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 June 30, 2008

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

COMMUNITY BANCORP

Nevada		01-0668846
(State or other jurisdiction of incorporation)		(I.R.S. Employer Identification No.)
400 South 4th Street, Suite 215, Las Vegas, NV		89101
(Address of principal executive offices)		(Zip Code)

Indicate by check mark whether the registrant (1) has 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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ      No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o		Accelerated filer þ		Non-accelerated filer o		Smaller reporting company o
				(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o      No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Title of Class		Outstanding as of July 31, 2008
Common Stock, $0.001 par value		10,250,986 shares

 

 

COMMUNITY BANCORP

TABLE OF CONTENTS

				Page
PART I — FINANCIAL INFORMATION
ITEM 1.		FINANCIAL STATEMENTS		3
ITEM 2.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		17
ITEM 3.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		35
ITEM 4.		CONTROLS AND PROCEDURES		36
PART II — OTHER INFORMATION
ITEM 1.		LEGAL PROCEEDINGS		36
ITEM 1A.		RISK FACTORS		36
ITEM 2.		UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		36
ITEM 3.		DEFAULTS UPON SENIOR SECURITIES		36
ITEM 4.		SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS		37
ITEM 5.		OTHER INFORMATION		37
ITEM 6.		EXHIBITS		37
		SIGNATURES		38
		CERTIFICATIONS		40
EXHIBIT 3.1
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

		Page
Consolidated Balance Sheets			4
Consolidated Statements of Operations and Comprehensive Income (Loss)			5
Consolidated Statements of Cash Flows			6
Notes to Unaudited Consolidated Financial Statements			7

		June 30,				December 31,
		2008				2007
		(In thousands, except share data)
ASSETS
Cash and due from banks		$	13,159			$	19,243
Interest bearing deposits in other banks			791				141
Federal funds sold			447				20
Cash and cash equivalents			14,397				19,404
Securities available for sale, at fair value			61,161				88,217
Securities held to maturity, at amortized cost (fair value of $645 as of June 30, 2008 and $817 as of December 31, 2007)			635				801
Required equity investments, at cost			12,335				14,014
Loans, net of allowance for loan losses of $28,050 as of June 30, 2008 and $17,098 as of December 31, 2007			1,473,961				1,396,890
Premises and equipment, net			25,557				27,535
Other real estate owned			11,033				—
Accrued interest and dividends receivable			7,083				8,046
Deferred income taxes, net			1,716				1,503
Bank owned life insurance			10,719				10,521
Goodwill			113,636				113,636
Core deposit intangible, net of accumulated amortization of $3,148 as of June 30, 2008 and $2,478 as of December 31, 2007			6,811				7,481
Other assets			8,780				5,473
Total assets		$	1,747,824			$	1,693,521
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
Deposits:
Non-interest bearing		$	163,551			$	170,725
Interest bearing:
Demand			706,181				672,567
Savings			22,445				28,465
Time, $100,000 or more			186,857				171,664
Other time			250,189				187,041
Total deposits			1,329,223				1,230,462
Borrowings			105,412				146,684
Accrued interest payable and other liabilities			7,190				9,090
Junior subordinated debt			72,166				72,166
Total liabilities			1,513,991				1,458,402
Commitments and Contingencies (Note 9)
Stockholders’ equity
Preferred stock, par value: $0.001; shares authorized: 20,000,000 at June 30, 2008 and none at December 31, 2007; shares issued: none			—				—
Common stock, par value: $0.001; shares authorized: 50,000,000 at June 30, 2008 and 30,000,000 at December 31, 2007; shares issued: 10,604,570 as of June 30, 2008 (including 145,178 shares of unvested restricted stock) and 10,620,529 as of December 31, 2007 (including 161,137 shares of unvested restricted stock)			11				11
Additional paid-in capital			169,815				168,931
Retained earnings			70,853				72,797
Accumulated other comprehensive (loss) income, net of tax			(162	)			64
			240,517				241,803
Less cost of treasury stock, 350,575 shares as of June 30, 2008 and December 31, 2007			(6,684	)			(6,684	)
Total stockholders’ equity			233,833				235,119
Total liabilities and stockholders’ equity		$	1,747,824			$	1,693,521

See Notes to Consolidated Financial Statements (Unaudited).

COMMUNITY BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

		For the three months ended								For the six months ended
		June 30,				June 30,				June 30,				June 30,
		2008				2007				2008				2007
						(In thousands, except per share data)
Interest and dividend income:
Loans, including fees		$	25,232			$	30,439			$	54,058			$	59,373
Securities and investments			948				1,448				2,067				2,884
Federal funds sold			17				529				27				1,047
Total interest and dividend income			26,197				32,416				56,152				63,304
Interest expense on:
Deposits			8,615				11,926				18,758				22,623
Borrowings			1,021				1,149				2,400				2,301
Junior subordinated debt			1,034				1,543				2,188				3,073
Total interest expense			10,670				14,618				23,346				27,997
Net interest income before provision for loan losses			15,527				17,798				32,806				35,307
Provision for loan losses			14,226				486				18,394				968
Net interest income after provision for loan losses			1,301				17,312				14,412				34,339
Non-interest income:
Service charges and other income			738				557				1,401				1,185
Bank owned life insurance			98				111				198				229
Net swap settlements			(85	)			44				(115	)			92
Rental income			39				38				87				76
Gain on sale of securities			31				4				196				4
Gain on sale of property			—				—				1,210				—
Net gain on sale of loans			—				250				—				285
Total non-interest income			821				1,004				2,977				1,871
Non-interest expense:
Salaries, wages and employee benefits			5,230				5,589				11,095				11,301
Occupancy, equipment and depreciation			1,291				1,227				2,573				2,423
Core deposit intangible amortization			335				335				670				670
Data processing			303				268				533				583
Advertising and public relations			405				464				782				737
Professional fees			616				428				1,206				700
Telephone and postage			163				193				326				394
Stationery and supplies			207				192				402				358
Directors fees			119				50				236				178
Insurance			436				140				660				259
Software maintenance			173				116				319				221
Loan related			123				82				223				177
Foreclosed assets, net			154				—				154				—
(Gain) Loss on interest rate swaps			(814	)			—				15				—
Other operating expenses			541				539				1,198				1,080
Total non-interest expense			9,282				9,623				20,392				19,081
(Loss) income before income tax provision			(7,160	)			8,693				(3,003	)			17,129
Income tax (benefit) provision			(2,524	)			3,050				(1,059	)			6,037
Net (loss) income			(4,636	)			5,643				(1,944	)			11,092
Other comprehensive (loss) income — unrealized (loss) on available-for-sale securities, net of income tax benefit of $381, $333, $26 and $262, respectively			(877	)			(600	)			(226	)			(445	)
Comprehensive (loss) income		$	(5,513	)		$	5,043			$	(2,170	)		$	10,647
(LOSS) EARNINGS PER SHARE:
Basic		$	(0.46	)		$	0.54			$	(0.19	)		$	1.06
Diluted		$	(0.46	)		$	0.54			$	(0.19	)		$	1.06

