**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 SEPTEMBER 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.*

----

*Index*

**ITEM      1 – FINANCIAL STATEMENTS**

**VALLEY      COMMERCE BANCORP**

**CONDENSED      CONSOLIDATED BALANCE SHEET**

**(UNAUDITED)**

|                                                                                                                                                                                                                                                       |   | **September                30,****2007** |        |   | **December                31,****2006** |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------|-------------|--------|-----------------------------------------|--------|
|                                                                                                                                                                                                                                                       |   |                                     |        |   |                                    |   |
| **Assets**                                                                                                                                                                                                                                                 |   |                                     |        |   |                                    |   |
| Cash                and due from banks                                                                                                                                                                                                                     |   | $                                        | 9,761,596   |   |                                    | $      | 13,265,547 |   |
| Available-for-sale                investment securities, at fair value                                                                                                                                                                                     |   |                                     | 58,964,000  |   |                                    |   | 55,298,000 |   |
| Loans,                less allowance for loan losses of $1,751,799 at September 30, 2007                and                $1,745,582 at December 31, 2006                                                                                                 |   |                                     | 198,122,170 |   |                                    |   | 182,331,506 |   |
| Bank                premises and equipment, net                                                                                                                                                                                                            |   |                                     | 2,596,446   |   |                                    |   | 1,832,177 |   |
| Cash                surrender value of bank-owned life insurance                                                                                                                                                                                           |   |                                     | 6,124,474   |   |                                    |   | 5,934,563 |   |
| Accrued                interest receivable and other assets                                                                                                                                                                                                |   |                                     | 5,016,402   |   |                                    |   | 5,002,900 |   |
| Total                assets                                                                                                                                                                                                                                |   | $                                        | 280,585,088 |   |                                    | $      | 263,664,693 |   |
|                                                                                                                                                                                                                                                       |   |                                     |        |   |                                    |   |   |   |
| **Liabilities                and Shareholders’ Equity**                                                                                                                                                                                              |   |                                     |        |   |                                    |   |   |   |
| Deposits:                                                                                                                                                                                                                                                  |   |                                     |        |   |                                    |   |   |   |
| Noninterest-bearing                                                                                                                                                                                                                                        |   | $                                        | 56,915,795  |   |                                    | $      | 63,019,956 |   |
| Interest-bearing                                                                                                                                                                                                                                           |   |                                     | 87,824,034  |   |                                    |   | 75,292,723 |   |
| Time                                                                                                                                                                                                                                                       |   |                                     | 65,664,908  |   |                                    |   | 69,263,490 |   |
| Total                deposits                                                                                                                                                                                                                              |   |                                     | 210,404,737 |   |                                    |   | 207,576,169 |   |
|                                                                                                                                                                                                                                                       |   |                                     |        |   |                                    |   |   |   |
| Accrued                interest payable and other liabilities                                                                                                                                                                                              |   |                                     | 5,726,024   |   |                                    |   | 1,399,787 |   |
| Short-term                debt                                                                                                                                                                                                                             |   |                                     | 24,840,300  |   |                                    |   | 17,600,000 |   |
| Long-term                debt                                                                                                                                                                                                                              |   |                                     | 8,197,374   |   |                                    |   | 8,547,638 |   |
| Junior                subordinated deferrable interest debentures                                                                                                                                                                                          |   |                                     | 3,093,000   |   |                                    |   | 3,093,000 |   |
| Total                liabilities                                                                                                                                                                                                                           |   |                                     | 252,261,435 |   |                                    |   | 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, none                issued                                                                                                                                        |   |                                     |        |   |                                    |   |   |   |
| Common                  stock - no par value; 30,000,000 shares authorized;                  issued and outstanding –  2,423,875 shares at September 30, 2007 and                  2,326,553 shares  at                  December 31, 2006 |   |                                     | 23,757,936  |   |                                    |   | 20,683,720 |   |
| Retained                earnings                                                                                                                                                                                                                           |   |                                     | 4,861,870   |   |                                    |   | 5,040,381 |   |
| Accumulated                other comprehensive loss, net of taxes (Note 5)                                                                                                                                                                                 |   |                                     | (296,153    | )      |                                    |   | (276,002 | ) |
| Total                shareholders’ equity                                                                                                                                                                                                            |   |                                     | 28,323,653  |   |                                    |   | 25,448,099 |   |
|                                Total liabilities and shareholders’                equity                                                                                  |   | $                                        | 280,585,088 |   |                                    | $      | 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 Nine Months |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|-----------|--------|------------------------------------|--------|
|                                                                                                                                                    |   | Ended                September 30,  |      |   | Ended                September 30, |   |
|                                                                                                                                                    |   | **2007**                            |      |   | **2006**                           |   |   | **2007** |   |   | **2006** |   |
| **Interest                Income:**                                                                                                                     |   |                                |      |   |                               |   |   |   |   |   |   |   |
| Interest                and fees on loans                                                                                                               |   | $                                   | 4,164,148 |   |                               | $      | 3,854,467 |   |   | $ | 12,071,084 |   |   | $ | 10,485,908 |   |
| Interest                on investment securities:                                                                                                       |   |                                |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                                                                                                                 |   |                                | 358,814   |   |                               |   | 385,855 |   |   |   | 1,141,512 |   |   |   | 1,063,598 |   |
| Exempt                from Federal income taxes                                                                                                         |   |                                | 192,494   |   |                               |   | 187,916 |   |   |   | 573,734 |   |   |   | 525,300 |   |
| Interest                on Federal funds sold                                                                                                           |   |                                | 834       |   |                               |   | 3,021 |   |   |   | 2,835 |   |   |   | 136,965 |   |
| Total                interest income                                                                                                                    |   |                                | 4,716,290 |   |                               |   | 4,431,259 |   |   |   | 13,789,165 |   |   |   | 12,211,771 |   |
|                                                                                                                                                    |   |                                |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| **Interest                Expense:**                                                                                                                    |   |                                |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Interest                on deposits                                                                                                                     |   |                                | 1,534,709 |   |                               |   | 1,185,353 |   |   |   | 4,484,395 |   |   |   | 3,015,825 |   |
| Interest                on short-term debt                                                                                                              |   |                                | 131,308   |   |                               |   | 198,269 |   |   |   | 484,758 |   |   |   | 268,784 |   |
| Interest                on long-term debt                                                                                                               |   |                                | 90,652    |   |                               |   | 95,408 |   |   |   | 272,432 |   |   |   | 286,253 |   |
| Interest                on junior subordinated deferrable interest debentures                                                                           |   |                                | 68,450    |   |                               |   | 69,386 |   |   |   | 203,097 |   |   |   | 195,426 |   |
|         Total                interest expense                                                                   |   |                                | 1,825,119 |   |                               |   | 1,548,416 |   |   |   | 5,444,682 |   |   |   | 3,766,288 |   |
|                                                                                                                                                    |   |                                |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
|               Net                interest income before provision for loan losses |   |                                | 2,891,171 |   |                               |   | 2,882,843 |   |   |   | 8,344,483 |   |   |   | 8,445,483 |   |
|                                                                                                                                                    |   |                                |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| **Provision                for loan losses**                                                                                                            |   |                                | -         |   |                               |   | - |   |   |   | - |   |   |   | - |   |
|               Net                interest income after provision for loan losses  |   |                                | 2,891,171 |   |                               |   | 2,882,843 |   |   |   | 8,344,483 |   |   |   | 8,445,483 |   |
|                                                                                                                                                    |   |                                |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| **Non-Interest                Income:**                                                                                                                 |   |                                |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Service                charges                                                                                                                          |   |                                | 156,207   |   |                               |   | 147,638 |   |   |   | 431,773 |   |   |   | 409,548 |   |
| Loss                on sale of available-for-sale investment securities, net                                                                            |   |                                | -         |   |                               |   | - |   |   |   | (1,145 | ) |   |   | (52,737 | ) |
| Mortgage                loan brokerage fees                                                                                                             |   |                                | 19,213    |   |                               |   | 34,445 |   |   |   | 66,543 |   |   |   | 76,429 |   |
| Earnings                on cash surrender value of life insurance policies                                                                              |   |                                | 66,564    |   |                               |   | 38,952 |   |   |   | 194,691 |   |   |   | 93,265 |   |
| Other                                                                                                                                                   |   |                                | 57,862    |   |                               |   | 59,354 |   |   |   | 181,154 |   |   |   | 161,981 |   |
|          Total                non-interest income                                                          |   |                                | 299,846   |   |                               |   | 280,389 |   |   |   | 873,016 |   |   |   | 688,486 |   |
|                                                                                                                                                    |   |                                |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| **Non-Interest                Expense:**                                                                                                                |   |                                |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Salaries                and employee benefits                                                                                                           |   |                                | 1,147,489 |   |                               |   | 1,043,529 |   |   |   | 3,563,025 |   |   |   | 3,173,177 |   |
| Occupancy                and equipment                                                                                                                  |   |                                | 260,942   |   |                               |   | 229,838 |   |   |   | 756,218 |   |   |   | 659,914 |   |
| Other                                                                                                                                                   |   |                                | 740,994   |   |                               |   | 619,293 |   |   |   | 2,055,402 |   |   |   | 1,897,279 |   |
|          Total                non-interest expense                                                         |   |                                | 2,149,425 |   |                               |   | 1,892,660 |   |   |   | 6,374,645 |   |   |   | 5,730,370 |   |
|                                                                                                                                                    |   |                                |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
|          Income                before provision for income taxes                                           |   |                                | 1,041,592 |   |                               |   | 1,270,572 |   |   |   | 2,842,854 |   |   |   | 3,403,599 |   |
|                                                                                                                                                    |   |                                |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| **Provision                for income taxes**                                                                                                           |   |                                | 320,000   |   |                               |   | 454,000 |   |   |   | 857,000 |   |   |   | 1,194,000 |   |
|                                                                                                                                                    |   |                                |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| **            Net                income**                                                   |   | $                                   | 721,592   |   |                               | $      | 816,572 |   |   | $ | 1,985,854 |   |   | $ | 2,209,599 |   |
|                                                                                                                                                    |   |                                |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Basic                earnings per share (Notes 2 and 4)                                                                                                 |   | $                                   | 0.31      |   |                               | $      | 0.33 |   |   | $ | 0.85 |   |   | $ | 0.96 |   |
|                                                                                                                                                    |   |                                |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Diluted                earnings per share (Notes 2 and 4)                                                                                               |   | $                                   | 0.30      |   |                               | $      | 0.32 |   |   | $ | 0.81 |   |   | $ | 0.92 |   |
|                                                                                                                                                    |   |                                |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| See                notes to unaudited condensed consolidated financial                statements.                                                       |   |

