Exhibit 13

Providing personal, prompt, efficient service 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. Strong roots  strong

branches.



|                                                                                    |  |      
|----------------------------------------------------------------------------------- |  | -----
|Contents:                                                                           |  |      
|Shareholder Letter                                                                  |  | 2    
|Summary of Selected Financial Data                                                  |  | 3    
|Financial Charts                                                                    |  | 4-7  
|Managements Discussion and Analysis                                                |  | 8-24 
|Report of Independent Registered Public Accounting Firm                             |  | 25   
|Consolidated Balance Sheets                                                         |  | 26   
|Consolidated Statements of Income                                                   |  | 27   
|Consolidated Statements of Changes in Shareholders Equity and Comprehensive Income |  | 28   
|Consolidated Statements of Cash Flows                                               |  | 29   
|Notes to Consolidated Financial Statements                                          |  | 30-49
|Directors, Officers and Staff                                                       |  | 50   
|Corporate Data                                                                      |  | 51   
|Services                                                                            |  | 52   

Member FDIC



---

COMMUNITYCORP

Dear Shareholder,

It is a pleasure to report the progress of Communitycorp and its subsidiary, Bank of Walterboro, during 2006. The Company
continued to experience good growth in deposits and loans during the year. More detailed information follows, but we are pleased to report return on average assets of 1.11%, a sound capital to asset ratio of 9.10%, and an allowance for loan losses
of 1.75%.

Deposits at year-end were $140,786,264, an increase of $13,327,958, or 10.46%, over 2005 year-end. Net loans increased from $95,930,351 to
$103,983,472, an increase of $8,053,121, or 8.39%. The allowance for loan losses increased from a December 31, 2005 balance of $1,664,948 to $1,856,888 or 1.75% of gross loans. Total assets increased from $142,219,736 to a December 31,
2006 total of $158,091,986 an increase of $15,872,250, or 11.16%.

Earnings increased in 2006 for the Company with net income of $1,742,621, an increase of
$32,197, or 1.88%, more than 2005 earnings of $1,710,424. Earnings of $7.18 per share increased over $6.99 per share in 2005. Our net interest margin decreased from 4.20% in 2005 to 3.71% in 2006.

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 of 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 24, 2007.

Very truly yours,



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



2



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COMMUNITYCORP

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 should be read in conjunction with Managements Discussion and Analysis of Financial Condition and Results of Operations.



