Community National Bank of the Lakeway Area Continues Consistent Profitability and Receives Approval for a Full Service Branch

Community National Bank of the Lakeway Area Continues Consistent Profitability and Receives Approval for a Full Service Branch
10/16/2007

MORRISTOWN, Tenn., Oct 16, 2007 /PRNewswire-FirstCall via COMTEX News Network/ --

Community National Bank of the Lakeway Area (Nasdaq: CNLA) today reported results for the third quarter of 2007, ending September 30, 2007. Net income for the quarter was $121 thousand, or $0.07 per basic and diluted share, compared with a $70 thousand, or $0.04 per basic and diluted share for the same prior year period. Highlights for the third quarter of 2007 include:

-- Community National Bank reported its sixth consecutive quarterly
profit. Loan demand continues to be relatively strong, and the net
interest margin increased from the quarter ended September 30, 2006.
Return on average assets increased from 0.28% for the quarter ended
September 30, 2006 to 0.46% for the quarter ended September 30, 2007.

-- The net interest margin for the quarter ended September 30, 2007 was
3.57% compared to 3.27% for the same period in 2006. Loan growth
continued to be relatively strong during the quarter with the Bank's
loan to average deposit ratio increasing to 100% as compared to 89% for
the same period in 2006.

-- Gross loans grew 19.3% for the twelve-month period from $64.7 million
at September 30, 2006 to $77.2 million at September 30, 2007. The
majority of the loan growth was in commercial and industrial loans and
real estate loans which both experienced double digit growth rates.

-- Deposits grew 6.8% from $70.8 million at September 30, 2006 to $75.6
million at September 30, 2007. The addition of a third strategically
placed banking facility in the marketplace should help the Bank sustain
or increase its deposit growth rate.

The Bank received approval from the Office of the Comptroller of the Currency to open a full service branch in west Morristown. The Bank intends to open a temporary facility and break ground on a permanent location during the fourth quarter of 2007. The added convenience provided by this branch in a high traffic location should spur future deposit growth.

During the quarter ended September 30, 2007, the Bank added approximately $135 thousand in foreclosed property bringing the total to $505 thousand at quarter end. Nonperforming assets totaled 0.51% at September 30, 2007 as compared to 0.41% at September 30, 2006. Although our Bank does not participate in sub-prime lending, the effect has been a slowing of home sales in our area. The Morristown Metropolitan Statistical Area continues to grow, with new industries relocating here as well as an influx of retirees, both boosting the local economy. Unemployment numbers for the area remain low as well.

Samuel F. Grigsby, Jr. CEO of Community National Bank of the Lakeway Area, commented, "The third quarter of 2007 was a good one for both loan growth and net interest margin. The net interest margin was up significantly from the third quarter of 2006, but was down slightly from the second quarter of 2007 due to a yield adjustment on purchased loans. The Bank continues to build a solid base of profitable quarters, and we expect the bottom line to continue growing positively. It feels good to have established this trend, and we feel like the Bank has turned the corner. The new Loan Production Office in Dandridge is beginning to establish itself, and our soon to open full service branch in Morristown will provide needed liquidity to fund our loan growth. We believe both these locations will grow our base, and although they may temporarily slow the rate of increase in profitability, will be very beneficial in the long run to the Bank and our shareholders."

This press release contains forward-looking statements concerning Community National Bank of the Lakeway Area's future activities. Such statements are subject to important factors that could cause Community National Bank of the Lakeway Area's actual results to differ materially from those anticipated by the forward-looking statements. These factors include the factors identified in Community National Bank of the Lakeway Area's Annual Report on Form 10-KSB for the year ended December 31, 2006 under the heading "Risk Factors" which are incorporated herein by reference.

Community National Bank of the Lakeway Area
Financial Highlights
(Unaudited)

Three-Months Ended Nine-Months Ended
September 30, September 30,
% %
2007 2006 Change 2007 2006 Change
All dollars in thousands All dollars in thousands
except per share data except per share data

EARNINGS
Net interest income $897 $773 16.0% $2,688 $2,106 27.6%
Provision for loan losses 24 64 (62.5%) 88 149 (40.9%)
Noninterest income 93 93 0.0% 274 226 21.2%
Noninterest expense 845 732 15.4% 2,505 2,143 16.9%
Income taxes 0 0 0% 0 0 0%
Net income 121 70 72.9% 369 40 822.5%

PER SHARE INFORMATION
Earnings per share,
basic $0.07 $0.04 69.6% $0.20 $0.02 917.7%
Dividends per share 0 0 0 0 0 0
Book value per share 8.14 7.76 4.9% 8.14 7.76 4.9%

OPERATING RATIOS (1)
Net interest margin 3.57% 3.27% 3.61% 3.00%
Return on average assets 0.46% 0.28% 0.47% 0.05%
Return on average equity 3.41% 2.86% 3.35% 0.76%
Efficiency ratio 85.4% 84.5% 84.6% 91.9%
Net charge offs /
average loans 0.01% 0.01% 0.17% 0.03%

AVERAGE BALANCES
Loans $75,590 $64,018 18.1% $74,237 $59,385 25.0%
Total earning assets 100,454 94,532 6.3% 99,352 93,699 6.0%
Total assets 105,503 99,062 6.5% 104,213 98,103 6.2%
Deposits 75,981 76,312 (0.4%) 75,282 79,105 (4.8%)
Borrowed funds 14,166 12,421 14.0% 13,699 11,460 19.5%
Shareholders' equity 14,182 9,800 44.7% 14,693 7,063 108.0%

As of As of
September 30, % December 31, %
END OF PERIOD BALANCES 2007 2006 Change 2006 Change

Loans $77,216 $64,738 19.3% $72,971 5.8%
Reserve for loan losses 696 682 2.1% 734 (5.2%)
Total earning assets 99,487 92,842 7.2% 98,922 0.6%
Total assets 104,631 97,317 7.5% 104,348 0.3%
Deposits 75,549 70,768 6.8% 75,823 (0.4%)
Borrowed funds 13,585 11,949 13.7% 13,631 (0.3%)
Shareholders' equity 15,048 14,075 6.9% 14,300 5.2%

ASSET QUALITY (END OF PERIOD)
Loans 90 days past due
and still accruing $0 $0 $17
Nonaccrual loans 24 397 295
Foreclosed assets 505 0 0
Total nonperforming assets 529 397 312
Nonperforming assets /
total assets 0.51% 0.41% 0.30%
Allowance for loan losses /
total loans .90% 1.05% 1.01%

(1) All ratios are annualized.

SOURCE Community National Bank of the Lakeway Area