<PAGE>



                                  Exhibit 13.1

                        Communitycorp 2001 Annual Report

<PAGE>

                                  Exhibit 13.1

Providing personal, prompt, efficient services is the goal of Bank of
Walterboro. We are committed to the concept of "Hometown Banking" and hope we
can be of service to you. "Where other Banks have their Branches we have our
Roots."

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Contents:
Shareholder's Letter...........................................................1
Summary of Selected Financial Data.............................................2
Financial Charts.............................................................3-6
Company's Business.............................................................7
Management's Discussion and Analysis........................................8-21
Independent Auditor's Report..................................................22
Consolidated Balance Sheets...................................................23
Consolidated Statements of Operations.........................................24
Consolidated Statements of Changes in Shareholders' Equity
  and Comprehensive Income....................................................25
Consolidated Statements of Cash Flows.........................................26
Notes to Consolidated Financial Statements.................................27-42
Directors, Officers and Staff.................................................43
Corporate Data................................................................44
Services......................................................................45

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                                       2

<PAGE>

Dear Shareholder,

It is a pleasure to report the progress of Communitycorp and its subsidiary,
Bank of Walterboro, during 2001. The Company continued to experience good growth
in deposits and loans during the year. Earnings decreased slightly, 10.52%,
primarily as a result of the deteriorating economy. More detailed information
follows, but we are pleased to report return on average assets of 1.18%, a sound
capital to asset ratio of 9.93%, and reserve for loan losses of 1.73%.

Deposits at year-end were $98,420,311, an increase of $6,622,519, or 7.21%, over
2000 year-end. Net loans increased from $66,620,891 to $70,127,879, an increase
of $3,506,988, or 5.26%. The reserve for loan losses increased from a December
31, 2000 balance of $1,173,832 to $1,231,051, or 1.73% of gross loans. Total
assets increased from $103,068,799 to a December 31, 2001 total of $110,850,168,
an increase of 7.55%.

Earnings decreased slightly in 2001 for the Company with net income of
$1,303,082, a decrease of $153,269, or 10.52%, less than 2000 earnings of
$1,456,351. Earnings decreased from $5.14 per share in 2000 to $4.65 per share
in 2001. Our net interest margin decreased from 4.33% in 2000 to 3.68% in 2001.

Please read the following financial information so you may become aware of your
Company's progress. We believe the information contained in this Annual Report
shows that a local, well-managed, independent bank can compete successfully in a
deregulated market against national, regional, and state-wide banking
institutions. Our success can be attributed to the teamwork by our shareholders,
directors, officers, and employees. We most importantly want to thank our
customers for allowing us to be of service to them.

The Board of Directors, officers, and employees thank you for your past support
and solicit your continued support as we continue our efforts to provide prompt,
efficient, and courteous service to our customers. We welcome any suggestions
you may have.

We invite and encourage you to attend our Annual Meeting on Tuesday, April 23,
2002.

Very truly yours,


W. Roger Crook                                             Peden B. McLeod
President and CEO.                                         Chairman of the Board

                                       3

<PAGE>

                             Selected Financial Data

The following table sets forth certain selected financial data concerning the
Company. The selected financial data has been derived from the consolidated
financial statements which have been audited by Tourville, Simpson & Caskey,
L.L.P., independent accountants. This information should be read in conjunction
with Management's Discussion and Analysis of Financial Condition and Results of
Operations.

<TABLE>
<CAPTION>
Year Ended December 31,                        2001       2000       1999       1998       1997
                                             --------   --------   --------   --------   --------
<S>                                          <C>        <C>        <C>        <C>        <C>
(Dollars in thousands, except per share)
Results of Operations:
 Interest income                             $  7,897   $  7,511   $  6,882   $  5,728   $  4,749
 Interest expense                               4,030      3,579      3,168      2,674      2,131
                                             --------   --------   --------   --------   --------
 Net interest income                            3,867      3,932      3,714      3,054      2,618
 Provision for loan losses                        257        290        360        260        135
                                             --------   --------   --------   --------   --------
 Net interest income after provision for
  loan losses                                   3,610      3,642      3,354      2,794      2,483
 Other income                                     493        480        488        362        258
 Other expense                                  2,183      1,974      1,810      1,630      1,329
                                             --------   --------   --------   --------   --------
 Income before income taxes                     1,920      2,148      2,032      1,526      1,412
 Income tax expense                               617        692        652        500        468
                                             --------   --------   --------   --------   --------
  Net income                                 $  1,303   $  1,456   $  1,380   $  1,026   $    944
                                             ========   ========   ========   ========   ========

Balance Sheet Data:
 Securities available-for-sale               $ 11,343   $ 18,867   $ 18,760   $ 10,744   $  9,395
 Securities held-to-maturity                    3,499      4,598      5,327      5,192      6,301
 Allowance for loan losses                      1,231      1,174      1,087        929        743
 Net loans                                     70,128     66,621     58,576     50,950     40,614
 Premises and equipment, net                    2,013      2,160      1,776      1,906      1,999
 Total assets                                 110,850    103,069     96,695     89,503     65,075
 Noninterest-bearing deposits                   9,230      9,800      9,953      8,533      6,064
 Interest-bearing deposits                     89,190     81,997     76,982     71,816     50,879
 Total deposits                                98,420     91,797     86,935     80,349     56,943
 Short-term borrowings                            560        530        290        410        480
 Total liabilities                             99,848     93,189     87,890     81,333     57,841
 Total shareholders' equity                    11,002      9,880      8,805      8,170      7,234

Per Share Data:
 Weighted-average common shares outstanding   280,330    283,194    296,522    298,390    298,646
 Net income                                  $   4.65   $   5.14   $   4.65   $   3.44   $   3.16
 Cash dividends paid                         $   0.55   $   0.50   $   0.40   $   0.31   $   0.28
 Period end book value                       $  39.52   $  35.07   $  30.15   $  27.37   $  24.24
</TABLE>

                                       4

<PAGE>

                                  COMMUNITYCORP

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

                                     GENERAL

Communitycorp is a South Carolina corporation organized on March 13, 1995 to be
a bank holding company (the Company). The Company's subsidiary, Bank of
Walterboro, is a state-chartered commercial bank with two banking locations. The
Bank's main office and operations center is located at 1100 North Jefferies
Boulevard, Walterboro, South Carolina. The Bank has branches at 6225 Savannah
Highway, Ravenel, South Carolina and at 110 Forest Hills Road in Walterboro,
South Carolina. The Company's primary market area includes Colleton and
Charleston Counties. Depository accounts are insured by the Federal Deposit
Insurance Corporation up to the maximum amount permitted by law. The Bank, which
received its charter on October 11, 1988 and opened for business on May 1, 1989,
is dedicated to providing prompt, efficient, personal service to its customers.
A full range of deposit services for individuals and businesses is offered by
the Bank. Deposit products include checking accounts, savings accounts,
certificates of deposit, money market accounts, and IRA's.

The Company is primarily engaged in the business of attracting deposits from the
general public and using these deposits together with other funds to make
commercial, consumer, and real estate loans. The Company's operating results
depend to a substantial extent on the difference between interest and fees
earned on loans, investments, and services, and the Company's interest expense,
consisting principally of interest paid on deposits. Unlike most industrial
companies, virtually all of the assets and liabilities of financial institutions
are monetary. As a result, interest rates have a greater effect on the financial
institution's performance. In addition to competing with other traditional
financial institutions, the Company also competes for savings dollars with
nontraditional financial intermediaries such as mutual funds. This has resulted
in a highly competitive market area which demands the type of personal service
and attention provided by Bank of Walterboro.

The earnings and growth of the banking industry and the Company are and will be
affected by general conditions of the economy and by the fiscal and monetary
policies of the federal government and its agencies, including the Board of
Governors of the Federal Reserve System (the Board). The Board regulates money
and credit conditions and, as a result, has a strong influence on interest rates
and on general economic conditions. The effect of such policies in the future on
the business and earnings of the Company cannot be predicted with certainty.

The terrorist attacks that occurred in New York City and Washington, D.C. on
September 11, 2001, and the United States' subsequent response to these events
have resulted in a general economic slowdown that may adversely affect our
banking business. Economic slowdowns or recessions in our primary market area
may be accompanied by reduced demand for credit, decreasing interest margins and
declining real estate values, which may in turn result in a decrease in net
earnings and an increased possibility of potential loan losses in the event of
default. Any sustained period of decreased economic activity, increased
delinquencies, foreclosures or losses could limit our growth and negatively
affect our results of operations. We cannot predict the extent or duration of
these events or their effect upon our business and operations. We will, however,
closely monitor the effect of these events upon our business, and make
adjustments to our business strategy as we deem necessary.

As of December 31, 2001, the Company had twenty-two full-time and one part-time
employee in the Walterboro branch, seven full-time and one part-time employee at
the Ravenel branch, and one full time employee at the Forest Hills branch.

                                       5

<PAGE>

                                  COMMUNITYCORP

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

                              RESULTS OF OPERATIONS

This discussion and analysis is intended to assist the reader in understanding
the financial condition and results of operations of Communitycorp and its
subsidiary, Bank of Walterboro. This commentary should be read in conjunction
with the consolidated financial statements and the related notes and the other
statistical information in this report.

2001 compared to 2000

Net income for the year ended December 31, 2001 was $1,303,082, or $4.65 per
share, compared to $1,456,351, or $5.14 per share, for the year ended December
31, 2000. A decrease in net interest income of $65,311 over the 2000 amount of
$3,932,407 contributed to this overall decrease. The net interest margin
decreased from 4.33% in 2000 to 3.68% in 2001 as a result of the deteriating
economy. Other income increased from $480,155 for the year ended December 31,
2000 to $493,209 for the year ended December 31, 2001. Other expenses increased
from $1,974,528 for 2000 to $2,182,822 for 2001. The increase in other expenses
is primarily attributable to an increase in salaries and employee benefits of
$127,950 from 2000 to 2001. Annual pay raises for the staff contributed to this
increase.

2000 compared to 1999

Net income for the year ended December 31, 2000 was $1,456,351, or $5.14 per
share, compared to $1,379,803, or $4.65 per share, for the year ended December
31, 1999. An increase in net interest income of $218,085 over the 1999 amount of
$3,714,322 contributed to this overall increase. Other income decreased from
$488,445 for the year ended December 31, 1999 to $480,155 for the year ended
December 31, 2000. Other expenses increased from $1,810,490 for 1999 to
$1,974,528 for 2000. The increase in other expenses is primarily attributable to
an increase in salaries and employee benefits of $78,904 from 1999 to 2000.
Annual pay raises for the staff at both locations contributed to this increase.

                               NET INTEREST INCOME

General. To a large degree, earnings are dependent on net interest income. It
represents the difference between interest earned on assets and interest paid on
liabilities. Interest rate spread and net interest margin are two significant
elements in analyzing the Company's net interest income. Interest rate spread is
the difference between the yield on average earning assets and the rate on
average interest bearing liabilities. Net interest margin is net interest income
divided by average earning assets.

Net interest income decreased from $3,932,407 in 2000 to $3,867,096 in 2001,
resulting in a decrease of 1.66%. While total interest income increased $386,278
to $7,897,327 in 2001, interest expense increased $451,589 to $4,030,231 in
2001. Income from loans increased by 6.51% to $6,342,684 in 2001 as compared to
$5,954,829 in 2000. This increase was attributable to the growth in the loan
portfolio from $67,794,723 at December 31, 2000 to $71,358,930 at December 31,
2001. Investment income decreased 43.30% from $1,439,877 in 2000 to $816,448 in
2001. The net interest spread and net interest margin were 3.01% and 3.68% in
2001 as compared to 3.66% and 4.33% in 2000.

Net interest income increased from $3,714,322 in 1999 to $3,932,407 in 2000,
resulting in an increase of 5.87%. Income from loans increased by 14.73% to
$5,954,829 for 2000 as compared to $5,190,261 for 1999. This increase was
attributable to the growth in the loan portfolio from $59,663,015 at December
31, 1999 to $67,794,723 at December 31, 2000. There was also an increase in
investment income of $287,354, an increase of 24.93% over the 1999 amount of
$1,152,523. The net interest spread and net interest margin were 3.66% and 4.33%
in 2000 as compared to 3.67% and 4.25% in 1999.

Average Balances, Income, Expenses, and Rates. The following table sets forth,
for the periods indicated, the weighted average yields earned, the weighted
average yields paid, the net interest spread, and the net interest margin on
earning assets. The table also indicates the average monthly balance and the
interest income or expense by specific categories.

                                       6

<PAGE>
                                  COMMUNITYCORP

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

                         NET INTEREST INCOME (continued)

<TABLE>
<CAPTION>
Average Balances, Income, Expenses, and Rates
Year ended December 31,                         2001                               2000
                                   -------------------------------    -------------------------------
                                    Average     Income/     Yield/     Average     Income/     Yield/
(Dollars in thousands)              Balance     Expense      Rate      Balance     Expense      Rate
                                   ---------    --------    ------    ---------    --------    ------
<S>                                <C>          <C>         <C>       <C>          <C>         <C>
Assets:
 Earning Assets:
  Securities, taxable (1)          $   9,782    $    539    5.51%     $  18,062    $  1,147    6.35%
  Securities, tax-exempt (1)           5,963         254    4.26          6,150         269    4.37
  Nonmarketable equity
   securities                            331          22    6.65            264           4    9.09
  Federal funds sold                  19,446         735    3.78          1,969         116    5.89
  Time deposits with other banks          90           4    4.40             --          --      --
  Loans (2)                           69,505       6,343    9.13          4,314       5,955    9.26
                                   ---------    --------              ---------    --------
   Total earning assets              105,117       7,897    7.51         90,759       7,511    8.28
  Cash and due from banks              3,282                              3,785
  Allowance for loan losses           (1,231)                            (1,137)
  Premises and equipment               2,080                              1,778
  Other assets                         1,422                              1,784
                                   ---------                          ---------
   Total assets                    $ 110,670                          $  96,969
                                   =========                          =========

Liabilities:
 Interest-bearing Liabilities:
  Interest-bearing deposits        $  89,024       4,012    4.51%     $  76,888       3,538    4.60%
  Short-term borrowings                  576          18    3.13            660          41    6.21
                                   ---------    --------              ---------    --------
 Total interest-bearing
  liabilities                         89,600       4,030    4.50         77,548       3,579    4.62
                                   ---------    --------              ---------
 Noninterest-bearing deposits          9,578                              9,541
 Accrued interest and other
  liabilities                          1,027                                872
 Shareholders' equity                 10,465                              9,008
                                   ---------                          ---------
 Total liabilities and
  shareholders' equity             $ 110,670                          $  96,969
                                   =========                          =========
 Net interest spread                                        3.01%                              3.66%
 Net interest income                            $  3,867                           $  3,932
                                                ========                           ========
 Net interest margin                                        3.68%                              4.33%
</TABLE>

(1) Averages for securities are stated at historical cost.
(2) The effect of loans in nonaccrual status and fees collected is not
significant to the computations. All loans and deposits are domestic.