|                                                                 |  |      |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|---------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------- | - |  | - | ------- | -
|Year Ended December 31, (Dollars in thousands, except per share) |  | 2006 |         |   | 2005 |   |         | 2004 |  |   | 2003    |   |  | 2002 |        
|Results of Operations:                                           |  |      |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Interest income                                                  |  | $    | 9,358   |   |      | $ | 7,737   |      |  | $ | 6,831   |   |  | $    | 6,537   |   |  | $ | 7,000   |  
|Interest expense                                                 |  |      | 3,871   |   |      |   | 2,225   |      |  |   | 1,607   |   |  |      | 1,906   |   |  |   | 2,640   |  
|                                                                 |  |      |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Net interest income                                              |  |      | 5,487   |   |      |   | 5,512   |      |  |   | 5,224   |   |  |      | 4,631   |   |  |   | 4,360   |  
|Provision for loan losses                                        |  |      | 225     |   |      |   | 381     |      |  |   | 471     |   |  |      | 405     |   |  |   | 405     |  
|                                                                 |  |      |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Net interest income after provision for loan losses              |  |      | 5,262   |   |      |   | 5,131   |      |  |   | 4,753   |   |  |      | 4,226   |   |  |   | 3,955   |  
|Other income                                                     |  |      | 713     |   |      |   | 599     |      |  |   | 579     |   |  |      | 558     |   |  |   | 492     |  
|Other expense                                                    |  |      | 3,411   |   |      |   | 3,232   |      |  |   | 2,875   |   |  |      | 2,706   |   |  |   | 2,224   |  
|                                                                 |  |      |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Income before income taxes                                       |  |      | 2,565   |   |      |   | 2,498   |      |  |   | 2,457   |   |  |      | 2,078   |   |  |   | 2,223   |  
|Income tax expense                                               |  |      | 823     |   |      |   | 788     |      |  |   | 802     |   |  |      | 653     |   |  |   | 715     |  
|                                                                 |  |      |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Net income                                                       |  | $    | 1,742   |   |      | $ | 1,710   |      |  | $ | 1,655   |   |  | $    | 1,425   |   |  | $ | 1,508   |  
|                                                                 |  |      |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Balance Sheet Data:                                              |  |      |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Securities available-for-sale                                    |  | $    | 32,468  |   |      | $ | 30,856  |      |  | $ | 25,310  |   |  | $    | 16,495  |   |  | $ | 12,661  |  
|Securities held-to-maturity                                      |  |      | 1,574   |   |      |   | 1,875   |      |  |   | 2,181   |   |  |      | 2,644   |   |  |   | 3,050   |  
|Allowance for loan losses                                        |  |      | 1,857   |   |      |   | 1,665   |      |  |   | 1,456   |   |  |      | 1,270   |   |  |   | 1,319   |  
|Net loans                                                        |  |      | 103,983 |   |      |   | 95,930  |      |  |   | 81,550  |   |  |      | 78,899  |   |  |   | 73,856  |  
|Premises and equipment, net                                      |  |      | 3,131   |   |      |   | 3,266   |      |  |   | 3,441   |   |  |      | 2,517   |   |  |   | 2,169   |  
|Total assets                                                     |  |      | 158,092 |   |      |   | 142,220 |      |  |   | 138,408 |   |  |      | 124,755 |   |  |   | 115,775 |  
|Noninterest-bearing deposits                                     |  |      | 19,765  |   |      |   | 18,021  |      |  |   | 16,532  |   |  |      | 13,952  |   |  |   | 9,304   |  
|Interest-bearing deposits                                        |  |      | 121,021 |   |      |   | 109,437 |      |  |   | 108,379 |   |  |      | 98,631  |   |  |   | 93,316  |  
|Total deposits                                                   |  |      | 140,786 |   |      |   | 127,458 |      |  |   | 124,911 |   |  |      | 112,584 |   |  |   | 102,620 |  
|Short-term borrowings                                            |  |      | 250     |   |      |   | 370     |      |  |   | 390     |   |  |      | 450     |   |  |   | 400     |  
|Total liabilities                                                |  |      | 142,955 |   |      |   | 128,576 |      |  |   | 125,772 |   |  |      | 113,515 |   |  |   | 103,526 |  
|Total shareholders equity                                       |  |      | 15,137  |   |      |   | 13,643  |      |  |   | 12,636  |   |  |      | 11,240  |   |  |   | 12,249  |  
|                                                                 |  |      |         |   |     
|Per Share Data:                                                  |  |      |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Weighted-average common shares outstanding                       |  |      | 242,636 |   |      |   | 244,788 |      |  |   | 247,446 |   |  |      | 261,221 |   |  |   | 276,473 |  
|Net income                                                       |  | $    | 7.18    |   |      | $ | 6.99    |      |  | $ | 6.69    |   |  | $    | 5.46    |   |  | $ | 5.46    |  
|Cash dividends paid                                              |  | $    | 0.90    |   |      | $ | 0.82    |      |  | $ | 0.72    |   |  | $    | 0.65    |   |  | $ | 0.59    |  
|Period end book value                                            |  | $    | 62.62   |   |      | $ | 56.13   |      |  | $ | 51.26   |   |  | $    | 45.45   |   |  | $ | 44.62   |  
|                                                                 |  |      |         |   |     
|Return on Equity and Assets:                                     |  |      |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Return on average assets                                         |  |      | 1.11    | % |      |   | 1.23    | %    |  |   | 1.29    | % |  |      | 1.18    | % |  |   | 1.31    | %
|Return on average equity                                         |  |      | 12.35   | % |      |   | 13.11   | %    |  |   | 14.04   | % |  |      | 13.08   | % |  |   | 13.04   | %
|Equity to assets ratio                                           |  |      | 9.58    | % |      |   | 9.35    | %    |  |   | 9.16    | % |  |      | 9.02    | % |  |   | 10.04   | %
|Dividend payout ratio                                            |  |      | 12.57   | % |      |   | 11.79   | %    |  |   | 10.85   | % |  |      | 12.52   | % |  |   | 10.86   | %



3



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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, (the Bank) is a state-chartered commercial bank with four banking locations. The Banks main office and operations center is in Walterboro, South Carolina. In addition, the Bank has
branches in Ravenel, and Ridgeland, South Carolina. The Companys primary market area includes Colleton, Jasper 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. The Bank offers a full range of deposit
services for individuals and businesses. Deposit products include checking accounts, savings accounts, certificates of deposit, money market accounts, and IRAs.

The Company primarily is 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.

As of December 31, 2006, the Company had forty-two full-time employees and five part time employees in all offices.

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.

CRITICAL ACCOUNTING POLICY

The Company has adopted various accounting policies, which govern
the application of account principles generally accepted in the United States of America in the preparation of the Companys consolidated financial statements. The significant accounting policies of the Company are described in the notes to the
consolidated financial statements.

