UNITED STATES
                     SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D.C. 20549
                ___________________________________________

                                 FORM 10-QSB

[X]   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                            EXCHANGE ACT OF 1934

             For the quarterly period ended September 30, 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 No. 0-25437

                       COMMUNITY NATIONAL BANCORPORATION
               ------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

                Georgia                            58-1856963
         ----------------------        ----------------------------------
        (State of Incorporation)      (I.R.S. Employer Identification No.)

          561 E. Washington Avenue, P.O. Box 2619, Ashburn, Georgia 31714
          ---------------------------------------------------------------
                     (Address of Principal Executive Offices)

                                  (229) 567-9686
               ------------------------------------------------
               (Issuer's Telephone Number, Including Area Code)

                                  Not Applicable
               ------------------------------------------------
             (Former Name, Former Address and Former Fiscal Year,
                          if Changed Since Last Report)

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

                                Yes  X            No
                                    ----             ----

      APPLICABLE ONLY TO CORPORATE ISSUERS:  Indicate the number of shares
outstanding of each of the issuer's classes of common equity as of the latest
practicable date.

      As of November 10, 2004, the issuer had outstanding 2,008,595 shares of
Common Stock, no par value.

      Transitional Small Business Disclosure Format    Yes        No  X
                                                           ----      ----



                            PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS
-----------------------------

                      COMMUNITY NATIONAL BANCORPORATION
                              ASHBURN, GEORGIA
                         CONSOLIDATED BALANCE SHEETS

                                  ASSETS
                                  ------
                                                      (Unaudited)    (Audited)
                                                     September 30,  December 31,
                                                         2004           2003
                                                         ----           ----
Cash and due from banks                             $  2,893,354   $  3,801,214
Interest bearing deposits in other banks               6,443,970      5,239,000
Federal funds sold                                     6,611,000     18,442,000
                                                     -----------    -----------
Total Cash and Cash Equivalents                       15,948,324     27,482,214
Securities:
Available for sale, at fair values                    11,973,889     11,826,275
Loans, net                                           130,023,438    132,367,198
Property and equipment, net                            3,402,966      3,602,421
Other real estate owned                                  528,551        576,351
Goodwill, net                                          1,719,130      1,719,130
Other assets                                           3,852,093      3,295,717
                                                     -----------    -----------
Total Assets                                        $167,448,391   $180,869,306
                                                     ===========    ===========

                    LIABILITIES AND SHAREHOLDERS' EQUITY
                    ------------------------------------
Liabilities:
Deposits
  Non-interest bearing deposits                     $ 12,486,215   $ 18,435,530
  Interest bearing deposits                          130,836,858    140,470,992
                                                     -----------    -----------
  Total deposits                                     143,323,073    158,906,522

Note payable                                           2,900,000      2,900,000
FHLB borrowings                                        3,000,000         -  -
Other liabilities                                        895,710        667,437
                                                     -----------    -----------
  Total Liabilities                                 $150,118,783   $162,473,959
                                                     -----------    -----------

Commitments and contingencies

Shareholders' Equity:
Preferred stock, no par value,
  10,000,000 shares authorized,
  61,500 shares issued and outstanding              $    615,000   $    615,000
Common stock, no par value,
  50,000,000 shares authorized,
  2,008,595 shares issued and outstanding             11,488,452     11,488,452
Retained earnings                                      5,155,677      6,171,500
Unrealized gain on securities, net                        70,479        120,395
                                                     -----------    -----------
  Total Shareholders' Equity                        $ 17,329,608   $ 18,395,347
                                                     -----------    -----------
Total Liabilities and Shareholders' Equity          $167,448,391   $180,869,306
                                                     ===========    ===========


            Refer to notes to the consolidated financial statements.



                    COMMUNITY NATIONAL BANCORPORATION
                           ASHBURN, GEORGIA
               UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

                                                     For the nine months ended
                                                          September 30,
                                                    ---------------------------
                                                         2004           2003
                                                         ----           ----
Interest income                                     $  7,612,474   $ 11,786,097
Interest expense                                       2,419,415      4,945,073
                                                     -----------    -----------
Net interest income                                    5,193,059      6,841,024

Provisions for possible loan losses                    2,893,000      1,432,000
                                                     -----------    -----------

Net interest income
 after provisions for possible loan losses             2,300,059      5,409,024
                                                     -----------    -----------

Other Income:
Service charges                                          780,869        952,992
Other fees                                               204,763        169,892
(Loss) on sale of other real estate owned                (57,065)       (55,212)
Gain (loss) on sale of assets and securities              (6,064)        70,605
                                                     -----------    -----------
Total other income                                       922,503      1,138,277
                                                     -----------    -----------