See Notes to Consolidated Financial Statements (Unaudited).

COMMUNITY BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the six months ended

(Unaudited)

		June 30,				June 30,
		2008				2007
		(In thousands)
Cash flows from operating activities:
Net (loss) income		$	(1,944	)		$	11,092
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation of premises and equipment			962				929
Gain on sales of fixed assets			—				(20	)
Gain on sale of property			(1,210	)			—
Amortization of core deposit intangible			670				670
Loss on interest rate swaps			15				—
Income from bank owned life insurance			(198	)			(229	)
Gain on sale of loans			—				(285	)
Gain on sale of securities			(196	)			(4	)
Proceeds from sales of loans held for sale			—				3,559
Originations of loans held for sale			—				(2,262	)
Deferred taxes, net			(188	)			1,082
Provision for loan losses			18,394				968
Share-based compensation expense			884				417
Net amortization (accretion) of investment premium and discount			23				(76	)
Decrease (increase) in accrued interest receivable			963				(617	)
(Increase) in other assets			(3,307	)			(501	)
Decrease in accrued interest payable and other liabilities			(1,915	)			(972	)
Income from required equity investments — stock dividends			(189	)			(117	)
Net cash provided by operating activities			12,764				13,634
Cash flows from investing activities:
Net increase in loans			(106,383	)			(112,035	)
(Payments) receipts on net swap settlements			(115	)			92
Proceeds from maturities of and principal paydowns on securities held to maturity			166				98
Purchase of securities available for sale			(100	)			(2,617	)
Proceeds from maturities of and principal paydowns on securities available for sale			26,882				13,019
Proceeds from sale of securities available for sale			196				3,272
Net investment in required equity investments			1,868				(5,726	)
(Purchase) sale of premises and equipment			(339	)			(2,261	)
Proceeds from sale of premises and equipment			2,565				48
Net cash used in investing activities			(75,260	)			(106,110	)
Cash flows from financing activities:
Net (decrease) increase in borrowings			(38,760	)			32,139
Net increase in deposits			98,761				50,261
Repayment of long-term debt			(2,512	)			—
Excess tax benefit related to exercise of stock options			—				51
Proceeds from exercise of stock options			—				264
Net cash provided by financing activities			57,489				82,715
Net decrease in cash and cash equivalents			(5,007	)			(9,761	)
Cash and cash equivalents, beginning of the year			19,404				46,116
Cash and cash equivalents, end of the period		$	14,397			$	36,355
Supplemental disclosure of cash flow information:
Interest paid		$	23,882			$	27,843
Income taxes paid		$	2,565			$	5,161
Transfer of loans to other real estate owned		$	11,033			$	—

See Notes to Consolidated Financial Statements (Unaudited).

COMMUNITY BANCORP AND SUBSIDIARIES

Note 1. Nature of Business

     Community Bancorp is a bank holding company headquartered in Las Vegas, Nevada with four wholly-owned subsidiaries: 1) Community Bank of Nevada, 2) Community Bank of Arizona, 3) Community Bancorp (NV) Statutory Trust II and 4) Community Bancorp (NV) Statutory Trust III. Community Bancorp exists primarily for the purpose of holding the stock of its wholly-owned subsidiaries and facilitating their activities. Community Bancorp and its consolidated subsidiaries discussed below are collectively referred to herein as the “Company.”

     Community Bank of Nevada is a Nevada state chartered bank providing a full range of commercial and consumer bank products through thirteen branches located in the greater Las Vegas area.

     Community Bank of Arizona is an Arizona state chartered bank providing a full range of commercial and consumer bank products through three branches located in the greater Phoenix, Arizona area. Community Bank of Arizona was acquired in September 2006.

     The statutory trusts were formed for the exclusive purpose of issuing and selling trust preferred securities (see Note 2 and Note 8). The trust preferred securities issued through Community Bancorp (NV) Statutory Trust I were redeemed in September 2007 and management has dissolved this entity.

     Community Bancorp’s principal source of income is currently dividends from its two bank subsidiaries, Community Bank of Nevada and Community Bank of Arizona. The expenses of Community Bancorp, including interest from junior subordinated debt, salaries, legal, accounting and NASDAQ listing fees, have been and will generally be paid from dividends and management fees paid to Community Bancorp by its bank subsidiaries.

Note 2. Basis of Presentation

     The unaudited consolidated financial statements include the accounts of Community Bancorp, Community Bank of Nevada and Community Bank of Arizona. Intercompany items and transactions have been eliminated in consolidation. The statutory trusts are not consolidated, as disclosed in Note 8.

     The interim consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements. The information furnished in these interim statements reflects all adjustments that are, in the opinion of management, necessary for the fair statement of results for the periods presented. All adjustments are of a normal and recurring nature. Results for the three months and six months ended June 30, 2008 are not necessarily indicative of the results that may be expected for any other interim period or for the year as a whole. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted. The unaudited consolidated financial statements should be read in conjunction with the audited financial statements and notes included in the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.

     A consolidated statement of stockholders’ equity is not included as part of these interim financial statements since there have been no material changes, other than a net loss, during the six months ended June 30, 2008.

     Certain amounts in the 2007 Consolidated Statement of Cash Flows have been reclassified to conform to the 2008 presentation.

