##### Table of Contents

---

U. S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



---

FORM 10-QSB



---

(Mark One)

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

For the Quarterly Period Ended September 30, 2006

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



---

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

(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 date of this filing.

242,292 shares of common stock, $5 par value, as of November 10, 2006

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

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



---



---

##### Table of Contents

COMMUNITYCORP

Index



|                              |  |                                                                                                                                                |  |         
|----------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------- |  | --------
|                              |  |                                                                                                                                                |  | Page No.
|PART I. FINANCIAL INFORMATION |  |                                                                                                                                               
|                              |  |                                                                                                                                               
|Item 1.                       |  | Financial Statements (Unaudited)                                                                                                               |  |         
|                              |  |                                                                                                                                               
|                              |  | Condensed Consolidated Balance Sheets - September 30, 2006 and December 31, 2005                                                               |  | 3       
|                              |  |                                                                                                                                               
|                              |  | Condensed Consolidated Statements of Income - Nine months ended September 30, 2006 and 2005 and Three months ended September 30, 2006 and 2005 |  | 4       
|                              |  |                                                                                                                                               
|                              |  | Condensed Consolidated Statements of Shareholders Equity and Comprehensive Income - Nine months ended September 30, 2006 and 2005             |  | 5       
|                              |  |                                                                                                                                               
|                              |  | Condensed Consolidated Statements of Cash Flows - Nine months ended September 30, 2006 and 2005                                                |  | 6       
|                              |  |                                                                                                                                               
|                              |  | Notes to Condensed Consolidated Financial Statements                                                                                           |  | 7       
|                              |  |                                                                                                                                               
|Item 2.                       |  | Managements Discussion and Analysis or Plan of Operations                                                                                     |  | 8-15    
|                              |  |                                                                                                                                               
|Item 3.                       |  | Controls and Procedures                                                                                                                        |  | 15      
|                              | 
|PART II. OTHER INFORMATION    |  |                                                                                                                                               
|                              |  |                                                                                                                                               
|Item 6.                       |  | Exhibits and Reports on Form 8-K                                                                                                               |  | 16      
|                              |  |                                                                                                                                               
|                              |  | (a) Exhibits                                                                                                                                   |  | 16      
|                              |  |                                                                                                                                               
|                              |  | (b) Reports on Form 8-K                                                                                                                        |  | 16      
|                              | 
|Signatures                    |  | 16                                                                                                                                            
|                              | 
|Index to Exhibits             |  | 17                                                                                                                                            



---

##### Table of Contents

COMMUNITYCORP

PART 1. FINANCIAL INFORMATION

Item 1  Financial Statements

Condensed Consolidated Balance Sheets



|                                                                                                                                            |  |                   |             |   |                  |   |             |  
|------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ----------- | - | ---------------- | - | ----------- | -
|                                                                                                                                            |  | September 30,2006 |             |   | December 31,2005 |  
|                                                                                                                                            |  | (Unaudited)       |             |   | (Audited)        |  
|Assets:                                                                                                                                     |  |                   |             |   |                  |   |             |  
|Cash and cash equivalents:                                                                                                                  |  |                   |             |   |                  |   |             |  
|Cash and due from banks                                                                                                                     |  | $                 | 4,108,538   |   |                  | $ | 5,089,462   |  
|Federal funds sold                                                                                                                          |  |                   | 16,763,000  |   |                  |   | 2,773,000   |  
|                                                                                                                                            |  |                   |             |   |                  |   |             |  
|Total cash and cash equivalents                                                                                                             |  |                   | 20,871,538  |   |                  |   | 7,862,462   |  
|                                                                                                                                            |  |                   |             |   |                  |   |             |  
|Time deposits with other banks                                                                                                              |  |                   | 100,000     |   |                  |   | 300,000     |  
|                                                                                                                                            |  |                  
|Investment securities:                                                                                                                      |  |                   |             |   |                  |   |             |  
|Securities available-for-sale                                                                                                               |  |                   | 32,558,436  |   |                  |   | 30,855,760  |  
|Securities held-to-maturity (estimated market value of $1,599,590 and $1,908,781 at September 30, 2006 and December 31, 2005,
respectively) |  |                   | 1,574,150   |   |                  |   | 1,875,133   |  
|Nonmarketable equity securities                                                                                                             |  |                   | 342,857     |   |                  |   | 339,657     |  
|                                                                                                                                            |  |                   |             |   |                  |   |             |  
|Total investment securities                                                                                                                 |  |                   | 34,475,443  |   |                  |   | 33,070,550  |  
|                                                                                                                                            |  |                   |             |   |                  |   |             |  
|Loans receivable                                                                                                                            |  |                   | 105,765,497 |   |                  |   | 97,595,299  |  
|Less allowance for loan losses                                                                                                              |  |                   | (1,844,917  | ) |                  |   | (1,664,948  | )
|                                                                                                                                            |  |                   |             |   |                  |   |             |  
|Loans, net                                                                                                                                  |  |                   | 103,920,580 |   |                  |   | 95,930,351  |  
|                                                                                                                                            |  |                  
|Premises, furniture & equipment, net                                                                                                        |  |                   | 3,121,070   |   |                  |   | 3,265,920   |  
|Accrued interest receivable                                                                                                                 |  |                   | 1,123,340   |   |                  |   | 989,582     |  
|Other assets                                                                                                                                |  |                   | 914,505     |   |                  |   | 800,871     |  
|                                                                                                                                            |  |                   |             |   |                  |   |             |  
|Total assets                                                                                                                                |  | $                 | 164,526,476 |   |                  | $ | 142,219,736 |  
|                                                                                                                                            |  |                   |             |   |                  |   |             |  
|Liabilities and Shareholders Equity:                                                                                                       |  |                   |             |   |                  |   |             |  
|Liabilities:                                                                                                                                |  |                   |             |   |                  |   |             |  
|Deposits:                                                                                                                                   |  |                   |             |   |                  |   |             |  
|Noninterest-bearing                                                                                                                         |  | $                 | 19,268,648  |   |                  | $ | 18,020,633  |  
|Interest-bearing                                                                                                                            |  |                   | 128,573,335 |   |                  |   | 109,437,673 |  
|                                                                                                                                            |  |                   |             |   |                  |   |             |  
|                                                                                                                                            |  |                   | 147,841,983 |   |                  |   | 127,458,306 |  
|Short-term borrowings                                                                                                                       |  |                   | 450,000     |   |                  |   | 370,000     |  
|Accrued interest payable                                                                                                                    |  |                   | 1,262,358   |   |                  |   | 584,352     |  
|Other liabilities                                                                                                                           |  |                   | 263,383     |   |                  |   | 163,705     |  
|                                                                                                                                            |  |                   |             |   |                  |   |             |  
|Total liabilities                                                                                                                           |  |                   | 149,817,724 |   |                  |   | 128,576,363 |  
|                                                                                                                                            |  |                   |             |   |                  |   |             |  
|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                                                                                                                             |  |                   | 1,719,166   |   |                  |   | 1,716,455   |  
|Accumulated other comprehensive loss                                                                                                        |  |                   | (172,598    | ) |                  |   | (265,071    | )
|Retained earnings                                                                                                                           |  |                   | 15,245,582  |   |                  |   | 14,224,597  |  
|Treasury stock (57,708 shares in 2006 and 56,952 shares in 2005)                                                                            |  |                   | (3,583,398  | ) |                  |   | (3,532,608  | )
|                                                                                                                                            |  |                   |             |   |                  |   |             |  
|Total shareholders equity                                                                                                                  |  |                   | 14,708,752  |   |                  |   | 13,643,373  |  
|                                                                                                                                            |  |                   |             |   |                  |   |             |  
|Total liabilities and shareholders equity                                                                                                  |  | $                 | 164,526,476 |   |                  | $ | 142,219,736 |  
|                                                                                                                                            |  |                   |             |   |                  |   |             |  

