##### Table of Contents

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U. S. SECURITIES AND EXCHANGE
COMMISSION


Washington, D.C. 20549





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FORM 10-Q





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




For the Quarterly Period Ended June 30, 2002





OR





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




For the Transition Period from
 to





Commission File Number 33-76644





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COMMUNITYCORP


(Exact name of registrant as specified in its charter)





South Carolina (State or other
jurisdiction of incorporation)

57-1019001 (I.R.S.
Employer Identification No.)





1100 N. Jefferies Boulevard


Walterboro, SC 29488


(Address of principal executive offices, including zip code)





(843) 549-2265


(Registrants
telephone number, including area code)





---




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





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





300,000 shares of
common stock, $5 par value, as of July 31, 2002





PAGE 1 OF 1


EXHIBIT INDEX ON PAGE 2





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COMMUNITYCORP





INDEX





Page No.PART I.    FINANCIAL INFORMATIONItem 1.

Financial Statements (Unaudited)Condensed Consolidated Balance SheetsJune 30, 2002 and December 31, 2001

3Condensed Consolidated Statements of IncomeSix months ended June 30, 2002 and 2001 and three months ended June 30, 2002 and 2001

4Condensed Consolidated Statements of Shareholders Equity and Comprehensive IncomeSix months ended June 30, 2002 and 2001

5Condensed Consolidated Statements of Cash FlowsSix months ended June 30, 2002 and 2001

6Notes to Condensed Consolidated Financial Statements

7-8Item 2.

Managements Discussion and Analysis of Financial Condition and Results of Operations

9-13PART II.    OTHER INFORMATIONItem 4.

Submission of Matters to a Vote of Security Holders

14Item 6.

Exhibits and Reports on Form 8-K

14(a)  
Exhibits

14(b)  
Reports on Form 8-K

14







2




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COMMUNITYCORP





CONDENSED CONSOLIDATED BALANCE SHEETS


(Unaudited)





June 30, 2002


December 31, 2001ASSETS:Cash and cash equivalents:Cash and due from banks

$
2,866,963


$
3,841,132Federal funds sold and securities purchased under agreements to resell


18,096,000



18,062,000Total cash and cash equivalents


20,962,963



21,903,132Time deposits with other banks


299,000



299,000Investment securities:Securities available-for-sale


14,544,921



11,343,473Nonmarketable equity securities


332,375



332,375Securities held-to-maturity (estimated market value of $3,254,904 and $3,530,683 at June 30, 2002 and December 31,
2001, respectively)


3,172,658



3,499,225Total investment securities


18,049,954



15,175,073Loans receivable


73,181,463



71,358,930Less allowance for loan losses


(1,295,887
)


(1,231,051
)Loans, net


71,885,576



70,127,879Accrued interest receivable


934,313



911,811Premises, furniture & equipment, net


2,129,483



2,013,147Other assets


556,829



420,126Total assets

$
114,818,118


$
110,850,168LIABILITIES AND SHAREHOLDERS EQUITY:Liabilities:Deposits:Noninterest-bearing

$
10,704,231


$
9,230,016Interest-bearing


91,508,073



89,190,295102,212,304



98,420,311Short-term borrowings


470,000



560,000Accrued interest payable


503,849



717,570Other liabilities


96,756



150,176Total liabilities


103,282,909



99,848,057Shareholders 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



1,500,000Capital surplus


1,731,708



1,731,708Accumulated other comprehensive income


110,291



51,132Retained earnings


9,202,816



8,648,977Treasury stock (23,324 shares in 2002 and 21,594 shares in 2001)


(1,009,606
)


(929,706
)Total shareholders equity


11,535,209



11,002,111Total liabilities and shareholders equity

$
114,818,118


$
110,850,168





See notes to condensed consolidated financial statements




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COMMUNITYCORP





CONDENSED CONSOLIDATED STATEMENTS OF INCOME


(Unaudited)





