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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 June 30, 2008

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   ̈    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                         |  |  ̈ |  | Smaller reporting company |  | x
|(Do not check if a smaller reporting company) |  |   |  |                          

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:

240,106 shares of common stock, $5.00 par value, as of July 17, 2008









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COMMUNITYCORP



Index



|                              |  |                                                                                                                                     |  |     
|----------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------- |  | ----
|                              |  | Page No.                                                                                                                           
|PART I. FINANCIAL INFORMATION |  |                                                                                                                                    
|                              |  |                                                                                                                                    
|Item 1.                       |  | Financial Statements (Unaudited)                                                                                                    |  |     
|                              |  |                                                                                                                                    
|                              |  | Condensed Consolidated Balance Sheets - June 30, 2008 and December 31, 2007 (audited)                                               |  | 3   
|                              |  |                                                                                                                                    
|                              |  | Condensed Consolidated Statements of Income - Six months ended June 30, 2008 and 2007 and three months ended June 30, 2008 and 2007 |  | 4   
|                              |  |                                                                                                                                    
|                              |  | Condensed Consolidated Statements of Shareholders Equity and Comprehensive Income (Loss) - Six months ended June 30, 2008 and 2007 |  | 5   
|                              |  |                                                                                                                                    
|                              |  | Condensed Consolidated Statements of Cash Flows - Six months ended June 30, 2008 and 2007                                           |  | 6   
|                              |  |                                                                                                                                    
|                              |  | Notes to Condensed Consolidated Financial Statements                                                                                |  | 7-8 
|                              |  |                                                                                                                                    
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                               |  | 9-16
|                              |  |                                                                                                                                    
|Item 3                        |  | Quantitative and Qualitative Disclosure About Market Risk                                                                           |  | 16  
|                              |  |                                                                                                                                    
|Item 4                        |  | Controls and Procedures                                                                                                             |  | 16  
|                              | 
|PART II. - OTHER INFORMATION  |  |                                                                                                                                    
|                              |  |                                                                                                                                    
|Item 1                        |  | Legal Proceedings                                                                                                                   |  | 17  
|                              |  |                                                                                                                                    
|Item 2                        |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                         |  | 17  
|                              |  |                                                                                                                                    
|Item 3                        |  | Defaults Under Senior Securities                                                                                                    |  | 17  
|                              |  |                                                                                                                                    
|Item 4                        |  | Submission of Matters to a Vote of Security Holders                                                                                 |  | 17  
|                              |  |                                                                                                                                    
|Item 5                        |  | Other Information                                                                                                                   |  | 17  
|                              |  |                                                                                                                                    
|Item 6                        |  | Exhibits                                                                                                                            |  | 17  
|                              | 
|Signatures                    |  | 18                                                                                                                                 



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COMMUNITYCORP



PART I.  Financial Information



|Item 1. | Financial Statements
|------- | --------------------

Condensed Consolidated Balance Sheets



|                                                                                                                            |  |              |             |   |                  |   |             |  
|--------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ----------- | - | ---------------- | - | ----------- | -
|                                                                                                                            |  | June 30,2008 |             |   | December 31,2007 |  
|                                                                                                                            |  | (Unaudited)  |             |   | (Audited)        |  
|Assets:                                                                                                                     |  |              |             |   |                  |   |             |  
|Cash and cash equivalents:                                                                                                  |  |              |             |   |                  |   |             |  
|Cash and due from banks                                                                                                     |  | $            | 4,388,355   |   |                  | $ | 4,929,768   |  
|Federal funds sold                                                                                                          |  |              | 13,191,000  |   |                  |   | 1,991,000   |  
|                                                                                                                            |  |              |             |   |                  |   |             |  
|Total cash and cash equivalents                                                                                             |  |              | 17,579,355  |   |                  |   | 6,920,768   |  
|                                                                                                                            |  |              |             |   |                  |   |             |  
|Time deposits with other banks                                                                                              |  |              | 200,000     |   |                  |   |            |  
|Investment securities:                                                                                                      |  |              |             |   |                  |   |             |  
|Available-for-sale                                                                                                          |  |              | 34,659,978  |   |                  |   | 34,585,073  |  
|Held-to-maturity (estimated market value of $1,333,254 and $1,340,314 at June 30, 2008 and December 31, 2007,
respectively) |  |              | 1,319,556   |   |                  |   | 1,819,481   |  
|Nonmarketable equity securities                                                                                             |  |              | 508,435     |   |                  |   | 347,257     |  
|                                                                                                                            |  |              |             |   |                  |   |             |  
|Total investment securities                                                                                                 |  |              | 36,487,969  |   |                  |   | 36,751,811  |  
|                                                                                                                            |  |              |             |   |                  |   |             |  
|Loans receivable                                                                                                            |  |              | 109,889,326 |   |                  |   | 114,597,378 |  
|Less allowance for loan losses                                                                                              |  |              | (1,958,463  | ) |                  |   | (1,929,319  | )
|                                                                                                                            |  |              |             |   |                  |   |             |  
|Loans, net                                                                                                                  |  |              | 107,930,863 |   |                  |   | 112,668,059 |  
|Premises, furniture & equipment, net                                                                                        |  |              | 2,997,051   |   |                  |   | 2,989,119   |  
|Accrued interest receivable                                                                                                 |  |              | 1,168,369   |   |                  |   | 1,297,946   |  
|Other assets                                                                                                                |  |              | 935,150     |   |                  |   | 691,984     |  
|                                                                                                                            |  |              |             |   |                  |   |             |  
|Total assets                                                                                                                |  | $            | 167,298,757 |   |                  | $ | 161,319,687 |  
|                                                                                                                            |  |              |             |   |                  |   |             |  
|Liabilities and Shareholders Equity:                                                                                       |  |              |             |   |                  |   |             |  
|Liabilities:                                                                                                                |  |              |             |   |                  |   |             |  
|Deposits:                                                                                                                   |  |              |             |   |                  |   |             |  
|Noninterest-bearing                                                                                                         |  | $            | 16,099,928  |   |                  | $ | 16,461,238  |  
|Interest-bearing                                                                                                            |  |              | 132,726,613 |   |                  |   | 123,133,074 |  
|                                                                                                                            |  |              |             |   |                  |   |             |  
|                                                                                                                            |  |              | 148,826,541 |   |                  |   | 139,594,312 |  
|Short-term borrowings                                                                                                       |  |              | 100,000     |   |                  |   | 3,068,000   |  
|Accrued interest payable                                                                                                    |  |              | 1,207,378   |   |                  |   | 1,767,670   |  
|Other liabilities                                                                                                           |  |              | 152,035     |   |                  |   | 153,304     |  
|                                                                                                                            |  |              |             |   |                  |   |             |  
|Total liabilities                                                                                                           |  |              | 150,285,954 |   |                  |   | 144,583,286 |  
|                                                                                                                            |  |              |             |   |                  |   |             |  
|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                                                                                                             |  |              | 1,725,841   |   |                  |   | 1,723,196   |  
|Accumulated other comprehensive income (loss)                                                                               |  |              | (174,714    | ) |                  |   | 70,928      |  
|Retained earnings                                                                                                           |  |              | 17,699,534  |   |                  |   | 17,153,490  |  
|Treasury stock (59,837 shares in 2008 and 59,537 shares in 2007)                                                            |  |              | (3,737,858  | ) |                  |   | (3,711,213  | )
|                                                                                                                            |  |              |             |   |                  |   |             |  
|Total shareholders equity                                                                                                  |  |              | 17,012,803  |   |                  |   | 16,736,401  |  
|                                                                                                                            |  |              |             |   |                  |   |             |  
|Total liabilities and shareholders equity                                                                                  |  | $            | 167,298,757 |   |                  | $ | 161,319,687 |  
|                                                                                                                            |  |              |             |   |                  |   |             |  

