##### Table of Contents

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U. S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-QSB



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



For the Quarterly Period Ended June 30, 2005



OR



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



For the Transition Period from
to



Commission File Number 33-76644



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COMMUNITYCORP

(Exact name of registrant as specified in its charter)



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|                                               |  |                                     
|---------------------------------------------- |  | ------------------------------------
|South Carolina                                 |  | 57-1019001                          
|(State or other jurisdiction of incorporation) |  | (I.R.S. Employer Identification No.)



1100 N. Jefferies
Boulevard

Walterboro, SC 29488

(Address of principal executive offices, including zip code)



(843) 549-2265

(Registrants telephone number, including area code)



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Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    YES  x    NO ̈



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



244,365 shares of common stock, $5 par value, as of August
8, 2004



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



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##### Table of Contents

COMMUNITYCORP



Index



|                              |  |                                                                                                                                     |  |         
|----------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------- |  | --------
|                              |  |                                                                                                                                     |  | Page No.
|PART I. FINANCIAL INFORMATION |  |                                                                                                                                    
|                              |  |                                                                                                                                    
|Item 1.                       |  | Financial Statements (Unaudited)                                                                                                    |  |         
|                              |  |                                                                                                                                    
|                              |  | Condensed Consolidated Balance Sheets - June 30, 2005 and December 31, 2004                                                         |  | 3       
|                              |  |                                                                                                                                    
|                              |  | Condensed Consolidated Statements of Income - Six months ended June 30, 2005 and 2004 and three months ended June 30, 2005 and 2004 |  | 4       
|                              |  |                                                                                                                                    
|                              |  | Condensed Consolidated Statements of Shareholders Equity and Comprehensive Income -Six months ended June 30, 2005 and 2004         |  | 5       
|                              |  |                                                                                                                                    
|                              |  | Condensed Consolidated Statements of Cash Flows - Six months ended June 30, 2005 and 2004                                           |  | 6       
|                              |  |                                                                                                                                    
|                              |  | Notes to Condensed Consolidated Financial Statements                                                                                |  | 7       
|                              |  |                                                                                                                                    
|Item 2.                       |  | Managements Discussion or Analysis of Plan of Operations                                                                           |  | 8-15    
|                              |  |                                                                                                                                    
|Item 3.                       |  | Controls and Procedures                                                                                                             |  | 15      
|                              | 
|PART II. OTHER INFORMATION    |  |                                                                                                                                    
|                              |  |                                                                                                                                    
|Item 4.                       |  | Submission of Matters to a Vote of Security Holders                                                                                 |  | 15      
|                              |  |                                                                                                                                    
|Item 6.                       |  | Exhibits and Reports on Form 8-K                                                                                                    |  | 15      
|                              |  |                                                                                                                                    
|                              |  | (a)
Exhibits                                                                                                                        |  | 15      
|                              |  |                                                                                                                                    
|                              |  | (b)
Reports on Form 8-K                                                                                                             |  | 15      
|                              | 
|Signatures                    |  | 16                                                                                                                                 
|                              | 
|Index to Exhibits             |  | 17                                                                                                                                 



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##### Table of Contents

COMMUNITYCORP



Condensed
Consolidated Balance Sheets



|                                                                                                                                       |  |               |             |   |                  |   |             |  
|-------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ----------- | - | ---------------- | - | ----------- | -
|                                                                                                                                       |  | June 30, 2005 |             |   | December 31,2004 |  
|                                                                                                                                       |  | (Unaudited)   |             |   | (Audited)        |  
|Assets:                                                                                                                                |  |               |             |   |                  |   |             |  
|Cash and cash equivalents:                                                                                                             |  |               |             |   |                  |   |             |  
|Cash and due from banks                                                                                                                |  | $             | 5,805,814   |   |                  | $ | 3,705,335   |  
|Federal funds sold                                                                                                                     |  |               | 7,097,000   |   |                  |   | 19,046,000  |  
|                                                                                                                                       |  |               |             |   |                  |   |             |  
|Total cash and cash equivalents                                                                                                        |  |               | 12,902,814  |   |                  |   | 22,751,335  |  
|                                                                                                                                       |  |               |             |   |                  |   |             |  
|Time deposits with other banks                                                                                                         |  |               | 499,000     |   |                  |   | 499,000     |  
|                                                                                                                                       |  |              
|Investment securities:                                                                                                                 |  |               |             |   |                  |   |             |  
|Securities available-for-sale                                                                                                          |  |               | 30,687,620  |   |                  |   | 25,309,730  |  
|Nonmarketable equity securities                                                                                                        |  |               | 338,157     |   |                  |   | 305,175     |  
|Securities held-to-maturity (estimated market value of $2,333,444 and $2,269,336 at June 30, 2005 and December 31, 2004,
respectively) |  |               | 2,077,524   |   |                  |   | 2,180,728   |  
|                                                                                                                                       |  |               |             |   |                  |   |             |  
|Total investment securities                                                                                                            |  |               | 33,103,301  |   |                  |   | 27,795,633  |  
|                                                                                                                                       |  |               |             |   |                  |   |             |  
|Loans receivable                                                                                                                       |  |               | 85,164,695  |   |                  |   | 83,006,251  |  
|Less allowance for loan losses                                                                                                         |  |               | (1,484,745  | ) |                  |   | (1,456,326  | )
|                                                                                                                                       |  |               |             |   |                  |   |             |  
|Loans, net                                                                                                                             |  |               | 83,679,950  |   |                  |   | 81,549,925  |  
|                                                                                                                                       |  |              
|Accrued interest receivable                                                                                                            |  |               | 919,808     |   |                  |   | 822,240     |  
|Premises, furniture & equipment, net                                                                                                   |  |               | 3,360,728   |   |                  |   | 3,441,334   |  
|Other real estate owned                                                                                                                |  |               | 239,722     |   |                  |   | 701,880     |  
|Other assets                                                                                                                           |  |               | 573,644     |   |                  |   | 846,376     |  
|                                                                                                                                       |  |               |             |   |                  |   |             |  
|Total assets                                                                                                                           |  | $             | 135,278,967 |   |                  | $ | 138,407,723 |  
|                                                                                                                                       |  |               |             |   |                  |   |             |  
|Liabilities and Shareholders Equity:                                                                                                  |  |               |             |   |                  |   |             |  
|Liabilities:                                                                                                                           |  |               |             |   |                  |   |             |  
|Deposits:                                                                                                                              |  |               |             |   |                  |   |             |  
|Noninterest-bearing                                                                                                                    |  | $             | 14,533,169  |   |                  | $ | 16,531,784  |  
|Interest-bearing                                                                                                                       |  |               | 106,889,523 |   |                  |   | 108,379,543 |  
|                                                                                                                                       |  |               |             |   |                  |   |             |  
|                                                                                                                                       |  |               | 121,422,692 |   |                  |   | 124,911,327 |  
|                                                                                                                                       |  |              
|Short-term borrowings                                                                                                                  |  |               | 240,000     |   |                  |   | 390,000     |  
|Accrued interest payable                                                                                                               |  |               | 479,306     |   |                  |   | 295,430     |  
|Other liabilities                                                                                                                      |  |               | 84,950      |   |                  |   | 174,838     |  
|                                                                                                                                       |  |               |             |   |                  |   |             |  
|Total liabilities                                                                                                                      |  |               | 122,226,948 |   |                  |   | 125,771,595 |  
|                                                                                                                                       |  |               |             |   |                  |   |             |  
|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                                                                                                                        |  |               | 1,716,454   |   |                  |   | 1,721,023   |  
|Accumulated other comprehensive income (loss)                                                                                          |  |               | (92,119     | ) |                  |   | 32,129      |  
|Retained earnings                                                                                                                      |  |               | 13,381,272  |   |                  |   | 12,715,882  |  
|Treasury stock (55,635 shares in 2005 and 53,505 shares in 2004)                                                                       |  |               | (3,453,588  | ) |                  |   | (3,332,906  | )
|                                                                                                                                       |  |               |             |   |                  |   |             |  
|Total shareholders equity                                                                                                             |  |               | 13,052,019  |   |                  |   | 12,636,128  |  
|                                                                                                                                       |  |               |             |   |                  |   |             |  
|Total liabilities and shareholders equity                                                                                             |  | $             | 135,278,967 |   |                  | $ | 138,407,723 |  
|                                                                                                                                       |  |               |             |   |                  |   |             |  



