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U. S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



FORM 10-QSB



(Mark One)

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



For the Quarterly Period Ended September 30, 2003



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)



|South Carolina                                 |  | 57-1019001                          
|---------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of incorporation) |  | (I.R.S. Employer Identification 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 date of this
filing.



247,336 shares of common stock, $5 par value, as of
November 12, 2003



PAGE 1 OF 15

EXHIBIT INDEX ON PAGE 2



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COMMUNITYCORP



Index



|                                                                                                                                               |  | Page No.
|---------------------------------------------------------------------------------------------------------------------------------------------- |  | --------
|PART I. FINANCIAL INFORMATION                                                                                                                  |  |         
|                                                                                                                                               | 
|Item 1. Financial Statements (Unaudited)                                                                                                       |  |         
|                                                                                                                                               | 
|Condensed Consolidated Balance Sheets  September 30, 2003 and December 31, 2002                                                               |  | 3       
|                                                                                                                                               | 
|Condensed Consolidated Statements of Income  Nine months ended September 30, 2003 and 2002 and Three months ended September 30, 2003 and 2002 |  | 4       
|                                                                                                                                               | 
|Condensed Consolidated Statements of Shareholders Equity and Comprehensive Income  Nine months ended September 30, 2003 and 2002             |  | 5       
|                                                                                                                                               | 
|Condensed Consolidated Statements of Cash Flows  Nine months ended September 30, 2003 and 2002                                                |  | 6       
|                                                                                                                                               | 
|Notes to Condensed Consolidated Financial Statements                                                                                           |  | 7-8     
|                                                                                                                                               | 
|Item 2. Managements Discussion and Analysis or Plan of Operations                                                                             |  | 9-14    
|                                                                                                                                               | 
|Item 3. Controls and Procedures                                                                                                                |  | 15      
|                                                                                                                                               | 
|PART II. OTHER INFORMATION                                                                                                                     |  |         
|                                                                                                                                               | 
|Item 6. Exhibits and Reports on Form 8-K                                                                                                       |  | 15      
|                                                                                                                                               | 
|(a) Exhibits                                                                                                                                   |  | 15      
|                                                                                                                                               | 
|(b) Reports on Form 8-K                                                                                                                        |  | 15      
|                                                                                                                                               | 
|Signature                                                                                                                                      |  | 16      
|                                                                                                                                               | 
|Exhibits                                                                                                                                       |  | 17-20   





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##### Table of Contents

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)



