##### Table of Contents





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 10-Q





(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, 2010

or



| ̈ | Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ----------------------------------------------------------------------------------------

For the Transition Period from 
to

Commission File Number 33-76644





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

(Issurer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 by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to
Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    YES   ̈    NO    ̈

Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of large accelerated filer, accelerated filer, and
smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):



|                        |  |                                                  |  |                           |  |  
|----------------------- |  | ------------------------------------------------ |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈                                                |  | Accelerated filer         |  |  ̈
|                        |  |                                                  | 
|Non-accelerated filer   |  |  ̈  (Do not check if a smaller reporting company) |  | Smaller reporting company |  | x

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

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

233,003 shares of common stock, $5.00 par value, as of October 31, 2010









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##### Table of Contents



Index



|                                         |  |                                                                                                                                                     |    |  |    | 
|---------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------- | -- |  | -- | 
|PART I. FINANCIAL INFORMATION            |  | Page No.                                                                                                                                            |   
|                                         | 
|Item 1. Financial Statements (Unaudited) |  |                                                                                                                                                     |    | 
|                                         |  |                                                                                                                                                    
|                                         |  | Condensed Consolidated Balance Sheets - September 30, 2010 and December 31, 2009
(audited)                                                          |    |  | 3  | 
|                                         |  |                                                                                                                                                    
|                                         |  | Condensed Consolidated Statements of Operations - Nine months ended September 30, 2010 and 2009 and three months
 ended September 30, 2010 and 2009 |    |  | 4  | 
|                                         |  |                                                                                                                                                    
|                                         |  | Condensed Consolidated Statements of Shareholders Equity and Comprehensive Income (Loss)- Nine months
 ended September 30, 2010 and 2009           |    |  | 5  | 
|                                         |  |                                                                                                                                                    
|                                         |  | Condensed Consolidated Statements of Cash Flows - Nine months ended September 30, 2010 and
2009                                                     |    |  | 6  | 
|                                         |  |                                                                                                                                                    
|                                         |  | Notes to Condensed Consolidated Financial Statements                                                                                                |    |  | 7  | 
|                                         |  |                                                                                                                                                    
|Item 2.                                  |  | Managements Discussion and Analysis of Financial Condition and Results of
Operations                                                               |    |  | 14 | 
|                                         |  |                                                                                                                                                    
|Item 3                                   |  | Quantitative and Qualitative Disclosure About Market Risk                                                                                           |    |  | 21 | 
|                                         |  |                                                                                                                                                    
|Item 4                                   |  | Controls and Procedures                                                                                                                             |    |  | 21 | 
|                                         | 
|PART II. - OTHER INFORMATION             |  |                                                                                                                                                     |    | 
|                                         |  |                                                                                                                                                    
|Item 1                                   |  | Legal Proceedings                                                                                                                                   |    |  | 22 | 
|                                         |  |                                                                                                                                                    
|Item 1A                                  |  | Risk Factors                                                                                                                                        |    |  | 22 | 
|                                         |  |                                                                                                                                                    
|Item 2                                   |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                         |    |  | 22 | 
|                                         |  |                                                                                                                                                    
|Item 3                                   |  | Defaults Under Senior Securities                                                                                                                    |    |  | 22 | 
|                                         |  |                                                                                                                                                    
|Item 4                                   |  | Removed and Reserved                                                                                                                                |    |  | 22 | 
|                                         |  |                                                                                                                                                    
|Item 5                                   |  | Other Information                                                                                                                                   |    |  | 22 | 
|                                         |  |                                                                                                                                                    
|Item 6                                   |  | Exhibits                                                                                                                                            |    |  | 23 | 
|                                         | 
|Signatures                               |  |                                                                                                                                                     | 23 | 



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##### Table of Contents



PART I.
 Financial Information

Item 1. Financial Statements

COMMUNITYCORP

Condensed Consolidated Balance Sheets



|                                                                                                                             |  |                   |             |   |                  |   |             |  
|---------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ----------- | - | ---------------- | - | ----------- | -
|                                                                                                                             |  | September 30,2010 |             |   | December 31,2009 |  
|                                                                                                                             |  | (Unaudited)       |             |   | (Audited)        |  
|Assets:                                                                                                                      |  |                   |             |   |                  |   |             |  
|Cash and cash equivalents:                                                                                                   |  |                   |             |   |                  |   |             |  
|Cash and due from banks                                                                                                      |  | $                 | 4,059,456   |   |                  | $ | 14,589,266  |  
|Interest-bearing deposits with other banks                                                                                   |  |                   | 13,920,331  |   |                  |   | 1,075,000   |  
|Federal funds sold                                                                                                           |  |                   | 3,979,000   |   |                  |   | 2,030,000   |  
|                                                                                                                             |  |                   |             |   |                  |   |             |  
|Total cash and cash equivalents                                                                                              |  |                   | 21,958,787  |   |                  |   | 17,694,266  |  
|                                                                                                                             |  |                   |             |   |                  |   |             |  
|                                                                                                                             |  |                  
|Time deposits with other banks                                                                                               |  |                   | 1,250,000   |   |                  |   | 1,500,000   |  
|                                                                                                                             |  |                  
|Investment securities:                                                                                                       |  |                   |             |   |                  |   |             |  
|Available-for-sale                                                                                                           |  |                   | 24,129,825  |   |                  |   | 24,620,177  |  
|Held-to-maturity (estimated market value of $314,851 and $572,115 at September 30, 2010 and December 31, 2009,
respectively) |  |                   | 299,876     |   |                  |   | 564,821     |  
|Nonmarketable equity securities                                                                                              |  |                   | 302,300     |   |                  |   | 302,300     |  
|                                                                                                                             |  |                   |             |   |                  |   |             |  
|Total investment securities                                                                                                  |  |                   | 24,732,001  |   |                  |   | 25,487,298  |  
|                                                                                                                             |  |                   |             |   |                  |   |             |  
|                                                                                                                             |  |                  
|Loans receivable                                                                                                             |  |                   | 108,183,919 |   |                  |   | 116,458,480 |  
|Less allowance for loan losses                                                                                               |  |                   | (2,058,795  | ) |                  |   | (2,053,340  | )
|                                                                                                                             |  |                   |             |   |                  |   |             |  
|Loans, net                                                                                                                   |  |                   | 106,125,124 |   |                  |   | 114,405,140 |  
|                                                                                                                             |  |                  
|Premises, furniture & equipment, net                                                                                         |  |                   | 2,949,951   |   |                  |   | 3,089,929   |  
|Accrued interest receivable                                                                                                  |  |                   | 843,790     |   |                  |   | 978,500     |  
|Other real estate owned                                                                                                      |  |                   | 1,488,357   |   |                  |   | 340,000     |  
|Other assets                                                                                                                 |  |                   | 1,429,466   |   |                  |   | 1,897,922   |  
|                                                                                                                             |  |                   |             |   |                  |   |             |  
|                                                                                                                             |  |                  
|Total assets                                                                                                                 |  | $                 | 160,777,476 |   |                  | $ | 165,393,055 |  
|                                                                                                                             |  |                   |             |   |                  |   |             |  
|                                                                                                                             |  |                  
|Liabilities and Shareholders Equity:                                                                                        |  |                   |             |   |                  |   |             |  
|Liabilities:                                                                                                                 |  |                   |             |   |                  |   |             |  
|Deposits:                                                                                                                    |  |                   |             |   |                  |   |             |  
|Noninterest-bearing                                                                                                          |  | $                 | 13,748,910  |   |                  | $ | 14,163,321  |  
|Interest-bearing                                                                                                             |  |                   | 128,201,711 |   |                  |   | 132,524,675 |  
|                                                                                                                             |  |                   |             |   |                  |   |             |  
|Total deposits                                                                                                               |  |                   | 141,950,621 |   |                  |   | 146,687,996 |  
|Accrued interest payable                                                                                                     |  |                   | 529,846     |   |                  |   | 701,979     |  
|Other liabilities                                                                                                            |  |                   | 435,283     |   |                  |   | 257,427     |  
|                                                                                                                             |  |                   |             |   |                  |   |             |  
|Total liabilities                                                                                                            |  |                   | 142,915,750 |   |                  |   | 147,647,402 |  
|                                                                                                                             |  |                   |             |   |                  |   |             |  
|                                                                                                                             |  |                  
|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                                                                                                              |  |                   | 1,737,924   |   |                  |   | 1,737,924   |  
|Retained earnings                                                                                                            |  |                   | 18,527,036  |   |                  |   | 18,440,398  |  
|Accumulated other comprehensive income                                                                                       |  |                   | 413,908     |   |                  |   | 286,072     |  
|Treasury stock (66,997 shares in 2010 and 65,697 shares in 2009)                                                             |  |                   | (4,317,142  | ) |                  |   | (4,218,741  | )
|                                                                                                                             |  |                   |             |   |                  |   |             |  
|Total shareholders equity                                                                                                   |  |                   | 17,861,726  |   |                  |   | 17,745,653  |  
|                                                                                                                             |  |                   |             |   |                  |   |             |  
|                                                                                                                             |  |                  
|Total liabilities and shareholders equity                                                                                   |  | $                 | 160,777,476 |   |                  | $ | 165,393,055 |  
|                                                                                                                             |  |                   |             |   |                  |   |             |  