----

*Index*

**VALLEY      COMMERCE BANCORP**

**CONDENSED      CONSOLIDATED STATEMENT OF CASH FLOWS**

**(UNAUDITED)**

|                                                                                                                                                               |   | **For                the Nine Months** |        |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------|-------------|
|                                                                                                                                                               |   | **Ended                September 30,** |        |
|                                                                                                                                                               |   | **2007**                               |        |   | **2006** |   |
|                                                                                                                                                               |   |                                   |        |   |   |   |
| **Cash                Flows from Operating Activities:**                                                                                                           |   |                                   |        |   |   |   |
| Net                income                                                                                                                                          |   | $                                      | 1,985,854   |   |   | $ | 2,209,599 |   |
| Adjustments                to reconcile net income to net cash provided by operating                activities:                                                    |   |                                   |        |   |   |   |   |   |
| Provision                for loan losses                                                                                                                           |   |                                   | -           |   |   |   | - |   |
| Decrease                in deferred loan origination fees, net                                                                                                     |   |                                   | (43,423     | ) |   |   | (52,520 | ) |
| Depreciation                                                                                                                                                       |   |                                   | 220,049     |   |   |   | 177,196 |   |
| Amortization                of intangibles                                                                                                                         |   |                                   | 46,903      |   |   |   | 46,904 |   |
| Loss                on sale of available-for-sale investment securities, net                                                                                       |   |                                   | 1,145       |   |   |   | 52,737 |   |
| Dividends                on Federal Home Loan Bank stock                                                                                                           |   |                                   | (62,500     | ) |   |   | (37,000 | ) |
| Amortization                and accretion of investment securities, net                                                                                            |   |                                   | 102,629     |   |   |   | 185,012 |   |
| Increase                in cash surrender value of bank-owned life insurance                                                                                       |   |                                   | (189,911    | ) |   |   | (92,435 | ) |
| Stock-based                compensation expense                                                                                                                    |   |                                   | 23,013      |   |   |   | 23,500 |   |
| Deferred                tax benefit from exercise of stock options                                                                                                 |   |                                   | 335,894     |   |   |   | 125,828 |   |
| Net                loss on sale of equipment                                                                                                                       |   |                                   | 1,255       |   |   |   | - |   |
| Deferred                tax benefit                                                                                                                                |   |                                   | 30,541      |   |   |   | - |   |
| Decrease                in accrued interest receivable and other assets                                                                                            |   |                                   | (239,125    | ) |   |   | (739,979 | ) |
| Increase                in accrued interest payable and other liabilities                                                                                          |   |                                   | 207,764     |   |   |   | 81,269 |   |
|          Net                cash provided by operating activities                                                     |   |                                   | 2,420,088   |   |   |   | 1,980,111 |   |
|                                                                                                                                                               |   |                                   |        |   |   |   |   |   |
| **Cash                Flows from Investing Activities:**                                                                                                           |   |                                   |        |   |   |   |   |   |
| Proceeds                from matured and called available-for-sale investment                securities                                                            |   |                                   | 5,115,000   |   |   |   | 655,000 |   |
| Proceeds                from sales of available-for-sale investment securities                                                                                     |   |                                   | 1,510,000   |   |   |   | 2,752,737 |   |
| Purchases                of available-for-sale investment securities                                                                                               |   |                                   | (8,152,270  | ) |   |   | (11,142,829 | ) |
| Proceeds                from principal repayments from available-for-sale        mortgage-backed                securities |   |                                   | 1,730,897   |   |   |   | 1,575,968 |   |
| Redemption                (purchase) of Federal Home Loan Bank Stock, net                                                                                          |   |                                   | 335,600     |   |   |   | (632,600 | ) |
| Net                increase in loans                                                                                                                               |   |                                   | (15,747,241 | ) |   |   | (30,749,074 | ) |
| Purchase                of premises and equipment                                                                                                                  |   |                                   | (994,886    | ) |   |   | (596,572 | ) |
| Proceeds                from sale of equipment                                                                                                                     |   |                                   | 9,313       |   |   |   | - |   |
| Premiums                paid for life insurance policies                                                                                                           |   |                                   | -           |   |   |   | (3,000,000 | ) |
|         Net                cash used in investing activities                                                               |   |                                   | (16,193,587 | ) |   |   | (41,137,370 | ) |
|                                                                                                                                                               |   |                                   |        |   |   |   |   |   |
| Continued                on next page.                                                                                                                             |   |

