##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number 000  51044
 
 COMMUNITY BANCORP
 (Exact name of registrant as specified in its charter)
 
 Nevada
    
    01-0668846(State or other jurisdiction of incorporation)
    
    (I.R.S. Employer Identification No.)400 South 4thStreet, Suite 215, Las Vegas, NV
    
    89101(Address of principal executive offices)
    
    (Zip Code)
 (702) 878  0700
(Registrants telephone number, including area code)
  þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
(Do not check if a smaller reporting company)
    
    Small reporting company o
  o þ
  Title of Class
    
    Outstanding as of April 30, 2008Common Stock, $0.001 par value
    
    10,261,272 shares




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##### 



COMMUNITY BANCORP
 TABLE OF CONTENTS
 PagePART I  FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTS
    
    
    3ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
    
    
    16ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
    
    
    31ITEM 4. CONTROLS AND PROCEDURES
    
    
    32PART II  OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGS
    
    
    33ITEM 1A. RISK FACTORS
    
    
    33ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    33ITEM 3. DEFAULTS UPON SENIOR SECURITIES
    
    
    33ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    33ITEM 5. OTHER INFORMATION
    
    
    33ITEM 6. EXHIBITS
    
    
    33SIGNATURES
    
    
    34CERTIFICATIONSEXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1
  2




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PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements (Unaudited)
 PageConsolidated Balance Sheets
    
    
    4Consolidated Statements of Income and Comprehensive Income
    
    
    5Consolidated Statements of Cash Flows
    
    
    6Notes to Consolidated Financial Statements
    
    
    7
 3




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COMMUNITY BANCORP AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 (Unaudited)
 March 31,
    
    
    December 31,2008
    
    
    2007(In thousands, except share data)ASSETSCash and due from banks
    
    $
    18,059
    
    
    $
    19,243Interest bearing deposits in other banks
    
    
    670
    
    
    
    141Federal funds sold
    
    
    2,465
    
    
    
    20Cash and cash equivalents
    
    
    21,194
    
    
    
    19,404Securities available for sale, at fair value
    
    
    70,432
    
    
    
    88,217Securities held to maturity, at amortized cost (fair value of $808 as of March 31, 2008 and $817 as of December 31, 2007)
    
    
    792
    
    
    
    801Required equity investments, at cost
    
    
    14,109
    
    
    
    14,014Loans, net of allowance for loan losses of $19,831 as of March 31, 2008 and $17,098 as of December 31, 2007
    
    
    1,443,872
    
    
    
    1,396,890Premises and equipment, net
    
    
    25,801
    
    
    
    27,535Other real estate owned
    
    
    2,778
    
    
    
    Accrued interest and dividends receivable
    
    
    7,927
    
    
    
    8,046Deferred income taxes, net
    
    
    1,236
    
    
    
    1,503Bank owned life insurance
    
    
    10,621
    
    
    
    10,521Goodwill
    
    
    113,636
    
    
    
    113,636Core deposit intangible, net of accumulated amortization of $2,813 as of March 31, 2008 and $2,478 as of December 31, 2007
    
    
    7,146
    
    
    
    7,481Other assets
    
    
    4,056
    
    
    
    5,473Total assets
    
    $
    1,723,600
    
    
    $
    1,693,521LIABILITIES AND STOCKHOLDERS EQUITYLiabilitiesDeposits:Non-interest bearing
    
    $
    171,898
    
    
    $
    170,725Interest bearing:Demand
    
    
    732,639
    
    
    
    672,567Savings
    
    
    24,519
    
    
    
    28,465Time, $100,000 or more
    
    
    171,476
    
    
    
    171,664Other time
    
    
    218,265
    
    
    
    187,041Total deposits
    
    
    1,318,797
    
    
    
    1,230,462Borrowings
    
    
    84,381
    
    
    
    146,684Accrued interest payable and other liabilities
    
    
    9,352
    
    
    
    9,090Junior subordinated debt
    
    
    72,166
    
    
    
    72,166Total liabilities
    
    
    1,484,696
    
    
    
    1,458,402Commitments and Contingencies (Note 8)Stockholders equityCommon stock, par value: $0.001; shares authorized: 30,000,000; shares issued: 10,614,860 as of
March 31, 2008 (including 155,468 shares of unvested restricted stock) and 10,620,529 as of
December 31, 2007 (including 161,137 shares of unvested restricted stock)
    
    
    11
    
    
    
    11Additional paid-in capital
    
    
    169,373
    
    
    
    168,931Retained earnings
    
    
    75,489
    
    
    
    72,797Accumulated other comprehensive income, net of tax
    
    
    715
    
    
    
    64245,588
    
    
    
    241,803Less cost of treasury stock, 350,575 shares as of March 31, 2008 and December 31, 2007
    
    
    (6,684
    )
    
    
    (6,684
    )Total stockholders equity
    
    
    238,904
    
    
    
    235,119Total liabilities and stockholders equity
    
    $
    1,723,600
    
    
    $
    1,693,521
  4




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COMMUNITY BANCORP AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
 (Unaudited)
 For the three months endedMarch 31,
    
    
    March 31,2008
    
    
    2007(In thousands, except per share data)Interest and dividend income:Loans, including fees
    
    $
    28,826
    
    
    $
    28,934Securities and investments
    
    
    1,119
    
    
    
    1,436Federal funds sold
    
    
    10
    
    
    
    518Total interest and dividend income
    
    
    29,955
    
    
    
    30,888Interest expense on:Deposits
    
    
    10,143
    
    
    
    10,697Borrowings
    
    
    1,379
    
    
    
    1,152Junior subordinated debt
    
    
    1,154
    
    
    
    1,530Total interest expense
    
    
    12,676
    
    
    
    13,379Net interest income before provision for loan losses
    
    
    17,279
    
    
    
    17,509Provision for loan losses
    
    
    4,168
    
    
    
    482Net interest income after provision for loan losses
    
    
    13,111
    
    
    
    17,027Non-interest income:Service charges and other income
    
    
    663
    
    
    
    628Bank owned life insurance
    
    
    100
    
    
    
    118Net swap settlements
    
    
    (30
    )
    
    
    48Rental income
    
    
    48
    
    
    
