**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C.  20549**

**FORM      10-Q**

|       | **(Mark                One)**                                                                                                                                                                                                                                                                                                                                                                  |
|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       |                                                                                                                                                                                                                                                                                                                                                                                           |
| **ý** | **QUARTERLY                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30,                2007**                                                                                                                                                                                           |
|       |                                                                                                                                                                                                                                                                                                                                                                                           |
| **o**      | **TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934 FOR THE TRANSITION PERIOD FROM                                                              TO** |

**COMMISSION      FILE NUMBER:**

**VALLEY      COMMERCE BANCORP**

| **California**                                                                                   | **46-1981399**                                      |
|--------------------------------------------------------------------------------------------------|-----------------------------------------------------|
| (State                or other jurisdiction of incorporation or organization)                    | (I.R.S.                Employer Identification No.) |
|                                                                                             |                                                |
| **200                South Court Street****Visalia,                California  93291** |
| (Address                of principal executive offices)                                     |
|                                                                                             |                                                |
| **(559)                622-9000**(Issuer’s                telephone number)                |

----

D

| PART                I - FINANCIAL INFORMATION                                                                                     | 3      |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                              |   |
| ITEM                1 - FINANCIAL STATEMENTS                                                                                      | 4      |
|                                                                                                                              |   |
| ITEM                2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL                CONDITION AND RESULTS OF OPERATONS | 13     |
|                                                                                                                              |   |
| ITEM                3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET                RISK                           | 26     |
|                                                                                                                              |   |
| ITEM                4 – CONTROLS AND PROCEDURES                                                                             | 26     |
|                                                                                                                              |   |
| PART                II - OTHER INFORMATION                                                                                        | 28     |
|                                                                                                                              |   |
| ITEM                1 LEGAL PROCEEDINGS                                                                                           | 28     |
|                                                                                                                              |   |
| ITEM                1A  RISK FACTORS                                                                                    | 28     |
|                                                                                                                              |   |
| ITEM                2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF                PROCEEDS                                  | 28     |
|                                                                                                                              |   |
| ITEM                3 DEFAULTS UPON SENIOR SECURITIES                                                                             | 28     |
|                                                                                                                              |   |
| ITEM                4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY                HOLDERS                                          | 28     |
|                                                                                                                              |   |
| ITEM                5 OTHER INFORMATION                                                                                           | 29     |
|                                                                                                                              |   |
| ITEM                6 EXHIBITS                                                                                                    | 29     |
|                                                                                                                              |   |
| SIGNATURES                                                                                                                        | 30     |
|                                                                                                                              |   |
| EXHIBIT                INDEX                                                                                                      | 31     |

----

*Index*

**PART      I**

**Forward-Looking      Information**

*Certain      matters discussed in this Quarterly Report on Form 10-Q including, but not      limited to, those described in Item 2 - Management’s Discussion and Analysis of      Financial Condition and Results of Operations,, are forward-looking statements      that are subject to risks and uncertainties that could cause actual results      to      differ materially from those projected in the forward-looking statements. Such risks and uncertainties include, among others: (1) significant increases      in      competitive pressure in the banking and financial services industries; (2)      changes in the interest rate environment, which could reduce anticipated or      actual margins; (3) changes in the regulatory environment; (4) general economic      conditions, either nationally or regionally and especially in the Company’s      primary service area, becoming less favorable than expected and resulting in,      among other things, a deterioration in credit quality; (5) operational risks,      including data processing systems failures or fraud; (6) changes in business      conditions and inflation; (7) changes in technology; (8) changes in monetary      and      tax policies; and (9) changes in the securities markets, (10) civil disturbances      or terrorist threats or acts, or apprehension about the possible future      occurrences or acts of this type; (11) outbreak or escalation of hostilities      in      which the United States is involved, any declaration of war by the U.S. Congress      or any other national or international calamity, crisis or emergency; (12)      changes in laws and regulations; (13) recently issued accounting pronouncements;      (14) government policies, regulations and their enforcement including Bank      Secrecy Act – related matters, taxing statutes and regulations; (15)      restrictions on dividends that our subsidiaries are allowed to pay to us; (16)      the ability to satisfy requirements related to the Sarbanes-Oxley Act and other      regulation on internal control; and (17) management’s ability to manage these      and other risks.  Therefore, the information set forth in such      forward-looking statements should be carefully considered when evaluating the      business prospects of the Company.*

*When      the Company uses in this Quarterly Report on Form 10-Q the words “anticipate,”“estimate,” “expect,” “project,” “intend,” “commit,” “believe” and similar      expressions, the Company intends to identify forward-looking statements. Such statements are not guarantees of performance and are subject to certain      risks, uncertainties and assumptions, including those described in this      Quarterly Report on Form 10-Q.  Should one or more of these risks or      uncertainties materialize, or should underlying assumptions prove incorrect,      actual results may vary materially from those anticipated, estimated, expected,      projected, intended, committed or believed.  The future results and      shareholder values of the Company may differ materially from those expressed      in      these forward-looking statements.  Many of the factors that will determine      these results and values are beyond the Company’s ability to control or      predict.  The Company undertakes no obligation to revise or publicly      release the results of any revision to these forward-looking      statements.  For those statements, the Company claims the protection      of the safe harbor for forward-looking statements contained in the Private      Securities Litigation Reform Act of 1995.*

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*Index*

**ITEM      1 – FINANCIAL STATEMENTS**

**VALLEY      COMMERCE BANCORP**

**CONDENSED      CONSOLIDATED BALANCE SHEET**

**(UNAUDITED)**

|                                                                                                                                                                                                              |   | **June                30,****2007** |        |   | **December                31,****2006** |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|-------------|--------|-----------------------------------------|--------|
|                                                                                                                                                                                                              |   |                                |        |   |                                    |   |
| **Assets**                                                                                                                                                                                                        |   |                                |        |   |                                    |   |
| Cash                and due from banks                                                                                                                                                                            |   | $                                   | 8,195,700   |   |                                    | $      | 13,265,547 |   |
| Available-for-sale                investment securities, at fair value                                                                                                                                            |   |                                | 51,153,000  |   |                                    |   | 55,298,000 |   |
| Loans,                less allowance for loan losses of $1,751,799 at June 30, 2007 and                $1,745,582 at December 31, 2006                                                                            |   |                                | 194,986,256 |   |                                    |   | 182,331,506 |   |
| Bank                premises and equipment, net                                                                                                                                                                   |   |                                | 2,023,513   |   |                                    |   | 1,832,177 |   |
| Cash                surrender value of bank-owned life insurance                                                                                                                                                  |   |                                | 6,057,710   |   |                                    |   | 5,934,563 |   |
| Accrued                interest receivable and other assets                                                                                                                                                       |   |                                | 4,834,814   |   |                                    |   | 5,002,900 |   |
| Total                assets                                                                                                                                                                                       |   | $                                   | 267,250,993 |   |                                    | $      | 263,664,693 |   |
|                                                                                                                                                                                                              |   |                                |        |   |                                    |   |   |   |
| **Liabilities                and Shareholders’ Equity**                                                                                                                                                     |   |                                |        |   |                                    |   |   |   |
| Deposits:                                                                                                                                                                                                         |   |                                |        |   |                                    |   |   |   |
| Noninterest-bearing                                                                                                                                                                                               |   | $                                   | 58,707,450  |   |                                    | $      | 63,019,956 |   |
| Interest-bearing                                                                                                                                                                                                  |   |                                | 82,504,185  |   |                                    |   | 75,292,723 |   |
| Time                                                                                                                                                                                                              |   |                                | 72,613,221  |   |                                    |   | 69,263,490 |   |
| Total                deposits                                                                                                                                                                                     |   |                                | 213,824,856 |   |                                    |   | 207,576,169 |   |
|                                                                                                                                                                                                              |   |                                |        |   |                                    |   |   |   |
| Accrued                interest payable and other liabilities                                                                                                                                                     |   |                                | 1,701,175   |   |                                    |   | 1,399,787 |   |
| Short-term                debt                                                                                                                                                                                    |   |                                | 14,053,000  |   |                                    |   | 17,600,000 |   |
| Long-term                debt                                                                                                                                                                                     |   |                                | 8,248,075   |   |                                    |   | 8,547,638 |   |
| Junior                subordinated deferrable interest debentures                                                                                                                                                 |   |                                | 3,093,000   |   |                                    |   | 3,093,000 |   |
| Total                liabilities                                                                                                                                                                                  |   |                                | 240,920,106 |   |                                    |   | 238,216,594 |   |
|                                                                                                                                                                                                              |   |                                |        |   |                                    |   |   |   |
| Commitments                and contingencies (Note 6)                                                                                                                                                             |   |                                |        |   |                                    |   |   |   |
|                                                                                                                                                                                                              |   |                                |        |   |                                    |   |   |   |
| Shareholders’                equity (Note 2 and 5):                                                                                                                                                         |   |                                |        |   |                                    |   |   |   |
| Serial                preferred stock - no par value; 10,000,000 shares authorized,                noneissued                                                                                                     |   |                                |        |   |                                    |   |   |   |
| Common                stock - no par value; 30,000,000 sharesauthorized; issued and outstanding                – 2,328,191 shares at June 30, 2007 and 2,326,553 shares at December                31, 2006 |   |                                | 22,871,037  |   |                                    |   | 20,683,720 |   |
| Retained                earnings                                                                                                                                                                                  |   |                                | 4,140,278   |   |                                    |   | 5,040,381 |   |
| Accumulated                other comprehensive loss, net of taxes (Note 5)                                                                                                                                        |   |                                | (680,428    | )      |                                    |   | (276,002 | ) |
|                  Total shareholders’ equity                                                                                                                                                            |   |                                | 26,330,887  |   |                                    |   | 25,448,099 |   |
|               Total                liabilities and shareholders’ equity                                                               |   | $                                   | 267,250,993 |   |                                    | $      | 263,664,693 |   |
|                                                                                                                                                                                                              |   |                                |        |   |                                    |   |   |   |
|                                                                                                                                                                                                              |   |                                |        |   |                                    |   |   |   |
|                                                                                                                                                                                                              |   |                                |        |   |                                    |   |   |   |
| See                notes to unaudited condensed consolidated financial                statements.                                                                                                                 |   |