See notes to condensed
consolidated financial statements



3



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##### Table of Contents

COMMUNITYCORP



Condensed
Consolidated Statements of Income

(Unaudited)



|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|--------------------------------------------------- |  | ------------------------- | --------- | --------------------------- | - | --------- |  | ---- | --------- |  | - | ---------
|                                                    |  | Six Months Ended June 30, |           | Three Months Ended June 30,
|                                                    |  | 2005                      |           | 2004                        |   | 2005      |  | 2004
|Interest income:                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Loans, including fees                               |  | $                         | 3,055,568 |                             | $ | 2,893,430 |  | $    | 1,588,826 |  | $ | 1,383,674
|Securities                                          |  |                           | 509,625   |                             |   | 306,463   |  |      | 275,426   |  |   | 159,523  
|Other interest income                               |  |                           | 186,078   |                             |   | 99,986    |  |      | 82,231    |  |   | 52,720   
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Total                                               |  |                           | 3,751,271 |                             |   | 3,299,879 |  |      | 1,946,483 |  |   | 1,595,917
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Interest expense:                                   |  |                           |           |                             |   |           |  |      |           |  |   |          
|Deposit accounts                                    |  |                           | 999,040   |                             |   | 763,163   |  |      | 516,482   |  |   | 381,399  
|Other interest expense                              |  |                           | 3,209     |                             |   | 170       |  |      | 1,597     |  |   | 80       
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Total                                               |  |                           | 1,002,249 |                             |   | 763,333   |  |      | 518,079   |  |   | 381,479  
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Net interest income                                 |  |                           | 2,749,022 |                             |   | 2,536,546 |  |      | 1,428,404 |  |   | 1,214,438
|                                                    |  |                           |           |                            
|Provision for loan losses                           |  |                           | 132,600   |                             |   | 220,951   |  |      | 57,600    |  |   | 75,000   
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Net interest income after provision for loan losses |  |                           | 2,616,422 |                             |   | 2,315,595 |  |      | 1,370,804 |  |   | 1,139,438
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Noninterest income:                                 |  |                           |           |                             |   |           |  |      |           |  |   |          
|Service charges                                     |  |                           | 191,132   |                             |   | 207,752   |  |      | 97,350    |  |   | 110,336  
|Other income                                        |  |                           | 86,472    |                             |   | 54,033    |  |      | 38,050    |  |   | 22,726   
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Total                                               |  |                           | 277,604   |                             |   | 261,785   |  |      | 135,400   |  |   | 133,062  
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Noninterest expenses:                               |  |                           |           |                             |   |           |  |      |           |  |   |          
|Salaries and benefits                               |  |                           | 905,017   |                             |   | 748,297   |  |      | 462,577   |  |   | 363,043  
|Net occupancy expense                               |  |                           | 113,928   |                             |   | 95,144    |  |      | 58,836    |  |   | 42,360   
|Equipment expense                                   |  |                           | 153,123   |                             |   | 152,638   |  |      | 78,273    |  |   | 63,703   
|Other operating expenses                            |  |                           | 450,860   |                             |   | 438,722   |  |      | 238,305   |  |   | 209,192  
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Total                                               |  |                           | 1,622,928 |                             |   | 1,434,801 |  |      | 837,991   |  |   | 678,298  
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Income before taxes                                 |  |                           | 1,271,098 |                             |   | 1,142,579 |  |      | 668,213   |  |   | 594,202  
|                                                    |  |                           |           |                            
|Income tax provision                                |  |                           | 404,000   |                             |   | 359,000   |  |      | 213,000   |  |   | 187,000  
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Net income                                          |  | $                         | 867,098   |                             | $ | 783,579   |  | $    | 455,213   |  | $ | 407,202  
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Earnings per share:                                 |  |                           |           |                             |   |           |  |      |           |  |   |          
|Weighted average common shares outstanding          |  |                           | 245,309   |                             |   | 247,675   |  |      | 244,866   |  |   | 247,766  
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Net income per common share                         |  | $                         | 3.53      |                             | $ | 3.16      |  | $    | 1.86      |  | $ | 1.64     
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          