Six Months Ended June 30,

Three Months Ended June 30,2002

2001

2002

2001Interest income:Loans, including fees

$
2,934,769

$
3,206,320

$
1,472,218

$
1,613,886Securities


363,432


456,445


190,806


180,914Other interest income


165,504


479,212


81,649


220,983Total


3,463,705


4,141,977


1,744,673


2,015,783Interest expense:Deposit accounts


1,411,218


2,187,654


680,020


1,048,276Other interest expense


2,279


12,475


1,122


5,735Total


1,413,497


2,200,129


681,142


1,054,011Net interest income


2,050,208


1,941,848


1,063,531


961,772Provision for loan losses


150,000


142,000


75,000


80,000Net interest income after provision for loan losses


1,900,208


1,799,848


988,531


881,772Other operating income:Service charges


175,126


155,064


86,880


76,662Other income


58,049


67,200


27,111


30,408Total


233,175


222,264


113,990


107,070Other operating expenses:Salaries and benefits


561,646


538,979


287,056


266,922Net occupancy expense


75,584


74,116


38,508


36,749Equipment expense


130,418


127,930


59,608


67,208Other operating expenses


313,951


372,069


154,834


181,344Total


1,081,599


1,113,094


540,006


552,223Income before taxes


1,051,784


909,018


562,516


436,619Income tax provision


334,099


281,901


182,000


137,000Net income

$
717,685

$
627,117

$
380,516

$
299,619Earnings per share:Weighted average common shares outstanding


277,577


281,212


277,176


280,737Net income per common share

$
2.59

$
2.23

$
1.37

$
1.07





See notes to condensed consolidated financial statements




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COMMUNITYCORP





CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY AND COMPREHENSIVE INCOME


For the six months ended June 30, 2002 and
2001


(Unaudited)





Common Stock

Capital Surplus

Accumulated Other Comprehensive Income


Retained Earning


Treasury Stock


TotalShares

AmountBalance, December 31, 2000

300,000

$
1,500,000

$
1,731,708

$
(71,480
)

$
7,500,834


$
(781,206
)

$
9,879,856Cash dividends declared$.55 per share














(154,938
)






(154,938
)Net income for the period














627,117







627,117Other comprehensive income, net of taxes










122,425











122,425Comprehensive income






















749,542Purchase of Treasury Stock


















(81,000
)


(81,000
)Balance, June 30, 2001

300,000

$
1,500,000

$
1,731,708

$
50,945


$
7,973,013


$
(862,206
)

$
10,393,460Balance, December 31, 2001

300,000

$
1,500,000

$
1,731,708

$
51,132


$
8,648,977


$
(929,706
)

$
11,002,111Cash dividends declared$.59 per share














(163,846
)






(163,846
)Net income for the period














717,685







717,685Other comprehensive income, net of taxes










59,159











59,159Comprehensive income






















776,844Purchase of treasury stock


















(79,900
)


(79,900
)Balance, June 30, 2002

300,000

$
1,500,000

$
1,731,708

$
110,291


$
9,202,816


$
(1,009,606
)

$
11,535,209





See notes to condensed consolidated financial statements




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COMMUNITYCORP





CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(Unaudited)





Six Months Ended June 30,2002


2001Cash flows from operating activities:Net income

$
717,685


$
627,117Adjustments to reconcile net income to net cash provided by operating activities:Depreciation


95,444



96,214Provision for possible loan losses


150,000



142,000Amortization less accretion on investments


19,420



7,764Amortization of deferred loan costs


34,144



39,738Gain on sale of premises and equipment


(13,268
)


(Increase) decrease in interest receivable


(22,502
)


156,343Increase (decrease) in interest payable


(213,721
)


191,238(Increase) decrease in other assets


(167,862
)


76,830Increase (decrease) in other liabilities


(53,420
)


10,644Net cash provided by operating activities


545,920



1,347,888Cash flows from investing activities:Net increase in loans to customers


(1,941,841
)


(2,353,685
)Purchases of securities available-for-sale


(9,407,734
)


(6,499,531
)Maturities of securities available-for-sale


6,278,898



16,126,100Maturities of securities held-to-maturity


324,853



780,606Proceeds from disposal of premises and equipment


15,702



Purchases of premises and equipment


(214,214
)