See notes to condensed consolidated financial statements



3



---

##### Table of Contents

COMMUNITYCORP

Condensed Consolidated Statements of Income

(Unaudited)



|                                                    |  |                                |           |                                  |   |           |  |      |           |  |   |          
|--------------------------------------------------- |  | ------------------------------ | --------- | -------------------------------- | - | --------- |  | ---- | --------- |  | - | ---------
|                                                    |  | Nine Months EndedSeptember 30, |           | Three Months Ended September 30,
|                                                    |  | 2006                           |           | 2005                             |   | 2006      |  | 2005
|Interest income:                                    |  |                                |           |                                  |   |           |  |      |           |  |   |          
|Loans, including fees                               |  | $                              | 5,491,515 |                                  | $ | 4,638,198 |  | $    | 1,934,962 |  | $ | 1,582,630
|Securities                                          |  |                                | 980,992   |                                  |   | 797,773   |  |      | 352,717   |  |   | 288,148  
|Other interest income                               |  |                                | 399,549   |                                  |   | 268,708   |  |      | 163,520   |  |   | 82,630   
|                                                    |  |                                |           |                                  |   |           |  |      |           |  |   |          
|Total                                               |  |                                | 6,872,056 |                                  |   | 5,704,679 |  |      | 2,451,199 |  |   | 1,953,408
|                                                    |  |                                |           |                                  |   |           |  |      |           |  |   |          
|Interest expense:                                   |  |                                |           |                                  |   |           |  |      |           |  |   |          
|Deposit accounts                                    |  |                                | 2,773,956 |                                  |   | 1,574,588 |  |      | 1,054,440 |  |   | 575,548  
|Other interest expense                              |  |                                | 10,889    |                                  |   | 4,968     |  |      | 4,017     |  |   | 1,759    
|                                                    |  |                                |           |                                  |   |           |  |      |           |  |   |          
|                                                    |  |                                | 2,784,845 |                                  |   | 1,579,556 |  |      | 1,058,457 |  |   | 577,307  
|                                                    |  |                                |           |                                  |   |           |  |      |           |  |   |          
|Net interest income                                 |  |                                | 4,087,211 |                                  |   | 4,125,123 |  |      | 1,392,742 |  |   | 1,376,101
|                                                    |  |                                |           |                                 
|Provision for loan losses                           |  |                                | 225,000   |                                  |   | 262,600   |  |      | 75,000    |  |   | 130,000  
|                                                    |  |                                |           |                                  |   |           |  |      |           |  |   |          
|Net interest income after provision for loan losses |  |                                | 3,862,211 |                                  |   | 3,862,523 |  |      | 1,317,742 |  |   | 1,246,101
|                                                    |  |                                |           |                                  |   |           |  |      |           |  |   |          
|Noninterest income:                                 |  |                                |           |                                  |   |           |  |      |           |  |   |          
|Service charges                                     |  |                                | 403,928   |                                  |   | 308,515   |  |      | 126,027   |  |   | 117,383  
|Other income                                        |  |                                | 136,542   |                                  |   | 128,811   |  |      | 39,972    |  |   | 42,339   
|                                                    |  |                                |           |                                  |   |           |  |      |           |  |   |          
|Total                                               |  |                                | 540,470   |                                  |   | 437,326   |  |      | 165,999   |  |   | 159,722  
|                                                    |  |                                |           |                                  |   |           |  |      |           |  |   |          
|Noninterest expenses:                               |  |                                |           |                                  |   |           |  |      |           |  |   |          
|Salaries and benefits                               |  |                                | 1,423,383 |                                  |   | 1,363,054 |  |      | 475,619   |  |   | 458,037  
|Net occupancy expense                               |  |                                | 185,357   |                                  |   | 173,187   |  |      | 74,646    |  |   | 59,259   
|Equipment expense                                   |  |                                | 255,584   |                                  |   | 238,179   |  |      | 86,327    |  |   | 85,056   
|Other operating expenses                            |  |                                | 715,673   |                                  |   | 661,574   |  |      | 238,422   |  |   | 210,714  
|                                                    |  |                                |           |                                  |   |           |  |      |           |  |   |          
|Total                                               |  |                                | 2,579,997 |                                  |   | 2,435,994 |  |      | 875,014   |  |   | 813,066  
|                                                    |  |                                |           |                                  |   |           |  |      |           |  |   |          
|Income before taxes                                 |  |                                | 1,822,684 |                                  |   | 1,863,855 |  |      | 608,727   |  |   | 592,757  
|                                                    |  |                                |           |                                 
|Income tax provision                                |  |                                | 582,600   |                                  |   | 595,000   |  |      | 182,000   |  |   | 191,000  
|                                                    |  |                                |           |                                  |   |           |  |      |           |  |   |          
|Net income                                          |  | $                              | 1,240,084 |                                  | $ | 1,268,855 |  | $    | 426,727   |  | $ | 401,757  
|                                                    |  |                                |           |                                  |   |           |  |      |           |  |   |          
|Earnings per share:                                 |  |                                |           |                                  |   |           |  |      |           |  |   |          
|Weighted average common shares outstanding          |  |                                | 242,862   |                                  |   | 245,153   |  |      | 242,451   |  |   | 244,219  
|                                                    |  |                                |           |                                  |   |           |  |      |           |  |   |          
|Net income per common share                         |  | $                              | 5.11      |                                  | $ | 5.18      |  | $    | 1.76      |  | $ | 1.65     
|                                                    |  |                                |           |                                  |   |           |  |      |           |  |   |          