Note 3. Significant Accounting Policies

     Accounting policies are fully described in Note 2 of the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007 and there have been no material changes during the six months ended June 30, 2008 (also see Note 4 and Note 17).

Note 4. Recent Accounting Pronouncements

     In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, which addresses how companies should measure fair value when they are required to use a fair value measure for recognition or disclosure purposes under GAAP. SFAS No. 157 provides a common definition of fair value to be used throughout GAAP. The FASB believes that the new standard will make the measurement of fair value more consistent and comparable and improve disclosures about those measures. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. The Company adopted

SFAS No. 157 effective January 1, 2008. The adoption of SFAS No. 157 had no effect on the Company’s Consolidated Balance Sheet or Consolidated Statement of Operations and Comprehensive Income (Loss) (also see Note 17).

     In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities-Including an Amendment of FASB Statement No. 115. SFAS No. 159 permits an entity to choose to measure many financial instruments and certain other items at fair value. SFAS No. 159 applies to all reporting entities, including not-for-profit organizations, and contains financial statement presentation and disclosure requirements for assets and liabilities reported at fair value. For companies electing the fair value option for financial instruments under SFAS No. 159, unrealized gains and losses will be reported in earnings. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. However, early adoption was permitted subject to certain conditions including the adoption of SFAS No. 157 at the same time. The Company adopted SFAS No. 159 on January 1, 2008. The adoption of SFAS No. 159 had no effect on the Company’s Consolidated Balance Sheet and Consolidated Statement of Operations and Comprehensive Income (Loss).

     In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133. SFAS No. 161 requires enhanced disclosures about derivative instruments and hedging activities. It is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The Company is currently assessing the extent, if any, of any additional required disclosures.

Note 5. Loans

     The composition of the Company’s loan portfolio as of June 30, 2008 and December 31, 2007 is as follows:

		June 30,				December 31,
		2008				2007
		(In thousands)
Commercial and industrial		$	232,579			$	210,614
Real estate:
Commercial			406,218				370,464
Residential			38,853				43,212
Construction and land development			823,429				789,185
Consumer and other			4,797				5,707
Total gross loans			1,505,876				1,419,182
Less:
Allowance for loan losses			28,050				17,098
Net unearned loan fees and discounts			3,865				5,194
Total net loans		$	1,473,961			$	1,396,890

     Changes in the allowance for loan losses for the three months and six months ended June 30, 2008 and 2007 are as follow:

		For the three months ended								For the six months ended
		June 30,								June 30,
		2008				2007				2008				2007
		(In thousands)								(In thousands)
Balance at beginning of period		$	19,831			$	15,615			$	17,098			$	14,973
Provision for loan losses			14,226				486				18,394				968
Less amounts charged off			(6,126	)			(129	)			(7,671	)			(228	)
Recoveries of amounts charged off			119				13				229				272
Balance at end of period		$	28,050			$	15,985			$	28,050			$	15,985

     At June 30, 2008, total impaired loans were $103.1 million, including $69.3 million in non-accrual loans, and total loans past due 90 days or more and still accruing interest were $10,000. At December 31, 2007, total impaired loans were $29.8 million, including $12.1 million in non-accrual loans, and total loans past due 90 days or more and still accruing interest were $20,000.

Note 6. Other Real Estate Owned

     OREO is real estate that is held for sale and is initially recorded at fair value, net of estimated disposition costs and is subsequently carried at the lower of its carrying amount or fair value. The Company’s OREO as of June 30, 2008 consists of seven properties totaling $11.0 million, compared to two properties totaling $2.8 million at March 31, 2008 and no OREO at December 31, 2007. During the quarter ended June 30, 2008, the Company charged-off $1.4 million to the allowance for loan losses to record OREO at its estimated fair value less costs to sell. Of the $1.4 million in loan balances charged-off during the second quarter of 2008, the Company had previously established a specific allowance on these loans of $1.3 million at March 31, 2008. The Company also recognized a $525,000 write down of one OREO property during the second quarter of 2008 to adjust the carrying value of the property to its estimated fair value less costs to sell based on acceptance of a purchase offer, less selling costs. One property in the amount of $2.4 million was sold on July 22, 2008 and for three properties, totaling $7.2 million, the Company has accepted purchase offers (two of which are in escrow) with anticipated closings in the third quarter of 2008.

     OREO is evaluated to ensure the recorded amount is supported by its current fair value and valuation allowances. Reductions in the carrying amount are recorded as necessary. Costs relating to the development and improvement of the OREO are capitalized to the extent that the total does not exceed the property’s net realizable value.

Note 7. Borrowings

     The Company regularly uses the Federal Home Loan Bank of San Francisco (“FHLB”) for short term and long term borrowings. FHLB term debt, which matures from July 2008 through March 2009, amounted to $93.3 million at June 30, 2008. Interest on all FHLB borrowings accrued at an average rate of 3.95% and 4.15% for the three and six months ended June 30, 2008, respectively. Remaining available debt financing through the FHLB amounted to $69.1 million at June 30, 2008.

     The Company also has agreements with other lending institutions under which it can purchase up to $108.0 million of federal funds. The interest rate charged on borrowings is determined by the lending institutions at the time of borrowings. Each line is unsecured. As of June 30, 2008 and December 31, 2007, there were no federal funds purchased.

     In September 2007, the Company borrowed $15.5 million and used the proceeds to redeem junior subordinated debt owed to Community Bancorp (NV) Statutory Trust I which used the proceeds to redeem its trust preferred issuances. The borrowing is unsecured, bears interest at the one month LIBOR plus 1.50% (equal to 3.88% at June 30, 2008), is payable in the amount of approximately $461,000 monthly with all unpaid interest and principal due on September 26, 2010 and requires the lender’s approval prior to issuing dividends to shareholders. At June 30, 2008, the Company was not in compliance with the debt service coverage ratio requirement of this loan agreement. The Company has received a waiver from the lender of this requirement through September 30, 2008. The outstanding balance on the note was $11.8 million and $14.3 million as of June 30, 2008 and December 31, 2007, respectively.

