.  All intercompany transactions are eliminated in consolidation.



SECURITIES-

S
ecurities are classified as available-for-sale and are reported at fair value.  Amortization of premiums and accretion of discounts are recognized in interest income over the life of the investment.  Realized gains or losses from the sale of securities are recorded at the time of the sale on the specific-identification method
..  Unrealized gains and losses are included in accumulated other comprehensive income.



Decline
s in the fair value of individual available-for-sale securities below their cost that are other than temporary result in write-downs of the individual securities to their fair value.  The related write-downs are included in earnings as realized losses.  In estimating other-than-temporary impairment losses, management considers (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Bank to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.



Federal Reserve Bank (FRB) stock and Federal Home Loan Bank (FHLB) stock are equity interests that are carried at cost.  They can only be sold at cost, or par value, to the issuer or to another member institution.  The Bank is required to maintain a percentage of its capital and surplus in FRB stock.  An investment in FHLB stock is required in order to have a line of credit with, or borrow funds from, the FHLB.









Page 27











LOANS AND ALLOWANCE FOR LOAN LOSSES-

Loans are stated at the principal amount outstanding, net of unearned income, including deferred loan fees and an allowance for loan losses.  Interest on other loans is calculated by using the simple interest method on daily balances of the principal amount outstanding.  The accrual of interest is discontinued at the time a loan is past due 90 days unless the loan is well-secured and in process of collection or when there is a clear indication that the borrowers cash flow may not be sufficient to meet payments as they become due.   Interest on non-accrual loans is recognized on the cash basis until payments of interest and principal are current.  Loan origination fees, net of loan origination costs, are deferred and recognized as income over the life of the loan.



The allowance for loan losses is established through a provision for loan losses charged to expense.  Loans are charged against the allowance for loan losses when management believes that the collectibility of the principal is unlikely.  Loans are considered impaired when management believes, based on current information and events, it is probable that the Bank will be unable to collect all amounts due according to the contractual terms of the loan agreement.  Factors considered by management in determining impairment include payment status, collateral values, and the probability of collecting scheduled principal and interest payments when due.  Loans with insignificant payment delays or shortfalls generally are not considered impaired.  Impaired loans are measured based on the present value of expected future cash flows discounted at the loans effective interest rate or the fair value of the underlying collateral.  Large groups of smaller balance loans are collectively evaluated for impairment.



The allowance for loan losses is evaluated on a regular basis by management and is based upon managements periodic review of the collectibility of loans, and prior loan loss experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrowers ability to repay, estimated value of any underlying collateral and prevailing economic conditions.  This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.



PREMISES AND EQUIPMENT-

Premises and equipment are stated at cost less accumulated depreciation.  Depreciation is computed on the straight-line method over the estimated useful lives of the assets.  Estimated useful lives are three years for software, five years for computer equipment, ten years for office equipment, fifteen to twenty years for vaults and automated teller machines and forty years for buildings.  Costs incurred for maintenance and repairs are expensed currently.



OTHER REAL ESTATE OWNED-

Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at the lower of the Bank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.  Costs related to holding property are expensed.  After foreclosure, valuations are periodically performed by management and the





























assets are carried at the lower of the carrying amount or fair value less the cost to sell.  Any subsequent reductions in the carrying value are expensed.



INTANGIBLE ASSETS-

Intangible assets consist of core deposits and goodwill.  Core deposits are amortized over their estimated useful lives of 16 months to 119 months.  Goodwill is not amortized.  Intangible assets are evaluated for impairment annually in accordance with Statement of Financial Accounting Standard (SFAS) No. 142 Goodwill and Other Intangible Assets.



ADVERTISING COSTS-

Advertising costs
 are generally expensed as incurred.



INCOME TAXES-

Deferred income tax assets and liabilities are determined using the liability method of accounting.  Under this method, the net deferred tax asset or liability is determined based on the tax effects of the temporary differences between book and tax bases of the various balance sheet assets and liabilities and gives current recognition to changes in tax rates and laws.  CNC files consolidated income tax returns with its subsidiary.



STATEMENTS OF CASH FLOWS-

For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks with maturities of three months or less and federal funds sold.



EARNINGS PER SHARE-

Basic earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding during the period.  The Companys capital structure includes no potential for dilution.  There are no warrants, options or other arrangements that would increase the number of shares outstanding.



RECLASSIFICATIONS-

Certain prior year expenses have been reclassified to conform to the current years presentation.  The changes have no effect on prior years income or earnings per share.



RECENT ACCOUNTING PRONOUNCEMENTS-

The Financial Accounting Standards Board has issued SFAS
No. 151
, Amendment of ARB 43
on Inventory Costs
, effective after June 15, 2005
; S FAS
 No. 152
, Accounting for Real Estate Time-Sharing Transactionsan amendment of SFAS No. 66 and 67





, effective after June 15, 2005
; SFAS No. 153, Exchanges of Nonmonetary Assetsan amendment of APB Opinion No. 29, effective after June 15, 2005; and
revised SFAS No. 123, Accounting for Stock-Based Compensation,
effective after December 15, 200 5.  
These standards will not have a significant impact on the Companys financial condition or results of operations.









