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 June 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 August 1, 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)
                                                        June 30,    December 31,
                                                         2004           2003
                                                         ----           ----
Cash and due from banks                             $  3,061,956   $  3,801,214
Interest bearing deposits in other banks               6,938,970      5,239,000
Federal funds sold                                     3,024,000     18,442,000
                                                     -----------    -----------
Total Cash and Cash Equivalents                       13,024,926     27,482,214
Securities:
Available for sale, at fair values                    11,731,415     11,826,275
Loans, net                                           130,550,915    132,367,198
Property and equipment, net                            3,468,112      3,602,421
Other real estate owned                                  589,051        576,351
Goodwill, net                                          1,719,130      1,719,130
Other assets                                           3,704,075      3,295,717
                                                     -----------    -----------
Total Assets                                        $164,787,624   $180,869,306
                                                     ===========    ===========

                    LIABILITIES AND SHAREHOLDERS' EQUITY
                    ------------------------------------
Liabilities:
Deposits
  Non-interest bearing deposits                     $ 12,301,121   $ 18,435,530
  Interest bearing deposits                          131,823,293    140,470,992
                                                     -----------    -----------
  Total deposits                                     144,124,414    158,906,522

Note payable                                           2,900,000      2,900,000
Other liabilities                                        746,489        667,437
                                                     -----------    -----------
  Total Liabilities                                 $147,770,903   $162,473,959
                                                     -----------    -----------

Commitments and contingencies

Shareholder's 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                                      5,035,905      6,171,500
Unrealized (loss) on securities, net                    (122,636)       120,395
                                                     -----------    -----------
  Total Shareholders' Equity                        $ 17,016,721   $ 18,395,347
                                                     -----------    -----------
Total Liabilities and Shareholders' Equity          $164,787,624   $180,869,306
                                                     ===========    ===========


            Refer to notes to the consolidated financial statements.



                    COMMUNITY NATIONAL BANCORPORATION
                           ASHBURN, GEORGIA
               UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

                                                     For the six months ended
                                                             June 30,
                                                    ---------------------------
                                                         2004           2003
                                                         ----           ----
Interest income                                     $  5,078,550   $  8,105,582
Interest expense                                       1,584,568      3,531,235
                                                     -----------    -----------
Net interest income                                    3,493,982      4,574,347

Provisions for possible loan losses                    2,568,000        652,000
                                                     -----------    -----------

Net interest income
 after provisions for possible loan losses               925,982      3,922,347
                                                     -----------    -----------

Other Income:
Service charges                                          520,789        615,804
Other fees                                               124,481        184,738
Loss on sale of other real estate owned                  (52,583)        -  -
Gain (loss) on sale of assets and securities              (4,698)         1,155
                                                     -----------    -----------
Total other income                                       587,989        801,697
                                                     -----------    -----------

Salaries and benefits                                  1,617,299      2,190,748
Advertising and business development                      39,707         89,828
Repairs and maintenance                                   94,814        119,075
Depreciation and amortization                            146,096        214,849
Legal and professional                                   335,664        583,975
Data processing                                          162,093        210,525
Regulatory fees and assessments                           91,499        135,717
Other operating expenses                                 666,249        854,869
                                                     -----------    -----------
Total other expenses                                   3,153,421      4,399,586
                                                     -----------    -----------

Net income (loss) before taxes                        (1,639,450)       324,458
Income tax (benefit)                                    (503,855)       107,947
                                                     -----------    -----------

Net income (loss)                                   $ (1,135,595)  $    216,511
                                                     ===========    ===========

Basic income (loss) per share                       $      (0.57)  $       0.11
                                                     ===========    ===========

Diluted income (loss) per share                     $      (0.57)  $       0.11
                                                     ===========    ===========


           Refer to notes to the consolidated financial statements.