----

*Index*

**VALLEY      COMMERCE      BANCORP**

**CONDENSED      CONSOLIDATED STATEMENT OF INCOME**

**(UNAUDITED)**

|                                                                                                                                                      |   | For                  the Three Months |      |   | For                  the Six Months |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|-----------|--------|-------------------------------------|--------|
|                                                                                                                                                      |   | Ended                  June 30,       |      |   | Ended                  June 30,     |   |
|                                                                                                                                                      |   | **2007**                              |      |   | **2006**                            |   |   | **2007** |   |   | **2006** |   |
| **Interest                  Income:**                                                                                                                     |   |                                  |      |   |                                |   |   |   |   |   |   |   |
| Interest                  and fees on loans                                                                                                               |   | $                                     | 4,066,212 |   |                                | $      | 3,421,858 |   |   | $ | 7,906,936 |   |   | $ | 6,631,441 |   |
| Interest                  on investment securities:                                                                                                       |   |                                  |      |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                                                                                                                   |   |                                  | 357,855   |   |                                |   | 345,097 |   |   |   | 782,698 |   |   |   | 677,743 |   |
| Exempt                  from Federal income taxes                                                                                                         |   |                                  | 190,705   |   |                                |   | 176,332 |   |   |   | 381,240 |   |   |   | 337,384 |   |
| Interest                  on Federal funds sold                                                                                                           |   |                                  | 1,667     |   |                                |   | 34,969 |   |   |   | 2,001 |   |   |   | 133,944 |   |
| Total                  interest income                                                                                                                    |   |                                  | 4,616,439 |   |                                |   | 3,978,256 |   |   |   | 9,072,875 |   |   |   | 7,780,512 |   |
|                                                                                                                                                      |   |                                  |      |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| **Interest                  Expense:**                                                                                                                    |   |                                  |      |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Interest                  on deposits                                                                                                                     |   |                                  | 1,521,781 |   |                                |   | 952,360 |   |   |   | 2,949,686 |   |   |   | 1,830,472 |   |
| Interest                  on short-term debt                                                                                                              |   |                                  | 176,073   |   |                                |   | 70,515 |   |   |   | 353,450 |   |   |   | 70,515 |   |
| Interest                  on long-term debt                                                                                                               |   |                                  | 90,359    |   |                                |   | 95,053 |   |   |   | 181,780 |   |   |   | 190,845 |   |
| Interest                  on junior subordinated deferrable interest debentures                                                                           |   |                                  | 67,675    |   |                                |   | 65,185 |   |   |   | 134,647 |   |   |   | 126,040 |   |
|            Total                  interest expense                                                 |   |                                  | 1,855,888 |   |                                |   | 1,183,113 |   |   |   | 3,619,563 |   |   |   | 2,217,872 |   |
|                                                                                                                                                      |   |                                  |      |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|               Net                  interest income before provision for loan losses |   |                                  | 2,760,551 |   |                                |   | 2,795,143 |   |   |   | 5,453,312 |   |   |   | 5,562,640 |   |
|                                                                                                                                                      |   |                                  |      |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| **Provision                  for loan losses**                                                                                                            |   |                                  | -         |   |                                |   | - |   |   |   | - |   |   |   | - |   |
|               Net                  interest income after provision for loan losses  |   |                                  | 2,760,551 |   |                                |   | 2,795,143 |   |   |   | 5,453,312 |   |   |   | 5,562,640 |   |
|                                                                                                                                                      |   |                                  |      |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| **Non-Interest                  Income:**                                                                                                                 |   |                                  |      |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Service                  charges                                                                                                                          |   |                                  | 137,039   |   |                                |   | 136,072 |   |   |   | 275,566 |   |   |   | 261,910 |   |
| Loss                  on sale of available-for-sale investment securities, net                                                                            |   |                                  | (1,145    | )      |                                |   | (52,737 | ) |   |   | (1,145 | ) |   |   | (52,737 | ) |
| Mortgage                  loan brokerage fees                                                                                                             |   |                                  | 23,560    |   |                                |   | 25,694 |   |   |   | 47,330 |   |   |   | 41,984 |   |
| Earnings                  on cash surrender value of life insurance policies                                                                              |   |                                  | 64,349    |   |                                |   | 26,334 |   |   |   | 128,127 |   |   |   | 54,313 |   |
| Other                                                                                                                                                     |   |                                  | 58,319    |   |                                |   | 48,917 |   |   |   | 123,292 |   |   |   | 102,627 |   |
|          Total                  non-interest income                                                          |   |                                  | 282,122   |   |                                |   | 184,280 |   |   |   | 573,170 |   |   |   | 408,097 |   |
|                                                                                                                                                      |   |                                  |      |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| **Non-Interest                  Expense:**                                                                                                                |   |                                  |      |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Salaries                  and employee benefits                                                                                                           |   |                                  | 1,165,354 |   |                                |   | 1,027,579 |   |   |   | 2,415,536 |   |   |   | 2,129,648 |   |
| Occupancy                  and equipment                                                                                                                  |   |                                  | 249,309   |   |                                |   | 213,798 |   |   |   | 495,276 |   |   |   | 430,076 |   |
| Other                                                                                                                                                     |   |                                  | 698,760   |   |                                |   | 711,029 |   |   |   | 1,314,408 |   |   |   | 1,277,986 |   |
|          Total                  non-interest expense                                                         |   |                                  | 2,113,423 |   |                                |   | 1,952,406 |   |   |   | 4,225,220 |   |   |   | 3,837,710 |   |
|                                                                                                                                                      |   |                                  |      |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|          Income                  before provision for income taxes                                           |   |                                  | 929,250   |   |                                |   | 1,027,017 |   |   |   | 1,801,262 |   |   |   | 2,133,027 |   |
|                                                                                                                                                      |   |                                  |      |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| **Provision                  for income taxes**                                                                                                           |   |                                  | 258,000   |   |                                |   | 362,000 |   |   |   | 537,000 |   |   |   | 740,000 |   |
|                                                                                                                                                      |   |                                  |      |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|             Net                  income                                                       |   | $                                     | 671,250   |   |                                | $      | 665,017 |   |   | $ | 1,264,262 |   |   | $ | ,393,027 |   |
|                                                                                                                                                      |   |                                  |      |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Basic                  earnings per share (Notes 2 and 4)                                                                                                 |   | $                                     | 0.29      |   |                                | $      | 0.29 |   |   | $ | 0.54 |   |   | $ | 0.61 |   |
|                                                                                                                                                      |   |                                  |      |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Diluted                  earnings per share (Notes 2 and 4)                                                                                               |   | $                                     | 0.28      |   |                                | $      | 0.27 |   |   | $ | 0.52 |   |   | $ | 0.57 |   |
|                                                                                                                                                      |   |                                  |      |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| See                  notes to unaudited condensed consolidated financial                  statements.                                                     |   |