----

*Index*

**VALLEY      COMMERCE BANCORP**

**CONDENSED      CONSOLIDATED STATEMENT OF CASH FLOWS**

**(UNAUDITED)**

|                                                                                              |   | **For                the Nine Months** |             |
|---------------------------------------------------------------------------------------------------|--------|----------------------------------------|------------------|
|                                                                                              |   | **Ended                September 30,** |             |
|                                                                                              |   | **2007**                               |             |   | **2006** |   |
|                                                                                              |   |                                   |             |   |   |   |
| **Cash                Flows from Financing Activities:**                                          |   |                                   |             |   |   |   |
| Net                increase in noninterest-bearing and interest-bearing                deposits   |   | $                                      | 6,427,150        |   |   | $ | 1,095,512 |   |
| Net                (decrease) increase in time deposits                                           |   |                                   | (3,598,582       | ) |   |   | 3,795,335 |   |
| Proceeds                from exercised stock options                                              |   |                                   | 556,336          |   |   |   | 154,403 |   |
| Payments                on Federal Home Loan Bank long-term advances                              |   |                                   | (350,264         | ) |   |   | (343,105 | ) |
| Proceeds                from Federal Home Loan Bank short-term advances                           |   |                                   | 7,240,300        |   |   |   | 27,756,000 |   |
|      Cash                paid to repurchase fractional shares            |   |                                   | (5,392           | ) |   |   | (5,004 | ) |
| Net                cash provided by financing activities                                          |   |                                   | 10,269,548       |   |   |   | 32,453,141 |   |
|                                                                                              |   |                                   |             |   |   |   |   |   |
| Decrease                in cash and cash equivalents                                              |   |                                   | (3,503,951       | ) |   |   | (6,704,118 | ) |
| **Cash                and Cash Equivalents at Beginning of Year**                                 |   |                                   | 13,265,547       |   |   |   | 19,618,285 |   |
| **Cash                and Cash Equivalents at End of Period**                                     |   | $                                      | 9,761,596        |   |   | $ | 12,914,167 |   |
|                                                                                              |   |                                   |             |   |   |   |   |   |
| **Supplemental                Disclosure of Cash Flow Information:**                              |   |                                   |             |   |   |   |   |   |
| Cash                paid during the period for:                                                   |   |                                   |             |   |   |   |   |   |
| Interest                expense                                                                   |   | $                                      | 5,324,309        |   |   | $ | 3,721,514 |   |
| Income                taxes                                                                       |   | $                                      | 740,000          |   |   | $ | 1,290,000 |   |
|                                                                                              |   |                                   |             |   |   |   |   |   |
| **Non-Cash                Investing Activities:**                                                 |   |                                   |             |   |   |   |   |   |
| Net                change in unrealized loss on available-for-sale securities                     |   | $                                      | (9,705           | ) |   | $ | 223,416 |   |
| Purchase of                AFS securities, unsettled                                         |   | $                                 |  (3,983,106 | )  |   | $  |  - |   |
|                                                                                              |   |                                   |             |   |   |   |   |   |
|                                                                                              |   |                                   |             |   |   |   |   |   |
| See                notes to unaudited condensed consolidated financial                statements. |   |

----

*Index*

**VALLEY      COMMERCE BANCORP**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

----

*Index*

|                                                     |   | **For                the Nine Months Ended September 30, 2007**   |
|----------------------------------------------------------|--------|-----------------------------------------------------------------------------|
|                                                     |   | **Shares**                                                                  |   |   | **Weighted                Average****Exercise                Price** |   | **Weighted****Average****Remaining****Contractual****Term** |   | **Aggregate                Intrinsic****Value                (in****thousands)**   |
| **Incentive:**                                           |   |                                                                        |   |   |   |   |    |   |   |   |
| Options                outstanding at January 1, 2007    |   |                                                                        | 35,896 |   |   | $ | 8.20 |   |   |   |   |   |
| Options                granted                           |   |                                                                        | - |   |   |   | - |   |   |   |   |   |
| Options                exercised                         |   |                                                                        | (1,914 | ) |   |   | 6.79 |   |   |   |   |   |
| Options                cancelled                         |   |                                                                        | (608 | ) |   |   | 11.52 |   |   |   |   |   |
| Options                outstanding at September 30, 2007 |   |                                                                        | 33,374 |   |   |   | 8.20 |   | 5.58                years |   | $ | 345,036 |   |
| Options                exercisable at September 30, 2007 |   |                                                                        | 28,751 |   |   |   | 7.80 |   | 5.58                years |   |   | 308,900 |   |
|                                                     |   |                                                                        |   |   |   |   |   |   |   |   |   |   |   |
| **Nonstatutory:**                                        |   |                                                                        |   |   |   |   |   |   |   |   |   |   |   |
| Options                outstanding at January 1, 2007    |   |                                                                        | 199,669 |   |   | $ | 7.47 |   |   |   |   |   |   |
| Options                granted                           |   |                                                                        | - |   |   |   | - |   |   |   |   |   |   |
| Options                exercised                         |   |                                                                        | (95,684 | ) |   |   | 5.68 |   |   |   |   |   |   |
| Options                cancelled                         |   |                                                                        | - |   |   |   | - |   |   |   |   |   |   |
| Options                outstanding at September 30, 2007 |   |                                                                        | 103,985 |   |   |   | 9.10 |   |  5.73                years |   | $ | 981,500 |  (1) |
| Options                exercisable at September 30, 2007 |   |                                                                        | 90,044 |   |   |   | 8.29 |   |  5.73                years |   |   | 922,844 |  (1) |