See notes to condensed consolidated financial statements



4



---

##### Table of Contents

COMMUNITYCORP

Condensed Consolidated Statements of Shareholders Equity and Comprehensive Income

for the nine months ended September 30, 2006 and 2005

(Unaudited)



|                                                     |        |              |        |                 |           |  |                                               |           |   |                   |   |          |                |  |   |            |   |  |   |            |   |  |   |            |  
|---------------------------------------------------- | ------ | ------------ | ------ | --------------- | --------- |  | --------------------------------------------- | --------- | - | ----------------- | - | -------- | -------------- |  | - | ---------- | - |  | - | ---------- | - |  | - | ---------- | -
|                                                     |        | Common Stock |        | Capital Surplus |           |  | Accumulated Other Comprehensive Income (Loss) |           |   | Retained Earnings |   |          | Treasury Stock |  |   | Total      |  
|                                                     | Shares |              | Amount |                 |           |  |                                               |          
|Balance, December 31, 2004                           |        | 300,000      |        | $               | 1,500,000 |  | $                                             | 1,721,023 |   |                   | $ | 32,129   |                |  | $ | 12,715,882 |   |  | $ | (3,332,906 | ) |  | $ | 12,636,128 |  
|Cash dividends declared  ($.82 per share)           |        |              |        |                 |           |  |                                               |           |   |                   |   |          |                |  |   | (201,708   | ) |  |   |            |   |  |   | (201,708   | )
|Net income for the period                            |        |              |        |                 |           |  |                                               |           |   |                   |   |          |                |  |   | 1,268,855  |   |  |   |            |   |  |   | 1,268,855  |  
|Other comprehensive loss, net of taxes of $80,463    |        |              |        |                 |           |  |                                               |           |   |                   |   | (152,763 | )              |  |   |            |   |  |   |            |   |  |   | (152,763   | )
|                                                     |        |              |        |                 |           |  |                                               |           |   |                   |   |          |                |  |   |            |   |  |   |            |   |  |   |            |  
|Comprehensive income                                 |        |              |        |                 |           |  |                                               |           |   |                   |   |          |                |  |   |            |   |  |   |            |   |  |   | 1,116,092  |  
|                                                     |        |              |        |                 |           |  |                                               |           |   |                   |   |          |                |  |   |            |   |  |   |            |   |  |   |            |  
|Sale of treasury stock                               |        |              |        |                 |           |  |                                               | (4,569    | ) |                   |   |          |                |  |   |            |   |  |   | 47,218     |   |  |   | 42,649     |  
|Purchase of treasury stock                           |        |              |        |                 |           |  |                                               |           |   |                   |   |          |                |  |   |            |   |  |   | (179,900   | ) |  |   | (179,900   | )
|                                                     |        |              |        |                 |           |  |                                               |           |   |                   |   |          |                |  |   |            |   |  |   |            |   |  |   |            |  
|Balance, September 30, 2005                          |        | 300,000      |        | $               | 1,500,000 |  | $                                             | 1,716,454 |   |                   | $ | (120,634 | )              |  | $ | 13,783,029 |   |  | $ | (3,465,588 | ) |  | $ | 13,413,261 |  
|                                                     |        |              |        |                 |           |  |                                               |           |   |                   |   |          |                |  |   |            |   |  |   |            |   |  |   |            |  
|Balance, December 31, 2005                           |        | 300,000      |        | $               | 1,500,000 |  | $                                             | 1,716,455 |   |                   | $ | (265,071 | )              |  | $ | 14,224,597 |   |  | $ | (3,532,608 | ) |  | $ | 13,643,373 |  
|Cash dividends declared  ($.90 per share)           |        |              |        |                 |           |  |                                               |           |   |                   |   |          |                |  |   | (219,099   | ) |  |   |            |   |  |   | (219,099   | )
|Net income for the period                            |        |              |        |                 |           |  |                                               |           |   |                   |   |          |                |  |   | 1,240,084  |   |  |   |            |   |  |   | 1,240,084  |  
|Other comprehensive income, net of taxes of $ 48,707 |        |              |        |                 |           |  |                                               |           |   |                   |   | 92,473   |                |  |   |            |   |  |   |            |   |  |   | 92,473     |  
|                                                     |        |              |        |                 |           |  |                                               |           |   |                   |   |          |                |  |   |            |   |  |   |            |   |  |   |            |  
|Comprehensive income                                 |        |              |        |                 |           |  |                                               |           |   |                   |   |          |                |  |   |            |   |  |   |            |   |  |   | 1,332,557  |  
|                                                     |        |              |        |                 |           |  |                                               |           |   |                   |   |          |                |  |   |            |   |  |   |            |   |  |   |            |  
|Sale of treasury stock                               |        |              |        |                 |           |  |                                               | 2,711     |   |                   |   |          |                |  |   |            |   |  |   | 168,924    |   |  |   | 171,635    |  
|Purchase of treasury stock                           |        |              |        |                 |           |  |                                               |           |   |                   |   |          |                |  |   |            |   |  |   | (219,714   | ) |  |   | (219,714   | )
|                                                     |        |              |        |                 |           |  |                                               |           |   |                   |   |          |                |  |   |            |   |  |   |            |   |  |   |            |  
|Balance, September 30, 2006                          |        | 300,000      |        | $               | 1,500,000 |  | $                                             | 1,719,166 |   |                   | $ | (172,598 | )              |  | $ | 15,245,582 |   |  | $ | (3,583,398 | ) |  | $ | 14,708,752 |  
|                                                     |        |              |        |                 |           |  |                                               |           |   |                   |   |          |                |  |   |            |   |  |   |            |   |  |   |            |  