    38Gain on sale of securities
    
    
    165
    
    
    
    Gain on sale of property
    
    
    1,210
    
    
    
    Net gain on sale of loans
    
    
    
    
    
    
    35Total non-interest income
    
    
    2,156
    
    
    
    867Non-interest expense:Salaries, wages and employee benefits
    
    
    5,865
    
    
    
    5,712Occupancy, equipment and depreciation
    
    
    1,282
    
    
    
    1,196Core deposit intangible amortization
    
    
    335
    
    
    
    335Data processing
    
    
    230
    
    
    
    315Advertising and public relations
    
    
    377
    
    
    
    273Professional fees
    
    
    590
    
    
    
    272Telephone and postage
    
    
    163
    
    
    
    201Stationery and supplies
    
    
    195
    
    
    
    166Directors fees
    
    
    117
    
    
    
    128Insurance
    
    
    224
    
    
    
    119Software maintenance
    
    
    146
    
    
    
    105Loan related
    
    
    100
    
    
    
    95Loss on interest rate swaps
    
    
    829
    
    
    
    Other operating expenses
    
    
    657
    
    
    
    541Total non-interest expense
    
    
    11,110
    
    
    
    9,458Income before income tax provision
    
    
    4,157
    
    
    
    8,436Income tax provision
    
    
    1,465
    
    
    
    2,987Net income
    
    
    2,692
    
    
    
    5,449Other comprehensive income  unrealized gain on available-for-sale securities, net of income
tax expense benefit of $355 and $71, respectively
    
    
    651
    
    
    
    155Comprehensive income
    
    $
    3,343
    
    
    $
    5,604EARNINGS PER SHARE:Basic
    
    $
    0.27
    
    
    $
    0.52Diluted
    
    $
    0.26
    
    
    $
    0.52
  5




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COMMUNITY BANCORP AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the three months ended
 (Unaudited)
 March 31,
    
    
    March 31,2008
    
    
    2007(In thousands)Cash flows from operating activities:Net income
    
    $
    2,692
    
    
    $
    5,449Adjustments to reconcile net income to net cash provided by operating activities:Depreciation of premises and equipment
    
    
    496
    
    
    
    444Gain on sales of fixed assets
    
    
    
    
    
    
    (20
    )Gain on sale of property
    
    
    (1,210
    )
    
    
    Amortization of core deposit intangible
    
    
    335
    
    
    
    335Loss on interest rate swaps
    
    
    829
    
    
    
    Income from bank owned life insurance
    
    
    (100
    )
    
    
    (118
    )Gain on sale of loans
    
    
    
    
    
    
    (35
    )Gain on sale of securities
    
    
    (165
    )
    
    
    Proceeds from sales of loans held for sale
    
    
    
    
    
    
    1,012Originations of loans held for sale
    
    
    
    
    
    
    (977
    )Increase in other real estate owned
    
    
    (2,778
    )
    
    
    Deferred taxes, net
    
    
    (89
    )
    
    
    (12
    )Provision for loan losses
    
    
    4,168
    
    
    
    482Share-based compensation expense
    
    
    442
    
    
    
    197Net amortization (accretion) of investment premium and discount
    
    
    3
    
    
    
    (43
    )Decrease (increase) in accrued interest receivable
    
    
    119
    
    
    
    (404
    )Decrease (increase) in other assets
    
    
    1,417
    
    
    
    2,763Decrease in accrued interest payable and other liabilities
    
    
    (567
    )
    
    
    (691
    )Income from required equity investments  stock dividends
    
    
    (84
    )
    
    
    (60
    )Net cash provided by operating activities
    
    
    5,508
    
    
    
    8,322Cash flows from investing activities:Net increase in loans
    
    
    (51,120
    )
    
    
    (43,147
    )(Payments) receipts on net swap settlements
    
    
    (30
    )
    
    
    48Proceeds from maturities of and principal paydowns on securities held to maturity
    
    
    9
    
    
    
    55Purchase of securities available for sale
    
    
    (100
    )
    
    
    (1,637
    )Proceeds from maturities of and principal paydowns on securities available for sale
    
    
    18,889
    
    
    
    8,177Proceeds from sale of securities available for sale
    
    
    165
    
    
    
    Net investment in required equity investments
    
    
    (11
    )
    
    
    (4,878
    )Purchase of premises and equipment
    
    
    (117
    )
    
    
    (724
    )Proceeds from sale of premises and equipment
    
    
    2,565
    
    
    
    20Net cash used in investing activities
    
    
    (29,750
    )
    
    
    (42,086
    )Cash flows from financing activities:Net (decrease) increase in borrowings
    
    
    (62,303
    )
    
    
    18,100Net increase in deposits
    
    
    88,335
    
    
    
    106,641Excess tax benefit related to exercise of stock options
    
    
    
    
    
    
    51Proceeds from exercise of stock options
    
    
    
    
    
    
    264Net cash provided by financing activities
    
    
    26,032
    
    
    
    125,056Net increase in cash and cash equivalents
    
    
    1,790
    
    
    
    91,292Cash and cash equivalents, beginning of the year
    
    
    19,404
    
    
    
    46,116Cash and cash equivalents, end of the period
    
    $
    21,194
    
    
    $
    137,408Supplemental disclosure of cash flow information:Interest paid
    
    $
    12,171
    
    
    $
    12,937Income taxes paid
    
    $
    
    
    
    $
    93
  6




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COMMUNITY BANCORP AND SUBSIDIARIES
 
 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 Note 1. Nature of Business
      Note 2. Basis of Presentation
     Note 3. Significant Accounting Policies
  7




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COMMUNITY BANCORP AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 Note 4. Recent Accounting Pronouncements
 Fair Value Measurements
 Accounting for Purchases of Life Insurance-Determining the Amount That Could Be Realized in
Accordance with FASB Technical Bulletin No. 85-4, Accounting for Purchases of Life Insurance
 The Fair Value Option for Financial Assets and
Financial Liabilities-Including an Amendment of FASB Statement No. 115.
 Disclosures about Derivative Instruments and
Hedging Activities, an amendment of FASB Statement No. 133.
 Note 5. Loans
  March 31,
    