Salaries and benefits                                  2,421,691      3,195,777
Advertising and business development                      65,347         93,727
Repairs and maintenance                                  135,511        183,765
Depreciation and amortization                            219,206        316,988
Legal and professional                                   465,997        621,469
Data processing                                          240,141        321,876
Regulatory fees and assessments                          134,171        213,879
Loss on sale of subsidiary Bank                           -  -        2,124,606
Other operating expenses                                 976,134      1,316,328
                                                     -----------    -----------
Total other expenses                                   4,658,198      8,388,415
                                                     -----------    -----------

Net (loss) before taxes                               (1,435,636)    (1,841,114)
Income tax (benefit)                                    (419,813)      (642,604)
                                                     -----------    -----------

Net (loss)                                          $ (1,015,823)  $ (1,198,510)
                                                     ===========    ===========

Basic (loss) per shares                             $      (0.51)  $      (0.60)
                                                     ===========    ===========

Diluted (loss) per share                            $      (0.51)  $      (0.60)
                                                     ===========    ===========


           Refer to notes to the consolidated financial statements.




                    COMMUNITY NATIONAL BANCORPORATION
                           ASHBURN, GEORGIA
               UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

                                                     For the three months ended
                                                          September 30,
                                                    ---------------------------
                                                         2004           2003
                                                         ----           ----
Interest income                                     $  2,533,924   $  3,680,515
Interest expense                                         834,847      1,413,838
                                                     -----------    -----------
Net interest income                                    1,699,077      2,266,677

Provisions for possible loan losses                      325,000        780,000
                                                     -----------    -----------

Net interest income
 after provisions for possible loan losses             1,374,077      1,486,677
                                                     -----------    -----------

Other Income:
Service charges                                          260,080        337,188
Other fees                                                80,282        (14,846)
(Loss) on sale of other real estate owned                 (4,482)       (55,212)
Gain (loss) on sale of assets and securities              (1,366)        69,450
                                                     -----------    -----------
Total other income                                       334,514        336,580
                                                     -----------    -----------

Salaries and benefits                                    804,392      1,005,029
Advertising and business development                      25,640          3,899
Repairs and maintenance                                   40,697         64,690
Depreciation and amortization                             73,110        102,139
Legal and professional                                   130,333         37,494
Data processing                                           78,048        111,351
Regulatory fees and assessments                           42,672         78,162
Loss on sale of subsidiary Bank                           -  -        2,124,606
Other operating expenses                                 309,885        461,459
                                                     -----------    -----------
Total other expenses                                   1,504,777      3,988,829
                                                     -----------    -----------

Net income (loss) before taxes                           203,814     (2,165,572)
Income tax (benefit)                                      84,042       (750,551)
                                                     -----------    -----------

Net income (loss)                                   $    119,772   $ (1,415,021)
                                                     ===========    ===========

Basic income (loss) per share                       $       0.06   $      (0.70)
                                                     ===========    ===========

Diluted income (loss) per share                     $       0.06   $      (0.70)
                                                     ===========    ===========


           Refer to notes to the consolidated financial statements.




                     COMMUNITY NATIONAL BANCORPORATION
                             ASHBURN, GEORGIA
              UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                       For the three quarters
                                                         ended September 30,
                                                    ---------------------------
                                                         2004           2003
                                                         ----           ----
Cash flows from operating activities                $  1,690,850   $    488,729
                                                     -----------    -----------

Cash flows from investing activities:
  Decrease in other real estate owned               $     47,800   $   (334,181)
  Securities, available-for-sale:
    Sale of securities                                     - -           -  -
    Purchase of securities                            (7,500,000)    (7,042,450)
    Maturity and paydowns                              7,379,900     15,255,294
  (Increase) in loans, net                              (549,240)    49,107,646
  Purchase of property and equipment                     (19,751)     1,601,769
                                                     -----------    -----------
    Net cash provided by investing activities       $   (641,291)  $ 58,588,078
                                                     -----------    -----------

Cash flows from financing activities:
  Increase in borrowings and FHLB funding           $  3,000,000   $  5,858,000
  (Decrease) in customer deposits                    (15,583,449)   (68,399,336)
  Issuance of preferred stock                             -  -          615,000
                                                     -----------    -----------
    Net cash used for financing activities          $(12,583,449)  $(61,926,336)
                                                     -----------    -----------

Net (decrease) in cash and cash equivalents         $(11,533,890)  $ (2,849,529)
Cash and cash equivalents, beginning of period        27,482,214     25,262,350
                                                     -----------    -----------
Cash and cash equivalents, end of period            $ 15,948,324   $ 22,412,821
                                                     ===========    ===========


               Refer to notes to the consolidated financial statements.