                                       7

<PAGE>

                                  COMMUNITYCORP

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

                         NET INTEREST INCOME (continued)

Analysis of Changes in Net Interest Income. Net interest income can also be
analyzed in terms of the impact of changing rates and changing volume. The
following table describes the extent to which changes in interest rates and
changes in the volume of earning assets and interest-bearing liabilities have
affected the Company's interest income and interest expense during the periods
indicated. Information on changes in each category attributable to (i) changes
due to volume (change in volume multiplied by prior period rate), (ii) changes
due to rates (changes in rates multiplied by prior period volume) and (iii)
changes in rate and volume (change in rate multiplied by the change in volume)
is provided as follows:

Analysis of Changes in Net Interest Income

<TABLE>
<CAPTION>
                                2001 Compared With 2000               2000 Compared With 1999
                            --------------------------------    ---------------------------------
 (Dollars in thousands)              Variance Due to                      Variance Due to
                                              Volume/                              Volume/
                            Volume     Rate     Rate   Total    Volume     Rate     Rate    Total
                            ------    -----    -----   -----    ------    -----    -----    -----
<S>                         <C>       <C>      <C>     <C>      <C>       <C>      <C>      <C>
Earning Assets
Securities, taxable         $ (526)   $(152)   $  70   $(608)   $ 206     $  47    $  10    $ 263
Securities, tax-exempt          (8)      (7)      --      15)      (3)        7       --        4
 Nonmarketable equity       ------    -----    -----   -----    -----     -----    -----    -----
securities                       6       (5)      (1)     --        5         7        7       19
Federal funds sold           1,032      (42)    (372)    618     (444)      115      (94)    (423)
Time deposits with
other banks                     --       --        4       4       --        --       --       --
Loans                          480      (86)      (7)    388      847       (71)     (11)     765
                            ------    -----    -----   -----    -----     -----    -----    -----
Total interest income          984     (292)    (306)    387      611       105      (88)     628
                            ------    -----    -----   -----    -----     -----    -----    -----

Interest-Bearing
 Liabilities
Interest-bearing deposits      558      (73)     (11)    474       89       291        8      388
 Short-term borrowings          (5)     (20)       2     (23)       8        10        4       22
                            ------    -----    -----   -----    -----     -----    -----    -----
Total interest expense         553      (93)      (9)    451       97       301       12      410
                            ------    -----    -----   -----    -----     -----    -----    -----

Net interest income         $  431    $(199)   $(297)  $ (64)   $ 514     $(196)   $(100)   $ 218
                            ======    =====    =====   =====    =====     =====    =====    =====
</TABLE>

Interest Sensitivity. The Company monitors and manages the pricing and maturity
of its assets and liabilities in order to diminish the potential adverse impact
that changes in interest rates could have on its net interest income. The
principal monitoring technique employed by the Company is the measurement of the
Company's interest sensitivity "gap," which is the positive or negative dollar
difference between assets and liabilities that are subject to interest rate
repricing within a given period of time. Interest rate sensitivity can be
managed by repricing assets or liabilities, selling securities
available-for-sale, replacing an asset or liability at maturity, or adjusting
the interest rate during the life of an asset or liability. Managing the amount
of assets and liabilities repricing in this same time interval helps to hedge
the risk and minimize the impact on net interest income of rising or falling
interest rates.

                                       8

<PAGE>

                                  COMMUNITYCORP

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

                         NET INTEREST INCOME (continued)

The following table presents the Company's rate sensitivity at each of the time
intervals indicated as of December 31, 2001. The table may not be indicative of
the Company's rate sensitivity position at other points in time.

Interest Sensitivity Analysis

<TABLE>
<CAPTION>
                                                                  After Three    After One   Greater Than
                                                      Within       Through         Year      Five Years
December 31, 2001                                     Three        Twelve         Through      or Non-
 (Dollars in thousands)                               Months       Months       Five Years    Sensitive      Total
                                                     --------     -----------   ----------   ------------   --------
<S>                                                  <C>          <C>             <C>          <C>          <C>
Assets
Earning Assets:
 Federal funds sold and securities purchased under   $ 18,062     $     --        $    --      $    --      $ 18,062
   agreements to resell
Time deposits with other banks                             --           --            299           --           299
Investment securities                                     367          644         10,064        4,098        15,173
Loans (1)                                              13,138       18,159         36,823           --        68,120
                                                     --------     --------        -------      -------      --------
   Total earning assets                                31,567       18,803         47,186        4,098       101,654
                                                     --------     --------        -------      -------      --------

Liabilities
Interest-bearing liabilities:
 Interest-bearing deposits:
  Demand deposits                                      14,692           --             --           --        14,692
  Savings deposits                                     16,815           --             --           --        16,815
  Time deposits                                        19,410       34,747          3,526           --        57,683
                                                     --------     --------        -------      -------      --------
   Total interest-bearing deposits                     50,917       34,747          3,526           --        89,190
 Short-term borrowings                                    560           --             --           --           560
                                                     --------     --------        -------      -------      --------
  Total interest-bearing liabilities                   51,477       34,747          3,526           --        89,750
                                                     --------     --------        -------      -------      --------
Period gap                                           $(19,910)    $(15,944)       $43,660      $ 4,098
                                                     ========     ========        =======      =======
Cumulative gap                                       $(19,910)    $(35,854)       $ 7,806      $11,904
                                                     ========     ========        =======      =======
Ratio of cumulative gap to total earning assets        (19.59)%     (35.27)%        7.68%        11.71%
</TABLE>

(1) Excludes nonaccrual loans.

The above table reflects the balances of interest-earning assets and
interest-bearing liabilities at the earlier of their repricing or maturity
dates. Overnight federal funds and securities purchased under agreements to
resell are reflected at the earliest pricing interval due to the immediately
available nature of the instruments. Scheduled payment amounts of fixed rate
amortizing loans are reflected at each scheduled payment date. Scheduled payment
amounts of variable rate amortizing loans are reflected at each scheduled
payment date until the loan may be repriced contractually; the unamortized
balance is reflected at that point. Interest-bearing liabilities with no
contractual maturity, such as savings deposits and interest-bearing transaction
accounts, are reflected in the earliest repricing period due to contractual
arrangements which give the Company the opportunity to vary the rates paid on
those deposits within a thirty-day or shorter period. Fixed rate time deposits,
principally certificates of deposit, are reflected at their contractual maturity
date. Short-term borrowings are reflected in the earliest repricing period since
these borrowings mature daily.

                                       9

<PAGE>

                                  COMMUNITYCORP

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

                         NET INTEREST INCOME (continued)

The Company generally would benefit from increasing market rates of interest
when it has an asset-sensitive gap and generally would benefit from decreasing
market rates of interest when it is liability sensitive. The Company currently
is liability-sensitive over periods with maturity dates of less than twelve
months. However, the Company's gap analysis is not a precise indicator of its
interest sensitive position. The analysis presents a static view of the timing
of maturities and repricing opportunities, without taking into consideration
that changes in interest rates do not affect all assets and liabilities equally.
Net interest income is also impacted by other significant factors, including
changes in the volume and mix of earning assets and interest-bearing
liabilities.

                     PROVISION AND ALLOWANCE FOR LOAN LOSSES

General. The Company has developed policies and procedures for evaluating the
overall quality of its credit portfolio and the timely identification of
potential problem credits. Management's judgment as to the adequacy of the
allowance is based upon a number of assumptions about future events which it
believes to be reasonable, but which may or may not be valid. Thus, there can be
no assurance that charge-offs in future periods will not exceed the allowance
for loan losses or that additional increases in the loan loss allowance will not
be required.

Additions to the allowance for loan losses, which are expensed as the provision
for loan losses on the Company's Statements of Operations, are made periodically
to maintain the allowance at an appropriate level based on management's analysis
of the potential risk in the loan portfolio. Currently, the allowance for loan
losses is evaluated on an overall portfolio basis. Although an informal
allocation was used in the past, management intends to implement a more formal
allocation system in the future. This system will allocate the allowance to loan
categories and will be implemented at the time the size and mix of the portfolio
support such a system. The amount of the provision is a function of the level of
loans outstanding, the level of nonperforming loans, historical loan loss
experience, the amount of loan losses actually charged against the reserve
during a given period, and current and anticipated economic conditions.

The Company's allowance for loan losses is based upon judgments and assumptions
of risk elements in the portfolio, future economic conditions, and other factors
affecting borrowers. The process includes identification and analysis of loss
potential in various portfolio segments utilizing a credit risk grading process
and specific reviews and evaluations of significant problem credits. In
addition, management monitors the overall portfolio quality through observable
trends in delinquency, charge-offs, and general and economic conditions in the
service area. The adequacy of the allowance for loan losses and the
effectiveness of the Company's monitoring and analysis system are also reviewed
periodically by the banking regulators and the Company's independent auditors.

The reserve for loan losses was 1.73% of total loans on December 31, 2001 and
2000. On a continual basis, management evaluates its reserve policy and adjusts
the policy based on historical loss experience, changes in economic conditions,
growth in the portfolio, and evaluations of specific loans. Management believes
the level of the allowance for loan losses is sufficient to provide for
potential losses in the loan portfolio.

Accrual of interest is discontinued on a loan when management believes, after
considering economic and business conditions and collection efforts, that the
borrower's financial condition is such that the collection of interest is
doubtful. A delinquent loan is generally placed in nonaccrual status when it
becomes 90 days or more past due. When a loan is placed in nonaccrual status,
all interest which has been accrued on the loan but remains unpaid is reversed
and deducted from current earnings as a reduction of reported interest income.
No additional interest is accrued on the loan balance until the collection of
both principal and interest becomes reasonably certain. When a problem loan is
finally resolved, there may ultimately be an actual write-down or charge-off of
the principal balance of the loan which would necessitate additional charges to
earnings.

                                       10

<PAGE>

                                  COMMUNITYCORP

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

               PROVISION AND ALLOWANCE FOR LOAN LOSSES (continued)

<TABLE>
<CAPTION>
Allowance for Loan Losses
Year ended December 31,                                     2001           2000           1999
                                                        -----------    -----------    -----------
<S>                                                     <C>            <C>            <C>
Total loans outstanding at end of period                $71,358,930    $67,794,723    $59,663,015
                                                        ===========    ===========    ===========
Average loans outstanding                               $69,505,339    $64,314,225    $55,287,891
                                                        ===========    ===========    ===========
Balance of allowance for loan losses at beginning
 of period                                              $ 1,173,832    $ 1,086,980    $   929,482
Loan losses:
Real estate - construction                                       --             --             --
Real estate - mortgage                                           --             --             --
Commercial and industrial                                    56,132        118,031         77,646
Consumer                                                    153,016         99,866        151,400
                                                        -----------    -----------    -----------
Total loan losses                                           209,148        217,897        229,046
                                                        -----------    -----------    -----------
Recoveries of previous loan losses:
Real estate - construction                                       --             --             --
Real estate - mortgage                                           --             --             --
Commercial and industrial                                     1,734          2,100          2,166
Consumer                                                      7,633         12,649         24,378
                                                        -----------    -----------    -----------
Total recoveries                                              9,367         14,749         26,544
                                                        -----------    -----------    -----------
Net charge-offs                                             199,781        203,148        202,502
Provision charged to operations                             257,000        290,000        360,000
                                                        -----------    -----------    -----------
Balance of allowance for loan losses at end of period   $ 1,231,051    $ 1,173,832    $ 1,086,980
                                                        ===========    ===========    ===========

Ratios:
Net charge-offs to average loans outstanding                   0.29%          0.32%          0.36%
Net charge-offs to loans at end of year                        0.28%          0.30%          0.34%
Allowance for loan losses to average loans                     1.77%          1.83%          1.96%
Allowance for loan losses to loans at end of year              1.73%          1.73%          1.82%
Net charge-offs to allowance for loan losses                  16.23%         17.31%         18.63%
Net charge-offs to provisions for loan losses                 77.74%         70.05%         56.25%
</TABLE>

Nonperforming Assets. The following table sets forth the Company's nonperforming
assets at the dates indicated:

<TABLE>
<CAPTION>
                                                                          December 31,
                                                             ------------------------------------
                                                                2001          2000         1999
                                                             ----------    ----------    --------
<S>                                                          <C>           <C>           <C>
Nonaccrual loans                                             $3,239,425    $1,353,224    $703,795
Restructured or impaired loans                                       --            --          --
                                                             ----------    ----------    --------
    Total nonperforming loans                                 3,239,425     1,353,224     703,795
Other real estate owned                                              --       170,000          --
                                                             ----------    ----------    --------
    Total nonperforming assets                               $3,239,425    $1,523,224    $703,795
                                                             ==========    ==========    ========

Loans 90 days or more past due and still accruing interest   $   26,492    $    1,000    $10,551
Nonperforming assets to period end loans                           4.54%         2.25%       1.18%
</TABLE>

Potential Problem Loans. At December 31, 2001, through their internal review
mechanisms the Company had identified no criticized loans and $3,012,226 of
classified loans. At December 31, 2000, the internal review mechanisms had
identified $131,008 of criticized loans and $1,664,472 of classified loans. The
results of this internal review process are the primary determining factor in
management's assessment of the adequacy of the allowance for loan losses.

                                       11

<PAGE>

                                  COMMUNITYCORP

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

                         NONINTEREST INCOME AND EXPENSE

Noninterest Income. Other income increased from $480,155 in 2000 to $493,209 for
the year ended December 31, 2001. Service charges on deposit accounts increased
from $333,379 for 2000 to $348,416 for the year ended December 31, 2001. NSF and
overdraft fees totaled $293,585 for the year ended December 31, 2001, which
contributed to a significant portion of the increase in service charges on
deposit accounts. Other charges, fees, and commissions increased from $80,452 in
2000 to $90,564 in 2001.