NOTE 2 -

BRANCH ACQUISITION



On June 25, 2004, the Bank completed the acquisition of certain fixed assets and deposits of First National Bank of Germantown (FNB).  The acquisition allows the Bank to expand its presence in the Warren/Butler County area in southwestern Ohio.  CNC now operates 5 full-service banking centers.  The acquisition is being accounted for as a business combination in accordance with SFAS No. 141.  The results of operations of the branches are included in the financial statements for the year ended December 31, 2004 since the date of acquisition.

















Under the terms of the cash transaction, the Bank received cash of approximately $6
, 8
00,000 , fixed assets consisting of land, buildings and various equipment for $471,000 and intangible assets for $656,000 consisting of core deposits and goodwill, and acquired $7
, 8
00,000
i n deposits for a premium of 7.5%.



The purchased assets, deposits and direct costs associated with the transaction were recorded on the balance sheet at their respective fair values as of the closing date.



The transaction resulted in total intangible assets of $656,000 based upon the purchase price of the acquired deposits and the direct costs consisting of core deposit intangibles of $459,000, and goodwill of $197,000.  The core deposit intangible is amortized using a straight-line method from 16 months to 119 months.  Goodwill is not amortizable but will be subject to annual impairment testing.  Intangible assets are reported in the balance sheet net of accumulated amortization of $28,000.

















NOTE   3
 -

SECURITIES



Carrying amounts and approximate market values of investment securities at December 3 1
 are summarized as follows ($000's):





|                                     |           | 2004   |           | 2003  
|------------------------------------ | --------- | ------ | --------- | ------
|                                     | Amortized | Fair   | Amortized | Fair  
|                                     |           | Cost   |           | Value 
|                                     |           |        |           |       
|Securities Available for Sale:       |           |        |           |       
|U.S. Treasury and Agency Securities: |           |        |           |       
|Within 1 year                        | $         | 15,942 |           | 15,847
|Over 1 year through 5 yeas           |           | 400    |           | 396   
|Subtotal                             |           | 16,342 |           | 16,243
|Mortgage-backed securities           |           | 7,433  |           | 7,361 
|Total Securities Available for Sale  | $         | 23,775 |           | 23,604
|                                     |           |        |           |       
|Other Securities:                    |           |        |           |       
|Federal Reserve Bank, at cost        | $         | 53     |           | 53    
|Federal Home Loan Bank, at cost      |           | 369    |           | 369   
|Total Other Securities               | $         | 422    |           | 422   





Page 28









The carry value, approximate market values and unrealized losses on securities in a loss position twelve months or less and those in a loss position twelve months or more, as well as securities in a gain position, at December 31, 2004
 are as follows ($000's):













|                                           |   | Book
Value |  | Market
Value | Unrealized
Gain (Loss)
|------------------------------------------ | - | ---------- |  | ------------ | ----------------------
|                                           |   |            |  |              |                       
|Treasury / Agency                          | $ | 15,085     |  | 14,985       |                       
|MBS/CMO                                    |   | 4,616      |  | 4,587        |                       
|Loss position 12 month or less             |   | 19,701     |  | 19,572       |                       
|                                           |   |            |  |              |                       
|MBS/CMO Loss position 12 months
or greater |   | 2,817      |  | 2,774        |                       
|                                           |   |            |  |              |                       
|Treasury / Agency Gains                    |   | 1,257      |  | 1,258        |                       
|                                           |   |            |  |              |                       
|Total                                      | $ | 23,775     |  | 23,604       |                       



Gross unrealized gains and (losses) on investment securities were $1,000 and ($172,000) at December 31, 2004, respectively.  Gross unrealized gains and (losses) were $46,000 and ($104,000) at December 31, 2003, respectively.  During 2004, all securities were classified as available-for-sale.







Unrealized holding losses of $171,000, net of deferred tax of $58,000
, are included as a component
 of shareholders equity as accumulated other comprehensive income.  Management considers the unrealized losses on debt securities as temporary and
has the ability and intent to hold those securities with losses in excess of one year
 for the foreseeable future or to maturity.



During 2003, securities classified as held-to-maturity were sold for $4,719,000 with an amortized cost of $4,538,000 resulting in realized gains of $181,000 and securities classified as available for sale were sold for $1,015,000 with an amortized cost of $993,000 resulting in
realized gains of $22,000 for total gains of $203,000.  Management reclassified all securities to available-for-sale to provide liquidity and to potentially sell investments if warranted.







Investment securities with a par value of $16,279,000 and $19,172,000 at December 31, 2004 and 2003, respectively, were pledged to secure public deposits.  The Bank is required to maintain $172,500 in Federal Home Loan Bank stock at December 31, 2004.