See notes to condensed consolidated financial statements



3



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##### Table of Contents



COMMUNITYCORP

Condensed Consolidated Statements of Operations

(Unaudited)



|                                                     |  |                                |           |  |                                 |   |           |      |  |   |           |  |  |   |           | 
|---------------------------------------------------- |  | ------------------------------ | --------- |  | ------------------------------- | - | --------- | ---- |  | - | --------- |  |  | - | --------- | 
|                                                     |  | Nine Months EndedSeptember 30, |           |  | Three Months EndedSeptember 30, |  
|                                                     |  | 2010                           |           |  | 2009                            |   |           | 2010 |  |   | 2009      | 
|Interest income:                                     |  |                                |           |  |                                 |   |           |      |  |   |           |  |  |   |           | 
|Loans, including fees                                |  | $                              | 5,163,742 |  |                                 | $ | 5,849,283 |      |  | $ | 1,642,566 |  |  | $ | 1,917,447 | 
|Securities                                           |  |                                | 597,330   |  |                                 |   | 778,714   |      |  |   | 183,473   |  |  |   | 251,852   | 
|Other interest income                                |  |                                | 53,643    |  |                                 |   | 54,671    |      |  |   | 17,060    |  |  |   | 17,841    | 
|                                                     |  |                                |           |  |                                 |   |           |      |  |   |           |  |  |   |           | 
|Total                                                |  |                                | 5,814,715 |  |                                 |   | 6,682,668 |      |  |   | 1,843,099 |  |  |   | 2,187,140 | 
|                                                     |  |                                |           |  |                                 |   |           |      |  |   |           |  |  |   |           | 
|                                                     |  |                                |           | 
|Interest expense:                                    |  |                                |           |  |                                 |   |           |      |  |   |           |  |  |   |           | 
|Deposit accounts                                     |  |                                | 1,686,426 |  |                                 |   | 2,597,968 |      |  |   | 521,189   |  |  |   | 797,485   | 
|Other interest expense                               |  |                                | 1         |  |                                 |   | 7         |      |  |   |          |  |  |   |          | 
|                                                     |  |                                |           |  |                                 |   |           |      |  |   |           |  |  |   |           | 
|Total                                                |  |                                | 1,686,427 |  |                                 |   | 2,597,975 |      |  |   | 521,189   |  |  |   | 797,485   | 
|                                                     |  |                                |           |  |                                 |   |           |      |  |   |           |  |  |   |           | 
|                                                     |  |                                |           | 
|Net interest income                                  |  |                                | 4,128,288 |  |                                 |   | 4,084,693 |      |  |   | 1,321,910 |  |  |   | 1,389,655 | 
|                                                     |  |                                |           | 
|Provision for loan losses                            |  |                                | 1,626,000 |  |                                 |   | 290,000   |      |  |   | 415,000   |  |  |   | 110,000   | 
|                                                     |  |                                |           |  |                                 |   |           |      |  |   |           |  |  |   |           | 
|                                                     |  |                                |           | 
|Net interest income after provision for loan losses  |  |                                | 2,502,288 |  |                                 |   | 3,794,693 |      |  |   | 906,910   |  |  |   | 1,279,655 | 
|                                                     |  |                                |           |  |                                 |   |           |      |  |   |           |  |  |   |           | 
|                                                     |  |                                |           | 
|Noninterest income:                                  |  |                                |           |  |                                 |   |           |      |  |   |           |  |  |   |           | 
|Service charges                                      |  |                                | 332,097   |  |                                 |   | 370,785   |      |  |   | 121,624   |  |  |   | 125,321   | 
|Impairment losses on securities available for sale   |  |                                |          |  |                                 |   | (250,000  | )    |  |   |          |  |  |   |          | 
|Impairment losses on nonmarketable equity securities |  |                                |          |  |                                 |   | (211,935  | )    |  |   |          |  |  |   |          | 
|Gain on sale of securities available for sale        |  |                                | 262,011   |  |                                 |   |          |      |  |   | 262,011   |  |  |   |          | 
|Other income                                         |  |                                | 101,735   |  |                                 |   | 106,896   |      |  |   | 26,211    |  |  |   | 28,040    | 
|                                                     |  |                                |           |  |                                 |   |           |      |  |   |           |  |  |   |           | 
|Total                                                |  |                                | 695,843   |  |                                 |   | 15,746    |      |  |   | 409,846   |  |  |   | 153,361   | 
|                                                     |  |                                |           |  |                                 |   |           |      |  |   |           |  |  |   |           | 
|                                                     |  |                                |           | 
|Noninterest expenses:                                |  |                                |           |  |                                 |   |           |      |  |   |           |  |  |   |           | 
|Salaries and benefits                                |  |                                | 1,532,304 |  |                                 |   | 1,503,623 |      |  |   | 521,505   |  |  |   | 505,898   | 
|Net occupancy expense                                |  |                                | 469,290   |  |                                 |   | 474,884   |      |  |   | 163,053   |  |  |   | 166,488   | 
|Other operating expenses                             |  |                                | 982,148   |  |                                 |   | 998,070   |      |  |   | 363,984   |  |  |   | 331,001   | 
|                                                     |  |                                |           |  |                                 |   |           |      |  |   |           |  |  |   |           | 
|Total                                                |  |                                | 2,983,742 |  |                                 |   | 2,976,577 |      |  |   | 1,048,542 |  |  |   | 1,003,387 | 
|                                                     |  |                                |           |  |                                 |   |           |      |  |   |           |  |  |   |           | 
|                                                     |  |                                |           | 
|Income before taxes                                  |  |                                | 214,389   |  |                                 |   | 833,862   |      |  |   | 268,214   |  |  |   | 429,629   | 
|                                                     |  |                                |           | 
|Income tax provision                                 |  |                                | 10,750    |  |                                 |   | 237,638   |      |  |   | 33,000    |  |  |   | 117,000   | 
|                                                     |  |                                |           |  |                                 |   |           |      |  |   |           |  |  |   |           | 
|                                                     |  |                                |           | 
|Net income                                           |  | $                              | 203,639   |  |                                 | $ | 596,224   |      |  | $ | 235,214   |  |  | $ | 312,629   | 
|                                                     |  |                                |           |  |                                 |   |           |      |  |   |           |  |  |   |           | 
|                                                     |  |                                |           | 
|Earnings per share:                                  |  |                                |           |  |                                 |   |           |      |  |   |           |  |  |   |           | 
|Weighted average common shares outstanding           |  |                                | 233,335   |  |                                 |   | 235,002   |      |  |   | 233,003   |  |  |   | 234,363   | 
|                                                     |  |                                |           |  |                                 |   |           |      |  |   |           |  |  |   |           | 
|                                                     |  |                                |           | 
|Net income per common share                          |  | $                              | .87       |  |                                 | $ | 2.54      |      |  | $ | 1.01      |  |  | $ | 1.33      | 
|                                                     |  |                                |           |  |                                 |   |           |      |  |   |           |  |  |   |           | 

See notes to condensed consolidated financial statements



4



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##### Table of Contents



COMMUNITYCORP

Condensed Consolidated Statements of Shareholders Equity and Comprehensive Income

for the nine months ended September 30, 2010 and 2009

(Unaudited)



|                                                           |  |              |         |  |                |   |           |                               |  |   |                  |  |  |               |         |  |       |   |            |   |  |   |            |   |  |   |            |  
|---------------------------------------------------------- |  | ------------ | ------- |  | -------------- | - | --------- | ----------------------------- |  | - | ---------------- |  |  | ------------- | ------- |  | ----- | - | ---------- | - |  | - | ---------- | - |  | - | ---------- | -
|                                                           |  |              |         |  |                |   |           | AccumulatedOtherComprehensive |  |   |                  |  |  |               |         |  |       |  
|                                                           |  | Common Stock |         |  | CapitalSurplus |   |           | Income(Loss)                  |  |   | RetainedEarnings |  |  | TreasuryStock |         |  | Total |  
|                                                           |  | Shares       |         |  | Amount         |   |           |                               |  |   |                 
|Balance, December 31, 2008                                 |  |              | 300,000 |  |                | $ | 1,500,000 |                               |  | $ | 1,728,328        |  |  | $             | 75,701  |  |       | $ | 18,392,614 |   |  | $ | (4,003,225 | ) |  | $ | 17,693,418 |  
|                                                           |  |              |         |  |                |   |          
|Cash dividends declared  ($1.05 per share)                |  |              |         |  |                |   |           |                               |  |   |                  |  |  |               |         |  |       |   | (252,690   | ) |  |   |            |   |  |   | (252,690   | )
|                                                           |  |              |         |  |                |   |          
|Net income for the period                                  |  |              |         |  |                |   |           |                               |  |   |                  |  |  |               |         |  |       |   | 596,224    |   |  |   |            |   |  |   | 596,224    |  
|                                                           |  |              |         |  |                |   |          
|Other comprehensive income, net of tax expense of $243,015 |  |              |         |  |                |   |           |                               |  |   |                  |  |  |               | 461,377 |  |       |   |            |   |  |   |            |   |  |   | 461,377    |  
|                                                           |  |              |         |  |                |   |           |                               |  |   |                  |  |  |               |         |  |       |   |            |   |  |   |            |   |  |   |            |  
|                                                           |  |              |         |  |                |   |          
|Comprehensive income                                       |  |              |         |  |                |   |           |                               |  |   |                  |  |  |               |         |  |       |   |            |   |  |   |            |   |  |   | 1,057,601  |  
|                                                           |  |              |         |  |                |   |           |                               |  |   |                  |  |  |               |         |  |       |   |            |   |  |   |            |   |  |   |            |  
|                                                           |  |              |         |  |                |   |          
|Sale of treasury stock                                     |  |              |         |  |                |   |           |                               |  |   | 9,280            |  |  |               |         |  |       |   |            |   |  |   | 37,520     |   |  |   | 46,800     |  
|                                                           |  |              |         |  |                |   |          
|Purchase of treasury stock                                 |  |              |         |  |                |   |           |                               |  |   |                  |  |  |               |         |  |       |   |            |   |  |   | (238,320   | ) |  |   | (238,320   | )
|                                                           |  |              |         |  |                |   |           |                               |  |   |                  |  |  |               |         |  |       |   |            |   |  |   |            |   |  |   |            |  
|                                                           |  |              |         |  |                |   |          
|Balance, September 30, 2009                                |  |              | 300,000 |  |                | $ | 1,500,000 |                               |  | $ | 1,737,608        |  |  | $             | 537,078 |  |       | $ | 18,736,148 |   |  | $ | (4,204,025 | ) |  | $ | 18,306,809 |  
|                                                           |  |              |         |  |                |   |           |                               |  |   |                  |  |  |               |         |  |       |   |            |   |  |   |            |   |  |   |            |  
|                                                           |  |              |         |  |                |   |          
|Balance, December 31, 2009                                 |  |              | 300,000 |  |                | $ | 1,500,000 |                               |  | $ | 1,737,924        |  |  | $             | 286,072 |  |       | $ | 18,440,398 |   |  | $ | (4,218,741 | ) |  | $ | 17,745,653 |  
|                                                           |  |              |         |  |                |   |          
|Cash dividends paid  ($0.50 per share)                    |  |              |         |  |                |   |           |                               |  |   |                  |  |  |               |         |  |       |   | (117,001   | ) |  |   |            |   |  |   | (117,001   | )
|                                                           |  |              |         |  |                |   |          
|Net income for the period                                  |  |              |         |  |                |   |           |                               |  |   |                  |  |  |               |         |  |       |   | 203,639    |   |  |   |            |   |  |   | 203,639    |  
|                                                           |  |              |         |  |                |   |          
|Other comprehensive income, net of tax expense of $67,333  |  |              |         |  |                |   |           |                               |  |   |                  |  |  |               | 127,836 |  |       |   |            |   |  |   |            |   |  |   | 127,836    |  
|                                                           |  |              |         |  |                |   |           |                               |  |   |                  |  |  |               |         |  |       |   |            |   |  |   |            |   |  |   |            |  
|                                                           |  |              |         |  |                |   |          
|Comprehensive income                                       |  |              |         |  |                |   |           |                               |  |   |                  |  |  |               |         |  |       |   |            |   |  |   |            |   |  |   | 331,475    |  
|                                                           |  |              |         |  |                |   |           |                               |  |   |                  |  |  |               |         |  |       |   |            |   |  |   |            |   |  |   |            |  
|                                                           |  |              |         |  |                |   |          
|Purchase of treasury stock                                 |  |              |         |  |                |   |           |                               |  |   |                  |  |  |               |         |  |       |   |            |   |  |   | (98,401    | ) |  |   | (98,401    | )
|                                                           |  |              |         |  |                |   |           |                               |  |   |                  |  |  |               |         |  |       |   |            |   |  |   |            |   |  |   |            |  
|                                                           |  |              |         |  |                |   |          
|Balance, September 30, 2010                                |  |              | 300,000 |  |                | $ | 1,500,000 |                               |  | $ | 1.737.924        |  |  | $             | 413,908 |  |       | $ | 18,527,036 |   |  | $ | (4,317,142 | ) |  | $ | 17,861,726 |  
|                                                           |  |              |         |  |                |   |           |                               |  |   |                  |  |  |               |         |  |       |   |            |   |  |   |            |   |  |   |            |  