                      COMMUNITY NATIONAL BANCORPORATION
                             ASHBURN, GEORGIA
     CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
        FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2003 AND 2004


                                                          Accumulated
                                                             Other
                    Common Stock      Preferred             Compre-
                  ------------------    Stock   Retained    hensive
                 Shares    Zero Par   Zero Par  Earnings    Income    Total
                 ------    --------   --------  --------    ------    -----
Balance,
 December 31,
 2002           2,008,595 $11,488,452 $  - -   $7,378,253 $ 241,631 $19,108,336
                ---------  ----------  -------  ---------  --------  ----------

Issuance of 61,500
 shares of zero par
 preferred stock   - -         - -     615,000     - -       - -        615,000

Comprehensive (Loss):
---------------------
Net (loss),
 nine-month
 period ended
 Sept. 30, 2003    - -         - -       - -   (1,198,510)   - -     (1,198,510)

Net unrealized
 (loss) on
 securities,
 nine-month
 period ended
 Sept. 30, 2003    - -         - -       - -       - -      (99,656)    (99,656)
                ---------  ----------  -------  ---------  --------  ----------

Total
 comprehensive
 (loss)            - -         - -       - -   (1,198,510)  (99,656) (1,298,166)
                ---------  ----------  -------  ---------  --------  ----------

Balance,
 Sept. 30,
 2003           2,008,595 $11,488,452 $615,000 $6,179,743 $ 141,975 $18,425,170
                =========  ==========  =======  =========  ========  ==========

-------------------------------------

Balance,
 December 31,
 2003           2,008,595 $11,488,452 $615,000 $6,171,500 $ 120,395 $18,395,347
                ---------  ----------  -------  ---------  --------  ----------

Comprehensive (Loss):
---------------------
Net (loss),
 nine-month
 period ended
 Sept. 30, 2004    - -         - -       - -   (1,015,823)   - -     (1,015,823)

Net unrealized
 (loss) on
 securities,
 nine-month
 period ended
 Sept. 30, 2004    - -         - -       - -       - -      (49,916)    (49,916)
                ---------  ----------  -------  ---------   -------  ----------

Total
 comprehensive
 income (loss)     - -         - -       - -   (1,015,823)  (49,916) (1,065,739)
                ---------  ----------  -------  ---------   -------  ----------

Balance,
 Sept. 30,
 2004           2,008,595 $11,488,452 $615,000 $5,155,677 $  70,479  $17,329,608
                =========  ==========  =======  =========  ========   ==========


           Refer to notes to the consolidated financial statements.



                         COMMUNITY NATIONAL BANCORPORATION
                                 ASHBURN, GEORGIA
                     NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
                                SEPTEMBER 30, 2004


NOTE 1 - BASIS OF PRESENTATION

     The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-QSB.  Accordingly, they do not include all the
information and footnotes required by generally accepted accounting principles
for complete financial statements.  In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included.  Operating results for the three and nine-
month periods ended September 30, 2004 are not necessarily indicative of the
results that may be expected for the year ending December 31, 2004.  These
statements should be read in conjunction with the consolidated financial
statements and footnotes thereto included in Form 10-KSB for the year ended
December 31, 2003.

NOTE 2 - ORGANIZATION OF THE BUSINESS

     Community National Bancorporation, Ashburn, Georgia (the "Company") was
organized in August 1989 to serve as a holding company for a proposed de novo
bank, Community National Bank, Ashburn, Georgia ("CNB").  CNB was capitalized
with approximately $3.4 million when it commenced operations in August 1990.
During 1998, the Company issued and sold 400,000 shares of its common stock at
$10.00 per share.  The public offering yielded approximately $4 million, all of
which was invested in 1999, in a de novo bank, Cumberland National Bank, St.
Marys, Georgia ("Cumberland").  In February 2000, the Company purchased Tarpon
Financial Corporation, Tarpon Springs, Florida, a one-bank holding company with
respect to First National Bank, Tarpon Springs, Florida ("Tarpon").  The
acquisition was accounted for as a purchase as it resulted in approximately $1.9
million in goodwill.  During Calendar year 2003, the Company sold Cumberland to
an unrelated financial institution, leaving the Company with two subsidiary
banks.  CNB and Tarpon were chartered by and are currently regulated by the
Office of the Comptroller of the Currency (the "OCC").  The subsidiary banks are
primarily engaged in the business of obtaining deposits and providing
commercial, consumer and real estate loans to the general public.  Bank deposits
are each insured up to $100,000 by the Federal Deposit Insurance Corporation
(the "FDIC") subject to certain limitations imposed by the FDIC.

NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS

      In January 2003, the Financial Accounting Standards Board ("FASB") issued
Consolidation of Variable Interest Entities, an interpretation of Accounting
Research Bulleting No. 51 (the Interpretation), FASB Interpretation No. 46 ("FIN
46").  The purpose of this interpretation is to provide guidance on how to
identify a variable interest entity (VIE) and determine when the assets,
liabilities, non-controlling interests, and results of operations of a VIE need
to be included in a company's consolidated financial statements.  A company that
holds variable interest in an entity will need to consolidate that entity if the
company's interest in the VIE is such that the company will absorb a majority of
the VIE's expected losses and or receive a majority of the VIE's expected
residual returns, if they occur.  As of September 30, 2004, management believes
that the Company does not have any VIE's which would be consolidated under the
provisions of FIN 46.