Other income increased from $488,445 in 1999 to $480,155 for the year ended
December 31, 2000. Service charges on deposit accounts increased from $328,669
for 1999 to $333,379 for the year ended December 31, 2000. NSF and overdraft
fees totaled $286,067 for the year ended December 31, 2000, which contributed a
significant portion of the increase in service charges on deposit accounts.
Commissions on credit life insurance increased $1,845 to $24,573 for the year
ended December 31, 2000.

Noninterest Expense. The Company had an increase in noninterest expense of
$208,294, or 10.55%, to a total of $2,182,822 for the year ended December 31,
2001. Annual pay raises contributed to an increase of $127,950, or 13.39%, in
salaries and employee benefits. Other operating expenses increased $52,980, or
8.25%, over the 2000 amount of $642,086. Net occupancy expense increased $30,187
to $158,400 in 2001 when compared to 2000. Increases in other operating expenses
and net occupancy expense were partially attributable to the new Forest Hills
branch opened in 2001.

The Company had an increase in noninterest expense of $164,038, or 9.06%, to a
total of $1,974,528 for the year ended December 31, 2000. Annual pay raises
contributed to an increase of $78,904, or 9.00%, in salaries and employee
benefits. Equipment expense increased to $248,692 for the year ended December
31, 2000 from $231,106 for the year ended December 31, 1999. Other operating
expenses increased $61,810, or 10.65%, over the 1999 amount of $580,276.

Income Taxes. The Company's income tax expense for 2001 was $617,401, a decrease
of $74,282 over the 2000 expense of $691,683. The decrease in expense resulted
primarily from the decrease in the income before taxes. The Company's effective
tax rates for the years ended December 31, 2001 and 2000 were 32.15% and 32.20%,
respectively.

The Company's income tax expense for 2000 was $691,683, an increase of $39,209
over the 1999 expense of $652,474. The increase in the expense results primarily
from increased income before taxes. The Company's effective tax rates for the
years ended December 31, 2000 and 1999 were 32.20% and 32.11%, respectively.

                                 EARNING ASSETS

Loans. Loans are the largest category of earning assets and typically provide
higher yields than other types of earning assets. Associated with the higher
loan yields are the inherent credit and liquidity risks which management
attempts to control and counterbalance. Loans averaged $69,505,339 in 2001
compared to $64,314,225 in 2000, an increase of $5,191,114, or 8.07%. At
December 31, 2001, total loans were $71,358,930 compared to $67,794,723 at
December 31, 2000.

The Company's ratio of loans to deposits was 72.50% at December 31, 2001 as
compared to 73.85% at December 31, 2000. The loan to deposit ratio is used to
monitor a financial institution's potential profitability and efficiency of
asset distribution and utilization. Generally, a higher loan to deposit ratio is
indicative of higher interest income since loans yield a higher return than
alternative investment vehicles. Management has concentrated on maintaining
quality in the loan portfolio while continuing to increase the deposit base.

                                       12

<PAGE>

                                  COMMUNITYCORP

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

                           EARNING ASSETS (continued)

The Company extends credit primarily to consumers and small businesses in
Walterboro and Ravenel, South Carolina, and to customers in surrounding areas.
The Company's service area is mixed in nature. Walterboro is a regional business
center whose economy contains elements of medium and light manufacturing, higher
education, regional health care, and distribution facilities. Outside the
incorporated city limits of Walterboro, the economy includes manufacturing,
agriculture, timber, and recreational activities. Loan growth in the Ravenel
area is expected to come primarily from consumer loans and small businesses in
neighboring Charleston County. No particular category or segment of the
economies previously described is expected to grow or contract
disproportionately in 2002. Management is of the opinion that the loan portfolio
is adequately diversified. There are no significant concentrations of loans in
any particular individuals or industry or group of related individuals or
industries. The loan demand remains strong in the Company's market area.

The following table sets forth the composition of the loan portfolio by category
at the dates indicated and highlights our general emphasis on commercial and
mortgage lending.

<TABLE>
<CAPTION>
Loan Portfolio Composition
December 31,                               2001                                2000
                            --------------------------------   ---------------------------------
                               Amount       Percent of Total       Amount       Percent of Total
                            ------------    ----------------   --------------   ----------------
<S>                         <C>                  <C>           <C>                  <C>
Commercial and industrial   $ 25,868,360          36.25%       $   26,192,807        38.64%
Real estate
 Construction                  6,312,748           8.85             4,191,111         6.18
 Mortgage                     24,844,649          34.82            23,119,132        34.10
Consumer and other loans      14,333,173          20.08            14,291,673        21.08
                            ------------         ------        --------------       ------
  Total loans                 71,358,930         100.00%           67,794,723       100.00%
                                                 ======                             ======
Allowance for loan losses     (1,231,051)                          (1,173,832)
                            ------------                       --------------
 Net loans                  $ 70,127,879                       $   66,620,891
                            ============                       ==============
</TABLE>

Real estate loans, including construction and mortgage loans, increased
$3,847,154 or 14.09% to $31,157,397 at December 31, 2001. Consumer and all other
loans increased $41,500 or .29% to $14,333,173 at December 31, 2001. Commercial
and industrial loans decreased $324,447 or 1.24% from $26,192,807 at December
31, 2000.

Maturities and Sensitivity of Loans to Changes in Interest Rates

The following table summarizes the loan maturity distribution, by type, at
December 31, 2001 and related interest rate characteristics:

<TABLE>
<CAPTION>
                                                     Over One
                                                       Year
December 31, 2001                     One Year or     Through      Over Five
                                         Less       Five Years       Years         Total
                                      -----------   -----------   -----------   -----------
<S>                                   <C>           <C>           <C>           <C>
Real estate - construction            $ 4,868,436   $ 1,444,312   $        --   $ 6,312,748
Real estate - mortgage                  5,620,032    18,669,882       554,735    24,844,649
Commercial and industrial              11,525,587    13,983,543       359,230    25,868,360
Consumer and other                      3,896,204     9,802,944       634,025    14,333,173
                                      -----------   -----------   -----------   -----------
                                      $25,910,259   $43,900,681   $ 1,547,990   $71,358,930
                                      -----------   -----------   -----------   -----------

Loans maturing after one year with:
 Fixed interest rates                                                           $45,448,671
 Floating interest rates                                                                 --
                                                                                -----------
                                                                                $45,448,671
                                                                                ===========
</TABLE>

                                       13

<PAGE>

                                  COMMUNITYCORP

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

                           EARNING ASSETS (continued)

The information presented in the above table is based on the contractual
maturities of the individual loans, including loans which may be subject to
renewal at their contractual maturity. Renewal of such loans is subject to
review and credit approval as well as modification of terms upon their maturity.
Consequently, management believes the treatment shown in the above table
presents fairly the maturity and repricing structure of the loan portfolio.

Short-Term Investments. Short-term investments, which consist of federal funds
sold and securities purchased under agreements to resell averaged $19,445,836 in
2001, compared to $1,969,382 in 2000. At December 31, 2001, short-term
investments totaled $18,062,000. These funds are a primary source of the
Company's liquidity and are generally invested in an earning capacity on an
overnight basis. Also included are time deposits with other banks which averaged
$90,110 in 2001. The total of these time deposits was $299,000 at December 31,
2001.

Investment Securities. The investment securities portfolio is a significant
component of the Company's total earning assets. Total securities, stated at
historical cost, averaged $16,075,968 in 2001, compared to $24,476,232 in 2000.
At December 31, 2001, the total securities portfolio was $15,173,073. Securities
designated as available-for-sale totaled $11,343,473 and were recorded at
estimated fair value. Securities designated as held-to-maturity totaled
$3,499,225 and were recorded at amortized cost. Securities designated as
nonmarketable equity securities totaled $330,375 at December 31, 2001. The
investment objectives of the Company include maintaining and investing in a
portfolio of high quality and highly liquid investments with competitive
returns. Based on these objectives, the Company's investments are primarily in
obligations of U.S. government agencies and corporations.

Investment Portfolio. The following tables summarize the carrying value of
investment securities as of the indicated dates and weighted average yields of
those securities at December 31, 2001 and 2000.

Investment Securities Portfolio Composition

<TABLE>
<CAPTION>
December 31,                                                      2001          2000
                                                              -----------   -----------
<S>                                                           <C>           <C>
Available-for-Sale (1)
U.S. treasury and U.S. government agencies and corporations   $ 7,789,721   $16,438,643
Obligations of states and local governments                     2,472,742     2,247,452
                                                              -----------   -----------
                                                               10,262,463    18,686,095
Mortgage-backed securities                                      1,081,010       180,562
                                                              -----------   -----------

 Total available-for-sale securities                          $11,343,473   $18,866,657
                                                              ===========   ===========
</TABLE>

<TABLE>
<CAPTION>
December 31,                                                     2001         2000
                                                              ----------   ----------
<S>                                                           <C>          <C>
Held-to-Maturity (1)
U.S. treasury and U.S. government agencies and corporations   $       --   $  700,000
Obligations of states and local governments                    3,417,253    3,758,473
                                                              ----------   ----------
                                                               3,417,253    4,458,473
Mortgage-backed securities                                        81,972      139,299
                                                              ----------   ----------

 Total held-to-maturity securities                            $3,499,225   $4,597,772
                                                              ==========   ==========
</TABLE>

(1) Held-to-maturity securities are stated at amortized cost and
available-for-sale securities are stated at fair value.

                                       14

<PAGE>

                                  COMMUNITYCORP

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

                           EARNING ASSETS (continued)

Investment Securities Maturity Distribution and Yields
Available-for-Sale

<TABLE>
<CAPTION>
                                                                      After One But          After Five But
December 31, 2001                           Within One Year         Within Five Years       Within Ten Years        Over Ten Years
                                         ----------------------   ---------------------   ---------------------   ------------------
                                           Amount      Yield(1)     Amount     Yield(1)     Amount     Yield(1)    Amount   Yield(1)
                                         ----------   ---------   ----------   --------   ----------   --------   -------   --------
<S>                                      <C>             <C>      <C>            <C>      <C>            <C>      <C>          <C>
U.S. government agencies (3)             $       --        --%    $7,789,721     4.59%    $       --      --      $    --      --%
Obligations of states and
  local governments                         217,088      5.97        801,816     5.72      1,453,838     6.06          --      --
                                         ----------               ----------              ----------              -------
  Total available-for-sale securities    $  217,088      5.97%    $8,591,537     4.70%    $1,453,838     6.06%    $    --      --%
                                         ==========               ==========              ==========              =======
</TABLE>

Held-to-Maturity

<TABLE>
<CAPTION>
                                                                      After One But          After Five But
December 31, 2001                           Within One Year         Within Five Years       Within Ten Years        Over Ten Years
                                         ----------------------   ---------------------   ---------------------   ------------------
                                           Amount      Yield(1)     Amount     Yield(1)     Amount     Yield(1)    Amount   Yield(1)
                                         ----------   ---------   ----------   --------   ----------   --------   -------   --------
<S>                                      <C>             <C>      <C>            <C>      <C>            <C>      <C>         <C>
U.S. government agencies (2)             $       --        --%    $       --       --%    $       --       --%    $    --       --%
Obligations of states and
  local governments                         411,004      5.85     1 ,402,611     5.89      1,504,081     6.14      99,557     6.38
                                         ----------               ----------              ----------              -------
  Total held-to-maturity securities      $  411,004      5.85%    $1,402,611     5.89%    $1,504,081     6.14%    $99,557     6.38%
                                         ==========               ==========              ==========              =======
</TABLE>

-----------------
(1)  Tax equivalent yield has been calculated using an incremental rate of 34%.
(2)  Excludes mortgage-backed securities totaling $81,972 with a yield of 7.05%.
(3)  Excludes mortgage-backed securities totaling $1,081,010 with a yield of
     5.58%.

                 DEPOSITS AND OTHER INTEREST-BEARING LIABILITIES

Deposits. During 2001, the Company experienced significant growth in overall
deposits. Total average deposits increased from $86,428,246 in 2000 to
$98,601,630 in 2001. This represents an increase of $12,173,384 or 14.08% over
the 2000 amount. The following table summarizes the Company's deposits for the
years ended December 31, 2001 and 2000.

Deposits

<TABLE>
<CAPTION>
December 31,                                     2001                        2000
                                    ---------------------------   -------------- ----------
                                                     Percent of                  Percent of
                                        Amount        Deposits       Amount       Deposits
                                    --------------   ----------   ------------   ----------
<S>                                 <C>                <C>        <C>              <C>
Noninterest-bearing demand          $    9,230,016       9.38%    $  9,800,324      10.68%
Interest-bearing demand                 14,692,130      14.93       17,203,993      18.74
Savings accounts                        16,815,417      17.08       15,548,984      16.94
Time deposits of $100,000 or over       30,163,719      30.65       22,825,372      24.86
Other time deposits                     27,519,029      27.96       26,419,119      28.78
                                    --------------     ------     ------------     ------
Total deposits                      $   98,420,311     100.00%    $ 91,797,792     100.00%
                                    ==============     ======     ============     ======
</TABLE>

                                       15

<PAGE>

                                  COMMUNITYCORP

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

           DEPOSITS AND OTHER INTEREST-BEARING LIABILITIES (continued)

Core deposits, which exclude certificates of deposit of $100,000 or more,
provide a relatively stable funding source for the Company's loan portfolio and
other earning assets. The Company's core deposits were $68,256,592 and
$68,972,420 at December 31, 2001 and 2000, respectively. A stable base of
deposits is expected to be the Company's primary source of funding to meet both
its short-term and long-term liquidity needs in the future.

Maturities of Certificates of Deposit of $100,000 or More

The maturity distribution of the Company's time deposits of $100,000 or more at
December 31, 2001, is shown in the following table.

<TABLE>
<CAPTION>
                                                                                            After Six
                                                                            After Three      Through
                                              Within Three   Through Six       Twelve      After Twelve
                                                Months         Months          Months         Months        Total
                                              ------------   -----------   ------------    -----------    -----------
<S>                                           <C>            <C>            <C>            <C>            <C>
Certificates of deposit of $100,000 or more   $11,325,214    $10,178,837    $ 7,647,945    $ 1,011,723    $30,163,719
</TABLE>

Large certificate of deposit customers tend to be extremely sensitive to
interest rate levels, making these deposits less reliable sources of funding for
liquidity planning purposes than core deposits. Some financial institutions
partially fund their balance sheet using large certificates of deposit obtained
through brokers. These brokered deposits are generally expensive and are
unreliable as long-term funding sources. Accordingly, the Company does not
accept brokered deposits.