See notes to condensed consolidated financial statements



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COMMUNITYCORP

Condensed Consolidated Statements of Cash Flows

(Unaudited)



|                                                                                                                 |  |                                |             |   |      |   |             |  
|---------------------------------------------------------------------------------------------------------------- |  | ------------------------------ | ----------- | - | ---- | - | ----------- | -
|                                                                                                                 |  | Nine Months EndedSeptember 30, |            
|                                                                                                                 |  | 2010                           |             |   | 2009 |  
|Cash flows from operating activities:                                                                            |  |                                |             |   |      |   |             |  
|Net income                                                                                                       |  | $                              | 203,639     |   |      | $ | 596,224     |  
|Adjustments to reconcile net income to net cash                                                                  |  |                                |             |   |      |   |             |  
|Provided by operating activities:                                                                                |  |                                |             |   |      |   |             |  
|Depreciation and amortization expense                                                                            |  |                                | 179,265     |   |      |   | 189,624     |  
|Provision for loan losses                                                                                        |  |                                | 1,626,000   |   |      |   | 290,000     |  
|Net amortization on investments                                                                                  |  |                                | 39,077      |   |      |   | 62,982      |  
|Net Amortization (accretion) of deferred loan costs                                                              |  |                                | 326         |   |      |   | (5,690      | )
|Gain on sale of securities available-for-sale                                                                    |  |                                | (262,011    | ) |      |   |            |  
|Other than temporary impairment of securities available for-sale                                                 |  |                                |            |   |      |   | 250,000     |  
|Other than temporary impairment of nonmarketable equity securities                                               |  |                                |            |   |      |   | 211,935     |  
|Loss on sale of other real estate owned                                                                          |  |                                | 17,000      |   |      |   |            |  
|(Increase) decrease in interest receivable                                                                       |  |                                | 134,710     |   |      |   | (34,343     | )
|Decrease in interest payable                                                                                     |  |                                | (172,133    | ) |      |   | (97,107     | )
|(Increase) decrease in other assets                                                                              |  |                                | 468,456     |   |      |   | (290,890    | )
|Increase in other liabilities                                                                                    |  |                                | 110,523     |   |      |   | 170,287     |  
|                                                                                                                 |  |                                |             |   |      |   |             |  
|Net cash provided by operating activities                                                                        |  |                                | 2,344,852   |   |      |   | 1,343,022   |  
|                                                                                                                 |  |                                |             |   |      |   |             |  
|                                                                                                                 |  |                               
|Cash flows from investing activities:                                                                            |  |                                |             |   |      |   |             |  
|Net (increase) decrease in loans receivable                                                                      |  |                                | 5,438,333   |   |      |   | (4,129,323  | )
|Purchases of securities available-for-sale                                                                       |  |                                | (11,593,700 | ) |      |   | (13,289,361 | )
|Maturities of securities available-for-sale                                                                      |  |                                | 7,939,663   |   |      |   | 14,437,730  |  
|Maturities of securities held-to-maturity                                                                        |  |                                | 265,000     |   |      |   | 756,000     |  
|Proceeds from the sale of securities available-for-sale                                                          |  |                                | 4,562,437   |   |      |   |            |  
|Increase in nonmarketable equity securities                                                                      |  |                                |            |   |      |   | (5,800      | )
|Maturities of time deposits in other banks                                                                       |  |                                | 250,000     |   |      |   |            |  
|Proceeds from sale of other real estate owned                                                                    |  |                                | 50,000      |   |      |   |            |  
|Purchases of premises and equipment                                                                              |  |                                | (39,287     | ) |      |   | (173,539    | )
|                                                                                                                 |  |                                |             |   |      |   |             |  
|Net cash provided (used) by investing activities                                                                 |  |                                | 6,872,446   |   |      |   | (2,404,293  | )
|                                                                                                                 |  |                                |             |   |      |   |             |  
|                                                                                                                 |  |                               
|Cash flows from financing activities:                                                                            |  |                                |             |   |      |   |             |  
|Net increase (decrease) in demand deposits accounts, interest-bearing transactions accounts and savings accounts |  |                                | (2,327,694  | ) |      |   | 1,709,779   |  
|Net decrease in time deposits                                                                                    |  |                                | (2,409,681  |   |      |   | (452,704    | )
|Dividends paid                                                                                                   |  |                                | (117,001    | ) |      |   | (252,690    | )
|Sale of treasury stock                                                                                           |  |                                |            |   |      |   | 46,800      |  
|Purchase of treasury stock                                                                                       |  |                                | (98,401     | ) |      |   | (238,320    | )
|                                                                                                                 |  |                                |             |   |      |   |             |  
|Net cash provided (used) by financing activities                                                                 |  |                                | (4,952,777  | ) |      |   | 812,865     |  
|                                                                                                                 |  |                                |             |   |      |   |             |  
|                                                                                                                 |  |                               
|Net increase (decrease) in cash and cash equivalents                                                             |  |                                | 4,264,521   |   |      |   | (248,406    | )
|                                                                                                                 |  |                               
|Cash and cash equivalents, beginning of period                                                                   |  |                                | 17,694,266  |   |      |   | 16,614,965  |  
|                                                                                                                 |  |                                |             |   |      |   |             |  
|                                                                                                                 |  |                               
|Cash and cash equivalents, end of period                                                                         |  | $                              | 21,958,787  |   |      | $ | 16,366,559  |  
|                                                                                                                 |  |                                |             |   |      |   |             |  
|                                                                                                                 |  |                               
|Cash paid during the period for                                                                                  |  |                                |             |   |      |   |             |  
|Income taxes                                                                                                     |  | $                              |            |   |      | $ | 778,200     |  
|Interest                                                                                                         |  | $                              | 1,858,560   |   |      | $ | 2,695,082   |  
|                                                                                                                 |  |                               
|Supplemental noncash investing and financing activities                                                          |  |                                |             |   |      |   |             |  
|Changes in unrealized gains on securities available-for sale                                                     |  | $                              | 127,836     |   |      | $ | 461,377     |  
|Foreclosures on loans                                                                                            |  | $                              | 1,215,357   |   |      | $ | 105,000     |  

See notes to
condensed consolidated financial statements



6



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##### Table of Contents



COMMUNITYCORP

Notes to Consolidated Financial Statements

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, 2010 and for the interim periods ended September 30, 2010 and 2009 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, 2009 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 2009 Annual Report.

NOTE 2  RECENTLY ISSUED ACCOUNTING PRONONCEMENTS

The following is a summary of recent authoritative pronouncements:

In July 2010, the Receivables topic of the Accounting Standards Codification (ASC) was amended to require expanded disclosures related to a companys allowance for credit
losses and the credit quality of its financing receivables. The amendments will require the allowance disclosures to be provided on a disaggregated basis. The Company is required to begin to comply with the disclosures in its financial statements
for the year ended December 31, 2010.

On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and
Consumer Protection Act (the Dodd-Frank Act), which significantly changes the regulation of financial institutions and the financial services industry. The Dodd-Frank Act includes several provisions that will affect how community
banks, thrifts, and small bank and thrift holding companies will be regulated in the future. Among other things, these provisions abolish the Office of Thrift Supervision and transfer its functions to the other federal banking agencies, relax
rules regarding interstate branching, allow financial institutions to pay interest on business checking accounts, change the scope of federal deposit insurance coverage, and impose new capital requirements on bank and thrift holding
companies. The Dodd-Frank Act also establishes the Bureau of Consumer Financial Protection as an independent entity within the Federal Reserve, which will be given the authority to promulgate consumer protection regulations applicable to all
entities offering consumer financial services or products, including banks. Additionally, the Dodd-Frank Act includes a series of provisions covering mortgage loan origination standards affecting originator compensation, minimum repayment
standards, and pre-payments. Management is actively reviewing the provisions of the Dodd-Frank Act and assessing its probable impact on the Companys business, financial condition, and results of operations.

In August 2010, two updates were issued to amend various Securities and Exchange Commission (the SEC) rules and schedules pursuant to Release
No. 33-9026: Technical Amendments to Rules, Forms, Schedules and Codification of Financial Reporting Policies and based on the issuance of SEC Staff Accounting Bulletin 112. The amendments related primarily to business combinations and removed
references to minority interest and added references to controlling and non-controlling interest(s). The updates were effective upon issuance but had no impact on the Companys financial statements.

Other accounting standards that have been issued or proposed by the Financial Accounting Standards Board (the FASB) or other
standards-setting bodies are not expected to have a material impact on the Companys financial position, results of operations or cash flows.