                    COMMUNITY NATIONAL BANCORPORATION
                           ASHBURN, GEORGIA
               UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

                                                     For the three months ended
                                                             June 30,
                                                    ---------------------------
                                                         2004           2003
                                                         ----           ----
Interest income                                     $  2,529,897   $  3,958,950
Interest expense                                         771,697      1,689,547
                                                     -----------    -----------
Net interest income                                    1,758,200      2,269,403

Provisions for possible loan losses                    1,978,000        302,000
                                                     -----------    -----------

Net interest income
 after provisions for possible loan losses              (219,800)     1,967,403
                                                     -----------    -----------

Other Income:
Service charges                                          272,105        310,905
Other fees                                                86,842         86,197
Loss on sale of other real estate owned                  (37,901)        -  -
Gain (loss) on sale of assets and securities                (339)        -  -
                                                     -----------    -----------
Total other income                                       320,707        397,102
                                                     -----------    -----------

Salaries and benefits                                    794,478      1,098,275
Advertising and business development                      21,949         45,581
Repairs and maintenance                                   46,628         56,357
Depreciation and amortization                             73,048        106,383
Legal and professional                                   212,884        450,491
Data processing                                           78,433         98,666
Regulatory fees and assessments                           45,190         67,621
Other operating expenses                                 335,190        446,028
                                                     -----------    -----------
Total other expenses                                   1,607,800      2,369,402
                                                     -----------    -----------

Net income (loss) before taxes                        (1,506,893)        (4,897)
Income tax (benefit)                                    (460,992)        (1,635)
                                                     -----------    -----------

Net income (loss)                                   $ (1,045,901)  $     (3,262)
                                                     ===========    ===========

Basic income (loss) per share                       $      (0.52)  $      (0.00)
                                                     ===========    ===========

Diluted income (loss) per share                     $      (0.52)  $      (0.00)
                                                     ===========    ===========


           Refer to notes to the consolidated financial statements.




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

                                                       For the quarter ended
                                                             June 30,
                                                    ---------------------------
                                                         2004           2003
                                                         ----           ----
Cash flows from operating activities                $  1,271,124   $  2,131,430
                                                     -----------    -----------

Cash flows from investing activities:
  (Increase) in other real estate owned             $    (12,700)  $    (31,335)
  Securities, available-for-sale:
    Sale of securities                                     - -          500,469
    Purchase of securities                            (7,500,000)    (7,042,450)
    Maturity and paydowns                              7,329,900      7,605,942
  (Increase) in loans, net                              (751,717)     3,746,708
  Purchase of property and equipment                     (11,787)       (16,585)
                                                     -----------    -----------
    Net cash provided by investing activities       $   (946,304)  $  4,762,749
                                                     -----------    -----------

Cash flows from financing activities:
  (Decrease) in customers' deposits                 $(14,782,108)  $(16,260,429)
  Increase in borrowings and FHLB funding                 -  -        7,495,800
  Issuance of preferred stock                             -  -          615,000
                                                     -----------    -----------
    Net cash used for financing activities          $(14,782,108)  $ (8,149,629)
                                                     -----------    -----------

Net (decrease) in cash and cash equivalents         $(14,457,288)  $ (1,255,450)
Cash and cash equivalents, beginning of period        27,482,214     25,262,350
                                                     -----------    -----------
Cash and cash equivalents, end of period            $ 13,024,926   $ 24,006,900
                                                     ===========    ===========


               Refer to notes to the consolidated financial statements.

                      COMMUNITY NATIONAL BANCORPORATION
                             ASHBURN, GEORGIA
     CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
             FOR THE SIX-MONTH PERIODS ENDED JUNE 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 Income:
---------------------
Net income,
 six-month
 period ended
 June 30, 2003     - -         - -       - -      216,511    - -        216,511

Net unrealized
 gain on
 securities,
 six-month
 period ended
 June 30, 2003     - -         - -       - -       - -       24,187      24,187
                ---------  ----------  -------  ---------  --------  ----------

Total
 comprehensive
 income            - -         - -       - -      216,511    24,187     240,698
                ---------  ----------  -------  ---------  --------  ----------

Balance,
 June 30,
 2003           2,008,595 $11,488,452 $615,000 $7,594,764 $ 265,818 $19,964,034
                =========  ==========  =======  =========  ========  ==========

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

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

Comprehensive Income:
---------------------
Net (loss),
 six-month
 period ended
 June 30, 2004     - -         - -       - -   (1,135,595)   - -     (1,135,595)

Net unrealized
 (loss) on
 securities,
 six-month
 period ended
 June 30, 2004     - -         - -       - -       - -     (243,031)   (243,031)
                ---------  ----------  -------  ---------   -------  ----------

Total
 comprehensive
 income (loss)     - -         - -       - -   (1,135,595) (243,031) (1,378,626)
                ---------  ----------  -------  ---------   -------  ----------

Balance,
 June 30,
 2004           2,008,595 $11,488,452 $615,000 $5,035,905 $(122,636) $17,016,721
                =========  ==========  =======  =========  ========   ==========


           Refer to notes to the consolidated financial statements.