Short-term Borrowings. At December 31, 2001 and 2000, the Company had short-term
borrowings which consisted of securities sold under agreements to repurchase of
$560,000 and $530,000, respectively. The maximum amount outstanding at any
month-end for the repurchase agreements was $640,000 and $1,290,000 for 2001 and
2000, respectively. The average interest rate paid on the repurchase agreements
was 4.29% and 5.83% for 2001 and 2000, respectively.

                                     CAPITAL

The Federal Reserve Board and bank regulatory agencies require bank holding
companies and financial institutions to maintain capital at adequate levels
based on a percentage of assets and off-balance-sheet exposures, adjusted for
risk weights ranging form 0% to 100%. The Federal Reserve guidelines also
contain an exemption from the capital requirements for bank holding companies
with less than $150 million in consolidated assets. Because the Company has less
than $150 million in assets, it is not currently subject to these rules.

Under the risk-based standard, capital is classified into two tiers. Tier 1
capital of the Company consists of common shareholders' equity, excluding the
unrealized gain (loss) on securities available-for-sale, minus certain
intangible assets. Tier 2 capital consists of the general reserve for loan
losses subject to certain limitations. A bank holding company's qualifying
capital base for purposes of its risk-based capital ratio consists of the sum of
its Tier 1 and Tier 2 capital. The regulatory minimum requirements are 4% for
Tier 1 and 8% for total risk-based capital. The holding company and banking
subsidiary are also required to maintain capital at a minimum level based on
quarterly average assets, which is known as the leverage ratio. Only the
strongest bank holding companies and banks are allowed to maintain capital at
the minimum requirement of 3%. All others are subject to maintaining ratios 100
to 200 basis points above the minimum.

                                       16

<PAGE>

                                  COMMUNITYCORP

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

                               CAPITAL (continued)

<TABLE>
<CAPTION>
Risk-Based Capital Ratios
                                                                       The Bank      The Company
                                                                     ------------    -----------
<S>                                                                  <C>            <C>
  Tier 1 capital                                                     $  9,954,718   $ 10,950,979
  Tier 2 capital                                                          950,000         946,398
                                                                     ------------   -------------
  Total qualifying capital                                           $ 10,904,718   $ 11,897,377
                                                                     ============   =============

Risk-adjusted total assets (including off-balance sheet exposures)   $ 75,706,234   $ 75,711,806
                                                                     ============   ============

  Total average assets                                               $110,670,413   $110,675,886
                                                                     ============   ============

Risk-based capital ratios:
  Tier 1 risk-based capital ratio                                           14.40%         14.46%
  Total risk-based capital ratio                                            15.66%         15.71%
  Tier 1 leverage ratio                                                      9.89%          9.89%
</TABLE>

                              LIQUIDITY MANAGEMENT

The Company manages its liquidity from both the asset and liability side of the
balance sheet through the coordination of the relative maturities of its assets
and liabilities. Short-term liquidity needs are generally met from cash, due
from banks, federal funds sold, and deposit levels. Management has established
policies and procedures governing the length of time to maturity on loans and
investments. Investments classified as available-for-sale are placed in this
category specifically to fund future liquidity needs, if necessary. The Company
maintained a high level of liquidity during 2001 which was attributable to the
growth in deposits during the year. In the opinion of management, the Company's
short-term and long-term liquidity needs can be adequately supported by the
Company's deposit base.

                     IMPACT OF OFF-BALANCE-SHEET INSTRUMENTS

We are a party to financial instruments with off-balance-sheet risk in the
normal course of business to meet the financing needs of our customers. These
financial instruments consist of commitments to extend credit and standby
letters of credit. Commitments to extend credit are legally binding agreements
to lend to a customer at predetermined interest rates as long as there is no
violation of any condition established in the contract. Commitments generally
have fixed expiration dates or other termination clauses and may require payment
of a fee. A commitment involves, to varying degrees, elements of credit and
interest rate risk in excess of the amount recognized in the balance sheet. Our
exposure to credit loss in the event of nonperformance by the other party to the
instrument is represented by the contractual notional amount of the instrument.
Since certain commitments are expected to expire without being drawn upon, the
total commitment amounts do not necessarily represent future cash requirements.
Letters of credit are conditional commitments issued to guarantee a customer's
performance to a third party and have essentially the same credit risk as other
lending facilities. Standby letters of credit often expire without being used.
We believe that through various sources of liquidity, we have the necessary
resources to meet obligations arising from these financial instruments.

We use the same credit underwriting procedures for commitments to extend credit
and standby letters of credit as we do for our on-balance-sheet instruments. The
credit worthiness of each borrower is evaluated and the amount of collateral, if
deemed necessary, is based on the credit evaluation. Collateral held for
commitments to extend credit and standby letters of credit varies but may
include accounts receivable, inventory, property, plant, equipment, and
income-producing commercial properties.

                                       17

<PAGE>

                                  COMMUNITYCORP

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

               IMPACT OF OFF-BALANCE-SHEET INSTRUMENTS (continued)

We are not involved in off-balance-sheet contractual relationships, other than
those disclosed in this report, that could result in liquidity needs or other
commitments or that could significantly impact earnings.

As of December 31, 2001 our commitments to extend credit totaled $4,366,691 and
our standby letters of credit totaled $634,803.

The following table sets forth the Company's expiration of commitments by period
as of December 31, 2001.

<TABLE>
<CAPTION>
                                         Over One Year    Over Three       Over
                            Within One      Through      Through Five      Five
Form of Commitment             Year       Three Years        Years         Years       Total
-------------------------   ----------   -------------   ------------   ----------   ----------
<S>                         <C>           <C>             <C>           <C>          <C>
Lines of Credit             $3,811,015    $    5,818      $  183,587    $  366,271   $4,366,691
Standby Letters of Credit      634,803            --              --            --      634,803
                            ----------    ----------      ----------    ----------   ----------

                            $4,445,818    $    5,818      $   83,587    $  366,271   $5,001,494
                            ==========    ==========      ==========    ==========   ==========
</TABLE>

                               IMPACT OF INFLATION

The financial statements and related financial data presented herein have been
prepared in accordance with generally accepted accounting principles which
require the measurement of financial position and operating results in terms of
historical dollars, without considering changes in relative purchasing power
over time due to inflation. Unlike most industrial companies, virtually all of
the assets and liabilities of a financial institution are monetary in nature. As
a result, interest rates generally have a more significant impact on a financial
institution's performance than does the effect of inflation.

While the effect of inflation on a bank is normally not as significant as its
influence on those businesses that have large investments in plant and
inventories, it does have an effect. Interest rates generally increase as the
rate of inflation increases, but the magnitude of the change in rates may not be
the same. While interest rates have traditionally moved with inflation, the
effect on income is diminished because both interest earned on assets and
interests paid on liabilities vary directly with each other. Also, increases in
the price of goods and services will generally result in increased operating
expenses.

                                       18

<PAGE>

                                  COMMUNITYCORP

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

                    ACCOUNTING AND FINANCIAL REPORTING ISSUES

In July, 2001 the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) 141, Business Combinations, and SFAS
142, Goodwill and Other Intangible Assets. SFAS 141 eliminates the pooling of
interests method of accounting for business combinations and requires the use of
the purchase method. The Statement also requires that intangible assets be
reported separately from goodwill. This Statement is effective for all
transactions initiated after June 30, 2001. Under SFAS 142, goodwill is no
longer subject to amortization; however, it should be evaluated for impairment
on at least an annual basis and adjusted to its fair value. In addition, an
acquired intangible should be separately recognized if the benefit of the
intangible asset is obtained through contractual or other legal rights, or if
the intangible asset can be sold, transferred, licensed, rented or exchanged,
regardless of intent to do so. However, the FASB recommends that financial
institutions continue to follow the basic guidelines of SFAS 72 in recording and
amortizing goodwill and other unidentifiable intangible assets. The Company
adopted SFAS 141 on July 1, 2001. SFAS 142 is effective for entities with fiscal
years beginning after December 15, 2001. The Company plans to adopt SFAS 142 on
January 1, 2002. The adoption of these Statements is not expected to have a
material impact on the consolidated financial statements.

In June 1998, the FASB issued SFAS 133, Accounting for Derivative Instruments
and Hedging Activities, which as amended by SFAS 137 and SFAS 138 is effective
for fiscal years beginning after June 15, 2000. This Statement establishes
accounting and reporting standards for derivative instruments and hedging
activities, including certain derivative instruments embedded in other
contracts, and requires that an entity recognize all derivatives as assets or
liabilities in the balance sheet and measure them at fair value. The accounting
for changes in the fair value of a derivative depends on how the derivative is
used and how the derivative is designated. The Company adopted SFAS 133 on
January 1, 2001. The adoption of SFAS 133 did not have any impact on the
consolidated financial statements since the Company did not have any derivative
instruments nor any derivative instruments embedded in other contracts in 2001.

                              INDUSTRY DEVELOPMENTS

On November 4, 1999, the U.S. Senate and House of Representatives each passed
the Gramm-Leach-Bliley Act, previously known as the Financial Services
Modernization Act of 1999. The Act was signed into law by President Clinton in
November 1999. Among other things, the Act repeals the restrictions on banks
affiliating with securities firms contained in sections 20 and 32 of the
Glass-Steagall Act. The Act also creates a new "financial holding company" under
the Bank Holding Company Act, which will permit holding companies to engage in a
statutorily provided list of financial activities, including insurance and
securities underwriting and agency activities, merchant banking, and insurance
company portfolio investment activities. The Act also authorizes activities that
are "complementary" to financial activities. The Act is intended to grant to
community banks certain powers as a matter of right that larger institutions
have accumulated on an ad hoc basis. Nevertheless, the Act may have the result
of increasing the amount of competition that the Company faces from larger
institutions and other types of companies. In fact, it is not possible to
predict the full effect that the Act will have on the Company.

From time to time, various bills are introduced in the United States Congress
with respect to the regulation of financial institutions. Certain of these
proposals, if adopted, could significantly change the regulation of banks and
the financial services industry. The Company cannot predict whether any of these
proposals will be adopted or, if adopted, how these proposals would affect the
Company.

                      FORWARD LOOKING AND TREND INFORMATION

The management of the Company is not aware of any trends or events other than
those included in this discussion that are likely to have a material effect on
the Company's capital resources, liquidity, or operations. Also, no known
factors regarding regulatory matters are expected to affect the overall
operating results of the Company.

                                       19

<PAGE>

                       TOURVILLE, SIMPSON & CASKEY, L.L.P.

                          CERTIFIED PUBLIC ACCOUNTANTS
                              POST OFFICE BOX 1769
                         COLUMBIA, SOUTH CAROLINA 29202

                            TELEPHONE (803) 252-3000
                               FAX (803) 252-2226
WILLIAM E. TOURVILLE, CPA                                   MEMBER AICPA SEC AND
HARRIET S. SIMPSON, CPA, CISA, CDP                             PRIVATE COMPANIES
R. JASON CASKEY, CPA                                           PRACTICE SECTIONS
   --------------
JOHN T. DRAWDY, JR., CPA
TIMOTHY R. ALFORD, CPA
W. CLAYTON HESLOP, CPA
TIMOTHY S. VOGEL, CPA

                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------

The Board of Directors
Communitycorp
Walterboro, South Carolina

We have audited the accompanying consolidated balance sheets of Communitycorp as
of December 31, 2001 and 2000, and the related consolidated statements of
operations, changes in shareholders' equity and comprehensive income, and cash
flows for each of the three years in the period ended December 31, 2001. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting principles
used and the significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Communitycorp as
of December 31, 2001 and 2000, and the consolidated results of its operations
and cash flows for each of the three years in the period ended December 31, 2001
in conformity with accounting principles generally accepted in the United States
of America.

/s/ Tourville, Simpson & Caskey, L.L.P.
Tourville, Simpson & Caskey, L.L.P.
Columbia, South Carolina
February 27, 2002

                                       20

<PAGE>

                                  COMMUNITYCORP

                           Consolidated Balance Sheets
                           December 31, 2001 and 2000

<TABLE>
<CAPTION>
                                                                                  2001            2000
                                                                             -------------    -------------
<S>                                                                          <C>              <C>
Assets:
  Cash and cash equivalents:
    Cash and due from banks                                                  $   3,841,132    $   5,215,660
    Federal funds sold and securities purchased under agreements to resell      18,062,000        3,610,000
                                                                             -------------    -------------
      Total cash and cash equivalents                                           21,903,132        8,825,660
                                                                             -------------    -------------

  Time deposits with other banks                                                   299,000               --

  Investment securities:
    Securities available-for-sale                                               11,343,473       18,866,657
    Securities held-to-maturity (estimated fair value of $3,530,683
       in 2001 and $4,583,562 in 2000)                                           3,499,225        4,597,772
    Nonmarketable equity securities                                                330,375          330,375
                                                                             -------------    -------------
      Total investment securities                                               15,173,073       23,794,804
                                                                             -------------    -------------

  Loans receivable:                                                             71,358,930       67,794,723
    Less allowance for loan losses                                              (1,231,051)      (1,173,832)
                                                                             -------------    -------------
      Loans, net                                                                70,127,879       66,620,891

  Premises and equipment, net                                                    2,013,147        2,160,046
  Accrued interest receivable                                                      911,811        1,076,924
  Other assets                                                                     422,126          590,474
                                                                             -------------    -------------

      Total assets                                                           $ 110,850,168    $ 103,068,799
                                                                             =============    =============

Liabilities:
  Deposits:
    Noninterest-bearing transaction accounts                                 $   9,230,016    $   9,800,324
    Interest-bearing transaction accounts                                       14,692,130       17,203,993
    Money market savings accounts                                                2,916,348        2,787,160
    Savings                                                                     13,899,069       12,761,824
    Time deposits $100,000 and over                                             30,163,719       22,825,372
    Other time deposits                                                         27,519,029       26,419,119
                                                                             -------------    -------------
      Total deposits                                                            98,420,311       91,797,792

  Short-term borrowings                                                            560,000          530,000
  Accrued interest payable                                                         717,570          735,659
  Other liabilities                                                                150,176          125,492
                                                                             -------------    -------------
      Total liabilities                                                         99,848,057       93,188,943
                                                                             -------------    -------------

 Commitments and Contingencies (Notes 4 and 10)