----

*Index*

**VALLEY      COMMERCE BANCORP**

**CONDENSED      CONSOLIDATED STATEMENT OF CASH FLOWS**

**(UNAUDITED)**

|                                                                                                                                                               |   | **For                the Six Months** |        |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|-------------|
|                                                                                                                                                               |   | **Ended                June 30,**     |        |
|                                                                                                                                                               |   | **2007**                              |        |   | **2006** |   |
|                                                                                                                                                               |   |                                  |        |   |   |   |
| **Cash                Flows from Operating Activities:**                                                                                                           |   |                                  |        |   |   |   |
| Net                income                                                                                                                                          |   | $                                     | 1,264,262   |   |   | $ | 1,393,027 |   |
| Adjustments                to reconcile net income to net cash provided by operating                activities:                                                    |   |                                  |        |   |   |   |   |   |
| Provision                for loan losses                                                                                                                           |   |                                  | -           |   |   |   | - |   |
| Increase                in deferred loan origination fees, net                                                                                                     |   |                                  | 42,945      |   |   |   | 4,517 |   |
| Depreciation                                                                                                                                                       |   |                                  | 142,999     |   |   |   | 115,658 |   |
| Amortization                of intangibles                                                                                                                         |   |                                  | 31,269      |   |   |   | 31,269 |   |
| Loss                on sale of available-for-sale investment securities, net                                                                                       |   |                                  | 1,145       |   |   |   | 52,737 |   |
| Dividends                on Federal Home Loan Bank stock                                                                                                           |   |                                  | (45,700     | ) |   |   | (24,000 | ) |
| Amortization                and accretion of investment securities, net                                                                                            |   |                                  | 55,722      |   |   |   | 178,745 |   |
| Increase                in cash surrender value of bank-owned life insurance                                                                                       |   |                                  | (123,147    | ) |   |   | (54,313 | ) |
| Stock-based                compensation expense                                                                                                                    |   |                                  | 15,342      |   |   |   | 14,500 |   |
| Net                loss on sale of equipment                                                                                                                       |   |                                  | 1,255       |   |   |   | - |   |
| Decrease                in accrued interest receivable and other assets                                                                                            |   |                                  | (278,060    | ) |   |   | (530,820 | ) |
| Increase                in accrued interest payable and other liabilities                                                                                          |   |                                  | 301,388     |   |   |   | 837,342 |   |
|        Net                cash provided by operating activities                                                                 |   |                                  | 1,409,420   |   |   |   | 2,018,662 |   |
|                                                                                                                                                               |   |                                  |        |   |   |   |   |   |
| **Cash                Flows from Investing Activities:**                                                                                                           |   |                                  |        |   |   |   |   |   |
| Proceeds                from matured and called available-for-sale investment                securities                                                            |   |                                  | 2,000,000   |   |   |   | 655,000 |   |
| Proceeds                from sales of available-for-sale investment securities                                                                                     |   |                                  | 2,623,855   |   |   |   | 2,752,737 |   |
| Purchases                of available-for-sale investment securities                                                                                               |   |                                  | (2,226,905  | ) |   |   | (10,472,291 | ) |
| Proceeds                from principal repayments from available-for-sale        mortgage-backed                securities |   |                                  | 1,114,134   |   |   |   | 1,010,893 |   |
| Redemption                of Federal Home Loan Bank Stock, net                                                                                                     |   |                                  | 633,200     |   |   |   | 13,400 |   |
| Net                increase in loans                                                                                                                               |   |                                  | (12,697,695 | ) |   |   | (12,500,804 | ) |
| Purchase                of premises and equipment                                                                                                                  |   |                                  | (344,903    | ) |   |   | (111,889 | ) |
| Proceeds                from sale of equipment                                                                                                                     |   |                                  | 9,313       |   |   |   | - |   |
|         Net                cash used in investing activities                                                               |   |                                  | (8,889,001  | ) |   |   | (18,652,954 | ) |
|                                                                                                                                                               |   |                                  |        |   |   |   |   |   |
| Continued                on next page.                                                                                                                             |   |

----

*Index*

**VALLEY      COMMERCE BANCORP**

**CONDENSED      CONSOLIDATED STATEMENT OF CASH FLOWS**

**(UNAUDITED)**

|                                                                                              |   | **For                the Six Months** |       |
|---------------------------------------------------------------------------------------------------|--------|---------------------------------------|------------|
|                                                                                              |   | **Ended                June 30,**     |       |
|                                                                                              |   | **2007**                              |       |   | **2006** |   |
|                                                                                              |   |                                  |       |   |   |   |
| **Cash                Flows from Financing Activities:**                                          |   |                                  |       |   |   |   |
| Net                increase in noninterest-bearing and interest-bearing                deposits   |   | $                                     | 2,898,956  |   |   | $ | 2,761,785 |   |
| Net                increase (decrease) in time deposits                                           |   |                                  | 3,349,731  |   |   |   | (423,290 | ) |
| Proceeds                from exercised stock options                                              |   |                                  | 13,000     |   |   |   | 1,000 |   |
| Increase                (decrease) in short-term debt                                             |   |                                  | (3,547,000 | ) |   |   | 10,000,000 |   |
| Decrease                in long-term debt                                                         |   |                                  | (299,563   | ) |   |   | (294,820 | ) |
|     Cash                paid to repurchase fractional shares                  |   |                                  | (5,390     | ) |   |   | (5,004 | ) |
| Net                cash provided by financing activities                                          |   |                                  | 2,409,734  |   |   |   | 12,039,671 |   |
|                                                                                              |   |                                  |       |   |   |   |   |   |
| Decrease                in cash and cash equivalents                                              |   |                                  | (5,069,847 | ) |   |   | (4,594,621 | ) |
| **Cash                and Cash Equivalents at Beginning of Year**                                 |   |                                  | 13,265,547 |   |   |   | 19,618,285 |   |
| **Cash                and Cash Equivalents at End of Period**                                     |   | $                                     | 8,195,700  |   |   | $ | 15,023,664 |   |
|                                                                                              |   |                                  |       |   |   |   |   |   |
| **Supplemental                Disclosure of Cash Flow Information:**                              |   |                                  |       |   |   |   |   |   |
| Cash                paid during the period for:                                                   |   |                                  |       |   |   |   |   |   |
| Interest                expense                                                                   |   | $                                     | 3,461,916  |   |   | $ | 2,230,418 |   |
| Income                taxes                                                                       |   | $                                     | 615,000    |   |   | $ | 1,255,000 |   |
|                                                                                              |   |                                  |       |   |   |   |   |   |
| **Non-Cash                Investing Activities:**                                                 |   |                                  |       |   |   |   |   |   |
| Net                change in unrealized loss on available-for-sale securities                     |   | $                                     | (577,049   | ) |   | $ | (753,653 | ) |
|                                                                                              |   |                                  |       |   |   |   |   |   |
|                                                                                              |   |                                  |       |   |   |   |   |   |
| See                notes to unaudited condensed consolidated financial                statements. |   |

----

*Index*

**VALLEY      COMMERCE BANCORP**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

----

*Index*

|                                                    |   | **For                  the Six Months Ended June 30, 2007** |    |
|---------------------------------------------------------|--------|-------------------------------------------------------------|---------|
|                                                    |   | **Shares**                                                  |    |   | **Weighted                  Average****Exercise                  Price** |   | **Weighted****Average****Remaining****Contractual****Term** |   | **Aggregate                  Intrinsic****Value                  (in thousands)** |   |
| **Incentive:**                                          |   |                                                        |    |   |   |   |    |   |   |   |
| Options                  outstanding at January 1, 2007 |   |                                                        | 35,895  |   |   | $ | 8.20 |   |   |   |   |   |
| Options                  granted                        |   |                                                        | -       |   |   |   | - |   |   |   |   |   |
| Options                  exercised                      |   |                                                        | (1,914  | ) |   |   | 6.79 |   |   |   |   |   |
| Options                  cancelled                      |   |                                                        | (608    | ) |   |   | 11.52 |   |   |   |   |   |
| Options                  outstanding at June 30, 2007   |   |                                                        | 33,373  |   |   |   | 8.20 |   | 5.83                  years |   | $ | 388,423 |   |
| Options                  exercisable at June 30, 2007   |   |                                                        | 28,751  |   |   |   | 7.80 |   | 5.83                  years |   |   | 346,277 |   |
|                                                    |   |                                                        |    |   |   |   |   |   |   |   |   |   |   |
| **Nonstatutory:**                                       |   |                                                        |    |   |   |   |   |   |   |   |   |   |   |
| Options                  outstanding at January 1, 2007 |   |                                                        | 199,669 |   |   | $ | 7.47 |   |   |   |   |   |   |
| Options                  granted                        |   |                                                        | -       |   |   |   | - |   |   |   |   |   |   |
| Options                  exercised                      |   |                                                        | -       |   |   |   | - |   |   |   |   |   |   |
| Options                  cancelled                      |   |                                                        | -       |   |   |   | - |   |   |   |   |   |   |
| Options                  outstanding at June 30, 2007   |   |                                                        | 199,669 |   |   |   | 7.47 |   | 4.67                  years |   | $ | 2,471,384 |   |
| Options                  exercisable at June 30, 2007   |   |                                                        | 185,728 |   |   |   | 6.95 |   | 4.67                  years |   |   | 2,394,802 |   |