Note 8. Junior Subordinated Debt

     The Company had $72.2 million of subordinated debentures outstanding at June 30, 2008, which bore interest at an averaged rate of 5.76% and 6.10% for the three months and six months ended June 30, 2008, respectively. The subordinated debentures were issued in three separate series. Each issuance has a maturity of thirty years from its date of issue. The subordinated debentures were issued to trusts established by the Company, which in turn issued trust preferred securities. The proceeds from the issuance of the securities were used to fund the Company’s 2005 and 2006 acquisitions.

     In accordance with FIN 46 (revised December 2004), Consolidation of Variable Interest Entities-an interpretation of ARB No. 51, statutory trusts are not reported on a consolidated basis. Therefore, the trust preferred debt securities of $70.0 million do not appear on the Consolidated Balance Sheets. Instead, the junior subordinated debentures of $72.2 million payable by Community Bancorp to the statutory trusts and the investment in the statutory trusts common stock of $2.2 million (included in other assets) are reported on the Consolidated Balance Sheets.

     The Company has the option to defer payments of interest on the trust preferred securities for a period of up to five years, as long as the Company is not in default on the payment of interest. If the Company elects to defer payments of interest by extending the interest distribution period, then the Company may not declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to any of the Company’s common stock, until such time as all deferred interest is paid.

     In the event of certain changes or amendments to regulatory requirements or federal tax rules, the debt is redeemable in whole. Certain obligations under these instruments are fully and unconditionally guaranteed by the Company and rank subordinate and junior in right of payment to all other liabilities of the Company.

     In March 2005, the Federal Reserve Bank adopted a final rule that allows the continued inclusion of trust preferred securities in the Tier I capital of bank holding companies, subject to stricter quantitative limits and qualitative standards. Under the final ruling, qualifying mandatory preferred securities may be included in Tier I capital, subject to a limit of 25% of all core capital. Amounts of restricted core capital elements in excess of this limit generally may be included in Tier II capital. The quantitative limits become effective on March 31, 2009. As of June 30, 2008, the trust preferred securities have been included in Tier I capital for regulatory capital purposes up to the specified limit ($70.0 million).

Note 9. Commitments and Contingencies

Financial Instruments with Off-Balance Sheet Risk

     The Company is party to financial instruments with off-balance sheet risk in the normal course of business in order to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. They involve, to varying degrees, elements of credit risk in excess of amounts recognized in the Consolidated Balance Sheets.

     The Company’s exposure to credit loss for these commitments, in the event of nonperformance, is represented by the contractual amounts of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.

     A summary of the contract amount of the Company’s exposure to off-balance sheet risk as of June 30, 2008 and December 31, 2007 is as follows:

Outstanding commitments

		June 30,				December 31,
		2008				2007
		(In thousands)
Commitments to extend credit, including unsecured commitments of approximately $22,604 for 2008 and $28,137 for 2007		$	326,023			$	430,093
Credit card commitments, including unsecured amounts of approximately $838 for 2008 and $818 for 2007			838				818
Standby letters of credit, including unsecured commitments of approximately $1,542 for 2008 and $2,485 for 2007			3,137				4,083
		$	329,998			$	434,994

     Commitments to extend credit are agreements to lend to a customer as long as there are no violations of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained is based on management’s credit evaluation of the party. Collateral held varies, but may include accounts receivable; inventory; property and equipment; residential real estate; income-producing commercial properties; and owner-occupied commercial properties. The Company had approximately $989,000 and $877,000 at June 30, 2008 and December 31, 2007, respectively, reflected in other liabilities for the allowance for loan losses of off-balance sheet risk associated with commitments to extend credit.

     Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. Collateral held varies as specified above and is required as the Company deems necessary. Essentially all letters of credit issued have expiration dates within one year. Upon entering into letters of credit, the Company records the related

liability at fair value pursuant to FASB Interpretation No. 45 (“FIN 45”). Thereafter, the liability is evaluated pursuant to FASB Statement No. 5, Accounting for Contingencies. As of June 30, 2008 and December 31, 2007, the amount of the liability related to guarantees was approximately $8,000 and $10,000, respectively.

     In connection with standby letters of credit, the Company recognizes the related commitment fee received from the third party as a liability at the inception of the guarantee arrangement pursuant to FIN 45. Commitment fees, where the likelihood of exercise of the commitment is remote, are generally recognized as service fee income on a straight line basis over the commitment period. All other commitment fees are deferred over the entire commitment period and are not recognized as service fee income until the expiration of the commitment period.

Financial Instruments with Concentrations of Credit Risk

     The Company makes commercial, commercial real estate, residential real estate and consumer loans to customers primarily in the greater Las Vegas, Nevada and Phoenix, Arizona areas. Real estate loans accounted for approximately 84% of the total gross loans as of June 30, 2008. Substantially all of these loans are secured by first liens with an initial loan-to-value ratio of generally not more than 75%. Approximately 2% of total gross loans were unsecured as of June 30, 2008. The Company’s loans are expected to be repaid from cash flows or from proceeds from the sale of selected assets of the borrowers.

     At June 30, 2008 the Company’s impaired loans totaled $103.1 million, including $69.3 million in non-accrual loans. Approximately 89% and 91% of the non-accrual loans and impaired loans, respectively, were related to borrowers in the greater Las Vegas, Nevada geographic region.

     At June 30, 2008, seven customer balances totaling $461.4 million comprised 34.7% of total deposits. These customer balances constitute all brokered deposits at June 30, 2008. Of these deposits at June 30, 2008, $364.7 million were interest bearing wholesale demand deposits and $96.7 million were other time deposits.

Lease Commitments

     The Company leases certain branches and office facilities under operating leases. The Company has lease obligations for ten of its branch locations and its corporate headquarters and administrative offices under various non-cancelable agreements with expiration dates through March 2018, which require various minimum annual rentals.

     In January 2008, the Company also executed a new land lease agreement for property on which it will construct a new branch. The Company took possession of the property on March 21, 2008 and will commence construction of the branch. The initial term of the lease is ten years with four ten year renewal options. Monthly rent will commence on the date the branch facility is open for business or at the latest in November 2008.

Contingencies

     In the normal course of business, the Company is involved in various legal proceedings. In the opinion of management, any liability resulting from such proceedings would not have a material adverse effect on the consolidated financial statements.

