##### Table of Contents

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U. S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-QSB



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|x | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------



| | For the Quarterly Period Ended June 30, 2006
| | --------------------------------------------

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
|- | ----------------------------------------------------------------------------------------------------------



| | For the Transition Period from  to
| | ----------------------------------

Commission
File Number 33-76644



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COMMUNITYCORP

(Exact name of registrant as specified in its charter)



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|                                                             |  |                                    
|------------------------------------------------------------ |  | -----------------------------------
|South Carolina                                               |  | 57-1019001                         
|(State or other jurisdiction ofincorporation)                |  | (I.R.S. EmployerIdentification No.)
|                                                             |  |                                    
|1100 N. Jefferies Boulevard Walterboro, SC 29488            
|(Address of principal executive offices, including zip code)



|                                                     |  | 
|---------------------------------------------------- |  | 
|(843) 549-2265                                      
|(Registrants telephone number, including area 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  x    NO ̈

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):    YES ̈NO  x

242,542 shares of common
stock, $5 par value, as of August 11, 2006

Transitional Small Business Disclosure Format (Check
one):    Yes ̈No  x



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##### Table of Contents

COMMUNITYCORP

Index



|                                                                                                                                  |  |         
|--------------------------------------------------------------------------------------------------------------------------------- |  | --------
|PART I. FINANCIAL INFORMATION                                                                                                     |  | Page No.
|                                                                                                                                  | 
|Item 1. Financial Statements (Unaudited)                                                                                          |  |         
|                                                                                                                                  | 
|Condensed Consolidated Balance SheetsJune 30, 2006 and December 31, 2005 (audited)                                               |  | 3       
|                                                                                                                                  | 
|Condensed Consolidated Statements of IncomeSix months ended June 30, 2006 and 2005 and three months ended June 30, 2006 and 2005 |  | 4       
|                                                                                                                                  | 
|Condensed Consolidated Statements of Shareholders Equity and Comprehensive IncomeSix months ended June 30, 2006 and 2005        |  | 5       
|                                                                                                                                  | 
|Condensed Consolidated Statements of Cash FlowsSix months ended June 30, 2006 and 2005                                           |  | 6       
|                                                                                                                                  | 
|Notes to Condensed Consolidated Financial Statements                                                                              |  | 7       
|                                                                                                                                  | 
|Item 2. Managements Discussion or Analysis or Plan of Operations                                                                 |  | 8-15    
|                                                                                                                                  | 
|Item 3. Controls and Procedures                                                                                                   |  | 15      
|                                                                                                                                  | 
|PART II. OTHER INFORMATION                                                                                                        |  |         
|                                                                                                                                  | 
|Item 4. Submission of Matters to a Vote of Security Holders                                                                       |  | 15      
|                                                                                                                                  | 
|Item 6. Exhibits and Reports on Form 8-K                                                                                          |  | 15      
|                                                                                                                                  | 
|(a) Exhibits                                                                                                                      |  | 15      
|                                                                                                                                  | 
|(b) Reports on Form 8-K                                                                                                           |  | 15      
|                                                                                                                                  | 
|Signatures                                                                                                                        |  | 16      
|                                                                                                                                  | 
|Index to Exhibits                                                                                                                 |  | 17      



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##### Table of Contents

COMMUNITYCORP

Condensed Consolidated Balance Sheets



|                                                                                                                           |  |              |             |   |                  |   |             |  
|-------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ----------- | - | ---------------- | - | ----------- | -
|                                                                                                                           |  | June 30,2006 |             |   | December 31,2005 |  
|                                                                                                                           |  | (Unaudited)  |             |   | (Audited)        |  
|Assets:                                                                                                                    |  |              |             |   |                  |   |             |  
|Cash and cash equivalents:                                                                                                 |  |              |             |   |                  |   |             |  
|Cash and due from banks                                                                                                    |  | $            | 4,527,665   |   |                  | $ | 5,089,462   |  
|Federal funds sold                                                                                                         |  |              | 13,465,000  |   |                  |   | 2,773,000   |  
|                                                                                                                           |  |              |             |   |                  |   |             |  
|Total cash and cash equivalents                                                                                            |  |              | 17,992,665  |   |                  |   | 7,862,462   |  
|                                                                                                                           |  |              |             |   |                  |   |             |  
|Time deposits with other banks                                                                                             |  |              | 100,000     |   |                  |   | 300,000     |  
|                                                                                                                           |  |             
|Investment securities:                                                                                                     |  |              |             |   |                  |   |             |  
|Available-for-sale                                                                                                         |  |              | 33,266,320  |   |                  |   | 30,855,760  |  
|Held-to-maturity (estimated market value of$1,594,320 and $1,908,781 at June 30, 2006 and December 31, 2005,
respectively) |  |              | 1,574,085   |   |                  |   | 1,875,133   |  
|Nonmarketable equity securities                                                                                            |  |              | 342,857     |   |                  |   | 339,657     |  
|                                                                                                                           |  |              |             |   |                  |   |             |  
|Total investment securities                                                                                                |  |              | 35,183,262  |   |                  |   | 33,070,550  |  
|                                                                                                                           |  |              |             |   |                  |   |             |  
|Loans receivable                                                                                                           |  |              | 103,431,595 |   |                  |   | 97,595,299  |  
|Less allowance for loan losses                                                                                             |  |              | (1,763,907  | ) |                  |   | (1,664,948  | )
|                                                                                                                           |  |              |             |   |                  |   |             |  
|Loans, net                                                                                                                 |  |              | 101,667,688 |   |                  |   | 95,930,351  |  
|Premises, furniture & equipment, net                                                                                       |  |              | 3,173,466   |   |                  |   | 3,265,920   |  
|Accrued interest receivable                                                                                                |  |              | 1,138,365   |   |                  |   | 989,582     |  
|Other assets                                                                                                               |  |              | 902,897     |   |                  |   | 800,871     |  
|                                                                                                                           |  |              |             |   |                  |   |             |  
|Total assets                                                                                                               |  | $            | 160,158,343 |   |                  | $ | 142,219,736 |  
|                                                                                                                           |  |              |             |   |                  |   |             |  
|Liabilities and Shareholders Equity:                                                                                      |  |              |             |   |                  |   |             |  
|Liabilities:                                                                                                               |  |              |             |   |                  |   |             |  
|Deposits:                                                                                                                  |  |              |             |   |                  |   |             |  
|Noninterest-bearing                                                                                                        |  | $            | 16,637,515  |   |                  | $ | 18,020,633  |  
|Interest-bearing                                                                                                           |  |              | 127,920,899 |   |                  |   | 109,437,673 |  
|                                                                                                                           |  |              |             |   |                  |   |             |  
|                                                                                                                           |  |              | 144,558,414 |   |                  |   | 127,458,306 |  
|                                                                                                                           |  |             
|Short-term borrowings                                                                                                      |  |              | 300,000     |   |                  |   | 370,000     |  
|Accrued interest payable                                                                                                   |  |              | 915,368     |   |                  |   | 584,352     |  
|Other liabilities                                                                                                          |  |              | 181,554     |   |                  |   | 163,705     |  
|                                                                                                                           |  |              |             |   |                  |   |             |  
|Total liabilities                                                                                                          |  |              | 145,955,336 |   |                  |   | 128,576,363 |  
|                                                                                                                           |  |              |             |   |                  |   |             |  
|Shareholders Equity:                                                                                                      |  |              |             |   |                  |   |             |  
|Preferred stock, $5 par value, 3,000,000 shares authorized and unissued                                                    |  |              |            |   |                  |   |            |  
|Common stock, $5 par value, 3,000,000 shares authorized, 300,000 shares issued and outstanding                             |  |              | 1,500,000   |   |                  |   | 1,500,000   |  
|Capital surplus                                                                                                            |  |              | 1,718,972   |   |                  |   | 1,716,455   |  
|Accumulated other comprehensive loss                                                                                       |  |              | (315,069    | ) |                  |   | (265,071    | )
|Retained earnings                                                                                                          |  |              | 14,818,856  |   |                  |   | 14,224,597  |  
|Treasury stock (56,708 shares in 2006 and 56,952 shares in 2005)                                                           |  |              | (3,519,752  | ) |                  |   | (3,532,608  | )
|                                                                                                                           |  |              |             |   |                  |   |             |  
|Total shareholders equity                                                                                                 |  |              | 14,203,007  |   |                  |   | 13,643,373  |  
|                                                                                                                           |  |              |             |   |                  |   |             |  
|Total liabilities and shareholders equity                                                                                 |  | $            | 160,158,343 |   |                  | $ | 142,219,736 |  
|                                                                                                                           |  |              |             |   |                  |   |             |  