COMMUNITYCORP



Condensed Consolidated Balance
Sheets



|                                                                                                                                            |  | September 30, 2003 |             |   | December 31,2002 |  
|------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ----------- | - | ---------------- | -
|                                                                                                                                            |  | (Unaudited)        |             |   |                  |  
|Assets:                                                                                                                                     |  |                    |             |   |                  |  
|Cash and cash equivalents:                                                                                                                  |  |                    |             |   |                  |  
|Cash and due from banks                                                                                                                     |  | $                  | 3,711,337   |   |                  | $
|Federal funds sold and securities purchased under agreements to resell                                                                      |  |                    | 18,268,000  |   |                  |  
|                                                                                                                                            |  |                    |             |   |                  |  
|Total cash and cash equivalents                                                                                                             |  |                    | 21,979,337  |   |                  |  
|                                                                                                                                            |  |                    |             |   |                  |  
|Time deposits with other banks                                                                                                              |  |                    | 499,000     |   |                  |  
|Investment securities:                                                                                                                      |  |                    |             |   |                  |  
|Securities available-for-sale                                                                                                               |  |                    | 14,617,254  |   |                  |  
|Nonmarketable equity securities                                                                                                             |  |                    | 209,875     |   |                  |  
|Securities held-to-maturity (estimated market value of $2,773,127 and $3,156,497 at September 30, 2003 and December 31, 2002,
respectively) |  |                    | 2,650,194   |   |                  |  
|                                                                                                                                            |  |                    |             |   |                  |  
|Total investment securities                                                                                                                 |  |                    | 17,477,323  |   |                  |  
|                                                                                                                                            |  |                    |             |   |                  |  
|Loans receivable                                                                                                                            |  |                    | 77,822,867  |   |                  |  
|Less allowance for loan losses                                                                                                              |  |                    | (1,298,473  | ) |                  |  
|                                                                                                                                            |  |                    |             |   |                  |  
|Loans, net                                                                                                                                  |  |                    | 76,524,394  |   |                  |  
|Accrued interest receivable                                                                                                                 |  |                    | 714,376     |   |                  |  
|Premises, furniture & equipment, net                                                                                                        |  |                    | 2,175,258   |   |                  |  
|Other assets                                                                                                                                |  |                    | 1,319,954   |   |                  |  
|                                                                                                                                            |  |                    |             |   |                  |  
|Total assets                                                                                                                                |  | $                  | 120,689,642 |   |                  | $
|                                                                                                                                            |  |                    |             |   |                  |  
|Liabilities and Shareholders Equity:                                                                                                       |  |                    |             |   |                  |  
|Liabilities:                                                                                                                                |  |                    |             |   |                  |  
|Deposits:                                                                                                                                   |  |                    |             |   |                  |  
|Noninterest-bearing                                                                                                                         |  | $                  | 11,545,854  |   |                  | $
|Interest-bearing                                                                                                                            |  |                    | 97,419,446  |   |                  |  
|                                                                                                                                            |  |                    |             |   |                  |  
|                                                                                                                                            |  |                    | 108,965,300 |   |                  |  
|Short-term borrowings                                                                                                                       |  |                    | 300,000     |   |                  |  
|Accrued interest payable                                                                                                                    |  |                    | 362,601     |   |                  |  
|Other liabilities                                                                                                                           |  |                    | 130,159     |   |                  |  
|                                                                                                                                            |  |                    |             |   |                  |  
|Total liabilities                                                                                                                           |  |                    | 109,758,060 |   |                  |  
|                                                                                                                                            |  |                    |             |   |                  |  
|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   |   |                  |  
|Capital surplus                                                                                                                             |  |                    | 1,731,708   |   |                  |  
|Accumulated other comprehensive income                                                                                                      |  |                    | 59,072      |   |                  |  
|Retained earnings                                                                                                                           |  |                    | 10,935,878  |   |                  |  
|Treasury stock (52,664 shares in 2003 and 25,471 shares in 2002)                                                                            |  |                    | (3,295,076  | ) |                  |  
|                                                                                                                                            |  |                    |             |   |                  |  
|Total shareholders equity                                                                                                                  |  |                    | 10,931,582  |   |                  |  
|                                                                                                                                            |  |                    |             |   |                  |  
|Total liabilities and shareholders equity                                                                                                  |  | $                  | 120,689,642 |   |                  | $
|                                                                                                                                            |  |                    |             |   |                  |  



See notes to condensed
consolidated financial statements





3



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##### Table of Contents

COMMUNITYCORP



Condensed
Consolidated Statements of Income

(Unaudited)



|                                                    |  | Nine Months Ended September 30, |           | Three Months Ended September 30,
|--------------------------------------------------- |  | ------------------------------- | --------- | --------------------------------
|                                                    |  | 2003                            |           | 2002                            
|Interest income:                                    |  |                                 |           |                                 
|Loans, including fees                               |  | $                               | 4,336,968 |                                 
|Securities                                          |  |                                 | 430,423   |                                 
|Other interest income                               |  |                                 | 176,002   |                                 
|                                                    |  |                                 |           |                                 
|Total                                               |  |                                 | 4,943,393 |                                 
|                                                    |  |                                 |           |                                 
|Interest expense:                                   |  |                                 |           |                                 
|Deposit accounts                                    |  |                                 | 1,493,024 |                                 
|Other interest expense                              |  |                                 | 704       |                                 
|                                                    |  |                                 |           |                                 
|                                                    |  |                                 | 1,493,728 |                                 
|                                                    |  |                                 |           |                                 
|Net interest income                                 |  |                                 | 3,449,665 |                                 
|Provision for loan losses                           |  |                                 | 210,000   |                                 
|                                                    |  |                                 |           |                                 
|Net interest income after provision for loan losses |  |                                 | 3,239,665 |                                 
|                                                    |  |                                 |           |                                 
|Noninterest income:                                 |  |                                 |           |                                 
|Service charges                                     |  |                                 | 309,366   |                                 
|Other income                                        |  |                                 | 103,467   |                                 
|                                                    |  |                                 |           |                                 
|Total                                               |  |                                 | 412,833   |                                 
|                                                    |  |                                 |           |                                 
|Noninterest expenses:                               |  |                                 |           |                                 
|Salaries and benefits                               |  |                                 | 1,057,165 |                                 
|Net occupancy expense                               |  |                                 | 92,171    |                                 
|Equipment expense                                   |  |                                 | 246,423   |                                 
|Other operating expenses                            |  |                                 | 614,866   |                                 
|                                                    |  |                                 |           |                                 
|Total                                               |  |                                 | 2,010,625 |                                 
|                                                    |  |                                 |           |                                 
|Income before taxes                                 |  |                                 | 1,641,873 |                                 
|Income tax provision                                |  |                                 | 520,000   |                                 
|                                                    |  |                                 |           |                                 
|Net income                                          |  | $                               | 1,121,873 |                                 
|                                                    |  |                                 |           |                                 
|Earnings per share:                                 |  |                                 |           |                                 
|Weighted average common shares outstanding          |  |                                 | 265,900   |                                 
|                                                    |  |                                 |           |                                 
|Net income per common share                         |  | $                               | 4.22      |                                 
|                                                    |  |                                 |           |                                 