(12,016
)Net cash provided (used) by investing activities


(4,944,336
)


8,041,474Cash flows from financing activities:Net increase in deposit accounts


3,791,993



4,670,078(Decrease) increase in short-term borrowings


(90,000
)


80,000Dividends paid


(163,846
)


(154,938
)Purchase of treasury stock


(79,900
)


(81,000
)Net cash provided by financing activities


3,458,247



4,514,140Net increase in cash and cash equivalents


(940,169
)


13,903,502Cash and cash equivalents, beginning of period


21,903,132



8,825,660Cash and cash equivalents, end of period

$
20,962,963


$
22,729,162Cash paid during the period for:Income taxes

$
538,287


$
313,588Interest

$
1,627,218


$
2,008,891








See notes condensed consolidated
financial statements




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COMMUNITYCORP





NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)





NOTE 1BASIS OF PRESENTATION





The
accompanying consolidated financial statements have been prepared in accordance with the requirements for interim financial statements and, accordingly, they are condensed and omit disclosures, which would substantially duplicate those contained in
the most recent annual report to shareholders. The financial statements as of June 30, 2002 and for the interim periods ended June 30, 2002 and 2001 are unaudited and, in the opinion of management, include all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation. The financial information as of December 31, 2001 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 2001 Annual Report.





NOTE 2COMPREHENSIVE INCOME





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





Pre-tax Amount

(Expense) Benefit


Net-of-tax AmountFor the Six Months Ended June 30, 2002:Unrealized gains (losses) on securities available-for-sale

$
90,318

$
(31,159
)

$
59,159Plus: reclassification adjustment for gains realized in net income









Net unrealized gains (losses) on securities


90,318


(31,159
)


59,159Other comprehensive income

$
90,318

$
(31,159
)

$
59,159Pre-tax Amount

(Expense) Benefit


Net-of-tax AmountFor the Six Months Ended June 30, 2001:Unrealized gains (losses) on securities available-for-sale

$
186,801

$
(64,376
)

$
122,425Plus: reclassification adjustment for gains realized in net income









Net unrealized gains (losses) on securities


186,801


(64,376
)


122,425Other comprehensive income

$
186,801

$
(64,376
)

$
122,425




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COMMUNITYCORP





NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)





NOTE 2COMPREHENSIVE INCOMEcontinued





Pre-tax Amount

(Expense) Benefit


Net-of-tax AmountFor the Three Months Ended June 30, 2002:Unrealized gains (losses) on securities available-for-sale

$
141,217

$
(48,788
)

$
92,429Plus: reclassification adjustment for gains realized in net income









Net unrealized gains (losses) on securities


141,217


(48,788
)


92,429Other comprehensive income

$
141,217

$
(48,788
)

$
92,429Pre-tax Amount

(Expense) Benefit


Net-of-tax AmountFor the Three Months Ended June 30, 2001:Unrealized gains (losses) on securities available-for-sale

$
17,854

$
(5,960
)

$
11,894Plus: reclassification adjustment for gains realized in net income









Net unrealized gains (losses) on securities


17,854


(5,960
)


11,894Other comprehensive income

$
17,854

$
(5,960
)

$
11,894





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




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COMMUNITYCORP





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





The
following is a discussion of the Companys financial condition as of June 30, 2002 compared to December 31, 2001, and the results of operations for the three and six months ended June 30, 2002 compared to the three and six months ended June 30,
2001. These comments should be read in conjunction with the Companys condensed consolidated financial statements and accompanying footnotes appearing in this report.