See notes to condensed consolidated financial statements



3



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##### Table of Contents

COMMUNITYCORP

Condensed Consolidated Statements of Income

(Unaudited)



|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|--------------------------------------------------- |  | ------------------------- | --------- | --------------------------- | - | --------- |  | ---- | --------- |  | - | ---------
|                                                    |  | Six Months Ended June 30, |           | Three Months Ended June 30,
|                                                    |  | 2006                      |           | 2005                        |   | 2006      |  | 2005
|Interest income:                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Loans, including fees                               |  | $                         | 3,556,553 |                             | $ | 3,055,568 |  | $    | 1,821,271 |  | $ | 1,588,826
|Securities                                          |  |                           | 628,275   |                             |   | 509,625   |  |      | 331,282   |  |   | 275,426  
|Other interest income                               |  |                           | 236,029   |                             |   | 186,078   |  |      | 161,870   |  |   | 82,231   
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Total                                               |  |                           | 4,420,857 |                             |   | 3,751,271 |  |      | 2,314,423 |  |   | 1,946,483
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Interest expense:                                   |  |                           |           |                             |   |           |  |      |           |  |   |          
|Deposit accounts                                    |  |                           | 1,719,516 |                             |   | 999,040   |  |      | 955,345   |  |   | 516,482  
|Other interest expense                              |  |                           | 6,872     |                             |   | 3,209     |  |      | 3,437     |  |   | 1,597    
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Total                                               |  |                           | 1,726,388 |                             |   | 1,002,249 |  |      | 958,782   |  |   | 518,079  
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Net interest income                                 |  |                           | 2,694,469 |                             |   | 2,749,022 |  |      | 1,355,641 |  |   | 1,428,404
|Provision for loan losses                           |  |                           | 150,000   |                             |   | 132,600   |  |      | 75,000    |  |   | 57,600   
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Net interest income after provision for loan losses |  |                           | 2,544,469 |                             |   | 2,616,422 |  |      | 1,280,641 |  |   | 1,370,804
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Noninterest income:                                 |  |                           |           |                             |   |           |  |      |           |  |   |          
|Service charges                                     |  |                           | 277,901   |                             |   | 191,132   |  |      | 148,217   |  |   | 97,350   
|Other income                                        |  |                           | 96,570    |                             |   | 86,472    |  |      | 47,707    |  |   | 38,050   
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Total                                               |  |                           | 374,471   |                             |   | 277,604   |  |      | 195,924   |  |   | 135,400  
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Noninterest expenses:                               |  |                           |           |                             |   |           |  |      |           |  |   |          
|Salaries and benefits                               |  |                           | 947,764   |                             |   | 905,017   |  |      | 479,771   |  |   | 462,577  
|Net occupancy expense                               |  |                           | 110,711   |                             |   | 113,928   |  |      | 54,534    |  |   | 58,836   
|Equipment expense                                   |  |                           | 169,257   |                             |   | 153,123   |  |      | 84,948    |  |   | 78,273   
|Other operating expenses                            |  |                           | 477,251   |                             |   | 450,860   |  |      | 230,513   |  |   | 238,305  
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Total                                               |  |                           | 1,704,983 |                             |   | 1,622,928 |  |      | 849,766   |  |   | 837,991  
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Income before taxes                                 |  |                           | 1,213,957 |                             |   | 1,271,098 |  |      | 626,799   |  |   | 668,213  
|Income tax provision                                |  |                           | 400,600   |                             |   | 404,000   |  |      | 220,000   |  |   | 213,000  
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Net income                                          |  | $                         | 813,357   |                             | $ | 867,098   |  | $    | 406,799   |  | $ | 455,213  
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Earnings per share:                                 |  |                           |           |                             |   |           |  |      |           |  |   |          
|Weighted average common shares outstanding          |  |                           | 243,071   |                             |   | 245,309   |  |      | 242,758   |  |   | 244,866  
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Net income per common share                         |  | $                         | 3.35      |                             | $ | 3.53      |  | $    | 1.68      |  | $ | 1.86     
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          

See notes to condensed consolidated financial statements



4



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##### Table of Contents

COMMUNITYCORP

Condensed Consolidated Statement of Shareholders Equity and Comprehensive Income

for the six months ended June 30, 2006 and 2005

(Unaudited)