7



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##### Table of Contents

COMMUNITYCORP

Notes to Consolidated Financial Statements



NOTE 3  COMPREHENSIVE INCOME

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



|                                                                      |  |               |         |  |            |   |          |                  |  |   |         | 
|--------------------------------------------------------------------- |  | ------------- | ------- |  | ---------- | - | -------- | ---------------- |  | - | ------- | 
|                                                                      |  | Pre-taxAmount |         |  | TaxExpense |   |          | Net-of-taxAmount | 
|For the Nine Months Ended September 30, 2010:                         |  |               |         |  |            |   |          |                  |  |   |         | 
|Net unrealized Gains on securities available-for-sale                 |  | $             | 457,180 |  |            | $ | (157,727 | )                |  | $ | 299,453 | 
|Reclassification adjustment for gains (losses) realized in net income |  |               | 262,011 |  |            |   | (90,394  | )                |  |   | 171,617 | 
|                                                                      |  |               |         |  |            |   |          |                  |  |   |         | 
|Other comprehensive income                                            |  | $             | 195,169 |  |            | $ | (67,333  | )                |  | $ | 127,836 | 
|                                                                      |  |               |         |  |            |   |          |                  |  |   |         | 
|                                                                      |  |               |        
|For the Nine Months Ended September 30, 2009:                         |  |               |         |  |            |   |          |                  |  |   |         | 
|Net unrealized gains on securities available-for-sale                 |  | $             | 704,392 |  |            | $ | (243,015 | )                |  | $ | 461,377 | 
|Reclassification adjustment for gains (losses) realized in net income |  |               |        |  |            |   |         |                  |  |   |        | 
|                                                                      |  |               |         |  |            |   |          |                  |  |   |         | 
|Other comprehensive income                                            |  | $             | 704,392 |  |            | $ | (243,015 | )                |  | $ | 461,377 | 
|                                                                      |  |               |         |  |            |   |          |                  |  |   |         | 
|                                                                      |  |               |        
|For the Three Months Ended September 30, 2010:                        |  |               |         |  |            |   |          |                  |  |   |         | 
|Net unrealized losses on securities available-for-sale                |  | $             | 303,384 |  |            | $ | (104,668 | )                |  | $ | 198,716 | 
|Reclassification adjustment for gains (losses) realized in net income |  |               | 262,011 |  |            |   | (90,394  | )                |  |   | 171,617 | 
|                                                                      |  |               |         |  |            |   |          |                  |  |   |         | 
|Other comprehensive income                                            |  | $             | 41,373  |  |            | $ | (14,274  | )                |  | $ | 27,099  | 
|                                                                      |  |               |         |  |            |   |          |                  |  |   |         | 
|                                                                      |  |               |        
|For the Three Months Ended September 30, 2009:                        |  |               |         |  |            |   |          |                  |  |   |         | 
|Net unrealized losses on securities available-for-sale                |  | $             | 624,943 |  |            | $ | (215,605 | )                |  | $ | 409,338 | 
|Reclassification adjustment for gains (losses) realized in net income |  |               |        |  |            |   |         |                  |  |   |        | 
|                                                                      |  |               |         |  |            |   |          |                  |  |   |         | 
|Other comprehensive income                                            |  | $             | 624,943 |  |            | $ | (215,605 | )                |  | $ | 409,338 | 
|                                                                      |  |               |         |  |            |   |          |                  |  |   |         | 

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

NOTE 4  RECLASSIFICATIONS

Certain captions and amounts in the financial statements in the Companys Form 10-Q for the quarter ended September 30, 2009 were reclassified to conform to the September 30, 2010
presentation.

NOTE 5  INVESTMENT SECURITIES

Securities Available-for-Sale

The amortized cost and estimated fair values of securities
available-for-sale were:



|                                           |  |           |            |  |                  |   |         |        |  |   |            |  |  |   |            | 
|------------------------------------------ |  | --------- | ---------- |  | ---------------- | - | ------- | ------ |  | - | ---------- |  |  | - | ---------- | 
|                                           |  | Amortized |            |  | Gross Unrealized |   |         |        | 
|                                           |  | Cost      |            |  | Gains            |   |         | Losses |  |   | Fair Value | 
|September 30, 2010                         |  |           |            |  |                  |   |         |        |  |   |            |  |  |   |            | 
|Government-sponsored enterprises           |  | $         | 12,172,684 |  |                  | $ | 64,093  |        |  | $ | 13,575     |  |  | $ | 12,223,202 | 
|Obligations of state and local governments |  |           | 11,125,221 |  |                  |   | 593,332 |        |  |   | 11,930     |  |  |   | 11,706,623 | 
|Other                                      |  |           | 200,000    |  |                  |   |        |        |  |   |           |  |  |   | 200,000    | 
|                                           |  |           |            |  |                  |   |         |        |  |   |            |  |  |   |            | 
|                                           |  |           |            | 
|Total                                      |  | $         | 23,497,905 |  |                  | $ | 657,425 |        |  | $ | 25,505     |  |  | $ | 24,129,825 | 
|                                           |  |           |            |  |                  |   |         |        |  |   |            |  |  |   |            | 
|                                           |  |           |            | 
|December 31, 2009                          |  |           |            |  |                  |   |         |        |  |   |            |  |  |   |            | 
|Government-sponsored enterprises           |  | $         | 11,550,964 |  |                  | $ | 244,051 |        |  | $ | 27,959     |  |  | $ | 11,767,056 | 
|Obligations of state and local governments |  |           | 12,432,461 |  |                  |   | 247,181 |        |  |   | 26,521     |  |  |   | 12,653,121 | 
|Other                                      |  |           | 200,000    |  |                  |   |        |        |  |   |           |  |  |   | 200,000    | 
|                                           |  |           |            |  |                  |   |         |        |  |   |            |  |  |   |            | 
|                                           |  |           |            | 
|Total                                      |  | $         | 24,183,425 |  |                  | $ | 491,232 |        |  | $ | 54,480     |  |  | $ | 24,620,177 | 
|                                           |  |           |            |  |                  |   |         |        |  |   |            |  |  |   |            | 



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COMMUNITYCORP

Notes to Consolidated Financial Statements



NOTE 5  INVESTMENT SECURITIES (continued)



The following table shows gross unrealized losses and fair value, aggregated by investment category, and
length of time that individual securities have been in a continuous unrealized loss position, at September 30, 2010 and December 31, 2009.



|                                           |  |                    |           |  |                   |   |        |           |  |   |                  |  |  |   |        | 
|------------------------------------------ |  | ------------------ | --------- |  | ----------------- | - | ------ | --------- |  | - | ---------------- |  |  | - | ------ | 
|                                           |  | September 30, 2010 |           |  | December 31, 2009 |  
|                                           |  | FairValue          |           |  | UnrealizedLosses  |   |        | FairValue |  |   | UnrealizedLosses | 
|Less Than 12 Months                        |  |                    |           |  |                   |   |        |           |  |   |                  |  |  |   |        | 
|Government-sponsored enterprises           |  | $                  | 4,981,952 |  |                   | $ | 13,575 |           |  | $ | 1,874,183        |  |  | $ | 27,959 | 
|Obligations of state and local governments |  |                    |          |  |                   |   |       |           |  |   | 887,972          |  |  |   | 17,701 | 
|                                           |  |                    |           |  |                   |   |        |           |  |   |                  |  |  |   |        | 
|                                           |  |                    | 4,981,952 |  |                   |   | 13,575 |           |  |   | 2,762,155        |  |  |   | 45,660 | 
|                                           |  |                    |           | 
|12 Months or More                          |  |                    |           |  |                   |   |        |           |  |   |                  |  |  |   |        | 
|Obligations of state and local governments |  |                    | 228,070   |  |                   |   | 11,930 |           |  |   | 191,180          |  |  |   | 8,820  | 
|                                           |  |                    |           |  |                   |   |        |           |  |   |                  |  |  |   |        | 
|                                           |  |                    |           | 
|Total                                      |  | $                  | 5,210,022 |  |                   | $ | 25,505 |           |  | $ | 2,953,335        |  |  | $ | 54,480 | 
|                                           |  |                    |           |  |                   |   |        |           |  |   |                  |  |  |   |        | 

A total of eleven available-for-sale securities were in a loss position at September 30, 2010. Of these securities,
only one was in a loss position of twelve months or more, which consisted of an obligation of a state and local government. The Company believes that the deterioration in value is attributable to changes in market interest rates and not in credit
quality and considers these losses temporary. The Company does not intend to sell these securities and it is more likely than not that the Company will not be required to sell these securities before recovery of their amortized costs. Management
evaluates investment securities in a loss position based on length of impairment, severity of impairment and other factors.

Management
determined that impairment related to certain securities were not temporary in nature at September 30, 2009. Other then temporary impairment losses were $461,935 for the nine months ended September 30, 2009. There were no other than
temporary impairment losses for the nine months ended September 30, 2010.

The amortized cost and estimated fair values of securities
available-for-sale based on their contractual maturities are summarized below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations without penalty.



|                                          |  |                    |            |  |           |   |            | 
|----------------------------------------- |  | ------------------ | ---------- |  | --------- | - | ---------- | 
|                                          |  | September 30, 2010 |           
|                                          |  | AmortizedCost      |            |  | FairValue |  
|Due in one year or less                   |  | $                  | 400,679    |  |           | $ | 405,516    | 
|Due after one year but within five years  |  |                    | 1,911,485  |  |           |   | 1,952,191  | 
|Due after five years but within ten years |  |                    | 13,142,040 |  |           |   | 13,587,329 | 
|Due after ten years                       |  |                    | 6,965,561  |  |           |   | 7,081,760  | 
|                                          |  |                    |            |  |           |   |            | 
|                                          |  |                    | 22,419,765 |  |           |   | 23,026,796 | 
|Mortgage-backed securities                |  |                    | 1,078,140  |  |           |   | 1,103,029  | 
|                                          |  |                    |            |  |           |   |            | 
|Total                                     |  | $                  | 23,497,905 |  |           | $ | 24,129,825 | 
|                                          |  |                    |            |  |           |   |            | 

During the first nine months of 2010 gross proceeds from the sale of available-for-sale securities were $4,562,437 resulting
in gains of $262,011.