Page 29













NOTE   4
 -

LOANS



Major classifications of loans at December 31 are as follows ($000's):



|                               |   | 2004      |  | 2003  
|------------------------------ | - | --------- |  | ------
|Mortgage loans on real estate: |   |           |  |       
|Residential 1-4 family         | $ | 48,214    |  | 46,855
|Commercial                     |   | 37,719    |  | 35,235
|Construction                   |   | 1,272     |  | 1,531 
|Second mortgages               |   | 875       |  | 523   
|Equity lines of credit         |   | 1,897     |  | 2,427 
|Total                          |   | 89,977    |  | 86,571
|Commercial loans               |   | 3,493     |  | 3,277 
|Installment loans              |   | 4,687     |  | 4,874 
|                               |   | 98,157    |  | 94,722
|Unearned loan origination fees |   | (3)       |  | (3)   
|                               |   | 98,154    |  | 94,719
|Allowance for loan losses      |   | ( 1,002
) |  | (887) 
|Loans  net                    | $ | 97, 152   |  | 93,832
|                               |   |           |  |       



The following is a summary of information related to impaired loans ($000's):



|                                              |   | 2004   |  | 2003
|--------------------------------------------- | - | ------ |  | ----
|                                              |   |        |  |     
|Impaired loans with a valuation allowance     | $ | 1,252  |  | 305 
|Valuation allowance related to impaired loans |   | 230    |  | 60  
|Average investment in impaired loans          |   | 1
,061 |  | 546 
|Interest income recognized on impaired loans  |   | 33     |  | 43  
|Interest income received on cash basis on     |   |        |  |     
|impaired loans                                |   | 21     |  | 10  







Loans on which the accrual of interest has been discontinued or reduced amounted to $1,252,000 and $305,000 at December 31, 2004 and 2003, respectively.  Loans past due greater than 90 days and accruing interest were $20,000 at December 31, 2004.  No additional funds are committed to be advanced in connection with impaired loans.



Changes in the allowance for loan losses for the years ended December 31 were as follows ($000's):

|                                |   | 2004  |  | 2003 
|------------------------------- | - | ----- |  | -----
|                                |   |       |  |      
|BALANCE  January 1,            | $ | 887   |  | 804  
|Provision charged to operations |   | 230   |  | 311  
|Loans charged off               |   | (188) |  | (262)
|Recoveries                      |   | 73    |  | 34   
|BALANCE  December 31,          | $ | 1,002 |  | 887  
|                                |   |       |  |      





The Bank has entered into related-party transactions with various directors and officers.  Such transactions originate in the normal course of the Bank's operations as a depository and lending institution.  At December 31, 2004 and 2003, certain officers, directors and companies of which they have a direct or indirect interest, were indebted to the Bank directly or as guarantors in the aggregate amount of $1,64 4
,000 and $1,850,000, respectively.  New loans to related parties were $7 6
,000 and repayments were $21 3
,000 during 2004.  Deposits from certain officers and directors were $1,902,000 and $2,138,000 at December 31, 2004 and 2003, respectively.



During 2004 t
he Bank sold all
 of its Other Real Estate Owned (OREO) and did not hold any
OREO at December 31, 2004.
   Gains on the sale of OREO in 2004 of approximately $38,000 are included in other income.  
Loss es
 on the sale of
OREO of approximately $140,000 for the year ended December 31, 2003 are included in other operating expenses.  Loans were issued in connection with sales of OREO, totaling $433,000 and
$655,000 for the respective years ended December 31, 2004 and 2003
..





NOTE   5
-

PREMISES AND EQUIPMENT



Premises and equipment at December 31 are summarized as follows ($000's):



|                                |   | 2004  |  | 2003 
|------------------------------- | - | ----- |  | -----
|                                |   |       |  |      
|Land                            | $ | 1,172 |  | 970  
|Buildings                       |   | 3,238 |  | 2,981
|Equipment                       |   | 2,276 |  | 2,284
|Leasehold improvements          |   | 14    |  | 16   
|Total                           |   | 6,700 |  | 6,251
|Less  Accumulated depreciation |   | 1,408 |  | 1,626
|Premises and Equipment  Net    | $ | 5,292 |  | 4,625
|                                |   |       |  |      



Depreciation charged to income was $299,000 in 2004 and $275,000 in 2003.

















