##### 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, 2004



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 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)



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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.



247,788 shares of
common stock, $5 par value, as of August 6, 2004



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



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##### Table of Contents

COMMUNITYCORP



Index



|                                                                                                                                    |  |         
|----------------------------------------------------------------------------------------------------------------------------------- |  | --------
|                                                                                                                                    | 
|                                                                                                                                    |  | Page No.
|                                                                                                                                    | 
|PART I. FINANCIAL INFORMATION                                                                                                       |  |         
|                                                                                                                                    | 
|Item 1. Financial Statements (Unaudited)                                                                                            |  |         
|                                                                                                                                    | 
|Condensed Consolidated Balance Sheets - June 30, 2004 and December 31, 2003                                                         |  | 3       
|                                                                                                                                    | 
|Condensed Consolidated Statements of Income - Six months ended June 30, 2004 and 2003 and three months ended June 30, 2004 and 2003 |  | 4       
|                                                                                                                                    | 
|Condensed Consolidated Statements of Shareholders Equity and Comprehensive Income - Six months ended June 30, 2004 and 2003        |  | 5       
|                                                                                                                                    | 
|Condensed Consolidated Statements of Cash Flows - Six months ended June 30, 2004 and 2003                                           |  | 6       
|                                                                                                                                    | 
|Notes to Condensed Consolidated Financial Statements                                                                                |  | 7       
|                                                                                                                                    | 
|Item 2.
Managements Discussion and Analysis of Plan of Operations                                                                  |  | 8-14    
|                                                                                                                                    | 
|Item 3.
Controls and Procedures                                                                                                     |  | 14      
|                                                                                                                                    | 
|PART II.
OTHER INFORMATION                                                                                                          |  |         
|                                                                                                                                    | 
|Item 4.
Submission of Matters to a Vote of Security Holders                                                                         |  | 14      
|                                                                                                                                    | 
|Item 6.
Exhibits and Reports on Form 8-K                                                                                            |  | 14      
|                                                                                                                                    | 
|(a) Exhibits                                                                                                                        |  | 14      
|                                                                                                                                    | 
|(b) Reports on Form 8-K                                                                                                             |  | 14      
|                                                                                                                                    | 
|Signature                                                                                                                           |  | 15      
|                                                                                                                                    | 
|Index to Exhibits                                                                                                                   |  | 16      





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##### Table of Contents

COMMUNITYCORP



Condensed
Consolidated Balance Sheets



|                                                                                                                                       |  |               |             |   |                  |   |             |  
|-------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ----------- | - | ---------------- | - | ----------- | -
|                                                                                                                                       |  | June 30, 2004 |             |   | December 31,2003 |  
|                                                                                                                                       |  | (Unaudited)   |             |   | (Audited)        |  
|Assets:                                                                                                                                |  |               |             |   |                  |   |             |  
|Cash and cash equivalents:                                                                                                             |  |               |             |   |                  |   |             |  
|Cash and due from banks                                                                                                                |  | $             | 4,835,504   |   |                  | $ | 4,862,983   |  
|Federal funds sold and securities purchased under agreements to resell                                                                 |  |               | 15,818,000  |   |                  |   | 16,367,000  |  
|                                                                                                                                       |  |               |             |   |                  |   |             |  
|Total cash and cash equivalents                                                                                                        |  |               | 20,653,504  |   |                  |   | 21,229,983  |  
|                                                                                                                                       |  |               |             |   |                  |   |             |  
|Time deposits with other banks                                                                                                         |  |               | 699,000     |   |                  |   | 499,000     |  
|                                                                                                                                       |  |              
|Investment securities:                                                                                                                 |  |               |             |   |                  |   |             |  
|Securities available-for-sale                                                                                                          |  |               | 22,396,706  |   |                  |   | 16,494,638  |  
|Nonmarketable equity securities                                                                                                        |  |               | 197,375     |   |                  |   | 214,375     |  
|Securities held-to-maturity (estimated market value of $2,258,435 and $2,764,762 at June 30, 2004 and December 31, 2003,
respectively) |  |               | 2,186,763   |   |                  |   | 2,644,498   |  
|                                                                                                                                       |  |               |             |   |                  |   |             |  
|Total investment securities                                                                                                            |  |               | 24,780,844  |   |                  |   | 19,353,511  |  
|                                                                                                                                       |  |               |             |   |                  |   |             |  
|Loans receivable                                                                                                                       |  |               | 79,746,055  |   |                  |   | 80,169,314  |  
|Less allowance for loan losses                                                                                                         |  |               | (1,389,004  | ) |                  |   | (1,270,062  | )
|                                                                                                                                       |  |               |             |   |                  |   |             |  
|Loans, net                                                                                                                             |  |               | 78,357,051  |   |                  |   | 78,899,252  |  
|                                                                                                                                       |  |              
|Accrued interest receivable                                                                                                            |  |               | 817,400     |   |                  |   | 817,309     |  
|Premises, furniture & equipment, net                                                                                                   |  |               | 2,696,437   |   |                  |   | 2,517,479   |  
|Other real estate owned                                                                                                                |  |               | 725,035     |   |                  |   | 725,035     |  
|Other assets                                                                                                                           |  |               | 661,456     |   |                  |   | 596,372     |  
|                                                                                                                                       |  |               |             |   |                  |   |             |  
|Total assets                                                                                                                           |  | $             | 129,390,727 |   |                  | $ | 124,637,941 |  
|                                                                                                                                       |  |               |             |   |                  |   |             |  
|Liabilities and Shareholders Equity:                                                                                                  |  |               |             |   |                  |   |             |  
|Liabilities:                                                                                                                           |  |               |             |   |                  |   |             |  
|Deposits:                                                                                                                              |  |               |             |   |                  |   |             |  
|Noninterest-bearing                                                                                                                    |  | $             | 14,458,353  |   |                  | $ | 13,952,334  |  
|Interest-bearing                                                                                                                       |  |               | 102,461,318 |   |                  |   | 98,631,492  |  
|                                                                                                                                       |  |               |             |   |                  |   |             |  
|                                                                                                                                       |  |               | 116,919,671 |   |                  |   | 112,583,826 |  
|                                                                                                                                       |  |              
|Short-term borrowings                                                                                                                  |  |               | 350,000     |   |                  |   | 450,000     |  
|Accrued interest payable                                                                                                               |  |               | 284,710     |   |                  |   | 295,934     |  
|Other liabilities                                                                                                                      |  |               | 216,597     |   |                  |   | 67,958      |  
|                                                                                                                                       |  |               |             |   |                  |   |             |  
|Total liabilities                                                                                                                      |  |               | 117,770,978 |   |                  |   | 113,397,718 |  
|                                                                                                                                       |  |               |             |   |                  |   |             |  
|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                                                                                                                        |  |               | 1,721,023   |   |                  |   | 1,731,708   |  
|Accumulated other comprehensive income (loss)                                                                                          |  |               | (183,687    | ) |                  |   | 64,545      |  
|Retained earnings                                                                                                                      |  |               | 11,844,204  |   |                  |   | 11,239,046  |  
|Treasury stock (52,212 shares in 2004 and 52,664 shares in 2003)                                                                       |  |               | (3,261,791  | ) |                  |   | (3,295,076  | )
|                                                                                                                                       |  |               |             |   |                  |   |             |  
|Total shareholders equity                                                                                                             |  |               | 11,619,749  |   |                  |   | 11,240,223  |  
|                                                                                                                                       |  |               |             |   |                  |   |             |  
|Total liabilities and shareholders equity                                                                                             |  | $             | 129,390,727 |   |                  | $ | 124,637,941 |  
|                                                                                                                                       |  |               |             |   |                  |   |             |  