      In December 2003, the FASB issued a revision of FIN 46.  The Revised
Interpretation codifies both the proposed modifications and other decisions
previously issued through certain FASB Staff Positions (FSPs) and supersedes the
original Interpretation to include:  (1) deferring the effective date of the
Interpretation's provisions for certain variable interests, (2) providing
additional scope exceptions for certain other variable interests, (3) clarifying
the impact of troubled debt restructurings on the requirement to reconsider (a)
whether an entity is a VIE or (b) which party is the primary beneficiary of a
VIE, and (4) revising Appendix B of the Interpretation to provide additional
guidance on what constitutes a variable interest.  The revised Interpretation is
effective for financial statements of periods ending after March 15, 2004.
Adoption of the revised FIN 46 did not have an adverse effect on the Company's
financial position, results of operations, or liquidity.

      SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and
Hedging Activities."  In April 2003, the FASB issued SFAS No. 149, which amends
and clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts and for
hedging activities under SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities," resulting in more consistent reporting of contracts as
either derivatives or hybrid instruments.  SFAS No. 149 is effective for
contracts entered into or modified after June 30, 2003, and should be applied
prospectively.  Adoption of SFAS No. 149 did not have a material impact on the
Company's financial position, results of operations or liquidity.

      SFAS No. 150, "Accounting for Certain Financial Instruments with
Characteristics of Both Liabilities and Equity."  In May 2003, the FASB issued
SFAS No. 150, which establishes standards for how certain financial instruments
with characteristics of both liabilities and equity should be measured and
classified.  Certain financial instruments with characteristics of both
liabilities and equity will be required to be classified as a liability.  This
statement is effective for financial instruments entered into or modified after
May 31, 2003, and July 1, 2003, for all other financial instruments issued by
limited life subsidiaries that have been indefinitely deferred from the scope of
the statements.  Adoption of SFAS 150 did not have a material impact on the
Company's financial position, results of operations or liquidity.

      Statement of Position 03-3 ("SOP 03-3"), "Accounting for Certain Loans or
Debt Securities Acquired in a Transfer."  In December 2003, the American
Institute of Certified Public Accounts ("AICPA") issued SOP 03-3.  SOP 03-3
requires loans acquired through a transfer, such as a business combination,
where there are differences in expected cash flows and contractual cash flows
due in part to credit quality be recognized at their fair value.  The excess of
contractual cash flows over expected cash flows is not to be recognized as an
adjustment of yield, loss accrual, or valuation allowance.  Valuation allowances
cannot be created nor "carried over" in the initial accounting for loans
acquired in a transfer on loans subject to SFAS 114, "Accounting by Creditors
for Impairment of a Loan."  This SOP is effective for loans acquired after
December 31, 2004, with early adoption encouraged.  The Company does not believe
the adoption of SOP 03-3 will have a material impact on the Company's financial
position, results of operations or liquidity.

      In December 2003, the FASB issued a revision of SFAS No. 132, Employer's
Disclosure about Pensions and Other Postretirement Benefits.  Most of the
provisions of the revised statements are effective for fiscal years ending after
December 15, 2003.  The Statement requires more detailed disclosures about plan
assets, investment strategies, benefit obligations, cash flows, and the
assumptions used in accounting for the plans.  Adoption of the revision to SFAS
No. 132 did not have a material impact on the Company's financial position,
results of operations or liquidity.

      On March 9, 2004, the SEC staff released Staff Accounting Bulletin ("SAB")
No. 105, Loan Commitments Accounted for as Derivative Instruments.  This SAB
clarifies staff's view that the fair value of the recorded loan commitments
should not consider the expected future cash flows related to the associated
servicing of the future loan. The provisions of SAB 105 must be applied to loan
commitments accounted for as derivatives that are entered into after March 31,
2004.  The staff will not object to the application of existing accounting
practices to loan commitments accounted for as derivatives that are entered into
on or before March 31, 2004, with appropriate disclosures. On April 1, 2004, the
Company adopted the provisions of SAB 105.  The Company does not anticipate that
the adoption of SAB 105 will have a material impact on the Company's financial
position, results of operations or liquidity.


ITEM 2.  MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATION.

      The purpose of the disclosure in this section is to convey information
relating to the financial condition and results of operations of the Company
that may not be readily apparent from a review of the consolidated financial
statements and the notes thereto appearing elsewhere in this report.  The
following discussion of the Company's financial condition and results of
operations should be read in conjunction with the Company's consolidated
financial statements, related notes and other financial information.