Certain accounting policies involve significant judgments and assumptions by management, which have a material impact
on the carrying value of certain assets and liabilities. Management considers such accounting policies to be critical accounting policies. The judgments and assumptions used by management are based on historical experience and other factors, which
are believed to be reasonable under the circumstances. Because of the nature of the judgments and assumptions made by management, actual results could differ from these judgments and estimates, which could have a material impact on the carrying
values of assets and liabilities and the results of operations of the Company.

The Company believes the allowance for loan losses is a critical accounting
policy that requires the most significant judgments and estimates used in preparation of its consolidated financial statements. Refer to the section Provision and Allowance for Loan Losses and Note 1 to the consolidated financial
statements for a detailed description of the Companys estimation process and methodology related to the allowance for loan losses.



8



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COMMUNITYCORP

Managements Discussion and Analysis of

Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS



Statements included in Managements Discussion and Analysis which are not historical in nature are intended to
be, and are hereby identified, as forward looking statements for purposes of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements concerning plans,
objectives, goals, strategies, future events or performance and underlying assumptions and other statements which are other than statements of historical facts. Such forward-looking statements may be identified, without limitation, by the use of the
words anticipates, believes, estimates, expects, intends, plans, predicts, projects, and similar expressions. The Companys expectations, beliefs
and projections are expressed in good faith and are believed by the Company to have a reasonable basis, including without limitation, managements examination of historical operating trends, data contained in the Companys records and
other data available from third parties, but there can be no assurance that managements expectations, beliefs or projections will result or be achieved or accomplished. The Company cautions readers that forward looking statements, including
without limitation, those relating to future business prospects, revenues, working capital, liquidity, capital needs, interest costs, and income, are subject to certain risks and uncertainties that could cause actual results to differ materially
from those indicated in the forward looking statements, due to several important factors herein identified, among others, and other risks and factors identified from time to time in the Companys reports filed with the Securities and Exchange
Commission.

RESULTS OF OPERATIONS

OVERVIEW

Net income for the year ended December 31, 2006 was $1,742,621 or $7.18 per share, compared to
$1,710,424, or $6.99 per share, for the year ended December 31, 2005. Interest income increased $1,621,469 over the 2005 amount of $7,736,639. Total interest expense also increased $1,646,049 over the 2005 amount of $2,224,533. Net interest
income decreased $24,580 from the 2005 amount of $5,512,106. For the year ended December 31, 2006 net interest margin decreased from 4.20% in 2005 to 3.71% in 2006. Noninterest income increased $114,524 over the 2005 amount of $598,966.
Noninterest expense was $3,410,840, which is an increase of $178,709 over the 2005 amount.



9



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COMMUNITYCORP

Managements Discussion and Analysis of

Financial Condition and Results of Operations

NET INTEREST INCOME



General.The largest component of total income is net interest income, the difference between the
income earned on assets and the interest accrued or paid on deposits and borrowings used to support such assets. The volume and mix of assets and liabilities and their sensitivity to interest rate movement determine changes in net interest income.
Net interest margin is determined by dividing annualized net interest income by average earning assets. Net interest spread is derived from determining the weighted-average rate of interest paid on deposits and borrowings and subtracting it from the
weighted-average yield on earning assets.

Net interest income for 2006 was $5,487,526 compared to $5,512,106 for 2005, a decrease of .45%. The decrease
was mainly attributable to the increase in the average balances of our interest bearing liabilities, which increased by 13.20% while our average earning assets increased only 12.76%.

For 2006 average-earning assets totaled approximately $147,849,000 with an annualized average yield of 6.33% compared to approximately $131,123,000 and 5.90%, respectively, for 2005. Average interest-bearing
liabilities totaled approximately $123,188,000 with an annualized average cost of 3.14% for 2006 compared to approximately $108,819,000 and 2.04%, respectively, for 2005.

Our net interest margin and net interest spread was 3.71% and 3.19% for 2006 compared to 4.20% and 3.86% respectively for 2005.

Our annualized yield on average earning assets increased 43 basis points for 2006 compared to 2005, while our annualized average cost of our interest-bearing liabilities also increased 110 basis points for 2006 compared to 2005. These
increases were reflective of the increasing interest rate environment during 2006.

Details of certain components of our earning assets and
interest-bearing liabilities are discussed in the following paragraphs.

Because loans often provide a higher yield than other types of earning assets, one
of our goals it to maintain our loan portfolio as the largest component of total earning assets. Loans comprised approximately 69.13% and 66.93% of average earning assets for December 31, 2006 and 2005, respectively. Loan interest income for
the years ended December 31, 2006 and 2005 was $7,454,641 and $6,313,934, respectively. The annualized average yield on loans was 7.29% and 7.19% for 2006 and 2005, respectively. Average balances of loans increased to approximately $102,207,000
during 2006, an increase of approximately $14,451,000 over the average of approximately $87,756,000 during 2005. The increase in the annualized yield on loans is mainly attributable to the increase in the average volume of loans outstanding during
2006.