Page 30

















NOTE   6
-

CERTIFICATES OF DEPOSIT



Certificates of deposit and their remaining maturities are as follows ($000's):



|                         |          |          |  |           |        |  |  |       
|------------------------ | -------- | -------- |  | --------- | ------ |  |  | ------
|                         |          | Over     |  | Less than |        | 
|                         | $100,000 | $100,000 |  | Total    
|Year ending December 31, |          |          |  |           |        |  |  |       
|2005                     | $        | 20,985   |  |           | 26,397 |  |  | 47,382
|2006                     |          | 3,155    |  |           | 5,739  |  |  | 8,894 
|2007                     |          | 642      |  |           | 1,269  |  |  | 1,911 
|2008                     |          | -        |  |           | 249    |  |  | 249   
|2009                     |          | -        |  |           | 15     |  |  | 15    
|Thereafter               |          | -        |  |           | 36     |  |  | 36    
|                         | $        | 24,782   |  |           | 33,705 |  |  | 58,487
|                         |          |          |  |           |        |  |  |       



NOTE   7
-

ADVANCES AND LINES OF CREDIT



The Bank has a line of credit with the Federal Home Loan Bank of Cincinnati for borrowings up to $10,000,000.  The line of credit is collateralized by a blanket lien on one to four family residential mortgages.  The Bank must maintain minimum levels of shareholders equity under the line of credit agreement.  The Bank did not have any borrowings under this line of credit as of December 31, 2004.  Borrowings totaled $3,865,000 at December 31, 2003.  The Bank also has an unsecured line of credit of up to $2,000,000 with a regional bank for liquidity purposes.  There were no borrowings under this line of credit at December 31, 2004 or 2003.





NOTE   8
 -

INCOME TAX



The provision for federal income tax consists of ($000's):

|                             |   | 2004 |  | 2003
|---------------------------- | - | ---- |  | ----
|                             |   |      |  |     
|Income tax currently payable | $ | 566  |  | 669 
|Deferred income tax          |   | 72   |  | 28  
|Provision for income taxes   | $ | 638  |  | 697 



Page 31









The following is a reconciliation of the provision for federal income tax to the amount computed at the statutory rate of 34% ($000's):

|                                       |   | 2004  |  | 2003
|-------------------------------------- | - | ----- |  | ----
|                                       |   |       |  |     
|Tax at statutory rate on income before |   |       |  |     
|Income tax                             | $ | 639   |  | 696 
|Miscellaneous                          |   | (
1 ) |  | 1   
|Federal income tax applicable          |   |       |  |     
|to income before income tax            | $ | 638   |  | 697 



Deferred taxes, included in other liabilities, consisted of the following at December 31 ($000's):



|                                                 |   | 2004   |  | 2003  
|------------------------------------------------ | - | ------ |  | ------
|                                                 |   |        |  |       
|Deferred tax assets:                             |   |        |  |       
|Allowance for loan losses                        | $ | 272    |  | 237   
|Intangible assets                                |   | 2      |  | -     
|Unrealized loss on securities available for sale |   | 58     |  | 20    
|Organization expense                             |   | 3      |  | 5     
|Total deferred tax assets                        |   | 335    |  | 262   
|                                                 |   |        |  |       
|Deferred tax liabilities:                        |   |        |  |       
|FHLB stock dividends                             |   | 11     |  | 5     
|Depreciation                                     |   | 375    |  | 274   
|Total deferred tax liabilities                   |   | 386    |  | 279   
|                                                 |   |        |  |       
|Net deferred tax asset (liability)               | $ | ( 51
) |  | ( 17
)





NOTE   9
-

EMPLOYEE BENEFIT PLANS



The Bank maintains a savings and investment plan under Section 401(k) of the Internal Revenue Code.  The plan covers substantially all employees who meet certain eligibility requirements.  Employees may contribute to the plan up to 20% of annual compensation.  For every dollar an employee contributes (up to 8% of compensation), the Bank will contribute an amount equal to 50% of the employee's contribution.  The plan also includes a profit-sharing feature.  Annually, the Bank determines the amount of its contribution.  The Bank made total contributions of $47,000 and $29,000 to the plan for the years ended December 31, 2004 and 2003, respectively.









Page 32









NOTE 10
-

LEASES



The Bank leases a portion of its Springboro building under an operating lease agreement expiring in 2007.  Future minimum rentals to be received under the agreement are as follows:



|2005 | $ | 73,000 
|---- | - | -------
|2006 |   | 75,000 
|2007 |   | 25,000 
|     | $ | 173,000
|     |   |        

The Bank occupied a building under an operating lease agreement that expired in 2004.  Rent expense in 2004 and 2003 was $10,000 and $15,000 respectively.



NOTE 11
-

COMMITMENTS AND CONTINGENT LIABILITIES



The Bank 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.  These financial instruments include commitments to extend credit.  They involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the statement of financial position.



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.  Management evaluates each customer's credit worthiness on a case-by-case basis.  The amount of collateral obtained, if deemed necessary by management, upon extension of credit is based on management's credit evaluation of the counter party.  Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment, and income-producing properties.



The Bank has commitments to extend credit and letters of credit aggregating $6,574,000 at December 31, 2004.  The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.  No significant losses are anticipated as a result of these commitments.



Cash and cash equivalents at December 31, 2004, included cash and federal funds sold in excess of federally insured amounts at several financial institutions.



The Bank is party to various claims and proceedings arising in the normal course of business which, in the opinion of management, will not result in a material liability to the Bank.

