See notes to condensed consolidated financial statements



3



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COMMUNITYCORP



Condensed Consolidated Statements of Income

(Unaudited)



|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|--------------------------------------------------- |  | ------------------------- | --------- | --------------------------- | - | --------- |  | ---- | --------- |  | - | ---------
|                                                    |  | Six Months Ended June 30, |           | Three Months Ended June 30,
|                                                    |  | 2008                      |           | 2007                        |   | 2008      |  | 2007
|Interest income:                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Loans, including fees                               |  | $                         | 4,186,819 |                             | $ | 4,030,549 |  | $    | 2,039,699 |  | $ | 2,060,151
|Securities                                          |  |                           | 766,209   |                             |   | 759,453   |  |      | 365,586   |  |   | 395,173  
|Other interest income                               |  |                           | 126,841   |                             |   | 284,886   |  |      | 73,217    |  |   | 163,704  
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Total                                               |  |                           | 5,079,869 |                             |   | 5,074,888 |  |      | 2,478,502 |  |   | 2,619,028
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Interest expense:                                   |  |                           |           |                             |   |           |  |      |           |  |   |          
|Deposit accounts                                    |  |                           | 2,295,690 |                             |   | 2,310,725 |  |      | 1,100,516 |  |   | 1,188,825
|Other interest expense                              |  |                           | 4,232     |                             |   | 5,663     |  |      | 499       |  |   | 3,267    
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Total                                               |  |                           | 2,299,922 |                             |   | 2,316,388 |  |      | 1,101,015 |  |   | 1,192,092
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Net interest income                                 |  |                           | 2,779,947 |                             |   | 2,758,500 |  |      | 1,377,487 |  |   | 1,426,936
|Provision for loan losses                           |  |                           | 100,000   |                             |   | 140,000   |  |      | 25,000    |  |   | 65,000   
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Net interest income after provision for loan losses |  |                           | 2,679,947 |                             |   | 2,618,500 |  |      | 1,352,487 |  |   | 1,361,936
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Noninterest income:                                 |  |                           |           |                             |   |           |  |      |           |  |   |          
|Service charges                                     |  |                           | 274,124   |                             |   | 227,046   |  |      | 149,580   |  |   | 113,543  
|Other income                                        |  |                           | 82,609    |                             |   | 105,748   |  |      | 38,237    |  |   | 47,766   
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Total                                               |  |                           | 356,733   |                             |   | 332,794   |  |      | 187,817   |  |   | 161,309  
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Noninterest expenses:                               |  |                           |           |                             |   |           |  |      |           |  |   |          
|Salaries and benefits                               |  |                           | 1,008,809 |                             |   | 962,811   |  |      | 512,728   |  |   | 487,954  
|Net occupancy and equipment expense                 |  |                           | 286,213   |                             |   | 296,824   |  |      | 149,872   |  |   | 140,086  
|Other operating expenses                            |  |                           | 583,559   |                             |   | 494,746   |  |      | 292,035   |  |   | 267,497  
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Total                                               |  |                           | 1,878,581 |                             |   | 1,754,381 |  |      | 954,635   |  |   | 895,537  
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Income before taxes                                 |  |                           | 1,158,099 |                             |   | 1,196,913 |  |      | 585,669   |  |   | 627,708  
|Income tax provision                                |  |                           | 359,518   |                             |   | 370,000   |  |      | 182,218   |  |   | 196,000  
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Net income                                          |  | $                         | 798,581   |                             | $ | 826,913   |  | $    | 403,451   |  | $ | 431,708  
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Earnings per share:                                 |  |                           |           |                             |   |           |  |      |           |  |   |          
|Weighted average common shares outstanding          |  |                           | 240,339   |                             |   | 240,884   |  |      | 240,224   |  |   | 240,557  
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          
|Net income per common share                         |  | $                         | 3.32      |                             | $ | 3.43      |  | $    | 1.68      |  | $ | 1.79     
|                                                    |  |                           |           |                             |   |           |  |      |           |  |   |          