Investment securities averaged approximately $34,323,000 or 23.21% of average earning assets, for December 31, 2006 compared to approximately
$32,052,000 or 24.44% of average earning assets, for 2005. Interest earned on investment securities amounted to $1,336,917 for the year ended December 31, 2006, compared to $1,090,065 for the same period last year. Investment securities yielded
3.90% and 3.40% for the period ended December 31, 2006 and 2005, respectively.

Total interest expense for the years ended December 31, 2006 and
2005 was $3,870,582 and $2,224,533, respectively. The largest component of interest expense is interest on deposit accounts. Interest expense on deposit accounts was $3,856,669 and $2,216,939, for the years ended December 31, 2006 and 2005,
respectively. The average balance of interest bearing deposits increased to approximately $122,774,000 for the year ended December 31, 2006 from approximately $108,494,000 during the same period last year. The annualized average cost of
deposits was approximately 3.14% for the year ended December 31, 2006 compared to 2.04% for the same period in 2005.

For the year ended
December 31, 2006 and 2005, the total annualized average cost of funds was 3.14% and 2.04%, respectively.



10



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COMMUNITYCORP

Managements Discussion and Analysis of

Financial Condition and Results of Operations

NET INTEREST INCOME(continued)



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.

Average Balances, Income, Expenses, and Rates



|                                           |  |                |         |   |                |   |            |  |      |                |  |   |                |   |            |   |       |  |      |  
|------------------------------------------ |  | -------------- | ------- | - | -------------- | - | ---------- |  | ---- | -------------- |  | - | -------------- | - | ---------- | - | ----- |  | ---- | -
|                                           |  | 2006           |         |   | 2005           |  
|(Dollars in thousands)                     |  | AverageBalance |         |   | Income/Expense |   | Yield/Rate |  |      | AverageBalance |  |   | Income/Expense |   | Yield/Rate |  
|Assets:                                    |  |                |         |   |                |   |            |  |      |                |  |   |                |   |            |   |       |  |      |  
|Earning assets:                            |  |                |         |   |                |   |            |  |      |                |  |   |                |   |            |   |       |  |      |  
|Securities, taxable (1)                    |  | $              | 27,129  |   |                | $ | 1,064      |  | 3.92 | %              |  | $ | 25,828         |   |            | $ | 835   |  | 3.23 | %
|Securities, tax-exempt (1)                 |  |                | 6,858   |   |                |   | 264        |  | 3.85 |                |  |   | 5,897          |   |            |   | 249   |  | 4.22 |  
|Nonmarketable equity securities            |  |                | 336     |   |                |   | 9          |  | 2.68 |                |  |   | 327            |   |            |   | 6     |  | 1.83 |  
|Federal funds sold                         |  |                | 11,195  |   |                |   | 555        |  | 4.96 |                |  |   | 10,874         |   |            |   | 316   |  | 2.91 |  
|Time deposits with other banks             |  |                | 124     |   |                |   | 11         |  | 8.87 |                |  |   | 441            |   |            |   | 17    |  | 3.85 |  
|Loans (2)                                  |  |                | 102,207 |   |                |   | 7,455      |  | 7.29 |                |  |   | 87,756         |   |            |   | 6,314 |  | 7.19 |  
|                                           |  |                |         |   |                |   |            |  |      |                |  |   |                |   |            |   |       |  |      |  
|Total earning assets                       |  |                | 147,849 |   |                |   | 9,358      |  | 6.33 |                |  |   | 131,123        |   |            |   | 7,737 |  | 5.90 |  
|                                           |  |                |         |   |                |   |            |  |      |                |  |   |                |   |            |   |       |  |      |  
|Cash and due from banks                    |  |                | 5,265   |   |                |   |            |  |      |                |  |   | 4,689          |   |            |   |       |  |      |  