See notes to condensed
consolidated financial statements



4



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COMMUNITYCORP



Condensed
Consolidated Statement of Shareholders Equity and Comprehensive Income

for the nine months ended September 30, 2003 and 2002

(Unaudited)



|                                         |  | Common Stock |  | Capital Surplus |           | Accumulated Other Comprehensive Income |   |           | Retained Earning |   |         | Treasury Stock |  |   | Total      |  
|---------------------------------------- |  | ------------ |  | --------------- | --------- | -------------------------------------- | - | --------- | ---------------- | - | ------- | -------------- |  | - | ---------- | -
|                                         |  | Shares       |  | Amount          |           |                                        |   |           |                 
|Balance, December 31, 2001               |  | 300,000      |  | $               | 1,500,000 |                                        | $ | 1,731,708 |                  | $ | 51,132  |                |  | $ | 8,648,977  |  
|Cash dividends declared  $.59 per share |  |              |  |                 |           |                                        |   |           |                  |   |         |                |  |   | (163,847   | )
|Net income for the period                |  |              |  |                 |           |                                        |   |           |                  |   |         |                |  |   | 1,124,998  |  
|Other comprehensive income, net of taxes |  |              |  |                 |           |                                        |   |           |                  |   | 97,974  |                |  |   |            |  
|                                         |  |              |  |                 |           |                                        |   |           |                  |   |         |                |  |   |            |  
|Comprehensive income                     |  |              |  |                 |           |                                        |   |           |                  |   |         |                |  |   |            |  
|                                         |  |              |  |                 |           |                                        |   |           |                  |   |         |                |  |   |            |  
|Purchase of treasury Stock               |  |              |  |                 |           |                                        |   |           |                  |   |         |                |  |   |            |  
|                                         |  |              |  |                 |           |                                        |   |           |                  |   |         |                |  |   |            |  
|Balance, September 30, 2002              |  | 300,000      |  | $               | 1,500,000 |                                        | $ | 1,731,708 |                  | $ | 149,106 |                |  | $ | 9,610,128  |  
|                                         |  |              |  |                 |           |                                        |   |           |                  |   |         |                |  |   |            |  
|Balance, December 31, 2002               |  | 300,000      |  | $               | 1,500,000 |                                        | $ | 1,731,708 |                  | $ | 128,119 |                |  | $ | 9,993,521  |  
|Cash dividends declared  $.65 per share |  |              |  |                 |           |                                        |   |           |                  |   |         |                |  |   | (179,516   | )
|Net income for the period                |  |              |  |                 |           |                                        |   |           |                  |   |         |                |  |   | 1,121,873  |  
|Other comprehensive loss, net of taxes   |  |              |  |                 |           |                                        |   |           |                  |   | (69,047 | )              |  |   |            |  
|                                         |  |              |  |                 |           |                                        |   |           |                  |   |         |                |  |   |            |  
|Comprehensive income                     |  |              |  |                 |           |                                        |   |           |                  |   |         |                |  |   |            |  
|                                         |  |              |  |                 |           |                                        |   |           |                  |   |         |                |  |   |            |  
|Sale of treasury stock                   |  |              |  |                 |           |                                        |   |           |                  |   |         |                |  |   |            |  
|Purchase of treasury stock               |  |              |  |                 |           |                                        |   |           |                  |   |         |                |  |   |            |  
|                                         |  |              |  |                 |           |                                        |   |           |                  |   |         |                |  |   |            |  
|Balance, September 30, 2003              |  | 300,000      |  | $               | 1,500,000 |                                        | $ | 1,731,708 |                  | $ | 59,072  |                |  | $ | 10,935,878 |  
|                                         |  |              |  |                 |           |                                        |   |           |                  |   |         |                |  |   |            |  