    
    December 31,2008
    
    
    2007(In thousands)Commercial and industrial
    
    $
    234,713
    
    
    $
    210,614Real estate:Commercial
    
    
    389,569
    
    
    
    370,464Residential
    
    
    42,463
    
    
    
    43,212Construction and land development
    
    
    796,307
    
    
    
    789,185Consumer and other
    
    
    5,020
    
    
    
    5,707Total gross loans
    
    
    1,468,072
    
    
    
    1,419,182Less:Allowance for loan losses
    
    
    19,831
    
    
    
    17,098Net unearned loan fees and discounts
    
    
    4,369
    
    
    
    5,194Total net loans
    
    $
    1,443,872
    
    
    $
    1,396,890
 8




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COMMUNITY BANCORP AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  For the three monthsended March 31,2008
    
    
    2007(In thousands)Balance at beginning of period
    
    $
    17,098
    
    
    $
    14,973Provision for loan losses
    
    
    4,168
    
    
    
    482Less amounts charged off
    
    
    (1,545
    )
    
    
    (99
    )Recoveries of amounts charged off
    
    
    110
    
    
    
    259Balance at end of period
    
    $
    19,831
    
    
    $
    15,615
  Note 6. Other Real Estate Owned
   Note 7. Borrowings
    Note 8. Junior Subordinated Debt
  9




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COMMUNITY BANCORP AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 Consolidation of Variable Interest
Entities-an interpretation of ARB No. 51
    Note 9. Commitments and Contingencies
 Financial Instruments with Off-Balance Sheet Risk
    Outstanding commitments
 March 31,
    
    
    December 31,2008
    
    
    2007(In thousands)Commitments to extend credit, including unsecured commitments of
approximately $25,750 for 2008 and $28,137 for 2007
    
    $
    395,126
    
    
    $
    430,093Credit card commitments, including unsecured amounts of approximately
$804 for 2008 and $818 for 2007
    
    
    804
    
    
    
    818Standby letters of credit, including unsecured commitments of
approximately $2,194 for 2008 and $2,485 for 2007
    
    
    4,445
    
    
    
    4,083$
    400,375
    
    
    $
    434,994
 10




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COMMUNITY BANCORP AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
  Accounting for
Contingencies
  Financial Instruments with Concentrations of Credit Risk
    Lease Commitments
   Contingencies
  11




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COMMUNITY BANCORP AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 Note 10. Derivative Financial Instruments
    Note 11. Earnings per Share
   For the Three Months Ended March 31,2008
    
    
    2007(In thousands, except earnings per share data)Average
    
    
    
    
    
    
    
    
    
    
    AverageNet
    
    
    Number
    
    
    Per Share
    
    
    Net
    
    
    Number
    
    
    Per ShareIncome
    
    
    of Shares
    
    
    Amounts
    
    
    Income
    
    
    of Shares
    
    
    AmountsBasic EPS
    
    $
    2,692
    
    
    
    10,109
    
    
    $
    0.27
    
    
    $
    5,449
    
    
    
    10,416
    
    
    $
    0.52Effect of dilutive securities:Stock options
    
    
    
    
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    78
    
    
    
    Restricted stock
    
    
    
    
    
    
    103
    
    
    
    (0.01
    )
    
    
    
    
    
    
    
    
    
    
    Diluted EPS
    
    $
    2,692
    
    
    
    10,225
    
    
    $
    0.26
    
    
    $
    5,449
    
    
    
    10,494
    
    
    $
    0.52
  Note 12. Share-Based Compensation
 Stock options
  12




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COMMUNITY BANCORP AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 Restricted stock
  Stock appreciation rights
   Note 13. Segments
  For the three months ended and as of March 31, 2008Community
    
    
    CommunityBank of
    
    
    Bank ofNevada
    
    
    Arizona
    
    
    Other (3)
    
    
    Total(In thousands)Interest and dividend income
    
    $
    28,356
    
    
    $
    1,631
    
    
    $
    (32
    )
    
    $
    29,955Interest expense
    
    
    10,843
    
    
    
    572
    
    
    
    1,261
    
    
    
    12,676Net interest income before provision for loan
losses
    
    
    17,513
    
    
    
    1,059
    
    
    
    (1,293
    )
    
    
    17,279Provision for loan losses
    
    
    4,035
    
    
    
    133
    
    
    
    
    
    
    
    4,168Net interest income after provision for loan losses
    
    
    13,478
    
    
    
    926
    
    
    
    (1,293
    )
    
    
    13,111Non-interest income
    
    
    2,105
    
    
    
    51
    
    
    
    
    
    
    
    2,156Non-interest expenses
    
    
    8,947
    
    
    
    1,237
    
    
    
    926
    
    
    
    11,110Segment pretax income (loss)
    
    $
    6,636
    
    
    $
    (260
    )
    
    $
    (2,219
    )
    
    $
    4,157Segment assets (1)
    
    $
    1,618,866
    
    
    $
    105,747
    
    
    $
    (1,013
    )
    
    $
    1,723,600
 For the three months ended and as of March 31, 2007Community
    
    
    CommunityBank of
    
    
    Bank ofNevada
    
    
    Arizona
    
    
    Other (3)
    
    
    Total(In thousands)Interest and dividend income
    
    $
    29,471
    
    
    $
    1,362
    
    
    $
    55
    
    
    $
    30,888Interest expense
    
    
    11,383
    
    
    
    466
    
    
    
    1,530
    
    
    
    13,379Net interest income before provision for loan
losses
    
    
    18,088
    
    
    
    896
    
    
    
    (1,475
    )
    
    
    17,509Provision for loan losses
    
    
    382
    
    
    
    100
    
    
    
    
    
    
    
    482Net interest income after provision for loan losses
    
    
    17,706
    
    
    
    796
    
    
    
    (1,475
    )
    
    
    17,027Non-interest income
    
    
    707
    
    
    
    85
    
    
    
    75
    
    
    
    867Non-interest expenses
    
    
    8,338
    
    
    
    774
    
    
    
    346
    
    
    
    9,458Segment pretax income (loss)
    
    $
    10,075
    
    
    $
    107
    
    
    $
    (1,746
    )
    
    $
    8,436Segment assets (2)
    