Shareholders' Equity:
  Preferred stock, $5 par value, 3,000,000 shares authorized and unissued               --               --
  Common stock, $5 par value, 3,000,000 shares authorized;
     300,000 shares issued and outstanding                                       1,500,000        1,500,000
  Capital surplus                                                                1,731,708        1,731,708
  Accumulated other comprehensive income (loss)                                     51,132          (71,480)
  Retained earnings                                                              8,648,977        7,500,834
  Treasury stock (21,594 shares in 2001 and 18,294 shares in 2000)                (929,706)        (781,206)
                                                                             -------------    -------------
      Total shareholders' equity                                                11,002,111        9,879,856
                                                                             -------------    -------------

      Total liabilities and shareholders' equity                             $ 110,850,168    $ 103,068,799
                                                                             =============    =============
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

                                       21

<PAGE>

                                  COMMUNITYCORP

                      Consolidated Statements of Operations
              For the years ended December 31, 2001, 2000, and 1999

<TABLE>
<CAPTION>
                                                         2001        2000          1999
                                                      ----------   ----------   ----------
<S>                                                   <C>          <C>          <C>
Interest income:
  Loans, including fees                               $6,342,684   $5,954,829   $5,190,261
  Investment securities:
    Taxable                                              538,797    1,147,177      883,624
    Tax-exempt                                           253,827      268,685      264,426
    Nonmarketable equity securities                       23,824       24,015        4,473
  Federal funds sold and securities purchased under
       agreements to resell                              734,690      116,343      540,119
  Time deposits with other banks                           3,505           --           --
                                                      ----------   ----------   ----------
    Total interest income                              7,897,327    7,511,049    6,882,903
                                                      ----------   ----------   ----------

Interest expense:
  Deposits                                             4,012,000    3,537,917    3,149,420
  Short-term borrowings                                   18,231       40,725       19,161
                                                      ----------   ----------   ----------
    Total interest expense                             4,030,231    3,578,642    3,168,581
                                                      ----------   ----------   ----------

Net interest income                                    3,867,096    3,932,407    3,714,322

Provision for loan losses                                257,000      290,000      360,000
                                                      ----------   ----------   ----------

Net interest income after provision for loan losses    3,610,096    3,642,407    3,354,322
                                                      ----------   ----------   ----------

Other operating income:
  Service charges on deposit accounts                    348,416      333,379      328,669
  Commissions on credit life insurance                    20,305       24,573       22,728
  Other charges, fees, and commissions                    90,564       80,452       81,265
  Other income                                            33,924       41,751       55,783
                                                      ----------   ----------   ----------
    Total operating income                               493,209      480,155      488,445
                                                      ----------   ----------   ----------

Other operating expenses:
  Salaries and employee benefits                       1,083,487      955,537      876,633
  Net occupancy expense                                  158,400      128,213      122,475
  Equipment expense                                      245,869      248,692      231,106
  Other operating expenses                               695,066      642,086      580,276
                                                      ----------   ----------   ----------
    Total operating expenses                           2,182,822    1,974,528    1,810,490
                                                      ----------   ----------   ----------

Income before income taxes                             1,920,483    2,148,034    2,032,277

Income tax expense                                       617,401      691,683      652,474
                                                      ----------   ----------   ----------

Net income                                            $1,303,082   $1,456,351   $1,379,803
                                                      ==========   ==========   ==========

  Earnings per share:
  Weighted-average common shares outstanding             280,330      283,194      296,522
  Net income                                          $     4.65   $     5.14   $     4.65
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

                                       22

<PAGE>

                                  COMMUNITYCORP

         Consolidated Statements of Changes in Shareholders' Equity and
                              Comprehensive Income
              For the years ended December 31, 2001, 2000, and 1999

<TABLE>
<CAPTION>
                                                                              Accumulated
                               Common Stock                                     Other
                           --------------------     Capital      Retained    Comprehensive    Treasury
                           Shares      Amount       Surplus      Earnings       Income          Stock         Total
                           -------   ----------   ----------   -----------   -------------   ----------   -----------
<S>                        <C>       <C>          <C>          <C>             <C>           <C>          <C>
 Balance,
  December 31, 1998        300,000   $1,500,000   $1,731,708   $ 4,925,661     $  39,620     $  (27,411)  $ 8,169,578

 Net income                                                      1,379,803                                  1,379,803

 Other comprehensive
   income, net of tax
   benefit of $175,627                                                          (334,739)                    (334,739)
                                                                                                          -----------

 Comprehensive income                                                                                       1,045,064
                                                                                                          -----------

 Cash dividends
  declared $.40
  per share                                                       (119,383)                                  (119,383)

 Purchase of treasury                                                                          (290,520)     (290,520)
  stock                    -------   ----------   ----------   -----------     ---------     ----------   -----------

 Balance,
  December 31, 1999        300,000    1,500,000    1,731,708     6,186,081      (295,119)      (317,931)    8,804,739

 Net income                                                      1,456,351                                  1,456,351

 Other comprehensive
   income, net of tax
   expense of $117,596                                                           223,639                      223,639
                                                                                                          -----------

 Comprehensive income                                                                                       1,679,990
                                                                                                          -----------

 Cash dividends
  declared $.50
  per share                                                       (141,598)                                  (141,598)

 Purchase of treasury
  stock                                                                                        (485,775)     (485,775)

 Sale of treasury stock                                                                          22,500        22,500
                           -------   ----------   ----------   -----------     ---------     ----------   -----------

 Balance,
  December 31, 2000        300,000    1,500,000    1,731,708     7,500,834       (71,480)      (781,206)    9,879,856

 Net income                                                      1,303,082                                  1,303,082

 Other comprehensive
   income, net of tax
   expense of $64,781                                                            122,612                      122,612
                                                                                                          -----------

 Comprehensive income                                                                                       1,425,694
                                                                                                          -----------

 Cash dividends
  declared $.55
  per share                                                       (154,939)                                  (154,939)

 Purchase of treasury
  stock                                                                                        (180,000)     (180,000)

 Sale of treasury stock                                                                          31,500        31,500
                           -------   ----------   ----------   -----------     ---------     ----------   -----------

 Balance,
  December 31, 2001        300,000   $1,500,000   $1,731,708   $ 8,648,977     $  51,132     $ (929,706)  $11,002,111
                           =======   ==========   ==========   ===========     =========     ==========   ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.

                                       23

<PAGE>

                                  COMMUNITYCORP
                      Consolidated Statements Of Cash Flows
               For the years ended December 31,2001,2000, and 1999

<TABLE>
<CAPTION>
                                                                   2001           2000            1999
                                                               ------------   ------------   ------------
<S>                                                            <C>            <C>            <C>
Cash flows from operating activities:
Net income                                                     $  1,303,082   $  1,456,351   $  1,379,803
Adjustments to reconcile net income to net cash
   provided by operating activities:
   Provision for possible loan losses                               257,000        290,000        360,000
   Depreciation and amortization expense                            174,527        161,026        168,524
   Premium amortization less accretion on investments                18,936         18,657         11,361
   Deferred income tax provision (benefit)                         (139,898)       (45,115)        (7,683)
   Amortization of loan fees and costs                               77,738         26,546         10,233
   Gain on sales of premises and equipment                               --             --        (18,500)
   (Increase) decrease in accrued interest receivable               165,113        (72,395)      (214,399)
   Increase (decrease) in accrued interest payable                  (18,089)       225,716         11,687
   (Increase) decrease in other assets                              243,465         34,380       (228,439)
   Increase (decrease) in other liabilities                          24,684        (29,716)        78,841
                                                               ------------   ------------   ------------
     Net cash provided by operating activities                    2,106,558      2,065,450      1,551,428
                                                               ------------   ------------   ------------

Cash flows from investing activities:
   Proceeds from maturities of securities available-for-sale     21,721,026      1,023,651      2,765,150
   Purchases of securities available-for-sale                   (14,023,328)      (800,000)   (11,295,195)
   Proceeds from maturities of securities held-to-maturity        1,092,490        721,395      1,541,834
   Purchases of securities held-to-maturity                              --             --     (1,683,927)
   Increase in time deposits with other banks                      (299,000)            --             --
   Net increase in loans to customers                            (3,841,726)    (8,531,402)    (7,996,096)
   Proceeds from disposal of premises and equipment                      --             --         18,500
   Purchases of premises and equipment                              (27,628)      (544,752)       (39,083)
                                                               ------------   ------------   ------------
     Net cash provided (used) by investing activities             4,621,834     (8,131,108)   (16,688,817)
                                                               ------------   ------------   ------------

Cash flows from financing activities:
   Net increase (decrease) in demand deposits, interest-bearing
   transaction accounts and savings accounts                     (1,815,738)        94,148      3,288,852
   Net increase in time deposits                                  8,438,257      4,768,273      3,297,750
   Net increase (decrease) in short-term borrowings                  30,000        240,000       (120,000)
   Cash dividends paid                                             (154,939)      (141,598)      (119,383)
   Purchase of treasury stock                                      (180,000)      (485,775)      (290,520)
   Sale of treasury stock                                            31,500         22,500             --
                                                               ------------   ------------   ------------
     Net cash provided by financing activities                    6,349,080      4,497,548      6,056,699
                                                               ------------   ------------   ------------

Net increase (decrease) in cash and cash equivalents             13,077,472     (1,568,110)    (9,080,690)

Cash and cash equivalents, beginning of period                    8,825,660     10,393,770     19,474,460
                                                               ------------   ------------   ------------
Cash and cash equivalents, end of period                       $ 21,903,132   $  8,825,660   $ 10,393,770
                                                               ============   ============   ============
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

                                       24

<PAGE>

                                  COMMUNITYCORP
                   Notes to Consolidated financial Statements

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------

Consolidation - Communitycorp, a bank holding company, (the Company), and its
-------------
subsidiary, Bank of Walterboro (the Bank), provide commercial banking services
to domestic markets principally in Colleton and Charleston Counties, South
Carolina. The consolidated financial statements include the accounts of the
parent company and its wholly-owned subsidiary after elimination of all
significant intercompany balances and transactions.

Management's Estimates - The preparation of financial statements in conformity
----------------------
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant change
relate to the determination of the allowance for losses on loans, including
valuation allowances for impaired loans, and the valuation of real estate
acquired in connection with foreclosures or in satisfaction of loans. In
connection with the determination of the allowances for losses on loans and
foreclosed real estate, management obtains independent appraisals for
significant properties. Management must also make estimates in determining the
estimated useful lives and methods for depreciating premises and equipment.

While management uses available information to recognize losses on loans and
foreclosed real estate, future additions to the allowances may be necessary
based on changes in local economic conditions. In addition, regulatory agencies,
as an integral part of their examination process, periodically review the
Company's allowances for losses on loans and foreclosed real estate. Such
agencies may require the Company to recognize additions to the allowances based
on their judgments about information available to them at the time of their
examination. Because of these factors, it is possible that the allowances for
losses on loans and foreclosed real estate may change in the near term.

Concentrations of Credit Risk - Financial instruments, which potentially subject
-----------------------------
the Company to concentrations of credit risk, consist principally of loans
receivable, investment securities, federal funds sold and amounts due from
banks. Management is not aware of any concentrations of loans to classes of
borrowers or industries that would be similarly affected by economic conditions.
Although the Company's loan portfolio is diversified, a substantial portion of
its borrowers' ability to honor the terms of their loans is dependent on
business and economic conditions in Colleton and Charleston Counties and
surrounding areas. Management does not believe credit risk is associated with
obligations of the United States, its agencies or its corporations. The Company
places its deposits and correspondent accounts with and sells its federal funds
to high credit quality institutions. By policy, time deposits are limited to
amounts insured by the Federal Deposit Insurance Corporation. Management
believes credit risk associated with correspondent accounts is not significant.

Investment Securities Available-for-Sale - Investment securities
----------------------------------------
available-for-sale are carried at amortized cost and adjusted to estimated fair
value by recognizing the aggregate unrealized gains or losses in a valuation
account. Aggregate market valuation adjustments are recorded in shareholders'
equity net of deferred income taxes. Reductions in fair value considered by
management to be other than temporary are reported as a realized loss and a
reduction in the cost basis of the security. The adjusted cost basis of
securities available-for-sale is determined by specific identification and is
used in computing the gain or loss upon sale.

Investment Securities Held-to-Maturity - Investment securities held-to-maturity
--------------------------------------
are stated at cost, adjusted for amortization of premium and accretion of
discount computed by the straight-line method. The Company has the ability and
management has the intent to hold designated investment securities to maturity.
Reductions in market value considered by management to be other than temporary
are reported as a realized loss and a reduction in the cost basis of the
security.

                                       25

<PAGE>

                                  COMMUNITYCORP
                   Notes to Consolidated financial Statements

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
---------------------------------------------------

Nonmarketable Equity Securities - Nonmarketable equity securities include the
-------------------------------
Company's investments in the stock of the Federal Home Loan Bank and Community
Financial Services, Inc. The stocks are carried at cost because they have no
quoted market value and no ready market exists. Investment in Federal Home Loan
Bank stock is a condition of borrowing from the Federal Home Loan Bank, and the
stock is pledged to collateralize the borrowings. Dividends received on Federal
Home Loan Bank stock and Community Financial Services, Inc. stock are included
as a separate component in interest income.

At December 31, 2001 and 2000, the investment in Federal Home Loan Bank stock
was $279,800. At December 31, 2001 and 2000, the investment in Community
Financial Services, Inc. stock was $50,575.

Interest and Fees on Loans - Interest income on all loans is computed based upon
--------------------------
the unpaid principal balance. Interest income is computed using the simple
interest method and is recorded in the period earned.

The accrual of interest income is discontinued when a loan becomes 90 days past
due as to principal or interest. Management may elect to continue the accrual of
interest when the estimated net realizable value of collateral exceeds the
principal balance and accrued interest.

Loan origination and commitment fees and certain direct loan origination costs
(principally salaries and employee benefits) are being deferred and amortized to
income over the contractual life of the related loans or commitments, adjusted
for prepayments, using the level yield method.

Allowance for Loan Losses - An allowance for possible loan losses is maintained
-------------------------
at a level deemed appropriate by management to provide adequately for known and
inherent risks in the loan portfolio. The allowance is based upon a continuing
review of past loan loss experience, current economic conditions which may
affect the borrowers' ability to pay, and the underlying collateral value of the
loans. Loans which are deemed to be uncollectible are charged off and deducted
from the allowance. The provision for possible loan losses and recoveries on
loans previously charged off are added to the allowance.

Impaired loans are measured based on the present value of discounted expected
cash flows. When it is determined that a loan is impaired, a direct charge to
bad debt expense is made for the difference between the net present value of
expected future cash flows based on the contractual rate and the Company's
recorded investment in the related loan. The corresponding entry is to a related
valuation account. Interest is discontinued on impaired loans when management
determines that a borrower may be unable to meet payments as they become due.