Securities Held-To-Maturity

The amortized cost and estimated fair values of securities held-to-maturity were:



|                                           |  |           |         |  |                  |   |        |        |  |   |           |  |  |   |         | 
|------------------------------------------ |  | --------- | ------- |  | ---------------- | - | ------ | ------ |  | - | --------- |  |  | - | ------- | 
|                                           |  | Amortized |         |  | Gross Unrealized |   |        |        | 
|                                           |  | Cost      |         |  | Gains            |   |        | Losses |  |   | FairValue | 
|September 30, 2010 -                       |  |           |         |  |                  |   |        |        |  |   |           |  |  |   |         | 
|Obligations of state and local governments |  | $         | 299,876 |  |                  | $ | 14,975 |        |  | $ |          |  |  | $ | 314,851 | 
|                                           |  |           |         |  |                  |   |        |        |  |   |           |  |  |   |         | 
|                                           |  |           |         | 
|December 31, 2009 -                        |  |           |         |  |                  |   |        |        |  |   |           |  |  |   |         | 
|Obligations of state and local governments |  | $         | 564,821 |  |                  | $ | 7,294  |        |  | $ |          |  |  | $ | 572,115 | 
|                                           |  |           |         |  |                  |   |        |        |  |   |           |  |  |   |         | 



9



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##### Table of Contents

COMMUNITYCORP

Notes to Consolidated Financial Statements



NOTE 5  INVESTMENT SECURITIES (continued)



The amortized cost and estimated fair values of securities held-to-maturity based on their contractual
maturities are summarized below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations without penalty.



|                                          |  |                    |         |  |           |   |         | 
|----------------------------------------- |  | ------------------ | ------- |  | --------- | - | ------- | 
|                                          |  | September 30, 2010 |        
|                                          |  | AmortizedCost      |         |  | FairValue |  
|                                          |  |                   
|Due after one year but within five years  |  | $                  | 99,876  |  |           | $ | 101,487 | 
|Due after five years but within ten years |  |                    | 200,000 |  |           |   | 213,364 | 
|                                          |  |                    |         |  |           |   |         | 
|                                          |  |                   
|                                          |  | $                  | 299,876 |  |           | $ | 314,851 | 
|                                          |  |                    |         |  |           |   |         | 

NOTE 6  FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair Value Measurements

Fair value is the exchange price that would be received for an
asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company utilizes a fair value
hierarchy, which maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The three levels of inputs used to measure fair value are as follows:



|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Level 1 |  | Valuation is based upon quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        | 
|Level 2 |  | Valuation is based upon quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted
prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        | 
|Level 3 |  | Valuation is generated from model-based techniques that use at least one significant assumption based on unobservable inputs for the asset or liability, which are typically based
on an entitys own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair
value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Companys assessment of the significance of a particular input to the
fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

Assets
Measured at Fair Value on a Recurring Basis

The following is a description of valuation methodologies used for assets and liabilities
recorded at fair value on a recurring basis.

Securities Available-for-Sale  Investment securities available-for-sale are
recorded at fair value on a recurring basis. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques
such as the present value of future cash flows, adjusted for the securitys credit rating, prepayment assumptions and other factors such as credit loss assumptions. Level 1 securities include those securities traded on an active exchange, such
as the New York Stock Exchange, as well as U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets, and money market funds. Level 2 securities include mortgage-backed securities issued by government
sponsored entities, municipal bonds, and corporate debt securities. Securities classified as Level 3 include asset-backed securities in less liquid markets.

The table below presents the Companys assets measured at fair value on a recurring basis as of September 30, 2010, and December 31, 2009, aggregated by the level in the fair value
hierarchy within which those measurements fall.



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COMMUNITYCORP

Notes to Consolidated Financial Statements



NOTE 6  FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)



|                                           |  |       |            |  |         |   |   |         |  |   |            |  |  |   |   | 
|------------------------------------------ |  | ----- | ---------- |  | ------- | - | - | ------- |  | - | ---------- |  |  | - | - | 
|September 30, 2010                         |  | Total |            |  | Level 1 |   |   | Level 2 |  |   | Level 3    | 
|                                           |  |       |            | 
|Available for Sale Securities:             |  |       |            |  |         |   |   |         |  |   |            |  |  |   |   | 
|Government-sponsored enterprises           |  | $     | 12,223,202 |  |         | $ |  |         |  | $ | 12,223,202 |  |  | $ |  | 
|Obligations of state and local governments |  |       | 11,706,623 |  |         |   |  |         |  |   | 11,706,623 |  |  |   |  | 
|Other                                      |  |       | 200,000    |  |         |   |  |         |  |   | 200,000    |  |  |   |  | 
|                                           |  |       |            |  |         |   |   |         |  |   |            |  |  |   |   | 
|                                           |  |       |            | 
|Total                                      |  | $     | 24,129,825 |  |         | $ |  |         |  | $ | 24,129,825 |  |  | $ |  | 
|                                           |  |       |            |  |         |   |   |         |  |   |            |  |  |   |   | 
|                                           |  |       |            | 
|December 31, 2009                          |  |       |            |  |         |   |   |         |  |   |            |  |  |   |   | 
|                                           |  |       |            | 
|Available for Sale Securities:             |  |       |            |  |         |   |   |         |  |   |            |  |  |   |   | 
|                                           |  |       |            | 
|Government-sponsored enterprises           |  | $     | 11,767,056 |  |         | $ |  |         |  | $ | 11,767,056 |  |  | $ |  | 
|Obligations of state and local governments |  |       | 12,653,121 |  |         |   |  |         |  |   | 12,653,121 |  |  |   |  | 
|Other                                      |  |       | 200,000    |  |         |   |  |         |  |   | 200,000    |  |  |   |  | 
|                                           |  |       |            |  |         |   |   |         |  |   |            |  |  |   |   | 
|                                           |  |       |            | 
|Total                                      |  | $     | 24,620,177 |  |         | $ |  |         |  | $ | 24,620,177 |  |  | $ |  | 
|                                           |  |       |            |  |         |   |   |         |  |   |            |  |  |   |   | 

There were no liabilities carried at fair value at September 30, 2010 or December 31, 2009.

Assets Measured at Fair Value on a Nonrecurring Basis

Certain assets and liabilities are measured at fair value on a nonrecurring basis. These instruments are not measured at fair value on an ongoing basis, but subject to fair value in certain
circumstances, such as when there is evidence of impairment that may require write-downs. The write-downs of the Companys more significant assets or liabilities, which are measured on a nonrecurring basis, are based on the lower of
amortized or estimated fair value.

The following is a description of valuation methodologies used for assets and liabilities recorded at fair
value on a recurring basis.

Impaired Loans  The Company is predominantly an asset-based lender with real estate serving
as collateral on a substantial majority of loans. Loans that are deemed impaired are primarily valued on a nonrecurring basis at the fair values of the underlying real estate collateral. Such fair values are obtained using independent appraisals,
which the Company considers to be Level 2 inputs.

Other Real Estate Owned  Other real estate owned consists of assets
acquired in settlement of loans and is carried at the lower of carrying value or fair value on a non-recurring basis. The fair value is dependent primarily upon independent appraisals, which the Company considers Level 2 inputs.

The table below presents the Companys assets measured at fair value on a nonrecurring basis as of September 30, 2010, and December 31,
2009, aggregated by the level in the fair value hierarchy within which those measurements fall.



|                           |  |       |           |  |         |   |   |         |  |   |           |  |  |   |   | 
|-------------------------- |  | ----- | --------- |  | ------- | - | - | ------- |  | - | --------- |  |  | - | - | 
|September 30, 2010         |  | Total |           |  | Level 1 |   |   | Level 2 |  |   | Level 3   | 
|Impaired loans             |  | $     | 8,293,617 |  |         | $ |  |         |  | $ | 8,293,617 |  |  | $ |  | 
|Other real estate owned    |  |       | 1,488,357 |  |         |   |  |         |  |   | 1,488,357 |  |  |   |  | 
|                           |  |       |           |  |         |   |   |         |  |   |           |  |  |   |   | 
|                           |  |       |           | 
|Total assets at fair value |  | $     | 9,781,974 |  |         | $ |  |         |  | $ | 9,781,974 |  |  | $ |  | 
|                           |  |       |           |  |         |   |   |         |  |   |           |  |  |   |   | 
|                           |  |       |           | 
|December 31, 2009          |  |       |           |  |         |   |   |         |  |   |           |  |  |   |   | 
|Impaired loans             |  | $     | 8,758,272 |  |         | $ |  |         |  | $ | 8,758,272 |  |  | $ |  | 
|Other real estate owned    |  |       | 340,000   |  |         |   |  |         |  |   | 340,000   |  |  |   |  | 
|                           |  |       |           |  |         |   |   |         |  |   |           |  |  |   |   | 
|                           |  |       |           | 
|Total assets at fair value |  | $     | 9,098,272 |  |         | $ |  |         |  | $ | 9,098,272 |  |  | $ |  | 
|                           |  |       |           |  |         |   |   |         |  |   |           |  |  |   |   | 



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COMMUNITYCORP

Notes to Consolidated Financial Statements



NOTE 6  FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)



There were no liabilities carried at fair value at September 30, 2010 or December 31, 2009.

Fair Value Disclosures

The
fair value of a financial instrument is the amount at which the asset or obligation could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Fair value estimates are made at a specific point in
time based on relevant market information and information about the financial instruments. Because no market value exists for a significant portion of the financial instruments, fair value estimates are based on judgments regarding future expected
loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. Premise and equipment, accrued interest receivable, other assets, accrued interest payable and other liabilities are not
considered financial instruments. The following methods and assumptions were used to estimate the fair value of significant financial instruments:

Cash and Due from Banks - The carrying amount is a reasonable estimate of fair value.

Federal Funds Sold - Federal funds sold are typically for a term of one day, and the carrying amount approximates the fair value.

Time Deposits with Other Banks- The carrying value of these instruments is a reasonable estimate of fair value.

Investment Securities - The fair values of marketable securities held-to-maturity are based on quoted market prices or dealer quotes. For securities available-for-sale, fair value equals the
carrying amount, which is the quoted market price. If quoted market prices are not available, fair values are based on quoted market prices of comparable securities. The carrying amount of nonmarketable securities is a reasonable estimate of fair
value since no ready market exists for these securities.

Loans Receivable - For certain categories of loans receivable, such as
variable rate loans which are repriced frequently and have no significant change in credit risk and credit card receivables, fair values are based on the carrying amounts. The fair value of other types of loans is estimated by discounting the future
cash flows using the current rates at which similar loans would be made to the borrowers with similar credit ratings and for the same remaining maturities.