    $
    1,614,158
    
    
    $
    82,942
    
    
    $
    3,821
    
    
    $
    1,700,921
 
 (1)
    
    Goodwill included in Community Bank of Nevadas and Community Bank of Arizonas segment
assets amounted to $103.7 million and $9.9 million, respectively.(2)
    
    Goodwill included in Community Bank of Nevadas and Community Bank of Arizonas segment
assets amounted to $105.6 million and $9.5 million, respectively.(3)
    
    Includes intersegment eliminations and reclassifications. 13




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COMMUNITY BANCORP AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 Note 14. Sale of Property
  Note 15. Adoption of New Accounting Pronouncements
 Fair Value
Measurements The Fair Value Option for Financial Assets and Financial
Liabilities-Including an Amendment of FASB Statement No. 115
   
    
    Level 1  Inputs to the valuation methodology are quoted prices (unadjusted) for
identical assets or liabilities in active markets;
    
    Level 2  Inputs to the valuation methodology include quoted prices for similar assets
and liabilities in active markets, and inputs that are observable for the asset or
liability, either directly or indirectly, for substantially the full term of the
financial instrument; and
    
    Level 3  Inputs to the valuation methodology are unobservable and significant to the
fair value measurement.
   Accounting by Creditors for Impairment of a Loan,
   14




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QuotedPrices inActive
    
    
    SignificantMarkets for
    
    
    Other
    
    
    SignificantIdentical
    
    
    Observable
    
    
    UnobservableAssets
    
    
    Inputs
    
    
    Inputs(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)(In thousands)DescriptionRecurring:Securities available for sale, at fair value
    
    $
    
    
    
    $
    70,432
    
    
    $
    OREO
    
    $
    
    
    
    $
    2,778
    
    
    $
    Interest rate swaps (1)
    
    $
    
    
    
    $
    1,209
    
    
    $
    
 
 (1)
    
    Included in accrued interest payable and other liabilities  15




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
   EXECUTIVE OVERVIEW
    
    
    Net income for the quarter ended March 31, 2008 was $2.7 million, or $0.26 per diluted share, compared to $5.4
million, or $0.52 per diluted share, in the same period in 2007.
    
    Provision for loan losses and charge-offs (net of recoveries) were $4.2 million and $1.4 million, respectively, for
the first quarter of 2008, compared to a provision for loan losses of $482,000 and net recoveries of $160,000 for
the first quarter of 2007.
  
    
    Total gross loans increased to $1.5 billion, or 3.4%, at March 31, 2008, compared to $1.4 billion at December 31,
2007.
    
    Non-performing loans totaled $13.7 million, or 0.93% of total gross loans, at March 31, 2008, compared to $12.1
million, or 0.85% of total gross loans, at December 31, 2007.
    
    Other real estate owned (OREO) was $2.8 million at March 31, 2008, and the Company had no OREO at
December 31, 2007.
 
 16




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##### Table of Contents



SUMMARY CONSOLIDATED FINANCIAL DATA AND OTHER DATA
(Unaudited)
 1st
    
    1stQuarter
    
    Quarter
    
    Percentage2008
    
    2007
    
    Change(In thousands, except share and percentage data)SHARE DATAEarnings per share  basic
    
    $
    0.27
    
    
    $
    0.52
    
    
    
    -48.8
    %Earnings per share  diluted
    
    $
    0.26
    
    
    $
    0.52
    
    
    
    -50.0
    %Book value per share
    
    $
    23.28
    
    
    $
    21.59
    
    
    
    7.8
    %Shares outstanding at period end
    
    
    10,264,285
    
    
    
    10,419,924
    
    
    
    -1.5
    %Weighted average shares outstanding  basic
    
    
    10,108,817
    
    
    
    10,415,894
    
    
    
    -2.9
    %Weighted average shares outstanding  diluted
    
    
    10,224,744
    
    
    
    10,493,721
    
    
    
    -2.6
    %SELECTED OTHER BALANCE SHEET DATAAverage assets
    
    $
    1,702,798
    
    
    $
    1,603,855
    
    
    
    6.2
    %Average earning assets
    
    $
    1,532,532
    
    
    $
    1,421,063
    
    
    
    7.8
    %Average stockholders equity
    
    $
    238,672
    
    
    $
    222,896
    
    
    
    7.1
    %Gross loans
    
    $
    1,468,072
    
    
    $
    1,297,860
    
    
    
    13.1
    %SELECTED FINANCIAL RATIOSReturn on average assets
    
    
    0.64
    %
    
    
    1.38
    %
    
    
    -53.9
    %Return on average stockholders equity
    
    
    4.54
    %
    
    
    9.91
    %
    
    
    -54.2
    %Net interest margin (1)
    
    
    4.56
    %
    
    
    5.03
    %
    
    
    -9.3
    %Efficiency ratio (2)
    
    
    57.16
    %
    
    
    51.47
    %
    
    
    11.1
    %Capital RatiosAverage stockholders equity to average assets
    
    
    14.02
    %
    
    
    13.90
    %
    
    
    0.9
    %Tier 1 leverage capital ratioConsolidated Company
    
    
    11.85
    %
    
    
    11.96
    %
    
    
    -0.9
    %Community Bank of Nevada
    
    
    11.54
    %
    
    
    11.38
    %
    
    
    1.4
    %Community Bank of Arizona
    
    
    26.31
    %
    
    
    33.58
    %
    
    
    -21.6
    %Tier 1 risk-based capital ratioConsolidated Company
    
    
    11.27
    %
    
    
    11.89
    %
    
    
    -5.2
    %Community Bank of Nevada
    
    
    11.03
    %
    
    
    11.15
    %
    
    
    -1.1
    %Community Bank of Arizona
    
    
    24.73
    %
    
    
    44.42
    %
    
    
    -44.3
    %Total risk-based capital ratioConsolidated Company
    
    
    12.46
    %
    
    
    13.59
    %
    
    
    -8.3
    %Community Bank of Nevada
    
    
    12.22
    %
    
    
    12.19
    %
    
    
    0.2
    %Community Bank of Arizona
    
    
    25.98
    %
    
    
    45.68
    %
    
    
    -43.1
    %Asset Quality RatiosNon-performing loans (3)
    