Note 10. Derivative Financial Instruments

     During 2006, the Company originated two fixed rate loans with an aggregate principal balance of approximately $20.0 million. The Company also entered into two interest rate swap agreements with notional values equal to the principal balance of the two fixed rate loans. The interest rate swap agreements are LIBOR-based where the Company’s interest payments are based on a fixed interest rate and the Company’s receipt of interest payments are based on a variable interest rate. The Company retains any net swap settlement income and pays any net swap settlement expense. As the Company has not used hedge accounting, the net swap settlement has been recorded in non-interest income.

     The interest rate swap agreements are recorded at fair value as required by SFAS No. 133 and as amended, by SFAS No. 155. The fair values of the swap agreements are reflected in other assets or other liabilities, as applicable and any amounts owed to the borrower are recorded in other liabilities on the Consolidated Balance Sheet. As a result of changes in market value associated with the interest rate swaps, a gain of $814,000 and a loss of $15,000 was recorded in the Company’s Consolidated Statement of Operations and Comprehensive Income (Loss) for the three and six months ended June 30, 2008, respectively. For the three and six months ended June 30, 2007, there was no corresponding gain or loss on interest rate swaps.

     Fair values for the swap agreements are based upon quoted market prices.

Note 11. Stockholders’ Equity

     At the Company’s annual stockholders’ meeting held May 29, 2008, the Company’s shareholders approved an amendment of the Articles of Incorporation, increasing the number of authorized shares of common stock from 30,000,000 to 50,000,000 and creating a new class of preferred stock in the amount of 20,000,000 shares that, if issued, will have such terms, rights and features as may be determined by the Board of Directors. All shares of stock have a par value of $.001.

Note 12. Earnings (Loss) per Share

     Basic (loss) earnings per share (“EPS”) are calculated on the basis of weighted-average number of common shares outstanding (excluding non-vested restricted stock) during the period. Diluted EPS reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued. Potential common shares that may be issued by the Company relate to outstanding stock options and non-vested restricted stock, and are determined using the treasury stock method. The diluted loss per share for the three and six months ended June 30, 2008, was based only on the weighted-average number of common shares outstanding, as any common stock equivalents would have been antidilutive.

     EPS has been computed based on the following:

		For the Three Months Ended June 30,																								For the Six Months Ended June 30,
		2008												2007												2008												2007
		(In thousands, except (loss) earnings per share data)																								(In thousands, except (loss) earnings per share data)
						Average												Average												Average												Average
		Net				Number				Per Share				Net				Number				Per Share				Net				Number				Per Share				Net				Number				Per Share
		(Loss)				of Shares				Amounts				Income				of Shares				Amounts				(Loss)				of Shares				Amounts				Income				of Shares				Amounts
Basic EPS		$	(4,636	)			10,109			$	(0.46	)		$	5,643				10,420			$	0.54			$	(1,944	)			10,109			$	(0.19	)		$	11,092				10,418			$	1.06
Effect of dilutive securities:
Stock options			—				—				—				—				68				—				—				—				—				—				72				—
Restricted stock			—				—				—				—				—				—				—				—				—				—				—				—
Diluted EPS		$	(4,636	)			10,109			$	(0.46	)		$	5,643				10,488			$	0.54			$	(1,944	)			10,109			$	(0.19	)		$	11,092				10,490			$	1.06

     Stock options and restricted stock that could potentially effect basic EPS in the future, that were not included in the computation of diluted EPS because they would have had an antidilutive effect, amounted to 698,000 shares and 708,000 shares for the three and six months ended June 30, 2008, respectively.

Note 13. Share-Based Compensation

     Stock options

     As of June 30, 2008, the Company has outstanding options under two share-based compensation plans. The related compensation cost was approximately $189,000 and $220,000 for the three months ended June 30, 2008 and 2007, respectively, and $376,000 and $417,000 for the six months ended June 30, 2008 and 2007, respectively. No share-based compensation was capitalized. No stock options were granted during the six months ended June 30, 2008 and 2007.

     Restricted stock

     In August and September 2007, the Company issued a total of approximately 163,000 shares of restricted common stock to certain employees and directors. Restricted common stock issued to employees is subject to a three year cliff vesting and the directors restricted common stock vest annually over a three year period. Share-based compensation costs associated with the issuance of the restricted common stock is recognized on a straight-line basis over three years and amounted to approximately $254,000 and $508,000 for the three months and six months ended June 30, 2008, respectively. For the three and six months ended June 30, 2007, there was no share-based compensation cost associated with the issuance of restricted stock.

     Stock appreciation rights

     In July 2000, the Company’s Board of Directors approved the 2000 Stock Appreciation Rights Plan. The Company accounts for the Stock Appreciation Rights (“SAR”) using liability accounting which requires the Company to record the liability of the SAR at fair value, rather than intrinsic value. All outstanding SAR were settled, with cash payments made in April 2007 and, accordingly, there was no accrued liability for SAR at June 30, 2008. There was no SAR expense recognized for the three months ended June 30, 2008 and 2007. SAR expense for the six months ended June 30, 2008 and 2007 was $0 and $32,000, respectively.

     The compensation cost related to share-based compensation plans was included in salaries, wages and employee benefits expense for grants to employees and directors fees for grants to board members in the Consolidated Statement of Operations and Comprehensive Income (Loss).

Note 14. Segments

     The Company provides a full range of banking services through its two consolidated subsidiaries, Community Bank of Nevada and Community Bank of Arizona. The Company currently manages its business with a primary focus on each bank subsidiary. Accordingly, the Company has two reportable segments. Community Bancorp’s financial information is included in the “Other” category, because it represents an overhead function rather than an operating segment.