See notes to condensed consolidated financial statements



5



---

##### Table of Contents

COMMUNITYCORP

Condensed Consolidated Statements of Cash Flows

(Unaudited)



|                                                                                  |  |                                |            |   |      |   |             |  
|--------------------------------------------------------------------------------- |  | ------------------------------ | ---------- | - | ---- | - | ----------- | -
|                                                                                  |  | Nine Months EndedSeptember 30, |           
|                                                                                  |  | 2006                           |            |   | 2005 |  
|Cash flows from operating activities:                                             |  |                                |            |   |      |   |             |  
|Net income                                                                        |  | $                              | 1,240,084  |   |      | $ | 1,268,855   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                                |            |   |      |   |             |  
|Depreciation                                                                      |  |                                | 180,141    |   |      |   | 175,591     |  
|Provision for possible loan losses                                                |  |                                | 225,000    |   |      |   | 262,600     |  
|Amortization less accretion on investments                                        |  |                                | 16,604     |   |      |   | 24,072      |  
|Amortization of deferred loan costs                                               |  |                                | (1,588     | ) |      |   |            |  
|Increase in interest receivable                                                   |  |                                | (133,758   | ) |      |   | (65,299     | )
|Increase in interest payable                                                      |  |                                | 678,006    |   |      |   | 292,887     |  
|Proceeds from sale of OREO property                                               |  |                                |           |   |      |   | 595,245     |  
|Net gain from sale of OREO property                                               |  |                                |           |   |      |   | (13,226     | )
|(Increase) decrease in other assets                                               |  |                                | (162,341   | ) |      |   | 198,111     |  
|Increase in other liabilities                                                     |  |                                | 99,678     |   |      |   | 51,062      |  
|                                                                                  |  |                                |            |   |      |   |             |  
|Net cash provided by operating activities                                         |  |                                | 2,141,826  |   |      |   | 2,789,898   |  
|                                                                                  |  |                                |            |   |      |   |             |  
|Cash flows from investing activities:                                             |  |                                |            |   |      |   |             |  
|Net increase in loans to customers                                                |  |                                | (8,213,641 | ) |      |   | (7,933,056  | )
|Purchases of securities available-for-sale                                        |  |                                | (5,664,681 | ) |      |   | (8,142,752  | )
|Maturities of securities available-for-sale                                       |  |                                | 4,084,396  |   |      |   | 2,271,398   |  
|Purchases of securities held-to-maturity                                          |  |                                |           |   |      |   | (200,000    | )
|Maturities of securities held-to-maturity                                         |  |                                | 303,168    |   |      |   | 304,606     |  
|Increase in nonmarketable equity securities                                       |  |                                | (3,200     | ) |      |   | (32,982     | )
|Decrease in time deposits with other banks                                        |  |                                | 200,000    |   |      |   | 199,000     |  
|Purchases of premises and equipment                                               |  |                                | (35,291    | ) |      |   | (36,845     | )
|                                                                                  |  |                                |            |   |      |   |             |  
|Net cash used by investing activities                                             |  |                                | (9,329,249 | ) |      |   | (13,570,631 | )
|                                                                                  |  |                                |            |   |      |   |             |  
|Cash flows from financing activities:                                             |  |                                |            |   |      |   |             |  
|Net increase in deposit accounts                                                  |  |                                | 20,383,677 |   |      |   | 2,622,044   |  
|Increase (decrease) in short-term borrowings                                      |  |                                | 80,000     |   |      |   | (290,000    | )
|Dividends paid                                                                    |  |                                | (219,099   | ) |      |   | (201,708    | )
|Sale of treasury stock                                                            |  |                                | 171,635    |   |      |   | 42,649      |  
|Purchase of treasury stock                                                        |  |                                | (219,714   | ) |      |   | (179,900    | )
|                                                                                  |  |                                |            |   |      |   |             |  
|Net cash provided by financing activities                                         |  |                                | 20,196,499 |   |      |   | 1,993,085   |  
|                                                                                  |  |                                |            |   |      |   |             |  
|Net increase (decrease) in cash and cash equivalents                              |  |                                | 13,009,076 |   |      |   | (8,787,648  | )
|                                                                                  |  |                               
|Cash and cash equivalents, beginning of period                                    |  |                                | 7,862,462  |   |      |   | 22,751,335  |  
|                                                                                  |  |                                |            |   |      |   |             |  
|Cash and cash equivalents, end of period                                          |  | $                              | 20,871,538 |   |      | $ | 13,963,687  |  
|                                                                                  |  |                                |            |   |      |   |             |  
|Cash paid during the period for:                                                  |  |                                |            |   |      |   |             |  
|Income taxes                                                                      |  | $                              | 623,700    |   |      | $ | 382,000     |  
|Interest                                                                          |  |                                | 2,106,839  |   |      |   | 1,286,688   |  
|                                                                                  |  |                               
|Supplemental noncash activities                                                   |  |                                |            |   |      |   |             |  
|Changes in unrealized gains (losses) on securities available-for-sale             |  | $                              | 92,473     |   |      | $ | (152,763    | )