See notes to condensed
consolidated financial statements



4



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##### Table of Contents

COMMUNITYCORP



Condensed
Consolidated Statement of Shareholders Equity and Comprehensive Income

for the six months ended June 30, 2005 and 2004

(Unaudited)



|                                                    |  |              |  |                |           |  |                                            |           |   |                  |   |          |               |  |   |            |   |  |   |            |   |  |   |            |  
|--------------------------------------------------- |  | ------------ |  | -------------- | --------- |  | ------------------------------------------ | --------- | - | ---------------- | - | -------- | ------------- |  | - | ---------- | - |  | - | ---------- | - |  | - | ---------- | -
|                                                    |  | Common stock |  | CapitalSurplus |           |  | AccumulatedOtherComprehensiveIncome (loss) |           |   | RetainedEarnings |   |          | TreasuryStock |  |   | Total      |  
|                                                    |  | Shares       |  | Amount         |           |  |                                            |           |  
|Balance, December 31, 2003                          |  | 300,000      |  | $              | 1,500,000 |  | $                                          | 1,731,708 |   |                  | $ | 64,545   |               |  | $ | 11,239,046 |   |  | $ | (3,295,076 | ) |  | $ | 11,240,223 |  
|                                                    |  |              |  |                |           |  |                                           
|Cash dividends declared ($.72 per share)            |  |              |  |                |           |  |                                            |           |   |                  |   |          |               |  |   | (178,421   | ) |  |   |            |   |  |   | (178,421   | )
|                                                    |  |              |  |                |           |  |                                           
|Net income for the period                           |  |              |  |                |           |  |                                            |           |   |                  |   |          |               |  |   | 783,579    |   |  |   |            |   |  |   | 783,579    |  
|                                                    |  |              |  |                |           |  |                                           
|Other comprehensive loss, net of taxes of $ 130,748 |  |              |  |                |           |  |                                            |           |   |                  |   | (248,232 | )             |  |   |            |   |  |   |            |   |  |   | (248,232   | )
|                                                    |  |              |  |                |           |  |                                            |           |   |                  |   |          |               |  |   |            |   |  |   |            |   |  |   |            |  
|Comprehensive income                                |  |              |  |                |           |  |                                            |           |   |                  |   |          |               |  |   |            |   |  |   |            |   |  |   | 535,347    |  
|                                                    |  |              |  |                |           |  |                                            |           |   |                  |   |          |               |  |   |            |   |  |   |            |   |  |   |            |  
|Sale of treasury stock                              |  |              |  |                |           |  |                                            | (10,685   | ) |                  |   |          |               |  |   |            |   |  |   | 53,285     |   |  |   | 42,600     |  
|                                                    |  |              |  |                |           |  |                                           
|Purchase of treasury stock                          |  |              |  |                |           |  |                                            |           |   |                  |   |          |               |  |   |            |   |  |   | (20,000    | ) |  |   | (20,000    | )
|                                                    |  |              |  |                |           |  |                                            |           |   |                  |   |          |               |  |   |            |   |  |   |            |   |  |   |            |  
|Balance, June 30, 2004                              |  | 300,000      |  | $              | 1,500,000 |  | $                                          | 1,721,023 |   |                  | $ | (183,687 | )             |  | $ | 11,844,204 |   |  | $ | (3,261,791 | ) |  | $ | 11,619,749 |  
|                                                    |  |              |  |                |           |  |                                            |           |   |                  |   |          |               |  |   |            |   |  |   |            |   |  |   |            |  
|Balance, December 31, 2004                          |  | 300,000      |  | $              | 1,500,000 |  | $                                          | 1,721,023 |   |                  | $ | 32,129   |               |  | $ | 12,715,882 |   |  | $ | (3,332,906 | ) |  | $ | 12,636,128 |  
|                                                    |  |              |  |                |           |  |                                           
|Cash dividends declared ($.82 per share)            |  |              |  |                |           |  |                                            |           |   |                  |   |          |               |  |   | (201,708   | ) |  |   |            |   |  |   | (201,708   | )
|                                                    |  |              |  |                |           |  |                                           
|Net income for the period                           |  |              |  |                |           |  |                                            |           |   |                  |   |          |               |  |   | 867,098    |   |  |   |            |   |  |   | 867,098    |  
|                                                    |  |              |  |                |           |  |                                           
|Other comprehensive loss, net of taxes of $65,443   |  |              |  |                |           |  |                                            |           |   |                  |   | (124,248 | )             |  |   |            |   |  |   |            |   |  |   | (124,248   | )
|                                                    |  |              |  |                |           |  |                                            |           |   |                  |   |          |               |  |   |            |   |  |   |            |   |  |   |            |  
|Comprehensive income                                |  |              |  |                |           |  |                                            |           |   |                  |   |          |               |  |   |            |   |  |   |            |   |  |   | 541,142    |  
|                                                    |  |              |  |                |           |  |                                            |           |   |                  |   |          |               |  |   |            |   |  |   |            |   |  |   |            |  
|Sale of treasury stock                              |  |              |  |                |           |  |                                            | (4,569    | ) |                  |   |          |               |  |   |            |   |  |   | 47,218     |   |  |   | 42,649     |  
|                                                    |  |              |  |                |           |  |                                           
|Purchase of treasury stock                          |  |              |  |                |           |  |                                            |           |   |                  |   |          |               |  |   |            |   |  |   | (167,900   | ) |  |   | (167,900   | )
|                                                    |  |              |  |                |           |  |                                            |           |   |                  |   |          |               |  |   |            |   |  |   |            |   |  |   |            |  
|Balance, June 30, 2005                              |  | 300,000      |  | $              | 1,500,000 |  | $                                          | 1,716,454 |   |                  | $ | (92,119  | )             |  | $ | 13,381,272 |   |  | $ | (3,453,588 | ) |  | $ | 13,052,019 |  
|                                                    |  |              |  |                |           |  |                                            |           |   |                  |   |          |               |  |   |            |   |  |   |            |   |  |   |            |  