----

*Index*

|                                                              |   | **For                the Three Months** |      |   | **For                the Six Months** |   |
|-------------------------------------------------------------------|--------|-----------------------------------------|-----------|--------|---------------------------------------|--------|
|                                                              |   | **Ended                June 30,**       |      |   | **Ended                June 30,**     |   |
|                                                              |   | **2007**                                |      |   | **2006**                              |   |   | **2007** |   |   | **2006** |   |
| **Earnings                Per Share:**                            |   |                                    |      |   |                                  |   |   |   |   |   |   |   |
| Basic                earnings per share                           |   | $                                       | 0.29      |   |                                  | $      | 0.29 |   |   | $ | 0.54 |   |   | $ | 0.61 |   |
| Diluted                earnings per share                         |   | $                                       | 0.28      |   |                                  | $      | 0.27 |   |   | $ | 0.52 |   |   | $ | 0.57 |   |
| **Weighted                Average Number of Shares Outstanding:** |   |                                    |      |   |                                  |   |   |   |   |   |   |   |   |   |   |   |
| Basic                shares                                       |   |                                    | 2,328,191 |   |                                  |   | 2,301,296 |   |   |   | 2,327,546 |   |   |   | 2,301,270 |   |
| Diluted                shares                                     |   |                                    | 2,424,810 |   |                                  |   | 2,455,118 |   |   |   | 2,425,239 |   |   |   | 2,454,504 |   |
|                                                              |   |                                    |      |   |                                  |   |   |   |   |   |   |   |   |   |   |   |

|  Comprehensive                income includes net income and other comprehensive income.  The                Company's only source of other comprehensive income is derived from                unrealized gains and losses on investment securities available for                sale.  The Company's comprehensive income was as                follows: |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                      |   |                                      |   |   |                                    |   |   |                          |   |   |                          |   |
|-----------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|--------|--------|-----------------------------------------|--------|--------|-------------------------------|--------|--------|-------------------------------|--------|
|                                                                                                      |   |                                      |   |   |                                    |   |   |                          |   |   |                          |   |
|                                                                                                      |   | **For                  the Three Months** |   |   | **For                  the Six Months** |   |
|                                                                                                      |   | **Ended**                                 |   |   | **Ended**                               |   |
|  (In                  Thousands)                                                                     |   | **June                  30,**             |   |   | **June                  30,**           |   |   | **June                  30,** |   |   | **June                  30,** |   |
|                                                                                                      |   | **2007**                                  |   |   | **2006**                                |   |   | **2007**                      |   |   | **2006**                      |   |
|                                                                                                      |   |                                      |   |   |                                    |   |   |                          |   |   |                          |   |
| **  Net                  income**                                                               |   | $                                         | 671    |   |                                    | $      | 665    |                          |   | $      | 1,264                         |   |   | $ | 1,393 |   |
|   Other                  comprehensive gain/(loss):                                             |   |                                      |   |   |                                    |   |   |                          |   |   |                          |   |   |   |   |   |
|       Unrealized                  holding gain/(loss) on available-for-sale |   |                                      |   |   |                                    |   |   |                          |   |   |                          |   |   |   |   |   |
|         investment                  securities, net of tax        |   |                                      | (459   | )      |                                    |   | (386   | )                             |   |   | (404                          | )      |   |   | (507 | ) |
|   Total                  other comprehensive income                                             |   | $                                         | 212    |   |                                    | $      | 279    |                          |   | $      | 860                           |   |   | $ | 886 |   |

----

*Index*

| 6. | COMMITMENTS                AND CONTINGENCIES |
|----|----------------------------------------------|

| 7. | INCOME                TAXES |
|----|-----------------------------|

*Accounting for      Uncertainty in Income Taxes—an Interpretation of FASB statement No. 109*
*Accounting for Income Taxes*

*Accounting for Contingencies*

----

*Index*

| 8. | RECENT                ACCOUNTING DEVELOPMENTS |
|----|-----------------------------------------------|

*Fair      Value Option for Financial Assets and Financial Liabilities*

*The Fair Value Option for Financial Assets and Financial      Liabilities*

----

*Index*

**ITEM      2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION      AND RESULTS OF OPERATIONS**

*The      following discussion and analysis should be read in conjunction with the      condensed consolidated financial statements and related notes appearing      in  Item 1, Financial Statements, in this Quarterly Report on      Form 10-Q and the condensed consolidated financial statements and notes      thereto included in Valley Commerce Bancorp’s Annual Report filed on form 10-K      for the year ended December 31, 2006.*

**Introduction**

**Overview**

**Critical      Accounting Policies**

----

*Index*

**Results      of Operations for the Six Months Ended June 30, 2007 and      2006**

**Net      Interest Income**

| (1)  Interest                income is not presented on a taxable-equivalent basis, however, the                average yield was calculated on a taxable-        equivalent                basis by using a marginal tax rate of 34%.                         |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)  Nonaccrual                loans are included in total loans.  Interest income is included                on nonaccrual loans only to the extent cash payments have been received.                No interest was received on nonaccrual loans for the periods                presented. |
| (3)  Interest                income on loans includes amortized loan fees, net of costs, of $139                and                $488 for 2007 and 2006,                respectively.                                                                                                                |