                         COMMUNITY NATIONAL BANCORPORATION
                                 ASHBURN, GEORGIA
                     NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
                                  JUNE 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 six-
month periods ended June 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 June 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 and state banking laws and
regulations, with which the Company or its subsidiary banks 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) a delay or failure to
consummate the previously announced sale of the Company's subsidiary First
National Bank, which sale is subject to various conditions, including a
financing condition; (v) the inability of the Company's subsidiary banks to
comply with the terms of their agreements with banking regulators; (vi) the
effect of changes in interest rates; and (vii) 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.


RESULTS OF OPERATIONS

      THREE- AND SIX-MONTH PERIODS ENDED JUNE 30, 2004 COMPARED TO THREE- AND
SIX-MONTH PERIODS ENDED JUNE 30, 2003

      For the three-month periods ended June 30, 2004 and June 30, 2003,
respectively the Company had a net loss of $1.05 million, or $.52 per share,
and $3 thousand, or $.00 per share, respectively.  For the six-month period
ended June 30, 2004, the Company had a net loss of $1.14 million, or $.57 per
share, as compared to net income of $0.22 million, or $0.11 per share, for the
six month period ended June 30, 2003.  The decrease in net income is
attributable primarily to the following factors, which are discussed in greater
detail below:

      *  Net interest income, prior to provision for loan losses, was $1.76
         million for the three-month period ended June 30, 2004, as compared
         to $2.27 million for the three-month period ended June 30, 2003.  For
         the six-month periods ended June 30, 2004 and June 30, 2003, net
         interest income, prior to provision for loan losses, was $3.49 million
         and $4.57 million, respectively.  The declines in net interest income
         is attributable largely to the decline in average earning assets, from
         $229.6 million at June 30, 2003 to $155.4 million at June 30, 2004.
         Of the $74.2 million decline in average earning assets from June 30,
         2003 to June 30, 2004, $48.5 million is due to the sale of Cumberland
         in September 2003.
      *  The provision for loan losses for the three- and six- month periods
         ended June 30, 2004 was $1.98 million and $2.57 million, respectively.
         For the three- and six- month periods ended June 30, 2003, provision
         for loan losses was $0.30 million and $0.65 million, respectively.
         The significantly larger provision for loan losses in 2004 was
         primarily due to loan charge-offs of $1.90 million during the three
         months ended June 30, 2004.  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.
      *  The above factors were partially offset by a decrease in non-interest
         expense from $2.37 million and $4.40 million for the three- and six-
         month periods ended June 30, 2003, respectively, to $1.61 million
         and $3.15 million for the three- and six-month periods ended June 30,
         2004, respectively.  This decline is primarily attributable to the
         decreased size of the Company due to the sale of Cumberland in
         September 2003 and the planned contraction of the Company.

      As of June 30, 2004, the Company's allowance for loan losses amounted to
$2.35 million, or 1.94% 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 $1.76
million for the three-month period ended June 30, 2004 as compared to $2.27
million for the corresponding period ended June 30, 2003.  For the six-month
period ended June 30, 2004, net interest income before provision for loan losses
was $3.49 million as compared to $4.57 million for the six-month period ended
June 30, 2003.  For the six-month period ended June 30, 2004, the Company's
average earning assets were $160 million, as compared to $232 million for the
six-month period ended June 30, 2003.  Earning assets include interest-bearing
bank balances, federal funds sold, securities and net loans.  Approximately
$48.5 million of this decrease is attributable to the sale of Cumberland in
September 2003, and approximately $18.5 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 $3.96 million and $8.11
million for the three months and six months ended June 30, 2003, respectively,
to $2.53 million and $5.08 million for the three months and six months ended
June 30, 2004 respectively.  Interest expense declined from $1.69 million for
the three months ended June 30, 2003 to $0.77 million for the three months ended
June 30, 2004.  Interest expense declined from $3.53 for the six months ended
June 30, 2003 to $1.58 million for the six months ended June 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 $204.3 million for the six-month period ended June 30, 2003
as compared to $133.7 million for the comparable period ended June 30, 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 six-
month periods ended June 30, 2004 and June 30, 2003 was 4.36% and 3.95%,
respectively.  The increase in net interest yield is primarily attributable to
the cost of funds declining more rapidly than the yield on average earning
assets during the six months ended June 30, 2004 as compared to the
corresponding period ended June 30, 2003.