|                                                        |  |              |  |         |           |         |                               |           |               |          |   |          |          |  |       |            |   |       |   |            |   |  |   |            |  
|------------------------------------------------------- |  | ------------ |  | ------- | --------- | ------- | ----------------------------- | --------- | ------------- | -------- | - | -------- | -------- |  | ----- | ---------- | - | ----- | - | ---------- | - |  | - | ---------- | -
|                                                        |  | Common stock |  | Capital |           |         | AccumulatedOtherComprehensive |           |               | Retained |   |          | Treasury |  |       |            |  
|                                                        |  | Shares       |  | Amount  |           | Surplus |                               |           | Income (loss) |          |   | Earnings |          |  | Stock |            |   | Total |  
|Balance, December 31, 2004                              |  | 300,000      |  | $       | 1,500,000 |         | $                             | 1,721,023 |               |          | $ | 32,129   |          |  | $     | 12,715,882 |   |       | $ | (3,332,906 | ) |  | $ | 12,636,128 |  
|Cash dividends declared ($.82 per share)                |  |              |  |         |           |         |                               |           |               |          |   |          |          |  |       | (201,708   | ) |       |   |            |   |  |   | (201,708   | )
|Net income for the period                               |  |              |  |         |           |         |                               |           |               |          |   |          |          |  |       | 867,098    |   |       |   |            |   |  |   | 867,098    |  
|Other comprehensive loss, net of tax benefit of $65,443 |  |              |  |         |           |         |                               |           |               |          |   | (124,248 | )        |  |       |            |   |       |   |            |   |  |   | (124,248   | )
|                                                        |  |              |  |         |           |         |                               |           |               |          |   |          |          |  |       |            |   |       |   |            |   |  |   |            |  
|Comprehensive income                                    |  |              |  |         |           |         |                               |           |               |          |   |          |          |  |       |            |   |       |   |            |   |  |   | 742,850    |  
|                                                        |  |              |  |         |           |         |                               |           |               |          |   |          |          |  |       |            |   |       |   |            |   |  |   |            |  
|Sale of treasury stock                                  |  |              |  |         |           |         |                               | (4,569    | )             |          |   |          |          |  |       |            |   |       |   | 47,218     |   |  |   | 42,649     |  
|Purchase of treasury stock                              |  |              |  |         |           |         |                               |           |               |          |   |          |          |  |       |            |   |       |   | (167,900   | ) |  |   | (167,900   | )
|                                                        |  |              |  |         |           |         |                               |           |               |          |   |          |          |  |       |            |   |       |   |            |   |  |   |            |  
|Balance, June 30, 2005                                  |  | 300,000      |  | $       | 1,500,000 |         | $                             | 1,716,454 |               |          | $ | (92,119  | )        |  | $     | 13,381,272 |   |       | $ | (3,453,588 | ) |  | $ | 13,052,019 |  
|                                                        |  |              |  |         |           |         |                               |           |               |          |   |          |          |  |       |            |   |       |   |            |   |  |   |            |  
|Balance, December 31, 2005                              |  | 300,000      |  | $       | 1,500,000 |         | $                             | 1,716,455 |               |          | $ | (265,071 | )        |  | $     | 14,224,597 |   |       | $ | (3,532,608 | ) |  | $ | 13,643,373 |  
|Cash dividends declared ($.90 per share)                |  |              |  |         |           |         |                               |           |               |          |   |          |          |  |       | (219,098   | ) |       |   |            |   |  |   | (219,098   | )
|Net income for the period                               |  |              |  |         |           |         |                               |           |               |          |   |          |          |  |       | 813,357    |   |       |   |            |   |  |   | 813,357    |  
|Other comprehensive loss, net of tax benefit of $26,335 |  |              |  |         |           |         |                               |           |               |          |   | (49,998  | )        |  |       |            |   |       |   |            |   |  |   | (49,998    | )
|                                                        |  |              |  |         |           |         |                               |           |               |          |   |          |          |  |       |            |   |       |   |            |   |  |   |            |  
|Comprehensive income                                    |  |              |  |         |           |         |                               |           |               |          |   |          |          |  |       |            |   |       |   |            |   |  |   | 763,359    |  
|                                                        |  |              |  |         |           |         |                               |           |               |          |   |          |          |  |       |            |   |       |   |            |   |  |   |            |  
|Sale of treasury stock                                  |  |              |  |         |           |         |                               | 2,517     |               |          |   |          |          |  |       |            |   |       |   | 165,820    |   |  |   | 168,337    |  
|Purchase of treasury stock                              |  |              |  |         |           |         |                               |           |               |          |   |          |          |  |       |            |   |       |   | (152,964   | ) |  |   | (152,964   | )
|                                                        |  |              |  |         |           |         |                               |           |               |          |   |          |          |  |       |            |   |       |   |            |   |  |   |            |  
|Balance, June 30, 2006                                  |  | 300,000      |  | $       | 1,500,000 |         | $                             | 1,718,972 |               |          | $ | (315,069 | )        |  | $     | 14,818,856 |   |       | $ | (3,519,752 | ) |  | $ | 14,203,007 |  
|                                                        |  |              |  |         |           |         |                               |           |               |          |   |          |          |  |       |            |   |       |   |            |   |  |   |            |  

See notes to condensed consolidated financial statements



5



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##### Table of Contents

COMMUNITYCORP

Condensed Consolidated Statements of Cash Flows

(Unaudited)



|                                                                                  |  |                           |            |   |      |   |            |  
|--------------------------------------------------------------------------------- |  | ------------------------- | ---------- | - | ---- | - | ---------- | -
|                                                                                  |  | Six Months Ended June 30, |           
|                                                                                  |  | 2006                      |            |   | 2005 |  
|Cash flows from operating activities:                                             |  |                           |            |   |      |   |            |  
|Net income                                                                        |  | $                         | 813,357    |   |      | $ | 867,098    |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                           |            |   |      |   |            |  
|Depreciation                                                                      |  |                           | 120,094    |   |      |   | 116,194    |  
|Provision for possible loan losses                                                |  |                           | 150,000    |   |      |   | 132,600    |  
|Amortization less accretion on investments                                        |  |                           | 10,834     |   |      |   | 16,159     |  
|Amortization of deferred loan costs                                               |  |                           | (2,878     | ) |      |   | (747       | )
|Loss on sale of other real estate owned                                           |  |                           |           |   |      |   | 2,255      |  
|Increase in interest receivable                                                   |  |                           | (148,783   | ) |      |   | (97,568    | )
|Increase in interest payable                                                      |  |                           | 331,016    |   |      |   | 183,876    |  
|(Increase) decrease in other assets                                               |  |                           | (75,691    | ) |      |   | 337,833    |  
|Increase (decrease) in other liabilities                                          |  |                           | 17,849     |   |      |   | (89,888    | )
|                                                                                  |  |                           |            |   |      |   |            |  
|Net cash provided by operating activities                                         |  |                           | 1,215,798  |   |      |   | 1,467,812  |  
|                                                                                  |  |                           |            |   |      |   |            |  
|                                                                                  |  |                          
|Cash flows from investing activities:                                             |  |                           |            |   |      |   |            |  
|Net increase in loans to customers                                                |  |                           | (5,884,459 | ) |      |   | (2,261,878 | )
|Purchases of securities available-for-sale                                        |  |                           | (4,351,732 | ) |      |   | (7,536,704 | )
|Maturities of securities available-for-sale                                       |  |                           | 1,851,874  |   |      |   | 1,952,951  |  
|Purchases of securities held-to-maturity                                          |  |                           |           |   |      |   | (200,000   | )
|Proceeds from maturities of securities held-to-maturity                           |  |                           | 303,179    |   |      |   | 303,217    |  
|Proceeds from the sale of other real estate owned                                 |  |                           |           |   |      |   | 460,245    |  
|Maturities of time deposits with other banks                                      |  |                           | 200,000    |   |      |   |           |  
|Increase in nonmarketable equity securities                                       |  |                           | (3,200     | ) |      |   | (32,982    | )
|Purchases of premises and equipment                                               |  |                           | (27,640    | ) |      |   | (35,588    | )
|                                                                                  |  |                           |            |   |      |   |            |  
|Net cash used by investing activities                                             |  |                           | (7,911,978 | ) |      |   | (7,350,739 | )
|                                                                                  |  |                           |            |   |      |   |            |  
|                                                                                  |  |                          
|Cash flows from financing activities:                                             |  |                           |            |   |      |   |            |  
|Net increase (decrease) in deposit accounts                                       |  |                           | 17,100,108 |   |      |   | (3,488,635 | )
|Decrease in short-term borrowings                                                 |  |                           | (70,000    | ) |      |   | (150,000   | )
|Dividends paid                                                                    |  |                           | (219,098   | ) |      |   | (201,708   | )
|Sale of treasury stock                                                            |  |                           | 168,337    |   |      |   | 42,649     |  
|Purchase of treasury stock                                                        |  |                           | (152,964   | ) |      |   | (167,900   | )
|                                                                                  |  |                           |            |   |      |   |            |  
|Net cash provided uses by financing activities                                    |  |                           | 16,826,383 |   |      |   | (3,965,594 | )
|                                                                                  |  |                           |            |   |      |   |            |  
|Net increase (decrease) in cash and cash equivalents                              |  |                           | 10,130,203 |   |      |   | (9,848,521 | )
|                                                                                  |  |                          
|Cash and cash equivalents, beginning of period                                    |  |                           | 7,862,462  |   |      |   | 22,751,335 |  
|                                                                                  |  |                           |            |   |      |   |            |  
|Cash and cash equivalents, end of period                                          |  | $                         | 17,992,665 |   |      | $ | 12,902,814 |  
|                                                                                  |  |                           |            |   |      |   |            |  
|Cash paid during the period for:                                                  |  |                           |            |   |      |   |            |  
|Income taxes                                                                      |  | $                         | 391,200    |   |      | $ | 105,620    |  
|Interest                                                                          |  | $                         | 1,395,372  |   |      | $ | 818,373    |  
|                                                                                  |  |                          
|Supplemental noncash activities                                                   |  |                           |            |   |      |   |            |  
|Changes in unrealized gains (losses) on securities available-for-sale             |  | $                         | (49,998    | ) |      | $ | (124,248   | )