      Certain statements that the Company may make from time to time, including
statements contained in this report or incorporated by reference into this
report, constitute "forward-looking statements" within the meaning of the
federal securities laws.  Forward-looking statements include all statements
other than statements of historical fact, and  may sometimes be identified by
words such as "estimate," "plan," "intend," "expect," "anticipate," "believe,"
"will" and similar expressions used in conjunction with, among other things,
discussions of plans, objectives, future operations, financial performance or
other events.  Such forward-looking statements are not guarantees of future
performance and are subject to risks and uncertainties. Factors that could cause
the actual results to differ materially from those expressed in any forward-
looking statement made by, or on behalf of, the Company include the following,
some of which are described in greater detail in this report: (i) the effect of
changes in laws and regulations, including federal securities laws and
regulations and federal and state banking laws and regulations, with which the
Company or its subsidiary bank must comply, and the associated costs of
compliance with such laws and regulations either currently or in the future;
(ii) the effect of changes in accounting policies and practices, as may be
adopted by the regulatory agencies as well as by the Financial Accounting
Standards Board, or of changes in the Company's organization, compensation and
benefit plans; (iii) the effect on the Company's competitive position within
its market area of the increasing consolidation within the banking and financial
services industries, including the increased competition from larger regional
and out-of-state banking organizations as well as non-bank providers of various
financial services; (iv) the inability of CNB to comply with the terms of its
agreement with banking regulators; (v) the effect of changes in interest rates;
and (vi) the effect of changes in the business cycle and downturns in local,
regional or national economies.

      The foregoing list of important factors is not exclusive.  Readers are
cautioned not to place undue reliance on any forward-looking statements.
Community National Bancorporation does not undertake to update any forward-
looking statement, whether written or oral, that it or its agents may make from
time to time.


CRITICAL ACCOUNTING POLICIES

      The Company has adopted various accounting policies which govern the
application of accounting principles generally accepted in the U.S. in the
preparation of financial statements.  The Company's significant accounting
policies are described in Note 2 to the Company's consolidated financial
statements included in its Form 10-KSB for the fiscal year ended December 31,
2003.  Certain accounting policies require the Company to make significant
assumptions and estimates, the use of which has a material impact on the
carrying value of certain assets and liabilities, and could potentially result
in materially different financial results under different assumptions and
conditions.  For further discussion of the accounting policies that management
believes are the most critical upon which the Company's financial condition
depends, and which involve the most complex or subjective decisions or
assessments, see the discussion of critical accounting policies under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the Company's Form 10-KSB for the fiscal year ended December 31,
2003.


RECENT DEVELOPMENTS

      On October 20, 2004, the Company completed its previously announced sale
of Tarpon to Gulf Atlantic Financial Group, Inc.  The sale of Tarpon was
completed pursuant to the terms of a previously announced Stock Purchase and
Sale Agreement, originally dated October 21, 2003 and amended on January 29,
2004, June 29, 2004 and September 22, 2004.  The total proceeds received by the
Company upon closing was approximately $6.0 million, of which approximately $2.9
million was used to repay the outstanding balance on the Company's loan from
Rivoli Bank, and approximately $665,000 was used to redeem in full the Company's
outstanding Series A Preferred Stock held by the Company's directors, including
all accrued and unpaid dividends.  The remainder of the sale proceeds will be
used for general corporate purposes.  With the sale of Tarpon, management's
efforts to contract the size of the Company have been largely implemented.  The
Company will seek to maintain its present size while continuing to seek to
improve asset quality.

      In connection with the Company's sale of Tarpon, W. Paul Gephart resigned
as the Company's chief financial officer, effective as of the date of the sale.
Mr. Gephart had performed his duties as the Company's chief financial officer at
the Tarpon location in Tarpon Springs, Florida.  The Company has not appointed a
replacement for Mr. Gephart.  The Company's chief executive officer, Theron G.
Reed, is currently acting as chief financial officer of the Company.


RESULTS OF OPERATIONS

      THREE- AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2004 COMPARED TO THREE-
AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2003

      For the three-month periods ended September 30, 2004 and September 30,
2003, the Company had net income of $119,772, or $.06 per share, and a net loss
of $1,415,021, or $.70 per share, respectively.  For the nine-month period ended
September 30, 2004, the Company had a net loss of $1,015,823, or $.51 per share,
as compared to a net loss of $1,198,510, or $0.60 per share, for the nine month
period ended September 30, 2003.  The improvement in net earnings is
attributable primarily to the following factors, which are discussed in greater
detail below:

   The Company's non-interest expense decreased from $3.99 million and $8.39
   million for the three- and nine-month periods ended September 30, 2003,
   respectively, to $1.50 million and $4.69 million for the three- and nine-
   month periods ended September 30, 2004, respectively.  Included in non-
   interest expense for the three- and nine-month periods ended September 2003
   was a loss of $2.17 million on the sale of the Company's Cumberland
   subsidiary to an unrelated third party financial institution in the three-
   month period ended September 30, 2003.  The remaining decline in non-interest
   expense during 2004 is primarily attributable to the decreased size of the
   Company due to the sale of Cumberland and the planned contraction of the
   Company during the first nine months of 2004.