		For the three months ended and as of June 30, 2008																For the six months ended and as of June 30, 2008
		Community				Community												Community				Community
		Bank of				Bank of												Bank of				Bank of
		Nevada				Arizona				Other (3)				Total				Nevada				Arizona				Other (3)				Total
		(In thousands)																(In thousands)
Interest and dividend income		$	24,478			$	1,706			$	13			$	26,197			$	52,834			$	3,337			$	(19	)		$	56,152
Interest expense			8,936				593				1,141				10,670				19,779				1,165				2,402				23,346
Net interest income before provision for loan losses			15,542				1,113				(1,128	)			15,527				33,055				2,172				(2,421	)			32,806
Provision for loan losses			12,484				1,742				—				14,226				16,519				1,875				—				18,394
Net interest income after provision for loan losses			3,058				(629	)			(1,128	)			1,301				16,536				297				(2,421	)			14,412
Non-interest income			783				38				—				821				2,888				89				—				2,977
Non-interest expenses			6,825				1,303				1,154				9,282				15,772				2,540				2,080				20,392
Segment pretax (loss) income		$	(2,984	)		$	(1,894	)		$	(2,282	)		$	(7,160	)		$	3,652			$	(2,154	)		$	(4,501	)		$	(3,003	)
Segment assets (1)																		$	1,636,013			$	124,886			$	(13,075	)		$	1,747,824

		For the three months ended and as of June 30, 2007																For the six months ended and as of June 30, 2007
		Community				Community												Community				Community
		Bank of				Bank of												Bank of				Bank of
		Nevada				Arizona				Other (3)				Total				Nevada				Arizona				Other (3)				Total
		(In thousands)																(In thousands)
Interest and dividend income		$	30,829			$	1,532			$	55			$	32,416			$	60,300			$	2,894			$	110			$	63,304
Interest expense			12,524				551				1,543				14,618				23,907				1,017				3,073				27,997
Net interest income before provision for loan losses			18,305				981				(1,488	)			17,798				36,393				1,877				(2,963	)			35,307
Provision for loan losses			386				100				—				486				768				200				—				968
Net interest income after provision for loan losses			17,919				881				(1,488	)			17,312				35,625				1,677				(2,963	)			34,339
Non-interest income			911				93				—				1,004				1,618				178				75				1,871
Non-interest expenses			8,149				973				501				9,623				16,487				1,747				847				19,081
Segment pretax income (loss)		$	10,681			$	1			$	(1,989	)		$	8,693			$	20,756			$	108			$	(3,735	)		$	17,129
Segment assets (2)																		$	1,569,683			$	89,420			$	4,083			$	1,663,186

Note 15. Quarterly Data

		For the three months ended								For the three months ended
		June 30,				March 31,				June 30,				March 31,
		2008				2008				2007				2007
						(In thousands, except per share data)
Interest and dividend income		$	26,197			$	29,955			$	32,416			$	30,888
Interest expense			10,670				12,676				14,618				13,379
Net interest income before provision for loan losses			15,527				17,279				17,798				17,509
Provision for loan losses			14,226				4,168				486				482
Net interest income after provision for loan losses			1,301				13,111				17,312				17,027
Non-interest income			821				2,156				1,004				867
Non-interest expense			9,282				11,110				9,623				9,458
(Loss) income before income tax provision			(7,160	)			4,157				8,693				8,436
Income tax (benefit) provision			(2,524	)			1,465				3,050				2,987
Net (loss) income		$	(4,636	)		$	2,692			$	5,643			$	5,449
Basic (loss) earnings per share		$	(0.46	)		$	0.27			$	0.54			$	0.52
Diluted (loss) earnings per share		$	(0.46	)		$	0.26			$	0.54			$	0.52

Note 16. Sale of Property

     On February 13, 2008, the Company completed the sale of its Warm Springs branch. Previously, the Company consolidated the branch’s activity with the Stephanie branch. The consolidation of the two branches and subsequent sale of the Warms Springs branch was implemented due to the close proximity of the two branches. The Stephanie branch was acquired in October 2006 through our acquisition of Valley Bancorp.

     Gross proceeds from the sale were approximately $2.7 million (approximately $2.6 million after selling costs) and the related gain of approximately $1.2 million was recorded in non-interest income.

Note 17. Fair Value Accounting

     As discussed in Note 4, on January 1, 2008 the Company adopted SFAS No. 157, Fair Value Measurements, and SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities-Including an Amendment of FASB Statement No. 115. The adoption of SFAS No. 157 and 159 had no affect on the Company’s December 31, 2007 and June 30, 2008 Consolidated Balance Sheets or the Consolidated Statement of Operations and Comprehensive Income (Loss) for the three months and six months ended June 30, 2008.

     SFAS No. 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value. SFAS No. 159 permits an entity to choose to measure many financial instruments and certain other items at fair value and contains financial statement presentation and disclosure requirements for assets and liabilities for which the fair value option under this pronouncement is elected. Upon adoption of SFAS No. 159, none of the Company’s assets or liabilities were valued using the fair value option allowed under this pronouncement.

     SFAS No. 157 also establishes a hierarchy for determining fair value measurement. The hierarchy includes three levels and is based upon the valuation techniques used to measure assets and liabilities. The three levels are as follow:

•

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.

     The following is a description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to valuation methodology.

Securities available-for-sale, at fair value — Where quoted prices are available in an active market, securities are classified within level 1 of the hierarchy. Level 1 includes securities that have quoted prices in an active market for identical assets. If quoted market prices are not available, then fair values are estimated using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. The Company has categorized its securities as level 2.

Impaired loans — SFAS No. 157 applies to loans measured for impairment using the practical expedients permitted by SFAS No. 114, Accounting by Creditors for Impairment of a Loan, including impaired loans measured at an observable market price (if available) or at the fair value of the loan’s collateral (if collateral dependent). Fair value of the loan’s collateral is determined by appraisals or independent valuation which is then adjusted for the cost related to liquidation of the collateral. The Company has categorized its impaired loans as level 2.

Interest rate swaps — The Company determines the fair value of its interest rate swaps based on termination estimates provided by the counter party to the swaps. These values are then validated by management using internal valuation models based on market information. The Company has categorized its interest rate swaps as level 2.

     The following table represents the assets and liabilities measured at fair value on recurring basis by the Company.