See notes to condensed consolidated financial statements



6



---

##### Table of Contents

COMMUNITYCORP

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 - BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements have been prepared in accordance with the requirements for interim financial statements
and, accordingly, they are condensed and omit disclosures, which would substantially duplicate those contained in the most recent annual report to shareholders. The condensed consolidated financial statements as of September 30, 2006 and for
the interim periods ended September 30, 2006 and 2005 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, 2005 has been derived from the audited consolidated financial statements as of that date. For further information, refer to the consolidated financial statements and the related notes included in Communitycorps 2005 Annual
Report.

NOTE 2 - COMPREHENSIVE INCOME

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



|                                                                      |  |               |          |   |            |   |         |                   |  |   |          |  
|--------------------------------------------------------------------- |  | ------------- | -------- | - | ---------- | - | ------- | ----------------- |  | - | -------- | -
|                                                                      |  | Pre-taxAmount |          |   | TaxBenefit |   |         | Net-of-tax Amount | 
|For the Nine Months Ended September 30, 2006:                         |  |               |          |   |            |   |         |                   |  |   |          |  
|Net unrealized gains on securities available-for-sale                 |  | $             | 141,180  |   |            | $ | (48,707 | )                 |  | $ | 92,473   |  
|Reclassification adjustment for gains (losses) realized in net income |  |               |         |   |            |   |        |                   |  |   |         |  
|                                                                      |  |               |          |   |            |   |         |                   |  |   |          |  
|Other comprehensive income (loss)                                     |  | $             | 141,180  |   |            | $ | (48,707 | )                 |  | $ | 92,473   |  
|                                                                      |  |               |          |   |            |   |         |                   |  |   |          |  
|For the Nine Months Ended September 30, 2005:                         |  |               |          |   |            |   |         |                   |  |   |          |  
|Net unrealized losses on securities available-for-sale                |  | $             | (233,226 | ) |            | $ | 80,463  |                   |  | $ | (152,763 | )
|Reclassification adjustment for gains (losses) realized in net income |  |               |         |   |            |   |        |                   |  |   |         |  
|                                                                      |  |               |          |   |            |   |         |                   |  |   |          |  
|Other comprehensive income (loss)                                     |  | $             | (233,226 | ) |            | $ | 80,463  |                   |  | $ | (152,763 | )
|                                                                      |  |               |          |   |            |   |         |                   |  |   |          |  
|For the Three Months Ended September 30, 2006:                        |  |               |          |   |            |   |         |                   |  |   |          |  
|Net unrealized gains on securities available-for-sale                 |  | $             | 217,513  |   |            | $ | (75,042 | )                 |  | $ | 142,471  |  
|Reclassification adjustment for gains (losses) realized in net income |  |               |         |   |            |   |        |                   |  |   |         |  
|                                                                      |  |               |          |   |            |   |         |                   |  |   |          |  
|Other comprehensive income (loss)                                     |  | $             | 217,513  |   |            | $ | (75,042 | )                 |  | $ | 142,471  |  
|                                                                      |  |               |          |   |            |   |         |                   |  |   |          |  
|For the Three Months Ended September 30, 2005:                        |  |               |          |   |            |   |         |                   |  |   |          |  
|Net unrealized losses on securities available-for-sale                |  | $             | (43,535  | ) |            | $ | 15,020  |                   |  | $ | (28,515  | )
|Reclassification adjustment for gains (losses) realized in net income |  |               |         |   |            |   |        |                   |  |   |         |  
|                                                                      |  |               |          |   |            |   |         |                   |  |   |          |  
|Other comprehensive income (loss)                                     |  | $             | (43,535  | ) |            | $ | 15,020  |                   |  | $ | (28,515  | )
|                                                                      |  |               |          |   |            |   |         |                   |  |   |          |  

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



7



---

##### Table of Contents

COMMUNITYCORP

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

The following is a discussion of the
Companys financial condition as of September 30, 2006 compared to December 31, 2005, and the results of operations for the three and nine months ended September 30, 2006 compared to the three and nine months ended
September 30, 2005. 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 it from the weighted-average yield on earning assets.

Net interest
income for the nine months ended September 30, 2006, was $4,087,211 compared to $4,125,123 for the same period last year, a decrease of .92%. The decrease was primarily attributable to the increase in interest rates paid on our interest bearing
liabilities combined with the negative impact of having a large volume of fixed rate loans in our loan portfolio. Fixed rate loans averaged approximately 95% of our loan portfolio. For the quarter ended September 30, 2006, net interest income
was $1,392,742, compared to $1,376,101for the quarter ended September 30, 2005 an increase of 1.21%.

For the nine months ended September 30,
2006, average-earning assets totaled $146,185,702 with an annualized average yield of 6.29%, compared to $130,523,312 and 5.84%, respectively, for the same period last year. Average interest-bearing liabilities totaled $122,288,772 with an
annualized average cost of 3.04% for the nine months ended September 30, 2006, compared to $108,371,195 and 1.95%, respectively, for the same period last year. For the quarter ended September 30, 2006, average-earning assets totaled
$152,069,504 with an annualized average yield of 6.47%, compared to $131,341,328 and 5.97%, respectively, for the same period last year. Average interest-bearing liabilities totaled $127,106,779 with an annualized average cost of 3.30% for the
quarter ended September 30, 2006, compared to $108,944,306 and 2.13%, respectively, for the same period last year.