See notes to condensed consolidated financial statements



4



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COMMUNITYCORP



Condensed Consolidated Statement of Shareholders Equity and
Comprehensive Income (Loss)

for the six months ended June 30, 2008 and 2007

(Unaudited)



|                                                         |  |              |  |                |           |                                            |   |           |                  |   |          |               |  |   |            |   |  |   |            |   |  |   |            |  
|-------------------------------------------------------- |  | ------------ |  | -------------- | --------- | ------------------------------------------ | - | --------- | ---------------- | - | -------- | ------------- |  | - | ---------- | - |  | - | ---------- | - |  | - | ---------- | -
|                                                         |  | Common stock |  | CapitalSurplus |           | AccumulatedOtherComprehensiveIncome (loss) |   |           | RetainedEarnings |   |          | TreasuryStock |  |   | Total      |  
|                                                         |  | Shares       |  | Amount         |           |                                            |   |           |                 
|Balance, December 31, 2006                               |  | 300,000      |  | $              | 1,500,000 |                                            | $ | 1,720,382 |                  | $ | (95,015  | )             |  | $ | 15,632,119 |   |  | $ | (3,620,051 | ) |  | $ | 15,137,435 |  
|Cash dividends declared ($1.00 per share)                |  |              |  |                |           |                                            |   |           |                  |   |          |               |  |   | (240,543   | ) |  |   |            |   |  |   | (240,543   | )
|Net income for the period                                |  |              |  |                |           |                                            |   |           |                  |   |          |               |  |   | 826,913    |   |  |   |            |   |  |   | 826,913    |  
|Other comprehensive loss, net of tax benefit of $58,308  |  |              |  |                |           |                                            |   |           |                  |   | (110,701 | )             |  |   |            |   |  |   |            |   |  |   | (110,701   | )
|                                                         |  |              |  |                |           |                                            |   |           |                  |   |          |               |  |   |            |   |  |   |            |   |  |   |            |  
|Comprehensive income                                     |  |              |  |                |           |                                            |   |           |                  |   |          |               |  |   |            |   |  |   |            |   |  |   | 716,212    |  
|                                                         |  |              |  |                |           |                                            |   |           |                  |   |          |               |  |   |            |   |  |   |            |   |  |   |            |  
|Sale of treasury stock                                   |  |              |  |                |           |                                            |   | 2,814     |                  |   |          |               |  |   |            |   |  |   | 28,738     |   |  |   | 31,552     |  
|Purchase of treasury stock                               |  |              |  |                |           |                                            |   |           |                  |   |          |               |  |   |            |   |  |   | (112,200   | ) |  |   | (112,200   | )
|                                                         |  |              |  |                |           |                                            |   |           |                  |   |          |               |  |   |            |   |  |   |            |   |  |   |            |  
|Balance, June 30, 2007                                   |  | 300,000      |  | $              | 1,500,000 |                                            | $ | 1,723,196 |                  | $ | (205,716 | )             |  | $ | 16,218,489 |   |  | $ | (3,703,513 | ) |  | $ | 15,532,456 |  
|                                                         |  |              |  |                |           |                                            |   |           |                  |   |          |               |  |   |            |   |  |   |            |   |  |   |            |  
|Balance, December 31, 2007                               |  | 300,000      |  | $              | 1,500,000 |                                            | $ | 1,723,196 |                  | $ | 70,928   |               |  | $ | 17,153,490 |   |  | $ | (3,711,213 | ) |  | $ | 16,736,401 |  
|Cash dividends declared ($1.05 per share)                |  |              |  |                |           |                                            |   |           |                  |   |          |               |  |   | (252,537   | ) |  |   |            |   |  |   | (252,537   | )
|Net income for the period                                |  |              |  |                |           |                                            |   |           |                  |   |          |               |  |   | 798,581    |   |  |   |            |   |  |   | 798,581    |  
|Other comprehensive loss, net of tax benefit of $126,175 |  |              |  |                |           |                                            |   |           |                  |   | (245,642 | )             |  |   |            |   |  |   |            |   |  |   | (245,642   | )
|                                                         |  |              |  |                |           |                                            |   |           |                  |   |          |               |  |   |            |   |  |   |            |   |  |   |            |  
|Comprehensive income                                     |  |              |  |                |           |                                            |   |           |                  |   |          |               |  |   |            |   |  |   |            |   |  |   | 552,939    |  
|                                                         |  |              |  |                |           |                                            |   |           |                  |   |          |               |  |   |            |   |  |   |            |   |  |   |            |  
|Sale of treasury stock                                   |  |              |  |                |           |                                            |   | 2,645     |                  |   |          |               |  |   |            |   |  |   | 9,355      |   |  |   | 12,000     |  
|Purchase of treasury stock                               |  |              |  |                |           |                                            |   |           |                  |   |          |               |  |   |            |   |  |   | (36,000    | ) |  |   | (36,000    | )
|                                                         |  |              |  |                |           |                                            |   |           |                  |   |          |               |  |   |            |   |  |   |            |   |  |   |            |  
|Balance, June 30, 2008                                   |  | 300,000      |  | $              | 1,500,000 |                                            | $ | 1,725,841 |                  | $ | (174,714 | )             |  | $ | 17,699,534 |   |  | $ | (3,737,858 | ) |  | $ | 17,012,803 |  
|                                                         |  |              |  |                |           |                                            |   |           |                  |   |          |               |  |   |            |   |  |   |            |   |  |   |            |  