|Allowance for loan losses                  |  |                | (1,764  | ) |                |   |            |  |      |                |  |   | (1,508         | ) |            |   |       |  |      |  
|Premises and equipment                     |  |                | 3,185   |   |                |   |            |  |      |                |  |   | 3,362          |   |            |   |       |  |      |  
|Other assets                               |  |                | 1,873   |   |                |   |            |  |      |                |  |   | 1,778          |   |            |   |       |  |      |  
|                                           |  |                |         |   |                |   |            |  |      |                |  |   |                |   |            |   |       |  |      |  
|Total assets                               |  | $              | 156,408 |   |                |   |            |  |      |                |  | $ | 139,444        |   |            |   |       |  |      |  
|                                           |  |                |         |   |                |   |            |  |      |                |  |   |                |   |            |   |       |  |      |  
|Liabilities:                               |  |                |         |   |                |   |            |  |      |                |  |   |                |   |            |   |       |  |      |  
|Interest-bearing liabilities:              |  |                |         |   |                |   |            |  |      |                |  |   |                |   |            |   |       |  |      |  
|Interest-bearing deposits                  |  | $              | 122,774 |   |                |   | 3,857      |  | 3.14 | %              |  | $ | 108,494        |   |            |   | 2,217 |  | 2.04 | %
|Short-term borrowings                      |  |                | 414     |   |                |   | 14         |  | 3.38 |                |  |   | 325            |   |            |   | 8     |  | 2.46 |  
|                                           |  |                |         |   |                |   |            |  |      |                |  |   |                |   |            |   |       |  |      |  
|Total interest- bearing liabilities        |  |                | 123,188 |   |                |   | 3,871      |  | 3.14 |                |  |   | 108,819        |   |            |   | 2,225 |  | 2.04 |  
|                                           |  |                |         |   |                |   |            |  |      |                |  |   |                |   |            |   |       |  |      |  
|Noninterest-bearing deposits               |  |                | 17,437  |   |                |   |            |  |      |                |  |   | 16,994         |   |            |   |       |  |      |  
|Accrued interest and other liabilities     |  |                | 1,666   |   |                |   |            |  |      |                |  |   | 587            |   |            |   |       |  |      |  
|Shareholders equity                       |  |                | 14,117  |   |                |   |            |  |      |                |  |   | 13,044         |   |            |   |       |  |      |  
|                                           |  |                |         |   |                |   |            |  |      |                |  |   |                |   |            |   |       |  |      |  
|Total liabilities and shareholders equity |  | $              | 156,408 |   |                |   |            |  |      |                |  | $ | 139,444        |   |            |   |       |  |      |  
|                                           |  |                |         |   |                |   |            |  |      |                |  |   |                |   |            |   |       |  |      |  
|Net interest spread                        |  |                |         |   |                |   |            |  | 3.19 | %              |  |   |                |   |            |   |       |  | 3.86 | %
|Net interest income                        |  |                |         |   |                | $ | 5,487      |  |      |                |  |   |                |   |            | $ | 5,512 |  |      |  
|                                           |  |                |         |   |                |   |            |  |      |                |  |   |                |   |            |   |       |  |      |  
|Net interest margin                        |  |                |         |   |                |   |            |  | 3.71 | %              |  |   |                |   |            |   |       |  | 4.20 | %