Premises and Equipment - Premises and equipment are stated at cost, less
----------------------
accumulated depreciation. The provision for depreciation is computed by the
straight-line method. Rates of depreciation are generally based on the following
estimated useful lives: buildings - 40 years; furniture and equipment - 5 to 10
years. The cost of assets sold or otherwise disposed of, and the related
accumulated depreciation are eliminated from the accounts and the resulting
gains or losses are reflected in the income statement. Maintenance and repairs
are charged to current expense as incurred, and the costs of major renewals and
improvements are capitalized.

Other Real Estate Owned - Other real estate owned includes real estate acquired
-----------------------
through foreclosure and loans accounted for as in-substance foreclosures.
Collateral is considered foreclosed in substance when the borrower has little or
no equity in the fair value of the collateral, proceeds for repayment of the
debt can be expected to come only from the sale of the collateral and it is
doubtful that the borrower can rebuild equity or otherwise repay the loan in the
foreseeable future. Other real estate owned is initially recorded at the lower
of cost (principal balance of the former loan plus costs of improvements) or
estimated fair value.

Any write-downs at the dates of acquisition are charged to the allowance for
possible loan losses. Expenses to maintain such assets, subsequent write-downs
and gains and losses on disposal are included in other expenses.

                                       26

<PAGE>

                                  COMMUNITYCORP
                   Notes to Consolidated financial Statements

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
         ------------------------------------------

Income and Expense Recognition - The accrual method of accounting is used for
------------------------------
all significant categories of income and expense. Immaterial amounts of
insurance commissions and other miscellaneous fees are reported when received.

Income Taxes - Income taxes are the sum of amounts currently payable to taxing
------------
authorities and the net changes in income taxes payable or refundable in future
years. Income taxes deferred to future years are determined utilizing a
liability approach. This method gives consideration to the future tax
consequences associated with differences between the financial accounting and
tax bases of certain assets and liabilities, principally the allowance for loan
losses and depreciable premises and equipment.

Retirement and Deferred Compensation Plans - The Company has a trusteed
------------------------------------------
noncontributory profit-sharing plan which provides retirement and other benefits
to all full-time employees who have worked 1,000 or more hours during the
calendar year and have put in one year of service. All eligible employees must
be at least age 21. Contributions are determined annually by the Board of
Directors. Expenses charged to earnings for the profit-sharing plan were
$44,731, $47,218 and $46,525 in 2001, 2000, and 1999, respectively. The
Company's policy is to fund contributions to the profit-sharing plan in the
amount accrued. In addition, the plan includes a "salary reduction" feature
pursuant to Section 401(k) of the Internal Revenue Code. Under the plan and
present policies, participants are permitted to make discretionary contributions
up to 10% of annual compensation. The Company has waived its option of matching
employee contributions for this feature of the plan.

In addition, the Company has a nonqualified voluntary salary deferral plan for
the Company's Chief Executive Officer. Under the plan, the Chief Executive
Officer may defer up to 25% of his compensation and earn interest on the
deferred amount. Upon retirement, the total amount deferred and interest earned
is to be paid to the participant over a period not exceeding fifteen years.
Expenses charged to earnings for the salary deferral plan were $30,000, $30,000
and $14,212 in 2001, 2000, and 1999, respectively.

The Company does not provide post employment benefits to employees beyond the
plans described above.

Earnings Per Share - Earnings per share is calculated by dividing earnings by
------------------
the weighted-average number of common shares outstanding during the year.

Statement of Cash Flows - For purposes of reporting cash flows, the Company
-----------------------
considers certain highly liquid debt instruments purchased with a maturity of
three months or less to be cash equivalents. Cash equivalents include amounts
due from banks, federal funds sold, and securities purchased under agreements to
resell.

During 2001, 2000, and 1999, the Company paid $4,048,320, $3,352,926 and
$3,156,744, respectively, for interest. Cash paid for income taxes was $652,185,
$724,000 and $648,130 in 2001, 2000, and 1999, respectively.

Supplemental noncash investing activities are as follows: There were no loans
reclassified as foreclosures of real estate or repossessions during 2001. During
2000, the Bank reclassified loans totaling $170,000 as foreclosures of real
estate and repossessed assets.

Changes in the valuation account of securities available for sale, including the
deferred tax effects, are considered noncash transactions for purposes of the
statement of cash flows and are presented in detail in the notes to the
financial statements.

Comprehensive Income - Accounting principles generally require that recognized
--------------------
revenue, expenses, gains, and losses be included in net income. Although certain
changes in assets and liabilities, such as unrealized gains and losses on
available-for-sale securities, are reported as a separate component of the
equity section of the balance sheet, such items, along with net income, are
components of comprehensive income.

                                       27

<PAGE>

                                  COMMUNITYCORP

                   Notes to Consolidated financial Statements

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
---------------------------------------------------

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

<TABLE>
<CAPTION>
                                                                  Year Ended December 31,
                                                             ---------------------------------
                                                                2001       2000        1999
                                                             ---------   ---------   ---------
<S>                                                          <C>         <C>         <C>
Unrealized gains (losses) on available-for-sale securities   $ 187,393   $ 341,235   $(510,366)
Reclassification adjustment for gains (losses) realized
 in net income                                                      --          --          --
                                                             ---------   ---------   ---------
Net unrealized gains (losses) on securities                    187,393     341,235    (510,366)

Tax effect                                                     (64,781)   (117,596)    175,627
                                                             ---------   ---------   ---------

Net-of-tax amount                                            $ 122,612   $ 223,639   $(334,739)
                                                             =========   =========   =========
</TABLE>

Off-Balance-Sheet Financial Instruments - In the ordinary course of business,
---------------------------------------
the Company has entered into off-balance-sheet financial instruments consisting
of commitments to extend credit and letters of credit. These financial
instruments are recorded in the financial statements when they become payable by
the customer.

Recent Accounting Pronouncements - In July, 2001 the Financial Accounting
--------------------------------
Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS)
141, Business Combinations, and SFAS 142, Goodwill and Other Intangible Assets.
SFAS 141 eliminates the pooling of interests method of accounting for business
combinations and requires the use of the purchase method. The Statement also
requires that intangible assets be reported separately from goodwill. This
Statement is effective for all transactions initiated after June 30, 2001. Under
SFAS 142, goodwill is no longer subject to amortization; however, it should be
evaluated for impairment on at least an annual basis and adjusted to its fair
value. In addition, an acquired intangible should be separately recognized if
the benefit of the intangible asset is obtained through contractual or other
legal rights, or if the intangible asset can be sold, transferred, licensed,
rented or exchanged, regardless of intent to do so. However, the FASB recommends
that financial institutions continue to follow the basic guidelines of SFAS 72
in recording and amortizing goodwill and other unidentifiable intangible assets.
The Company adopted SFAS 141 on July 1, 2001. SFAS 142 is effective for entities
with fiscal years beginning after December 15, 2001. The Company plans to adopt
SFAS 142 on January 1, 2002. The adoption of these Statements will not have any
impact on the consolidated financial statements.

In June 1998, the FASB issued SFAS 133, Accounting for Derivative Instruments
and Hedging Activities, which as amended by SFAS 137 and SFAS 138 is effective
for fiscal years beginning after June 15, 2000. This Statement establishes
accounting and reporting standards for derivative instruments and hedging
activities, including certain derivative instruments embedded in other
contracts, and requires that an entity recognize all derivatives as assets or
liabilities in the balance sheet and measure them at fair value. The accounting
for changes in the fair value of a derivative depends on how the derivative is
used and how the derivative is designated. The Company adopted SFAS 133 on
January 1, 2001. The adoption of SFAS 133 did not have any impact on the
consolidated financial statements since the Company did not have any derivative
instruments nor any derivative instruments embedded in other contracts in 2001.

Reclassifications - Certain captions and amounts in the consolidated financial
-----------------
statements of 2000 and 1999 were reclassified to conform with the 2001
presentation.

NOTE 2 - CASH AND DUE FROM BANKS
--------------------------------

The Company is required by regulation to maintain an average cash reserve
balance based on a percentage of deposits. The average amounts of the cash
reserve balances at December 31, 2001 and 2000 were approximately $513,000.
These requirements were satisfied by vault cash.

                                       28

<PAGE>

                                  COMMUNITYCORP

                   Notes to Consolidated financial Statements

NOTE 3- INVESTMENT SECURITIES
-----------------------------

The amortized cost and estimated fair values of securities available-for-sale at
December 31, 2001 were:

<TABLE>
<CAPTION>
                                              Amortized     Gross Unrealized     Estimated
                                                           ------------------
                                                Cost         Gains     Losses    Fair Value
                                             -----------   --------   -------   -----------
<S>                                          <C>           <C>        <C>       <C>
December 31, 2001
U.S. government agencies and corporations    $ 8,822,580   $ 72,745   $24,594   $ 8,870,731
Obligations of state and local governments     2,442,827     37,488     7,573     2,472,742
                                             -----------   --------   -------   -----------
  Total                                      $11,265,407   $110,233   $32,167   $11,343,473
                                             ===========   ========   =======   ===========
</TABLE>

The amortized cost and estimated fair values of securities available-for-sale at
December 31, 2000 were:

<TABLE>
<CAPTION>
                                              Amortized     Gross Unrealized     Estimated
                                                           ------------------
                                                Cost        Gains     Losses    Fair Value
                                             -----------   -------   --------   -----------
<S>                                          <C>           <C>       <C>        <C>
December 31, 2000
U.S. treasuries                              $   399,708   $    --   $  1,458   $   398,250
U.S. government agencies and corporations     16,328,461     2,865    110,371    16,220,955
Obligations of state and local governments     2,247,815    16,390     16,753     2,247,452
                                             -----------   -------   --------   -----------
  Total                                      $18,975,984   $19,255   $128,582   $18,866,657
                                             ===========   =======   ========   ===========
</TABLE>

The amortized cost and estimated fair values of securities held-to-maturity at
December 31, 2001 and 2000 were:

<TABLE>
<CAPTION>
                                              Amortized    Gross Unrealized   Estimated
                                                          -----------------
                                                Cost       Gains     Losses   Fair Value
                                             ----------   -------   -------   ----------
<S>                                          <C>          <C>       <C>       <C>
December 31, 2001
U.S. government agencies and corporations    $   81,972   $ 3,146   $    --   $   85,118
Obligations of state and local governments    3,417,253    49,789    21,477    3,445,565
                                             ----------   -------   -------   ----------
  Total                                      $3,499,225   $52,935   $21,477   $3,530,683
                                             ==========   =======   =======   ==========
</TABLE>

<TABLE>
<CAPTION>
                                              Amortized    Gross Unrealized   Estimated
                                                          -----------------
                                                Cost       Gains     Losses   Fair Value
                                             ----------   -------   -------   ----------
<S>                                          <C>          <C>       <C>       <C>
December 31, 2000
U.S. government agencies and corporations    $  839,299   $ 1,865   $ 2,145   $  839,019
Obligations of state and local governments    3,758,473    22,604    36,534    3,744,543
                                             ----------   -------   -------   ----------
  Total                                      $4,597,772   $24,469   $38,679   $4,583,562
                                             ==========   =======   =======   ==========
</TABLE>

                                       29

<PAGE>

                                  COMMUNITYCORP

                   Notes to Consolidated financial Statements

NOTE 3- INVESTMENT SECURITIES (continued)
-----------------------------

The amortized cost and estimated fair values of securities available-for-sale at
December 31, 2001 based on their contractual maturities are summarized below.
Actual maturities may differ from contractual maturities because borrowers may
have the right to call or prepay obligations without penalty.

                                                              2001
                                                   ----------------------------
                                                    Amortized    Estimated Fair
                                                      Cost           Value
                                                   -----------   --------------
Due in one year or less                            $   215,872    $   217,088
Due after one year but within five years             8,844,526      8,933,404
Due after five years but within  ten years           1,108,624      1,111,971
                                                   -----------    -----------
                                                    10,169,022     10,262,463
Mortgage-backed securities                           1,096,385      1,081,010
                                                   -----------    -----------
  Total                                            $11,265,407    $11,343,473
                                                   ===========    ===========

The amortized cost and estimated fair values of securities held-to-maturity at
December 31, 2001 based on their contractual maturities are summarized below.
Actual maturities may differ from contractual maturities because borrowers may
have the right to call or prepay obligations without penalty.

                                                              2001
                                                   ---------------------------
                                                    Amortized   Estimated Fair
                                                      Cost           Value
                                                   ----------   --------------
Due in one year or less                            $  411,004     $  414,320
Due after one year but within five years            1,457,612      1,490,604
Due after five years but within  ten years          1,449,081      1,444,433
Due after ten years                                    99,556         96,207
                                                   ----------     ----------
                                                    3,417,253      3,445,564
Mortgage-backed securities                             81,972         85,118
                                                   ----------     ----------
  Total                                            $3,499,225     $3,530,682
                                                   ==========     ==========

At December 31, 2001 and 2000, investment securities with an amortized cost of
$11,317,415 and $12,859,664 and a fair value of $12,387,126 and $10,487,168,
respectively, were pledged as collateral to secure public deposits. There were
no sales of investment securities for the years ended December 31, 2001 and
2000.

NOTE 4 - LOANS
--------------
Loans consisted of the following at December 31, 2001 and 2000:

                                                     2001           2000
                                                  -----------   -----------
Real estate - construction                        $ 6,312,748   $ 4,191,111
Real estate - mortgage                             24,844,649    23,119,132
Commercial and industrial                          25,868,360    26,192,807
Consumer and other                                 14,333,173    14,291,673
                                                  -----------   -----------
    Total gross loans                             $71,358,930   $67,794,723
                                                  ===========   ===========

                                       30

<PAGE>

                                  COMMUNITYCORP

                   Notes to Consolidated financial Statements

NOTE 4 - LOANS (continued)
--------------

The Company identifies impaired loans through its normal internal loan review
process. Loans on the Company's problem loan watch list are considered
potentially impaired loans. These loans are evaluated in determining whether all
outstanding principal and interest are expected to be collected. Loans are not
considered impaired if a minimal delay occurs and all amounts due including
accrued interest at the contractual interest rate for the period of delay are
expected to be collected. At December 31, 2001 and 2000, management reviewed its
problem loan watch list and determined that no impairment on loans existed that
would have a material effect on the Company's consolidated financial statements.