See notes to condensed
consolidated financial statements



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COMMUNITYCORP



Condensed
Consolidated Statements of Cash Flows

(Unaudited)



|                                                                                  |  | Nine Months EndedSeptember 30, |            
|--------------------------------------------------------------------------------- |  | ------------------------------ | -----------
|                                                                                  |  | 2003                           |            
|Cash flows from operating activities:                                             |  |                                |            
|Net income                                                                        |  | $                              | 1,121,873  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                                |            
|Depreciation                                                                      |  |                                | 159,186    
|Provision for possible loan losses                                                |  |                                | 210,000    
|Amortization less accretion on investments                                        |  |                                | 45,882     
|Amortization of deferred loan costs                                               |  |                                | 499        
|Gain on sale of premises and equipment                                            |  |                                |           
|Decrease in interest receivable                                                   |  |                                | 74,290     
|Decrease in interest payable                                                      |  |                                | (59,901    
|Increase in other assets                                                          |  |                                | (528,766   
|Increase (decrease) in other liabilities                                          |  |                                | 82,703     
|                                                                                  |  |                                |            
|Net cash provided by operating activities                                         |  |                                | 1,105,766  
|                                                                                  |  |                                |            
|Cash flows from investing activities:                                             |  |                                |            
|Net increase in loans to customers                                                |  |                                | (2,878,474 
|Purchases of securities available-for-sale                                        |  |                                | (15,826,418
|Maturities of securities available-for-sale                                       |  |                                | 13,718,855 
|Maturities of securities held-to-maturity                                         |  |                                | 399,783    
|Decrease in nonmarketable equity securities                                       |  |                                | 125,000    
|Increase in time deposits with other banks                                        |  |                                | (200,000   
|Proceeds from disposal of premises and equipment                                  |  |                                |           
|Purchases of premises and equipment                                               |  |                                | (165,293   
|                                                                                  |  |                                |            
|Net cash used by investing activities                                             |  |                                | (4,826,547 
|                                                                                  |  |                                |            
|Cash flows from financing activities:                                             |  |                                |            
|Net increase in deposit accounts                                                  |  |                                | 6,345,541  
|Decrease in short-term borrowings                                                 |  |                                | (100,000   
|Dividends paid                                                                    |  |                                | (179,516   
|Sale of treasury stock                                                            |  |                                | 167,715    
|Purchase of treasury stock                                                        |  |                                | (2,358,620 
|                                                                                  |  |                                |            
|Net cash provided by financing activities                                         |  |                                | 3,875,120  
|                                                                                  |  |                                |            
|Net increase (decrease) in cash and cash equivalents                              |  |                                | 154,339    
|                                                                                  |  |                               
|Cash and cash equivalents, beginning of period                                    |  |                                | 21,824,998 
|                                                                                  |  |                                |            
|                                                                                  |  |                               
|Cash and cash equivalents, end of period                                          |  | $                              | 21,979,337 
|                                                                                  |  |                                |            
|Cash paid during the period for:                                                  |  |                                |            
|Income taxes                                                                      |  | $                              | 652,445    
|Interest                                                                          |  | $                              | 1,553,629  



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 condensed 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 condensed consolidated financial statements as of September 30, 2003 and for the interim periods ended
September 30, 2003 and 2002 are unaudited and, in the opinion of management, include all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation. The financial information as of December 31, 2002 has been
derived from the audited consolidated financial statements as of that date. For further information, refer to the consolidated financial statements and the related notes included in Communitycorps 2002 Annual Report.



NOTE 2  COMPREHENSIVE INCOME



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



|                                                                            |  | Pre-tax Amount |          |   | (Expense) Benefit |   |         | Net-of-tax Amount | 
|--------------------------------------------------------------------------- |  | -------------- | -------- | - | ----------------- | - | ------- | ----------------- | 
|For the Nine Months Ended September 30, 2003:                               |  |                |          |   |                   |   |         |                   | 
|Unrealized gains (losses) on securities available-for-sale                  |  | $              | (105,383 | ) |                   | $ | 36,336  |                   | 
|Plus: reclassification adjustment for gains (losses) realized in net income |  |                |         |   |                   |   |        |                   | 
|                                                                            |  |                |          |   |                   |   |         |                   | 
|Net unrealized gains (losses) on securities                                 |  |                | (105,383 | ) |                   |   | 36,336  |                   | 
|                                                                            |  |                |          |   |                   |   |         |                   | 
|                                                                            |  |                |         
|Other comprehensive income (loss)                                           |  | $              | (105,383 | ) |                   | $ | 36,336  |                   | 
|                                                                            |  |                |          |   |                   |   |         |                   | 
|                                                                            |  |                |         
|                                                                            |  | Pre-tax Amount |          |   | (Expense) Benefit |   |         | Net-of-tax Amount | 
|For the Nine Months Ended September 30, 2002:                               |  |                |          |   |                   |   |         |                   | 
|Unrealized gains (losses) on securities available-for-sale                  |  | $              | 149,577  |   |                   | $ | (51,603 | )                 | 
|Plus: reclassification adjustment for gains (losses) realized in net income |  |                |         |   |                   |   |        |                   | 
|                                                                            |  |                |          |   |                   |   |         |                   | 
|Net unrealized gains (losses) on securities                                 |  |                | 149,577  |   |                   |   | (51,603 | )                 | 
|                                                                            |  |                |          |   |                   |   |         |                   | 
|                                                                            |  |                |         
|Other comprehensive income (loss)                                           |  | $              | 149,577  |   |                   | $ | (51,603 | )                 | 
|                                                                            |  |                |          |   |                   |   |         |                   | 