Results of Operations





Net Interest Income





For the six months ended June 30, 2002, net interest income increased $108,360, or 5.58%, as compared to the
same period in 2001. Interest and fees on loans decreased $271,551, or 8.47% to $2,934,769 for the six months ended June 30, 2002 as compared to the same period in 2001. Other interest income, which includes interest on federal funds sold, decreased
$313,708 or 65.46% to $165,504 for the six months ended June 30, 2002 when compared to the same period in 2001. In addition, interest income on securities decreased $93,013 to $363,432 for the six months ended June 30, 2002 when compared to the same
six months ended June 30, 2001. Interest expense decreased $786,632 to $1,413,497 for the six months ended June 30, 2002 when compared to the same period in 2001. The net interest margin realized on earning assets increased from 3.71% for the six
months ended June 30, 2001 to 3.79% for the same period in 2002. The interest rate spread also increased by 32 basis points from 3.01% at June 30, 2001 to 3.33% at June 30, 2002.





Net interest income increased $101,759 or 10.58% to $1,063,531 for the quarter ended June 30, 2002 when compared to the same quarter ended June 30, 2001. Interest on loans
and fees decreased $141,668 or 8.78% to $1,472,218 for the quarter ended June 30, 2002 when compared to the same period in 2001. Other interest income decreased $139,334 from $220,983 for the quarter ended June 30, 2001 to $81,649 for the quarter
ended June 30, 2002. The interest income on securities for the quarter ending June 30, 2002 increased $9,892 to $190,806 when compared to the same period in 2001. Interest expense on deposits decreased 35.38% to $372,869 for the quarter ended June
30, 2002 when compared to the same period in 2001. The net interest margin realized on earning assets increased from 3.73% for the quarter ended June 30, 2001 to 3.91% for the quarter ended June 30, 2002. The interest rate spread also increased from
3.00% for the quarter ended June 30, 2001 to 3.34% for the same period in 2002.





Provision and Allowance for
Loan Losses





The provision for loan losses is the charge to operating earnings that management believes is
necessary to maintain the allowance for possible loan losses at an adequate level. For the six months ended June 30, 2002, the provision charged to expense was $150,000, as compared to $142,000 for the same period in 2001. For the quarter ended June
30, 2002 and 2001, the provision charged to expense was $75,000 and $80,000, respectively. There are risks inherent in making all loans, including risks with respect to the period of time over which loans may be repaid, risks resulting from changes
in economic and industry conditions, risks inherent in dealing with individual borrowers, and, in the case of a collateralized loan, risks resulting from uncertainties about the future value of the collateral. We maintain an allowance for loan
losses based on, among other things, historical experience, an evaluation of economic conditions, and regular reviews of delinquencies and loan portfolio quality. Our judgment about the adequacy of the allowance is based upon a number of assumptions
about future events, which we believe to be reasonable, but which may not prove to be accurate. Thus, there is a risk that charge-offs in future periods could exceed the allowance for loan losses or that substantial additional increases in the
allowance for loan losses could be required. Additions to the allowance for loan losses would result in a decrease of our net income and, possibly, our capital.





Noninterest Income





Noninterest income during the six
months ended June 30, 2002 was $233,175, an increase of $10,911 or 4.91% from the comparable period in 2001. Service charges on deposit accounts increased $20,062 from the period ended June 30, 2001 to $175,126 for the period ended June 30, 2002.
The increase is partially attributable to a shift in deposit accounts to noninterest bearing checking accounts. Other income decreased 13.62% to $58,049 for the six months ended June 30, 2002 when compared to the same period ended June 30, 2001.





For the quarter ended June 30, 2002, noninterest income increased $6,920 or 6.46% over the same period in 2001.
This increase is primarily due to service charges, which increased 13.33% from the quarter ended June 30, 2001 to $86,880 for the quarter ended June 30, 2002. The increase in noninterest bearing deposit accounts led to the increase in service
charges.




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##### Table of Contents




COMMUNITYCORP





Item 2.Managements Discussion and Analysis of Financial Conditioncontinued





Noninterest Expense





Total noninterest expense for the six months ended June 30, 2002 was $1,081,599 or 2.83% lower than the six months ended June 30, 2001. Salaries and employee benefits increased from $538,979 for the six months ended June 30,
2001 to $561,646 for the six months ended June 30, 2002. This increase is primarily attributable to annual pay raises. Other operating expenses decreased $58,118 or 15.62% to $313,951 for the six months ended June 30, 2002 when compared to the same
period in 2001. Other operating expenses included a one time writedown of $20,983 on the disposal of other real estate owned during 2001 that did not exist in 2002.