See notes to condensed consolidated financial statements



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##### Table of Contents

COMMUNITYCORP



Condensed
Consolidated Statements of Income

(Unaudited)



|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|--------------------------------------------------- |  | ------------------------- | --------- | --------------------------- | - | --------- |  | ---- | --------- |  | - | ---------
|                                                    |  | Six Months Ended June 30, |           | Three Months Ended June 30,
|                                                    |  | 2004                      |           | 2003                        |   | 2004      |  | 2003
|Interest income:                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Loans, including fees                               |  | $                         | 2,893,430 |                             | $ | 2,898,662 |  | $    | 1,383,674 |  | $ | 1,454,382
|Securities                                          |  |                           | 306,463   |                             |   | 317,206   |  |      | 159,523   |  |   | 156,670  
|Other interest income                               |  |                           | 99,986    |                             |   | 116,753   |  |      | 52,720    |  |   | 56,473   
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Total                                               |  |                           | 3,299,879 |                             |   | 3,332,621 |  |      | 1,595,917 |  |   | 1,667,525
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Interest expense:                                   |  |                           |           |                             |   |           |  |      |           |  |   |          
|Deposit accounts                                    |  |                           | 763,163   |                             |   | 1,055,481 |  |      | 381,399   |  |   | 497,445  
|Other interest expense                              |  |                           | 170       |                             |   | 577       |  |      | 80        |  |   | 289      
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Total                                               |  |                           | 763,333   |                             |   | 1,056,058 |  |      | 381,479   |  |   | 497,734  
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Net interest income                                 |  |                           | 2,536,546 |                             |   | 2,276,563 |  |      | 1,214,438 |  |   | 1,169,791
|                                                    |  |                           |           |                            
|Provision for loan losses                           |  |                           | 220,951   |                             |   | 160,000   |  |      | 75,000    |  |   | 75,000   
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Net interest income after provision for loan losses |  |                           | 2,315,595 |                             |   | 2,116,563 |  |      | 1,139,438 |  |   | 1,094,791
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Noninterest income:                                 |  |                           |           |                             |   |           |  |      |           |  |   |          
|Service charges                                     |  |                           | 207,752   |                             |   | 196,889   |  |      | 110,336   |  |   | 99,376   
|Other income                                        |  |                           | 54,033    |                             |   | 78,522    |  |      | 22,726    |  |   | 24,529   
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Total                                               |  |                           | 261,785   |                             |   | 275,411   |  |      | 133,062   |  |   | 123,905  
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Noninterest expenses:                               |  |                           |           |                             |   |           |  |      |           |  |   |          
|Salaries and benefits                               |  |                           | 748,297   |                             |   | 696,666   |  |      | 363,043   |  |   | 361,977  
|Net occupancy expense                               |  |                           | 95,144    |                             |   | 60,756    |  |      | 42,360    |  |   | 14,295   
|Equipment expense                                   |  |                           | 152,638   |                             |   | 153,863   |  |      | 63,703    |  |   | 90,610   
|Other operating expenses                            |  |                           | 438,722   |                             |   | 391,087   |  |      | 209,192   |  |   | 200,873  
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Total                                               |  |                           | 1,434,801 |                             |   | 1,302,372 |  |      | 678,298   |  |   | 667,755  
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Income before taxes                                 |  |                           | 1,142,579 |                             |   | 1,089,602 |  |      | 594,202   |  |   | 550,941  
|                                                    |  |                           |           |                            
|Income tax provision                                |  |                           | 359,000   |                             |   | 340,000   |  |      | 187,000   |  |   | 175,000  
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Net income                                          |  | $                         | 783,579   |                             | $ | 749,602   |  | $    | 407,202   |  | $ | 375,941  
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Earnings per share:                                 |  |                           |           |                             |   |           |  |      |           |  |   |          
|Weighted average common shares outstanding          |  |                           | 247,675   |                             |   | 247,892   |  |      | 247,766   |  |   | 278,947  
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Net income per common share                         |  | $                         | 3.16      |                             | $ | 3.02      |  | $    | 1.64      |  | $ | 1.35     
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          