| (1) | 10,500                options at an average price are excluded from intrinsic value from                table                above because they are not in the                money. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

*Index*

|                                                              |   | **For                the Three Months** |      |   | **For                the Nine Months** |   |
|-------------------------------------------------------------------|--------|-----------------------------------------|-----------|--------|----------------------------------------|--------|
|                                                              |   | **Ended                September 30,**  |      |   | **Ended                September 30,** |   |
|                                                              |   | **2007**                                |      |   | **2006**                               |   |   | **2007** |   |   | **2006** |   |
| **Earnings                Per Share:**                            |   |                                    |      |   |                                   |   |   |   |   |   |   |   |
| Basic                earnings per share                           |   | $                                       | 0.31      |   |                                   | $      | 0.33 |   |   | $ | 0.85 |   |   | $ | 0.96 |   |
| Diluted                earnings per share                         |   | $                                       | 0.30      |   |                                   | $      | 0.32 |   |   | $ | 0.81 |   |   | $ | 0.92 |   |
| **Weighted                Average Number of Shares Outstanding:** |   |                                    |      |   |                                   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                shares                                       |   |                                    | 2,364,074 |   |                                   |   | 2,428,632 |   |   |   | 2,339,725 |   |   |   | 2,307,283 |   |
| Diluted                shares                                     |   |                                    | 2,439,305 |   |                                   |   | 2,516,661 |   |   |   | 2,466,771 |   |   |   | 2,396,899 |   |
|                                                              |   |                                    |      |   |                                   |   |   |   |   |   |   |   |   |   |   |   |

| 5. | COMPREHENSIVE                INCOME |
|----|-------------------------------------|

|  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 Nine Months** |   |
|-----------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|--------|--------|------------------------------------------|--------|
|                                                                                                      |   | **Ended**                                 |   |   | **Ended**                                |   |
|                                                                                                      |   | **September**                             |   |   | **September**                            |   |   | **September** |   |   | **September** |   |
| (In                  Thousands)                                                                           |   | ** ****30,                  2007**   |   |   | ** ****30,                  2006**  |   |   | ** ****30,                  2007** |   |   | ** ****30,                  2006** |   |
|                                                                                                      |   |                                      |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
| **  Net                  income**                                                               |   | $                                         | 722    |   |                                     | $      | 817 |   |   | $ | 1,986 |   |   | $ | 2,210 |   |
|   Other                  comprehensive gain/(loss):                                             |   |                                      |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
|       Unrealized                  holding gain/(loss) on available-for-sale |   |                                      | 384    |   |                                     |   | 730 |   |   |   | (20 | ) |   |   | 223 |   |
|         investment                  securities, net of tax        |   |                                      |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
|   Total                  other comprehensive income                                             |   | $                                         | 1,106  |   |                                     | $      | 1,547 |   |   | $ | 1,966 |   |   | $ | 2,433 |   |

----

*Index*

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

*Accounting for Contingencies*

----

*Index*

*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 Nine Months Ended September 30, 2007 and      2006**