See notes to condensed consolidated financial statements



5



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COMMUNITYCORP



Condensed Consolidated Statements of Cash Flows

(Unaudited)



|                                                                                  |  |                           |             |   |      |   |             |  
|--------------------------------------------------------------------------------- |  | ------------------------- | ----------- | - | ---- | - | ----------- | -
|                                                                                  |  | Six Months Ended June 30, |            
|                                                                                  |  | 2008                      |             |   | 2007 |  
|Cash flows from operating activities:                                             |  |                           |             |   |      |   |             |  
|Net income                                                                        |  | $                         | 798,581     |   |      | $ | 826,913     |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                           |             |   |      |   |             |  
|Depreciation                                                                      |  |                           | 109,362     |   |      |   | 80,250      |  
|Provision for possible loan losses                                                |  |                           | 100,000     |   |      |   | 140,000     |  
|Net amortization (accretion) on investments                                       |  |                           | (2,900      | ) |      |   | 8,826       |  
|Net amortization of deferred loan costs                                           |  |                           | 13,752      |   |      |   | 639         |  
|(Increase) decrease in interest receivable                                        |  |                           | 129,577     |   |      |   | (159,937    | )
|Decrease in interest payable                                                      |  |                           | (560,292    | ) |      |   | (309,151    | )
|(Increase) decrease in other assets                                               |  |                           | (116,991    | ) |      |   | 90,099      |  
|(Increase) decrease in other liabilities                                          |  |                           | (1,269      | ) |      |   | (226,929    | )
|                                                                                  |  |                           |             |   |      |   |             |  
|Net cash provided by operating activities                                         |  |                           | 469,820     |   |      |   | 450,710     |  
|                                                                                  |  |                           |             |   |      |   |             |  
|Cash flows from investing activities:                                             |  |                           |             |   |      |   |             |  
|Net (increase) decrease in loans to customers                                     |  |                           | 4,623,444   |   |      |   | (2,719,996  | )
|Purchases of securities available-for-sale                                        |  |                           | (16,033,605 | ) |      |   | (12,544,254 | )
|Maturities of securities available-for-sale                                       |  |                           | 15,589,708  |   |      |   | 11,658,202  |  
|Purchases of securities held-to-maturity                                          |  |                           |            |   |      |   | (300,000    | )
|Proceeds from maturities of securities held-to-maturity                           |  |                           | 500,000     |   |      |   | 55,000      |  
|Purchase of time deposits with other banks                                        |  |                           | (200,000    | ) |      |   |            |  
|Purchase of nonmarketable equity securities                                       |  |                           | (161,178    | ) |      |   | (4,400      | )
|Purchases of premises and equipment                                               |  |                           | (117,294    | ) |      |   | (9,392      | )
|                                                                                  |  |                           |             |   |      |   |             |  
|Net cash provided (used) by investing activities                                  |  |                           | 4,201,075   |   |      |   | (3,864,840  | )
|                                                                                  |  |                           |             |   |      |   |             |  
|Cash flows from financing activities:                                             |  |                           |             |   |      |   |             |  
|Net increase in deposit accounts                                                  |  |                           | 9,232,229   |   |      |   | 4,248,904   |  
|Increase (decrease) in short-term borrowings                                      |  |                           | (2,968,000  | ) |      |   | 120,000     |  
|Dividends paid                                                                    |  |                           | (252,537    | ) |      |   | (240,543    | )
|Sale of treasury stock                                                            |  |                           | 12,000      |   |      |   | 31,552      |  
|Purchase of treasury stock                                                        |  |                           | (36,000     | ) |      |   | (112,200    | )
|                                                                                  |  |                           |             |   |      |   |             |  
|Net cash provided by financing activities                                         |  |                           | 5,987,692   |   |      |   | 4,047,713   |  
|                                                                                  |  |                           |             |   |      |   |             |  
|Net increase in cash and cash equivalents                                         |  |                           | 10,658,587  |   |      |   | 633,583     |  
|Cash and cash equivalents, beginning of period                                    |  |                           | 6,920,768   |   |      |   | 14,404,317  |  
|                                                                                  |  |                           |             |   |      |   |             |  
|Cash and cash equivalents, end of period                                          |  | $                         | 17,579,355  |   |      | $ | 15,037,900  |  
|                                                                                  |  |                           |             |   |      |   |             |  
|Cash paid during the period for:                                                  |  |                           |             |   |      |   |             |  
|Income taxes                                                                      |  | $                         | 427,000     |   |      | $ | 237,964     |  
|Interest                                                                          |  | $                         | 2,860,214   |   |      | $ | 2,625,539   |  
|Supplemental noncash activities                                                   |  |                           |             |   |      |   |             |  
|Changes in unrealized gains (losses) on securities available-for-sale             |  | $                         | (245,642    | ) |      | $ | (110,701    | )

See notes to condensed consolidated financial statements



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##### Table of Contents

COMMUNITYCORP



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, 2008 and for the interim periods ended June 30, 2008 and 2007 are
unaudited and, in our opinion, include all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation. The results of operations for the six months ended June 30, 2008 are not necessarily indicative of
the results, which may be expected for the entire calendar year. The financial information as of December 31, 2007 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 2007 Annual Report.