See notes to condensed consolidated financial statements



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##### Table of Contents

COMMUNITYCORP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1BASIS OF
PRESENTATION

The accompanying consolidated financial statements have been prepared in accordance with the requirements for interim financial
statements and, accordingly, they are condensed and omit disclosures, which would substantially duplicate those contained in the most recent annual report to shareholders. The financial statements as of June 30, 2006 and for the interim periods
ended June 30, 2006 and 2005 are unaudited and, in our opinion, include all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation. The results of operations for the six months ended June 30,
2006 are not necessarily indicative of the results, which may be expected for the entire calendar year. The financial information as of December 31, 2005 has been derived from the audited financial statements as of that date. For further
information, refer to the financial statements and the notes included in Communitycorps 2005 Annual Report.

NOTE 2COMPREHENSIVE INCOME

The components of other comprehensive income and related tax
effects are as follows:



|                                                                      |  |                |          |   |            |   |         |                   |  |   |          |  
|--------------------------------------------------------------------- |  | -------------- | -------- | - | ---------- | - | ------- | ----------------- |  | - | -------- | -
|                                                                      |  | Pre-tax Amount |          |   | TaxBenefit |   |         | Net-of-tax Amount | 
|For the Six Months Ended June 30, 2006:                               |  |                |          |   |            |   |         |                   |  |   |          |  
|Unrealized losses on securities available-for-sale                    |  | $              | (76,333  | ) |            | $ | 26,335  |                   |  | $ | (49,998  | )
|Reclassification adjustment for gains (losses) realized in net income |  |                |         |   |            |   |        |                   |  |   |         |  
|                                                                      |  |                |          |   |            |   |         |                   |  |   |          |  
|Other comprehensive income (loss)                                     |  | $              | (76,333  | ) |            | $ | 26,335  |                   |  | $ | (49,998  | )
|                                                                      |  |                |          |   |            |   |         |                   |  |   |          |  
|For the Six Months Ended June 30, 2005:                               |  |                |          |   |            |   |         |                   |  |   |          |  
|Unrealized losses on securities available-for-sale                    |  | $              | (189,691 | ) |            | $ | 65,443  |                   |  | $ | (124,248 | )
|Reclassification adjustment for gains (losses) realized in net income |  |                |         |   |            |   |        |                   |  |   |         |  
|                                                                      |  |                |          |   |            |   |         |                   |  |   |          |  
|Other comprehensive income (loss)                                     |  | $              | (189,691 | ) |            | $ | 65,443  |                   |  | $ | (124,248 | )
|                                                                      |  |                |          |   |            |   |         |                   |  |   |          |  
|For the Three Months Ended June 30, 2006:                             |  |                |          |   |            |   |         |                   |  |   |          |  
|Unrealized gains on securities available-for-sale                     |  | $              | (51,945  | ) |            | $ | 17,921  |                   |  | $ | (34,024  | )
|Reclassification adjustment for gains (losses) realized in net income |  |                |         |   |            |   |        |                   |  |   |         |  
|                                                                      |  |                |          |   |            |   |         |                   |  |   |          |  
|Other comprehensive income (loss)                                     |  | $              | (51,945  | ) |            | $ | 17,921  |                   |  | $ | (34,024  | )
|                                                                      |  |                |          |   |            |   |         |                   |  |   |          |  
|For the Three Months Ended June 30, 2005:                             |  |                |          |   |            |   |         |                   |  |   |          |  
|Unrealized gains on securities available-for-sale                     |  | $              | 99,675   |   |            | $ | (52,956 | )                 |  | $ | 46,719   |  
|Reclassification adjustment for gains (losses) realized in net income |  |                |         |   |            |   |        |                   |  |   |         |  
|                                                                      |  |                |          |   |            |   |         |                   |  |   |          |  
|Other comprehensive income (loss)                                     |  | $              | 99,675   |   |            | $ | (52,956 | )                 |  | $ | 46,719   |  
|                                                                      |  |                |          |   |            |   |         |                   |  |   |          |  

Accumulated other comprehensive income consists solely of net unrealized gains and losses on securities available
for sale, net of the deferred tax effects.



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##### Table of Contents

COMMUNITYCORP

Item 2. Managements Discussion and Analysis or Plan of Operations

The following is a discussion of the Companys
financial condition as of June 30, 2006 compared to December 31, 2005, and the results of operations for the three and six months ended June 30, 2006 compared to the three and six months ended June 30, 2005. These comments should
be read in conjunction with the Companys condensed consolidated financial statements and accompanying footnotes appearing in this report. This report contains forward-looking statements relating to, without limitation, future
economic performance, plans and objectives of management for future operations, and projections of revenues and other financial items that are based on the beliefs of the Companys management, as well assumptions made by and information
currently available to the Companys management. The words expect, estimate, anticipate and believe, as well as similar expressions, are intended to identify forward-looking statements. The
Companys actual results may differ materially from the results discussed in the forward-looking statements, and the Companys operating performance each quarter is subject to various risks and uncertainties that are discussed in detail in
the Companys filings with the Securities and Exchange Commission.