**Net      Interest Income**

|                                                                                                      |   | **Average                balances and weighted average yields and costs****Nine                Months ended September 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                                                                         |   | $                                                                                                                           | 73      |   |   | $ | 3 |   |   |   | 5.13 | % |   | $ | 4,017 |   |   | $ | 137 |   |   |   | 4.56 | % |
| Available-for-sale                investment securities:                                                  |   |                                                                                                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|          Taxable                                             |   |                                                                                                                        | 34,416  |   |   |   | 1,141 |   |   |   | 4.43 | % |   |   | 36,747 |   |   |   | 1,064 |   |   |   | 3.87 | % |
|          Exempt                from Federal income taxes (1) |   |                                                                                                                        | 18,915  |   |   |   | 574 |   |   |   | 6.15 | % |   |   | 17,594 |   |   |   | 525 |   |   |   | 6.04 | % |
|     Total                securities (1)                                               |   |                                                                                                                        | 53,331  |   |   |   | 1,715 |   |   |   | 5.04 | % |   |   | 54,341 |   |   |   | 1,589 |   |   |   | 4.57 | % |
| Loans                (2) (3)                                                                              |   |                                                                                                                        | 192,546 |   |   |   | 12,071 |   |   |   | 8.38 | % |   |   | 160,606 |   |   |   | 10,486 |   |   |   | 8.73 | % |
|       Total                interest-earning assets (1)                      |   |                                                                                                                        | 245,950 |   |   |   | 13,789 |   |   |   | 7.66 | % |   |   | 218,964 |   |   |   | 12,212 |   |   |   | 7.62 | % |
|                                                                                                      |   |                                                                                                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest-earning                assets, net of allowance for loan losses                               |   |                                                                                                                        | 18,337  |   |   |   |   |   |   |   |   |   |   |   | 17,140 |   |   |   |   |   |   |   |   |   |
|        Total                assets                                     |   | $                                                                                                                           | 264,287 |   |   |   |   |   |   |   |   |   |   | $ | 236,104 |   |   |   |   |   |   |   |   |   |
|                                                                                                      |   |                                                                                                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **LIABILITIES                AND SHAREHOLDERS’ EQUITY**                                             |   |                                                                                                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                                                                                 |   |                                                                                                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Other                interest bearing                                                   |   | $                                                                                                                           | 80,735  |   |   | $ | 1,821 |   |   |   | 3.02 | % |   | $ | 73,228 |   |   | $ | 1,431 |   |   |   | 2.61 | % |
|    Time                deposits less than $100,000                                         |   |                                                                                                                        | 21,303  |   |   |   | 762 |   |   |   | 4.78 | % |   |   | 19,908 |   |   |   | 568 |   |   |   | 3.81 | % |
|    Time                deposits $100,000 or more                                           |   |                                                                                                                        | 50,471  |   |   |   | 1,901 |   |   |   | 5.04 | % |   |   | 32,982 |   |   |   | 1,017 |   |   |   | 4.12 | % |
|       Total                interest-bearing deposits                        |   |                                                                                                                        | 152,509 |   |   |   | 4,484 |   |   |   | 3.93 | % |   |   | 126,118 |   |   |   | 3,016 |   |   |   | 3.20 | % |
| Short-term                debt                                                                            |   |                                                                                                                        | 12,241  |   |   |   | 485 |   |   |   | 5.30 | % |   |   | 6,808 |   |   |   | 269 |   |   |   | 5.28 | % |
| Long-term                debt                                                                             |   |                                                                                                                        | 8,330   |   |   |   | 273 |   |   |   | 4.38 | % |   |   | 8,911 |   |   |   | 286 |   |   |   | 4.29 | % |
| Junior                subordinated deferrable interest debentures                                         |   |                                                                                                                        | 3,093   |   |   |   | 203 |   |   |   | 8.77 | % |   |   | 3,093 |   |   |   | 195 |   |   |   | 8.43 | % |
|       Total                interest-bearing liabilities                     |   |                                                                                                                        | 176,173 |   |   |   | 5,445 |   |   |   | 4.13 | % |   |   | 144,930 |   |   |   | 3,766 |   |   |   | 3.47 | % |
|                                                                                                      |   |                                                                                                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest-bearing                deposits                                                               |   |                                                                                                                        | 59,708  |   |   |   |   |   |   |   |   |   |   |   | 66,770 |   |   |   |   |   |   |   |   |   |
| Other                liabilities                                                                          |   |                                                                                                                        | 1,930   |   |   |   |   |   |   |   |   |   |   |   | 1,421 |   |   |   |   |   |   |   |   |   |
|     Total                liabilities                                                  |   |                                                                                                                        | 237,811 |   |   |   |   |   |   |   |   |   |   |   | 213,121 |   |   |   |   |   |   |   |   |   |
| Shareholders’                equity                                                                 |   |                                                                                                                        | 26,476  |   |   |   |   |   |   |   |   |   |   |   | 22,983 |   |   |   |   |   |   |   |   |   |
|     Total                liabilities and shareholders’ equity                   |   | $                                                                                                                           | 264,287 |   |   |   |   |   |   |   |   |   |   | $ | 236,104 |   |   |   |   |   |   |   |   |   |
|                                                                                                      |   |                                                                                                                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                interest income and margin (1)                                                         |   |                                                                                                                        |    |   |   | $ | 8,344 |   |   | $ | 4.70 | % |   |   |   |   |   | $ | 8,466 |   |   | $ | 5.32 | % |

| (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)                  There were no nonaccrual loan balances during either period. When                nonaccrual loans are present they are included in total loans and                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 $269                and                $540 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                                                                    |   | $ | (135 | ) |   | $ | 1 |   |   | $ | (134 | ) |
| Investment                securities                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
|      Taxable                                                                |   |   | (67 | ) |   |   | 144 |   |   |   | 77 |   |
|      Exempt                from Federal income taxes                        |   |   | 60 |   |   |   | (11 | ) |   |   | 49 |   |
|      Total                securities                                        |   |   | (7 | ) |   |   | 133 |   |   |   | 126 |   |
| Loans                                                                                                |   |   | 2,085 |   |   |   | (500 | ) |   |   | 1,585 |   |
|      Total                interest income                                   |   | $ | 1,943 |   |   | $ | (366 | ) |   | $ | 1,577 |   |
|                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Increase                (decrease) in interest expense:                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Other                interest bearing deposits                                                       |   |   | 147 |   |   |   | 243 |   |   |   | 390 |   |
| Time                deposits less than $100,000                                                      |   |   | 40 |   |   |   | 154 |   |   |   | 194 |   |
| Time                deposits $100,000 or more                                                        |   |   | 539 |   |   |   | 345 |   |   |   | 884 |   |
|      Total                interest-bearing deposits                         |   |   | 726 |   |   |   | 742 |   |   |   | 1,468 |   |
| Short-term                debt                                                                       |   |   | 215 |   |   |   | 1 |   |   |   | 216 |   |
| Long-term                debt                                                                        |   |   | (19 | ) |   |   | 6 |   |   |   | (13 | ) |
| Junior                subordinated deferrable interest debentures                                    |   |   | - |   |   |   | 8 |   |   |   | 8 |   |
|      Total                interest expense                                  |   |   | 922 |   |   |   | 757 |   |   |   | 1,679 |   |
|      Increase                (decrease) in net interest income              |   | $ | 1,021 |   |   | $ | (1,123 | ) |   | $ | (102 | ) |

----

*Index*

**Provision      for Loan Losses**

**Non-Interest      Income**

**Non-interest      income**

|                                                                       |   |  **Nine                Months ended September 30,** |   |   |     |   |
|----------------------------------------------------------------------------|--------|---------------------------------------------------------------|--------|--------|----------|--------|
|                                                                       |   | **2007**                                                      |   |   | **2006** |   |   | **Increase****(Decrease)** |   |
| *(in                  thousands)*                                     |   |                                                          |   |   |     |   |   |   |   |   |   |   |
| Service                charges                                             |   | $                                                             | 432    |   |     | $      | 410 |   |   | $ | 22 |   |
| Loss                on sale of available-for-sale investment securities    |   |                                                          | (1     | )      |     |   | (53 | ) |   |   | 52 |   |
| Mortgage                loan brokerage fees                                |   |                                                          | 66     |   |     |   | 76 |   |   |   | (10 | ) |
| Earnings                on cash surrender value of life insurance policies |   |                                                          | 195    |   |     |   | 93 |   |   |   | 102 |   |
| Other                                                                      |   |                                                          | 181    |   |     |   | 162 |   |   |   | 19 |   |
|      Total                non-interest income     |   | $                                                             | 873    |   |     | $      | 688 |   |   | $ | 185 |   |