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COMMUNITYCORP



Notes to Condensed Consolidated Financial Statements

(Unaudited)



NOTE 2  COMPREHENSIVE INCOME continued



|                                                                            |  | Pre-tax Amount |          |   | (Expense) Benefit |   |         | Net-of-tax Amount | 
|--------------------------------------------------------------------------- |  | -------------- | -------- | - | ----------------- | - | ------- | ----------------- | 
|For the Three Months Ended September 30, 2003:                              |  |                |          |   |                   |   |         |                   | 
|Unrealized gains (losses) on securities available-for-sale                  |  | $              | (169,263 | ) |                   | $ | 58,396  |                   | 
|Plus: reclassification adjustment for gains (losses) realized in net income |  |                |         |   |                   |   |        |                   | 
|                                                                            |  |                |          |   |                   |   |         |                   | 
|Net unrealized gains (losses) on securities                                 |  |                | (169,263 | ) |                   |   | 58,396  |                   | 
|                                                                            |  |                |          |   |                   |   |         |                   | 
|Other comprehensive income (loss)                                           |  | $              | (169,263 | ) |                   | $ | 58,396  |                   | 
|                                                                            |  |                |          |   |                   |   |         |                   | 
|                                                                            |  |                |         
|                                                                            |  | Pre-tax Amount |          |   | (Expense) Benefit |   |         | Net-of-tax Amount | 
|For the Three Months Ended September 30, 2002:                              |  |                |          |   |                   |   |         |                   | 
|Unrealized gains (losses) on securities available-for-sale                  |  | $              | 59,259   |   |                   | $ | (20,444 | )                 | 
|Plus: reclassification adjustment for gains (losses) realized in net income |  |                |         |   |                   |   |        |                   | 
|                                                                            |  |                |          |   |                   |   |         |                   | 
|Net unrealized gains (losses) on securities                                 |  |                | 59,259   |   |                   |   | (20,444 | )                 | 
|                                                                            |  |                |          |   |                   |   |         |                   | 
|Other comprehensive income (loss)                                           |  | $              | 59,259   |   |                   | $ | (20,444 | )                 | 
|                                                                            |  |                |          |   |                   |   |         |                   | 



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



NOTE 3  SHAREHOLDERS EQUITY



On June 30, 2003, the Company purchased and redeemed 27,454 shares of its common stock, $5.00 par value from Mr. Robert Redfearn, a corporation controlled by Mr. Redfearn and members of Mr. Redfearns family (collectively, the
Redfearn shares), for $80.00 per share or $2,196,320 in the aggregate. The 27,454 shares repurchased by the Company represented 9.92% of the 276,734 shares of common stock outstanding immediately prior to the purchase. An outside
consultant reported to the Board that the repurchase of Mr. Redfearns shares would be accretive as to all other Company shareholders in terms of earning per share.



8



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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 Communitycorps (the Company) financial condition as of September 30, 2003 compared to December 31, 2002, and the results of operations for the three and nine months ended September 30, 2003 compared to the three and
nine months ended September 30, 2002. These comments should be read in conjunction with our 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



For the nine months ended September 30, 2003, net
interest income increased $267,768 or 8.42%, as compared to the same period in 2002. Interest and fees on loans decreased $100,482 or 2.26% to $4,336,968 for the nine months ended September 30, 2003 as compared to the same period in 2002. Other
interest income, which includes interest on federal funds sold, decreased $74,414, or 29.72% to $176,002 for the nine months ended September 30, 2003 when compared to the same period in 2002. Interest income on securities decreased $108,253, or
20.10%, to $430,423 for the nine months ended September 30, 2003 when compared to the same nine months ended September 30, 2002. Although the volume of loans and securities increased during the nine months ended September 30, 2003, the decline in
interest rates led to the overall decrease in interest earned on these assets. Interest expense decreased 26.94% from $2,044,645 for the nine months ended September 30, 2002 to $1,493,728 for the same period ended September 30, 2003. This decrease
was also attributable to the decline in the cost of funds. The net interest margin realized on earning assets increased from 3.88% for the nine months ended September 30, 2002 to 4.04% for the same period in 2003. The interest rate spread increased
from 3.43% as of September 30, 2002 to 3.73% at September 30, 2003.