   *   The improvements in net earnings resulting from the decreased non-
       interest expense were partially offset by decreases in net interest
       income.  Net interest income, prior to provision for loan losses, was
       $1.70 million for the three-month period ended September 30, 2004, as
       compared to $2.27 million for the three-month period ended September 30,
       2003.  For the nine-month periods ended September 30, 2004 and September
       30, 2003, net interest income, prior to provision for loan losses, was
       $5.19 million and $6.84 million, respectively.  The declines in net
       interest income is attributable largely to the decline in average earning
       assets, from $227.0 million for the nine-month period ended September 30,
       2003 to $164.0 million for the nine-month period ended September 30,
       2004.  Of the $63.0 million decline in average earning assets from the
       nine-month period ended September 30, 2003 to the nine-month period ended
       September 30, 2004, $44.0 million is due to the sale of Cumberland in
       September 2003.

   *   An increase in provisions for loan losses during 2004 also partially
       offset improved earnings resulting from reduced non-interest expenses.
       The provision for loan losses for the three- and nine- month periods
       ended September 30, 2004 was $0.33 million and $2.89 million,
       respectively.  For the three- and nine- month periods ended September 30,
       2003, provision for loan losses was $0.78 million and $1.43 million,
       respectively.  The significantly larger provision for loan losses in the
       nine-month period ended September 30, 2004 was primarily due to heavy
       loan charge-offs during the 2004 period.  Management determined that the
       charge-offs were appropriate in connection with its ongoing review and
       analysis of the Company's loan portfolio and its continued efforts to
       reduce high-risk loans and lower the Company's risk profile.

      As of September 30, 2004, the Company's allowance for loan losses amounted
to $2.56 million, or 1.93% of gross loans, as compared to $2.7 million, or 1.98%
of gross loans as of December 31, 2003.  Management considers the allowance for
loan losses to be adequate to absorb future losses.  However, there can be no
assurance that charge-offs in future periods will not exceed the allowance for
loan losses or that additional provisions to the allowance will not be required.

      NET INTEREST INCOME

      The Company's results of operations are determined by its ability to
effectively manage interest income and expense, minimize loan and investment
losses, generate non-interest income, and control non-interest expense.  Since
interest rates are determined by market forces and economic conditions beyond
the control of the Company, the ability to generate net interest income is
dependent upon the Company's ability to maintain an adequate spread between the
rate earned on earning assets and the rate paid on interest-bearing liabilities,
such as deposits and borrowings.  Thus, net interest income is a key performance
measure for the Company.

      Net interest income, before provision for possible loan losses, was $1.70
million for the three-month period ended September 30, 2004 as compared to $2.27
million for the corresponding period ended September 30, 2003.  For the nine-
month period ended September 30, 2004, net interest income before provision for
loan losses was $5.19 million as compared to $6.84 million for the nine-month
period ended September 30, 2003.  For the nine-month period ended September 30,
2004, the Company's average earning assets were $164 million, as compared to
$227 million for the nine-month period ended September 30, 2003.  Earning assets
include interest-bearing bank balances, federal funds sold, securities and net
loans.  Approximately $44.0 million of this decrease is attributable to the sale
of Cumberland in September 2003, and approximately $18.0 million is a result of
loan reductions, primarily at CNB, as the Company continues its efforts to
reduce higher-risk loans and strengthen the quality of its loan portfolio.

      Due to the decrease in average earning assets and, to a lesser extent,
lower yields, gross interest income declined from $3.68 million and $11.79
million for the three months and nine months ended September 30, 2003,
respectively, to $2.53 million and $7.61 million for the three months and nine
months ended September 30, 2004 respectively.  Interest expense declined from
$1.41 million for the three months ended September 30, 2003 to $0.83 million for
the three months ended September 30, 2004.  Interest expense declined from $4.95
for the nine months ended September 30, 2003 to $2.42 million for the nine
months ended September 30, 2004.  The decrease in interest expense was primarily
due to a decrease in interest-bearing liabilities as well as a decline in the
cost of funds.  Interest-bearing deposits averaged $200.1 million for the nine-
month period ended September 30, 2003 as compared to $135.4 million for the
comparable period ended September 30, 2004.  The decrease is primarily due to
the sale of Cumberland and a reduction in deposits as part of the planned
contraction of the Company during the first nine months of 2004.

      Net yield on earning assets is computed by subtracting interest expense
from interest income and dividing the resulting figure by average earning assets
for the periods in question.  Net yield on average earning assets for the nine-
month periods ended September 30, 2004 and September 30, 2003 was 4.22% and
4.39%, respectively.  The decline in the net yield on earning assets is
primarily attributable to management's efforts to reduce the risk profile of the
loan portfolio.  In general, yields on high quality loans are lower than yields
on loans of lesser quality.