See notes to condensed
consolidated financial statements



5



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##### Table of Contents

COMMUNITYCORP



Condensed
Consolidated Statements of Cash Flows

(Unaudited)



|                                                                                  |  |                           |            |   |      |   |             |  
|--------------------------------------------------------------------------------- |  | ------------------------- | ---------- | - | ---- | - | ----------- | -
|                                                                                  |  | Six Months Ended June 30, |           
|                                                                                  |  | 2005                      |            |   | 2004 |  
|Cash flows from operating activities:                                             |  |                           |            |   |      |   |             |  
|Net income                                                                        |  | $                         | 867,098    |   |      | $ | 783,579     |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                           |            |   |      |   |             |  
|Depreciation                                                                      |  |                           | 116,194    |   |      |   | 105,244     |  
|Provision for possible loan losses                                                |  |                           | 132,600    |   |      |   | 220,951     |  
|Amortization less accretion on investments                                        |  |                           | 16,159     |   |      |   | 123,963     |  
|Amortization of deferred loan costs                                               |  |                           | (747       | ) |      |   | 2,111       |  
|Loss on sale of other real estate owned                                           |  |                           | 2,255      |   |      |   |            |  
|Increase in interest receivable                                                   |  |                           | (97,568    | ) |      |   | (91         | )
|Increase (decrease) in interest payable                                           |  |                           | 183,876    |   |      |   | (11,224     | )
|(Increase) decrease in other assets                                               |  |                           | 337,833    |   |      |   | (65,084     | )
|Increase (decrease) in other liabilities                                          |  |                           | (89,888    | ) |      |   | 279,387     |  
|                                                                                  |  |                           |            |   |      |   |             |  
|Net cash provided by operating activities                                         |  |                           | 1,467,812  |   |      |   | 1,438,836   |  
|                                                                                  |  |                           |            |   |      |   |             |  
|Cash flows from investing activities:                                             |  |                           |            |   |      |   |             |  
|Net (increase) decrease in loans to customers                                     |  |                           | (2,261,878 | ) |      |   | 319,139     |  
|Purchases of securities available-for-sale                                        |  |                           | (7,536,704 | ) |      |   | (12,553,311 | )
|Maturities of securities available-for-sale                                       |  |                           | 1,952,951  |   |      |   | 6,148,350   |  
|Purchases of securities held-to-maturity                                          |  |                           | (200,000   | ) |      |   |            |  
|Proceeds from maturities of securities held-to-maturity                           |  |                           | 303,217    |   |      |   | 457,685     |  
|Proceeds from the sale of other real estate owned                                 |  |                           | 460,245    |   |      |   |            |  
|Purchases of time deposits with other banks                                       |  |                           |           |   |      |   | (200,000    | )
|(Increase) decrease in nonmarketable equity securities                            |  |                           | (32,982    | ) |      |   | 17,000      |  
|Purchases of premises and equipment                                               |  |                           | (35,588    | ) |      |   | (284,202    | )
|                                                                                  |  |                           |            |   |      |   |             |  
|Net cash used by investing activities                                             |  |                           | (7,350,739 | ) |      |   | (6,095,339  | )
|                                                                                  |  |                           |            |   |      |   |             |  
|Cash flows from financing activities:                                             |  |                           |            |   |      |   |             |  
|Net increase (decrease) in deposit accounts                                       |  |                           | (3,488,635 | ) |      |   | 4,335,845   |  
|Decrease in short-term borrowings                                                 |  |                           | (150,000   | ) |      |   | (100,000    | )
|Dividends paid                                                                    |  |                           | (201,708   | ) |      |   | (178,421    | )
|Sale of treasury stock                                                            |  |                           | 42,649     |   |      |   | 42,600      |  
|Purchase of treasury stock                                                        |  |                           | (167,900   | ) |      |   | (20,000     | )
|                                                                                  |  |                           |            |   |      |   |             |  
|Net cash provided by financing activities                                         |  |                           | (3,965,594 | ) |      |   | 4,080,024   |  
|                                                                                  |  |                           |            |   |      |   |             |  
|Net decrease in cash and cash equivalents                                         |  |                           | (9,848,521 | ) |      |   | (576,479    | )
|                                                                                  |  |                          
|Cash and cash equivalents, beginning of period                                    |  |                           | 22,751,335 |   |      |   | 21,229,983  |  
|                                                                                  |  |                           |            |   |      |   |             |  
|Cash and cash equivalents, end of period                                          |  | $                         | 12,902,814 |   |      | $ | 20,653,504  |  
|                                                                                  |  |                           |            |   |      |   |             |  
|Cash paid during the period for:                                                  |  |                           |            |   |      |   |             |  
|Income taxes                                                                      |  | $                         | 105,620    |   |      | $ | 155,500     |  
|Interest                                                                          |  | $                         | 818,373    |   |      | $ | 774,557     |  



See notes to condensed
consolidated financial statements



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##### Table of Contents

COMMUNITYCORP



NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



NOTE 1 - BASIS OF PRESENTATION



The accompanying consolidated financial statements have been prepared in accordance with the requirements for interim financial statements and, accordingly, they are
condensed and omit disclosures, which would substantially duplicate those contained in the most recent annual report to shareholders. The financial statements as of June 30, 2005 and for the interim periods ended June 30, 2005 and 2004 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, 2004 has been derived from the audited financial
statements as of that date. For further information, refer to the financial statements and the notes included in CommunityCorps 2004 Annual Report.