**Non-Interest      Expense**

----

*Index*

**Non-interest      expense**

|                                                                    |   |                                                    |   |   |     |   |
|-------------------------------------------------------------------------|--------|---------------------------------------------------------|--------|--------|----------|--------|
|                                                                    |   | **Nine                Months ended September 30,** |   |   |     |   |
| *(in                thousands)*                                         |   | **2007**                                                |   |   | **2006** |   |   | **Increase****(Decrease)** |   |
| Salaries                and employee benefits                           |   | $                                                       | 3,563  |   |     | $      | 3,173 |   |   | $ | 390 |   |
| Occupancy                and equipment                                  |   |                                                    | 756    |   |     |   | 660 |   |   |   | 96 |   |
| Data                processing                                          |   |                                                    | 345    |   |     |   | 338 |   |   |   | 7 |   |
| Operations                                                              |   |                                                    | 346    |   |     |   | 334 |   |   |   | 12 |   |
| Professional                and legal                                   |   |                                                    | 390    |   |     |   | 280 |   |   |   | 110 |   |
| Advertising                and business development                     |   |                                                    | 201    |   |     |   | 215 |   |   |   | (14 | ) |
| Telephone                and postal                                     |   |                                                    | 160    |   |     |   | 160 |   |   |   | - |   |
| Supplies                                                                |   |                                                    | 132    |   |     |   | 130 |   |   |   | 2 |   |
| Assessment                and insurance                                 |   |                                                    | 132    |   |     |   | 83 |   |   |   | 49 |   |
| Amortization                expense                                     |   |                                                    | 47     |   |     |   | 47 |   |   |   | - |   |
| Other                expenses                                           |   |                                                    | 303    |   |     |   | 310 |   |   |   | (7 | ) |
|      Total                non-interest expense |   | $                                                       | 6,375  |   |     | $      | 5,730 |   |   | $ | 645 |   |

----

*Index*

**Provision      for Income Taxes**

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

**Net      Interest Income**

| **Average                balances and weighted average yields and                costs**                  |   |
|-----------------------------------------------------------------------------------------------------------|--------|
|                                                                                                      |   |   |   |
|                                                                                                      |   | **Three                Months ended September 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                                                                         |   | $ | 65 |   |   | $ | 1 |   |   |   | 5.09 | % |   | $ | 234 |   |   | $ | 3 |   |   |   | 5.09 | % |
| Available-for-sale                investment securities:                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|          Taxable                                             |   |   | 33,293 |   |   |   | 359 |   |   |   | 4.28 | % |   |   | 38,670 |   |   |   | 386 |   |   |   | 3.96 | % |
|          Exempt                from Federal income taxes (1) |   |   | 19,038 |   |   |   | 192 |   |   |   | 6.06 | % |   |   | 18,407 |   |   |   | 188 |   |   |   | 6.14 | % |
|     Total                securities (1)                                               |   |   | 52,331 |   |   |   | 551 |   |   |   | 4.93 | % |   |   | 57,077 |   |   |   | 574 |   |   |   | 4.66 | % |
| Loans                (2) (3)                                                                              |   |   | 199,047 |   |   |   | 4,164 |   |   |   | 8.30 | % |   |   | 174,283 |   |   |   | 3,854 |   |   |   | 8.77 | % |
|       Total                interest-earning assets (1)                      |   |   | 251,443 |   |   |   | 4,716 |   |   |   | 7.60 | % |   |   | 231,594 |   |   |   | 4,431 |   |   |   | 7.76 | % |
|                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest-earning                assets, net of allowance for loan losses                               |   |   | 18,957 |   |   |   |   |   |   |   |   |   |   |   | 17,333 |   |   |   |   |   |   |   |   |   |
|        Total                assets                                     |   | $ | 270,400 |   |   |   |   |   |   |   |   |   |   | $ | 248,927 |   |   |   |   |   |   |   |   |   |
|                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **LIABILITIES                AND SHAREHOLDERS’ EQUITY**                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Interest                bearing                                                         |   | $ | 88,306 |   |   | $ | 661 |   |   |   | 2.97 | % |   | $ | 76,216 |   |   | $ | 551 |   |   |   | 2.87 | % |
|    Time                deposits less than $100,000                                         |   |   | 20,490 |   |   |   | 244 |   |   |   | 4.72 | % |   |   | 21,384 |   |   |   | 230 |   |   |   | 4.27 | % |
|    Time                deposits $100,000 or more                                           |   |   | 49,901 |   |   |   | 630 |   |   |   | 5.01 | % |   |   | 34,407 |   |   |   | 405 |   |   |   | 4.67 | % |
|    Total                interest-bearing deposits                                          |   |   | 158,697 |   |   |   | 1,535 |   |   |   | 3.84 | % |   |   | 132,007 |   |   |   | 1,186 |   |   |   | 3.56 | % |
| Short-term                debt                                                                            |   |   | 10,149 |   |   |   | 131 |   |   |   | 5.12 | % |   |   | 14,675 |   |   |   | 198 |   |   |   | 5.35 | % |
| Long-term                debt                                                                             |   |   | 8,218 |   |   |   | 91 |   |   |   | 4.39 | % |   |   | 8,817 |   |   |   | 95 |   |   |   | 4.27 | % |
| Junior                subordinated deferrable interest debentures                                         |   |   | 3,093 |   |   |   | 68 |   |   |   | 8.77 | % |   |   | 3,093 |   |   |   | 69 |   |   |   | 8.85 | % |
|       Total                interest-bearing liabilities                     |   |   | 180,157 |   |   |   | 1,825 |   |   |   | 4.02 | % |   |   | 158,592 |   |   |   | 1,548 |   |   |   | 3.87 | % |
|                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest                bearing deposits                                                               |   |   | 60,412 |   |   |   |   |   |   |   |   |   |   |   | 65,234 |   |   |   |   |   |   |   |   |   |
| Other                liabilities                                                                          |   |   | 2,587 |   |   |   |   |   |   |   |   |   |   |   | 1,403 |   |   |   |   |   |   |   |   |   |
|     Total                liabilities                                                  |   |   | 243,156 |   |   |   |   |   |   |   |   |   |   |   | 225,229 |   |   |   |   |   |   |   |   |   |
| Shareholders’                equity                                                                 |   |   | 27,244 |   |   |   |   |   |   |   |   |   |   |   | 23,698 |   |   |   |   |   |   |   |   |   |
|     Total                liabilities and shareholders’ equity                   |   | $ | 270,400 |   |   |   |   |   |   |   |   |   |   | $ | 248,927 |   |   |   |   |   |   |   |   |   |
|                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                interest income and margin (1)                                                         |   |   |   |   |   | $ | 2,891 |   |   |   | 4.72 | % |   |   |   |   |   | $ | 2,883 |   |   |   | 5.10 | % |