Deposits - The fair value of demand deposits, interestbearing transaction, savings, and money market accounts is the amount payable on demand at the reporting date. The fair values of
time deposits are estimated using a discounted cash flow calculation

The carrying values and estimated fair values of the Companys
financial instruments were as follows:



|                                                                                 |  |                    |             |  |                     |   |             |                |  |   |                     |  |  |   |             | 
|-------------------------------------------------------------------------------- |  | ------------------ | ----------- |  | ------------------- | - | ----------- | -------------- |  | - | ------------------- |  |  | - | ----------- | 
|                                                                                 |  | September 30, 2010 |             |  | December 31, 2009   |  
|                                                                                 |  | CarryingAmount     |             |  | EstimatedFair
Value |   |             | CarryingAmount |  |   | EstimatedFair
Value | 
|Financial Assets:                                                                |  |                    |             |  |                     |   |             |                |  |   |                     |  |  |   |             | 
|Cash and due from banks                                                          |  | $                  | 17,979,787  |  |                     | $ | 17,979,787  |                |  | $ | 15,664,266          |  |  | $ | 15,664,266  | 
|Federal funds sold                                                               |  |                    | 3,979,000   |  |                     |   | 3,979,000   |                |  |   | 2,030,000           |  |  |   | 2,030,000   | 
|Time deposits with other banks                                                   |  |                    | 1,250,000   |  |                     |   | 1,250,000   |                |  |   | 1,500,000           |  |  |   | 1,500,000   | 
|Securities available-for-sale                                                    |  |                    | 24,129,825  |  |                     |   | 24,129,825  |                |  |   | 24,620,177          |  |  |   | 24,620,177  | 
|Securities held-to-maturity                                                      |  |                    | 299,876     |  |                     |   | 314,851     |                |  |   | 564,821             |  |  |   | 572,115     | 
|Nonmarketable equity securities                                                  |  |                    | 302,300     |  |                     |   | 302,300     |                |  |   | 302,300             |  |  |   | 302,300     | 
|Loans receivable, gross                                                          |  |                    | 108,183,919 |  |                     |   | 108,271,711 |                |  |   | 116,458,480         |  |  |   | 115,567,742 | 
|                                                                                 |  |                    |             | 
|Financial Liabilities:                                                           |  |                    |             |  |                     |   |             |                |  |   |                     |  |  |   |             | 
|Demand deposit, interest-bearing transaction, money market, and savings accounts |  | $                  | 51,831,574  |  |                     | $ | 51,831,574  |                |  | $ | 54,159,268          |  |  | $ | 54,159,268  | 
|Time deposits                                                                    |  |                    | 90,119,047  |  |                     |   | 90,513,908  |                |  |   | 92,528,728          |  |  |   | 92,710,544  | 



|                                         |  |                |           |  |                |   |           | 
|---------------------------------------- |  | -------------- | --------- |  | -------------- | - | --------- | 
|                                         |  | NotionalAmount |           |  | NotionalAmount |  
|                                         |  |               
|Off-Balance Sheet Financial Instruments: |  |                |           |  |                |   |           | 
|Commitments                              |  | $              | 6,399,000 |  |                | $ | 7,064,000 | 
|Standby letters of credit                |  |                | 810,000   |  |                |   | 825,000   | 



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COMMUNITYCORP

Notes to Consolidated Financial Statements





NOTE 7  SUBSEQUENT
EVENTS

Subsequent events are events or transactions that occur after the balance sheet date but before financial statements are
issued. Recognized subsequent events are events or transactions that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial
statements. Nonrecognized subsequent events are events that provide evidence about conditions that did not exist at the date of the balance sheet but arose after that date. Management has reviewed events occurring through the date the
financial statements were issued and no subsequent events occurred requiring accrual or disclosure.



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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations

The following is a discussion of the Companys financial condition as of September 30, 2010 compared to December 31, 2009, and the results
of operations for the three and nine months ended September 30, 2010 compared to the three and nine months ended September 30, 2009. 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

For the
nine months ended September 30, 2010 we realized a net income of $203,639, or $0.87 per share compared to a net income of $596,224, or $2.54 per share for the nine months ended September 30, 2009. For the quarter ended September 30,
2010 we realized a net income of $235,214, or $1.01 per share compared to $312,629, or $1.33 per share for the quarter ended September 30, 2009. Our net income declined $392,585 and $77,415 for the nine and three months ended September 30,
2010 and 2009, respectively.

The decrease in our net income for both periods is mainly attributable to the increase in the volume of our
problem loans. Defaults by our borrowers increased substantially during 2009 and continues into 2010, resulting in the recording of higher provisions for credit losses and higher net charge-offs. For the nine and three months ended
September 30, 2010, we recorded a provision for loan losses of $1,626,000 and $415,000, respectively compared to $290,000 and $110,000, respectively for the comparable 2009 periods. Our net charge offs for the nine and three months ended
September 30, 2010 was $1,620,545 and $512,342 compared to $250,910 and $153,411 for the nine and three months ended September 30, 2009, respectively.

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 nine months ended September 30, 2010,
was $4,128,288 compared to $4,084,693 for the same period last year, an increase of $43,595, or 1.07%. For the quarter ended September 30, 2010, net interest income was $1,321,910 compared to $1,389,655 for the quarter ended September 30,
2009, a decrease of $67,745, or 4.87%. The increases in net interest income for the nine months ended September 30, 2010, is mainly attributable to the decline in market interest rates, which resulted in the average cost of our interest-bearing
liabilities declining 92 basis points, while our the average yield on our earning assets declined 70 points. The high percentage of fixed rate loans, which we maintain, tends to minimize the effect of falling interest rates. Additionally, the effect
of the significant increase in our nonaccruing loans and our net loans charged off has a negative impact on our net interest income and is the primary reason for the decline of our net interest income for the quarter ended September 30, 2010,
compared to the third quarter of 2009.

For the nine months ended September 30, 2010, average-earning assets totaled $155,706,824 with an
annualized average yield of 4.99%, compared to $156,985,302 and 5.69%, respectively, for the same period last year. Average interest-bearing liabilities totaled $130,535,795 with an annualized average cost of 1.73% for the nine months ended
September 30, 2010, compared to $131,310,291 and 2.65%, respectively, for the same period last year. For the quarter ended September 30, 2010, average-earning assets totaled $153,174,681 with an annualized average yield of 4.77%, compared
to $159,561,683 and 5.44%, respectively, for the same period last year. Average interest-bearing liabilities totaled $127,862,613 with an annualized average cost of 1.62% for the three months ended September 30, 2010, compared to $132,998,368
and 2.38%, respectively, for the same period last year.

Our net interest margin and net interest spread was 3.54% and 3.27%, respectively for
the nine months ended September 30,



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2010, compared to 3.48% and 3.05%, respectively for the nine months ended September 30, 2009. For the quarter ended September 30, 2010 our net interest margin and our net interest
spread was 3.42% and 3.16%, respectively compared to 3.46% and 3.06%, respectively, for the quarter ended September 30, 2009.

Details of
the components of earning assets and interest-bearing liabilities are discussed in the following paragraphs.

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 72.81% and 73.48% of average earning assets for the nine months ended
September 30, 2010 and 2009, respectively, and 72.15%, and 72.32% for the quarter ended September 30, 2010 and 2009, respectively. Loan interest income for the nine months ended September 30, 2010 totaled $5,163,742 compared to
$5,849,283 for the same period in 2009. The annualized average yield on loans was 6.09% and 6.78% for the nine months ended September 30, 2010 and 2009, respectively. Loan interest income for the quarter ended September 30, 2010 totaled
$1,642,566 compared to $1,917,477 for the same period in 2009. For the quarter ended September 30, 2010 and 2009 the annualized average yield on loans was 5.90% and 6.59%, respectively. Average balances of loans decreased to $113,373,186 during
the nine months ended September 30, 2010, a decrease of $1,985,070 from the average of $115,358,256 during the comparable period in 2009. For the quarter ended September 30, 2010, the average balances of loans decreased by $4,887,535 from
the average balances of loans of $115,396,843 for the quarter ended September 30, 2009, to $110,509,308, for the quarter ended September 30, 2010. The decrease in the annualized yield on loans for both periods is mainly attributable to the
decline in market interest rates, the significant increase of in net loans charged off, and the significant increase in our nonaccruing loans. Fixed rate loans averaged approximately 96% and 98% of our loan portfolio during the first nine months of
2010 and 2009, respectively.

Investment securities averaged $22,687,520, or 14.57% of average earning assets, for the nine months ended
September 30, 2010, compared to $27,693,191, or 17.64% of average earning assets, for the same period in 2009. For the quarter ended September 30, 2010, investment securities averaged $21,825,994, or 14.25%, of average earning assets
compared to $28,160,742, or 17.65%, of average earnings assets, for the same period in 2009. Interest earned on investment securities was $597,330 for the nine months ended September 30, 2010, compared to $778,714, for the same period last
year. For the quarter ended September 30, 2010, interest earned on investment securities was $183,473 compared to $251,852 for the same period last year. Investment securities yielded 3.52% and 3.76% for the nine months ended September 30,
2010 and 2009, respectively. For the quarter ended September 30, 2010 and 2009 the yields on investment securities was 3.34% and 3.55%, respectively.

The largest component of interest expense is interest on deposit accounts. Interest expense for deposit accounts was $1,686,426 and $2,597,968 for the nine months ended September 30, 2010 and 2009,
respectively. For the quarter ended September 30, 2010 and 2009, interest expense was $521,189 and $797,485, respectively. The average balance of interest bearing deposits decreased to $130,535,601 during the nine months ended
September 30, 2010 from $131,309,010 during the same period last year. During the quarter ended September 30, 2010, the average balances of interest bearing deposits decreased to $127,862,613 from $132,998,368 for the same period last
year. The annualized average cost of deposits was 1.73% for the nine months ended September 30, 2010, compared to 2.65% for the same period in 2009. For the quarter ended September 30, 2010 and 2009, the annualized average cost of deposits
was 1.62% and 2.38%, respectively. The decline in the annualized cost of our deposits is due to our decision to lower the rates we paid for deposit accounts. Previously, we were paying the highest rates in our market area.

For the nine months ended September 30, 2010 and 2009, interest expense on other interest-bearing liabilities was insignificant. We did not have any
interest expense related to other borrowings for the three months ended September 30, 2010 or 2009.