The accrual of interest is discontinued on impaired loans when management
anticipates that a borrower may be unable to meet the obligations of the note.
Accrued interest through the date the interest is discontinued is reversed.
Subsequent interest earned is recognized only to the point that cash payments
are received. All payments are applied to principal if the ultimate amount of
principal is not expected to be collected.

As of December 31, 2001 and 2000, management had placed loans totaling
$3,239,425 and $1,353,224, respectively, in nonaccrual status because the loans
were not performing as originally contracted. Loans ninety days or more past due
and still accruing interest were $26,492 and $1,000, at December 31, 2001 and
2000, respectively. No impairment has been recognized because management has
determined that the discounted value of expected proceeds from the sale of
collateral, typically real estate, exceeds the carrying amount of these loans.

Transactions in the allowance for loan losses are summarized below:

<TABLE>
<CAPTION>
                                                 2001          2000           1999
                                             -----------   -----------   -----------
<S>                                          <C>           <C>           <C>
Balance, beginning of year                   $ 1,173,832   $ 1,086,980   $   929,482
Provision charged to operations                  257,000       290,000       360,000
Recoveries on loans previously charged-off         9,367        14,749        26,544
Loans charged-off                               (209,148)     (217,897)     (229,046)
                                             -----------   -----------   -----------
Balance, end of year                         $ 1,231,051   $ 1,173,832   $ 1,086,980
                                             ===========   ===========   ===========
</TABLE>

The Company is a party to financial instruments with off-balance-sheet risk in
the normal course of business to meet the financing needs of its customers.
These financial instruments consist of commitments to extend credit and standby
letters of credit. Commitments to extend credit are legally binding agreements
to lend to a customer at predetermined interest rates as long as there is no
violation of any condition established in the contract. Commitments generally
have fixed expiration dates or other termination clauses and may require payment
of a fee. A commitment involves, to varying degrees, elements of credit and
interest rate risk in excess of the amount recognized in the balance sheets. The
Company's exposure to credit loss in the event of nonperformance by the other
party to the instrument is represented by the contractual notional amount of the
instrument. Since certain commitments are expected to expire without being drawn
upon, the total commitment amounts do not necessarily represent future cash
requirements. Letters of credit are conditional commitments issued to guarantee
a customer's performance to a third party and have essentially the same credit
risk as other lending facilities. Standby letters of credit often expire without
being used. The Company believes that through various sources of liquidity, it
has the necessary resources to meet obligations arising from these financial
instruments.

The Company uses the same credit underwriting procedures for commitments to
extend credit and standby letters of credit as it does for on-balance sheet
instruments. The credit worthiness of each borrower is evaluated and the amount
of collateral, if deemed necessary, is based on the credit evaluation.
Collateral held for commitments to extend credit and standby letters of credit
varies but may include accounts receivable, inventory, property, plant,
equipment, and income-producing commercial properties.

The Company is not involved in off-balance-sheet contractual relationships,
other than those disclosed in this report, that could result in liquidity needs
or other commitments or could significantly impact earnings.

                                       31

<PAGE>

                                  COMMUNITYCORP

                   Notes to Consolidated financial Statements

NOTE 4 - LOANS (continued)
--------------

The following table summarizes the Company's off-balance-sheet financial
instruments whose contractual amounts represent credit risk as of December 31,
2001 and 2000:

                                              2001              2000
                                           ----------        ----------
Commitments to extend credit               $4,366,691        $3,737,445
Standby letters of credit                     634,803           315,000

Management is not aware of any significant concentrations of loans to classes of
borrowers or industries that would be affected similarly by economic conditions.
At December 31, 2001, the Company was not committed to lend additional funds to
borrowers having loans in nonaccrual status.

NOTE 5 - PREMISES AND EQUIPMENT
-------------------------------

Premises and equipment consisted of the following at December 31, 2001 and 2000:

                                               2001              2000
                                           -----------        -----------
Land                                       $   434,385        $   434,385
Building and land improvements               1,679,749          1,684,338
Furniture and equipment                      1,088,428          1,131,264
                                           -----------        -----------
  Total                                      3,202,562          3,249,987
Less, accumulated depreciation              (1,189,415)        (1,089,941)
                                           -----------        -----------

  Premises and equipment, net              $ 2,013,147        $ 2,160,046
                                           ===========        ===========

NOTE 6 - DEPOSITS
-----------------

At December 31, 2001, the scheduled maturities of time deposits were as follows:

Maturing In                                                   Amount
-----------                                                -----------
 2002                                                      $54,157,370
 2003                                                        2,353,675
 2004                                                          975,596
 2005                                                          181,192
 2006                                                           14,915
                                                           -----------
   Total                                                   $57,682,748
                                                           ===========

NOTE 7 - RELATED PARTY TRANSACTIONS
-----------------------------------

Certain parties (principally certain directors and officers of the Company,
their immediate families and business interests) were loan customers of, and had
other transactions in the normal course of business with the Company. Related
party loans are made on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions with
unrelated persons and do not involve more than normal risk of collectibility.
The aggregate dollar amount of loans to related parties was $1,788,793 and
$1,628,402 at December 31, 2001 and 2000, respectively. During 2001, $337,852 of
new loans were made to related parties, and repayments totaled $177,461.

Legal services were provided to the Company in the ordinary course of business
by a law firm in which two of the partners are directors of the Company. The
amount paid to this law firm for services rendered was $30,064, $51,690, and
$24,136 for the years ended December 31, 2001, 2000, and 1999, respectively.

                                       32

<PAGE>

                                  COMMUNITYCORP

                   Notes to Consolidated financial Statements

NOTE 8 - SHORT-TERM BORROWINGS
------------------------------

At December 31, 2001 and 2000, the Company had securities sold under agreements
to repurchase, which are classified as secured borrowings and generally mature
within one to seven day periods. Either party may cancel the arrangement without
penalty. Information concerning securities sold under agreements to repurchase
for the years ended December 31, 2001 and 2000 is summarized as follows:

                                                         2001           2000
                                                       --------      ----------
Average balance during the year                        $575,836      $  424,153
Average interest rate during the year                      4.29%           5.83%
Maximum month-end balance during the year              $640,000      $1,290,000

The Company has an agreement with its safekeeping agent (an independent third
party) to pledge certain of their U.S. Government obligation securities as
collateral for the agreements. As of December 31, 2001, the par value and fair
value of the securities underlying the agreements were $4,734,000 and
$4,725,124, respectively.

NOTE 9 - UNUSED LINES OF CREDIT
-------------------------------

As of December 31, 2001, the Company had unused lines of credit to purchase
federal funds from other financial institutions totaling $3,000,000. These lines
of credit are available on a one to seven day basis for general corporate
purposes. The lenders have reserved the right not to renew their respective
lines. The Company also has a credit availability agreement with the Federal
Home Loan Bank totaling 15 percent of the Bank's assets as of any quarter end.
As of December 31, 2001, the available credit totaled $16,627,000.

NOTE 10 - COMMITMENTS AND CONTINGENCIES
---------------------------------------

The Company is subject to claims and lawsuits which arise primarily in the
ordinary course of business. At December 31, 2001, management is not aware of
any pending or threatened litigation or unasserted claims that could result in
losses, if any, that would be material to the financial statements.

NOTE 11 - SHAREHOLDERS' EQUITY
------------------------------

In 1999, the Board of Directors approved the repurchase of certain shares of the
Company's outstanding stock at current market prices. At December 31, 2001 and
2000, the Company had repurchased 21,594 and 18,294 shares, respectively.

The ability of Communitycorp to pay cash dividends is dependent upon receiving
cash in the form of dividends from Bank of Walterboro. However, certain
restrictions exist regarding the ability of the Bank to transfer funds to
Communitycorp in the form of cash dividends. All of the Bank's dividends to the
Company are payable only from the undivided profits of the Bank. At December 31,
2001, the Bank's undivided profits were $10,955,850. The Bank is authorized to
pay cash dividends up to 100% of net income in any calendar year without
obtaining the prior approval of the Commissioner of Banking provided that the
Bank received a composite rating of one or two at the last Federal or State
regulatory examination. Under Federal Reserve Board regulations, the amounts of
loans or advances from the Bank to the parent company are also restricted.

                                       33

<PAGE>

                                  COMMUNITYCORP

                   Notes to Consolidated financial Statements

NOTE 12 - OTHER OPERATING EXPENSES
----------------------------------

Other operating expenses for the years ended December 31, 2001, 2000, and 1999
are summarized as follows:

                                                2001         2000         1999
                                              --------     --------     --------
Stationery, printing, and postage             $137,675     $135,684     $112,499
Advertising and promotion                       21,993       28,631       26,625
Professional fees                              118,154      128,892       87,695
Directors' fees                                 50,700       52,000       58,500
Telephone expenses                              26,381       25,311       24,823
ATM surcharges                                  68,965       42,908       42,485
ACH charges                                     32,319       30,053       26,373
Other                                          238,879      198,607      201,276
                                              --------     --------     --------

  Total                                       $695,066     $642,086     $580,276
                                              ========     ========     ========

NOTE 13 - INCOME TAXES
----------------------

Income tax expense included in the consolidated statements of operations for the
years ended December 31, 2001, 2000, and 1999 is summarized as follows:

                                                2001        2000        1999
                                              ---------   --------   ----------
Currently payable:
  Federal                                     $ 686,791   $667,355   $ 600,400
  State                                          70,508     69,185      59,758
                                              ---------   --------   ---------
    Total current                               757,299    736,540     660,158
                                              ---------   --------   ---------
Change in deferred income taxes:
  Federal                                       (65,009)    68,549    (163,758)
  State                                         (10,108)     4,190     (19,553)
                                              ---------   --------   ---------
    Total deferred                              (75,117)    72,739    (183,311)
                                              ---------   --------   ---------
Income tax expense                            $ 682,182   $809,279   $ 476,847
                                              =========   ========   =========

Income tax expense is allocated as follows:
  To continuing operations                    $ 617,401   $691,683   $ 652,474
  To shareholders' equity                        64,781    117,596    (175,627)
                                              ---------   --------   ---------
    Income tax expense                        $ 682,182   $809,279   $ 476,847
                                              =========   ========   =========

Deferred income taxes of $464,550 and $389,433 were included in other assets at
December 31, 2001 and 2000, respectively. Deferred income taxes result from
temporary differences in the recognition of certain items of income and expense
for tax and financial reporting purposes.

                                       34

<PAGE>

                                  COMMUNITYCORP

                   Notes to Consolidated financial Statements

NOTE 13 - INCOME TAXES (continued)
----------------------------------

The gross amounts of deferred tax assets and deferred tax liabilities as of
December 31, 2001 and 2000 were as follows:

                                                              2001       2000
                                                            --------   --------
Deferred tax assets:
  Allowance for loan losses                                 $405,224   $390,173
  Available-for-sale securities                                   --     37,589
  Deferred compensation                                       63,597     48,831
  Non accrual of interest income                              85,449         --
  Other                                                        3,142      3,944
                                                            --------   --------
    Total gross deferred tax assets                          557,412    480,537
  Less, valuation allowance                                       --         --
                                                            --------   --------
    Total net deferred tax assets                            557,412    480,537
                                                            --------   --------
Deferred tax liabilities:
  Accumulated depreciation                                    65,670     85,440
  Available-for-sale securities                               27,192         --
  Other                                                           --      5,664
                                                            --------   --------
    Total deferred tax liabilities                            92,862     91,104
                                                            --------   --------
    Net deferred tax asset                                  $464,550   $389,433
                                                            ========   ========

Deferred tax assets represent the future tax benefit of deductible differences
and, if it is more likely than not that a tax asset will not be realized, a
valuation allowance is required to reduce the recorded deferred tax assets to
net realizable value. Management has determined that it is more likely than not
that the entire deferred tax asset at December 31, 2001 will be realized, and
accordingly, has not established a valuation allowance.

A reconciliation between the income tax expense and the amount computed by
applying the Federal statutory rate of 34% to income before income taxes
follows:

<TABLE>
<CAPTION>
                                                         2001         2000       1999
                                                      ---------   ---------   ---------
<S>                                                   <C>         <C>         <C>
Tax expense at statutory rate                         $ 634,143   $ 730,332   $ 690,974
State income tax, net of federal income tax benefit      56,921      44,278      38,085
Tax-exempt interest income                              (94,675)   (108,226)    (99,824)
Disallowed interest expense                              19,017      24,284      20,811
Other, net                                                1,995       1,015       2,428
                                                      ---------   ---------   ---------
  Total                                               $ 617,401   $ 691,683   $ 652,474
                                                      =========   =========   =========
</TABLE>

NOTE 14 - FAIR VALUE OF FINANCIAL INSTRUMENTS
---------------------------------------------

The fair value of a financial instrument is the amount at which the asset or
obligation could be exchanged in a current transaction between willing parties,
other than in a forced or liquidation sale. Fair value estimates are made at a
specific point in time based on relevant market information and information
about the financial instruments. Because no market value exists for a
significant portion of the financial instruments, fair value estimates are based
on judgments regarding future expected loss experience, current economic
conditions, risk characteristics of various financial instruments, and other
factors. The following methods and assumptions were used to estimate the fair
value of significant financial instruments:

                                       35

<PAGE>

                                  COMMUNITYCORP
                   Notes to Consolidated Financial Statements

NOTE 14 - FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)
---------------------------------------------

Cash and Due from Banks - The carrying amount is a reasonable estimate of fair
value.

Federal Funds Sold and Securities Purchased under Agreements to Resell - Federal
funds sold and securities purchased under agreements to resell are typically for
a term of one day, and the carrying amount approximates the fair value.

Time Deposits with Other Banks - The carrying value of these instruments is a
reasonable estimate of fair value.

Investment Securities - The fair values of marketable securities
held-to-maturity are based on quoted market prices or dealer quotes. For
securities available-for-sale, fair value equals the carrying amount which is
the quoted market price. If quoted market prices are not available, fair values
are based on quoted market prices of comparable securities. The carrying amount
of nonmarketable securities is a reasonable estimate of fair value since no
ready market exists for these securities.

Loans - For certain categories of loans, such as variable rate loans which are
repriced frequently and have no significant change in credit risk and credit
card receivables, fair values are based on the carrying amounts. The fair value
of other types of loans is estimated by discounting the future cash flows using
the current rates at which similar loans would be made to the borrowers with
similar credit ratings and for the same remaining maturities.