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, 2004 and 2003

(Unaudited)



|                                                     |  |              |  |                 |           |  |                                      |           |   |                   |   |          |                |  |   |            |   |  |   |            |   |  |   |            |  
|---------------------------------------------------- |  | ------------ |  | --------------- | --------- |  | ------------------------------------ | --------- | - | ----------------- | - | -------- | -------------- |  | - | ---------- | - |  | - | ---------- | - |  | - | ---------- | -
|                                                     |  | Common stock |  | Capital Surplus |           |  | AccumulatedOtherComprehensive Income |           |   | Retained Earnings |   |          | Treasury Stock |  |   | Total      |  
|                                                     |  | Shares       |  | Amount          |           |  |                                      |           |  
|Balance, December 31, 2002                           |  | 300,000      |  | $               | 1,500,000 |  | $                                    | 1,731,708 |   |                   | $ | 128,119  |                |  | $ | 9,993,521  |   |  | $ | (1,104,171 | ) |  | $ | 12,249,177 |  
|Cash dividends declared ($.65 per share)             |  |              |  |                 |           |  |                                      |           |   |                   |   |          |                |  |   | (179,516   | ) |  |   |            |   |  |   | (179,516   | )
|Net income for the period                            |  |              |  |                 |           |  |                                      |           |   |                   |   |          |                |  |   | 749,602    |   |  |   |            |   |  |   | 749,602    |  
|Other comprehensive income, net of taxes of $ 22,060 |  |              |  |                 |           |  |                                      |           |   |                   |   | 41,820   |                |  |   |            |   |  |   |            |   |  |   | 41,820     |  
|                                                     |  |              |  |                 |           |  |                                      |           |   |                   |   |          |                |  |   |            |   |  |   |            |   |  |   |            |  
|Comprehensive income                                 |  |              |  |                 |           |  |                                      |           |   |                   |   |          |                |  |   |            |   |  |   |            |   |  |   | 791,422    |  
|                                                     |  |              |  |                 |           |  |                                      |           |   |                   |   |          |                |  |   |            |   |  |   |            |   |  |   |            |  
|Sale of treasury stock                               |  |              |  |                 |           |  |                                      |           |   |                   |   |          |                |  |   |            |   |  |   | 167,715    |   |  |   | 167,715    |  
|Purchase of treasury stock                           |  |              |  |                 |           |  |                                      |           |   |                   |   |          |                |  |   |            |   |  |   | (2,326,970 | ) |  |   | (2,326,970 | )
|                                                     |  |              |  |                 |           |  |                                      |           |   |                   |   |          |                |  |   |            |   |  |   |            |   |  |   |            |  
|Balance, June 30, 2003                               |  | 300,000      |  | $               | 1,500,000 |  | $                                    | 1,731,708 |   |                   | $ | 169,939  |                |  | $ | 10,563,607 |   |  | $ | (3,263,426 | ) |  | $ | 10,701,828 |  
|                                                     |  |              |  |                 |           |  |                                      |           |   |                   |   |          |                |  |   |            |   |  |   |            |   |  |   |            |  
|Balance, December 31, 2003                           |  | 300,000      |  | $               | 1,500,000 |  | $                                    | 1,731,708 |   |                   | $ | 64,545   |                |  | $ | 11,239,046 |   |  | $ | (3,295,076 | ) |  | $ | 11,240,223 |  
|Cash dividends declared ($.72 per share)             |  |              |  |                 |           |  |                                      |           |   |                   |   |          |                |  |   | (178,421   | ) |  |   |            |   |  |   | (178,421   | )
|Net income for the period                            |  |              |  |                 |           |  |                                      |           |   |                   |   |          |                |  |   | 783,579    |   |  |   |            |   |  |   | 783,579    |  
|Other comprehensive loss, net of taxes of $130,748   |  |              |  |                 |           |  |                                      |           |   |                   |   | (248,232 | )              |  |   |            |   |  |   |            |   |  |   | (248,232   | )
|                                                     |  |              |  |                 |           |  |                                      |           |   |                   |   |          |                |  |   |            |   |  |   |            |   |  |   |            |  
|Comprehensive income                                 |  |              |  |                 |           |  |                                      |           |   |                   |   |          |                |  |   |            |   |  |   |            |   |  |   | 535,347    |  
|                                                     |  |              |  |                 |           |  |                                      |           |   |                   |   |          |                |  |   |            |   |  |   |            |   |  |   |            |  
|Sale of treasury stock                               |  |              |  |                 |           |  |                                      | (10,685   | ) |                   |   |          |                |  |   |            |   |  |   | 53,285     |   |  |   | 42,600     |  
|Purchase of treasury stock                           |  |              |  |                 |           |  |                                      |           |   |                   |   |          |                |  |   |            |   |  |   | (20,000    | ) |  |   | (20,000    | )
|                                                     |  |              |  |                 |           |  |                                      |           |   |                   |   |          |                |  |   |            |   |  |   |            |   |  |   |            |  
|Balance, June 30, 2004                               |  | 300,000      |  | $               | 1,500,000 |  | $                                    | 1,721,023 |   |                   | $ | (183,687 | )              |  | $ | 11,844,204 |   |  | $ | (3,261,791 | ) |  | $ | 11,619,749 |  
|                                                     |  |              |  |                 |           |  |                                      |           |   |                   |   |          |                |  |   |            |   |  |   |            |   |  |   |            |  