NOTE 2 - COMPREHENSIVE INCOME

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



|                                                                      |  |               |          |   |            |   |                  |  |   |          |  
|--------------------------------------------------------------------- |  | ------------- | -------- | - | ---------- | - | ---------------- |  | - | -------- | -
|                                                                      |  | Pre-taxAmount |          |   | TaxBenefit |   | Net-of-taxAmount | 
|For the Six Months Ended June 30, 2008:                               |  |               |          |   |            |   |                  |  |   |          |  
|Unrealized losses on securities available-for-sale                    |  | $             | (371,817 | ) |            | $ | 126,175          |  | $ | (245,642 | )
|Reclassification adjustment for gains (losses) realized in net income |  |               |         |   |            |   |                 |  |   |         |  
|                                                                      |  |               |          |   |            |   |                  |  |   |          |  
|Other comprehensive income (loss)                                     |  | $             | (371,817 | ) |            | $ | 126,175          |  | $ | (245,642 | )
|                                                                      |  |               |          |   |            |   |                  |  |   |          |  
|                                                                      |  |               |         
|For the Six Months Ended June 30, 2007:                               |  |               |          |   |            |   |                  |  |   |          |  
|Unrealized losses on securities available-for-sale                    |  | $             | (169,009 | ) |            | $ | 58,308           |  | $ | (110,701 | )
|Reclassification adjustment for gains (losses) realized in net income |  |               |         |   |            |   |                 |  |   |         |  
|                                                                      |  |               |          |   |            |   |                  |  |   |          |  
|Other comprehensive income (loss)                                     |  | $             | (169,009 | ) |            | $ | 58,308           |  | $ | (110,701 | )
|                                                                      |  |               |          |   |            |   |                  |  |   |          |  
|                                                                      |  |               |         
|For the Three Months Ended June 30, 2008:                             |  |               |          |   |            |   |                  |  |   |          |  
|Unrealized losses on securities available-for-sale                    |  | $             | (560,478 | ) |            | $ | 193,399          |  | $ | (367,079 | )
|Reclassification adjustment for gains (losses) realized in net income |  |               |         |   |            |   |                 |  |   |         |  
|                                                                      |  |               |          |   |            |   |                  |  |   |          |  
|Other comprehensive income (loss)                                     |  | $             | (560,478 | ) |            | $ | 193,399          |  | $ | (367,079 | )
|                                                                      |  |               |          |   |            |   |                  |  |   |          |  
|                                                                      |  |               |         
|For the Three Months Ended June 30, 2007:                             |  |               |          |   |            |   |                  |  |   |          |  
|Unrealized losses on securities available-for-sale                    |  | $             | (223,859 | ) |            | $ | 77,231           |  | $ | (146,628 | )
|Reclassification adjustment for gains (losses) realized in net income |  |               |         |   |            |   |                 |  |   |         |  
|                                                                      |  |               |          |   |            |   |                  |  |   |          |  
|Other comprehensive income (loss)                                     |  | $             | (223,859 | ) |            | $ | 77,231           |  | $ | (146,628 | )
|                                                                      |  |               |          |   |            |   |                  |  |   |          |  

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

NOTE 3 - FAIR VALUE MEASUREMENTS

Effective January 1, 2008, the Company adopted SFAS No. 157, Fair Value Measurements (SFAS 157) which provides a framework for measuring and disclosing fair value under generally
accepted accounting principles. SFAS 157 requires disclosures about the fair value of assets and liabilities recognized in the balance sheet in periods subsequent to initial recognition, whether the measurements are made on a recurring basis (for
example, available-for-sale investment securities) or on a nonrecurring basis (for example, impaired loans).

SFAS 157 defines fair value as 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. SFAS 157
also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to
measure fair value:



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##### Table of Contents

COMMUNITYCORP



NOTE 3 - FAIR VALUE MEASUREMENTS (Continued)



|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Level 1 |  | Quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities include debt and equity securities and derivative contracts that are traded in an active
exchange market, as well as U.S. Treasury, other U.S. Government and agency mortgage-backed debt securities that are highly liquid and are actively traded in over-the-counter markets.                                                                                                                                                                                                                                                                                                                                                   
|        | 
|Level 2 |  | Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be
corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets and liabilities include debt securities with quoted prices that are traded less frequently than exchange-traded instruments and
derivative contracts whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. This category generally includes certain derivative
contracts and impaired loans.
|        | 
|Level 3 |  | Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial
instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. For
example, this category generally includes certain private equity investments, retained residual interests in securitizations, residential mortgage servicing rights, and highly-structured or long-term derivative contracts.                                                     

Available-for-sale investment securities ($34,659,978 at June 30, 2008) are the only assets whose fair values
are measured on a recurring basis using Level 1 inputs (active market quotes). The Company has no liabilities carried at fair value or measured at fair value on a nonrecurring basis.

The Company is predominantly an asset based lender with real estate serving as collateral on a substantial majority of loans. Loans, which are deemed to be impaired, are primarily valued 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. The aggregate carrying amount of impaired loans at June 30, 2008 was $1,042,854.



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##### Table of Contents

COMMUNITYCORP



|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 June 30, 2008 compared to December 31, 2007, and the results of operations for the three and six months ended June 30, 2008
compared to the three and six months ended June 30, 2007. 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, 2008, was $2,779,947, compared to $2,758,500 for the same period last year, an increase of 0.78 %. For the quarter ended June 30, 2008, net interest
income was $1,377,487, compared to $1,426,936 for the quarter ended June 30, 2007 a decrease of 3.47%. The change in both periods was significantly impacted by the decline in the interest rate market.

For the six months ended June 30, 2008, average-earning assets totaled $156,800,587 with an annualized average yield of 6.50%, compared to $153,390,282 and 6.67%,
respectively, for the same period last year. Average interest-bearing liabilities totaled $129,998,337 with an annualized average cost of 3.55% for the six months ended June 30, 2008, compared to $127,378,257 and 3.67%, respectively, for the
same period last year. For the quarter ended June 30, 2008, average-earning assets totaled $159,555,855 with an annualized average yield of 6.23%, compared to $156,145,542 and 6.73%, respectively, for the same period last year. Average
interest-bearing liabilities totaled $132,482,221 with an annualized average cost of 3.33% for the three months ended June 30, 2008, compared to $129,246,808 and 3.70%, respectively, for the same period last year.