Net
interest income increased $41,413, or 3.66%, to $1,173,102 for the quarter ending September 30, 2003 when compared to the same quarter ended September 30, 2002. Interest on loans and fees decreased $64,375 or 4.28% to $1,438,306 for the quarter
ended September 30, 2003 when compared to the same period in 2002. Other interest income decreased $25,663, or 30.22% from $84,912 for the quarter ended September 30, 2002 to $59,249 for the quarter ended September 30, 2003. The interest income on
securities for the quarter ending September 30, 2003 decreased $62,027, or 35.39% to $113,217 when compared to the same period in 2002. Interest expense decreased $193,478 to $437,670 for the quarter ended September 30, 2003 when compared to the
same period in 2002. This decrease in the cost of funds during the quarter led to the increase in net interest income when comparing the two quarters. The net interest margin realized on earning assets increased from 4.06% for the quarter ended
September 30, 2002 to 4.07% for the quarter ended September 30, 2003. The interest rate spread increased to 3.78% for the quarter ended September 30, 2003 from 3.62% for the quarter ended September 30, 2002.



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



Provision and Allowance for Loan Losses



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 nine months ended September 30, 2003, the provision charged to expense was $210,000. This was $30,000 less than for the comparable period in 2002. The
provision charged to expense for the quarter ended September 30, 2003 was $50,000 as compared to $90,000 for the same quarter a year ago. There are risks inherent in making all loans, including risks with respect to the period of time over which
loans may be repaid, risks resulting from changes in economic and industry conditions, risks inherent in dealing with individual borrowers, and, in the case of a collateralized loan, risks resulting from uncertainties about the future value of the
collateral. We maintain an allowance for loan losses based on, among other things, historical experience, an evaluation of economic conditions, and regular reviews of delinquencies and loan portfolio quality. Our judgment about the adequacy of the
allowance is based upon a number of assumptions about future events, which we believe to be reasonable, but which may not prove to be accurate. Thus, there is a risk that charge-offs in future periods could exceed the allowance for loan losses or
that substantial additional increases in the allowance for loan losses could be required. Additions to the allowance for loan losses would result in a decrease of our net income and, possibly, our capital.



We believe that the allowance for loan losses is adequate to absorb all estimated future risk
of loss inherent in the loan portfolio as of September 30, 2003.



Noninterest Income



Noninterest income during the nine
months ended September 30, 2003 was $412,833, an increase of $54,845 or 15.32% from the comparable period in 2002. Service charges on deposit accounts increased $38,654 or 14.28% from the period ended September 30, 2002 to $309,366 for the period
ended September 30, 2003. The increase is mainly attributable to the increase in noninterest bearing checking accounts. Other income increased 18.55% to $103,467 for the nine months ended September 30, 2003 when compared to the same period ended
September 30, 2002.



For the quarter ended September 30, 2003, noninterest
income increased $12,609 or 10.10% over the same period in 2002. This increase is primarily due to service charges, which increased 17.67% from the quarter ended September 30, 2002 to $112,477 for the quarter ended September 30, 2003. The increase
in noninterest bearing deposit accounts led to the increase in service charges.



Noninterest Expense



Total noninterest expense for the
nine months ended September 30, 2003 was $2,010,625, or 22.32%, higher than the nine months ended September 30, 2002. Salaries and employee benefits increased from $852,751 for the nine months ended September 30, 2002 to $1,057,165 for the nine
months ended September 30, 2003. This increase is primarily attributable to the addition of several full time employees and a loan officer and to normal annual pay raises. Other operating expenses increased $137,416, or 28.78%, to $614,866 for the
nine months ended September 30, 2003 when compared to the same period in 2002.



For the quarter ended September 30, 2003, noninterest expense increased $146,064, or 25.98%, over the same period in 2002. Salaries and employee benefits increased $69,394, or 23.84%, from $291,105 for the quarter ended September 30, 2002
to $360,499 for the quarter ended September 30, 2003. The increase was due to the same reasons discussed above.



Income Taxes



The income tax provision for the nine months ended September 30, 2003 was $520,000 as compared to $531,099 for the same period in 2002. This decrease was primarily due to the decrease in income before taxes which was
impacted by the decline in tax-exempt interest income. The effective tax rates were 31.67% and 32.07% for the nine months ended September 30, 2003 and September 30, 2002, respectively. The effective tax rates were 32.60% for both quarter ended
September 30, 2003 and September 30, 2002.



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



Net Income



The combination of the above factors resulted in net income for the nine months ended September 30, 2003 of $1,121,873 as compared to
$1,124,998 for the same period in 2002. This represents a decrease of $3,125, or .28%, over the same period in 2002. Net income for the quarter ended September 30, 2003 was $372,271, or 8.60% lower than for the same period in 2002.