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, |            
|                                                                                  |  | 2004                      |             |   | 2003 |  
|Cash flows from operating activities:                                             |  |                           |             |   |      |   |            |  
|Net income                                                                        |  | $                         | 783,579     |   |      | $ | 749,602    |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                           |             |   |      |   |            |  
|Depreciation                                                                      |  |                           | 105,244     |   |      |   | 103,294    |  
|Provision for possible loan losses                                                |  |                           | 220,951     |   |      |   | 160,000    |  
|Amortization less accretion on investments                                        |  |                           | 123,963     |   |      |   | 25,390     |  
|Amortization of deferred loan costs                                               |  |                           | 2,111       |   |      |   | 741        |  
|(Increase) decrease in interest receivable                                        |  |                           | (91         | ) |      |   | 5,642      |  
|Decrease in interest payable                                                      |  |                           | (11,224     | ) |      |   | (28,296    | )
|Increase in other assets                                                          |  |                           | (65,084     | ) |      |   | (109,006   | )
|Increase in other liabilities                                                     |  |                           | 279,387     |   |      |   | 90,136     |  
|                                                                                  |  |                           |             |   |      |   |            |  
|Net cash provided by operating activities                                         |  |                           | 1,438,836   |   |      |   | 997,503    |  
|                                                                                  |  |                           |             |   |      |   |            |  
|Cash flows from investing activities:                                             |  |                           |             |   |      |   |            |  
|Net (increase) decrease in loans to customers                                     |  |                           | 319,139     |   |      |   | (3,262,432 | )
|Purchases of securities available-for-sale                                        |  |                           | (12,553,311 | ) |      |   | (9,335,949 | )
|Maturities of securities available-for-sale                                       |  |                           | 6,148,350   |   |      |   | 10,682,429 |  
|Maturities of securities held-to-maturity                                         |  |                           | 457,685     |   |      |   | 392,262    |  
|Purchases of time deposits with other banks                                       |  |                           | (200,000    | ) |      |   | (200,000   | )
|Decrease in nonmarketable equity securities                                       |  |                           | 17,000      |   |      |   | 120,500    |  
|Purchases of premises and equipment                                               |  |                           | (284,202    | ) |      |   | (140,692   | )
|                                                                                  |  |                           |             |   |      |   |            |  
|Net cash used by investing activities                                             |  |                           | (6,095,339  | ) |      |   | (1,743,882 | )
|                                                                                  |  |                           |             |   |      |   |            |  
|Cash flows from financing activities:                                             |  |                           |             |   |      |   |            |  
|Net increase in deposit accounts                                                  |  |                           | 4,335,845   |   |      |   | 6,920,072  |  
|Decrease in short-term borrowings                                                 |  |                           | (100,000    | ) |      |   |           |  
|Dividends paid                                                                    |  |                           | (178,421    | ) |      |   | (179,516   | )
|Sale of treasury stock                                                            |  |                           | 42,600      |   |      |   | 167,715    |  
|Purchase of treasury stock                                                        |  |                           | (20,000     | ) |      |   | (2,326,970 | )
|                                                                                  |  |                           |             |   |      |   |            |  
|Net cash provided by financing activities                                         |  |                           | 4,080,024   |   |      |   | 4,581,301  |  
|                                                                                  |  |                           |             |   |      |   |            |  
|Net increase (decrease) in cash and cash equivalents                              |  |                           | (576,479    | ) |      |   | 3,834,922  |  
|                                                                                  |  |                          
|Cash and cash equivalents, beginning of period                                    |  |                           | 21,229,983  |   |      |   | 21,824,998 |  
|                                                                                  |  |                           |             |   |      |   |            |  
|Cash and cash equivalents, end of period                                          |  | $                         | 20,653,504  |   |      | $ | 25,659,920 |  
|                                                                                  |  |                           |             |   |      |   |            |  
|Cash paid during the period for:                                                  |  |                           |             |   |      |   |            |  
|                                                                                  |  |                          
|Income taxes                                                                      |  | $                         | 155,500     |   |      | $ | 433,445    |  
|Interest                                                                          |  | $                         | 774,557     |   |      | $ | 1,084,354  |  

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, 2004 and for the interim periods ended June 30, 2004 and 2003 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, 2003 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 2003 Annual Report.



