SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q

Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934

For the Quarterly Period Ended June 30, 2002
Commission File Number 000-16435

COMMUNITY BANCORP.

(Exact Name of Registrant as Specified in its Charter)

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 for such reports), and (2) has been subject to such filing requirements for the past 90 days.
  Yes ( X )  No (  )

At July 30, 2002 there were 3,558,088 shares outstanding of the Corporation's common stock.

Total Pages - 21 Pages

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements (Unaudited)

The following are the consolidated financial statements for Community Bancorp. and subsidiaries, "the Company".

Note 1

     The interim consolidated financial statements of Community Bancorp. and subsidiaries are unaudited. All significant intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, all adjustments necessary for fair presentation of the financial condition and results of operations of the Company contained herein have been made. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2001, contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2001.

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
For the Six Months Ended June 30, 2002

     Community Bancorp. (the "Company") is a bank holding company headquartered in Derby, Vermont, which has one operating commercial bank subsidiary, Community National Bank (the "Bank"). The Bank is a commercial banking institution which offers a full range of retail banking services to residents and businesses in northeastern and north central Vermont. The Bank has eight offices, five of which are located in Orleans County, one in Essex County, one in Caledonia County and the newest office, located in Washington County.

     The Company also owns all of the stock of Liberty Savings Bank ("Liberty"), an inactive New Hampshire guaranty savings bank charter. Liberty has no substantial assets and does not have any offices or deposit taking authority and there are currently no plans to activate this charter.

     Prior to March 31, 2002 Community National Bank operated a trust department through which it offered a full line of personal fiduciary services. As of such date, the Bank transferred its trust operations to a newly formed Vermont-chartered nondepository trust and investment management affiliate, Community Financial Services Group, LLC based in Newport, Vermont ("CFSG"). The Bank's ownership interest in CFSG is held indirectly, through Community Financial Services Partners, LLC, a Vermont limited liability company ("Partners"), which owns 100% of the limited liability company equity interests of CFSG. On April 1, 2002, the Bank sold a one-third interest in Partners to each of the National Bank of Middlebury, in Middlebury, Vermont and Guaranty Bancorp, Inc., the bank holding company parent of Woodsville Guaranty Savings Bank, Woodsville, New Hampshire. As of such date the Bank retained a one-third ownership interest in Partners and, indirectly, in CFSG. Partners and CFSG are not consolidated subsidiaries of the Bank.

     Substantially all of the Company's business is conducted through Community National Bank; therefore, the following narrative is based primarily on the Bank's operations. The balance sheet and statements of income preceding this section are consolidated figures for Community Bancorp. and subsidiaries and should be read in conjunction with the other information and reports following them to provide a more detailed comparison of the information disclosed in the following narrative.

OVERVIEW

     Net income for the second quarter ended June 30, 2002 was $948,460, representing an increase of 48% and 46%, respectively, over the net income figures of $640,976 for the second quarter ended June 30, 2001, and $648,664 for the same period in 2000. The results of this are earnings per share of $0.27 for the second quarter of 2002 and $0.18 for each of 2001 and 2000. As a result of a 5% stock dividend paid in February 2001, all per share information for 2000 cited in this report has been restated. The Company paid a cash dividend of $0.16 per share May 1, 2002 to shareholders of record as of April 15, 2002. The second quarter of 2002 was very profitable due to income of $617,355 booked in April through the sale of a two-thirds interest in the Bank's trust operations.

     Net interest income, the difference between interest income and expense, represents the largest portion of the Company's earnings, and is affected by the volume, mix, and rate sensitivity of earning assets as well as by interest bearing liabilities, market interest rates and the amount of non-interest bearing funds which support earning assets. Tables A and B at the end of this narrative provide a visual comparison for each period. Figures presented are consolidated and are stated on a tax equivalent basis assuming a federal tax rate of 34%.

     Net interest income for the second quarter comparison period was $2.9 million for 2002 compared to $2.5 million for 2001, resulting in an increase of 14.3%. Total interest income for the second quarter decreased $165,525 or by 3.5% from $4.8 million in 2001 to $4.6 million in 2002. Interest expense decreased $528,431 or by 23.8% from $2.2 million in 2001 to $1.7 million in 2002. A review of the second quarter figures for interest earned on loans, the major source of interest income, reveals a decrease of 8.7% for 2002 compared to 2001. In comparison, interest paid on deposits, the major source of interest expense, shows a decrease of $470,545 or 23.3% for the same comparison period. Net interest income for the six months comparison period was $5.7 million for 2002 compared to $4.9 million for 2001, an increase of $737,760 or 15%. Total interest income for the first six month of 2002 decreased $365,092, or by almost 4%, from $9.5 million to $9.2 million. Although an increase is n oted in the average volume of loans compared to the first six months of 2001, a decrease of 133 basis points is noted in the average yield, contributing to the decrease in income. Overall, an increase is noted in the average volume of interest bearing accounts, while the rate paid on these accounts has decreased 156 basis points, accounting for the decrease in interest expense. As a result of these changes, the tax equivalent spread for the first six months increased 26 basis points to 3.86% for 2002 versus 3.60% for 2001.