    $
    13,676
    
    
    $
    1,310
    
    
    
    944.0
    %Non-performing assets (4)
    
    $
    16,454
    
    
    $
    1,310
    
    
    
    1156.0
    %Non-performing loans to total gross loans
    
    
    0.93
    %
    
    
    0.10
    %
    
    
    830.0
    %Non-performing assets to total assets
    
    
    0.95
    %
    
    
    0.08
    %
    
    
    1087.5
    %Past due loans30 - 59 days
    
    $
    17,107
    
    
    $
    2,641
    
    
    
    547.7
    %60 - 89 days
    
    $
    10,826
    
    
    $
    1,126
    
    
    
    861.5
    %Allowance for loan losses to total gross loans
    
    
    1.35
    %
    
    
    1.20
    %
    
    
    12.6
    %Allowance for loan losses to non-performing assets
    
    
    121
    %
    
    
    1,192
    %
    
    
    -89.9
    %Allowance for loan losses to non-performing loans
    
    
    145
    %
    
    
    1,192
    %
    
    
    -87.8
    %Net charge-offs (recoveries) to average loans (5)
    
    
    0.40
    %
    
    
    (0.05)
    %
    
    
    
 
 (1)
    
    Net interest margin represents net interest income on a tax equivalent basis as a percentage of average
interest-earning assets.(2)
    
    Efficiency ratio represents non-interest expenses, excluding provision for loan losses, as a percentage of the
aggregate of net interest income and non-interest income.(3)
    
    Non-performing loans are defined as loans that are past due 90 days or more plus loans placed in non-accrual status.(4)
    
    Non-performing assets are defined as assets that are past due 90 days or more plus assets placed in non-accrual
status plus other real estate owned.(5)
    
    Annualized. 17




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##### Table of Contents



KEY FACTORS IN EVALUATING FINANCIAL CONDITION AND OPERATING PERFORMANCE
 Return
on average shareholders equity.
  
    
    An increase in the provision for loan losses of $3.7 million.
    
    An increase in the loss on interest rate swaps of $829,000.
    
    Mitigated, in part, by the gain on the sale of the Companys Warm Springs property of $1.2 million.
 Return on average assets.
 Asset
growth.
 Asset
quality.
  Operating
efficiency.
 Primary markets.
 CRITICAL ACCOUNTING POLICIES
  18




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##### Table of Contents



Allowance for loan losses.
 Available-for-sale securities. Accounting for
Certain Investments in Debt and Equity Securities
 Goodwill and other intangibles. Goodwill and Other Intangible Assets
 Accounting for the Impairment or Disposal of Long-Lived Assets
 Share-based compensation. Share-Based Payment,
 §
    
    Expected volatility  based on the historical volatility of similar entities stock price that have been public for a
period of time at least equal to the expected life of the option.§
    
    Expected term of the option  based on the simple average of the vesting term and the original contract term.§
    
    Risk-free rate  based upon the rate on a zero coupon U.S. Treasury bill, for periods within the expected term of
the option.§
    
    Dividend yield  the Company currently has a no dividend policy and accordingly, no dividend yield is utilized.
  Segment reporting.
 Fair Value Measurements. Fair Value
Measurements The Fair Value Option for Financial Assets and Financial Liabilities-Including an
Amendment of FASB Statement No. 115
 19




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##### Table of Contents




    
    Level 1  Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in
active markets;
    
    Level 2  Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active
markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the
full term of the financial instrument; and
    
    Level 3  Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
 RESULTS OF OPERATIONS
  20




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##### Table of Contents



Net Interest Income and Net Interest Margin
   Three Months Ended March 31,2008
    
    
    2007Interest
    
    
    Annualized
    
    
    
    
    
    
    Interest
    
    
    AnnualizedAverage
    
    
    Income/
    
    
    Average
    
    
    Average
    
    
    Income/
    
    
    AverageBalance
    
    
    Expense
    
    
    Rate/Yield (7)
    
    
    Balance
    
    
    Expense
    
    
    Rate/Yield (7)(In thousands, except percentage data)Assets:Interest earning assets:Loans (1)(2)
    
    $
    1,436,861
    
    
    $
    28,826
    
    
    
    8.07
    %
    
    $
    1,263,380
    
    
    $
    28,934
    
    
    
    9.29
    %Investment securities (3)(4)
    
    
    94,323
    
    
    
    1,119
    
    
    
    5.23
    %
    
    
    118,450
    
    
    
    1,436
    
    
    
    5.30
    %Federal funds sold
    
    
    1,348
    
    
    
    10
    
    
    
    2.98
    %
    
    
    39,233
    
    
    
    518
    
    
    
    5.35
    %Total interest earning assets (3)
    
    
    1,532,532
    
    
    
    29,955
    
    
    
    7.89
    %
    
    
    1,421,063
    
    
    
    30,888
    
    
    
    8.85
    %Non-interest earning assets:Cash and due from banks
    
    
    16,058
    
    
    
    
    
    
    
    
    
    
    
    24,950Goodwill and intangibles
    
    
    120,974
    
    
    
    
    
    
    
    
    
    
    
    123,662Other assets
    
    
    33,234
    
    
    
    
    
    
    
    
    
    
    
    34,180Total assets
    
    $
    1,702,798
    
    
    
    
    
    
    
    
    
    
    $
    1,603,855Liabilities and stockholders equity:Interest bearing liabilities:Deposits:Interest bearing demand
    
    $
    75,651
    
    
    
    410
    
    
    
    2.18
    %
    
    $
    62,832
    
    
    
    395
    
    
    
    2.55
    %Money market
    
    
    599,325
    
    
    
    4,939
    
    
    
    3.31
    %
    
    
    473,258
    
    
    
    5,389
    
    
    
    4.62
    %Savings
    
    
    25,068
    
    
    
    99
    
    
    
    1.59
    %
    
    
    54,468
    
    
    
    368
    
    
    
    2.74
    %Time
    
    
    390,584
    
    
    
    4,695
    
    
    
    4.83
    %
    
    
    407,340
    
    
    
    4,545
    
    
    
    4.53
    %Total interest
bearing deposits
    
    
    1,090,628
    
    
    
    10,143
    
    
    
    3.74
    %
    
    
    997,898
    
    
    