|                                                                                                        |   | **Average                  balances and weighted average yields and costs****Six                  Months ended June 30,** |    |
|-------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------|---------|
|                                                                                                        |   | **2007**                                                                                                                  |    |   | **2006** |   |
|                                                                                                        |   |                                                                                                                      |    |   | **Interest** |   |   | **Average** |   |   |   |   |   | **Interest** |   |   | **Average** |   |
|                                                                                                        |   | **Average**                                                                                                               |    |   | **income/** |   |   | **yield/** |   |   | **Average** |   |   | **income/** |   |   | **yield/** |   |
| *(dollars                  in thousands)*                                                                   |   | **Balance**                                                                                                               |    |   | **Expense** |   |   | **Cost** |   |   | **Balance** |   |   | **Expense** |   |   | **Cost** |   |
| **ASSETS**                                                                                                  |   |                                                                                                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal                  funds sold                                                                         |   | $                                                                                                                         | 77      |   |   | $ | 2 |   |   |   | 5.24 | % |   | $ | 5,940 |   |   | $ | 134 |   |   |   | 4.55 | % |
| Available-for-sale                  investment securities:                                                  |   |                                                                                                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|          Taxable                                               |   |                                                                                                                      | 34,987  |   |   |   | 783 |   |   |   | 4.51 | % |   |   | 35,332 |   |   |   | 678 |   |   |   | 3.87 | % |
|          Exempt                  from Federal income taxes (1) |   |                                                                                                                      | 18,852  |   |   |   | 381 |   |   |   | 6.18 | % |   |   | 16,842 |   |   |   | 337 |   |   |   | 6.11 | % |
|     Total                  securities (1)                                               |   |                                                                                                                      | 53,839  |   |   |   | 1,164 |   |   |   | 5.09 | % |   |   | 52,174 |   |   |   | 1,015 |   |   |   | 4.59 | % |
| Loans                  (2) (3)                                                                              |   |                                                                                                                      | 189,242 |   |   |   | 7,907 |   |   |   | 8.43 | % |   |   | 153,654 |   |   |   | 6,632 |   |   |   | 8.70 | % |
|       Total                  interest-earning assets (1)                      |   |                                                                                                                      | 243,158 |   |   |   | 9,073 |   |   |   | 7.69 | % |   |   | 211,768 |   |   |   | 7,781 |   |   |   | 7.57 | % |
|                                                                                                        |   |                                                                                                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest-earning                  assets, net of allowance for loan losses                          |   | 18,022                                                                                                                    |    |   |   |   |   |   |   |   |   |   |   | 17,818 |   |   |   |   |   |   |   |   |   |
|        Total                  assets                                     |   | $                                                                                                                         | 261,180 |   |   |   |   |   |   |   |   |   |   | $ | 229,586 |   |   |   |   |   |   |   |   |   |
|                                                                                                        |   |                                                                                                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **LIABILITIES                  AND SHAREHOLDERS’ EQUITY**                                             |   |                                                                                                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                                                                                   |   |                                                                                                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Other                  interest bearing                                                   |   | $                                                                                                                         | 76,888  |   |   | $ | 1,161 |   |   |   | 3.05 | % |   | $ | 71,704 |   |   | $ | 880 |   |   |   | 2.47 | % |
|    Time                  deposits less than $100,000                                         |   |                                                                                                                      | 21,715  |   |   |   | 518 |   |   |   | 4.81 | % |   |   | 19,157 |   |   |   | 337 |   |   |   | 3.55 | % |
|    Time                  deposits $100,000 or more                                           |   |                                                                                                                      | 50,761  |   |   |   | 1,271 |   |   |   | 5.05 | % |   |   | 32,259 |   |   |   | 613 |   |   |   | 3.83 | % |
|       Total                  interest-bearing deposits                        |   |                                                                                                                      | 149,364 |   |   |   | 2,950 |   |   |   | 3.98 | % |   |   | 123,120 |   |   |   | 1,830 |   |   |   | 3.00 | % |
| Short-term                  debt                                                                            |   |                                                                                                                      | 13,304  |   |   |   | 353 |   |   |   | 5.35 | % |   |   | 2,810 |   |   |   | 71 |   |   |   | 5.10 | % |
| Long-term                  debt                                                                             |   |                                                                                                                      | 8,387   |   |   |   | 182 |   |   |   | 4.38 | % |   |   | 8,959 |   |   |   | 191 |   |   |   | 4.30 | % |
| Junior                  subordinated deferrable interest debentures                                         |   |                                                                                                                      | 3,093   |   |   |   | 135 |   |   |   | 8.80 | % |   |   | 3,093 |   |   |   | 126 |   |   |   | 8.21 | % |
|       Total                  interest-bearing liabilities                     |   |                                                                                                                      | 174,148 |   |   |   | 3,620 |   |   |   | 4.19 | % |   |   | 137,982 |   |   |   | 2,218 |   |   |   | 3.24 | % |
|                                                                                                        |   |                                                                                                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest-bearing                  deposits                                                               |   |                                                                                                                      | 59,350  |   |   |   |   |   |   |   |   |   |   |   | 67,557 |   |   |   |   |   |   |   |   |   |
| Other                  liabilities                                                                          |   |                                                                                                                      | 1,597   |   |   |   |   |   |   |   |   |   |   |   | 1,428 |   |   |   |   |   |   |   |   |   |
|     Total                  liabilities                                                  |   |                                                                                                                      | 235,095 |   |   |   |   |   |   |   |   |   |   |   | 206,967 |   |   |   |   |   |   |   |   |   |
| Shareholders’                  equity                                                                 |   |                                                                                                                      | 26,085  |   |   |   |   |   |   |   |   |   |   |   | 22,619 |   |   |   |   |   |   |   |   |   |
|     Total                  liabilities and shareholders’ equity                   |   | $                                                                                                                         | 261,180 |   |   |   |   |   |   |   |   |   |   | $ | 229,586 |   |   |   |   |   |   |   |   |   |
|                                                                                                        |   |                                                                                                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  interest income and margin (1)                                                         |   |                                                                                                                      |    |   |   | $ | 5,453 |   |   | $ | 4.69 | % |   |   |   |   |   | $ | 5,563 |   |   | $ | 5.46 | % |
|                                                                                                        |   |                                                                                                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| (1)  Interest                  income is not presented on a taxable-equivalent basis, however,                  the                  average yield was calculated on a taxable-        equivalent                  basis by using a marginal tax rate of 34%.                           |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)  Nonaccrual                  loans are included in total loans.  Interest income is included                  on nonaccrual loans only to the extent cash payments have been                  received.                  No interest was received on nonaccrual loans for the periods                  presented. |
| (3)  Interest                  income on loans includes amortized loan fees, net of costs, of                  $139 and                  $488 for 2007 and 2006,                  respectively.                                                                                                                                 |

----

*Index*

| **Changes                in net interest income due to changes in volumes and                rates** |   |
|------------------------------------------------------------------------------------------------------|--------|
|                                                                                                 |   |
|                                                                                                 |   | **2007                period vs. 2006 period** |   |
|                                                                                                 |   | **Increase                (decrease) due to change in:** |   |
|                                                                                                 |   | **Average** |   |   | **Average** |   |   |   |   |
|                                                                                                 |   | **Volume** |   |   | **Rate                (1)** |   |   | **Total** |   |
|                                                                                                 |   |   |   |   |   |   |   |   |   |
| *(In                thousands)*                                                                      |   |   |   |   |   |   |   |   |   |
| Increase                (decrease) in interest income:                                               |   |   |   |   |   |   |   |   |   |
| Federal                funds sold                                                                    |   | $ | (132 | ) |   | $ | - |   |   | $ | (132 | ) |
| Investment                securities                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
|      Taxable                                                                |   |   | (7 | ) |   |   | 112 |   |   |   | 105 |   |
|      Exempt                from Federal income taxes                        |   |   | 61 |   |   |   | (17 | ) |   |   | 44 |   |
|      Total                securities                                        |   |   | 54 |   |   |   | 95 |   |   |   | 149 |   |
| Loans                                                                                                |   |   | 1,536 |   |   |   | (261 | ) |   |   | 1,275 |   |
|      Total                interest income                                   |   | $ | 1,458 |   |   | $ | (166 | ) |   | $ | 1,292 |   |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Increase                (decrease) in interest expense:                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Other                interest bearing deposits                                                       |   |   | 64 |   |   |   | 217 |   |   |   | 281 |   |
| Time                deposits less than $100,000                                                      |   |   | 45 |   |   |   | 136 |   |   |   | 181 |   |
| Time                deposits $100,000 or more                                                        |   |   | 352 |   |   |   | 306 |   |   |   | 658 |   |
|      Total                interest-bearing deposits                         |   |   | 461 |   |   |   | 659 |   |   |   | 1,120 |   |
| Short-term                debt                                                                       |   |   | 265 |   |   |   | 17 |   |   |   | 282 |   |
| Long-term                debt                                                                        |   |   | (12 | ) |   |   | 3 |   |   |   | (9 | ) |
| Junior                subordinated deferrable interest debentures                                    |   |   | - |   |   |   | 9 |   |   |   | 9 |   |
|      Total                interest expense                                  |   |   | 714 |   |   |   | 688 |   |   |   | 1,402 |   |
|      Increase                (decrease) in net interest income              |   | $ | 744 |   |   | $ | (854 | ) |   | $ | (110 | ) |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |

----

*Index*

**Provision      for Loan Losses**

**Non-Interest      Income**

| **Non-interest                income**                                     |   |
|----------------------------------------------------------------------------|--------|
|                                                                       |   | **Six                Months ended June 30,** |   |   |   |   |
| *(in                thousands)*                                            |   | **2007** |   |   | **2006** |   |   | **Increase****(Decrease)** |   |
| Service                charges                                             |   | $ | 276 |   |   | $ | 262 |   |   | $ | 14 |   |
| Loss                on sale of available-for-sale investment securities    |   |   | (1 | ) |   |   | (53 | ) |   |   | 52 |   |
| Mortgage                loan brokerage fees                                |   |   | 47 |   |   |   | 42 |   |   |   | 5 |   |
| Earnings                on cash surrender value of life insurance policies |   |   | 128 |   |   |   | 54 |   |   |   | 74 |   |
| Other                                                                      |   |   | 123 |   |   |   | 103 |   |   |   | 20 |   |
|      Total                non-interest income     |   | $ | 573 |   |   | $ | 408 |   |   | $ | 165 |   |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |

**Non-Interest      Expense**

----

*Index*

| **Non-interest                expense**                                 |   |
|-------------------------------------------------------------------------|--------|
|                                                                    |   | **Six                Months ended June 30,** |   |   |   |   |
| *(in                thousands)*                                         |   | **2007** |   |   | **2006** |   |   | **Increase****(Decrease)** |   |
| Salaries                and employee benefits                           |   | $ | 2,415 |   |   | $ | 2,130 |   |   | $ | 285 |   |
| Occupancy                and equipment                                  |   |   | 495 |   |   |   | 430 |   |   |   | 65 |   |
| Data                processing                                          |   |   | 221 |   |   |   | 225 |   |   |   | (4 | ) |
| Operations                                                              |   |   | 224 |   |   |   | 215 |   |   |   | 9 |   |
| Professional                and legal                                   |   |   | 228 |   |   |   | 172 |   |   |   | 56 |   |
| Advertising                and business development                     |   |   | 143 |   |   |   | 156 |   |   |   | (13 | ) |
| Telephone                and postal                                     |   |   | 100 |   |   |   | 110 |   |   |   | (10 | ) |
| Supplies                                                                |   |   | 82 |   |   |   | 94 |   |   |   | (12 | ) |
| Assessment                and insurance                                 |   |   | 68 |   |   |   | 51 |   |   |   | 17 |   |
| Amortization                expense                                     |   |   | 31 |   |   |   | 31 |   |   |   | - |   |
| Other                expenses                                           |   |   | 218 |   |   |   | 223 |   |   |   | (5 | ) |
|      Total                non-interest expense |   | $ | 4,225 |   |   | $ | 3,837 |   |   | $ | 388 |   |

----

*Index*

**Provision      for Income Taxes**

**Results      of Operations for the Three Months Ended June 30, 2007**

**Net      Interest Income**

| **Average                balances and weighted average yields and costs**                                 |   |
|-----------------------------------------------------------------------------------------------------------|--------|
|                                                                                                      |   | **Three                Months ended June 30,** |   |
|                                                                                                      |   | **2007** |   |   | **2006** |   |
|                                                                                                      |   |   |   |   | **Interest** |   |   | **Average** |   |   |   |   |   | **Interest** |   |   | **Average** |   |
|                                                                                                      |   | **Average** |   |   | **income/** |   |   | **yield/** |   |   | **Average** |   |   | **income/** |   |   | **yield/** |   |
| *(dollars                in thousands)*                                                                   |   | **Balance** |   |   | **Expense** |   |   | **Cost** |   |   | **Balance** |   |   | **Expense** |   |   | **Cost** |   |
| **ASSETS**                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal                funds sold                                                                         |   | $ | 128 |   |   | $ | 2 |   |   |   | 5.33 | % |   | $ | 2,900 |   |   | $ | 35 |   |   |   | 4.84 | % |
| Available-for-sale                investment securities:                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|          Taxable                                             |   |   | 34,005 |   |   |   | 358 |   |   |   | 4.22 | % |   |   | 35,679 |   |   |   | 345 |   |   |   | 3.88 | % |
|          Exempt                from Federal income taxes (1) |   |   | 18,774 |   |   |   | 191 |   |   |   | 6.18 | % |   |   | 17,455 |   |   |   | 176 |   |   |   | 6.13 | % |
|     Total                securities (1)                                               |   |   | 52,779 |   |   |   | 549 |   |   |   | 4.92 | % |   |   | 53,134 |   |   |   | 521 |   |   |   | 4.62 | % |
| Loans                (2) (3)                                                                              |   |   | 194,366 |   |   |   | 4,066 |   |   |   | 8.39 | % |   |   | 157,219 |   |   |   | 3,422 |   |   |   | 8.73 | % |
|       Total                interest-earning assets (1)                      |   |   | 247,273 |   |   |   | 4,617 |   |   |   | 7.65 | % |   |   | 213,253 |   |   |   | 3,978 |   |   |   | 7.65 | % |
|                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest-earning                assets, net of allowance for loan losses                               |   |   | 17,667 |   |   |   |   |   |   |   |   |   |   |   | 16,919 |   |   |   |   |   |   |   |   |   |
|        Total                assets                                     |   | $ | 264,940 |   |   |   |   |   |   |   |   |   |   | $ | 230,172 |   |   |   |   |   |   |   |   |   |
|                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **LIABILITIES                AND SHAREHOLDERS’ EQUITY**                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Interest                bearing                                                         |   | $ | 79,040 |   |   | $ | 609 |   |   |   | 3.09 | % |   | $ | 71,184 |   |   | $ | 475 |   |   |   | 2.68 | % |
|    Time                deposits less than $100,000                                         |   |   | 21,874 |   |   |   | 264 |   |   |   | 4.84 | % |   |   | 18,773 |   |   |   | 171 |   |   |   | 3.65 | % |
|    Time                deposits $100,000 or more                                           |   |   | 51,661 |   |   |   | 650 |   |   |   | 5.05 | % |   |   | 31,231 |   |   |   | 306 |   |   |   | 3.93 | % |
|    Total                interest-bearing deposits                                          |   |   | 152,575 |   |   |   | 1,523 |   |   |   | 4.00 | % |   |   | 121,188 |   |   |   | 952 |   |   |   | 3.15 | % |
| Short-term                debt                                                                            |   |   | 13,178 |   |   |   | 176 |   |   |   | 5.36 | % |   |   | 5,588 |   |   |   | 71 |   |   |   | 5.10 | % |
| Long-term                debt                                                                             |   |   | 8,269 |   |   |   | 90 |   |   |   | 4.37 | % |   |   | 8,865 |   |   |   | 95 |   |   |   | 4.30 | % |
| Junior                subordinated deferrable interest debentures                                         |   |   | 3,093 |   |   |   | 67 |   |   |   | 8.69 | % |   |   | 3,093 |   |   |   | 65 |   |   |   | 8.43 | % |
|       Total                interest-bearing liabilities                     |   |   | 177,115 |   |   |   | 1,856 |   |   |   | 4.20 | % |   |   | 138,734 |   |   |   | 1,183 |   |   |   | 3.42 | % |
|                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest                bearing deposits                                                               |   |   | 59,796 |   |   |   |   |   |   |   |   |   |   |   | 67,096 |   |   |   |   |   |   |   |   |   |
| Other                liabilities                                                                          |   |   | 1,580 |   |   |   |   |   |   |   |   |   |   |   | 1,534 |   |   |   |   |   |   |   |   |   |
|     Total                liabilities                                                  |   |   | 238,491 |   |   |   |   |   |   |   |   |   |   |   | 207,364 |   |   |   |   |   |   |   |   |   |
| Shareholders’                equity                                                                 |   |   | 26,449 |   |   |   |   |   |   |   |   |   |   |   | 22,808 |   |   |   |   |   |   |   |   |   |
|     Total                liabilities and shareholders’ equity                   |   | $ | 264,940 |   |   |   |   |   |   |   |   |   |   | $ | 230,172 |   |   |   |   |   |   |   |   |   |
|                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                interest income and margin (1)                                                         |   |   |   |   |   | $ | 2,761 |   |   |   | 4.64 | % |   |   |   |   |   | $ | 2,795 |   |   |   | 5.43 | % |
|                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| (1)  Interest                income is not presented on a taxable-equivalent basis, however, the                average yield was calculated on a taxable-        equivalent                basis by using a marginal tax rate of 34%.                         |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)  Nonaccrual                loans are included in total loans.  Interest income is included                on nonaccrual loans only to the extent cash payments have been received.                No interest was received on nonaccrual loans for the periods                presented. |
| (3)  Interest                income on loans includes amortized loan fees, net of costs, of $141                and                $222 for 2007 and 2006,                respectively.                                                                                                                |