---

|(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.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------



11



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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



|                                |  |                         |       |   |                         |   |       |              |  |   |       |   |  |        |       |   |      |   |     |              |  |   |       |   |  |   |      |   |  |   |     |  
|------------------------------- |  | ----------------------- | ----- | - | ----------------------- | - | ----- | ------------ |  | - | ----- | - |  | ------ | ----- | - | ---- | - | --- | ------------ |  | - | ----- | - |  | - | ---- | - |  | - | --- | -
|                                |  | 2006 Compared With 2005 |       |   | 2005 Compared With 2004 |  
|                                |  | Variance Due to         |       |   | Variance Due to         |  
|(Dollars in thousands)          |  | Volume                  |       |   | Rate                    |   |       | Volume/ Rate |  |   | Total |   |  | Volume |       |   | Rate |   |     | Volume/ Rate |  |   | Total |  
|Earning Assets                  |  |                         |       |   |                         |   |       |              |  |   |       |   |  |        |       |   |      |   |     |              |  |   |       |   |  |   |      |   |  |   |     |  
|Securities, taxable             |  | $                       | 42    |   |                         | $ | 178   |              |  | $ | 9     |   |  | $      | 229   |   |      | $ | 236 |              |  | $ | 68    |   |  | $ | 32   |   |  | $ | 336 |  
|Securities, tax-exempt          |  |                         | 41    |   |                         |   | (22   | )            |  |   | (4    | ) |  |        | 15    |   |      |   | 19  |              |  |   | 16    |   |  |   | 1    |   |  |   | 36  |  
|Nonmarketable equity securities |  |                         |      |   |                         |   | 3     |              |  |   |      |   |  |        | 3     |   |      |   | 3   |              |  |   | (1    | ) |  |   | (1   | ) |  |   | 1   |  
|Federal funds sold              |  |                         | 9     |   |                         |   | 223   |              |  |   | 7     |   |  |        | 239   |   |      |   | (81 | )            |  |   | 285   |   |  |   | (106 | ) |  |   | 98  |  
|Time deposits with other banks  |  |                         | (12   | ) |                         |   | 22    |              |  |   | (16   | ) |  |        | (6    | ) |      |   | (5  | )            |  |   | 5     |   |  |   | (2   | ) |  |   | (2  | )
|Loans                           |  |                         | 1,040 |   |                         |   | 86    |              |  |   | 15    |   |  |        | 1,141 |   |      |   | 581 |              |  |   | (131  | ) |  |   | (13  | ) |  |   | 437 |  
|                                |  |                         |       |   |                         |   |       |              |  |   |       |   |  |        |       |   |      |   |     |              |  |   |       |   |  |   |      |   |  |   |     |  
|Total interest income           |  |                         | 1,120 |   |                         |   | 490   |              |  |   | 11    |   |  |        | 1,621 |   |      |   | 753 |              |  |   | 242   |   |  |   | (89  | ) |  |   | 906 |  
|                                |  |                         |       |   |                         |   |       |              |  |   |       |   |  |        |       |   |      |   |     |              |  |   |       |   |  |   |      |   |  |   |     |  
|Interest-Bearing Liabilities    |  |                         |       |   |                         |   |       |              |  |   |       |   |  |        |       |   |      |   |     |              |  |   |       |   |  |   |      |   |  |   |     |  
|Interest-bearing deposits       |  |                         | 292   |   |                         |   | 1,191 |              |  |   | 157   |   |  |        | 1,640 |   |      |   | 115 |              |  |   | 463   |   |  |   | 33   |   |  |   | 611 |  
|Short-term borrowings           |  |                         | 2     |   |                         |   | 3     |              |  |   | 1     |   |  |        | 6     |   |      |   |    |              |  |   | 7     |   |  |   |     |   |  |   | 7   |  
|                                |  |                         |       |   |                         |   |       |              |  |   |       |   |  |        |       |   |      |   |     |              |  |   |       |   |  |   |      |   |  |   |     |  
|Total interest expense          |  |                         | 294   |   |                         |   | 1,194 |              |  |   | 158   |   |  |        | 1,646 |   |      |   | 115 |              |  |   | 470   |   |  |   | 33   |   |  |   | 618 |  
|                                |  |                         |       |   |                         |   |       |              |  |   |       |   |  |        |       |   |      |   |     |              |  |   |       |   |  |   |      |   |  |   |     |  
|Net interest income             |  | $                       | 826   |   |                         | $ | (704  | )            |  | $ | (147  | ) |  | $      | (25   | ) |      | $ | 638 |              |  | $ | (228  | ) |  | $ | (122 | ) |  | $ | 288 |  
|                                |  |                         |       |   |                         |   |       |              |  |   |       |   |  |        |       |   |      |   |     |              |  |   |       |   |  |   |      |   |  |   |     |  

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.



12



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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, 2006. The table may not be indicative of the Companys rate sensitivity position at other points in time.