N OTE 12 -

RETAINED EARNINGS



The Company may generally pay dividends in amounts determined by the Board of Directors.  Banking regulations limit the amount of dividends that may be paid by the Bank to its parent Corporation without prior approval of the Bank's regulatory agency.  Retained earnings against which dividends may be charged are $2,079,865 plus current retained income after December 31, 2004.  A dividend of $31
6 ,
5 00 was declared in 2004 and is payable in 2005.  The dividend is payable in shares of the Corporations stock, or cash, at the shareholders option.





A dividend of $264,000 was declared in 2003 and paid in 2004 consisting of $12 9
,000 paid in cash and $13 5
,000 paid in stock.  The value of the stock was based on the fair market value at the dividend payable date or $26.00 per share.  As a result of the dividend, 5,209 new shares of stock were issued.





NOTE 13
-

REGULATORY MATTERS



Banks and holding companies are 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 financial statements.  Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank and Holding Company 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 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 and Holding Company maintain minimum amounts and ratios (set forth in the table below) of total and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier I capital (as defined) to average assets (as defined).  The capital ratios of the consolidated Company are not materially different from those of the Bank.  Management believes, as of December 31, 2004, that the Bank and Holding Company meet all capital adequacy requirements to which it is subject.  In addition, minimum cash reserves of approximately $1,225,000 at December 31, 2004, and an average of approximately $1,141,000 during 2004 were required to be maintained.



As of December 31, 2004, the most recent notification from the Office of the Comptroller of the Currency categorized the Bank as well capitalized under the regulatory framework for prompt corrective action.  To be categorized as adequately capitalized, minimum total risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the following table must be maintained.  There are no conditions or events since that notification that management believes have changed the institutions classification.



The actual capital amounts ($000s) and ratios of the Bank are also presented in the table.



|                         |  |         |  |                   |  |                    |  |                   |  | To Be Well       
|------------------------ |  | ------- |  | ----------------- |  | ------------------ |  | ----------------- |  | -----------------
|                         |  |         |  |                   |  |                    |  |                   |  | Capitalized Under
|                         |  |         |  |                   |  | For Capital        |  | Prompt Corrective
|                         |  | Actual  |  | Adequacy Purpose: |  | Action Provisions:
|                         |  | Amount  |  | Ratio             |  | Amount             |  | Ratio             |  | Amount           
|                         |  |         |  |                   |  |                    |  |                   |  |                  
|As of December 31, 2004: |  |         |  |                   |  |                    |  |                   |  |                  
|Total Capital (to Risk   |  |         |  |                   |  |                    |  |                   |  |                  
|Weighted Assets)         |  | $12,984 |  | 15.02%            |  | >$6,914            |  | >8.0%             |  | >$8,642          
|                         |  |         |  |                   |  |                    |  |                   |  |                  
|Tier I Capital (to Risk  |  |         |  |                   |  |                    |  |                   |  |                  
|Weighted Assets)         |  | $11,982 |  | 13.86%            |  | >$3,457            |  | >4.0%             |  | >$5,185          
|                         |  |         |  |                   |  |                    |  |                   |  |                  
|Tier I Capital (to       |  |         |  |                   |  |                    |  |                   |  |                  
|Average Assets)          |  | $11,982 |  | 8.58%             |  | >$5,587            |  | >4.0%             |  | >$6,984          
|                         |  |         |  |                   |  |                    |  |                   |  |                  
|As of December 31, 2003: |  |         |  |                   |  |                    |  |                   |  |                  
|Total Capital (to Risk   |  |         |  |                   |  |                    |  |                   |  |                  
|Weighted Assets)         |  | $12,537 |  | 15.78%            |  | >$6,356            |  | >8.0%             |  | >$7,945          
|                         |  |         |  |                   |  |                    |  |                   |  |                  
|Tier I Capital (to Risk  |  |         |  |                   |  |                    |  |                   |  |                  
|Weighted Assets)         |  | $11,650 |  | 14.66%            |  | >$3,178            |  | >4.0%             |  | >$4,767          
|                         |  |         |  |                   |  |                    |  |                   |  |                  
|Tier I Capital (to       |  |         |  |                   |  |                    |  |                   |  |                  
|Average Assets)          |  | $11,650 |  | 9.31%             |  | >$5,004            |  | >4.0%             |  | >$6,225          





Page 33









NOTE 1 4
 -

FAIR MARKET DISCLOSURES OF FINANCIAL INSTRUMENTS



Carrying amounts and estimated fair values for financial instruments as of December 31 were as follows ($000's):



|                                   |   | 2004     |  | 2003  
|---------------------------------- | - | -------- |  | ------
|                                   |   | Carrying |  | Fair  
|                                   |   | Amount   |  | Value 
|                                   |   |          |  |       
|Financial Assets:                  |   |          |  |       
|Cash and due from banks            | $ | 3,891    |  | 3,891 
|Federal funds sold                 |   | 3,725    |  | 3,725 
|Interest bearing deposits in banks |   | 101      |  | 101   
|Investment and other securities    |   | 24,197   |  | 24,026
|Loans                              |   | 98,154   |  | 99,855
|                                   |   |          |  |       
|Financial Liabilities:             |   |          |  |       
|Time deposits                      |   | 58,487   |  | 58,577
|Other deposits                     |   | 63,332   |  | 63,332
|Short-term borrowings              |   | -        |  | -     



The fair value of off-balance sheet financial instruments at December 31, 2004 and 2003, was not material.