----

*Index*

| **Changes                in net interest income due to changes in volumes and                rates**                               |   |
|------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                               |   |
|                                                                                                                               |   | **2007                period vs. 2006 period** |   |
|                                                                                                                               |   | **Increase                (decrease) due to change in:** |   |
|                                                                                                                               |   | **Average** |   |   | **Average** |   |   |   |   |
|                                                                                                                               |   | **Volume** |   |   | **Rate                (1)** |   |   | **Total** |   |
|                                                                                                                               |   |   |   |   |   |   |   |   |   |
| *(In                thousands)*                                                                                                    |   |   |   |   |   |   |   |   |   |
| Increase                (decrease) in interest income:                                                                             |   |   |   |   |   |   |   |   |   |
| Federal                funds sold                                                                                                  |   | $ | (33 | ) |   | $ | - |   |   | $ | (33 | ) |
| Investment                securities                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
|          Taxable                                                                      |   |   | (16 | ) |   |   | 29 |   |   |   | 13 |   |
|          Exempt                from Federal income taxes                              |   |   | 20 |   |   |   | (5 | ) |   |   | 15 |   |
|          Total                securities                                              |   |   | 4 |   |   |   | 24 |   |   |   | 28 |   |
| Loans                                                                                                                              |   |   | 809 |   |   |   | (165 | ) |   |   | 644 |   |
|      Total                interest income                                                                 |   |   | 780 |   |   |   | (141 | ) |   |   | 639 |   |
|                                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
| (Decrease)                increase in interest expense:                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Other                interest-bearing deposits                                                                                     |   |   | 52 |   |   |   | 82 |   |   |   | 134 |   |
| Time                deposits less than $100,000                                                                                    |   |   | 28 |   |   |   | 65 |   |   |   | 93 |   |
| Time                deposits $100,000 or more                                                                                      |   |   | 200 |   |   |   | 144 |   |   |   | 344 |   |
|               Total                interest-bearing deposits |   |   | 280 |   |   |   | 291 |   |   |   | 571 |   |
| Short-term                debt                                                                                                     |   |   | 96 |   |   |   | 9 |   |   |   | 105 |   |
| Long-term                debt                                                                                                      |   |   | (6 | ) |   |   | 1 |   |   |   | (5 | ) |
| Junior                subordinated deferrable interest debentures                                                                  |   |   | - |   |   |   | 2 |   |   |   | 2 |   |
|      Total                interest expense                                                                |   |   | 370 |   |   |   | 303 |   |   |   | 673 |   |
|      Decrease                in net interest income                                                       |   | $ | 410 |   |   | $ | (444 | ) |   | $ | (34 | ) |
|                                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |

----

*Index*

**Provision      for Loan Losses**

**Non-Interest      Income**

| **Non-interest                income**                                                                                         |   |
|--------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                           |   | **Three                Months ended June 30,** |   |   |   |   |
| *(in                thousands)*                                                                                                |   | **2007** |   |   | **2006** |   |   | **Increase                (Decrease)** |   |
| Service                charges                                                                                                 |   | $ | 137 |   |   | $ | 136 |   |   | $ | 1 |   |
| Loss                on sale of available-for-sale investment                securities,      net |   |   | (1 | ) |   |   | (53 | ) |   |   | 52 |   |
| Mortgage                loan brokerage fees                                                                                    |   |   | 24 |   |   |   | 26 |   |   |   | (2 | ) |
| Earnings                on cash surrender value of life insurance policies                                                     |   |   | 64 |   |   |   | 26 |   |   |   | 38 |   |
| Other                                                                                                                          |   |   | 58 |   |   |   | 49 |   |   |   | 9 |   |
|      Total                non-interest income                                                         |   | $ | 282 |   |   | $ | 184 |   |   | $ | 98 |   |
|                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |

**Non-Interest      Expense**

----

*Index*

| **Non-interest                expense**                                 |   |
|-------------------------------------------------------------------------|--------|
|                                                                    |   | **Three                Months ended June 30,** |   |   |   |   |
| *(in                thousands)*                                         |   | **2007** |   |   | **2006** |   |   | **Increase                (Decrease)** |   |
| Salaries                and employee benefits                           |   | $ | 1,165 |   |   | $ | 1,028 |   |   | $ | 137 |   |
| Occupancy                and equipment                                  |   |   | 249 |   |   |   | 214 |   |   |   | 35 |   |
| Data                processing                                          |   |   | 108 |   |   |   | 118 |   |   |   | (10 | ) |
| Operations                                                              |   |   | 112 |   |   |   | 110 |   |   |   | 2 |   |
| Professional                and legal                                   |   |   | 140 |   |   |   | 103 |   |   |   | 37 |   |
| Advertising                and business development                     |   |   | 81 |   |   |   | 106 |   |   |   | (25 | ) |
| Telephone                and postal                                     |   |   | 51 |   |   |   | 47 |   |   |   | 4 |   |
| Supplies                                                                |   |   | 41 |   |   |   | 56 |   |   |   | (15 | ) |
| Assessment                and insurance                                 |   |   | 35 |   |   |   | 27 |   |   |   | 8 |   |
| Amortization                expense                                     |   |   | 16 |   |   |   | 16 |   |   |   | - |   |
| Other                expenses                                           |   |   | 115 |   |   |   | 127 |   |   |   | (12 | ) |
|      Total                non-interest expense |   | $ | 2,113 |   |   | $ | 1,952 |   |   | $ | 161 |   |

**Provision      for Income Taxes**

**Financial      Condition**

**Investment      Securities**

----

*Index*

| **Market                value of securities available for sale** |   |
|------------------------------------------------------------------|--------|
|                                                             |   | **June                30, 2007** |   |
| *(in                thousands)*                                  |   | Amortized Cost |   |   | Unrealized Gain |   |   | Unrealized Loss |   |   | Fair Value |   |
| U.S.                government  agencies               |   | $ | 17,801 |   |   | $ | - |   |   | $ | (268 | ) |   | $ | 17,533 |   |
| U.S.                treasury securities                          |   |   | 246 |   |   |   | - |   |   |   | - |   |   |   | 246 |   |
| Mortgage-backed                securities                        |   |   | 11,820 |   |   |   | 3 |   |   |   | (336 | ) |   |   | 11,487 |   |
| Municipal                securities                              |   |   | 18,778 |   |   |   | 16 |   |   |   | (365 | ) |   |   | 18,429 |   |
| Corporate                debt securities                         |   |   | 3,517 |   |   |   | - |   |   |   | (59 | ) |   |   | 3,458 |   |
|     Total                                    |   | $ | 52,162 |   |   | $ | 19 |   |   | $ | (1,028 | ) |   | $ | 51,153 |   |

|                                               |   | **December                31, 2006** |   |
|----------------------------------------------------|--------|--------------------------------------|--------|
| *(in                thousands)*                    |   | Amortized                Cost        |   |   | Unrealized                Gain |   |   | Unrealized                Loss |   |   | FairValue |   |
| U.S.                government  agencies |   | $                                    | 20,325 |   |   | $ | 6 |   |   | $ | (282 | ) |   | $ | 20,049 |   |
| Mortgage-backed                securities          |   |                                 | 12,422 |   |   |   | 65 |   |   |   | (251 | ) |   |   | 12,236 |   |
| Municipal                securities                |   |                                 | 18,950 |   |   |   | 142 |   |   |   | (35 | ) |   |   | 19,057 |   |
| Corporate                debt securities           |   |                                 | 4,033  |   |   |   | - |   |   |   | (77 | ) |   |   | 3,956 |   |
|     Total                      |   | $                                    | 55,730 |   |   | $ | 213 |   |   | $ | (645 | ) |   | $ | 55,298 |   |

**Loans**

| *(dollars                in  thousands)*      |   | **June                30, 2007** |    |   | **December                31, 2006** |   |
|---------------------------------------------------------|--------|----------------------------------|---------|--------|--------------------------------------|--------|
| Commercial                                              |   | $                                | 42,092  |   |                                 |   | 21 | % |   | $ | 41,104 |   |   |   | 22 | % |
| Real                estate – mortgage (1)         |   |                             | 96,282  |   |                                 |   | 49 |   |   |   | 92,639 |   |   |   | 50 |   |
| Real                estate – construction         |   |                             | 50,771  |   |                                 |   | 26 |   |   |   | 44,273 |   |   |   | 24 |   |
| Agricultural                                            |   |                             | 5,704   |   |                                 |   | 3 |   |   |   | 4,693 |   |   |   | 3 |   |
| Consumer                and other                       |   |                             | 2,368   |   |                                 |   | 1 |   |   |   | 1,805 |   |   |   | 1 |   |
|     Subtotal                        |   |                             | 197,217 |   |                                 |   | 100 | % |   |   | 184,514 |   |   |   | 100 | % |
| Deferred                loan fees, net                  |   |                             | (479    | )      |                                 |   |   |   |   |   | (436 | ) |   |   |   |   |
| Allowance                for loan losses                |   |                             | (1,752  | )      |                                 |   |   |   |   |   | (1,746 | ) |   |   |   |   |
|     Total                loans, net |   | $                                | 194,986 |   |                                 |   |   |   |   | $ | 182,332 |   |   |   |   |   |

| (1)                Consists primarily of commercial mortgage loans. |
|---------------------------------------------------------------------|
|                                                                |