      PROVISION FOR LOAN LOSSES

      Provision for loan losses during the three-month period ended June 30,
2004 was $1.98 million, as compared to $0.3 million for the three-month period
ended June 30, 2003.  For the six-month periods ended June 30, 2004 and June 30,
2003, provision for loan losses was $2.57 million and $0.65 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 three
months ended June 30, 2004, the Company charged off loans totaling $1.90
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 six months
ended June 30, 2004 total impaired loans decreased by $1.5 million, from $10.1
million at December 31, 2003 to $8.6 million at June 30, 2004.

      NON-INTEREST INCOME

      Non-interest income decreased from approximately $0.40 million during the
three-month period ended June 30, 2003 to $0.32 million during the three-month
period ended June 30, 2004.  The primary cause of this decline was the decline
in total deposits of $67.1 million from June 30, 2003 to June 30, 2004, as
described above, and a corresponding decrease in transactional and other account
fees.  Of the decline in total deposits, $46.1 million is attributable to the
sale of Cumberland.  The remaining decline is primarily due to the Company's
ongoing effort to contract the Company's size and lower its risk profile.  As
a percentage of average assets, non-interest income increased slightly from
0.64% for the six-month period ended March 31, 2003 to 0.65% for the six-month
period ended March 31, 2004.

      NON-INTEREST EXPENSE

      Non-interest expense declined from $2.37 million for the three-month
period ended June 30, 2003 to $1.61 million for the six-month period ended June
30, 2004.  Non-interest expense declined from $4.40 million for the six-month
period ended June 30, 2003 to $3.15 million for the six-month period ended June
30, 2004.  The decrease in non-interest expense was primarily due to the sale
of Cumberland and the continuing contraction in the Company's size.  As a
percentage of average assets, non-interest expense increased from 3.53% during
the six-month period ended June 30, 2003 to 3.65% during the six-month period
ended June 30, 2004, as salaries, benefits and other miscellaneous expenses did
not decline proportionally to the decline in total assets.


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 June 30, 2004 and December 31, 2003:


                                              June 30,    December 31,
                                               2004           2003
                                               ----           ----
                                              (Dollars in thousands)
      Cash and cash equivalents              $13,025         $27,482
      CDs, over $100,000
         to total deposits ratio               16.5%           14.4%
      Loan to deposit ratio                    90.6%           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 six months ended June 30, 2004 was
primarily a result of the reduction in deposits as management continues its
efforts to strategically contract 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").  Under the
terms of the Rivoli Loan, the Company is obligated to make monthly interest
payments with the principal balance due 18 months from the origination date of
the loan.

      In October 2003, the Company entered into an agreement to sell Tarpon to
Gulf Atlantic Financial Group, Inc. for approximately $6 million.  In January
2004, the Tarpon sale agreement was amended to change the date by which Gulf
Atlantic must satisfy or waive its financing condition from January 31, 2004 to
June 30, 2004.  In June 2004, the Tarpon sale agreement was amended a second
time to change the date by which either party may terminate the agreement if it
has not closed to the earlier of (i) September 15, 2004 and (ii) within five
business days of Gulf Atlantic's receipt of all necessary governmental approvals
and the expiration of all waiting periods.  As part of the Second Amendment,
Gulf Atlantic waived its financing condition so that Gulf Atlantic's obligation
to consummate the purchase of Tarpon is no longer conditioned on its obtaining
financing.

      The Company intends to use a portion of the proceeds from the sale of
Tarpon to repay the balance of the Rivoli Loan and to redeem the Series A
Preferred Stock, including all accrued and unpaid dividends.