Results of Operations

Net Interest Income

The largest component of total income is net
interest income, the difference between the income earned on assets and the interest accrued or paid on deposits and borrowings used to support such assets. The volume and mix of assets and liabilities and their sensitivity to interest rate movement
determine changes in net interest income. Net interest margin is determined by dividing annualized net interest income by average earning assets. Net interest spread is derived from determining the weighted-average rate of interest paid on deposits
and borrowings and subtracting them from the weighted-average yield on earning assets.

Net interest income for the six months ended June 30, 2006,
was $2,694,469, compared to $2,749,022 for the same period last year, a decrease of 1.98%. For the quarter ended June 30, 2006, net interest income was $1,355,641, compared to $1,428,404 for the quarter ended June 30, 2005 a decrease of
5.09%. The decrease in both periods was primarily attributable to the increase in interest rates paid on our interest bearing liabilities combined with the negative impact of having a large volume of fixed rate loans in our loan portfolio. Fixed
rate loans averaged approximately 95% of our loan portfolio for both periods presented.

For the six months ended June 30, 2006, average-earning
assets totaled $143,195,036 with an annualized average yield of 6.23%, compared to $130,153,585 and 5.81%, respectively, for the same period last year. Average interest-bearing liabilities totaled $119,839,841 with an annualized average cost of
2.91% for the six months ended June 30, 2006, compared to $108,069,062 and 1.87%, respectively, for the same period last year. For the quarter ended June 30, 2006, average-earning assets totaled $148,947,426 with an annualized average
yield of 6.23%, compared to $129,553,986 and 6.03%, respectively, for the same period last year. Average interest-bearing liabilities totaled $124,831,507 with an annualized average cost of 3.08% for the three months ended June 30, 2006,
compared to $107,211,445 and 1.94%, respectively, for the same period last year.

Our net interest margin was 3.79% and 4.26% for the six months ended
June 30, 2006 and 2005, respectively. For the quarter ended June 30, 2006 and 2005, net interest margin was 3.65% and 4.42%, respectively. The decline in both periods is reflective of the volume of fixed rates loans included in our loan
portfolio that cannot be repriced to current market interest rates as quickly as our interest bearing liabilities are subject to repricing. Once market interest rates stabilize or if rates decline our interest margin should improve.

Our annualized yield on earning assets increased 42 and 20 basis points during the six months and quarter ended June 30, 2006, respectively, from the annualized
yield on earnings assets for the same periods last year. Annualized average cost of our interest-bearing liabilities increased 104 and 114 basis points during the six months and quarter ended June 30, 2006, respectively, from the annualized
average cost of our interest-bearing liabilities for the same periods last year. Details of the components of earning assets and interest-bearing liabilities are discussed in the following paragraphs.



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##### Table of Contents

COMMUNITYCORP

Item 2. Managements Discussion and Analysis or Plan of Operations  continued

Net Interest Income (continued)

Because loans often provide a higher yield than other types of earning assets, one of our goals is to maintain our
loan portfolio as the largest component of total earning assets. Loans comprised approximately 69.42% and 64.89% of average earning assets for the six months ended June 30, 2006 and 2005, respectively, and 67.81%, and 65.55% for the quarter
ended June 30, 2006 and 2005, respectively. Loan interest income for the six months ended June 30, 2006 totaled $3,556,553, compared to $3,055,568 for the same period in 2005. The annualized average yield on loans was 7.21% and 7.30% for
the six months ended June 30, 2006 and 2005, respectively. The decrease is due to the volume of fixed rate loans in our portfolio that were made at a time when the interest rates were much lower. Loan interest income for the quarter ended
June 30, 2006 totaled $1,821,271, compared to $1,588,826 for the same period in 2005. For the quarter ended June 30, 2006 and 2005 the annualized average yield on loans was 7.23% and 7.50%, respectively. Average balances of loans increased
to $99,409,397 during the six months ended June 30, 2006, an increase of $14,952,984 over the average of $84,456,413 during the comparable period in 2005. For the quarter ended June 30, 2006, the average balances of loans increased by
$16,075,141 over the average balances of loans of $84,919,920 for the quarter ended June 30, 2005. Fixed rate loans averaged approximately 95% of our loan portfolio for both periods presented.

Investment securities averaged $33,662,838, or 23.51% of average earning assets, for the six months ended June 30, 2006, compared to $31,038,316 or 23.85% of
average earning assets, for the same period in 2005. For the quarter ended June 30, 2006, investment securities averaged $34,610,047, or 23.24%, of average earning assets compared to $32,830,770 or 25.34% of average earnings assets, for the
same period in 2005. Interest earned on investment securities amounted to $628,275 for the six months ended June 30, 2006, compared to $509,625 for the same period last year. For the quarter ended June 30, 2006, interest earned on
investment securities amounted to $331,282 compared to $275,426 for the same period last year. Investment securities yielded 3.76% and 3.31% for the six months ended June 30, 2006 and 2005, respectively. For the quarter ended June 30, 2006
and 2005 the yields on investment securities was 3.84% and 3.36%, respectively.

Total interest expense for the six months ended June 30, 2006 and
2005 was $1,726,388 and $1,002,249, respectively. For the quarter ended June 30, 2006 and 2005, interest expense was $958,782 and $518,079, respectively. The largest component of interest expense is interest on deposit accounts. Interest
expense for deposit accounts was $1,719,516 and $999,040, for the six months ended June 30, 2006 and 2005, respectively. The average balance of interest bearing deposits increased to $119,335,066 during the six months ended June 30, 2006
from $107,714,172 during the same period last year. During the quarter ended June 30, 2006, the average balances of interest bearing deposits increased to $124,491,987 from $106,915,237 for the same period last year. The annualized average cost
of deposits was 2.91% for the six months ended June 30, 2006, compared to 1.87% for the same period in 2005. For the quarter ended June 30, 2006 and 2005, the annualized average cost of deposits was 3.08% and 1.94%, respectively.

For the six months ended June 30, 2006 and 2005, the total annualized average cost of funds was 2.91% and 1.87%, respectively. The overall cost of
funds was 3.08% and 1.94 % for the quarter ended June 30, 2006, and 2005, respectively.

Provision and Allowance for Loan Losses

We provide for loan losses using the allowance method. Increases to the allowance are charged by recording a provision for loan losses. Loan losses and
recoveries are charged to the allowance. Charge-offs to the allowance are made when all or a portion of the loan is confirmed as a loss based on our review of the loan, through possession of the underlying security, or through a troubled debt
restructuring transaction. Likewise, recoveries offset these increases through credits to the allowance.