CHANGES IN FINANCIAL CONDITION

     The Company had total average assets of $288 million at June 30, 2002 and $270 million at December 31, 2001. Average earning assets were $275 million for the period ended June 30, 2002, including average loans of $193 million and average investment securities of almost $79 million. Average earning assets were $249 million for the year ended December 31, 2001 including average loans of $182 million and average investment securities of $58 million. An increase in available for sale agencies as well as municipal investments accounts for a substantial portion of the increase.

     Average interest bearing liabilities at June 30, 2002 were $233 million, with average time deposits reported totaling $99 million and NOW & money market funds of $81 million. At December 31, 2001, average interest bearing liabilities of just over $209 million were reported including average time deposits of $99 million and NOW & money market funds at an average volume $57 million. An increase in municipal deposits, from the new collateralized deposit product as discussed below, accounts for most of the increase in NOW & money market funds, as well as a significant portion of the decrease in repurchase agreements.

RISK MANAGEMENT

Liquidity Risk - Liquidity management refers to the ability of the Company to adequately cover fluctuations in assets and liabilities. Meeting loan demand (assets) and covering the withdrawal of deposit funds (liabilities) are two key components of the liquidity management process. The repayment of loans and growth in deposits are two of the major sources of liquidity. Other time deposits increased $549,727 as of the end of the first six months of 2002, while time deposits greater than $100,000 increased $498,719. A review of these deposits, primarily the time deposits over $100,000 indicates that they are primarily generated locally and regionally and are established customers of the Company. The Company has no brokered deposits. Now and money market funds decreased $2.5 million from December 31, 2001 to end the first six months of 2002 at a balance of $74 million. The Company began offering a new collateralized deposit account to its municipal account holders during the last part of 2001. This a ccount has been well received during 2002, helping to offset a portion of the decrease in these funds. Savings accounts increased $3.4 million for the first six months of 2002, as customers wait for more favorable rates from the other interest bearing account products. The Company's loan portfolio has increased $1.9 million over the last six months, while the investment portfolio has increased $7.4 million for the same time period. As of June 30, 2002, the Company held in its investment portfolio treasuries classified as "Available for Sale" at a fair value of $42 million, compared to $32.5 million as of December 31, 2001, an increase of $9.5 million or 29%. Securities classified as "Held to Maturity" ended the first six months of 2002 at a book value of $38.4 million compared to almost $41 million as of the end of the 2001 calendar year. Both of these types of investments mature at monthly intervals as shown on the gap report at the end of this section. Securities classified as "Restricted Equity Securities " are made up of equity securities the Company is required to maintain in the form of Federal Home Loan Bank of Boston (FHLB) and Federal Reserve Bank stock. FHLB stock increased $84,400, increasing the combined stock balance to $1.3 million as of June 30, 2002.

     The Company has a credit line with an available balance of $4.3 million. Interest is chargeable at a rate determined daily of approximately 25 basis points higher than the rate paid on fed funds sold. Additional borrowing capacity of approximately $103 million is available through the Federal Home Loan Bank of Boston, which is secured by the Company's qualifying loan and investment portfolio. As of June 30, 2002, the Company had an advance of just over $9 million against the $103 million line at FHLB. Under a separate agreement, the Bank has the authority to collateralize public unit deposits, up to their borrowing capacity, $103 million less outstanding advances, with letters of credit issued by the Federal Home Loan Bank. At June 30, 2002, approximately $31 million was pledged as collateral for these deposits. Interest is charged to the Bank quarterly based on the average daily balance outstanding at a rate of 20 basis points. At June 30, 2002, an average daily balance of appr oximately $5.3 million was reported.

Credit Risk - A primary concern of management is to reduce the exposure of credit loss within the portfolio. Management follows strict underwriting guidelines, and has established a thorough loan review policy. These measures help to insure the adequacy of the loan loss coverage. The Executive Officers and the Board of Directors conduct an ongoing review of the loan portfolio, and meet to discuss, among other matters, potential exposures. Factors considered are each borrower's financial condition, the industry or sector for the economy in which the borrower operates, and overall economic conditions. Existing or potential problems are noted and addressed by senior management in order to assess the risk of probable loss or delinquency. A variety of loans are reviewed periodically by an independent firm in order to assure accuracy and compliance with various policies and procedures set by the regulatory authorities. The Company also employs a Credit Administration Officer whose duties include, among othe rs, a review of the loan portfolio including delinquent and non-performing loans.