| (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)                  There were no nonaccrual loan balances during either                period. When nonaccrual loans are present they are included in total                loans and 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                $76 and $93 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                                                                                                  |   | $ | (2 | ) |   | $ | - |   |   | $ | (2 | ) |
| Investment                securities                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
|          Taxable                                                                      |   |   | (54 | ) |   |   | 27 |   |   |   | (27 | ) |
|          Exempt                from Federal income taxes                              |   |   | 10 |   |   |   | (6 | ) |   |   | 4 |   |
|          Total                securities                                              |   |   | (44 | ) |   |   | 21 |   |   |   | (23 | ) |
| Loans                                                                                                                              |   |   | 548 |   |   |   | (238 | ) |   |   | 310 |   |
|      Total                interest income                                                                 |   |   | 502 |   |   |   | (217 | ) |   |   | 285 |   |
|                                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
| (Decrease)                increase in interest expense:                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Other                interest-bearing deposits                                                                                     |   |   | 87 |   |   |   | 23 |   |   |   | 110 |   |
| Time                deposits less than $100,000                                                                                    |   |   | (10 | ) |   |   | 24 |   |   |   | 14 |   |
| Time                deposits $100,000 or more                                                                                      |   |   | 182 |   |   |   | 43 |   |   |   | 225 |   |
|               Total                interest-bearing deposits |   |   | 259 |   |   |   | 90 |   |   |   | 349 |   |
| Short-term                debt                                                                                                     |   |   | (61 | ) |   |   | (6 | ) |   |   | (67 | ) |
| Long-term                debt                                                                                                      |   |   | (6 | ) |   |   | 2 |   |   |   | (4 | ) |
| Junior                subordinated deferrable interest debentures                                                                  |   |   | - |   |   |   | (1 | ) |   |   | (1 | ) |
|      Total                interest expense                                                                |   |   | 192 |   |   |   | 85 |   |   |   | 277 |   |
|      Decrease                in net interest income                                                       |   | $ | 310 |   |   | $ | (302 | ) |   | $ | 8 |   |

----

*Index*

**Provision      for Loan Losses**

**Non-Interest      Income**

**Non-interest      income**

|                                                                       |   |                                                     |   |   |     |   |
|----------------------------------------------------------------------------|--------|----------------------------------------------------------|--------|--------|----------|--------|
|                                                                       |   | **Three                Months ended September 30,** |   |   |     |   |
| *(in                thousands)*                                            |   | **2007**                                                 |   |   | **2006** |   |   | **Increase****(Decrease)** |   |
| Service                charges                                             |   | $                                                        | 156    |   |     | $      | 148 |   |   | $ | 8 |   |
| Mortgage                loan brokerage fees                                |   |                                                     | 19     |   |     |   | 34 |   |   |   | (15 | ) |
| Earnings                on cash surrender value of life insurance policies |   |                                                     | 67     |   |     |   | 39 |   |   |   | 28 |   |
| Other                                                                      |   |                                                     | 58     |   |     |   | 59 |   |   |   | (1 | ) |
|      Total                non-interest income     |   | $                                                        | 300    |   |     | $      | 280 |   |   | $ | 20 |   |

**Non-Interest      Expense**

----

*Index*

**Non-interest      expense**

|                                                                      |   | **Three                  Months ended September 30,** |   |   |     |   |
|---------------------------------------------------------------------------|--------|------------------------------------------------------------|--------|--------|----------|--------|
| *(in                  thousands)*                                         |   | **2007**                                                   |   |   | **2006** |   |   | **Increase****(Decrease)** |   |
| Salaries                  and employee benefits                           |   | $                                                          | 1,147  |   |     | $      | 1,043 |   |   | $ | 104 |   |
| Occupancy                  and equipment                                  |   |                                                       | 261    |   |     |   | 230 |   |   |   | 31 |   |
| Data                  processing                                          |   |                                                       | 124    |   |     |   | 113 |   |   |   | 11 |   |
| Operations                                                                |   |                                                       | 122    |   |     |   | 119 |   |   |   | 3 |   |
| Professional                  and legal                                   |   |                                                       | 162    |   |     |   | 108 |   |   |   | 54 |   |
| Advertising                  and business development                     |   |                                                       | 58     |   |     |   | 59 |   |   |   | (1 | ) |
| Telephone                  and postal                                     |   |                                                       | 60     |   |     |   | 50 |   |   |   | 10 |   |
| Supplies                                                                  |   |                                                       | 50     |   |     |   | 36 |   |   |   | 14 |   |
| Assessment                  and insurance                                 |   |                                                       | 64     |   |     |   | 32 |   |   |   | 32 |   |
| Amortization                  expense                                     |   |                                                       | 16     |   |     |   | 16 |   |   |   | - |   |
| Other                  expenses                                           |   |                                                       | 86     |   |     |   | 87 |   |   |   | (1 | ) |
|      Total                  non-interest expense |   | $                                                          | 2,150  |   |     | $      | 1,893 |   |   | $ | 257 |   |

**Provision      for Income Taxes**

**Financial      Condition**

**Investment      Securities**

----

*Index*

| **Market                value of securities available for sale** |   |
|------------------------------------------------------------------|--------|
|                                                             |   | **September                30, 2007** |   |
| *(in                thousands)*                                  |   | AmortizedCost |   |   | UnrealizedGain |   |   | Unrealized                Loss |   |   | Fair Value |   |
| U.S.                government  agencies               |   | $ | 19,299 |   |   | $ | 8 |   |   | $ | (147 | ) |   | $ | 19,160 |   |
| U.S.                treasury securities                          |   |   | 246 |   |   |   | 8 |   |   |   | - |   |   |   | 254 |   |
| Mortgage-backed                securities                        |   |   | 17,051 |   |   |   | 57 |   |   |   | (179 | ) |   |   | 16,929 |   |
| Municipal                securities                              |   |   | 19,298 |   |   |   | 45 |   |   |   | (185 | ) |   |   | 19,158 |   |
| Corporate                debt securities                         |   |   | 3,511 |   |   |   | - |   |   |   | (48 | ) |   |   | 3,463 |   |
|     Total                                    |   | $ | 59,405 |   |   | $ | 118 |   |   | $ | (559 | ) |   | $ | 58,964 |   |