Our net interest margin was 3.74%
and 4.23% for the nine months ended September 30, 2006 and 2005, respectively. For the quarter ended September 30, 2006 and 2005, net interest margin was 3.63% and 4.20%, respectively. The decline in both periods is reflective of the
volume of fixed rate loans included in our loan portfolio that cannot be repriced to current market interest rates as quickly as our interest bearing liabilities that are subject to repricing. Once market interest rates for deposits stabilize or if
rates decline, our interest margin should improve.

Our annualized yield on earning assets increased 45 and 50 basis points during the nine months and
quarter ended September 30, 2006, respectively, from the annualized yield on earnings assets for the same periods last year. Annualized average cost of our interest-bearing liabilities also increased 109 and 117 basis points during the nine
months and quarter ended September 30, 2006, respectively, from the annualized average cost of our interest-bearing liabilities for the same periods last year. Details of the components of earning assets and interest-bearing liabilities are
discussed in the following paragraphs.



8



---

##### Table of Contents

COMMUNITYCORP

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

Net Interest Income (continued)

Because loans often provide a higher yield than other types of earning assets,
one of our goals is to maintain our loan portfolio as the largest component of total earning assets. Loans comprised approximately 69.13% and 65.79% of average earning assets for the nine months ended September 30, 2006 and 2005, respectively,
and 68.59%, and 67.56% for the quarter ended September 30, 2006 and 2005, respectively. Loan interest income for the nine months and three months ended September 30, 2006 totaled $5,491,515 and $1,934,962, respectively, compared to
$4,638,198 and $1,582,630, respectively for the same periods in 2005. The annualized average yield on loans was 7.27% and 7.36% for the nine months and three months ended September 30, 2006, respectively. Average balances of loans increased to
$101,061,468 during the nine months ended September 30, 2006, an increase of $15,192,072 over the average of $85,869,396 during the comparable period in 2005. For the quarter ended September 30, 2006, the average balances of loans
increased by $15,571,816 over the average balances of loans of $88,739,920 for the quarter ended September 30, 2005. Fixed rates loans comprised approximately 95% of our loan portfolio for all periods presented.

Investment securities averaged $34,158,729, or 23.37% of average earning assets, for the nine months ended September 30, 2006, compared to $31,730,011, or 24.31% of
average earning assets, for the same period in 2005. For the quarter ended September 30, 2006, investment securities averaged $35,134,334, or 23.10%, of average earnings assets compared to $33,090,833, or 25.19%, of average earnings assets for
the three months ended September 30, 2005. Interest earned on investment securities amounted to $980,992 for the nine months ended September 30, 2006, compared to $797,773 for the same period last year. For the quarter ended
September 30, 2006, interest earned on investment securities amounted to $352,717 compared to $288,149 for the same period last year. Investment securities yielded 3.84% and 3.36% for the nine months ended September 30, 2006 and 2005,
respectively. For the quarter ended September 30, 2006 and 2005, the yields on investment securities were 3.98% and 3.48%, respectively.

Total
interest expense for the nine months ended September 30, 2006 and 2005 was $2,784,845 and $1,579,556, respectively. For the quarter ended September 30, 2006 and 2005, interest expense was $1,058,457 and $577,307, respectively. The largest
component of interest expense is interest on deposit accounts. Interest expense for deposit accounts was $2,773,956 and $1,574,588, for the nine months ended September 30, 2006 and 2005, respectively. The average balance of interest bearing
deposits increased to $121,827,841 during the nine months ended September 30, 2006 from $108,043,191during the same period last year. During the quarter ended September 30, 2006, the average balances of interest bearing deposits increased
to $126,732,106 from $108,669,198 for the same period last year. The annualized average cost of deposits was 3.04% for the nine months ended September 30, 2006, compared to 1.95% for the same period in 2005. For the quarter ended
September 30, 2006 and 2005, the annualized average cost of deposits was 3.30% and 2.12%, respectively.

For the nine months ended September 30,
2006 and 2005, the total annualized average cost of funds was 3.04% and 1.95%, respectively. The overall cost of funds was 3.30% and 2.13% for the quarter ended September 30, 2006, and 2005, respectively.

Provision and Allowance for Loan Losses

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

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



9



---

##### Table of Contents

COMMUNITYCORP

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

Provision and Allowance for Loan Losses  (continued)

Loans are graded at inception and are reviewed on a
periodic basis to ensure that assigned risk grades are proper based on the definition of such classification. The value of underlying collateral is also considered during such analysis. The resulting monthly model and the related conclusions are
reviewed and approved by Senior Management. Our analysis of allowance adequacy includes consideration for loan impairment. While we use the best information available to make evaluations, future adjustments to the allowance may be necessary if
results differ substantially from the assumptions used in making the evaluations.

The methodology for assessing the adequacy of the allowance establishes
both an allocated and unallocated component of the 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 1.74% and 1.71% of total loans at September 30,
2006 and 2005. The allowance for loan losses at September 30, 2006 is reflective of the results of our allowance model methodology. We monitor and evaluate the adequacy of the allowance and loss exposure in the loan portfolio by considering the
borrowers financial conditions and other factors in the unallocated component of the allowance model methodology. Accordingly, we believe the allowance as of September 30, 2006 is adequate, based on our assessment of probable losses, and
available facts and circumstances then prevailing.

The provision for loan losses is the charge to operating earnings that management feels is necessary to
maintain the allowance for possible loan losses at an adequate level. For the nine months ended September 30, 2006, the provision charged to expense was $225,000 as compared to $262,600 in the same period in 2005. For the three months ended
September 30, 2006 and 2005, the provision charged to expense was $75,000 and $130,000, respectively.