     Specific Allocations are made in situations management believes may represent at a greater risk for loss. A quarterly review of various qualitative factors, including levels of, and trends in, delinquencies and non-accruals and national and local economic trends and conditions, helps to ensure that areas with potential risk are noted and coverage increased or decreased to reflect the trends in delinquencies and non-accruals. Residential first mortgage loans make up the largest part of the loan portfolio and have the lowest historical loss ratio helping to alleviate the overall risk.

Allowance for loan losses and provisions - The valuation allowance for loan losses of $2.2 million as of June 30, 2002 composed 1.1% of the total gross loan portfolio. The Company maintains a residential loan portfolio of approximately $117 million and a commercial real estate portfolio of approximately $40 million. The total portfolio of approximately $157 million of real estate secured mortgages accounts for 80.5% of the total loan portfolio, and together with the low historical loan loss experience among these portfolios, helps to support the Company's basis for loan loss coverage.

     Non-Performing assets for the company are made up of three different types of loans, "90 Days or More Past Due", "Other Real Estate Owned" (OREO), and "Non-Accruing Loans". A comparison of these non-performing assets reveals a decrease in non-accruing loans of $267,541 or 17%, as well as a decrease of $50,169, or 85% in loans 90 days or more past due, while an increase of $30,466 or 51% is noted in the Company's OREO portfolio. The portfolio of non-accruing loans makes up the biggest portion of the non-performing assets and, as of June 30, 2002, $1.27 million or 97.4% were real estate secured mortgage loans, thereby reducing the exposure to loss.

Non-performing assets as of June 30, 2002 and December 31, 2001 were as follows:

     Other real estate owned is made up of property that the Company owns in lieu of foreclosure or through normal foreclosure proceedings, and property that the Company does not hold title to but is in actual control of, known as in-substance foreclosure. The value of the property is determined prior to transferring the balance to other real estate owned. The balance transferred to OREO is the lesser of the appraised value of the property, or book value of the loan. A write-down may be deemed necessary to bring the book value of the loan equal to the appraised value. Appraisals are then done periodically thereafter charging any additional write-downs to the appropriate expense account.

Market Risk and Asset and Liability Management - Market risk is the risk of loss in a financial instrument arising from adverse changes in market prices and rates, foreign currency exchange rates, commodity prices and equity prices. The Company's market risk arises primarily from interest rate risk inherent in its lending and deposit taking activities. To that end, management actively monitors and manages its interest rate risk exposure. The Company does not have any market risk sensitive instruments acquired for trading purposes. The Company attempts to structure its balance sheet to maximize net interest income while controlling its exposure to interest rate risk. The Company's Asset/Liability Committee formulates strategies to manage interest rate risk by evaluating the impact on earnings and capital of such factors as current interest rate forecasts and economic indicators, potential changes in such forecasts and indicators, liquidity, and various business strategies. The Asset/Liability Committee 's methods for evaluating interest rate risk include an analysis of the Company's interest rate sensitivity "gap", which provides a static analysis of the maturity and repricing characteristics of the entire balance sheet, and a simulation analysis which calculates projected net interest income based on alternative balance sheet and interest rate scenarios, including "rate shock" scenarios involving immediate substantial increases or decreases in market rates of interest.

Interest Rate Sensitivity "Gap" Analysis - An interest rate sensitivity "gap" is defined as the difference between the interest-earning assets and interest-bearing liabilities maturing or repricing within a given time period. A gap is considered positive when the amount of interest rate sensitive assets exceeds the amount of interest rate sensitive liabilities. A gap is considered negative when the amount of interest rate sensitive liabilities exceeds the amount of interest rate sensitive assets. During a period of rising interest rates, a negative gap would tend to adversely affect net interest income, while a positive gap would tend to result in an increase in net interest income. During a period of falling interest rates, a negative gap would tend to result in an increase in net interest income, while a positive gap would tend to affect net interest income adversely. Because different types of assets and liabilities with the same or similar maturities may react differently to changes in overall mar ket interest rates or conditions, changes in interest rates may affect net interest income positively or negatively even if an institution were perfectly matched in each maturity category.

     The following tables set forth the estimated maturity or repricing of the Company's interest earning assets and interest-bearing liabilities at June 30, 2002, and December 31, 2001. The Company prepares its interest rate sensitivity "gap" analysis by scheduling assets and liabilities into periods based upon the next date on which such assets and liabilities could mature or reprice. The amounts of assets and liabilities shown within a particular period were determined in accordance with the contractual term of the assets and liabilities, except that:

     Management believes that these assumptions approximate actual experience and considers them reasonable. However, the interest rate sensitivity of the Company's assets and liabilities in the tables could vary substantially if different assumptions were used or actual experience differs from the historical experiences on which the assumptions are based.