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##### Table of Contents

COMMUNITYCORP

Item 2. Managements Discussion and Analysis or Plan of Operations continued

Provision and
Allowance for Loan Losses (continued)

The allowance is maintained at a level that we believe is sufficient to cover losses in the loan
portfolio at a specific point in time. Assessing the adequacy of the allowance requires considerable judgment. The adequacy of the allowance is analyzed on a monthly basis using an internal analysis model. For purposes of this analysis, adequacy is
defined as a level sufficient to absorb probable losses in the portfolio. This methodology relies upon our judgment. Our judgments are based on our assessment of various issues, including, but not limited to, the pace of loan growth, emerging
portfolio concentrations, the risk management system relating to lending activities, entry into new markets, new product offerings, loan portfolio quality trends, and uncertainty in current and future economic and business conditions. An allowance
model is used that takes into account factors including the composition of the loan portfolio such as risk grade classifications, historical asset quality trends including, but not limited to, previous loss experience ratios, our assessment of
current and future economic conditions, and reviews of specific high risk sectors of the portfolio. Loans are graded at inception and are reviewed on a periodic basis to ensure that assigned risk grades are proper based on the definition of such
classification. The value of underlying collateral is also considered during such analysis. The resulting monthly model and the related conclusions are reviewed and approved by Senior Management. Our analysis of allowance adequacy includes
consideration for loan impairment. While we use the best information available to make evaluations, future adjustments to the allowance may be necessary if results differ substantially from the assumptions used in making the evaluations.

The methodology for assessing the adequacy of the allowance establishes both an allocated and unallocated component of the allowance. The allocated component is based
principally on current loan grades and historical loss rates. The unallocated component is the result of the portion of the assessment that estimates probable losses in the portfolio that are not fully captured in the allocated allowance. This
analysis includes, but is not necessarily limited to, industry concentrations, future market expansions, model imprecision, and the estimated impact of current economic conditions on historical loss rates. On a continual basis, we monitor trends
within the portfolio, both quantitative and qualitative, and assess the reasonableness of the unallocated component.

The allowance is subject to
examination and adequacy testing by regulatory agencies. In addition, such regulatory agencies could require allowance adjustments based on information available to them at the time of their examination

The allowance for loan losses was 1.71% and 1.74% of total loans at June 30, 2006 and 2005 respectively. The allowance for loan losses at June 30, 2006 is
reflective of the results of our allowance model methodology. We monitor and evaluate the adequacy of the allowance and loss exposure in the loan portfolio by considering the borrowers financial conditions and other factors in the unallocated
component of the allowance model methodology. Accordingly, we believe the allowance as of June 30, 2006 is adequate, based on our assessment of probable losses, and available facts and circumstances then prevailing.

The provision for loan losses is the charge to operating earnings that management feels is necessary to maintain the allowance for possible loan losses at an adequate
level. For the six months ended June 30, 2006, the provision charged to expense was $150,00 as compared to $132,600 for the same period in 2005. For the three months ended June 30, 2006 and 2005, the provision charged to expense was
$75,000 and $57,600 respectively.

Noninterest Income

Noninterest income for the six months ended June 30, 2006 was $374,471, an increase of $96,867 or 34.89% from the comparable period in 2005. This increase is primarily attributable to the increase in service charges on deposit
accounts. During the current year, we became more aggressive in charging for non-sufficient fund checks, which resulted in an $86,769 or 45.40% increase in service charges. Income from service charges was $277,901 and $191,132 for the six months
ended June 30, 2006 and 2005, respectively, while other income was $96,570 and 86,472, respectively.

For the quarter ended June 30, 2006,
noninterest income increased $60,524 or 44.70% over the same period in 2005. Service charges on deposit accounts increased $50,867 from the quarter ended June 30, 2005 to $148,217 for the quarter ended June 30, 2006. Other income was
$47,707 and $38,050 for the quarter ended June 30, 2006 and 2005 respectively.



10



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##### Table of Contents

COMMUNITYCORP

Item 2. Managements Discussion and Analysis or Plan of Operations continued

Noninterest Expense

Total noninterest expense for the six months ended June 30, 2006 increased $82,055 or 5.06% over the same period in 2005. Total noninterest
expense was $1,704,983 and 1,622,928 for the six months ended June 30, 2006 and 2005 respectively. This increase is primarily attributable to normal salary increases plus the increase in the cost of providing our employees health benefits.
During the six months ended June 30, 2006, the increase in health benefits was approximately $19,000 when compared to the same period in 2005. Other operating expenses increased $26,391 or 5.85% to $477,251 for the six months ended
June 30, 2006 when compared to the same period in 2005. Net occupancy and equipment expense increased $12,917 for the six months ended June 30, 2006 to $279,968.

For the quarter ended June 30, 2006, noninterest expense increased $11,775 or 1.41% over the same period in 2005. Noninterest expense was $849,766 and $837,991 for the quarter ended June 30, 2006 and 2005,
respectively. Salaries and benefits increased $17,194 or 3.72% over the same period in 2005. Net occupancy and equipment expense, which increased $2,373 or 1.73% over the same period in 2005. Other operating expenses decreased $7,792 or 3.27% over
the same period in 2005.

Income Taxes

The income tax
provision for the six months ended June 30, 2006 was $400,600 as compared to $404,000 for the same period in 2005. This decrease was primarily a result of the decrease in income before taxes. The effective tax rates were 33.00% for the six
months ended June 30, 2006 and 31.78% for the six months ended June 30, 2005. The effective tax rates were 35.10% and 31.88% for the quarter ended June 30, 2006 and June 30, 2005, respectively.

Net Income

The combination of the above factors resulted in net
income for the six months ended June 30, 2006 of $813,357 as compared to $867,098 for the same period in 2005. This represents a decrease of $53,741 or 6.20% over the same period in 2005. Net income for the quarter ended June 30, 2006
decreased $48,414 or 10.64% over the same period in 2005.

Assets and Liabilities

During the first six months of 2006, total assets increased $17,938,607, or 12.61%, when compared to December 31, 2005. The increase in total assets was mainly attributable to federal funds sold, investments
securities, and gross loans, which increased $10,692,000, $2,112,712 and $5,836,296 respectively.

For the six months ended June 30, 2006 total
liabilities increased $17,378,973 or 13.52% from December 31, 2005. Deposits increased $17,100,108 or 13.42% and other liabilities increased $17,849 or 10.90%.

For more analysis of the components of the changes in asset and liabilities, see the following discussion of major balance sheet categories and the Consolidated Statements of Cash Flows included in Item 1.
Financial Statements.

We closely monitor and seek to maintain appropriate levels of interest earning-assets and interest-bearing liabilities so that
maturities of assets are such that adequate funds are provided to meet customer withdrawals and loan demands.