Fair values of financial instruments are based on various assumptions, including the discount rate and estimates of future cash flows.  Therefore, the fair values presented may not represent amounts that could be realized in actual transactions.  In addition, because the required disclosures exclude certain financial instruments and all nonfinancial instruments, any aggregation of the fair value amounts presented would not represent the underlying value of the Bank.  The following methods and assumptions were used to estimate the fair value of certain financial instruments:



Cash and cash equivalents

The carrying amounts presented are deemed to approximate fair value.



Interest-bearing deposits in banks

Fair value is estimated for these certificates of deposit by discounting the future cash flows at current rates.



Investment Securities

Fair values are based on quoted market prices, if available.  If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities.







Page 34











Loans

Fair value is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.



Deposits and short-term borrowings

The fair value of demand deposits, savings accounts and certain money market deposits is the amount payable on demand at the reporting date.  Short-term borrowings are due within 90 days of issuance and the fair value approximates carrying value.  The fair value of fixed-maturity certificates of deposit is estimated using the rates currently offered for deposits of similar remaining maturities.





NOTE 1 5
 -

PARENT COMPANY FINANCIAL INFORMATION



Condensed financial information for Community National Corporation (parent company only) for the year ended December 31, 2004 and 2003 follows ($000s):



|Condensed Balance Sheet                    |   |        |  |       
|------------------------------------------ | - | ------ |  | ------
|                                           |   | 2004   |  | 2003  
|Assets:                                    |   |        |  |       
|Cash                                       | $ | 343    |  | 242   
|Investment in subsidiary                   |   | 12,497 |  | 11,612
|Accounts receivable - subsidiary           |   | 317    |  | 264   
|Total assets                               | $ | 13,157 |  | 12,118
|                                           |   |        |  |       
|Liabilities:                               |   |        |  |       
|Accrued dividends                          | $ | 317    |  | 264   
|                                           |   |        |  |       
|Shareholders equity                       |   | 12,840 |  | 11,854
|Total liabilities and shareholders equity | $ | 13,157 |  | 12,118
|                                           |   |        |  |       
|                                           |   |        |  |       
|Condensed Statement of Income              |   |        |  |       
|                                           |   |        |  |       
|Dividends from subsidiary                  | $ | 317    |  | 264   
|Legal and professional fees                |   | (3 4
) |  | (33)  
|                                           |   |        |  |       
|Income before equity in undistributed      |   |        |  |       
|income of subsidiary                       |   | 28 3   |  | 231   
|                                           |   |        |  |       
|Equity in undistributed income             |   |        |  |       
|of subsidiary                              |   | 959    |  | 1,120 
|Net income                                 | $ | 1,24 2 |  | 1,351 
|                                           |   |        |  |       
|                                           |   |        |  |       

Page 35











|Condensed Statement of Cash Flows          |   |         |  |        
|------------------------------------------ | - | ------- |  | -------
|                                           |   |         |  |        
|Cash flows from operating activities:      |   |         |  |        
|Net income                                 | $ | 1,24 2  |  | 1,351  
|Equity in undistributed income of          |   |         |  |        
|Subsidiary                                 |   | (959)   |  | (1,120)
|(Increase) decrease in accounts receivable |   | (53)    |  | (264)  
|(Increase) decrease in other assets        |   | -       |  | -      
|Net cash provided by operating activities  |   | 2 30    |  | (33)   
|                                           |   |         |  |        
|Cash flows from financing activities:      |   |         |  |        
|Cash dividends paid                        |   | (12 9
) |  | (98)   
|Net cash provided by financing activities  |   | (12 9
) |  | (98)   
|                                           |   |         |  |        
|Net change in cash:                        |   | 101     |  | (131)  
|                                           |   |         |  |        
|Cash at beginning of year                  |   | 242     |  | 373    
|Cash at end of year                        | $ | 343     |  | 242    

Page 36



























ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING

AND FINANCIAL DISCLOSURE



None.





ITEM 8A.  CONTROLS AND PROCEDURES



a.

Disclosure controls and procedures .  
The Chief Executive Officer and the principal financial officer have carried
 out an evaluation of the
 e ffectiveness of the Company's
 disclosure controls and procedures that are
 designed to
ensure that information relating to the Company required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities
 and Exchange Commission's rules and forms
..  Based upon this evaluation
, the se
 officers have concluded
 that as of
December 31, 200
4 , the Company's
d isclosure
 controls and procedures were adequate.



b.

Changes in internal control over financial reporting .
   During the period
 covered by this report, t
here were
 no changes in the Company's
internal control over financial reporting that have materially
 affected, or are
 reasonably likely to materially affect, the Company's internal control over
 financial reporting
..