NOTE 2 - COMPREHENSIVE INCOME



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



|                                                                   |  |               |          |   |                  |   |         |                   |  |   |          |  
|------------------------------------------------------------------ |  | ------------- | -------- | - | ---------------- | - | ------- | ----------------- |  | - | -------- | -
|                                                                   |  | Pre-taxAmount |          |   | (Expense)Benefit |   |         | Net-of-tax Amount | 
|For the Six Months Ended June 30, 2004:                            |  |               |          |   |                  |   |         |                   |  |   |          |  
|Unrealized losses on securities available-for-sale                 |  | $             | (378,980 | ) |                  | $ | 130,748 |                   |  | $ | (248,232 | )
|Plus: reclassification adjustment for gains realized in net income |  |               |         |   |                  |   |        |                   |  |   |         |  
|                                                                   |  |               |          |   |                  |   |         |                   |  |   |          |  
|Net unrealized losses on securities                                |  |               | (378,980 | ) |                  |   | 130,748 |                   |  |   | (248,232 | )
|                                                                   |  |               |          |   |                  |   |         |                   |  |   |          |  
|Other comprehensive loss                                           |  | $             | (378,980 | ) |                  | $ | 130,748 |                   |  | $ | (248,232 | )
|                                                                   |  |               |          |   |                  |   |         |                   |  |   |          |  
|For the Six Months Ended June 30, 2003:                            |  |               |          |   |                  |   |         |                   |  |   |          |  
|Unrealized gains on securities available-for-sale                  |  | $             | 63,880   |   |                  | $ | (22,060 | )                 |  | $ | 41,820   |  
|Plus: reclassification adjustment for gains realized in net income |  |               |         |   |                  |   |        |                   |  |   |         |  
|                                                                   |  |               |          |   |                  |   |         |                   |  |   |          |  
|Net unrealized gains on securities                                 |  |               | 63,880   |   |                  |   | (22,060 | )                 |  |   | 41,820   |  
|                                                                   |  |               |          |   |                  |   |         |                   |  |   |          |  
|Other comprehensive income                                         |  | $             | 63,880   |   |                  | $ | (22,060 | )                 |  | $ | 41,820   |  
|                                                                   |  |               |          |   |                  |   |         |                   |  |   |          |  
|For the Three Months Ended June 30, 2004:                          |  |               |          |   |                  |   |         |                   |  |   |          |  
|Unrealized losses on securities available-for-sale                 |  | $             | (520,435 | ) |                  | $ | 179,550 |                   |  | $ | (340,885 | )
|Plus: reclassification adjustment for gains realized in net income |  |               |         |   |                  |   |        |                   |  |   |         |  
|                                                                   |  |               |          |   |                  |   |         |                   |  |   |          |  
|Net unrealized losses on securities                                |  |               | (520,435 | ) |                  |   | 179,550 |                   |  |   | (340,885 | )
|                                                                   |  |               |          |   |                  |   |         |                   |  |   |          |  
|Other comprehensive loss                                           |  | $             | (520,435 | ) |                  | $ | 179,550 |                   |  | $ | (340,885 | )
|                                                                   |  |               |          |   |                  |   |         |                   |  |   |          |  
|For the Three Months Ended June 30, 2003:                          |  |               |          |   |                  |   |         |                   |  |   |          |  
|Unrealized gains on securities available-for-sale                  |  | $             | 20,644   |   |                  | $ | (7,123  | )                 |  | $ | 13,521   |  
|Plus: reclassification adjustment for gains realized in net income |  |               |         |   |                  |   |        |                   |  |   |         |  
|                                                                   |  |               |          |   |                  |   |         |                   |  |   |          |  
|Net unrealized gains on securities                                 |  |               | 20,644   |   |                  |   | (7,123  | )                 |  |   | 13,521   |  
|                                                                   |  |               |          |   |                  |   |         |                   |  |   |          |  
|Other comprehensive income                                         |  | $             | 20,644   |   |                  | $ | (7,123  | )                 |  | $ | 13,521   |  
|                                                                   |  |               |          |   |                  |   |         |                   |  |   |          |  



Accumulated other comprehensive income
consists solely of the unrealized gain 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, 2004 compared to December 31, 2003, and the results of operations for the three and six months ended June 30, 2004 compared to the
three and six months ended June 30, 2003. 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, 2004, was $2,536,546, compared to $2,276,563 for the same period last year, an
increase of 11.42%. For the quarter ended June 30, 2004 net interest income was $1,214,438, compared to $1,169,791 for the quarter ended June 30, 2003 an increase of 3.82%. The increase in both periods was the result of increased balances of earning
assets and the impact of lower interest rates on our interest-bearing liabilities, offset partially by the effect of lower interest rates on earning assets.