Our annualized yield on earning assets decreased 17 and 50 basis points during the six months and quarter ended June 30, 2008, respectively, from the annualized
yield on earnings assets for the same periods last year. Annualized average cost of our interest-bearing liabilities decreased 12 and 37 basis points during the six months and quarter ended June 30, 2008, respectively, from the annualized
average cost of our interest-bearing liabilities for the same periods last year.



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##### Table of Contents

COMMUNITYCORP



|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations -(continued)
|------- | --------------------------------------------------------------------------------------------------



Net Interest Income (continued)



Our net interest margin and net interest spread was 3.56% and 2.95%, respectively for the six
months ended June 30, 2008, compared to 3.63% and 3.00%, respectively for the six months ended June 30, 2007. For the quarter ended June 30, 2008 our net interest margin and our net interest spread was 3.46% and 2.90%, respectively
compared to 3.67% and 3.03%, respectively, for the quarter ended June 30, 2007. The decrease in the net interest margin and net interest spread for the six and three months ended June 30, 2008, is primarily attributable to the decline in
the interest rate market.

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 71.51% and 70.15% of average earning assets for the six months ended June 30, 2008 and 2007, respectively, and 69.12%, and 69.48% for the quarter ended June 30, 2008 and 2007,
respectively. Loan interest income for the six months ended June 30, 2008 totaled $4,186,819 compared to $4,030,549 for the same period in 2007. The annualized average yield on loans was 7.49% and 7.55% for the six months ended June 30,
2008 and 2007, respectively. Loan interest income for the quarter ended June 30, 2008 totaled $2,039,699, compared to $2,060,151 for the same period in 2007. For the quarter ended June 30, 2008 and 2007 the annualized average yield on
loans was 7.42% and 7.62%, respectively. Average balances of loans increased to $112,125,437 during the six months ended June 30, 2008, an increase of $4,515,619 over the average of $107,609,818 during the comparable period in 2007. For the
quarter ended June 30, 2008, the average balances of loans increased by $1,795,481 over the average balances of loans of $108,484,719 for the quarter ended June 30, 2007. The decline in the yield on loans for both periods was attributable
to the decline in the interest rate market. The effect of the decline in the interest market was minimized by the significant volume of our fixed rate loans included in our loan portfolio. Fixed rate loans averaged approximately 98% of our loan
portfolio for all periods presented.

Investment securities averaged $33,941,342, or 21.65% of average earning assets, for the six months ended
June 30, 2008, compared to $34,956,800 or 22.79% of average earning assets, for the same period in 2007. For the quarter ended June 30, 2008, investment securities averaged $35,074,403, or 21.98%, of average earning assets compared to
$35,479,821, or 22.72% of average earnings assets, for the same period in 2007. Interest earned on investment securities amounted to $766,209 for the six months ended June 30, 2008, compared to $759,453 for the same period last year. For the
quarter ended June 30, 2008, interest earned on investment securities amounted to $365,586 compared to $395,173 for the same period last year. Investment securities yielded 4.53% and 4.38% for the six months ended June 30, 2008 and 2007,
respectively. For the quarter ended June 30, 2008 and 2007 the yields on investment securities was 4.18% and 4.47%, respectively.

Total interest
expense for the six months ended June 30, 2008 and 2007 was $2,299,922 and $2,316,388, respectively. For the quarter ended June 30, 2008 and 2007, interest expense was $1,101,015 and $1,192,092, respectively. The largest component of
interest expense is interest on deposit accounts. Interest expense for deposit accounts was $2,295,690 and $2,310,725, for the six months ended June 30, 2008 and 2007, respectively. The average balance of interest bearing deposits increased to
$129,673,517 during the six months ended June 30, 2008 from $127,118,787 during the same period last year. During the quarter ended June 30, 2008, the average balances of interest bearing deposits increased to $132,325,231 from
$128,946,765 for the same period last year. The annualized average cost of deposits was 3.55% for the six months ended June 30, 2008, compared to 3.67% for the same period in 2007. For the quarter ended June 30, 2008 and 2007, the
annualized average cost of deposits was 3.34% and 3.70%, respectively.

For the six months ended June 30, 2008 and 2007, the total annualized average
cost of funds was 3.55% and 3.67%, respectively. The overall cost of funds was 3.33% and 3.70% for the quarter ended June 30, 2008, and 2007, respectively.

Provision and Allowance for Loan Losses

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



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COMMUNITYCORP



|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations -(continued)
|------- | --------------------------------------------------------------------------------------------------



Provision and Allowance for Loan Losses (continued)



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

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

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

The allowance for loan losses was 1.78% and 1.77% of total loans at June 30, 2008 and 2007 respectively. The allowance for loan losses at June 30, 2008 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 June 30, 2008 is adequate, based on our assessment of probable losses, and available facts and circumstances then prevailing.

The provision for loan losses is the charge to operating earnings that management feels is necessary to maintain the allowance for possible loan losses at an adequate
level. For the six months ended June 30, 2008, the provision charged to expense was $100,000 as compared to $140,000 for the same period in 2007. For the three months ended June 30, 2008 and 2007, the provision charged to expense was
$25,000 and $65,000 respectively.

Noninterest Income

Noninterest income for the six months ended June 30, 2008 was $356,733, an increase of $23,939 or 7.19% from the comparable period in 2007. This increase is primarily attributable to the increase in service charges on deposit accounts,
which increased as a result of increasing the charge for non-sufficient checks. Income from service charges was $274,124 and $227,046 for the six months ended June 30, 2008 and 2007, respectively. Other income was $82,609 and $105,748,
respectively. The decline in other income is attributable to the decline in rates paid for certain types of miscellaneous income.