CAPITAL ADEQUACY

      The Company opened for business in 1990 with $3.4 million in its capital
accounts.  By June 30, 2004, the Company's shareholders' equity had increased
to $17.0 million through the sale of additional common stock and through
retained earnings.  However, the Company's shareholders' equity decreased by
$1.4 million during the six-month period ended June 30, 2004 due to the
Company's loss of $1.1 million during the period, with the remainder due to a
decrease in the market value of the securities held by the Company.  As
evidenced by the table below, the Company's two remaining subsidiary banks
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
                                       June 30, 2004       Requirement
                                       -------------       -----------
   CNB
   ---
     Tier 1 Capital Ratio                  12.1%               8.0%
     Total Risk-Based Capital Ratio        13.4%              10.0%
     Leverage Ratio                        10.0%               4.0%

   Company--Consolidated
   ---------------------
     Tier 1 Capital Ratio                  12.1%               8.0%
     Total Risk-Based Capital Ratio        13.4%              10.0%
     Leverage Ratio                         9.5%               4.0%

      Each of the subsidiary banks is subject to a formal or informal agreement
with the OCC imposing higher minimum capital ratios on each of the subsidiary
banks, including a risk-based Tier 1 capital ratio of at least 10%, and a total
risk-based capital ratio of at least 12%.

      During the six-month period ended June 30, 2004, total assets decreased by
$16.1 million, to $164.8 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 six-month period ended June 30, 2004,
cash and cash equivalents decreased by $14.5 million, to $13.0 million.  This
decrease was due primarily to a decrease in high-rate deposits in connection
with the Company's planned contraction.  During the six months ended June 30,
2004, securities decreased by $0.1 million, to $11.7 million; loans decreased
by $1.8 million, to $130.6 million; property and equipment decreased by $.1
million, to $3.5 million; and other assets, including goodwill, increased by
$0.4 million, to $6.0 million.  To accommodate the decline in assets, deposits
declined by $14.7 million to $144.1 million and shareholders' equity decreased
by $1.4 million to $17.0 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 June 30, 2004, the Company had outstanding unused loan commitments
of approximately $7.8 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 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------------------------------------------------------------

      The Company held its Annual Meeting of Shareholders on May 26, 2004.  The
following is a summary of the matters voted on at that meeting:

      The shareholders voted on the election of four Class II directors, all
incumbent directors of the Company, to serve for a three-year term or until
their successors are duly elected and qualified. Each of these directors was
elected by the affirmative vote of a plurality of the votes cast at the Annual
Meeting. The number of shares cast for and the number of shares withheld, with
respect to each of these persons, were as follows:

                   Name                 Votes For      Votes Withheld
                   ----                 ---------      --------------
             Lloyd Greer Ewing          1,377,881          3,960
             Grady Elmer Moore          1,377,781          4,060
             Sara Ruth Raines           1,377,881          3,960
             Joe Sheppard               1,377,081          4,760



                          PART II - OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.
------------------------------------------

     (a)  EXHIBITS:

          10.1 - Second Amendment to Stock Purchase and Sale Agreement between
          Community National Bancorporation and Gulf Atlantic Financial Group,
          Inc. dated June 29, 2004 (filed as an exhibit to the Company's Form
          8-K filed on July 2, 2004 and incorporated by reference herein).

          10.2 - Loan Agreement dated July 7, 2004 between Community National
          Bancorporation and Rivoli Bank & Trust.

          10.3 - Securities Pledge Agreement dated July 7, 2004, between
          Community National Bancorporation and Rivoli Bank & Trust.

          10.4 - Promissory Note dated July 7, 2004 from Community National
          Bancorporation to Rivoli Bank & Trust.

          31.1 - Certification of Chief Executive Officer pursuant to 18 U.S.C.
          Section 1350

          31.2 - Certification of Chief Financial Officer pursuant to 18 U.S.C.
          Section 1350

          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

     (b)  REPORTS ON FORM 8-K

          The registrant filed no reports on Form 8-K during the quarter ended
          June 30, 2004.



                                    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 and Chief Executive Officer
Date:  August 16, 2004              (Principal Executive Officer)

                                    /s/W. Paul Gephart
                                    -----------------------------
                                    W. Paul Gephart
                                    Chief Financial Officer
Date:  August 16, 2004              (Principal Financial and Accounting Officer)