Provision and Allowance for Loan
Losses

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

The
allowance is maintained at a level that we believe is sufficient to cover losses in the loan portfolio at a specific point in time. Assessing the adequacy of the allowance requires considerable judgment. The adequacy of the allowance is analyzed on
a monthly basis using an internal analysis model. For purposes of this analysis, adequacy is defined as a level sufficient to absorb probable losses in the portfolio. This methodology relies upon our judgment. Our judgments are based on our
assessment of various issues, including, but not limited to, the pace of loan growth, emerging portfolio concentrations, the



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risk management system relating to lending activities, entry into new markets, new product offerings, loan portfolio quality trends, and uncertainty in current economic and business conditions.
An allowance model is used that takes into account factors including the composition of the loan portfolio such as risk grade classifications, historical asset quality trends including, but not limited to, previous loss experience ratios, our
assessment of current economic conditions, and reviews of specific high risk sectors of the portfolio. Loans are graded at inception and are reviewed on a periodic basis to ensure that assigned risk grades are proper based on the definition of such
classification. The value of underlying collateral is also considered during such analysis. The resulting monthly model and the related conclusions are reviewed and approved by Senior Management. Our analysis of allowance adequacy includes
consideration for loan impairment. While we use the best information available to make evaluations, future adjustments to the allowance may be necessary if results differ substantially from the assumptions used in making the evaluations.

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

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

The allowance for loan losses was 1.90% and 1.72% of total loans at September 30, 2010 and 2009 respectively. The allowance for loan losses at
September 30, 2010 is reflective of the results of our allowance model methodology. We monitor and evaluate the adequacy of the allowance and loss exposure in the loan portfolio by considering the borrowers financial conditions and other
factors in the unallocated component of the allowance. Accordingly, we believe the allowance as of September 30, 2010 is adequate, based on our assessment of probable losses, and available facts and circumstances then prevailing.

The provision for loan losses is the charge to operating earnings that management feels is necessary to maintain the allowance for possible loan losses
at an adequate level. For the nine months ended September 30, 2010, the provision charged to expense was $1,626,000 as compared to $290,000 for the same period in 2009. For the three months ended September 30, 2010 and 2009, the provision
charged to expense was $415,000 and $110,000 respectively.

Noninterest Income

Noninterest income for the nine months ended September 30, 2010 was $695,843 compared to $15,746 for the comparable 2009 period. The increase is mostly attributable to the $461,935 write down of
certain investment securities for being other than temporarily impaired during the nine months ended September 30, 2009 and to the $262,011 gain realized on the sale of available-for-sale securities during the nine months ended
September 30, 2010. For the quarter ended September 30, 2010 and 2009 noninterest income was $409,846 and $153,361, respectively. This reflects an increase of $256,485, which is mainly attributable to the $262,011 gain realized on the sale
of available-for-sale securities during the quarter ended September 30, 2010. During the third quarter of 2010 we sold certain mortgage-backed securities totaling $4,562,437 because we believed they would not perform favorably in the future.

Noninterest Expense

Total
noninterest expense for the nine months ended September 30, 2010 and 2009 was $2,983,742 and $2,976,577, respectively. This represented a decrease of $7,165, or 0.24%. Salaries and employee benefits increased $28,681, or 1.91%, from $1,503,623
for the nine months ended September 30, 2009 to $1,532,304 for the comparable period in 2010. For the nine months ended September 30, 2009, other operating expense was $982,148 or $15,922 lower than the nine months ended September 30,
2009. Net occupancy and equipment expense decreased from $474,884 for the nine months ended September 30, 2009, to $469,290 for the comparable period in 2010.

Noninterest expense was $1,048,542 and $1,003,387 for the quarter ended September 30, 2010 and 2009, respectively. This represents an increase of $45,155, or 4.50%. Compared to the quarter ended
September 30, 2009, salaries and benefits increased $15,607 or 3.09% to $521,505, net occupancy and equipment expense decreased $3,435, or 2.06% to $166,053 and other operating expenses increased $32,983, or 9.96% to $363,984.

Income Taxes



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The income tax provision for the nine
and three months ended September 30, 2010 reflects an income tax expense of $10,750 and $33,000, respectively compared to a income tax expense of $237,638 and $117,000, respectively for the comparable 2009 periods. The changes in the tax
provisions relates to the changes in pre-tax income and by the relationship of the amount of non deductible items for income tax purposes that were included in net income before taxes.

Assets and Liabilities

During the first nine months of 2010, total assets decreased
$4,615,579, or 2.79%, when compared to December 31, 2009. The decrease in total assets was mainly attributable to loans, which decreased $8,274,561, or 7.11%.

For the nine months ended September 30, 2010 total liabilities decreased $4,731,652, or 3.20% from December 31, 2009 and deposits decreased $4,737,375, or 3.23%.

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

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

Loans

At September 30, 2010, our
total loans were $108,183,919 compared to $116,458,480 at December 31, 2009, a decrease of $8,274,561, or 7.11%. At September 30, 2010 and 2009, approximately 96% and 98%, respectively, of our loan portfolio consisted of fixed rate loans.
Balances within the major loans receivable categories as of September 30, 2010 and December 31, 2009 are as follows



|                                              |  |                   |             |  |                  |   |             | 
|--------------------------------------------- |  | ----------------- | ----------- |  | ---------------- | - | ----------- | 
|                                              |  | September 30,2010 |             |  | December 31,2009 |  
|Real estate  construction                    |  | $                 | 2,147,110   |  |                  | $ | 3,256,857   | 
|Real estate  mortgage                        |  |                   | 26,611,053  |  |                  |   | 31,601,663  | 
|Commercial and industrial                     |  |                   | 71,724,089  |  |                  |   | 71,750,588  | 
|Consumer and other                            |  |                   | 7,701,667   |  |                  |   | 9,849,372   | 
|                                              |  |                   |             |  |                  |   |             | 
|                                              |  |                  
|                                              |  | $                 | 108,183,919 |  |                  | $ | 116,458,480 | 
|                                              |  |                   |             |  |                  |   |             | 
|The loan portfolio consisted of loans having: |  |                   |             |  |                  |   |             | 
|Variable rates loans                          |  | $                 | 4,149,398   |  |                  | $ | 3,802,991   | 
|                                              |  |                   |             |  |                  |   |             | 
|Fixed rates                                   |  |                   | 104,034,521 |  |                  |   | 112,655,489 | 
|                                              |  |                  
|Total gross loans                             |  | $                 | 108,183,919 |  |                  | $ | 116,458,480 | 
|                                              |  |                   |             |  |                  |   |             | 

Risk Elements in the Loan Portfolio

The following table sets forth the Companys nonperforming assets at the dates indicated:



|                                                                              |  |               |            |   |      |   |           |  
|----------------------------------------------------------------------------- |  | ------------- | ---------- | - | ---- | - | --------- | -
|                                                                              |  | September 30, |           
|                                                                              |  | 2010          |            |   | 2009 |  
|Nonaccrual loans                                                              |  | $             | 5,708,894  |   |      | $ | 2,930,598 |  
|Total loans impaired not in nonaccrual                                        |  |               | 3,026,630  |   |      |   | 5,111,364 |  
|                                                                              |  |               |            |   |      |   |           |  
|Total impaired loans                                                          |  |               | 8,735,524  |   |      |   | 8,041,962 |  
|Loans 90 days or more past due and still accruing interest                    |  |               | 3,176      |   |      |   | 2,313     |  
|                                                                              |  |               |            |   |      |   |           |  
|Total impaired and nonperforming loans                                        |  |               | 8,738,700  |   |      |   | 8,044,275 |  
|Other real estate owned                                                       |  |               | 1,488,357  |   |      |   | 180,000   |  
|                                                                              |  |               |            |   |      |   |           |  
|                                                                              |  |              
|Total impaired and nonperforming assets                                       |  | $             | 10,227,057 |   |      | $ | 8,224,275 |  
|                                                                              |  |               |            |   |      |   |           |  
|                                                                              |  |              
|Total impaired and nonperforming loans to total loans                         |  |               | 8.08       | % |      |   | 6.91      | %
|                                                                              |  |              
|Allowance for loan losses as a percentage of impaired and nonperforming loans |  |               | 23.56      | % |      |   | 25.12     | %
|                                                                              |  |              
|Total nonperforming assets to total assets                                    |  |               | 6.36       | % |      |   | 4.93      | %

The following tables summarize information
on impaired loans at and for the years ended September 30, 2010 and 2009.



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|                                              |  |      |           |  |      |   |           | 
|--------------------------------------------- |  | ---- | --------- |  | ---- | - | --------- | 
|                                              |  | 2010 |           |  | 2009 |  
|                                              |  |     
|Impaired loans with specific allowance        |  | $    | 2,604,179 |  |      | $ | 2,520,895 | 
|Impaired loans with no specific allowance     |  |      | 6,131,345 |  |      |   | 5,521,067 | 
|                                              |  |      |           |  |      |   |           | 
|                                              |  |     
|Total impaired loans                          |  | $    | 8,735,524 |  |      | $ | 8,041,962 | 
|                                              |  |      |           |  |      |   |           | 
|                                              |  |     
|Related specific allowance                    |  | $    | 441,907   |  |      | $ | 920,327   | 
|                                              |  |     
|Average recorded investment in impaired loans |  | $    | 8,714,283 |  |      | $ | 5,931,886 | 

At September 30, 2010 real
estate or other collateral secured practically all of the loans that were considered impaired. In the event of foreclosure on these loans, there can be no assurance that in 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 our internal review process and applying the allowance
model methodology are the primary determining factors in managements assessment of the adequacy of the allowance for loan losses.

Activity in the Allowance for Loan Losses is as follows:



|                                                 |  |               |             |   |      |   |             |  
|------------------------------------------------ |  | ------------- | ----------- | - | ---- | - | ----------- | -
|                                                 |  | September 30, |            
|                                                 |  | 2010          |             |   | 2009 |  
|Balance, January 1,                              |  | $             | 2,053,340   |   |      | $ | 1,981,637   |  
|Provision for loan losses for the period         |  |               | 1,626,000   |   |      |   | 290,000     |  
|Net loans (charged-off) recovered for the period |  |               | (1,620,545  | ) |      |   | (250,910    | )
|                                                 |  |               |             |   |      |   |             |  
|                                                 |  |              
|Balance, end of period                           |  | $             | 2,058,795   |   |      | $ | 2,020,727   |  
|                                                 |  |               |             |   |      |   |             |  
|                                                 |  |              
|Gross loans outstanding, end of period           |  | $             | 108,183,919 |   |      | $ | 117,483,623 |  
|                                                 |  |              
|Allowance for loan losses to loans outstanding   |  |               | 1.90        | % |      |   | 1.72        | %

Deposits

Total deposits decreased $4,737,375, or 3.23% from December 31, 2009. Interest-bearing deposits decreased $4,322,964 to $128,201,711 at
September 30, 2010. Noninterest-bearing deposits decreased $414,411 to $13,748,910 at September 30, 2010. Expressed in percentages, interest-bearing deposits decreased 3.26% and noninterest-bearing deposits decreased 2.93%.