|                                               |   | **December                31, 2006** |   |
|----------------------------------------------------|--------|--------------------------------------|--------|
| *(in                thousands)*                    |   | AmortizedCost                        |   |   | UnrealizedGain |   |   | UnrealizedLoss |   |   | 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)*      |   | **September                30, 2007** |    |   | **December                31, 2006** |   |
|---------------------------------------------------------|--------|---------------------------------------|---------|--------|--------------------------------------|--------|
| Commercial                                              |   | $                                     | 40,238  |   |                                 |   | 20 | % |   | $ | 41,104 |   |   |   | 22 | % |
| Real                estate – mortgage (1)         |   |                                  | 104,460 |   |                                 |   | 52 |   |   |   | 92,639 |   |   |   | 50 |   |
| Real                estate – construction         |   |                                  | 48,396  |   |                                 |   | 24 |   |   |   | 44,273 |   |   |   | 24 |   |
| Agricultural                                            |   |                                  | 5,094   |   |                                 |   | 3 |   |   |   | 4,693 |   |   |   | 3 |   |
| Consumer                and other                       |   |                                  | 2,078   |   |                                 |   | 1 |   |   |   | 1,805 |   |   |   | 1 |   |
|     Subtotal                        |   |                                  | 200,266 |   |                                 |   | 100 | % |   |   | 184,514 |   |   |   | 100 | % |
| Deferred                loan fees, net                  |   |                                  | (392    | )      |                                 |   |   |   |   |   | (436 | ) |   |   |   |   |
| Allowance                for loan losses                |   |                                  | (1,752  | )      |                                 |   |   |   |   |   | (1,746 | ) |   |   |   |   |
|     Total                loans, net |   | $                                     | 198,122 |   |                                 |   |   |   |   | $ | 182,332 |   |   |   |   |   |

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

----

*Index*

**Nonperforming      Assets**

**Allowance      for Loan Losses**

| **Changes                in allowance for loan losses** |   |
|---------------------------------------------------------|--------|

|                                                                          |   |                                  |    |
|-------------------------------------------------------------------------------|--------|---------------------------------------|---------|
|                                                                          |   | **Nine                Months ended**  |    |   | **Year                ended** |   |
|                                                                          |   | **September                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 |   |                                  | 0.00    | % |   |   | 0.00 | % |
| Average                loans outstanding                                      |   | $                                     | 192,546 |   |   | $ | 166,620 |   |
| Ending                allowance to total loans outstanding                    |   |                                  | 0.87    | % |   |   | 0.95 | % |
|                                                                          |   |                                  |    |   |   |   |   |   |

**Deposits**

----

*Index*

| **Deposit                Portfolio**     |
|-----------------------------------------------|
| *(dollars                in thousands)*  | **September                30, 2007**  |   | **December                31, 2006**  |
| Non-interest                bearing           |   | $ | 56,916 |   |   |   | 27 | % |   | $ | 63,020 |   |   |   | 30 | % |
| Interest                bearing               |   |   | 87,824 |   |   |   | 42 |   |   |   | 75,293 |   |   |   | 36 |   |
| Time                deposits                  |   |   | 65,665 |   |   |   | 31 |   |   |   | 69,263 |   |   |   | 34 |   |
| Total                Deposits                 |   | $ | 210,405 |   |   |   | 100 | % |   | $ | 207,576 |   |   |   | 100 | % |

**Borrowings**

----

*Index*

**Capital      Resources**

| **Capital                    and capital adequacy ratios**                                                                       |   |
|----------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                             |   |   |   |
|                                                                                                                             |   | **September                    30, 2007** |   |   | **December                    31, 2006** |   |
| *(dollars                    in thousands)*                                                                                      |   | **Amount** |   |   | **Ratio** |   |   | **Amount** |   |   | **Ratio** |   |
| **Leverage                    Ratio**                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Valley                    Commerce Bancorp    and                    Subsidiary                              |   | $ | 31,596 |   |   |   | 11.7 | % |   | $ | 28,654 |   |   |   | 11.1 | % |
| Minimum                    regulatory requirement                                                                                |   | $ | 10,816 |   |   |   | 4.0 | % |   | $ | 10,346 |   |   |   | 4.0 | % |
|                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Valley                    Business Bank                                                                                          |   | $ | 30,705 |   |   |   | 11.4 | % |   | $ | 28,336 |   |   |   | 11.0 | % |
| Minimum                    requirement for “Well-    Capitalized”                    institution |   | $ | 13,515 |   |   |   | 5.0 | % |   | $ | 12,926 |   |   |   | 5.0 | % |
| Minimum                    regulatory requirement                                                                                |   | $ | 10,812 |   |   |   | 4.0 | % |   | $ | 10,341 |   |   |   | 4.0 | % |
|                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Tier                    1 Risk-Based Capital Ratio**                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Valley                    Commerce Bancorp    and                    Subsidiary                              |   | $ | 31,596 |   |   |   | 13.7 | % |   | $ | 28,654 |   |   |   | 13.5 | % |
| Minimum                    regulatory requirement                                                                                |   | $ | 9,233 |   |   |   | 4.0 | % |   | $ | 8,495 |   |   |   | 4.0 | % |
|                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Valley                    Business Bank                                                                                          |   | $ | 30,705 |   |   |   | 13.3 | % |   | $ | 28,336 |   |   |   | 13.4 | % |
| Minimum                    requirement for “Well-    Capitalized”                    institution |   | $ | 13,845 |   |   |   | 6.0 | % |   | $ | 12,736 |   |   |   | 6.0 | % |
| Minimum                    regulatory requirement                                                                                |   | $ | 9,230 |   |   |   | 4.0 | % |   | $ | 8,490 |   |   |   | 4.0 | % |
|                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total                    Risk-Based Capital Ratio**                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Valley                    Commerce Bancorp    and                    Subsidiary                              |   | $ | 33,348 |   |   |   | 14.5 | % |   | $ | 30,399 |   |   |   | 14.3 | % |
| Minimum                    regulatory requirement                                                                                |   | $ | 18,466 |   |   |   | 8.0 | % |   | $ | 16,989 |   |   |   | 8.0 | % |
|                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Valley                    Business Bank                                                                                          |   | $ | 32,456 |   |   |   | 14.1 | % |   | $ | 30,081 |   |   |   | 14.2 | % |
| Minimum                    requirement for “Well-    Capitalized”                    institution |   | $ | 23,075 |   |   |   | 10.0 | % |   | $ | 21,226 |   |   |   | 10.0 | % |
| Minimum                    regulatory requirement                                                                                |   | $ | 18,460 |   |   |   | 8.0 | % |   | $ | 16,981 |   |   |   | 8.0 | % |
|                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

*Index*

**Liquidity**

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

----

*Index*

**ITEM      4 – CONTROLS AND PROCEDURES**

----

*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**

**ITEM      5 – OTHER INFORMATION**

**ITEM      6 – EXHIBITS**

----

*Index*

**SIGNATURES**

|                                              | VALLEY                COMMERCE BANCORP |
|---------------------------------------------------|----------------------------------------|
|                                              |                                   |
| Date:  November                14, 2007 | By:                                    | /s/                Donald A. Gilles |
|                                              |                                   | Donald                A. Gilles |
|                                              |                                   | President                and Chief Executive Officer |
|                                              |                                   |
| Date:                November 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            |