Interest Sensitivity
Analysis



|                                                                       |  |                    |         |    |                                 |   |         |                           |  |   |                                         |   |  |       |        |   |  |   |        
|---------------------------------------------------------------------- |  | ------------------ | ------- | -- | ------------------------------- | - | ------- | ------------------------- |  | - | --------------------------------------- | - |  | ----- | ------ | - |  | - | -------
|(Dollars in thousands)                                                 |  | Within ThreeMonths |         |    | After ThreeThroughTwelve Months |   |         | After OneThroughFiveYears |  |   | Greater ThanFive Years or Non-Sensitive |   |  | Total
|Assets                                                                 |  |                    |         |    |                                 |   |         |                           |  |   |                                         |   |  |       |        |   |  |   |        
|Earning assets:                                                        |  |                    |         |    |                                 |   |         |                           |  |   |                                         |   |  |       |        |   |  |   |        
|Federal funds sold and securities purchased under agreements to resell |  | $                  | 8,363   |    |                                 | $ |        |                           |  | $ |                                        |   |  | $     |       |   |  | $ | 8,363  
|Time deposits with other banks                                         |  |                    | 100     |    |                                 |   |        |                           |  |   |                                        |   |  |       |       |   |  |   | 100    
|Investment securities                                                  |  |                    | 2,659   |    |                                 |   | 10,056  |                           |  |   | 15,799                                  |   |  |       | 5,872  |   |  |   | 34,386 
|Loans (1)                                                              |  |                    | 16,545  |    |                                 |   | 30,158  |                           |  |   | 58,079                                  |   |  |       | 510    |   |  |   | 105,292
|                                                                       |  |                    |         |    |                                 |   |         |                           |  |   |                                         |   |  |       |        |   |  |   |        
|Total earning assets                                                   |  |                    | 27,667  |    |                                 |   | 40,214  |                           |  |   | 73,878                                  |   |  |       | 6,382  |   |  |   | 148,141
|                                                                       |  |                    |         |    |                                 |   |         |                           |  |   |                                         |   |  |       |        |   |  |   |        
|Liabilities                                                            |  |                    |         |    |                                 |   |         |                           |  |   |                                         |   |  |       |        |   |  |   |        
|Interest-bearing liabilities:                                          |  |                    |         |    |                                 |   |         |                           |  |   |                                         |   |  |       |        |   |  |   |        
|Interest-bearing deposits:                                             |  |                    |         |    |                                 |   |         |                           |  |   |                                         |   |  |       |        |   |  |   |        
|Demand                                                                 |  |                    | 23,916  |    |                                 |   |        |                           |  |   |                                        |   |  |       |       |   |  |   | 23,916 
|Savings and money market                                               |  |                    | 16,610  |    |                                 |   |        |                           |  |   |                                        |   |  |       |       |   |  |   | 16,610 
|Time                                                                   |  |                    | 23,837  |    |                                 |   | 54,934  |                           |  |   | 1,721                                   |   |  |       | 3      |   |  |   | 80,495 
|                                                                       |  |                    |         |    |                                 |   |         |                           |  |   |                                         |   |  |       |        |   |  |   |        
|Total interest-bearing deposits                                        |  |                    | 64,363  |    |                                 |   | 54,934  |                           |  |   | 1,721                                   |   |  |       | 3      |   |  |   | 121,021
|Short-term borrowings                                                  |  |                    | 250     |    |                                 |   |        |                           |  |   |                                        |   |  |       |       |   |  |   | 250    
|                                                                       |  |                    |         |    |                                 |   |         |                           |  |   |                                         |   |  |       |        |   |  |   |        
|Total interest-bearing deposits                                        |  |                    | 64,613  |    |                                 |   | 54,934  |                           |  |   | 1,721                                   |   |  |       | 3      |   |  |   | 121,271
|                                                                       |  |                    |         |    |                                 |   |         |                           |  |   |                                         |   |  |       |        |   |  |   |        
|Period gap                                                             |  | $                  | (36,946 | )  |                                 | $ | (14,720 | )                         |  | $ | 72,157                                  |   |  | $     | 6,379  |   |  |   |        
|                                                                       |  |                    |         |    |                                 |   |         |                           |  |   |                                         |   |  |       |        |   |  |   |        
|Cumulative gap                                                         |  | $                  | (36,946 | )  |                                 | $ | (51,666 | )                         |  | $ | 20,491                                  |   |  | $     | 26,870 |   |  |   |        
|                                                                       |  |                    |         |    |                                 |   |         |                           |  |   |                                         |   |  |       |        |   |  |   |        
|Ratio of cumulative gap to total earning assets                        |  |                    | (24.94  | )% |                                 |   | (34.88  | )%                        |  |   | 13.83                                   | % |  |       | 18.14  | % |  |   |        

---

|(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 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.



13



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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

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

The allowance is maintained at a level that we believe is sufficient to cover losses in the loan portfolio at a specific point in time. Assessing the adequacy of the
allowance requires considerable judgment. The adequacy of the allowance is analyzed on a monthly basis using an internal analysis model. For purposes of this analysis, adequacy is defined as a level sufficient to absorb probable losses in the
portfolio. This methodology relies upon our judgment. Our judgments are based on our assessment of various issues, including, but not limited to, the pace of loan growth, emerging portfolio concentrations, the risk management system relating to
lending activities, entry into new markets, new product offerings, loan portfolio quality trends, and uncertainty in current economic and business conditions. An allowance model is used that takes into account factors including the composition of
the loan portfolio such as risk grade classifications, historical asset quality trends including, but not limited to, previous loss experience ratios, our assessment of current economic conditions, and reviews of specific high risk sectors of the
portfolio. Loans are graded at inception and are reviewed on a periodic basis to ensure that assigned risk grades are proper based on the definition of such classification. The value of underlying collateral is also considered during such analysis.
The resulting monthly model and the related conclusions are reviewed and approved by Senior Management. Our analysis of allowance adequacy includes consideration for loan impairment. While we use the best information available to make evaluations,
future adjustments to the allowance may be necessary if results differ substantially from the assumptions used in making the evaluations.

The methodology
for assessing the adequacy of the allowance establishes both an allocated and unallocated component of the allowance. The allocated component is based principally on current loan grades and historical loss rates. The unallocated component is the
result of the portion of the assessment that estimates probable losses in the portfolio that are not fully captured in the allocated allowance. This analysis includes, but is not necessarily limited to, industry concentrations, future market
expansions, model imprecision, and the estimated impact of current economic conditions on historical loss rates. On a continual basis, we monitor trends within the portfolio, both quantitative and qualitative, and assess the reasonableness of the
unallocated component.