    10,697
    
    
    
    4.35
    %Borrowings
    
    
    124,047
    
    
    
    1,379
    
    
    
    4.47
    %
    
    
    90,589
    
    
    
    1,152
    
    
    
    5.16
    %Junior subordinated debt
    
    
    72,166
    
    
    
    1,154
    
    
    
    6.43
    %
    
    
    87,630
    
    
    
    1,530
    
    
    
    7.08
    %Total interest
bearing liabilities
    
    
    1,286,841
    
    
    
    12,676
    
    
    
    3.96
    %
    
    
    1,176,117
    
    
    
    13,379
    
    
    
    4.61
    %Non-interest bearing liabilities:Demand deposits
    
    
    167,766
    
    
    
    
    
    
    
    
    
    
    
    194,585Other liabilities
    
    
    9,519
    
    
    
    
    
    
    
    
    
    
    
    10,257Total liabilities
    
    
    1,464,126
    
    
    
    
    
    
    
    
    
    
    
    1,380,959Stockholders equity
    
    
    238,672
    
    
    
    
    
    
    
    
    
    
    
    222,896Total liabilities
and stockholders
equity
    
    $
    1,702,798
    
    
    
    
    
    
    
    
    
    
    $
    1,603,855Net interest income
    
    
    
    
    
    $
    17,279
    
    
    
    
    
    
    
    
    
    
    $
    17,509Net interest spread (3)(5)
    
    
    
    
    
    
    
    
    
    
    3.93
    %
    
    
    
    
    
    
    
    
    
    
    4.24
    %Net interest margin (3)(6)
    
    
    
    
    
    
    
    
    
    
    4.56
    %
    
    
    
    
    
    
    
    
    
    
    5.03
    %
 
 (1)
    
    Includes average non-accrual loans of $15.1 million and $961,000 for the three months ended March 31, 2008 and 2007, respectively.(2)
    
    Net loan fees of $2.1 million and $1.7 million are included in the yield computations for the three months ended March 31, 2008 and 2007, respectively.(3)
    
    Yields on securities, total interest-earning assets, net interest spread and net interest margin have been adjusted to a tax-equivalent basis.These adjustments amounted to $108,000 and $111,000 for the three months ended March 31, 2008 and 2007, respectively.(4)
    
    Includes securities available for sale, securities held to maturity, interest bearing deposits in other banks and required equity investments.(5)
    
    Net interest spread represents the average yield earned on interest earning assets less the average rate paid on interest bearing liabilities.(6)
    
    Net interest margin is computed by dividing net interest income, on a tax equivalent basis, by total average earning-assets.(7)
    
    Yields are computed based on actual number of days during the period. 21




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##### Table of Contents



Three months ended March 31, 2008 vs.2007 increase (decrease) due to change in(In thousands)Volume
    
    
    Rate
    
    
    TotalInterest and dividend income:Loans
    
    $
    3,714
    
    
    $
    (3,822
    )
    
    $
    (108
    )Investments securities
    
    
    (287
    )
    
    
    (30
    )
    
    
    (317
    )Federal funds sold
    
    
    (349
    )
    
    
    (159
    )
    
    
    (508
    )Total interest and dividend income
    
    
    3,078
    
    
    
    (4,011
    )
    
    
    (933
    )Interest expense:Interest bearing demand
    
    
    74
    
    
    
    (59
    )
    
    
    15Money market
    
    
    1,241
    
    
    
    (1,691
    )
    
    
    (450
    )Savings
    
    
    (152
    )
    
    
    (117
    )
    
    
    (269
    )Time
    
    
    (193
    )
    
    
    343
    
    
    
    150Borrowings
    
    
    387
    
    
    
    (160
    )
    
    
    227Junior subordinated debt
    
    
    (253
    )
    
    
    (123
    )
    
    
    (376
    )Total interest expense
    
    
    1,104
    
    
    
    (1,807
    )
    
    
    (703
    )Net interest income
    
    $
    1,974
    
    
    $
    (2,204
    )
    
    $
    (230
    )
     22




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##### Table of Contents



Provision for Loan Losses
   Non-Interest Income
  Three months endedSeptember 30,March 31,2008
    
    
    2007
    
    
    IncreaseAmount
    
    
    (decrease)(In thousands)Service charges and other income
    
    $
    663
    
    
    $
    628
    
    
    $
    35Income from bank owned life insurance
    
    
    100
    
    
    
    118
    
    
    
    (18
    )Net swap settlements
    
    
    (30
    )
    
    
    48
    
    
    
    (78
    )Rental income
    
    
    48
    
    
    
    38
    
    
    
    10Gain on sale of securities
    
    
    165
    
    
    
    
    
    
    
    165Gain on sale of property
    
    
    1,210
    
    
    
    
    
    
    
    1,210Net gain on sales of loans
    
    
    
    
    
    
    35
    
    
    
    (35
    )Total non-interest income
    
    $
    2,156
    
    
    $
    867
    
    
    $
    1,289
  23




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##### Table of Contents



Non-Interest Expense
  Three months endedMarch 31,2008
    
    
    2007
    
    
    IncreaseAmount
    
    
    (decrease)(In thousands)Salaries, wages and employee benefits
    
    $
    5,865
    
    
    $
    5,712
    
    
    $
    153Occupancy, equipment and depreciation
    
    
    1,282
    
    
    
    1,196
    
    
    
    86Core deposit intangible amortization
    
    
    335
    
    
    
    335
    
    
    
    Data processing
    
    
    230
    
    
    
    315
    
    
    
    (85
    )Advertising and public relations
    
    
    377
    
    
    
    273
    
    
    
    104Professional fees
    
    
    590
    
    
    
    272
    
    
    
    318Telephone and postage
    
    
    163
    
    
    
    201
    
    
    
    (38
    )Stationery and supplies
    
    
    195
    
    
    
    166
    
    
    
    29Directors fees
    
    
    117
    
    
    
    128
    
    
    
    (11
    )Insurance
    
    
    224
    
    
    
    119
    
    
    
    105Software maintenance
    
    
    146
    
    
    
    105
    
    
    
    41Loan related
    
    
    100
    
    
    
    95
    
    
    