----

*Index*

**Nonperforming      Assets**

**Allowance      for Loan Losses**

| **Changes                in allowance for loan losses**                                                                          |   |
|----------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                             |   |   |   |
|                                                                                                                             |   | **Six                Months ended** |   |   | **Year                ended** |   |
|                                                                                                                             |   | **June                30, 2007** |   |   | **December                31, 2006** |   |
| *(dollars                in thousands)*                                                                                          |   |   |   |   |   |   |
|                                                                                                                             |   |   |   |   |   |   |
| Balance,                beginning                                                                                                |   | $ | 1,746 |   |   | $ | 1,766 |   |
| Provision                for  loan losses                                                                              |   |   | - |   |   |   | - |   |
| Charge-offs                                                                                                                      |   |   | - |   |   |   | (21 | ) |
| Recoveries                                                                                                                       |   |   | 6 |   |   |   | 1 |   |
| Balance,                ending                                                                                                   |   | $ | 1,752 |   |   | $ | 1,746 |   |
|                                                                                                                             |   |   |   |   |   |   |   |   |
| Net                charge-offs (recoveries) to average                loans       outstanding |   |   | .00 | % |   |   | .01 | % |
| Average                loans outstanding                                                                                         |   | $ | 189,242 |   |   | $ | 166,620 |   |
| Ending                allowance to total loans outstanding                                                                       |   |   | 0.89 | % |   |   | 0.95 | % |
|                                                                                                                             |   |   |   |   |   |   |   |   |

**Deposits**

----

*Index*

| **Deposit                Portfolio**          |                                   |
|-----------------------------------------------|----------------------------------------|
| *(dollars                in thousands)*  | **June                30, 2007**  |   | **December                31, 2006**  |
| Non-interest                bearing           |                                   | $ | 58,707 |   |   |   | 27 | % |   | $ | 63,020 |   |   |   | 39 | % |
| Interest                bearing               |                                   |   | 82,504 |   |   |   | 39 |   |   |   | 75,293 |   |   |   | 33 |   |
| Time                deposits                  |                                   |   | 72,614 |   |   |   | 34 |   |   |   | 69,263 |   |   |   | 28 |   |
| Total                Deposits                 |                                   | $ | 213,825 |   |   |   | 100 | % |   | $ | 207,576 |   |   |   | 100 | % |

**Borrowings**

----

*Index*

**Capital      Resources**

| **Capital                and capital adequacy ratios**                                                                   |
|--------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                     |   |   |
|                                                                                                                     |   | **June                30, 2007** |   | **December                31, 2006** |
| *(dollars                in thousands)*                                                                                  |   | **Amount** |   | **Ratio** |   | **Amount** |   | **Ratio** |
| **Leverage                Ratio**                                                                                        |   |   |   |   |   |   |   |   |
| Valley                Commerce Bancorp    and                Subsidiary                              |   | $ | 29,972 |   | 11.5% |   | $ | 28,654 |   | 11.1% |
| Minimum                regulatory requirement                                                                            |   | $ | 10,446 |   | 4.0% |   | $ | 10,346 |   | 4.0% |
|                                                                                                                     |   |   |   |   |   |   |   |   |
| Valley                Business Bank                                                                                      |   | $ | 29,858 |   | 11.4% |   | $ | 28,336 |   | 11.0% |
| Minimum                requirement for “Well-    Capitalized”                institution |   | $ | 13,051 |   | 5.0% |   | $ | 12,926 |   | 5.0% |
| Minimum                regulatory requirement                                                                            |   | $ | 10,441 |   | 4.0% |   | $ | 10,341 |   | 4.0% |
|                                                                                                                     |   |   |   |   |   |   |   |   |
| **Tier                1 Risk-Based Capital Ratio**                                                                       |   |   |   |   |   |   |   |   |
| Valley                Commerce Bancorp    and                Subsidiary                              |   | $ | 29,972 |   | 13.4% |   | $ | 28,654 |   | 13.5% |
| Minimum                regulatory requirement                                                                            |   | $ | 8,951 |   | 4.0% |   | $ | 8,495 |   | 4.0% |
|                                                                                                                     |   |   |   |   |   |   |   |   |
| Valley                Business Bank                                                                                      |   | $ | 29,858 |   | 13.4% |   | $ | 28,336 |   | 13.4% |
| Minimum                requirement for “Well-    Capitalized”                institution |   | $ | 13,422 |   | 6.0% |   | $ | 12,736 |   | 6.0% |
| Minimum                regulatory requirement                                                                            |   | $ | 8,948 |   | 4.0% |   | $ | 8,490 |   | 4.0% |
|                                                                                                                     |   |   |   |   |   |   |   |   |
| **Total                Risk-Based Capital Ratio**                                                                        |   |   |   |   |   |   |   |   |
| Valley                Commerce Bancorp    and                Subsidiary                              |   | $ | 31,724 |   | 14.2% |   | $ | 30,399 |   | 14.3% |
| Minimum                regulatory requirement                                                                            |   | $ | 17,902 |   | 8.0% |   | $ | 16,989 |   | 8.0% |
|                                                                                                                     |   |   |   |   |   |   |   |   |
| Valley                Business Bank                                                                                      |   | $ | 31,609 |   | 14.1% |   | $ | 30,081 |   | 14.2% |
| Minimum                requirement for “Well-    Capitalized”                institution |   | $ | 22,370 |   | 10.0% |   | $ | 21,226 |   | 10.0% |
| Minimum                regulatory requirement                                                                            |   | $ | 17,896 |   | 8.0% |   | $ | 16,981 |   | 8.0% |
|                                                                                                                     |   |   |   |   |   |   |   |   |

----

*Index*

**Liquidity**

**ITEM      3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET      RISK**

**ITEM      4 – CONTROLS AND PROCEDURES**

----

*Index*

----

*Index*

**PART      II – OTHER INFORMATION**

**ITEM      1 – LEGAL PROCEEDINGS**

**ITEM      1A – RISK FACTORS**

**ITEM      2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF      PROCEEDS**

**ITEM      3 – DEFAULTS UPON SENIOR SECURITIES**

----

*Index*

**ITEM      4 – SUBMISSION OF MATTERS TO A VOTE OF SECURITY      HOLDERS**

|   | 1. | Elected                Directors of the Company to serve until the 2007 Annual Meeting of                Shareholders and until their |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------|

|                                  | Votes                CastFor                Election |   | Withheld                                                      |
|---------------------------------------|------------------------------------------------------|--------|---------------------------------------------------------------|
|                                  |                                                 |   |                                                          |
| David                B. Day           | 1,717,960                                            |   | 3,576                                                         |
| Walter                A. Dwelle       | 1,717,960                                            |   | 3,576                                                         |
| Thomas                A. Gaebe        | 1,717,960                                            |   | 3,576                                                         |
| Donald                A. Gilles       | 1,717,960                                            |   |    158,926       |
| Philip                R. Hammond, Jr. | 1,717,960                                            |   | 3,576                                                         |
| Russell                F. Hurley      | 1,717,960                                            |   | 3,576                                                         |
| Fred                P. LoBue, Jr.     | 1,717,960                                            |   | 3,576                                                         |
| Kenneth                H. Macklin     | 1,717,960                                            |   | 3,576                                                         |
| Barry                R. Smith         | 1,717,960                                            |   | 3,576                                                         |

|   | 2. | Approved                the Valley Commerce Bancorp 2007 Equity Incentive                Plan. |
|--------|----|------------------------------------------------------------------------------------------------|

|   | VotesFor  |   | VotesAgainst |
|--------|-----------|--------|--------------|
|   |      |   |         |
|   | 1,224,139 |   | 81,823       |

|   | 3. | Ratified                the appointment by the Board of Directors of Perry-Smith LLP, independent                certified public accountants, to serve as the Company’s auditors for the                fiscal year ending December 31, 2007. The votes tabulated                were: |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | VotesFor  |   | VotesAgainst |
|--------|-----------|--------|--------------|
|   |      |   |         |
|   | 1,694,565 |   | 4,631        |

**ITEM      5 – OTHER INFORMATION**

**ITEM      6 – EXHIBITS**

----

*Index*

**SIGNATURES**

|                                 | VALLEY                COMMERCE BANCORP |
|--------------------------------------|----------------------------------------|
|                                 |                                   |
| Date:                August 14, 2007 | By:                                    | /s/                Donald A. Gilles |
|                                 |                                   | Donald                A. Gilles |
|                                 |                                   | President                and Chief Executive Officer |
|                                 |                                   |
| Date:                August 14, 2007 | By:                                    | /s/Roy                O. Estridge  |
|                                 |                                   | Roy                O. Estridge, Chief Financial                Officer |

----

*Index*

**Exhibit Index**

| 31.1 | Rule                13a-14(a)/15d-14(a) Certification |
|------|-------------------------------------------------------|
| 31.2 | Rule                13a-14(a)/15d-14(a) Certification |
| 32.1 | Section                1350 Certifications            |