NOTE 2 - COMPREHENSIVE INCOME



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



|                                                                   |  |                |          |   |                     |   |         |                   |  |   |          |  
|------------------------------------------------------------------ |  | -------------- | -------- | - | ------------------- | - | ------- | ----------------- |  | - | -------- | -
|                                                                   |  | Pre-tax Amount |          |   | Tax(Expense)Benefit |   |         | Net-of-tax Amount | 
|For the Six Months Ended June 30, 2005:                            |  |                |          |   |                     |   |         |                   |  |   |          |  
|Unrealized losses on securities available-for-sale                 |  | $              | (189,691 | ) |                     | $ | 65,443  |                   |  | $ | (124,248 | )
|Plus: reclassification adjustment for gains realized in net income |  |                |         |   |                     |   |        |                   |  |   |         |  
|                                                                   |  |                |          |   |                     |   |         |                   |  |   |          |  
|Net unrealized losses on securities                                |  |                | (189,691 | ) |                     |   | 65,443  |                   |  |   | (124,248 | )
|                                                                   |  |                |          |   |                     |   |         |                   |  |   |          |  
|Other comprehensive loss                                           |  | $              | (189,691 | ) |                     | $ | 65,443  |                   |  | $ | (124,248 | )
|                                                                   |  |                |          |   |                     |   |         |                   |  |   |          |  
|For the Six Months Ended June 30, 2004:                            |  |                |          |   |                     |   |         |                   |  |   |          |  
|Unrealized gains on securities available-for-sale                  |  | $              | (378,980 | ) |                     | $ | 130,748 |                   |  | $ | (248,232 | )
|Plus: reclassification adjustment for gains realized in net income |  |                |         |   |                     |   |        |                   |  |   |         |  
|                                                                   |  |                |          |   |                     |   |         |                   |  |   |          |  
|Net unrealized gains on securities                                 |  |                | (378,980 | ) |                     |   | 130,748 |                   |  |   | (248,232 | )
|                                                                   |  |                |          |   |                     |   |         |                   |  |   |          |  
|Other comprehensive income                                         |  | $              | (378,980 | ) |                     | $ | 130,748 |                   |  | $ | (248,232 | )
|                                                                   |  |                |          |   |                     |   |         |                   |  |   |          |  
|For the Three Months Ended June 30, 2005:                          |  |                |          |   |                     |   |         |                   |  |   |          |  
|Unrealized gains on securities available-for-sale                  |  | $              | 99,675   |   |                     | $ | (52,956 | )                 |  | $ | 46,719   |  
|Plus: reclassification adjustment for gains realized in net income |  |                |         |   |                     |   |        |                   |  |   |         |  
|                                                                   |  |                |          |   |                     |   |         |                   |  |   |          |  
|Net unrealized gains on securities                                 |  |                | 99,675   |   |                     |   | (52,956 | )                 |  |   | 46,719   |  
|                                                                   |  |                |          |   |                     |   |         |                   |  |   |          |  
|Other comprehensive income                                         |  | $              | 99,675   |   |                     | $ | (52,956 | )                 |  | $ | 46,719   |  
|                                                                   |  |                |          |   |                     |   |         |                   |  |   |          |  
|For the Three Months Ended June 30, 2004:                          |  |                |          |   |                     |   |         |                   |  |   |          |  
|Unrealized gains on securities available-for-sale                  |  | $              | (520,435 | ) |                     | $ | 179,550 |                   |  | $ | (340,885 | )
|Plus: reclassification adjustment for gains realized in net income |  |                |         |   |                     |   |        |                   |  |   |         |  
|                                                                   |  |                |          |   |                     |   |         |                   |  |   |          |  
|Net unrealized gains on securities                                 |  |                | (520,435 | ) |                     |   | 179,550 |                   |  |   | (340,885 | )
|                                                                   |  |                |          |   |                     |   |         |                   |  |   |          |  
|Other comprehensive income                                         |  | $              | (520,435 | ) |                     | $ | 179,550 |                   |  | $ | (340,885 | )
|                                                                   |  |                |          |   |                     |   |         |                   |  |   |          |  



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



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##### Table of Contents

COMMUNITYCORP



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



The following is a discussion of the Companys financial condition as of June 30, 2005 compared to December 31, 2004, and the results of operations for the three and six months ended June 30, 2004 compared to the
three and six months ended June 30, 2004. These comments should be read in conjunction with the Companys condensed consolidated financial statements and accompanying footnotes appearing in this report. This report contains
forward-looking statements relating to, without limitation, future economic performance, plans and objectives of management for future operations, and projections of revenues and other financial items that are based on the beliefs of the
Companys management, as well assumptions made by and information currently available to the Companys management. The words expect, estimate, anticipate and believe, as well as similar
expressions, are intended to identify forward-looking statements. The Companys actual results may differ materially from the results discussed in the forward-looking statements, and the Companys operating performance each quarter is
subject to various risks and uncertainties that are discussed in detail in the Companys filings with the Securities and Exchange Commission.



Results of Operations



Net Interest Income



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



Net interest income for the six months ended June 30, 2005, was $2,749,022, compared to $2,536,546 for the same period last year, an
increase of 8.38%. For the quarter ended June 30, 2005, net interest income was $1,428,404, compared to $1,214,438 for the quarter ended June 30, 2004 an increase of 17.62%. The increase in both periods was primarily attributable to the increase in
the balances of earning assets plus the impact of higher yields earned on these balances.



For the six months ended June 30, 2005, average-earning assets totaled $130,153,585 with an annualized average yield of 5.81%, compared to $118,084,611 and 5.60%, respectively, for the same period last year. Average
interest-bearing liabilities totaled $108,069,062 with an annualized average cost of 1.87% for the six months ended June 30, 2005, compared to $99,312,071 and 1.54%, respectively, for the same period last year. For the quarter ended June 30, 2005,
average-earning assets totaled $129,553,986 with an annualized average yield of 6.03%, compared to $117,392,107 and 5.45%, respectively, for the same period last year. Average interest-bearing liabilities totaled $107,211,445 with an annualized
average cost of 1.94% for the three months ended June 30, 2005, compared to $99,047,760 and 1.54%, respectively, for the same period last year.



Our net interest margin was 4.26% and 4.31% for the six months ended June 30, 2005 and 2004, respectively. For the quarter ended June 30, 2005 and 2004, net interest
margin was 4.42% and 4.15%, respectively.