Loans

At June 30, 2006 our total loans were $103,431,595 compared to $97,595,299 at December 31, 2005, an increase of $5,836,296 or 5.98%. Balances within the major
loans receivable categories as of June 30, 2006 and December 31, 2005 are as follows:



|                           |  |               |             |                  |   |           
|-------------------------- |  | ------------- | ----------- | ---------------- | - | ----------
|                           |  | June 30, 2006 |             | December 31,2005
|Real estate  construction |  | $             | 4,109,761   |                  | $ | 4,453,312 
|Real estate  mortgage     |  |               | 33,802,358  |                  |   | 37,478,906
|Commercial and industrial  |  |               | 52,201,689  |                  |   | 42,727,235
|Consumer and other         |  |               | 13,317,787  |                  |   | 12,935,846
|                           |  |               |             |                  |   |           
|                           |  | $             | 103,431,595 |                  | $ | 97,595,299
|                           |  |               |             |                  |   |           



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##### Table of Contents

COMMUNITYCORP

Item 2. Managements Discussion and Analysis or Plan of Operations continued

Risk Elements in the Loan
Portfolio

The following is a summary of risk elements in the loan portfolio:



|                                                   |  |          |           |      |   |          
|-------------------------------------------------- |  | -------- | --------- | ---- | - | ---------
|                                                   |  | June 30,
|                                                   |  | 2006     |           | 2005
|Nonaccrual loans                                   |  | $        | 570,935   |      | $ | 893,555  
|Accruing loans more than 90 days past due          |  |          | 2,023     |      |   | 2,144    
|                                                   |  |         
|Loans identified by the internal review mechanism: |  |          |           |      |   |          
|Criticized                                         |  | $        | 1,351,606 |      | $ | 241,124  
|Classified                                         |  |          | 1,357,260 |      |   | 1,316,632

Criticized loans have potential weaknesses that deserve close attention and could, if uncorrected, result in
deterioration of the prospects for repayment or our credit position at a future date. Classified loans are inadequately protected by the sound worth and paying capacity of the borrower or any collateral and there is a distinct possibility or
probability that we will sustain a loss if the deficiencies are not corrected.

At June 30, 2006 real estate or other collateral secured practically
all of the loans that were criticized and classified. In the event of foreclosure on these loans, there can be no assurance that in the case of liquidation the collateral can be sold for its estimated fair market value or even for an amount at least
equal to or greater than the loan amount.

The results of this internal review process are the primary determining factor in managements assessment
of the adequacy of the allowance for loan losses.

Activity in the Allowance for Loan Losses is as follows:



|                                                 |  |          |             |   |      |   |            |  
|------------------------------------------------ |  | -------- | ----------- | - | ---- | - | ---------- | -
|                                                 |  | June 30, |            
|                                                 |  | 2006     |             |   | 2005 |  
|Balance, January 1,                              |  | $        | 1,664,948   |   |      | $ | 1,456,326  |  
|Provision for loan losses for the period         |  |          | 150,000     |   |      |   | 132,600    |  
|Net loans (charged-off) recovered for the period |  |          | (51,041     | ) |      |   | (104,181   | )
|                                                 |  |          |             |   |      |   |            |  
|Balance, end of period                           |  | $        | 1,763,907   |   |      | $ | 1,484,745  |  
|                                                 |  |          |             |   |      |   |            |  
|Gross loans outstanding, end of period           |  | $        | 103,431,595 |   |      | $ | 85,164,695 |  
|                                                 |  |         
|Allowance for loan losses to loans outstanding   |  |          | 1.71        | % |      |   | 1.74       | %

Deposits

Total deposits increased $17,100,108 or 13.42% from December 31, 2005. Interest-bearing deposits increased $18,483,226 to $127,920,899 at June 30, 2006. Noninterest-bearing deposits decreased $1,383,118 to $16,637,515 at
June 30, 2006. Expressed in percentages, interest-bearing deposits increased 16.89%, noninterest-bearing deposits decreased 7.68%.



12



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##### Table of Contents

COMMUNITYCORP

Item 2. Managements Discussion and Analysis or Plan of Operations  continued

Deposits (continued)

Balances within the major deposit categories are as follows:



|                                    |  |              |             |                  |   |            
|----------------------------------- |  | ------------ | ----------- | ---------------- | - | -----------
|                                    |  | June 30,2006 |             | December 31,2005
|Noninterest-bearing demand deposits |  | $            | 16,637,515  |                  | $ | 18,020,633 
|Interest-bearing demand deposits    |  |              | 23,762,724  |                  |   | 28,958,482 
|Savings deposits                    |  |              | 22,751,041  |                  |   | 18,123,425 
|Certificates of deposits            |  |              | 81,407,134  |                  |   | 62,355,766 
|                                    |  |              |             |                  |   |            
|                                    |  | $            | 144,558,414 |                  | $ | 127,458,306
|                                    |  |              |             |                  |   |            

At June 30, 2006, certificates of deposits included a brokered deposit totaling $2,078,000 that matures
September 2006 and will not be renewed. There were no brokered deposits at December 31, 2005.

In addition, certificates of deposits also include a
$10,037,000 deposit that was issued to a local school district on April 14, 2006, bearing an interest rate of 5.10% with a maturity date of May 14, 2007.

Liquidity

Liquidity needs are met by us through scheduled maturities of loans and investments on the asset side and through pricing
policies on the liability side for demand deposit accounts and short-term borrowings. The level of liquidity is measured by the loan-to-total funds ratio (total deposits plus short-term borrowings), which was at 71.40% at June 30, 2006 and
76.35% at December 31, 2005.

Asset liquidity is provided from several sources, including amounts due from banks and federal funds sold. Available for
sale securities, particularly those maturing within one year, provide a secondary source of liquidity. In addition, funds from maturing loans are a source of liquidity.

At June 30, 2006 we had available an unused short-term line of credit to purchase up to $3,800,000 of federal funds from an unrelated correspondent institution. We also have a credit availability agreement with
the Federal Home Loan Bank totaling 15 percent of the Banks assets as of any quarter end. As of June 30, 2006, the available credit totaled approximately $24,024,000, and there were no borrowings outstanding. Any borrowings from the
Federal Home Loan Bank will be secured by liens on all of the Banks 1-4 family residential first lien mortgage loans and or investment securities.

Interest Rate Sensitivity

Interest rate sensitivity is defined as the exposure to variability in net interest income resulting from changes
in market-based interest rates. Asset/liability management is the process by which we monitor and control the mix, maturities, and interest sensitivity of our assets and liabilities. Asset/liability management seeks to ensure adequate liquidity and
to maintain an appropriate balance between interest-sensitive assets and liabilities to minimize potentially adverse impacts on earnings from changes in market interest rates. Interest rate sensitivity can be managed by repricing assets or
liabilities, selling securities available-for-sale, replacing an asset or liability at maturity, or adjusting the interest rate during the life of an asset or liability. We believe that interest rate risk management becomes increasingly important in
an interest rate environment and economy such as the one that we are currently experiencing.

We monitor interest rate sensitivity by measuring our
interest sensitivity through a gap analysis, which is the positive or negative dollar difference between assets and liabilities that are subject to interest rate repricing within a given time period. Currently we are liability-sensitive
over periods with maturity dates of less than twelve months. However, since interest rates and yields on various interest sensitive assets and liabilities do not all adjust in the same degree when there is a change in prevailing interest rates (such
as prime rate), the traditional gap analysis is only a general indicator of rate sensitivity and net interest income volatility. As stated in Results of Operations for the Six Months Ended June 30, 2006 Compared to the Six Months Ended
June 30, 2005  Net Interest Income, our net interest margin decreased during the current period. If net interest margin continues to decline, net income will likely decline also.