      PROVISION FOR LOAN LOSSES

      Provision for loan losses during the three-month period ended September
30, 2004 was $0.33 million, as compared to $0.78 million for the three-month
period ended September 30, 2003.  For the nine-month periods ended September 30,
2004 and September 30, 2003, provision for loan losses was $2.89 million and
$1.43 million, respectively.  The substantial increase in provision for loan
losses during 2004 was primarily due to relatively high levels of loan charge-
offs and management's conclusion that an increase in the Company's allowance for
loan losses was appropriate following a close review and analysis of the
Company's loan portfolio during the three-month period ended June 30, 2004.
During the nine months ended September 30, 2004, the Company charged off loans,
net of recoveries, totaling $3.0 million.  Management determined that the
charge-offs were appropriate in connection with its ongoing review and analysis
of the Company's loan portfolio and its continued efforts to reduce high-risk
loans and lower the Company's risk profile.  Primarily as a result of the loan
charge-offs, during the nine months ended September 30, 2004 total impaired
loans decreased by $1.6 million, from $10.1 million at December 31, 2003 to $8.5
million at September 30, 2004.

      NON-INTEREST INCOME

      Non-interest income for the three-month period ended September 30, 2004
and 2003 remained virtually unchanged at $0.33 million.  For the nine-month
periods ended September 30, 2004 and 2003, non-interest income amounted to
approximately $0.9 million and $1.1 million, respectively.  The decline is due
to a reduction in average deposits of approximately $60.5 million, of which
$43.0 million is attributed to the sale of Cumberland, and a corresponding
decrease in transactional and other account fees.  As a percent of total average
assets, non-interest income for the nine-month periods ended September 30, 2004
and 2003 remained unchanged at 0.70%.

      NON-INTEREST EXPENSE

      Non-interest expense declined from $3.99 million for the three-month
period ended September 30, 2003 to $1.50 million for the three-month period
ended September 30, 2004.  Non-interest expense declined from $8.40 million for
the nine-month period ended September 30, 2003 to $4.7 million for the nine-
month period ended September 30, 2004.  Included in non-interest expense for the
three- and nine-month periods ended September 2003 was a loss of $2.17 million
on the sale of the Company's Cumberland subsidiary to an unrelated third party
financial institution in the three-month period ended September 30, 2003.  The
remaining decrease in non-interest expense during 2004 was primarily due to the
sale of Cumberland and the contraction in the Company's size.  As a percentage
of average assets, non-interest expense decreased from 5.19% during the nine-
month period ended September 30, 2003 to 3.54% during the nine-month period
ended September 30, 2004.


LIQUIDITY

      Liquidity represents the ability to provide steady sources of funds for
loan commitments and investment activities, as well as to maintain sufficient
funds to cover deposit withdrawals and payment of debt and operating
obligations.  The Company believes it has adequate liquidity to satisfy its
capital requirements for at least the next 12 months, and is not aware of any
trends or other uncertainties that are reasonably likely to have a material
adverse effect on the Company's liquidity.  Below are the pertinent liquidity
balances and ratios as of September 30, 2004 and December 31, 2003:

                                           September 30,  December 31,
                                               2004           2003
                                               ----           ----
                                              (Dollars in thousands)
      Cash and cash equivalents              $15,948         $27,482
      CDs, over $100,000
         to total deposits ratio               15.9%           14.4%
      Loan to deposit ratio                    90.7%           83.3%
      Securities to total assets ratio          7.1%            6.5%
      Brokered deposits                         --              --

      Cash and cash equivalents are the Company's primary source of liquidity,
and securities available for sale represent a secondary source of liquidity.
The Company's management monitors appropriate levels and maturities of earning
assets and interest-bearing liabilities to ensure that adequate funds are
available to meet customer withdrawals and loan demand.  The increase in the
Company's loan to deposit ratio during the nine months ended September 30, 2004
was primarily a result of the reduction in deposits as management strategically
contracted the size of the bank.

      On March 31, 2002, the Company obtained a ten-year $6 million line of
credit facility from an unrelated financial institution.  On April 1, 2003, a
principal payment of $504,200 was due under the facility.  On April 9, 2003, to
enable the Company to make the required principal payment, the Company issued,
in the aggregate, 61,500 shares of non-voting Series A Preferred Stock to its
directors for an aggregate price of $615,000.  The Company used the proceeds to
make the principal payment and for working capital.

      In July 2003, the Company repaid the outstanding balance on the line of
credit with the proceeds of a new $5.1 million loan from the son of Jimmie Ann
Ward, a director of the Company (the "Ward Loan").  The Company used
approximately $2.2 million of the proceeds from the sale of Cumberland, in
September 2003, to reduce the outstanding principal amount due under the Ward
Loan to approximately $2.9 million.  In July 2004, the Company repaid the
balance of the Ward Loan with the proceeds of a new $2.9 million loan from
Rivoli Bank, an unrelated financial institution (the "Rivoli Loan").

      In October 2003, the Company entered into an agreement to sell Tarpon to
Gulf Atlantic Financial Group, Inc.  In October 2004, after the end of the
period covered by this report, the Company completed the sale of Tarpon for
proceeds of approximately $6.0 million.  Approximately $2.9 million of the sale
proceeds were used to repay the outstanding balance on the Rivoli Loan, and
approximately $665,000 were used to redeem in full all of the Company's
outstanding Series A Preferred Stock held by the Company's directors, including
all accrued and unpaid dividends.  The remainder of the sale proceeds will be
used for general corporate purposes.