ITEM 8B.  OTHER INFORMATION



None.





Page 37











PART III





ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT





THE BOARD OF DIRECTORS



The following table sets forth for each director of the Company as of February 28, 2005 (a) the person's name, (b) age at December 31, 2004 (c) the year first elected as a director of the Company or Bank and (d) positions with the Company and the Bank, other than as a director, and principal occupation and business experience for the past five years.



|                    |     |          | POSITION WITH COMPANY;                                           
|------------------- | --- | -------- | -----------------------------------------------------------------
|                    |     | DIRECTOR | PRINCIPAL OCCUPATION:                                            
|NAME                | AGE | SINCE    | BUSINESS EXPERIENCE                                              
|                    |     |          |                                                                  
|Donald G. Burns     | 74  | 1983     | Chairman of CNC and CNB; Retired Physician                       
|                    |     |          |                                                                  
|Robert L. Campbell  | 72  | 1983     | Retired (Henderson Turf Farm)                                    
|                    |     |          |                                                                  
|W. Leslie Earnhart  | 84  | 1983     | Retired (Sand and gravel industry)                               
|                    |     |          |                                                                  
|T.C. Garland        | 72  | 1983     | Physician                                                        
|                    |     |          |                                                                  
|James L. Gross, Jr. | 57  | 1997     | President, Gross Lumber Co.                                      
|                    |     |          |                                                                  
|Stanley E. Kolb     | 73  | 1983     | Attorney                                                         
|                    |     |          |                                                                  
|Kent S. Libecap     | 48  | 2004     | Real Estate Broker and
Auctioneer                                
|                    |     |          |                                                                  
|Paul J. Scheuermann | 46  | 1994     | President and Chief Executive
Officer of the Company and
the Bank





Page 38











EXECUTIVE OFFICERS



The following table sets forth for each executive officer of the Company and the Bank as of February 28, 2005, (a) the person's name, (b) age at December 31, 2004, (c) the year first elected as an executive officer of the Company or Bank and (d) positions with the Company and the Bank.



|                    |     |            | POSITION WITH COMPANY;                                                             
|------------------- | --- | ---------- | -----------------------------------------------------------------------------------
|                    |     | YEAR FIRST | PRINCIPAL OCCUPATION:                                                              
|NAME                | AGE | ELECTED    | BUSINESS EXPERIENCE                                                                
|                    |     |            |                                                                                    
|Paul J. Scheuermann | 46  | 1986       | President and Chief Executive
Officer of the Company and
the Bank since 1994       
|                    |     |            |                                                                                    
|Jay A. Lees         | 62  | 1989       | Secretary of the Company;
Senior Vice President and
Senior Loan Officer of the
Bank





SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE



Based solely on a review of Forms 3, 4 and 5 furnished to Community National in the fiscal year ended December 31, 2004, Community National is not aware of the failure of any reporting person to timely file the above forms.





CODE OF ETHICS



The Board of Directors has adopted a Code of Ethics applicable to the Corporation's Chief Executive Officer, Chief Financial Officer and Controller.  A copy of the Code of Ethics is available on the Company's website at www.CommunityNatBank.com.  In addition, the Board of Directors has also adopted a Directors Code of Ethics and an Officers Code of Ethics which are each available on the website.





AUDIT COMMITTEE FINANCIAL EXPERTS



The Board of Directors has determined that none of the members of the Audit Committee meets the criteria of "financial expert" as defined in the rules of the Securities and Exchange Commission.  The Board has determined that it in order to fulfill all the duties and functions of the Board, it is not in the best interests of the Company to encompass a position on the Board solely because the person qualifies as a financial expert.  Instead, the Board has elected to engage Clark, Schaefer, Hackett and Company, Certified Public Accountants and Business Consultants ("CSH"), to perform in the capacity of financial expert.  CSH has been hired to perform outsourced internal audit services and will review financial reports, such as the annual report, 10-QSB and 10-KSB, prior to the reports being publicly released.  CSH will advise the Board on such matters and as needed or requested by the Board.







ITEM 10.  EXECUTIVE COMPENSATION



The information contained in the Company's definitive Proxy Statement on Schedule 14A under the captions "COMPENSATION OF EXECUTIVE OFFICERS" and "BOARD OF DIRECTORS - MEETINGS AND COMMITTEES" is incorporated herein by reference.





ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND

MANAGEMENT AND RELATED STOCKHOLDER MATTERS



The information contained in the Company's definitive Proxy Statement on Schedule 14A under the caption "VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF" and "CERTAIN BENEFICIAL OWNERS" is incorporated herein by reference.





ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS



The information contained in the Company's definitive Proxy Statement on Schedule 14A under the caption "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS" is incorporated herein by reference.