For the six months ended June 30, 2004, average earning assets totaled $118,084,611 with an annualized average yield of 5.60%, compared to $114,530,347 and 5.87%,
respectively, for the same period last year. Average interest-bearing liabilities totaled $99,312,071 with an annualized average cost of 1.54% for the six months ended June 30, 2004, compared to $96,590,495 and 2.20%, respectively, for the same
period last year. For the quarter ended June 30, 2004, average earning assets totaled $117,392,107 with an annualized average yield of 5.45%, compared to $114,084,085 and 5.86%, respectively, for the same period last year. Average interest-bearing
liabilities totaled $99,047,760 with an annualized average cost of 1.54% for the six months ended June 30, 2004, compared to $96,491,115 and 2.07%, respectively, for the same period last year.



Net interest margin was 4.31% and 4.01% for the six months ended June 30, 2004 and 2003,
respectively. For the quarter ended June 30, 2004 and 2003, net interest margin was 4.15% and 4.11%, respectively. The increase in net interest margin in both periods is due primarily to the reduction in the cost of our interest bearing liabilities.



Our annualized yield on earning assets declined 27 and 41 basis points during
the six months and quarter ended June 30, 2004, respectively, from the annualized yield on earnings assets for the same periods last year. These declines were offset by the decline of 66 and 53 basis points of the annualized average cost of our
interest-bearing liabilities during the six months and quarter ended June 30, 2004, respectively, from the annualized average cost of our interest-bearing liabilities for the same periods last year. The reduction in yields that we realized in both
periods is reflective of the declining interest rate environment. 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 67.20% and 67.22% of average earning assets for the six
months ended June 30, 2004 and 2003, respectively, and 67.54%, and 67.36% for the quarter ended June 30, 2004 and 2003, respectively. Loan interest income for the six months ended June 30, 2004 totaled $2,893,430, compared to $2,898,662 for the same
period in 2003. The annualized average yield on loans was 7.31% and 7.59% for the six months ended June 30, 2004 and 2003, respectively. Loan interest income for the quarter ended June 30, 2004 totaled $1,383,674, compared to $1,454,382 for the same
period in 2003. For the quarter ended June 30, 2004 and 2003 the annualized average yield on loans was 7.00% and 7.59%, respectively. Average balances of loans increased to $79,351,194 during the six months ended June 30, 2004, an increase of
$2,364,163 over the average of $76,987,031 during the comparable period in 2003. For the quarter ended June 30, 2004 the average balances of loans increased by $2,436,900 over the average balances of loans of $76,844,801 for the quarter ended June
30, 2003. The increase in net interest income for both the six months and the quarter ended June 30, 2004 was mainly attributable to the decrease in the cost of our interest bearing liabilities.



Investment securities averaged $19,812,905, or 16.78% of average earning assets, for the six
months ended June 30, 2004, compared to $16,814,775 or 14.74% of average earning assets, for the same period in 2003. For the quarter ended June 30, 2004, investment securities averaged $19,099,759, or 16.27%, of average earnings assets compared to
$16,942,708 or 14.85% of average earnings assets. Interest earned on investment securities amounted to $306,463 for the six months ended June 30, 2004, compared to $317,206 for the same period last year. For the quarter ended June 30, 2004, interest
earned on investment securities amounted to $159,523 compared to $156,670 for the same period last year. Investment securities yielded 3.18% and 3.77% for the six months ended June 30, 2004 and 2003, respectively. For the quarter ended June 30, 2004
and 2003 the yields on investment securities was 3.35% and 3.70%, respectively. The decline in the yield on investment securities is due to securities being called, whereby the proceeds were reinvested in lower prevailing interest rates securities.



Total interest expense for the six months ended June 30, 2004 and 2003 was
$763,333 and $1,056,058, respectively. For the quarter ended June 30, 2004 and 2003, interest expense was $381,479 and 497,734, respectively. The largest component of interest expense is interest on deposit accounts. Interest expense for deposit
accounts was $763,163 and $1,055,481, for the six months ended June 30, 2004 and 2003, respectively. The average balance of deposits increased to $98,985,780 during the six months ended June 30, 2004 from $96,257,180 during the same period last
year. During the quarter ended June 30, 2004 the average balances of deposits increased to $98,709,175 from $96,160,568 for the same period last year. The annualized average cost of deposits was 1.55% for the six months ended June 30, 2004, compared
to 2.21% for the same period in 2003. For the quarter ended June 30, 2004 and 2003, the annualized average cost of deposits was 1.55% and 2.07%, respectively. The decrease in the average cost of deposits in both periods was due to the decline in
market interest rates, which has impacted the rates we offer to our depositors.



For the six months ended June 30, 2004 and 2003, the total annualized average cost of funds was 1.54% and 2.20%, respectively. The overall cost of funds was 1.54% and 2.07 % for the quarter ended June 30, 2004, and 2003, respectively.



Provision and Allowance for Loan Losses



The provision for loan losses is the charge to operating earnings that management believes
is necessary to maintain the allowance for possible loan losses at an adequate level. For the six months ended June 30, 2004, the provision charged to expense was $220,951, as compared to $160,000 for the same period in 2003. For the quarters ended
June 30, 2004 and 2003, the provision charged to expense was $75,000. 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 June 30, 2004.