Assets and Liabilities



During the first nine months of 2003, total assets increased $4,914,412, or 4.24% when
compared to December 31, 2002. Total investment securities increased $1,431,515 from December 31, 2002 to $17,477,323 at September 30, 2003. Loans increased $2,647,246, or 3.52%, to $77,822,867 at September 30, 2003. Total deposits also increased by
6.18%, or $6,345,541, from December 31, 2002 to $108,965,300 at September 30, 2003. Noninterest-bearing deposits increased 24.10% from December 31, 2002 to $11,545,854. Interest-bearing deposits increased $4,103,489, or 4.40%, to $97,419,446 at
September 30, 2003. This increase was attributable to normal growth of the Bank.



Loans



The demand for loans was strong in the
Companys subsidiary, the Bank of Walterboros, (the Bank) marketplace during the first nine months of 2003. Gross loans increased $2,647,246 or 3.52% during the period. Balances within the major loans receivable categories as
of September 30, 2003 and December 31, 2002 are as follows:



|                           |  | September 30,2003 |            | December 31,2002
|-------------------------- |  | ----------------- | ---------- | ----------------
|Real estate  construction |  | $                 | 2,998,360  |                 
|Real estate  mortgage     |  |                   | 33,657,487 |                 
|Commercial and industrial  |  |                   | 28,782,140 |                 
|Consumer and other         |  |                   | 12,384,880 |                 
|                           |  |                   |            |                 
|                           |  | $                 | 77,822,867 |                 
|                           |  |                   |            |                 



Risk Elements in the Loan
Portfolio



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



|                                                   |  | September 30, 2003 |           | December 31, 2002
|-------------------------------------------------- |  | ------------------ | --------- | -----------------
|Loans: Nonaccrual loans                            |  | $                  | 2,674,045 |                  
|Accruing loans more than 90 days past due          |  | $                  | 1,101     |                  
|                                                   |  |                   
|Loans identified by the internal review mechanism: |  |                    |           |                  
|Criticized                                         |  | $                  | 195,430   |                  
|Classified                                         |  | $                  | 2,559,639 |                  



Generally, a loan is placed on
nonaccrual status when it becomes 90 days past due as to principal or interest, or when management believes, after considering economic and business conditions and collection efforts, that the borrowers financial condition is such that
collection of the loan is doubtful.



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



Risk Elements in the Loan Portfolio continued



Criticized loans have potential weaknesses that deserve close attention and could, if
uncorrected, result in deterioration of the prospects for repayment or the Banks 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 the Bank will sustain a loss if the deficiencies are not corrected.



At September 30, 2003 real estate or other collateral secured the loans that were criticized and classified, with the exception of loans totaling approximately $81,000.
We believe that in the event of foreclosure on these loans the Company will not incur a significant loss on those loans because of the estimated market value of the related collateral. However, 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.



Activity in the Allowance for Loan Losses is as follows:



|                                                 |  | September 30, |           
|------------------------------------------------ |  | ------------- | ----------
|                                                 |  | 2003          |           
|Balance, January 1,                              |  | $             | 1,319,202 
|Provision for loan losses for the period         |  |               | 210,000   
|Net loans (charged-off) recovered for the period |  |               | (230,729  
|                                                 |  |               |           
|Balance, end of period                           |  | $             | 1,298,473 
|                                                 |  |               |           
|Gross loans outstanding, end of period           |  | $             | 77,822,867
|Allowance for loan losses to loans outstanding   |  |               | 1.67      



Assessing the adequacy of the
allowance for loan losses requires considerable judgment. Although there has been an increase in nonaccrual loans from December 31, 2002 to September 30, 2003, we believe loss exposure in the loan portfolio is identified, adequately reserved, and is
continuously monitored to ensure that changes in the borrowers conditions are promptly accounted for in the analysis of the allowance for loan losses. Accordingly, we believe the allowance as of September 30, 2003 is adequate, based on our
assessment of probable losses, and available facts and circumstances then prevailing.



Deposits



Total deposits increased $6,345,541 or 6.18%
from December 31, 2002. The largest change was an increase in savings deposits. Savings deposits increased $3,101,772 or 17.22% at September 30, 2003. Certificates of deposit increased $1,549,083 or 2.75% to 57,873,952 at September 30, 2003.
Expressed in percentages, interest-bearing deposits increased 4.40%. Noninterest-bearing demand deposits increased $2,242,052 or 24.10%. The increase is attributable to the normal growth of the Bank.