For the quarter ended June 30, 2002, noninterest expense decreased $12,217 or 2.21% over the same period in 2001. This increase was largely attributable to the decrease of
other operating expenses of $26,510 or 14.62% to $154,834 for the quarter ended June 30, 2002 when compared to the quarter ended June 30, 2001. Salaries and employee benefits also increased $20,134 or 7.54% to $287,056 during the same comparable
period for the quarter ended June 30, 2002.





Income Taxes





The income tax provision for the six months ended June 30, 2002 was $334,099 as compared to $281,901 for the same period in 2001. This
increase was primarily a result of an increase in income before taxes. The effective tax rates were 31.76% and 31.01% for the six months ended June 30, 2002 and June 30, 2001, respectively. The effective tax rates were 32.35% and 31.38% for the
quarter ended June 30, 2002 and June 30, 2001, respectively.





Net Income





The combination of the above factors resulted in net income for the six months ended June 30, 2002 of $717,685 as compared to $627,117 for
the same period in 2001. This represents an increase of $90,568 or 14.44% over the same period in 2001. Net income for the quarter ended June 30, 2002 was $380,516, or 27.00% higher than for the same period in 2001. The increase in net interest
income and decrease in noninterest expenses resulted in the increase in the six and three month period.





Assets
and Liabilities





During the first six months of 2002, total assets increased $3,967,950, or 3.58%, when
compared to December 31, 2001. This increase was primarily a result of an increase in securities available for sale and loans. Total investment securities increased $2,874,881 from December 31, 2001 to $18,049,954 at June 30, 2002. Loans increased
$1,822,533, or 2.55%, to $73,181,463 at June 30, 2002. Total deposits also increased by 3.85%, or $3,791,993, from December 31, 2001 to $102,212,304 at June 30, 2002. While noninterest-bearing deposits increased 15.97% from December 31, 2001 to
$10,704,231, interest-bearing deposits also increased $2,317,778 or 2.6% to $91,508,073 at June 30, 2002.





Loans





The demand for loans continued to increase in the Walterboro marketplace during the
first six months of 2002. Gross loans increased $1,822,533 or 2.55% during the period. Balances within the major loans receivable categories as of June 30, 2002 and December 31, 2001 are as follows:





June 30, 2002

December 31, 2001Real estateconstruction

$
5,370,108

$
6,312,748Real estatemortgage


27,163,048


24,844,649Commercial and industrial


28,399,402


25,868,360Consumer and other


12,248,905


14,333,173$
73,181,463

$
71,358,930




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##### Table of Contents




COMMUNITYCORP





Item 2.Managements Discussion and Analysis of Financial Conditioncontinued





Risk Elements in the Loan Portfolio





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





June 30, 2002

December 31, 2001Loans: Nonaccrual loans

$
2,889,476

$
1,096,532Accruing loans more than 90 days past due

$


$
3,000Loans identified by the internal review mechanism:Criticized

$
82,649

$
Classified

$
2,886,268

$
1,764,786





Activity in the Allowance for Loan Losses is as follows:





June 30,2002


2001Balance, January 1,

$
1,231,051


$
1,173,832Provision for loan losses for the period


150,000



142,000Net loans (charged-off) recovered for the period


(85,164
)


(91,166
)Balance, end of period

$
1,295,887


$
1,224,666Gross loans outstanding, end of period

$
73,181,463


$
71,358,930Allowance for loan losses to loans outstanding


1.77
%


1.72
%





Deposits





Total deposits increased $3,791,993 or 3.85% from December 31, 2001. The largest change was an increase in interest-bearing deposits.
Interest-bearing deposits increased $2,317,778 to $91,508,073 at June 30, 2002. Expressed in percentages, interest-bearing deposits increased 2.60%. The increases were attributable to normal growth of the Bank.