Noninterest Income

Noninterest income during the nine months ended September 30, 2006 was $540,470, an increase of $103,144 or 23.59% from the comparable period in 2005. The increase
is primarily attributable to the increase in service charges on deposit accounts. During the current year, we became more aggressive in charging for non-sufficient fund checks, which resulted in an $95,413 or 30.93% increase in service charges.
Income from service charges was $403,928 and $308,515 for the nine months ended September 30, 2006 and 2005, respectively, while other income was $136,542 and $128,811, respectively.

For the quarter ended September 30, 2006, noninterest income increased $6,277 or 3.93% over the same period in 2005. Service charges on deposit accounts increased
$8,644 from the period ended September 30, 2005 to $126,027 for the period ended September 30, 2006. Other income was $39,972 and $42,339 for the quarter ended September 30, 2006 and 2005 respectively.



10



---

##### Table of Contents

COMMUNITYCORP

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

Noninterest
Expense

Total noninterest expense for the nine months ended September 30, 2006 increased $144,003 or 5.91% over the same period in 2005. Salaries
and employee benefits increased $60,329 from the nine months ended September 30, 2005 to $1,423,383 for the nine months ended September 30, 2006. This increase is primarily attributable to normal salary increases plus the increase in the
cost of providing our employees health benefits. During the nine months ended September 30, 2006, the increase in health benefits was approximately $26,000 when compared to the same period in 2005. Other operating expenses increased $54,099 or
8.18% to $715,673 for the nine months ended September 30, 2006 when compared to the same period in 2005. Net occupancy and equipment expense increased $29,575 for the nine months ended September 30, 2006 to $440,941.

For the quarter ended September 30, 2006, noninterest expense increased $61,948 or 7.62% over the same period in 2005. Salaries and benefits increased $17,582 or
3.84% over the same period in 2005. Net occupancy and equipment expense increased $16,658 or 11.54% over the same period in 2005. Other operating expenses increased $27,708 or 13.15% over the same period in 2005.

Income Taxes

The income tax provision for the nine months ended
September 30, 2006 was $582,600 as compared to $595,000 for the same period in 2005. The decrease was primarily a result of the decrease in income before taxes. The effective tax rates were 31.96% and 31.92% for the nine months ended
September 30, 2006 and September 30, 2005, respectively. The effective tax rates were 29.90% and 32.22% for the quarter ended September 30, 2006 and September 30, 2005, respectively.

Net Income

The combination of the above factors resulted in net
income for the nine months ended September 30, 2006 of $1,240,084 as compared to $1,268,855 for the same period in 2005. This represents a decrease of $28,771 or 2.27% over the same period in 2005. Net income for the quarter ended
September 30, 2006 increased $24,970 or 6.22% from the same period in 2005.

Assets and Liabilities

During the first nine months of 2006, total assets increased $22,306,740, or 15.68%, when compared to December 31, 2005. The increase in total assets was mainly
attributable to federal funds sold, investments securities and gross loans, which increased $13,990,000, $1,404,893, and $8,170,198 respectively.

For the
nine months ended September 30, 2006 total liabilities increased $21,241,361 or 16.52% from December 31, 2005. Deposits increased $20,383,677 or 15.99%, short-term borrowings increased $80,000 or 21.62%, and other liabilities increased
$99,678 or 60.89%.

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.



11



---

##### Table of Contents

COMMUNITYCORP

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

Loans

Our loan portfolio during the nine months ended September 30, 2006 increased $8,170,198 or 8.37% during the period. Balances
within the major loans receivable categories as of September 30, 2006 and December 31, 2005 are as follows:



|                           |  |                   |             |                   |   |           
|-------------------------- |  | ----------------- | ----------- | ----------------- | - | ----------
|                           |  | September 30,2006 |             | December 31, 2005
|Real estate  construction |  | $                 | 3,941,357   |                   | $ | 4,453,312 
|Real estate  mortgage     |  |                   | 33,764,813  |                   |   | 37,478,906
|Commercial and industrial  |  |                   | 55,571,740  |                   |   | 42,727,235
|Consumer and other         |  |                   | 12,487,587  |                   |   | 12,935,846
|                           |  |                   |             |                   |   |           
|                           |  | $                 | 105,765,497 |                   | $ | 97,595,299
|                           |  |                   |             |                   |   |           

Risk Elements in the Loan Portfolio

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



|                                                   |  |               |           |      |   |        
|-------------------------------------------------- |  | ------------- | --------- | ---- | - | -------
|                                                   |  | September 30,
|                                                   |  | 2006          |           | 2005
|Nonaccrual loans                                   |  | $             | 582,716   |      | $ | 662,529
|                                                   |  |              
|Accruing loans more than 90 days past due          |  | $             | 2,798     |      | $ | 3,194  
|                                                   |  |              
|Loans identified by the internal review mechanism: |  |               |           |      |   |        
|Criticized                                         |  | $             | 98,849    |      | $ | 510,333
|Classified                                         |  | $             | 2,529,459 |      | $ | 966,665

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 September 30, 2006 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:



|                                                 |  |               |             |   |      |   |            |  
|------------------------------------------------ |  | ------------- | ----------- | - | ---- | - | ---------- | -
|                                                 |  | September 30, |            
|                                                 |  | 2006          |             |   | 2005 |  
|Balance, January 1,                              |  | $             | 1,644,948   |   |      | $ | 1,456,326  |  
|Provision for loan losses for the period         |  |               | 225,000     |   |      |   | 262,600    |  
|Net loans (charged-off) recovered for the period |  |               | (25,031     | ) |      |   | (168,397   | )
|                                                 |  |               |             |   |      |   |            |  
|Balance, end of period                           |  | $             | 1,844,917   |   |      | $ | 1,550,529  |  
|                                                 |  |               |             |   |      |   |            |  
|Gross loans outstanding, end of period           |  | $             | 105,765,497 |   |      | $ | 90,770,910 |  
|Allowance for loan losses to loans outstanding   |  |               | 1.74        | % |      |   | 1.71       | %



12



---

##### Table of Contents

COMMUNITYCORP

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

Deposits

Total deposits increased $20,383,677 or 15.99% from December 31, 2005. Interest-bearing deposits increased $19,135,662 to $128,573,335 at
September 30, 2006. Noninterest-bearing deposits increased $1,248,015 to $19,268,648 at September 30, 2006. Expressed in percentages, interest-bearing deposits increased 17.49%, noninterest-bearing deposits increased 6.93%.