      During the three-month period ended September 30, 2004, the Company
borrowed $3.0 million from the Federal Home Loan Bank of Atlanta ("FHLB") to
fund loans.  The Company's management determined that at the present time,
funding loans with FHLB borrowings would be less costly and provide more
flexibility than attracting additional deposits.


CAPITAL ADEQUACY

      The Company opened for business in 1990 with $3.4 million in its capital
accounts.  By September 30, 2004, the Company's shareholders' equity had
increased to $17.3 million through the sale of additional common stock and
through retained earnings.  However, the Company's shareholders' equity
decreased by $1.0 million during the nine-month period ended September 30, 2004
due to the Company's loss of $1.0 million during the same time period.  As
evidenced by the table below, the Company and its remaining subsidiary bank
comply with the minimum capital guidelines for "well capitalized" banks.  Below
are the capital ratios of CNB and the Company on a consolidated basis, as well
as the minimum capital guidelines for "well capitalized" banks.

                                                            Minimum
                                                           Regulatory
                                    September 30, 2004     Requirement
                                    ------------------     -----------
   CNB
   ---
     Tier 1 Capital Ratio                  12.3%               8.0%
     Total Risk-Based Capital Ratio        13.5%              10.0%
     Leverage Ratio                        10.2%               4.0%

   Company--Consolidated
   ---------------------
     Tier 1 Capital Ratio                  12.3%               8.0%
     Total Risk-Based Capital Ratio        13.5%              10.0%
     Leverage Ratio                         9.6%               4.0%

      CNB is subject to an informal agreement with the OCC that imposes higher
minimum capital ratios on CNB, including a risk-based Tier 1 capital ratio of at
least 10%, and a total risk-based capital ratio of at least 12%.  As of
September 30, 2004, Tarpon was also subject to an agreement with the OCC
imposing higher minimum capital ratios on Tarpon.  Tarpon was sold to an
unrelated third party in October 2004.

      During the nine-month period ended September 30, 2004, total assets
decreased by $13.4 million, to $167.4 million.  This decline in assets was
effected as part of management's efforts to strategically contract the Company
in order to increase its asset quality.  During the nine-month period ended
September 30, 2004, cash and cash equivalents decreased by $11.6 million, to
$15.9 million.  This decrease was due primarily to a decrease in high-rate
deposits in connection with the Company's planned contraction.  During the nine
months ended September 30, 2004, securities increased by $0.1 million, to $12.0
million; loans decreased by $2.3 million, to $130.0 million; property and
equipment decreased by $.2 million, to $3.4 million; and other assets, including
goodwill, increased by $0.6 million, to $5.6 million.  To accommodate the
decline in assets, deposits declined by $15.6 million to $143.3 million,
borrowings and other liabilities increased by $3.3 million, and shareholders'
equity decreased by $1.1 million to $17.3 million.


OFF-BALANCE SHEET ARRANGEMENTS

      In the normal course of business, the Company has outstanding various
commitments to extend credit in the form of unused loan commitments and standby
letters of credit that are not reflected in the Company's consolidated financial
statements.  Since these commitments may expire without being exercised, these
commitments do not necessarily represent future funding requirements.  The
Company uses the same credit and collateral policies in making commitments as
those it uses in making loans.

      As of September 30, 2004, the Company had outstanding unused loan
commitments of approximately $8.3 million, and standby letters of credit of
approximately $79 thousand were outstanding.  Various assets collateralize the
majority of these commitments.  The Company does not anticipate that it will
suffer any material losses as a result of these transactions.


ITEM 3.  CONTROLS AND PROCEDURES

      As of the end of the period covered by this report, the company carried
out an evaluation, under the supervision and with the participation of the
company's management, including the Company's Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and operation of the
company's disclosure controls and procedures pursuant to Rule 13a-15(b) under
the Exchange Act.  Based upon that evaluation, the Chief Executive Officer and
Chief Financial Officer concluded that the company's disclosure controls and the
procedures are effective.  There were no changes in the company's internal
control over financial reporting or in other factors identified in connection
with this evaluation that occurred during the period covered by this report that
has materially affected, or is reasonably likely to materially affect, the
company's internal control over financial reporting.


ITEM 6.  EXHIBITS.

       (a)  Exhibits:

            31.1 - Certification of Principal Executive Officer and Principal
            Financial Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a)
            (filed herewith).

            32.1 - Certification of Principal Executive Officer and Principal
            Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
            pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished
            herewith).



                                     SIGNATURES

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

                                    COMMUNITY NATIONAL BANCORPORATION
                                    (Registrant)

                                    By: /s/Theron G. Reed
                                        -----------------------------
                                        Theron G. Reed
                                        President, Chief Executive Officer and
                                        Acting Chief Financial Officer
Date:  November 15, 2004                (Principal Executive Officer, Principal
                                        Financial Officer and Duly Authorized
                                        Officer)