    5Loss on interest rate swaps
    
    
    829
    
    
    
    
    
    
    
    829Other operating expenses
    
    
    657
    
    
    
    541
    
    
    
    116Total non-interest expense
    
    $
    11,110
    
    
    $
    9,458
    
    
    $
    1,652
      24




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##### Table of Contents



Income Tax Expense
    FINANCIAL CONDITION
 Investment Securities
  As of March 31,
    
    
    As of December 31,2008
    
    
    2007Amortized
    
    
    Fair
    
    
    Amortized
    
    
    FairCost
    
    
    Value
    
    
    Cost
    
    
    Value(In thousands)Available for sale:U.S. Government-sponsored agencies
    
    $
    10,636
    
    
    $
    10,867
    
    
    $
    26,537
    
    
    $
    26,811Municipal bonds
    
    
    20,213
    
    
    
    20,644
    
    
    
    20,750
    
    
    
    20,982SBA loan pools
    
    
    421
    
    
    
    419
    
    
    
    501
    
    
    
    497Mortgage-backed securities
    
    
    38,055
    
    
    
    38,502
    
    
    
    40,300
    
    
    
    39,897Mutual funds
    
    
    
    
    
    
    
    
    
    
    30
    
    
    
    30Total available for sale
    
    $
    69,325
    
    
    $
    70,432
    
    
    $
    88,118
    
    
    $
    88,217Held to maturity:Municipal bonds
    
    $
    646
    
    
    $
    661
    
    
    $
    646
    
    
    $
    661SBA loan pools
    
    
    146
    
    
    
    147
    
    
    
    155
    
    
    
    156Total held to maturity
    
    $
    792
    
    
    $
    808
    
    
    $
    801
    
    
    $
    817Total investment securities
    
    $
    70,117
    
    
    $
    71,240
    
    
    $
    88,919
    
    
    $
    89,034
  25




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##### Table of Contents



Loans
  March 31,
    
    
    December 31,2008
    
    
    2007(In thousands)Commercial and industrial
    
    $
    234,713
    
    
    $
    210,614Real estate:Commercial (1)
    
    
    389,569
    
    
    
    370,464Residential (2)
    
    
    42,463
    
    
    
    43,212Construction and land development (3)(4)
    
    
    796,307
    
    
    
    789,185Consumer and other
    
    
    5,020
    
    
    
    5,707Total gross loans
    
    
    1,468,072
    
    
    
    1,419,182Less:Allowance for Losses
    
    
    19,831
    
    
    
    17,098Net unearned loan fees and discounts
    
    
    4,369
    
    
    
    5,194Total net loans
    
    $
    1,443,872
    
    
    $
    1,396,890
 
 (1)
    
    Owner-occupied commercial real estate loans were approximately 48.9% and 50.5% of
the Companys commercial real estate loan portfolio as of March 31, 2008 and December 31,
2007, respectively.(2)
    
    Includes farmland loans and loans for custom homes to high net worth customers and
home equity lines of credit.(3)
    
    Includes loans for undeveloped land of approximately $180.0 million and $178.3
million as of March 31, 2008 and December 31, 2007, respectively.(4)
    
    Includes loans for property zoned for 1-4 family residential real estate, which
amounted to $242.5 million and $226.7 million as of March 31, 2008 and December 31, 2007,
respectively.   26




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##### Table of Contents



Non-performing Assets
  March 31,
    
    
    December 31,
    
    
    March 31,2008
    
    
    2007
    
    
    2007(In thousands)Non-accrual loans, not restructured
    
    $
    13,673
    
    
    $
    12,076
    
    
    $
    1,308Accruing loans past due 90 days or more
    
    
    3
    
    
    
    20
    
    
    
    2Restructured loans
    
    
    
    
    
    
    
    
    
    
    Total non-performing loans (NPLs)
    
    
    13,676
    
    
    
    12,096
    
    
    
    1,310OREO
    
    
    2,778
    
    
    
    
    
    
    
    Total non-performing assets
(NPAs)
    
    $
    16,454
    
    
    $
    12,096
    
    
    $
    1,310Selected ratiosNPLs to total gross loans
    
    
    0.93
    %
    
    
    0.85
    %
    
    
    0.10
    %NPAs to total gross loans and OREO
    
    
    1.12
    %
    
    
    0.85
    %
    
    
    0.10
    %NPAs to total assets
    
    
    0.95
    %
    
    
    0.71
    %
    
    
    0.08
    %
  March 31, 2008
    
    
    December 31, 2007Non-Accrual
    
    
    
    
    
    
    Percent of
    
    
    Non-Accrual
    
    
    
    
    
    
    Percent ofBalance
    
    
    %
    
    
    Total Loans
    
    
    Balance
    
    
    %
    
    
    Total Loans(In thousands, except percentage data)Commercial and industrial
    
    $
    1,035
    
    
    
    7.6
    %
    
    
    0.07
    %
    
    $
    2,042
    
    
    
    16.9
    %
    
    
    0.15
    %Real Estate:Commercial
    
    
    5,884
    
    
    
    43.0
    %
    
    
    0.40
    %
    
    
    4,291
    
    
    
    35.5
    %
    
    
    0.30
    %Residential
    
    
    3,950
    
    
    
    28.9
    %
    
    
    0.27
    %
    
    
    
    
    
    
    0.0
    %
    
    
    0.00
    %Construction and land development
    
    
    2,800
    
    
    
    20.5
    %
    
    
    0.19
    %
    
    
    5,738
    
    
    
    47.6
    %
    
    
    0.40
    %Consumer and Other
    
    
    4
    
    
    
    0.0
    %
    
    
    0.00
    %
    
    
    5
    
    
    
    0.0
    %
    
    
    0.00
    %Total Loans
    
    $
    13,673
    
    
    
    100.0
    %
    
    
    0.93
    %
    
    $
    12,076
    
    
    
    100.0
    %
    
    
    0.85
    %
   Impaired Loans
  27




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##### Table of Contents



March 31,
    
    
    December 31,2008
    
    
    2007(In thousands)Impaired loans with a valuation allowance
    
    $
    16,623
    
    
    $
    3,097Impaired loans without a valuation allowance
    
    
    24,568
    
    
    