Deposits - The fair value of demand deposits, savings, and money market accounts
is the amount payable on demand at the reporting date. The fair values of
certificates of deposit are estimated using a discounted cash flow calculation
that applies current interest rates to a schedule of aggregated expected
maturities.

Short Term Borrowings - The carrying value of securities sold under agreements
to repurchase is a reasonable estimate of fair value because these instruments
typically have terms of one day.

Accrued Interest Receivable and Payable - The carrying value of these
instruments is a reasonable estimate of fair value.

Off-Balance-Sheet Financial Instruments - The carrying amount for loan
commitments and letters of credit, which are off-balance-sheet financial
instruments, approximates the fair value since the obligations are typically
issued on a short-term or floating rate basis.

                                       36

<PAGE>

                                  COMMUNITYCORP
                   Notes to Consolidated Financial Statements

NOTE 14 - FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)
---------------------------------------------

The carrying values and estimated fair values of the Company's financial
instruments for the years ended December 31, 2001 and 2000 were as follows:

<TABLE>
<CAPTION>
                                                           2001                            2000
                                                -----------------------------   -----------------------------
                                                 Carrying      Estimated Fair    Carrying      Estimated Fair
                                                  Amount           Value          Amount           Value
                                                -----------    --------------   -----------    --------------
<S>                                             <C>              <C>            <C>              <C>
Financial Assets:
  Cash and due from banks                       $ 3,841,132      $ 3,841,132    $ 5,215,660      $ 5,215,660
  Federal funds sold and securities purchased
   under agreements to resell                    18,062,000       18,062,000      3,610,000        3,610,000
  Time deposits with other banks                    299,000          299,000             --               --
  Securities available-for-sale                  11,343,473       11,343,473     18,866,657       18,866,657
  Securities held-to-maturity                     3,499,225        3,530,683      4,597,772        4,583,562
  Nonmarketable equity securities                   330,375          330,375        330,375          330,375
  Loans                                          71,358,930       71,776,009     67,794,723       67,931,809
  Allowance for loan losses                      (1,231,051)      (1,231,051)    (1,173,832)      (1,173,832)
  Accrued interest receivable                       911,811          911,811      1,076,924        1,076,924

Financial Liabilities:
  Demand deposit, interest-bearing
   transaction, and savings accounts            $40,737,563      $40,737,563    $42,553,301      $42,553,301
  Time deposits                                  57,682,748       58,072,289     49,244,491       49,407,934
  Short-term borrowings                             560,000          560,000        530,000          530,000
  Accrued interest payable                          717,570          717,570        735,659          735,659
</TABLE>

<TABLE>
<CAPTION>
                                                 Notional    Estimated Fair    Notional    Estimated Fair
                                                  Amount         Value          Amount          Value
                                                ----------   -------------    ----------   --------------
<S>                                             <C>            <C>            <C>            <C>
Off-Balance-Sheet Financial Instruments:
  Commitments to extend credit                  $4,366,691     $4,366,691     $3,737,445     $3,737,445
  Standby letters of credit                        634,803        634,803        315,000        315,000
</TABLE>

NOTE 15 - REGULATORY MATTERS
----------------------------

The Bank is subject to various regulatory capital requirements administered by
the federal banking agencies. Failure to meet minimum capital requirements can
initiate certain mandatory, and possibly additional discretionary actions by
regulators that, if undertaken, could have a direct material effect on the
Bank's financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Bank must meet specific
capital guidelines that involve quantitative measures of the Bank's assets,
liabilities, and certain off-balance-sheet items as calculated under regulatory
accounting practices. The Bank's capital amounts and classification are also
subject to qualitative judgments by the regulators about components, risk
weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum ratios of Tier 1 and total capital as a
percentage of assets and off-balance-sheet exposures, adjusted for risk weights
ranging from 0% to 100%. Tier 1 capital consists of common shareholders' equity,
excluding the unrealized gain or loss on securities available for sale, minus
certain intangible assets. Tier 2 capital consists of the allowance for loan
losses subject to certain limitations. Total capital for purposes of computing
the capital ratios consists of the sum of Tier 1 and Tier 2 capital. Total
regulatory minimum requirements are 4% for Tier 1 and 8% for total risk-based
capital.

                                       37

<PAGE>

                                  COMMUNITYCORP
                   Notes to Consolidated Financial Statements

NOTE 15 - REGULATORY MATTERS (continued)
----------------------------

The Bank is also required to maintain capital at a minimum level based on
average assets, which is known as the leverage ratio. Only the strongest banks
are allowed to maintain capital at the minimum requirement of 3%. All others are
subject to maintaining ratios 1% to 2% above the minimum.

As of December 31, 2001, the most recent notification from the Bank's primary
regulator categorized the Bank as well-capitalized under the regulatory
framework for prompt-corrective action. There are no conditions or events that
management believes have changed the Bank's category.

The following table summarizes the capital amounts and ratios of the Bank and
the regulatory minimum requirements at December 31, 2001 and 2000.

<TABLE>
<CAPTION>
                                                                                            To Be Well-
                                                                                         Capitalized Under
                                                                      For Capital        Prompt Corrective
                                                    Actual          Adequacy Purposes    Action Provisions
                                             -------------------   ------------------   ------------------
                                               Amount      Ratio     Amount     Ratio     Amount     Ratio
                                             -----------   -----   ----------   -----   ----------   -----
<S>                                          <C>           <C>     <C>          <C>     <C>          <C>
December 31, 2001
  Total capital (to risk-weighted assets)    $10,904,718   15.66%  $6,056,480   8.00%   $7,570,600   10.00%
  Tier 1 capital (to risk-weighted assets)     9,954,718   14.40%   3,028,240   4.00%    4,542,360    6.00%
  Tier 1 capital (to average assets)           9,954,718    9.89%   4,410,720   4.00%    5,513,400    5.00%

December 31, 2000
  Total capital (to risk-weighted assets)    $10,860,556   15.15%  $5,733,250   8.00%   $7,166,562   10.00%
  Tier 1 capital (to risk-weighted assets)     9,964,736   13.90%   2,866,625   4.00%    4,299,937    6.00%
  Tier 1 capital (to average assets)           9,964,736   10.07%   3,959,160   4.00%    4,948,950    5.00%
</TABLE>

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

                                       38

<PAGE>

                                  COMMUNITYCORP
                   Notes to Consolidated Financial Statements

NOTE 16 - COMMUNITYCORP (PARENT COMPANY ONLY)
---------------------------------------------

Presented below are the condensed financial statements for Communitycorp (Parent
Company Only).

Balance Sheets
December 31, 2001 and 2000

                                                          2001          2000
                                                       -----------    ----------
Assets
  Cash                                                 $    40,689    $   16,451
  Investment in banking subsidiary                      10,955,850     9,854,965
  Other assets                                               5,572         8,440
                                                       -----------    ----------
   Total assets                                        $11,002,111    $9,879,856
                                                       ===========    ==========
Shareholders' equity                                   $11,002,111    $9,879,856
                                                       ===========    ==========

Statements of Operations
For the years ended December 31, 2001, 2000, and 1999

<TABLE>
<CAPTION>
                                                            2001         2000           1999
                                                         ----------    ----------    ----------
<S>                                                      <C>           <C>           <C>
Income
  Dividends from banking subsidiary                      $  325,000    $  590,000    $  370,000

Expenses                                                        290         8,205        11,423
                                                         ----------    ----------    ----------

Income before income taxes and equity in
 undistributed earnings of banking subsidiary               324,710       581,795       358,577

Income tax benefit                                              (99)       (4,017)       (4,226)

Equity in undistributed earnings of banking subsidiary      978,273       870,539     1,017,000
                                                         ----------    ----------    ----------
  Net income                                             $1,302,884    $1,448,317    $1,371,351
                                                         ==========    ==========    ==========
</TABLE>

                                       39

<PAGE>

                                  COMMUNITYCORP
                   Notes to Consolidated Financial Statements

NOTE 16 - COMMUNITYCORP (PARENT COMPANY ONLY) (continued)
---------------------------------------------

                            Statements of Cash Flows
              For the years ended December 31, 2001, 2000, and 1999


<TABLE>
<CAPTION>
                                                                   2001         2000           1999
                                                                ----------    ----------    ----------
<S>                                                             <C>           <C>           <C>
Cash flows from operating activities
 Net income                                                     $1,303,082    $1,456,351    $1,379,803
 Adjustments to reconcile net income to net cash provided by
 operating activities:
  Equity in undistributed earnings of banking subsidiary          (978,273)     (870,539)   (1,017,000)
Decrease in other assets                                             2,868        10,664         5,892
                                                                ----------    ----------    ----------
   Net cash provided by operating activities                       327,677       596,476       368,695
                                                                ----------    ----------    ----------

Cash flows from financing activities
  Cash dividends paid                                             (154,939)     (141,598)     (119,383)
  Purchases of treasury stock                                     (180,000)     (485,775)     (290,520)
  Sale of treasury stock                                            31,500        22,500            --
                                                                ----------    ----------    ----------
   Net cash used by financing activities                          (303,439)     (604,873)     (409,903)
                                                                ----------    ----------    ----------

Increase (decrease) in cash                                         24,238        (8,397)      (41,208)

Cash, beginning of period                                           16,451        24,848        66,056
                                                                ----------    ----------    ----------
Cash, ending of period                                          $   40,689    $   16,451    $   24,848
                                                                ==========    ==========    ==========
</TABLE>

                                       40

<PAGE>

                                  COMMUNITYCORP

                               BOARD OF DIRECTORS

George W. Cone                                 Harry L. Hill
Attorney                                       Retired
McLeod, Fraser & Cone
                                               Calvert W. Huffines
W. Roger Crook                                 President, The Huffines
Chief Executive Officer                        Company - Real Estate
  and President
Bank of Walterboro                             Peden B. McLeod
                                               Chairman of the Board
Steven Murdaugh                                Attorney
Certified Public Accountant                    McLeod, Fraser & Cone

J. Barnwell Fishburne                          Robert E. Redfearn
Owner, Fishburne & Co.                         Retired
Real Estate

Harold M. Robertson
Retired

                                    OFFICERS

W. Roger Crook                                 Mildred N. Whidden
Chief Executive Officer                        Assistant Cashier and Head Teller
  and President

Gwendolyn P. Bunton                            Pat Driggers
Vice President     and Cashier                 Branch Manager

Lynn H. Murdaugh                               M. Ellison Young
Assistant Vice President                       Vice President
  and Administrative Assistant

                                  STAFF MEMBERS

Brandy Ackerman                                Pam O'Quinn
Angela Adams                                   Rosemary Riddle
Melissa Dandridge                              Shelby Segura
Elizabeth Gray                                 Amy Shaffer
Barbara Grigg                                  Kelly Smith
Annette Henderson                              Susan Smoak
Stephanie Kelly                                Melissa T. Smyly
Joy Koth                                       Rose Walker
Amy Leonard                                    Bruce Tate
Amanda Lyons                                   Allison Thompson
Annette Lyons                                  Kathie P. Whetsell
Sharon Milligan                                Louie Whidden
Natalie Powers

                                       41

<PAGE>

                                  COMMUNITYCORP

                                 CORPORATE DATA

ANNUAL MEETING:

The Annual Meeting of Shareholders of Communitycorp will be held at 6 p.m. on
Tuesday, April 23, 2002 at Bank of Walterboro, 1100 North Jefferies Boulevard,
Walterboro, South Carolina.

CORPORATE OFFICE:                            GENERAL COUNSEL:

P.O. Box 1707                                McLeod, Fraser & Cone
1100 North Jefferies Blvd.                   P.O. Box 230
Walterboro, S.C.  29488                      Washington Street
(843) 549-2265                               Walterboro, S.C. 29488


STOCK TRANSFER DEPARTMENT:                   INDEPENDENT AUDITORS:

Bank of Walterboro                           Tourville, Simpson & Caskey, L.L.P.
P.O. Box 1707                                P.O. Box 1769
Walterboro, S.C. 29488                       Columbia, S.C. 29202

STOCK INFORMATION:

The Common Stock of Communitycorp is not listed on any exchange, nor is there a
recognized or established market. There is limited trading in the Company's
shares of Common Stock. Management believes that the Common Stock has traded for
a price per share of $30.00 to $45.00 during the past two years. There were
approximately 584 shareholders of record as of December 31, 2001.

The ability of Communitycorp to pay cash dividends is dependent upon receiving
cash in the form of dividends from Bank of Walterboro. However, certain
restrictions exist regarding the ability of the Bank to transfer funds to
Communitycorp in the form of cash dividends. All of the Bank's dividends to the
Company are payable only from the undivided profits of the Bank.

FORM 10-K

The Company will furnish upon request, free of charge, copies of the Annual
Report and the Company's Report to the Securities and Exchange Commission (Form
10-K) by contacting Gwen P. Bunton, Vice President, Communitycorp, P.O. Box
1707, Walterboro, South Carolina 29488.

This Annual Report serves as the ANNUAL FINANCIAL DISCLOSURE STATEMENT furnished
pursuant to Part 350 of the Federal Deposit Insurance Corporation's Rules and
Regulations. THIS STATEMENT HAS NOT BEEN REVIEWED, OR CONFIRMED FOR ACCURACY OR
RELEVANCE BY THE FEDERAL DEPOSIT INSURANCE CORPORATION.

                                       42

<PAGE>

                                  COMMUNITYCORP

                                    SERVICES

                                 All Day Banking
                        American Express Travelers Checks
                                   ATM Service
                                  Bank By Mail
                             Bond Coupon Redemption
                                Business Checking
                     Canceled Checks Returned with Statement
                                 Cashiers Checks
                             Certificates of Deposit
                                 Christmas Clubs
                                Collection Items
                                Commercial Loans
                                 Direct Deposits
                           Discount Brokerage Service
                                Drive-In Service
                         Individual Retirement Accounts
                                Interest Checking
                                Letters of Credit
                              Money Market Accounts
                                  Money Orders
                                Night Depository
                              Overdraft Protection
                                Personal Checking
                            Personal Lines of Credit
                                 Personal Loans
                                 Regular Savings
                               Safe Deposit Boxes
                                 Senior Checking
                          Treasury, Tax & Loan Deposits
                               U.S. Savings Bonds
                              Visa and Master Card
                                 Wire Transfers

                                    Section

                  110 Forest Hills Road, Walterboro, S.C. 29488
             1100 North Jefferies Boulevard, Walterboro, S.C. 29488
                   6225 Savannah Highway, Ravenel, S.C. 29470
                                   Member FDIC

                                       43