Our annualized yield on earning
assets increased 21 and 58 basis points during the six months and quarter ended June 30, 2005, respectively, from the annualized yield on earnings assets for the same periods last year. Annualized average cost of our interest-bearing liabilities
also increased 33 and 40 basis points during the six months and quarter ended June 30, 2005, respectively, from the annualized average cost of our interest-bearing liabilities for the same periods last year. Details of the components of earning
assets and interest-bearing liabilities are discussed in the following paragraphs.



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##### Table of Contents

COMMUNITYCORP



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



Net Interest Income (continued)



Because loans often provide a higher yield than other types of earning
assets, one of our goals is to maintain our loan portfolio as the largest component of total earning assets. Loans comprised approximately 64.89% and 67.20% of average earning assets for the six months ended June 30, 2005 and 2004, respectively, and
65.55%, and 67.54% for the quarter ended June 30, 2005 and 2004, respectively. Loan interest income for the six months ended June 30, 2005 totaled $3,055,568, compared to $2,893,430 for the same period in 2004. The annualized average yield on loans
was 7.30% and 7.31% for the six months ended June 30, 2005 and 2004, respectively. Loan interest income for the quarter ended June 30, 2005 totaled $1,588,826, compared to $1,383,674 for the same period in 2004. For the quarter ended June 30, 2005
and 2004 the annualized average yield on loans was 7.50% and 7.00%, respectively. Average balances of loans increased to $84,456,413 during the six months ended June 30, 2005, an increase of $5,105,219 over the average of $79,351,194 during the
comparable period in 2004. For the quarter ended June 30, 2005, the average balances of loans increased by $5,638,219 over the average balances of loans of $79,281,701 for the quarter ended June 30, 2004. Fixed rate loans comprised of approximately
95% of our loan portfolio for all periods presented.



Investment securities
averaged $31,038,316, or 23.85% of average earning assets, for the six months ended June 30, 2005, compared to $20,014,934 or 16.95% of average earning assets, for the same period in 2004. For the quarter ended June 30, 2005, investment securities
averaged $32,830,770, or 25.34%, of average earning assets compared to $19,099,759 or 16.27% of average earnings assets, for the same period in 2004. Interest earned on investment securities amounted to $509,625 for the six months ended June 30,
2005, compared to $306,463 for the same period last year. For the quarter ended June 30, 2005, interest earned on investment securities amounted to $275,426 compared to $159,523 for the same period last year. Investment securities yielded 3.31% and
3.18% for the six months ended June 30, 2005 and 2004, respectively. For the quarter ended June 30, 2005 and 2004 the yields on investment securities was 3.36% and 3.35%, respectively.



Total interest expense for the six months ended June 30, 2005 and 2004 was $1,002,249 and $763,333, respectively. For the quarter ended June
30, 2005 and 2004, interest expense was $518,079 and 381,479, respectively. The largest component of interest expense is interest on deposit accounts. Interest expense for deposit accounts was $999,040 and $763,163, for the six months ended June 30,
2005 and 2004, respectively. The average balance of deposits increased to $107,714,172 during the six months ended June 30, 2005 from $98,985,780 during the same period last year. During the quarter ended June 30, 2005, the average balances of
deposits increased to $106,915,237 from $98,709,175 for the same period last year. The annualized average cost of deposits was 1.87% for the six months ended June 30, 2005, compared to 1.55% for the same period in 2004. For the quarter ended June
30, 2005 and 2004, the annualized average cost of deposits was 1.94% and 1.55%, respectively.



For the six months ended June 30, 2005 and 2004, the total annualized average cost of funds was 1.87% and 1.54%, respectively. The overall cost of funds was 1.94% and 1.54 % for the quarter ended June 30, 2005, and
2004, respectively.



Provision and Allowance for Loan Losses



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



The allowance is maintained at a level that we believe is sufficient to cover losses in the loan portfolio at a specific point in time.
Assessing the adequacy of the allowance requires considerable judgment. The adequacy of the allowance is analyzed on a monthly basis using an internal analysis model. For purposes of this analysis, adequacy is defined as a level sufficient to absorb
probable losses in the portfolio. This methodology relies upon our judgment. Our judgments are based on our assessment of various issues, including, but not limited to, the pace of loan growth, emerging portfolio concentrations, the risk management
system relating to lending activities, entry into new markets, new product offerings, loan portfolio quality trends, and uncertainty in current 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.



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COMMUNITYCORP



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



Provision and Allowance for Loan Losses (continued)



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



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



The provision for loan losses is the charge to operating earnings that management feels is
necessary to maintain the allowance for possible loan losses at an adequate level. For the six months ended June 30, 2005, the provision charged to expense was $132,600 as compared to $220,951 in the same period in 2004. For the three months ended
June 30, 2005, the provision charged to expense was $57,600 as compared to $75,000 in the same period in 2004.



The allowance for loan losses was 1.74% of total loans at June30, 2005 and 2004. The allowance for loan losses at June 30, 2005 is reflective of the results of our allowance model methodology. We monitor and evaluate
the adequacy of the allowance and loss exposure in the loan portfolio by considering the borrowers financial conditions and other factors in the unallocated component of the allowance model methodology. Accordingly, we believe the allowance as
of June 30, 2005 is adequate, based on our assessment of probable losses, and available facts and circumstances then prevailing.



Noninterest Income



Noninterest income during the six months ended June 30, 2005 was $277,604, an increase of $15,819 or 6.04% from the comparable period in 2004. Service charges on deposit accounts decreased $16,620 from the period
ended June 30, 2004 to $191,132 for the period ended June 30, 2005. The decrease is mainly attributable to the closing of problem accounts and being more selective in opening new accounts that could potentially be problematic. Other income increased
60.04% to $86,472 for the six months ended June 30, 2005 when compared to the same period ended June 30, 2004. This increase is mostly attributable to fees received from the outsourcing of processing the Banks cashiers checks.



For the quarter ended June 30, 2005, noninterest income increased $2,338 or
1.76% over the same period in 2004. Other income increased 67.43% from the quarter ended June 30, 2004 to $38,050 for the quarter ended June 30, 2005 which was offset by a decrease of $12,986 or 11.77% in service charges from the quarter ended June
30, 2004 to $97,350 for the quarter ended June 30, 2005. These changes were attributable to the same reasons as noted above.