Balances within the major deposit categories are as follows:



|                                    |  |                   |             |                   |   |            
|----------------------------------- |  | ----------------- | ----------- | ----------------- | - | -----------
|                                    |  | September 30,2006 |             | December 31, 2005
|Noninterest-bearing demand deposits |  | $                 | 19,268,648  |                   | $ | 18,020,633 
|Interest-bearing demand deposits    |  |                   | 27,768,642  |                   |   | 28,958,482 
|Savings deposits                    |  |                   | 18,240,329  |                   |   | 18,123,425 
|Certificates of deposits            |  |                   | 82,564,364  |                   |   | 62,355,766 
|                                    |  |                   |             |                   |   |            
|                                    |  | $                 | 147,841,983 |                   | $ | 127,458,306
|                                    |  |                   |             |                   |   |            

There were no brokered deposits at December 31, 2005 or September 30, 2006.

Certificates of deposits include a $10,037,000 deposit that was issued to a local school district on April 14, 2006, bearing an interest rate of 5.10% with a
maturity date of May 14, 2007.

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 71.32% at September 30, 2006 and 76.35% at December 31, 2005.

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, 2006 we had available an unused short-term line of credit to
purchase up to $3,800,000 of federal funds from an unrelated correspondent institution. We also have a credit availability agreement with the Federal Home Loan Bank totaling 15 percent of the Banks assets as of any quarter end. As of
September 30, 2006, the available credit totaled approximately $24,679,000, and there were no borrowings outstanding. Any borrowings from the Federal Home Loan Bank will be secured by liens on all of the Banks 1-4 family residential first
lien mortgage loans and or investment securities.



13



---

##### Table of Contents

COMMUNITYCORP

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

Interest
Rate Sensitivity

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

We monitor interest rate sensitivity by measuring our interest sensitivity
through a gap analysis, which is the positive or negative dollar difference between assets and liabilities that are subject to interest rate repricing within a given time period. However, since interest rates and yields on various
interest sensitive assets and liabilities do not all adjust in the same degree when there is a change in prevailing interest rates (such as prime rate), the traditional gap analysis is only a general indicator of rate sensitivity and net interest
income volatility. As stated in Results of Operations for the Nine Months Ended September 30, 2006 Compared to the Nine Months Ended September 30, 2005  Net Interest Income, our net interest margin has decreased during
the current year. If net interest margin continues to decline, net income will likely decline also.

Capital Resources

Total shareholders equity increased from $13,643,373 at December 31, 2005 to $14,708,752 at September 30, 2006. The net increase of $1,065,379 is
attributable to earnings for the period of $1,240,084 before the payment of $219,099 in cash dividends, the net increase for the period of $92,473 in the fair value of securities available-for-sale and the net decrease of $48,079 from the sales and
purchases of treasury stock.

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

The following table summarizes the Banks risk-based capital at September 30, 2006:



|                                             |  |   |             |  
|-------------------------------------------- |  | - | ----------- | -
|Shareholders equity                         |  | $ | 14,813,812  |  
|Less: intangibles                            |  |   |            |  
|                                             |  |   |             |  
|Tier 1 capital                               |  |   | 14,813,812  |  
|Plus: allowance for loan losses (1)          |  |   | 1,472,488   |  
|                                             |  |   |             |  
|Total capital                                |  | $ | 16,286,300  |  
|                                             |  |   |             |  
|Net risk-weighted assets                     |  | $ | 117,799,000 |  
|                                             |  |   |             |  
|Risk-based capital ratios                    |  |   |             |  
|Tier 1 capital (to risk-weighted assets)     |  |   | 12.58       | %
|Total capital (to risk-weighted assets)      |  |   | 13.83       | %
|Tier 1 capital (to quarterly average assets) |  |   | 9.24        | %

---

|(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.



14



---

##### Table of Contents

COMMUNITYCORP

Item 2 - Managements Discussion and Analysis or Plan of Operations 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 September 30, 2006, we had issued commitments to extend credit of $7,210,000 and standby letters
of credit of $988,000 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.

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, 2005 as filed in our annual report on Form 10-KSB. Certain accounting policies involve significant
judgments and assumptions by us, which have a material impact on the carrying value of certain assets and liabilities. We consider these accounting policies to be critical accounting policies. The judgments and assumptions we use are based on
historical experience and other factors, which we believe to be reasonable under the circumstances. Because of the nature of the judgments and assumptions we make, actual results could differ from these judgments and estimates which could have a
material impact on our carrying values of assets and liabilities and our results of operations.

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

Recently Issued Accounting Standards

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

Item - 3 - Controls and Procedures

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

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



15



---

##### Table of Contents

COMMUNITYCORP

PART II - OTHER INFORMATION

Item 6 - Exhibits and Reports on Form 8-K



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



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



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



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



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

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

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: November 10, 2006 |  | By: |  | /s/ W. ROGER CROOK                 
|                        |  |     |  | W. Roger Crook                     
|                        |  |     |  | President & Chief Executive Officer
|                        |  |    
|Date: November 10, 2006 |  | By: |  | /s/ GWEN P. BUNTON                 
|                        |  |     |  | Gwen P. Bunton                     
|                        |  |     |  | Chief Financial Officer            



16



---

##### Table of Contents

COMMUNITYCORP

Index to Exhibits



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



17