Balances within the major deposit categories as of June 30, 2002 and December 31, 2001 are as follows:





June 30, 2002

December 31, 2001Noninterest-bearing demand deposits

$
10,704,231

$
9,230,016Interest-bearing demand deposits


14,380,569


14,692,130Savings deposits


25,088,751


16,815,417Certificates of deposit


52,038,753


57,682,748$
102,212,304

$
98,420,311





Liquidity





Liquidity needs are met by the Company through scheduled maturities of loans and investments on the asset side and through pricing
policies on the liability side for interest-bearing deposit accounts. The level of liquidity is measured by the loan-to-total funds ratio, which was at 71.27% at June 30, 2002 and 72.09% at December 31, 2001.




11




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##### Table of Contents




COMMUNITYCORP





Item 2.Managements Discussion and Analysis of Financial Conditioncontinued





Securities available-for-sale, which totaled $14,544,921 at June 30, 2002, serve as a ready source of liquidity. The Company also has
lines of credit available with correspondent banks to purchase federal funds. At June 30, 2002, unused lines of credit totaled $3,000,000.





Critical Accounting Policies





We have adopted various accounting policies which
govern the application of accounting principles generally accepted in the United States in the preparation of our financial statements. Our significant accounting policies are described in the footnotes to the consolidated financial statements at
December 31, 2001 as filed on our annual report on Form 10-K. Certain accounting policies involve significant judgments and assumptions by us which have a material impact on the carrying value of certain assets and liabilities. We consider these
accounting policies to be critical accounting policies. The judgments and assumptions we use are based on historical experience and other factors, which we believe to be reasonable under the circumstances. Because of the nature of the judgments and
assumptions we make, actual results could differ from these judgments and estimates which could have a material impact on our carrying values of assets and liabilities and our results of operations.





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





Capital Resources





Total shareholders equity increased from $11,002,111 at December 31, 2001 to $11,535,209 at June 30, 2002. The increase of $533,098 is attributable to earnings for the period of $717,685. The
increase was also attributable to an increase of $59,159 in the fair value for securities available for sale for the period. Equity was negatively affected by the purchase of treasury stock of $79,900 during the period and by the payment of
dividends which totaled $163,846.





Bank holding companies, such as the Company, 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 the Companys 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, 2002:





Shareholders equity

$
11,410,614Less: intangibles


Tier 1 capital


11,410,614Plus: allowance for loan losses(1)


981,000Total capital

$
12,391,614Net risk-weighted assets

$
78,173,000Risk-based capital ratiosTier 1 capital (to risk-weighted assets)


14.60
%Total capital (to risk-weighted assets)


15.85
%Tier 1 capital (to quarterly average assets)


9.94
%


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




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




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Item 2.Managements Discussion and Analysis of Financial Conditioncontinued





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, 2002, we had issued commitments to extend credit of $4,720,000 and standby letters of credit of $434,000 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





The management of the Company is 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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PART IIOTHER INFORMATION





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





On April 23, 2002, the
Company held its Annual Meeting of Shareholders for the purpose of (a) electing three directors for three-year terms, and (b) ratifying the appointment of Tourville, Simpson and Caskey, L.L.P., as the Companys independent auditors for the
fiscal year ending December 31, 2002.





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 204,102 shareholders voting for the nominees out of a total 300,000 outstanding shareholders. There were no abstention votes or no votes against
their election. There were 900 votes withheld.





Tourville, Simpson and Caskey, L.L.P. also received the requisite
number of affirmative votes required for approval pursuant to the Bylaws of the Company. Of the 300,000 outstanding shareholders of the Company, 204,102 shareholders voted for their selection as independent auditors. There were no abstention or no
votes against their selection as auditors. There were 900 votes withheld.





Item 6.Exhibits and Reports on Form 8-K





(a)  
Exhibits





(b)  
Reports on Form 8-KNo reports on Form 8-K were filed during the quarter ended June 30, 2002.





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




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SIGNATURE





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





COMMUNITYCORPBy:

/s/    W. ROGER
CROOKW. Roger Crook President &
Chief Executive Officer








By:

/s/    GWEN P. BUNTONGwen P. Bunton Chief Financial
Officer





Date:    August 12, 2002




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