    26,702Total impaired loans
    
    $
    41,191
    
    
    $
    29,799Average balance of impaired loans (1)
    
    $
    44,095
    
    
    $
    15,163Related valuation allowance
    
    $
    4,947
    
    
    $
    1,283Interest income recognized on impaired loans (1)
    
    $
    890
    
    
    $
    1,551Interest income recognized on a cash basis on impaired loans (1)
    
    $
    344
    
    
    $
    948
 
 (1)
    
    For the three months ended March 31, 2008 and twelve months ended December 31, 2007.  28




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##### Table of Contents



Allowance for Loan Losses
  Three Months
    
    
    
    
    
    
    Three MonthsEnded
    
    
    Year Ended
    
    
    EndedMarch 31,
    
    
    December 31,
    
    
    March 31,2008
    
    
    2007
    
    
    2007(In thousands)Allowance for Loan Losses:Balance at beginning of period
    
    $
    17,098
    
    
    $
    14,973
    
    
    $
    14,973Charge-offs:Commercial and industrial
    
    
    541
    
    
    
    1,125
    
    
    
    96Real Estate:
    
    
    
    
    
    
    
    
    
    
    Commercial
    
    
    
    
    
    
    
    
    
    
    Residential
    
    
    
    
    
    
    228
    
    
    
    Construction and land development
    
    
    1,000
    
    
    
    
    
    
    
    Consumer and other
    
    
    4
    
    
    
    199
    
    
    
    3Total charge-offs
    
    
    1,545
    
    
    
    1,552
    
    
    
    99RecoveriesCommercial and industrial
    
    
    103
    
    
    
    294
    
    
    
    259Real Estate:
    
    
    
    
    
    
    
    
    
    
    Commercial
    
    
    
    
    
    
    
    
    
    
    Residential
    
    
    
    
    
    
    26
    
    
    
    Construction and land development
    
    
    7
    
    
    
    1
    
    
    
    Consumer and other
    
    
    
    
    
    
    1
    
    
    
    Total recoveries
    
    
    110
    
    
    
    322
    
    
    
    259Net loans charge-offs (recoveries)
    
    
    1,435
    
    
    
    1,230
    
    
    
    (160
    )Provision for loan losses
    
    
    4,168
    
    
    
    3,355
    
    
    
    482Balance at end of period
    
    $
    19,831
    
    
    $
    17,098
    
    
    $
    15,615Total gross loans
    
    $
    1,468,072
    
    
    $
    1,419,182
    
    
    $
    1,297,860Average gross loans (net of deferred fees)
    
    
    1,436,861
    
    
    
    1,318,995
    
    
    
    1,263,380Non-performing loans
    
    
    13,676
    
    
    
    12,096
    
    
    
    1,310Non-performing assets
    
    
    16,454
    
    
    
    12,096
    
    
    
    1,310Selected ratios:Net charge-offs (recoveries) to average loans (annualized)
    
    
    0.40
    %
    
    
    0.09
    %
    
    
    -0.05
    %Provision for loan losses to average loans (annualized)
    
    
    1.17
    %
    
    
    0.25
    %
    
    
    0.15
    %Allowance for loan losses to total gross loans outstanding at end of period
    
    
    1.35
    %
    
    
    1.20
    %
    
    
    1.20
    %Allowance for loan losses to total non-performing loans
    
    
    145
    %
    
    
    141
    %
    
    
    1,192
    %
 
  29




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##### Table of Contents



Deposits
  Borrowings and Junior Subordinated Debt
     Consolidation of Variable Interest
Entities-an interpretation of ARB No. 51
 30




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##### Table of Contents



REGULATORY MATTERS
  ActualCommunity
    
    CommunityMinimum
    
    Well
    
    Bank of
    
    Bank of
    
    CommunityRegulatory
    
    Capitalized
    
    Nevada
    
    Arizona
    
    BancorpTier 1 leverage capital
    
    
    4.00
    %
    
    
    5.00
    %
    
    
    11.54
    %
    
    
    26.31
    %
    
    
    11.85
    %Tier 1 risk-based capital
    
    
    4.00
    %
    
    
    6.00
    %
    
    
    11.03
    %
    
    
    24.73
    %
    
    
    11.27
    %Total risk-based capital
    
    
    8.00
    %
    
    
    10.00
    %
    
    
    12.22
    %
    
    
    25.98
    %
    
    
    12.46
    %
  LIQUIDITY MANAGEMENT
   
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
    31




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##### Table of Contents



Item 4. Controls and Procedures
 Evaluation of Controls and Procedures
  (a)
    
    information required to be disclosed by the Company in
this Quarterly Report on Form 10-Q and the other
reports which the Company files or submits under the
Exchange Act would be accumulated and communicated to
the Companys management, including its Chief
Executive Officer and Chief Financial Officer, as
appropriate, to allow timely decisions regarding
required disclosure;(b)
    
    information required to be disclosed by the Company in
this Quarterly Report on Form 10-Q and the other
reports which the Company files or submits under the
Exchange Act would be recorded, processed, summarized
and reported within the time periods specified in the
SECs rules and forms; and(c)
    
    the Companys disclosure controls and procedures are effective as of
the end of the period covered by this Quarterly Report on Form 10-Q to
ensure that material information relating to the Company and its
consolidated subsidiary is made known to them, particularly during the
period for which periodic reports, including this Quarterly Report on
Form 10-Q, are being prepared.
 Changes in Internal Control over Financial Reporting
  32




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 Stock Repurchase Program
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  
 Item 6.  Exhibits
 31.1
    
    Rule 13a-14(a) Certification by Chief Executive Officer31.2
    
    Rule 13a-14(a) Certification by Chief Financial Officer32.1
    
    Section 1350 Certifications
 33




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##### Table of Contents



SIGNATURES
  COMMUNITY BANCORPBy:
    
    /s/ Edward M. JamisonEdward M. JamisonPresident and Chief Executive Officer(Principal Executive Officer)Dated: May 6, 2008COMMUNITY BANCORPBy:
    
    /s/ Patrick HartmanPatrick HartmanExecutive Vice President and Chief Financial Officer(Principal Financial Officer)(Chief Accounting Officer)Dated: May 6, 2008
 34