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COMMUNITYCORP



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



Noninterest Income



Noninterest income during the six months ended June 30, 2004 was $261,785, a decrease of
$13,626 or 4.95% from the comparable period in 2003. Service charges on deposit accounts increased $10,863 from the period ended June 30, 2003 to $207,752 for the period ended June 30, 2004. The increase is mainly attributable to the increase in
demand deposit accounts. Other income decreased 31.19% to $54,033 for the six months ended June 30, 2004 when compared to the same period ended June 30, 2003. The decrease in other income was mainly due to a refund of overpayment of property taxes
in prior years of approximately $20,000 received in the first quarter of 2003.



For the quarter ended June 30, 2004, noninterest income increased $9,157 or 7.39% over the same period in 2003. This increase is primarily due to service charges, which increased 11.03% from the quarter ended June 30, 2003 to $110,336 for
the quarter ended June 30, 2004, which was slightly offset by a decrease of $1,803 or 7.35% in other income from the quarter ended June 30, 2003 to $22,726 for the quarter ended June 30, 2004.



Noninterest Expense



Total noninterest expense for the six months ended June 30, 2004 increased $132,429 or 10.17% over the same period in 2003. Salaries and
employee benefits increased $51,631 from the six months ended June 30, 2003 to $748,297 for the six months ended June 30, 2004. This increase is primarily attributable to the addition of a branch manager and a mortgage loan processor plus normal
salary increases. Other operating expenses increased $47,635 or 12.18% to $438,722 for the six months ended June 30, 2004 when compared to the same period in 2003. This increase is largely due to an increase in legal fees of approximately $34,000
relating to loan collections. Net occupancy and equipment expense increased $33,163 for the six months ended June 30, 2004 to $247,782. The increase is mainly attributable to depreciation expense on new equipment and the implementation of internet
banking during 2003.



For the quarter ended June 30, 2004, noninterest expense
increased $10,543 or 1.58% over the same period in 2003. This increase was largely attributable to the increase in other operating expenses, which increased $8,319 or 4.14% over the same period in 2003. The total of all other categories of
noninterest expense increased only slightly.



Income Taxes



The income tax provision for the six months ended June 30, 2004 was $359,000 as compared
to $340,000 for the same period in 2003. This increase was primarily a result of the increase in income before taxes. The effective tax rates were 31.42% and 31.20% for the six months ended June 30, 2004 and June 30, 2003, respectively. The
effective tax rates were 31.47% and 31.76% for the quarter ended June 30, 2004 and June 30, 2003, respectively.



Net Income



The combination of the above factors resulted in net income for the six months ended June 30, 2004 of $783,579 as compared to $749,602 for the same period in 2003. This represents an increase of $33,977 or 4.53% over
the same period in 2003. Net income for the quarter ended June 30, 2004 increased $31,261 or 8.32% over the same period in 2003.



Assets and Liabilities



During the first six months of 2004, total assets increased $4,752,786, or 3.81%, when compared to December 31, 2003. This increase was primarily a result of an increase in investments of $5,427,333, or 28.04% from
the corresponding amount for December 31, 2003. This increase was reduced by the decrease in net loans of $542,201 or .69% from December 31, 2003 to $78,357,051 at June 30, 2004, plus the decrease in federal funds sold of $549,000 or 3.35% from
December 31, 2003.



Total deposits increased by 3.85%, or $4,335,845, from
December 31, 2003 to $116,919,671 at June 30, 2004. Noninterest-bearing deposits increased $506,019 or 3.63% to $14,458,353 at June 30, 2004 and interest-bearing deposits increased $3,829,826 or 3.88% to $102,461,318 at June 30, 2004. The increase
in deposits was the result of the continual growth of the Bank.



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.



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##### Table of Contents

COMMUNITYCORP



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



Loans



Our loan portfolio during the six months ended June 30, 2004 decreased slightly due to
payout of several large loans. Gross loans decreased $423,259 or .53% during the period. Balances within the major loans receivable categories as of June 30, 2004 and December 31, 2003 are as follows:



|                           |  |               |            |                   |   |           
|-------------------------- |  | ------------- | ---------- | ----------------- | - | ----------
|                           |  | June 30, 2004 |            | December 31, 2003
|Real estate  construction |  | $             | 3,115,064  |                   | $ | 2,011,177 
|Real estate  mortgage     |  |               | 36,593,534 |                   |   | 36,813,674
|Commercial and industrial  |  |               | 29,142,968 |                   |   | 30,668,580
|Consumer and other         |  |               | 10,894,489 |                   |   | 10,675,883
|                           |  |               |            |                   |   |           
|                           |  | $             | 79,746,055 |                   | $ | 80,169,314
|                           |  |               |            |                   |   |           



Risk Elements in the Loan Portfolio



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



|                                                   |  |          |           |      |   |          
|-------------------------------------------------- |  | -------- | --------- | ---- | - | ---------
|                                                   |  | June 30,
|                                                   |  | 2004     |           | 2003
|Nonaccrual loans                                   |  | $        | 2,358,961 |      | $ | 3,371,964
|                                                   |  |         
|Accruing loans more than 90 days past due          |  | $        | 1,142     |      | $ | 2,435    
|                                                   |  |         
|Loans identified by the internal review mechanism: |  |          |           |      |   |          
|Criticized                                         |  | $        | 1,130,623 |      | $ | 2,295,329
|Classified                                         |  | $        | 1,915,959 |      | $ | 1,296,144



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, 2004 real estate or other collateral secured majority of the loans that were criticized and classified. We believe that in the event of foreclosure on these
loans we 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.