Balances within the major deposit categories as of September 30, 2003 and December 31, 2002
are as follows:



|                                    |  | September 30,2003 |             | December 31,2002
|----------------------------------- |  | ----------------- | ----------- | ----------------
|Noninterest-bearing demand deposits |  | $                 | 11,545,854  |                 
|Interest-bearing demand deposits    |  |                   | 18,429,689  |                 
|Savings deposits                    |  |                   | 21,115,805  |                 
|Certificates of deposit             |  |                   | 57,873,952  |                 
|                                    |  |                   |             |                 
|                                    |  | $                 | 108,965,300 |                 
|                                    |  |                   |             |                 



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



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 interest-bearing deposit accounts. The level of liquidity is measured by the loan-to-total funds ratio, which was at 71.22% at September 30, 2003 and 72.97% at December 31, 2002.



Securities available-for-sale, which totaled $14,617,254 at September 30, 2003, serves as a
ready source of liquidity. We also have lines of credit available with correspondent banks to purchase federal funds. At September 30, 2003, unused lines of credit totaled $4,040,000. 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 September 30, 2003, the available credit totaled $18,000,000, and there were no draws on this line.



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 footnotes to the consolidated financial statements at December 31, 2002 as filed on our
annual report on Form 10-K. 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.



Capital Resources



Total shareholders equity decreased from $12,249,177 at December 31, 2002 to
$10,931,582 at September 30, 2003. The decrease of $1,317,595 is primarily attributable to the purchase of treasury stock during the period of $2,358,620, the payment of dividends of $179,516, and the decline in net income of $3,125. These decreases
were offset by the sale of treasury stock of $167,715.



On June 30, 2003, the
Company purchased and redeemed 27,454 shares of its common stock, $5.00 par value from Mr. Robert Redfearn, a corporation controlled by Mr. Redfearn and members of Mr. Redfearns family (collectively, the Redfearn shares), for
$80.00 per share or $2,196,320 in the aggregate. The 27,454 shares repurchased by the Company represented 9.92% of the 276,734 shares of common stock outstanding immediately prior to the purchase. An outside consultant reported to the Board that the
repurchase of Mr. Redfearns shares would be accretive as to all other Company shareholders in terms of earning per share.



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%.



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



Capital Resources- continued



The following table summarizes the Banks risk-based capital at September 30, 2003:



|Shareholders equity                     |  | $ | 10,786,805 |  
|---------------------------------------- |  | - | ---------- | -
|Less: intangibles                        |  |   |           |  
|                                         |  |   |            |  
|Tier 1 capital                           |  |   | 10,786,805 |  
|                                         |  |   |            |  
|Plus: allowance for loan losses(1)       |  |   | 1,056,683  |  
|                                         |  |   |            |  
|Total capital                            |  | $ | 11,843,488 |  
|                                         |  |   |            |  
|Risk-weighted assets                     |  | $ | 84,534,704 |  
|                                         |  |   |            |  
|Risk-based capital ratios                |  |   |            |  
|Tier 1 capital (to risk-weighted assets) |  |   | 12.76      | %
|Total capital (to risk-weighted assets)  |  |   | 14.01      | %
|Tier 1 capital (to total average assets) |  |   | 8.96       | %



|(1) | limited to 1.25% of 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 $150,000,000 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 September 30, 2003, we had issued commitments to extend credit of $8,173,000 through various types of lending agreements. 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. We manage the credit risk on these commitments by subjecting them to normal underwriting and risk management processes. Past experience indicates
that many of these commitments will expire unused. However, through its various sources of liquidity we believe that the Company has the necessary resources to meet these obligations should the need arise.



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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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 6. Exhibits and Reports on Form 8-K



|(a) | Exhibits
|--- | --------



Exhibit Description



| | a) | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
| | -- | ------------------------------------------------------------------------------------------------------------------------------



| | b) | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. This exhibit I not filed for purposes of
Section 18 of the Securities Exchange Act of 1934 but is instead furnished as provided by applicable rules of the Securities and Exchange Commission.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(b) | Reports on Form 8-K  a report on Form 8-K was filed August 5, 2003 relating to the purchase of 27,454 shares of our common stock from Mr. Robert Redfearn.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------



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



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SIGNATURE



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: November 12, 2003 |  |  | 
|                        |  |  | 
|                        |  |  | 



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CERTIFICATIONS



|ExhibitNumber |  | Description                                                                                                                                                                                                                                                                                                                      
|------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|              | 
|31            |  | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                  
|              | 
|32            |  | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. This exhibit is not filed for purposes
of Section 18 of the Securities Exchange Act of 1934 but is instead furnished as provided by applicable rules of the Securities and Exchange Commission.



17