For the quarter ended
June 30, 2008, noninterest income increased $26,508 or 16.43% over the same period in 2007. Service charges on deposit accounts increased $36,037 from the quarter ended June 30, 2007 to $149,580 for the quarter ended June 30, 2008.
Other income was $38,237 and $47,766 for the quarter ended June 30, 2008 and 2007 respectively. The explanations for the changes in noninterest income for the six months ended June 30, 2008, apply to the similar changes for the quarter
ended June 30, 2008.



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##### Table of Contents

COMMUNITYCORP



|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations -(continued)
|------- | --------------------------------------------------------------------------------------------------



Noninterest Expense

Total noninterest expense for the six months ended June 30, 2008 increased $124,200 or 7.08% over the same period in 2007. Total noninterest expense was $1,878,581 and 1,754,381 for the six months ended June 30, 2008 and 2007
respectively. Compared to the six-months ended June 30, 2007, salaries and benefits increased $45,998 or 4.78% to $1,008,809. This increase is primarily attributable to normal salary increases. Net occupancy and equipment expense decreased
$10,611 or 3.57 % to $286,213, and other operating expenses increased $88,813 or 17.95% to $583,559.

For the quarter ended June 30, 2008,
noninterest expense increased $59,098 or 6.60% over the same period in 2007. Noninterest expense was $954,635 and $895,537 for the quarter ended June 30, 2008 and 2007, respectively. Compared to the quarter ended June 30, 2007, salaries
and benefits increased $24,774 or 5.08% to $512,728, net occupancy and equipment expense increased $9,786 or 6.99% to $149,872 and other operating expenses increased $24,538 or 9.17% to $292,035.

Income Taxes

The income tax provision for the six months ended
June 30, 2008 and 2007 was $359,518 and $370,000, respectively. For the quarter ended June 30, 2008 and 2007, the income tax provision was $182,218 and $196,000, respectively. This decrease in both periods was primarily a result of the
decrease in income before taxes. The effective tax rates were 31.04% for the six months ended June 30, 2008 and 30.91% for the six months ended June 30, 2007. The effective tax rates were 31.11% and 31.22% for the quarter ended
June 30, 2008 and June 30, 2007, respectively.

Net Income

The combination of the above factors resulted in net income for the six months ended June 30, 2008 of $798,581 as compared to $826,913 for the same period in 2007. This represents a decrease of $28,332 or 3.43%
from the same period in 2007. Net income for the quarter ended June 30, 2008 decreased $28,257 or 6.55% from the same period in 2007.

Assets and
Liabilities

During the first six months of 2008, total assets increased $5,979,070, or 3.71%, when compared to December 31, 2007. The increase in
total assets was mainly attributable to federal funds sold, which increased $11,200,000. This increase was reduced by the $4,708,052 decline in loans and the $263,842 decline in investments securities.

For the six months ended June 30, 2008 total liabilities increased $5,702,668 or 3.94% from December 31, 2007. Deposits increased $9,232,229 or 6.61%, while
other short-term borrowings decreased $2,968,000 or 96.74%.

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

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

Loans

At June 30,2008 our total loans were $109,889,326
compared to $114,597,378 at December 31, 2007, a decrease of $4,708,052 or 4.11%. Balances within the major loans receivable categories as of June 30, 2008 and December 31, 2007 are as follows:



|                           |  |              |             |                  |   |            
|-------------------------- |  | ------------ | ----------- | ---------------- | - | -----------
|                           |  | June 30,2008 |             | December 31,2007
|Real estate  construction |  | $            | 5,642,602   |                  | $ | 4,791,125  
|Real estate  mortgage     |  |              | 29,777,243  |                  |   | 32,249,064 
|Commercial and industrial  |  |              | 64,834,627  |                  |   | 65,995,943 
|Consumer and other         |  |              | 9,634,854   |                  |   | 11,561,246 
|                           |  |              |             |                  |   |            
|                           |  | $            | 109,889,326 |                  | $ | 114,597,378
|                           |  |              |             |                  |   |            



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##### Table of Contents

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|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations -(continued)
|------- | --------------------------------------------------------------------------------------------------



Risk Elements in the Loan Portfolio

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



|                                                   |  |          |           |      |   |          
|-------------------------------------------------- |  | -------- | --------- | ---- | - | ---------
|                                                   |  | June 30,
|                                                   |  | 2008     |           | 2007
|Nonaccrual loans                                   |  | $        | 1,042,854 |      | $ | 982,589  
|Accruing loans more than 90 days past due          |  |          | 2,026     |      |   | 2,152    
|                                                   |  |         
|Loans identified by the internal review mechanism: |  |          |           |      |   |          
|Criticized                                         |  | $        | 660,646   |      | $ | 975,958  
|Classified                                         |  |          | 1,955,531 |      |   | 1,703,808

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, 2008 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, |            
|                                                 |  | 2008     |             |   | 2007 |  
|Balance, January 1,                              |  | $        | 1,929,319   |   |      | $ | 1,856,888   |  
|Provision for loan losses for the period         |  |          | 100,000     |   |      |   | 140,000     |  
|Net loans (charged-off) recovered for the period |  |          | (70,856     | ) |      |   | (77,548     | )
|                                                 |  |          |             |   |      |   |             |  
|Balance, end of period                           |  | $        | 1,958,463   |   |      | $ | 1,919,340   |  
|                                                 |  |          |             |   |      |   |             |  
|Gross loans outstanding, end of period           |  | $        | 109,889,326 |   |      | $ | 108,482,169 |  
|Allowance for loan losses to loans outstanding   |  |          | 1.78        | % |      |   | 1.77        | %

Deposits

Total deposits increased $9,232,229 or 6.61% from December 31, 2007. Interest-bearing deposits increased $9,593,539 to $132,726,613 at June 30, 2008. Noninterest-bearing deposits decreased $361,310 to $16,099,928 at June 30,
2008. Expressed in percentages, interest-bearing deposits increased 7.79%, noninterest-bearing deposits decreased 2.19%.