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, |           
|                                                 |  | 2004     |            |   | 2003 |  
|Balance, January 1,                              |  | $        | 1,270,062  |   |      | $ | 1,319,202  |  
|Provision for loan losses for the period         |  |          | 220,951    |   |      |   | 160,000    |  
|Net loans (charged-off) recovered for the period |  |          | (102,009   | ) |      |   | (147,413   | )
|                                                 |  |          |            |   |      |   |            |  
|Balance, end of period                           |  | $        | 1,389,004  |   |      | $ | 1,331,789  |  
|                                                 |  |          |            |   |      |   |            |  
|Gross loans outstanding, end of period           |  | $        | 79,746,055 |   |      | $ | 78,289,899 |  
|                                                 |  |         
|Allowance for loan losses to loans outstanding   |  |          | 1.74       | % |      |   | 1.70       | %



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##### Table of Contents

COMMUNITYCORP



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



Deposits



Total deposits increased $4,335,845 or 3.85% from December 31, 2003. The largest change was an increase in interest-bearing deposits.
Interest-bearing deposits increased $3,829,826 to $102,461,318 at June 30, 2004. Non interest-bearing deposits increased $506,019 to $14,458,353 at June 30, 2004. Expressed in percentages, noninterest-bearing deposits increased 3.63%,
interest-bearing deposits increased 3.88%. The increases were attributable to normal growth of the Bank.



Balances within the major deposit categories are as follows:



|                                    |  |               |             |                  |   |            
|----------------------------------- |  | ------------- | ----------- | ---------------- | - | -----------
|                                    |  | June 30, 2004 |             | December 31,2003
|Noninterest-bearing demand deposits |  | $             | 14,458,353  |                  | $ | 13,952,334 
|Interest-bearing demand deposits    |  |               | 20,700,470  |                  |   | 22,836,817 
|Savings deposits                    |  |               | 26,265,041  |                  |   | 21,945,671 
|Certificates of deposits            |  |               | 55,495,807  |                  |   | 53,849,004 
|                                    |  |               |             |                  |   |            
|                                    |  | $             | 116,919,671 |                  | $ | 112,583,826
|                                    |  |               |             |                  |   |            



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. The level of liquidity is measured by the loan-to-total funds ratio, which was at 68.00% at June 30, 2004 and 70.93% at December 31, 2003.



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, 2004 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, 2004, the
available credit totaled $19,408,609, and there were not draws on this line.



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. 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, 2004 Compared to the Six Months Ended June 30, 2004  Net Interest Income, our net interest margin has increased during the current year. If net interest margin were to decline, net income will likely decline
also.



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##### Table of Contents

COMMUNITYCORP



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



Capital Resources



Total shareholders equity increased from $11,240,223 at December 31, 2003 to $11,619,749 at June 30, 2004. The net increase of
$379,526 is attributable to earnings for the period of $783,579 before the payment of $178,421 in cash dividends, the net decrease for the period of $248,232 in the fair value of securities available-for-sale and the net increase of $22,600 from the
sales and purchases of treasury stock.



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, 2004:



|                                             |  |   |            |  
|-------------------------------------------- |  | - | ---------- | -
|Shareholders equity                         |  | $ | 11,657,475 |  
|Less: intangibles                            |  |   |           |  
|                                             |  |   |            |  
|Tier 1 capital                               |  |   | 11,657,475 |  
|Plus: allowance for loan losses (1)          |  |   | 1,115,525  |  
|                                             |  |   |            |  
|Total capital                                |  | $ | 12,773,000 |  
|                                             |  |   |            |  
|Net risk-weighted assets                     |  | $ | 89,242,000 |  
|                                             |  |   |            |  
|Risk-based capital ratios                    |  |   |            |  
|Tier 1 capital (to risk-weighted assets)     |  |   | 13.06      | %
|Total capital (to risk-weighted assets)      |  |   | 14.32      | %
|Tier 1 capital (to quarterly average assets) |  |   | 9.20       | %

---

|(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 $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 June 30, 2004, we had issued commitments to extend credit of $5,971,000 and standby letters of credit of $1,014,000 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, 2003 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 27, 2004, the Company held its Annual Meeting of Shareholders for the purpose of electing two 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 200,760 shareholders voting for the nominees out of a total 247,738 outstanding shareholders. There were no abstention votes or no votes against their election. There were no votes withheld.



Item 6. Exhibits and Reports on Form 8-K



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, 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



|                      |  |     |  |                                    
|--------------------- |  | --- |  | -----------------------------------
|                      |  | By: |  | /s/ W. ROGER CROOK                 
|                      |  |     |  | W. Roger Crook                     
|                      |  |     |  | President & Chief Executive Officer
|                      |  |    
|Date: August 11, 2004 |  | 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  



16