						Fair Value Measurements at Reporting Date Using:
						Quoted Prices in								Significant
						Active Markets for				Significant Other				Unobservable
						Identical Assets				Observable Inputs				Inputs
Description		June 30, 2008				(Level 1)				(Level 2)				(Level 3)
						(In thousands)
Assets:
Securities available for sale, at fair value		$	61,161			$	—			$	61,161			$	—
Interest rate swaps (1)			15				—				15				—
Total		$	61,176			$	—			$	61,176			$	—
Liabilities:
Interest rate swaps (2)		$	395			$	—			$	395			$	—
		$	395			$	—			$	395			$	—

     For the three months and six months ended June 30, 2008, the decrease in fair value of securities available-for-sale was $1.3 million and $252,000, respectively, which is included in other comprehensive income (loss) (net of taxes). The change in fair value of interest rate swaps resulting in a gain of $814,000 and a loss of $15,000 for the three and six months ended June 30, 2008, respectively, is included in non-interest expense. Methods of measuring fair values at June 30, 2008 for securities available-for-sale and interest rate swaps are consistent with those used in prior reporting periods.

     Certain assets are measured at fair value on a nonrecurring basis (e.g., the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments when there is evidence of impairment). The following table represents the assets measured at fair value on a nonrecurring basis by the Company.

Fair Value Measurements at Reporting Date Using:

Quoted Prices in

Significant

Active Markets for

Significant Other

Unobservable

Identical Assets

Observable Inputs

Inputs

Description

June 30, 2008

(Level 1)

(Level 2)

(Level 3)

(In thousands)

Assets:

Impaired loans with specific valuation allowance under SFAS No. 114

$

27,332

$

—

$

27,332

$

—

     At June 30, 2008, impaired loans in the amount of $38,346 (all collateral dependent) were written down to fair value of the underlying collateral, less cost to sell, through establishing a specific allowance for loan losses of $11.0 million. Methods of measuring fair values at June 30, 2008 for impaired loans are consistent with those used in prior reporting periods.

Note 18. Goodwill

     Goodwill represents the excess of the consideration over the fair value of the net assets acquired through the 2005 and 2006 acquisitions of Bank of Commerce, Community Bank of Arizona and Valley Bancorp. Under SFAS No. 142, Goodwill and Other Intangible Assets, goodwill is not amortized but rather tested for impairment, at least annually. The Company’s annual testing of impairment was last conducted as of October 1, 2007 for each of its reporting units (i.e., segments). No impairment of goodwill was identified at that time. In accordance with SFAS No. 142, goodwill of a reporting unit shall be tested for impairment between annual tests if an event or circumstance occurs that would more likely than not reduce the fair value of a reporting unit below its carrying value. As of June 30, 2008, management does not believe any events have occurred that require a current test for impairment. However, management will continue to monitor events and circumstances and if deemed necessary perform tests for impairments prior to the annual testing which might result in a reduction of the carrying value of the goodwill and an impairment loss. Because goodwill is not included in the calculation of risk-based capital, the Company’s regulatory risk-based capital would not be impacted by this potential expense.

Note 19. Subsequent Event

     On July 21, 2008, the Company completed the sale of its Jones property (an administrative facility acquired as part of the Valley Bancorp acquisition). Gross proceeds from the sale were $2.6 million (approximately $2.5 million after selling costs) resulting in a gain of approximately $37,000.

     Concurrent with the closing, the Company executed a leaseback agreement for the property. The term of the lease is for five years, to commence on completion of the sale, and includes two five year renewal options. The initial first year rent is approximately $210,000 and increases 3% annually. The lease also includes an early termination clause that states the Company has the absolute right to early termination of the lease following the thirty-sixth month of the lease term. If early termination is elected, written notice must be provided to the landlord as specified in the lease agreement and the Company will also be subject to an early termination penalty.

     In accordance with SFAS No. 28, Accounting for Sales with Leasebacks, an amendment of SFAS No. 13, the gain will be deferred and amortized over the initial term of the lease.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

     When used in this document, the words or phrases such as “will likely result in,” “management expects that,” “will continue,” “is anticipated,” “estimate,” “projected,” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”). Such forward looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Specific factors include, but are not limited to the recent fluctuations in the U.S. capital and credit markets, loan production, balance sheet management, the economic condition of the markets in Las Vegas, Nevada, or Phoenix, Arizona and their deteriorating real estate sectors, net interest margin, loan quality, the ability to control costs and expenses, interest rate changes and financial policies of the United States government, our ability to manage systemic risks and control operating risks, and general economic conditions. Additional information on these and other factors that could affect financial results are included in “Item 1A. Risk Factors” of our Annual Report on Form 10K for the year ended December 31, 2007, and our other Securities and Exchange Commission filings. Readers should not place undue reliance on forward-looking statements, which reflect management’s view only as of the date hereof. Community Bancorp undertakes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances. This statement is included for the express purpose of protecting Community Bancorp under the PSLRA’s safe harbor provisions. When relying on forward-looking statements to make decisions with respect to our Company, investors and others are cautioned to consider these and other risks and uncertainties.

EXECUTIVE OVERVIEW

     Community Bancorp is a bank holding company headquartered in Las Vegas, Nevada, with four wholly-owned subsidiaries: 1) Community Bank of Nevada, 2) Community Bank of Arizona, 3) Community Bancorp (NV) Statutory Trust II and 4) Community Bancorp (NV) Statutory Trust III. Community Bancorp exists primarily for the purpose of holding the stock of its wholly-owned subsidiaries and facilitating their activities. In accordance with FIN 46 (revised December 2004), the statutory trusts are not reported on a consolidated basis. Community Bancorp and its consolidated subsidiaries are collectively referred to herein as the “Company.” Community Bank of Nevada and Community Bank of Arizona are collectively referred to herein as the “Banks.”

     During the three and six months ended June 30, 2008 the Company’s earnings were challenged by difficult economic conditions in its primary markets as the deterioration of the real estate market during the second half of 2007 continued into the first half of 2008. The deterioration in the real estate market is due to a variety of factors, the most significant of which has been the fallout from the defaults associated with the residential sub-prime market and Alt-A loans. While the Company does not engage in residential sub-prime lending or Alt-A loans, its markets have been affected by these factors.