Noninterest Expense



Total noninterest expense for the six months ended June 30, 2005 increased $188,127 or 13.11% over the same period in 2004. Salaries and employee benefits increased $156,720 from the six months ended June 30, 2004 to
$905,017 for the six months ended June 30, 2005. This increase is primarily attributable to normal salary increases plus the staff for the new Ridgeland branch, which became fully operational during the first quarter of 2005. Other operating
expenses increased $12,138 or 2.77% to $450,860 for the six months ended June 30, 2005 when compared to the same period in 2004. Net occupancy and equipment expense increased $19,269 for the six months ended June 30, 2005 to $267,051. The opening of
the new Ridgeland branch was primarily attributable for the increase in all expense categories.



10



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##### Table of Contents

COMMUNITYCORP



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



Noninterest Expensecontinued



For the quarter ended June 30, 2005, noninterest expense increased
$159,693 or 23.54% over the same period in 2004. Salaries and benefits increased $99,534 or 27.42% over the same period in 2004. Net occupancy and equipment expense, which increased $31,046 or 29.27% over the same period in 2004. Other operating
expenses increased $29,113 or 13.92% over the same period in 2004. The increase in all expense categories was primarily attributable to the opening of the new Ridgeland branch.



Income Taxes



The income tax provision for the six months ended June 30, 2005 was $404,000 as compared to $359,000 for the same period in 2004. This increase was primarily a result of
the increase in income before taxes. The effective tax rates were 31.78% for the six months ended June 30, 2005 and 31.42% for the six months ended June 30, 2004. The effective tax rates were 31.88% and 31.47% for the quarter ended June 30, 2005 and
June 30, 2004, respectively.



Net Income



The combination of the above factors resulted in net income for the six months ended June
30, 2005 of $867,098 as compared to $783,579 for the same period in 2004. This represents an increase of $83,519 or 10.66% over the same period in 2004. Net income for the quarter ended June 30, 2005 increased $48,011 or 11.79% over the same period
in 2004.



Assets and Liabilities



During the first six months of 2005, total assets decreased $3,128,756, or 2.26%, when
compared to December 31, 2004. This decrease was due primarily to the decline in federal funds that were used to fund the $3,488,635 net decrease in total deposits.



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



Our loan portfolio during the six months ended June 30, 2005 increased $2,158,444 or 2.60%
during the period. Balances within the major loans receivable categories as of June 30, 2005 and December 31, 2004 are as follows:



|                           |  |               |            |                  |   |           
|-------------------------- |  | ------------- | ---------- | ---------------- | - | ----------
|                           |  | June 30, 2005 |            | December 31,2004
|Real estate  construction |  | $             | 4,268,051  |                  | $ | 4,695,143 
|Real estate  mortgage     |  |               | 36,282,662 |                  |   | 39,203,590
|Commercial and industrial  |  |               | 33,470,035 |                  |   | 27,991,611
|Consumer and other         |  |               | 11,143,947 |                  |   | 11,115,907
|                           |  |               |            |                  |   |           
|                           |  | $             | 85,164,695 |                  | $ | 83,006,251
|                           |  |               |            |                  |   |           



11



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##### Table of Contents

COMMUNITYCORP



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



Risk Elements in the Loan Portfolio



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



|                                                   |  |          |           |      |   |          
|-------------------------------------------------- |  | -------- | --------- | ---- | - | ---------
|                                                   |  | June 30,
|                                                   |  | 2005     |           | 2004
|Nonaccrual loans                                   |  | $        | 893,555   |      | $ | 2,358,961
|                                                   |  |         
|Accruing loans more than 90 days past due          |  | $        | 2,144     |      | $ | 1,142    
|                                                   |  |         
|Loans identified by the internal review mechanism: |  |          |           |      |   |          
|Criticized                                         |  | $        | 241,124   |      | $ | 1,130,623
|Classified                                         |  | $        | 1,316,632 |      | $ | 1,915,959



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



At June 30, 2005 real estate or other collateral secured practically all of the loans that were criticized and classified. In the event of foreclosure on these loans,
there can be no assurance that in the case of liquidation the collateral can be sold for its estimated fair market value or even for an amount at least equal to or greater than the loan amount.



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



Activity in the Allowance for Loan Losses is as follows:



|                                                 |  |          |            |   |      |   |            |  
|------------------------------------------------ |  | -------- | ---------- | - | ---- | - | ---------- | -
|                                                 |  | June 30, |           
|                                                 |  | 2005     |            |   | 2004 |  
|Balance, January 1,                              |  | $        | 1,456,326  |   |      | $ | 1,270,062  |  
|Provision for loan losses for the period         |  |          | 132,600    |   |      |   | 220,951    |  
|Net loans (charged-off) recovered for the period |  |          | (104,181   | ) |      |   | (102,009   | )
|                                                 |  |          |            |   |      |   |            |  
|Balance, end of period                           |  | $        | 1,484,745  |   |      | $ | 1,389,004  |  
|                                                 |  |          |            |   |      |   |            |  
|Gross loans outstanding, end of period           |  | $        | 85,164,695 |   |      | $ | 79,746,055 |  
|                                                 |  |         
|Allowance for loan losses to loans outstanding   |  |          | 1.74       | % |      |   | 1.74       | %



Deposits



Total deposits decreased $3,488,635 or 2.79% from December 31, 2004. The largest change was
a decrease in noninterest-bearing deposits. Noninterest-bearing deposits decreased $1,998,615 to $14,533,169 at June 30, 2005. Interest-bearing deposits decreased $1,490,020 to $106,889,523 at June 30, 2005. Expressed in percentages,
noninterest-bearing deposits decreased 12.09%, interest-bearing deposits decreased 1.37%.