ITEM 13.  EXHIBITS



|(3.1)  | Articles of Incorporation of Community National Corporation are   incorporated herein by reference to the registrant's Registration  Statement on Form S-4 filed with the Securities and Exchange   Commission on March 6, 2001.
|------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                 
|(3.2)  | Regulations of the registrant are incorporated herein by reference to the registrant's Registration Statement on Form S-4 filed with the Securities and Exchange Commission on March 6, 2001.                                   
|       |                                                                                                                                                                                                                                 
|(10)   | Purchase and Assumption Agreement by and between Community National Bank and The First National Bank of Germantown, dated  March 19, 2004.                                                                                      
|       |                                                                                                                                                                                                                                 
|(21)   | Subsidiary of the registrant.                                                                                                                                                                                                   
|       |                                                                                                                                                                                                                                 
|(31.1) | Certification of Principal executive officer pursuant to Rule 13a-14(a)/15d-14(a) of the Sarbanes-Oxley Act of 2002.                                                                                                            
|       |                                                                                                                                                                                                                                 
|(31.2) | Certification of Principal financial officer pursuant to Rule 13a-14(a)/15d-14(a) of the Sarbanes-Oxley Act of 2002.                                                                                                            
|       |                                                                                                                                                                                                                                 
|(32)   | Certification pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                         
|       |                                                                                                                                                                                                                                 







ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES



The information contained in the Company's definitive Proxy Statement on Schedule 14A under the captions "REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS" is incorporated herein by reference.





Page 39











SIGNATURES





In accordance with Section 13 or 15(d) of the Exchange Act, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|      | COMMUNITY NATIONAL CORPORATION       
|----- | -------------------------------------
|      |                                      
|By:   | /s/ Paul J. Scheuermann              
|      | Paul J. Scheuermann                  
|      | President and Chief Executive Officer
|      |                                      
|Date: | March 15, 2005                       



In accordance with the Exchange Act, this report has been signed below by the persons on behalf of the registrant and in the capacities and on the dates indicated.



|NAME                    | TITLE                                | DATE          
|----------------------- | ------------------------------------ | --------------
|                        |                                      |               
|/s/ Donald G. Burns     | Director                             | March 15, 2005
|Donald G. Burns         |                                      |               
|                        |                                      |               
|/s/ Robert L. Campbell  | Director                             | March 15, 2005
|Robert L. Campbell      |                                      |               
|                        |                                      |               
|/s/ W. Leslie Earnhart  | Director                             | March 15, 2005
|W. Leslie Earnhart      |                                      |               
|                        |                                      |               
|/s/ T.C. Garland        | Director                             | March 15, 2005
|T.C. Garland            |                                      |               
|                        |                                      |               
|/s/James L. Gross, Jr.  | Director                             | March 15, 2005
|James L. Gross, Jr.     |                                      |               
|                        |                                      |               
|/s/Stanley E. Kolb      | Director                             | March 15, 2005
|Stanley E. Kolb         |                                      |               
|                        |                                      |               
|/s/ Kent S. Libecap     | Director                             | March 15, 2005
|Kent S. Libecap         |                                      |               
|                        |                                      |               
|/s/ Paul J. Scheuermann | President, Chief Executive Officer   | March 15, 2005
|Paul J. Scheuermann     | and Director                         |               
|                        |                                      |               
|/s/ Jay A. Lees         | Secretary                            | March 15, 2005
|Jay A. Lees             |                                      |               
|                        |                                      |               
|/s/ Gregory G. Eagan    | Vice President, Chief Financial      | March 15, 2005
|Gregory G. Eagan        | Officer, Community National          |               
|                        | Bank; Principal financial officer of |               
|                        | Community National Corporation       |               



Page 40











EXHIBIT INDEX





(a)

Exhibits filed herewith or incorporated by reference are set forth in the following table prepared in accordance with Item 601 of Regulation S-B.



|(3.1)  | Articles of Incorporation of Community National Corporation are   incorporated herein by reference to the registrant's Registration   Statement on Form S-4 filed with the Securities and Exchange   Commission on March 6, 2001.
|------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                                                                                  
|(3.2)  | By-laws of the registrant are herein incorporated herein by reference   to the registrant's Registration Statement on Form S-4 filed with   the Securities and Exchange Commission on March 6, 2001.                             
|       |                                                                                                                                                                                                                                  
|(10)   | Purchase and Assumption Agreement by and between Community    National Bank and The First National Bank of Germantown, dated    March 19, 2004.                                                                                  
|       |                                                                                                                                                                                                                                  
|(21)   | Subsidiary of the registrant.                                                                                                                                                                                                    
|       |                                                                                                                                                                                                                                  
|(31.1) | Certification of Principal executive officer pursuant to Rule 13a-14(a)/15d-14(a) of the Sarbanes-Oxley Act of 2002.                                                                                                             
|       |                                                                                                                                                                                                                                  
|(31.2) | Certification of Principal financial officer pursuant to Rule 13a-14(a)/15d-14(a) of the Sarbanes-Oxley Act of 2002.                                                                                                             
|       |                                                                                                                                                                                                                                  
|(32)   | Certification pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                          
|       |