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COMMUNITYCORP

Item 2. Managements Discussion and Analysis or Plan of Operations continued

Capital Resources

Total shareholders equity increased from $13,643,373 at December 31, 2005 to $14,203,007 at June 30, 2006. The net increase of $559,634
is attributable to earnings for the period of $813,357 before the payment of $219,098 in cash dividends, and the net increase of $15,373 from the sales and purchases of treasury stock. The increase was offset by the decrease of $49,998 in the fair
value of securities available-for-sale, net of income taxes.

Bank holding companies, such as ours, and their banking subsidiaries are required by banking
regulators to meet certain minimum levels of capital adequacy, which are expressed in the form of certain ratios. Capital is separated into Tier 1 capital (essentially common shareholders equity less intangible assets) and Tier 2 capital
(essentially the allowance for loan losses limited to 1.25% of risk-weighted assets). The first two ratios, which are based on the degree of credit risk in our assets, provide the weighting of assets based on assigned risk factors and include
off-balance sheet items such as loan commitments and stand-by letters of credit. The ratio of Tier 1 capital to risk-weighted assets must be at least 4.0% and the ratio of total capital (Tier 1 capital plus Tier 2 capital) to risk-weighted assets
must be at least 8.0%. The capital leverage ratio supplements the risk-based capital guidelines. Banks and bank holding companies are required to maintain a minimum ratio of Tier 1 capital to adjusted quarterly average total assets of 3.0%.

The following table summarizes the Banks risk-based capital at June 30, 2006:



|                                             |  |   |            
|-------------------------------------------- |  | - | -----------
|Shareholders equity                         |  | $ | 14,387,064 
|Less: intangibles                            |  |   |           
|                                             |  |   |            
|Tier 1 capital                               |  |   | 14,387,064 
|Plus: allowance for loan losses (1)          |  |   | 1,435,250  
|                                             |  |   |            
|Total capital                                |  | $ | 15,822,314 
|                                             |  |   |            
|Net risk-weighted assets                     |  | $ | 114,820,000
|                                             |  |   |            
|Risk-based capital ratios                    |  |   |            
|Tier 1 capital (to risk-weighted assets)     |  |   | 12.53%     
|Total capital (to risk-weighted assets)      |  |   | 13.78%     
|Tier 1 capital (to quarterly average assets) |  |   | 9.18%      

---

|(1) | limited to 1.25% of gross risk-weighted assets
|--- | ----------------------------------------------

The Federal Reserve Board
has similar requirements for bank holding companies. The Company is currently not subject to these requirements because the Federal Reserve guidelines contain an exemption for bank holding companies of less than $500,000,000 in consolidated assets.

Off-Balance Sheet Risk

Through the operations of our
Bank, we have made contractual commitments to extend credit in the ordinary course of our business activities. These commitments are legally binding agreements to lend money to our customers at predetermined interest rates for a specified period of
time. At June 30, 2006, we had issued commitments to extend credit of $8,440,000 and standby letters of credit of $467,000 through various types of commercial lending arrangements. We evaluate each customers credit worthiness on a
case-by-case basis. The amount of collateral obtained, if deemed necessary by us upon extension of credit, is based on our credit evaluation of the borrower. Collateral varies but may include accounts receivable, inventory, property, plant and
equipment, commercial and residential real estate.

Regulatory Matters

We are not aware of any current recommendations by regulatory authorities which, if they were to be implemented, would have a material effect on liquidity, capital resources or operations.



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COMMUNITYCORP

Item 2. Managements Discussion and Analysis or Plan of Operations continued

Critical Accounting
Policies

We have adopted various accounting policies, which govern the application of accounting principles generally accepted in the United States in
the preparation of our financial statements. Our significant accounting policies are described in the notes to the consolidated financial statements at December 31, 2005 as filed in our annual report on Form 10-KSB. Certain accounting policies
involve significant judgments and assumptions by us, which have a material impact on the carrying value of certain assets and liabilities. We consider these accounting policies to be critical accounting policies. The judgments and assumptions we use
are based on historical experience and other factors, which we believe to be reasonable under the circumstances. Because of the nature of the judgments and assumptions we make, actual results could differ from these judgments and estimates which
could have a material impact on our carrying values of assets and liabilities and our results of operations.

We believe the allowance for loan losses is a
critical accounting policy that requires the most significant judgments and estimates used in preparation of our consolidated financial statements. Refer to the portion of this discussion that addresses our allowance for loan losses for a
description of our processes and methodology for determining our allowance for loan losses.

Recently Issued Accounting Standards

Accounting standards which have been issued or proposed by the Financial Accounting Standards Board that do not require adoption until a future date are not expected
to have a material impact on the consolidated financial statements upon adoption.

Item 3. Controls and Procedures.

Within 90 days prior to the date of this report, we carried out an evaluation, under
the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our principal
executive officer and principal financial officer concluded that our disclosure controls and procedures are effective in timely alerting them to material information required to be included in our periodic SEC reports. The design of any system of
controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

In addition, we reviewed our internal controls, and there have been no significant changes in our internal controls or in other factors that could
significantly affect those controls subsequent to the date of their last evaluation.

PART II - OTHER INFORMATION

Item 4. Submission of Matters to a Vote of Security Holders

On April 24, 2006, the Company held its Annual Meeting of Shareholders for the purpose of electing three directors for three-year terms.

The nominees for director received the number of affirmative votes of shareholders required for such nominees election in accordance with the Bylaws of the Company
with 204,182 shareholders voting for the nominees out of a total 243,292 outstanding shareholders. There were no abstention votes or no votes against their election. There were 5,666 votes withheld.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits  The following exhibits are filed with this report.



| | 31.1 | Rule 15d-14(a) Certifications
| | ---- | -----------------------------

| | 31.2 | Rule 15d-14(a) Certifications
| | ---- | -----------------------------

| | 32 | Section 1350 Certifications
| | -- | ---------------------------

(b) Reports on Form 8-K  There were no reports on form 8-K filed during the period.

Items 1, 2, 3, 4, and 5 are not
applicable.



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COMMUNITYCORP

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

COMMUNITYCORP



|                      |  |     |  |                                    
|--------------------- |  | --- |  | -----------------------------------
|Date: August 11, 2006 |  | By: |  | /s/ W. ROGER CROOK                 
|                      |  |     |  | W. Roger Crook                     
|                      |  |     |  | President & Chief Executive Officer
|                      |  |    
|Date: August 11, 2006 |  | By: |  | /s/ GWEN P. BUNTON                 
|                      |  |     |  | Gwen P. Bunton                     
|                      |  |     |  | Chief Financial Officer            



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COMMUNITYCORP

Index To Exhibits



|            |  |                              
|----------- |  | -----------------------------
|Exhibit No. |  | Description                  
|            | 
|31.1        |  | Rule 15d-14(a) Certifications
|            | 
|31.2        |  | Rule 15d-14(a) Certifications
|            | 
|32          |  | Section 1350 Certifications  



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