12



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##### Table of Contents

COMMUNITYCORP



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



Deposits (continued)



Balances within the major deposit categories are as follows:



|                                    |  |               |             |                  |   |            
|----------------------------------- |  | ------------- | ----------- | ---------------- | - | -----------
|                                    |  | June 30, 2005 |             | December 31,2004
|Noninterest-bearing demand deposits |  | $             | 14,533,169  |                  | $ | 16,531,784 
|Interest-bearing demand deposits    |  |               | 24,403,514  |                  |   | 27,151,995 
|Savings deposits                    |  |               | 21,649,077  |                  |   | 24,075,836 
|Certificates of deposits            |  |               | 60,836,932  |                  |   | 57,151,712 
|                                    |  |               |             |                  |   |            
|                                    |  | $             | 121,422,692 |                  | $ | 124,911,327
|                                    |  |               |             |                  |   |            



Liquidity



Liquidity needs are met by us through scheduled maturities of loans and investments on the
asset side and through pricing policies on the liability side for demand deposit accounts. The level of liquidity is measured by the loan-to-total funds ratio, which was at 70.00% at June 30, 2005 and 66.25% at December 31, 2004.



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



At June 30, 2005 we had available an unused short-term line of credit to purchase up to
$3,800,000 of federal funds from an unrelated correspondent institution. We also have a credit availability agreement with the Federal Home Loan Bank totaling 15 percent of the Banks assets as of any quarter end. As of June 30, 2005, the
available credit totaled $20,300,000, and there were no borrowings outstanding. Any borrowings from the Federal Home Loan Bank will be secured by liens on all of the Banks 1-4 family residential first lien mortgage loans.



Interest Rate Sensitivity



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



We monitor interest rate sensitivity by measuring our interest sensitivity through a gap analysis, which is the positive or negative dollar difference between
assets and liabilities that are subject to interest rate repricing within a given time period. However, since interest rates and yields on various interest sensitive assets and liabilities do not all adjust in the same degree when there is a change
in prevailing interest rates (such as prime rate), the traditional gap analysis is only a general indicator of rate sensitivity and net interest income volatility. As stated in Results of Operations for the Six Months Ended June 30, 2005
Compared to the Six Months Ended June 30, 2004  Net Interest Income, our net interest margin has decreased during the current year. If net interest margin continues to decline, net income will likely decline also.



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



Capital Resources



Total shareholders equity increased from $12,636,128 at December 31, 2004 to
$13,052,019 at June 30, 2005. The net increase of $415,891 is attributable to earnings for the period of $867,098 before the payment of $201,708 in cash dividends, the net decrease for the period of $124,248 in the fair value of securities
available-for-sale and the net decrease of $125,251 from the sales and purchases of treasury stock.



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



The following table summarizes the Banks risk-based capital at June 30, 2005:



|                                             |  |   |            |  
|-------------------------------------------- |  | - | ---------- | -
|Shareholders equity                         |  | $ | 13,100,249 |  
|Less: intangibles                            |  |   |           |  
|                                             |  |   |            |  
|Tier 1 capital                               |  |   | 13,100,249 |  
|Plus: allowance for loan losses (1)          |  |   | 1,202,438  |  
|                                             |  |   |            |  
|Total capital                                |  | $ | 14,302,687 |  
|                                             |  |   |            |  
|Net risk-weighted assets                     |  | $ | 96,195,000 |  
|                                             |  |   |            |  
|Risk-based capital ratios                    |  |   |            |  
|Tier 1 capital (to risk-weighted assets)     |  |   | 13.62      | %
|Total capital (to risk-weighted assets)      |  |   | 14.87      | %
|Tier 1 capital (to quarterly average assets) |  |   | 9.52       | %
|                                             |  |   |            |  

---

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



The Federal Reserve Board has similar requirements for bank holding companies. The Company is currently not subject to these requirements because the Federal Reserve
guidelines contain an exemption for bank holding companies of less than $150,000,000 in consolidated assets.



Off-Balance Sheet Risk



Through the
operations of our Bank, we have made contractual commitments to extend credit in the ordinary course of our business activities. These commitments are legally binding agreements to lend money to our customers at predetermined interest rates for a
specified period of time. At June 30, 2005, we had issued commitments to extend credit of $10,247,000 and standby letters of credit of $1,149,000 through various types of commercial lending arrangements. We evaluate each customers credit
worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by us upon extension of credit, is based on our credit evaluation of the borrower. Collateral varies but may include accounts receivable, inventory, property,
plant and equipment, commercial and residential real estate.



Regulatory
Matters



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



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



Critical Accounting Policies



We have adopted various accounting policies which govern the application of accounting
principles generally accepted in the United States in the preparation of our financial statements. Our significant accounting policies are described in the notes to the consolidated financial statements at December 31, 2004 as filed in our annual
report on Form 10-KSB. Certain accounting policies involve significant judgments and assumptions by us, which have a material impact on the carrying value of certain assets and liabilities. We consider these accounting policies to be critical
accounting policies. The judgments and assumptions we use are based on historical experience and other factors, which we believe to be reasonable under the circumstances. Because of the nature of the judgments and assumptions we make, actual results
could differ from these judgments and estimates which could have a material impact on our carrying values of assets and liabilities and our results of operations.



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



Recently Issued Accounting Standards



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



Item 3. Controls and Procedures.



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



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



PART II - OTHER INFORMATION



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



On April 27, 2005, the Company held its Annual Meeting of Shareholders for the purpose of electing three directors for three-year terms.



The nominees for director received the number of affirmative votes of shareholders required for such nominees election in accordance
with the Bylaws of the Company with 226,825 shareholders voting for the nominees out of a total 244,365 outstanding shareholders. There were no abstention votes or no votes against their election. There were no votes withheld.



Item 6. Exhibits and Reports on Form 8-K



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



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



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



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



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



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



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SIGNATURES



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



|                     |  |               |  |                                    
|-------------------- |  | ------------- |  | -----------------------------------
|                     |  | COMMUNITYCORP
|                     |  |              
|                     |  | By:           |  | /s/ W. ROGER CROOK                 
|                     |  |               |  | W. Roger Crook                     
|                     |  |               |  | President & Chief Executive Officer
|                     |  |              
|Date: August 8, 2005 |  | By:           |  | /s/ GWEN P. BUNTON                 
|                     |  |               |  | Gwen P. Bunton                     
|                     |  |               |  | Chief Financial Officer            



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Index To Exhibits



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



17