Balances within the major deposit categories are as follows:



|                                    |  |                   |             |  |                  |   |             | 
|----------------------------------- |  | ----------------- | ----------- |  | ---------------- | - | ----------- | 
|                                    |  | September 30,2010 |             |  | December 31,2009 |  
|Noninterest-bearing demand deposits |  | $                 | 13,748,910  |  |                  | $ | 14,163,321  | 
|Interest-bearing demand deposits    |  |                   | 20,026,965  |  |                  |   | 26,584,806  | 
|Savings deposits                    |  |                   | 18,055,699  |  |                  |   | 13,411,141  | 
|Certificates of deposits            |  |                   | 90,119,047  |  |                  |   | 92,528,728  | 
|                                    |  |                   |             |  |                  |   |             | 
|                                    |  |                  
|                                    |  | $                 | 141,950,621 |  |                  | $ | 146,687,996 | 
|                                    |  |                   |             |  |                  |   |             | 

Liquidity

Liquidity needs are met by us through scheduled maturities of loans and investments on the asset side and through pricing policies on the liability side
for demand deposit accounts and short-term borrowings. The level of liquidity is measured by the loan-to-total funds ratio (total deposits plus short-term borrowings), which was 76.21% at September 30, 2010 and 79.39% at December 31, 2009.



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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 September 30, 2010 the Bank had available an unused short-term line of credit to purchase up to $7,000,000 of federal
funds from unrelated correspondent institutions. The Bank also has 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, 2010, the available
credit totaled approximately $24,680,000 and there were no borrowings outstanding. Any borrowings from the Federal Home Loan Bank will be secured by a blanket lien on all of the Banks 1-4 family residential first lien mortgage loans and or
investment securities.

Interest Rate Sensitivity

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

We monitor interest rate sensitivity by measuring our interest sensitivity through a gap analysis, which is the
positive or negative dollar difference between assets and liabilities that are subject to interest rate repricing within a given time period. Currently we are liability-sensitive over periods with maturity dates of less than twelve months. However,
since interest rates and yields on various interest sensitive assets and liabilities do not all adjust in the same degree when there is a change in prevailing interest rates (such as prime rate), the traditional gap analysis is only a general
indicator of rate sensitivity and net interest income volatility. As stated in Results of Operations for the Nine Months September 30, 2010 Compared to the Nine Months Ended September 30, 2009  Net Interest Income, our
net interest margin increased. If net interest margin were to decline, net income would probably decline as well.

Capital Resources

Total shareholders equity increased from $17,745,653 at December 31, 2009 to $17,861,726 at September 30, 2010. The net
increase of $116,073 is attributable to the net income for the period of $203,639 and the net increase of $127,836 in the fair value of securities available-for-sale, net of income taxes. These increases were offset by the payment of a cash dividend
of $117,001 and the purchase of treasury stock of $98,401.

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 September 30, 2010:



|                                    |  |   |             | 
|----------------------------------- |  | - | ----------- | 
|Shareholders equity                |  | $ | 17,422,457  | 
|Less: intangibles                   |  |   |            | 
|                                    |  |   |             | 
|Tier 1 capital                      |  |   | 17,422,457  | 
|Plus: allowance for loan losses (1) |  |   | 1,471,250   | 
|                                    |  |   |             | 
|                                    | 
|Total capital                       |  | $ | 18,893,707  | 
|                                    |  |   |             | 
|                                    | 
|Net risk-weighted assets            |  | $ | 117.700.000 | 
|                                    |  |   |             | 



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|                                             |  |  |       |  
|-------------------------------------------- |  |  | ----- | -
|Risk-based capital ratios                    |  |  |       |  
|Tier 1 capital (to risk-weighted assets)     |  |  | 14.88 | %
|Total capital (to risk-weighted assets)      |  |  | 16.13 | %
|Tier 1 capital (to quarterly average assets) |  |  | 10.82 | %



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

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

Regulatory
Matters

The Dodd-Frank Wall Street Reform and Consumer Protection Act.

On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Act) which, among other things, alters the oversight and supervision
of financial institutions by federal and state regulators, introduces minimum capital requirements, creates a new federal agency to supervise consumer financial products and services, and implements changes to corporate governance and compensation
practices. Although the Act is particularly focused on large bank holding companies with consolidated assets of $50 billion or more, it does contain a number of provisions that may affect us, including:



| |  |  | Minimum Leverage and Risk-Based Capital Requirements.Under the Act, the appropriate Federal banking agencies are required to
establish minimum leverage and risk-based capital requirements on a consolidated basis for all insured depository institutions and bank holding companies, which can be no less than the currently applicable leverage and risk-based capital
requirements for depository institutions.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Deposit Insurance Modifications. The Act modifies the FDICs assessment base upon which deposit insurance premiums are
calculated. The new assessment base will equal our average total consolidated assets minus the sum of our average tangible equity during the assessment period. The Act also makes permanent the increase in maximum federal deposit insurance limits
from $100,000 to $250,000.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Creation of New Consumer Protection Bureau. The Act creates a new Bureau of Consumer Financial Protection within the Federal
Reserve with broad powers to supervise and enforce consumer protection laws. The Bureau of Consumer Financial Protection will have broad rule-making authority for a wide range of consumer protection laws that apply to all insured depository
institutions. The Bureau of Consumer Financial Protection has examination and enforcement authority over all depository institutions with more than $10 billion in assets. Depository institutions with $10 billion or less in assets, such as the Bank,
will be examined by their applicable bank regulators.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Executive Compensation and Corporate Governance Requirements. The Act includes provisions that may impact our corporate
governance, including a grant of authority to the SEC to issue rules that allow shareholders to nominate directors by using the companys proxy solicitation materials. The Act further requires the SEC to adopt rules that prohibit the listing of
any equity security of a company that does not have an independent compensation committee and require all exchange-traded companies to adopt clawback policies for incentive compensation paid to executive officers in the event of accounting
restatements based on material non-compliance with financial reporting requirements.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Many provisions of the Act will
require our regulators to adopt additional rules in order to implement the mandates included in the Act. In addition, the Act requires multiple studies which could result in additional legislative action. Governmental intervention and new
regulations under these programs could materially and adversely affect our business, financial condition and results of operations.

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

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,
2010, we had issued commitments to extend credit of approximately $6,399,000 and standby letters of credit of approximately $810,000 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.

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, 2009 as filed in 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.



|Item 3. | Quantitative and Qualitative Disclosure About Market Risk
|------- | ---------------------------------------------------------

Not applicable since we are a smaller reporting company.



|Item 4. | 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.



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##### Table of Contents



Part II
 Other Information



|Item 1 | Legal Proceedings
|------ | -----------------

There are no material
pending legal proceedings to which we are a party or of which any of our properties are the subject.



|Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds
|------ | -----------------------------------------------------------

Not applicable



|Item 1A | Risk Factors
|------- | ------------

In addition to the other
information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2009, which could materially affect our
business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial
also may materially adversely affect our business, financial condition and/or operating results.

The following risk supplement the risk
factors previously identified in our Annual Report on Form 10-K for the year ended December 31, 2009. The risks discussed below also include forward-looking statements, and our actual results may differ substantially from those discussed in
these forward-looking statements.

The Dodd-Frank Act and related regulations may adversely affect our business, financial condition,
liquidity or results of operations.

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 was enacted on
July 21, 2010. The Dodd-Frank Act creates a new Consumer Financial Protection Bureau with power to promulgate and enforce consumer protection laws. Smaller depository institutions, including those with $10 billion or less in assets, will be
subject to the Consumer Financial Protection Bureaus rule-writing authority, and existing depository institution regulatory agencies will retain examination and enforcement authority for such institutions. The Dodd-Frank Act also establishes a
Financial Stability Oversight Council chaired by the Secretary of the Treasury with authority to identify institutions and practices that might pose a systemic risk and, among other things, includes provisions affecting (1) corporate governance
and executive compensation of all companies whose securities are registered with the SEC, (2) FDIC insurance assessments, (3) interchange fees for debit cards, which would be set by the Federal Reserve under a restrictive reasonable
and proportional cost per transaction standard and (4) minimum capital levels for bank holding companies, subject to a grandfather clause for financial institutions with less than $15 billion in assets.

At this time, it is difficult to predict the extent to which the Dodd-Frank Act or the resulting regulations may adversely impact us. However, compliance
with these new laws and regulations may increase our costs, limit our ability to pursue attractive business opportunities, cause us to modify our strategies and business operations and increase our capital requirements and constraints, any of which
may have a material adverse impact on our business, financial condition, liquidity or results of operations.



|Item 3 | Default Upon Senior Securities
|------ | ------------------------------

Not
applicable



|Item 4 | Removed and Reserved
|------ | --------------------

Not applicable



|Item 5 | Other Information
|------ | -----------------

Not applicable



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##### Table of Contents



|Item 6. | Exhibits
|------- | --------

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



|     |  |                              
|---- |  | -----------------------------
|31.1 |  | Rule 15d-14(a) Certifications
|     | 
|31.2 |  | Rule 15d-14(a) Certifications
|     | 
|32   |  | Section 1350 Certifications  

SIGNATURES

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

COMMUNITYCORP



|                      |  |  |  |     |  |                                    
|--------------------- |  |  |  | --- |  | -----------------------------------
|Date: August 11, 2010 |  |  |  | By: |  | /s/ W. ROGER CROOK                 
|                      |  |  |  |     |  | W. Roger Crook                     
|                      |  |  |  |     |  | President & Chief Executive Officer
|                      |  |  | 
|Date: August 11, 2010 |  |  |  | By: |  | /s/ GWEN P. BUNTON                 
|                      |  |  |  |     |  | Gwen P. Bunton                     
|                      |  |  |  |     |  | Chief Financial Officer            



23