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##### Table of Contents

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|Item 2 | Managements Discussion and Analysis of Financial Condition and Results of Operations -(continued)
|------ | --------------------------------------------------------------------------------------------------



Deposits  (continued)



Balances within the major deposit categories are as follows:



|                                    |  |              |             |                  |   |            
|----------------------------------- |  | ------------ | ----------- | ---------------- | - | -----------
|                                    |  | June 30,2008 |             | December 31,2007
|Noninterest-bearing demand deposits |  | $            | 16,099,928  |                  | $ | 16,461,238 
|Interest-bearing demand deposits    |  |              | 21,963,304  |                  |   | 20,840,913 
|Savings deposits                    |  |              | 15,235,082  |                  |   | 14,270,926 
|Certificates of deposits            |  |              | 95,528,227  |                  |   | 88,021,235 
|                                    |  |              |             |                  |   |            
|                                    |  | $            | 148,826,541 |                  | $ | 139,594,312
|                                    |  |              |             |                  |   |            

Liquidity

Liquidity needs are met by us through scheduled maturities of loans and investments on the asset side and through pricing policies on the liability side for demand deposit accounts and short-term borrowings. The level of liquidity is
measured by the loan-to-total funds ratio (total deposits plus short-term borrowings), which was at 73.79% at June 30, 2008 and 80.33% at December 31, 2007.

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, 2008, the Bank had available unused short-term lines of
credit to purchase up to $4,300,000 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 June 30, 2008, the available credit totaled approximately $25,095,000, and there were no borrowings outstanding. Any borrowings from the Federal Home Loan Bank will be secured by a blanket on all of the Banks 1-4 family residential
first lien mortgage loans and or investment securities.

Interest Rate Sensitivity

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

We monitor interest rate sensitivity by measuring our interest sensitivity through a gap analysis, which is the positive or negative dollar
difference between assets and liabilities that are subject to interest rate repricing within a given time period. Currently we are liability-sensitive over periods with maturity dates of less than twelve months. However, since interest rates and
yields on various interest sensitive assets and liabilities do not all adjust in the same degree when there is a change in prevailing interest rates (such as prime rate), the traditional gap analysis is only a general indicator of rate sensitivity
and net interest income volatility. As stated in Results of Operations for the Six Months and Three Months Ended June 30, 2008 Compared to the Six Months Ended June 30, 2007  Net Interest Income, our net interest margin
and net interest spread decreased during both periods. If net interest margin and net interest spread continues to decline, net income will likely decline also.



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COMMUNITYCORP



|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations -(continued)
|------- | --------------------------------------------------------------------------------------------------



Capital Resources

Total shareholders equity increased from $16,736,401 at December 31, 2007 to $17,012,803 at June 30, 2008. The net increase of $276,402 is attributable to earnings for the period of $798,580 less the payment of a cash
dividend of $252,537, the net decrease of $24,000 from the sales and purchases of treasury stock and the net decrease of $245,642 in the fair value of securities available-for-sale, net of income taxes.

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

The following table summarizes the Banks risk-based capital at June 30, 2008:



|                                             |  |   |            |  
|-------------------------------------------- |  | - | ---------- | -
|Shareholders equity                         |  | $ | 17,045,798 |  
|Less: intangibles                            |  |   |           |  
|                                             |  |   |            |  
|Tier 1 capital                               |  |   | 17,045,798 |  
|Plus: allowance for loan losses (1)          |  |   | 1,533,100  |  
|                                             |  |   |            |  
|Total capital                                |  | $ | 18,578,898 |  
|                                             |  |   |            |  
|                                             | 
|Net risk-weighted assets                     |  | $ | 122,648    |  
|                                             |  |   |            |  
|                                             | 
|Risk-based capital ratios                    |  |   |            |  
|Tier 1 capital (to risk-weighted assets)     |  |   | 13.90      | %
|Total capital (to risk-weighted assets)      |  |   | 15.15      | %
|Tier 1 capital (to quarterly average assets) |  |   | 10.18      | %



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

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

Off-Balance Sheet Risk

Through the operations of our
Bank, we have made contractual commitments to extend credit in the ordinary course of our business activities. These commitments are legally binding agreements to lend money to our customers at predetermined interest rates for a specified period of
time. At June 30, 2008, we had issued commitments to extend credit of approximately $8,419,000 and standby letters of credit of approximately $1,178,000 through various types of commercial lending arrangements. We evaluate each customers
credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by us upon extension of credit, is based on our credit evaluation of the borrower. Collateral varies but may include accounts receivable, inventory,
property, plant and equipment, commercial and residential real estate.

Regulatory Matters

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



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COMMUNITYCORP



|Item 2. | Managements Discussion and Analysis of Financial Condition and Results 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, 2007 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. | 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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COMMUNITYCORP



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

Not applicable



|Item 4 | Submission of Matters to a Vote of Security Holders
|------ | ---------------------------------------------------

On
April 29, 2008, 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 approximately 229,000 shareholders voting for the nominees out of an approximately
240,000 outstanding shareholders. During the election, there were no abstention votes, no votes against nor any votes withheld



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

Not applicable



|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.



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COMMUNITYCORP



SIGNATURES

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

COMMUNITYCORP



|                      |  |     |  |                                    
|--------------------- |  | --- |  | -----------------------------------
|Date: August 12, 2008 |  | By: |  | /s/ W. ROGER CROOK                 
|                      |  |     |  | W. Roger Crook                     
|                      |  |     |  | President & Chief Executive Officer
|                      |  |    
|Date: August 12, 2008 |  | By: |  | /s/ GWEN P. BUNTON                 
|                      |  |     |  | Gwen P. Bunton                     
|                      |  |     |  | Chief Financial Officer            



18