     This sustained economic downturn had the following effect on the Company’s results of operations and financial condition:

     Results of operations

	•		The provision for loan losses was $14.2 million for the second quarter of 2008, compared to a provision for loan losses of $4.2 million for the first quarter of 2008 and $486,000 for the quarter ended June 30, 2007.
	•		The provision for loan losses for the first half of 2008 increased to $18.4 million, compared to a provision for loan losses of $968,000 for the first half of 2007.
	•		Due to an increase in non-performing loans for the three and six months ended June 30, 2008, interest and dividend income was adversely affected.
	•		Due primarily to the increased provision for loan losses and the adverse effect of the increase in non-performing loans on interest and dividend income, the Company recognized a loss for the second quarter of 2008 of $4.6 million, or $(0.46) per diluted share, compared to net income of $2.7 million for the first quarter of 2008, or $0.26 per diluted share, and $5.6 million, or $0.54 per diluted share, for the second quarter of 2007.

For the first half of 2008 the Company recognized a net loss of $1.9 million, or $(0.19) per diluted share, compared to net income of $11.1 million, or $1.06 per diluted share in the first half of 2007.

     Financial condition

	•		The allowance for loan losses increased to $28.1 million, or 1.86% of total gross loans, at June 30, 2008, compared to $17.1 million, or 1.20% of total gross loans, at December 31, 2007.
	•		Non-performing loans totaled $69.3 million, or 4.6% of total gross loans, at June 30, 2008, compared to $12.1 million, or 0.85% of total gross loans, at December 31, 2007. One loan in the amount of $26.2 million represented 1.7% of total gross loans and 37.9% of non-performing loans. While this loan was not 90 days past due at June 30, 2008, management classified this loan as non-accrual at June 30, 2008. By classifying this one loan to non-accrual status, interest income was adversely affected by approximately $884,000.
	•		OREO was $11.0 million at June 30, 2008, and the Company had no OREO at December 31, 2007. One property in the amount of $2.4 million was sold on July 22, 2008 and for three properties, totaling $7.2 million, the Company has accepted purchase offers (two of which are in escrow) with anticipated closings in the third quarter of 2008
	•		Impaired loans, which include all non-performing loans, increased to $103.1 million at June 30, 2008, compared to $29.8 million at December 31, 2007.
	•		The Company’s capital ratios continue to be above the well-capitalized guidelines established by bank regulatory agencies.

SUMMARY CONSOLIDATED FINANCIAL DATA AND OTHER DATA
(Unaudited)

		2nd				2nd								1st				1st
		Quarter				Quarter				Percentage				Half				Half				Percentage
		2008				2007				Change				2008				2007				Change
		(In thousands, except share and percentage data)												(In thousands, except share and percentage data)
SHARE DATA
Earnings (loss) per share — basic		$	(0.46	)		$	0.54				-185.2	%		$	(0.19	)		$	1.06				-117.9	%
Earnings (loss) per share — diluted		$	(0.46	)		$	0.54				-185.2	%		$	(0.19	)		$	1.06				-117.9	%
Book value per share			22.80			$	22.10				3.2	%			22.80			$	22.10				3.2	%
Shares outstanding at period end			10,253,995				10,419,924				-1.6	%			10,253,995				10,419,924				-1.6	%
Weighted average shares outstanding — basic			10,108,817				10,419,924				-3.0	%			10,108,817				10,417,919				-3.0	%
Weighted average shares outstanding — diluted (5)			10,108,817				10,488,289				-3.6	%			10,108,817				10,490,016				-3.6	%
SELECTED OTHER BALANCE SHEET DATA
Average assets		$	1,749,694			$	1,639,474				6.7	%		$	1,726,246			$	1,621,763				6.4	%
Average earning assets		$	1,576,857			$	1,457,476				8.2	%		$	1,554,694			$	1,439,371				8.0	%
Average stockholders’ equity		$	239,894			$	228,470				5.0	%		$	239,292			$	225,698				6.0	%
Gross loans		$	1,505,876			$	1,366,362				10.2	%		$	1,505,876			$	1,366,362				10.2	%
SELECTED FINANCIAL RATIOS
Return on average assets			(1.07	)%			1.38	%			-177.2	%			(0.23	)%			1.38	%			-116.4	%
Return on average stockholders’ equity			(7.77	)%			9.91	%			-178.4	%			(1.63	)%			9.91	%			-116.5	%
Net interest margin (1)			3.99	%			4.93	%			-19.1	%			4.27	%			4.98	%			-14.2	%
Efficiency ratio (2)			56.78	%			51.18	%			10.9	%			56.99	%			51.32	%			11.0	%
Capital Ratios
Average stockholders’ equity to average assets			13.71	%			13.94	%			-1.6	%			13.86	%			13.92	%			-0.4	%
Tier 1 leverage capital ratio
Consolidated Company															11.27	%			12.22	%			-7.8	%
Community Bank of Nevada															11.17	%			11.55	%			-3.3	%
Community Bank of Arizona															21.14	%			30.82	%			-31.3	%
Tier 1 risk-based capital ratio
Consolidated Company															10.98	%			12.07	%			-9.0	%
Community Bank of Nevada															10.97	%			11.32	%			-3.1	%
Community Bank of Arizona															18.37	%			35.51	%			-48.3	%
Total risk-based capital ratio
Consolidated Company															12.24	%			13.63	%			-10.2	%
Community Bank of Nevada															12.23	%			12.36	%			-1.1	%
Community Bank of Arizona															19.63	%			36.76	%			-46.6	%
Asset Quality Ratios
Non-performing loans (3)														$	69,282			$	1,311				5184.7	%
Non-performing assets (4)														$	80,315			$	1,311				6026.2	%
Non-performing loans to total gross loans															4.60	%			0.10	%			4500.8	%
Non-performing assets to total assets															4.60	%			0.08	%			5643.9	%
Past due loans
30 - 59 days														$	28,546			$	1,090				2517.3	%
60 - 89 days														$	13,780			$	906				1420.0	%
Allowance for loan losses to total gross loans															1.86	%			1.17	%			59.2	%
Allowance for loan losses to non-performing assets															35	%			1,219	%			-97.1	%
Allowance for loan losses to non-performing loans															40	%			1,219	%			-96.7	%
Net charge-offs (recoveries) to average loans (6)			1.62	%			0.04	%			39.5	%			1.02	%			(0.01	)%			103.0	%