The allowance is subject to examination and adequacy testing by regulatory agencies. In addition, such regulatory agencies could
require allowance adjustments based on information available to them at the time of their examination.

The allowance for loan losses was 1.75% and 1.71%
of total loans on December 31, 2006 and 2005, respectively. Although there has been an increase in potential problem loans from December 31, 2005 to December 31, 2006, we believe the allowance for loan losses at December 31, 2006
is reflective of the results of our allowance model methodology. We monitor and evaluate the adequacy of the allowance and loss exposure in the loan portfolio by considering the borrowers financial conditions and other factors in the
unallocated component of the allowance. Accordingly, we believe the allowance as of December 31, 2006 is adequate, based on our assessment of probable losses, and available facts and circumstances then prevailing.



14



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COMMUNITYCORP

Managements Discussion and Analysis of

Financial Condition and Results of Operations

PROVISION AND ALLOWANCE FOR LOAN LOSSES(continued)



Allowance for Loan Losses



|                                                                                                               |  |              |             |   |      |   |            |  
|-------------------------------------------------------------------------------------------------------------- |  | ------------ | ----------- | - | ---- | - | ---------- | -
|Year ended December 31,                                                                                        |  | 2006         |             |   | 2005 |  
|Total loans outstanding at end of year                                                                         |  | $            | 105,840,360 |   |      | $ | 97,595,299 |  
|                                                                                                               |  |              |             |   |      |   |            |  
|Average loans outstanding                                                                                      |  | $            | 102,207,241 |   |      | $ | 87,755,999 |  
|                                                                                                               |  |              |             |   |      |   |            |  
|Balance of allowance for loan losses at beginning of period                                                    |  | $            | 1,664,948   |   |      | $ | 1,456,326  |  
|Loan losses:                                                                                                   |  |              |             |   |      |   |            |  
|Real estateconstruction                                                                                       |  |              |            |   |      |   |           |  
|Real estatemortgage                                                                                           |  |              |            |   |      |   |           |  
|Commercial and industrial                                                                                      |  |              | 70,028      |   |      |   | 174,125    |  
|Consumer                                                                                                       |  |              | 35,014      |   |      |   | 41,267     |  
|                                                                                                               |  |              |             |   |      |   |            |  
|Total loan losses                                                                                              |  |              | 105,042     |   |      |   | 215,392    |  
|                                                                                                               |  |              |             |   |      |   |            |  
|Recoveries of previous loan losses:                                                                            |  |              |             |   |      |   |            |  
|Real estateconstruction                                                                                       |  |              |            |   |      |   |           |  
|Real estatemortgage                                                                                           |  |              |            |   |      |   |           |  
|Commercial and industrial                                                                                      |  |              | 52,987      |   |      |   | 18,427     |  
|Consumer                                                                                                       |  |              | 18,995      |   |      |   | 24,570     |  
|                                                                                                               |  |              |             |   |      |   |            |  
|Total recoveries                                                                                               |  |              | 71,982      |   |      |   | 42,997     |  
|                                                                                                               |  |              |             |   |      |   |            |  
|Net charge-offs                                                                                                |  |              | (33,060     | ) |      |   | (172,395   | )
|Provision charged to operations                                                                                |  |              | 225,000     |   |      |   | 381,017    |  
|                                                                                                               |  |              |             |   |      |   |            |  
|Balance of allowance for loan losses at end of year                                                            |  | $            | 1,856,888   |   |      | $ | 1,664,948  |  
|                                                                                                               |  |              |             |   |      |   |            |  
|                                                                                                               |  |             
|Ratios:                                                                                                        |  |              |             |   |      |   |            |  
|Net charge-offs to average loans outstanding                                                                   |  |              | 0.03        | % |      |   | 0.20       | %
|Net charge-offs to loans at end of year                                                                        |  |              | 0.03        | % |      |   | 0.18       | %
|Allowance for loan losses to average loans                                                                     |  |              | 1.82        | % |      |   | 1.90       | %
|Allowance for loan losses to loans at end of year                                                              |  |              | 1.75        | % |      |   | 1.71       | %
|Net charge-offs to allowance for loan losses                                                                   |  |              | 1.78        | % |      |   | 10.35      | %
|Net charge-offs to provisions for loan losses                                                                  |  |              | 14.69       | % |      |   | 45.25      | %
|                                                                                                              
|Nonperforming Assets.The following table sets forth the Companys nonperforming assets at the dates indicated: | 
|                                                                                                               | 
|                                                                                                               |  | December 31, |            
|                                                                                                               |  | 2006         |             |   | 2005 |  
|Nonaccrual loans (considered impaired)                                                                         |  | $            | 548,523     |   |      | $ | 279,969    |  
|Loans 90 days or more past due and still accruing interest                                                     |  |              | 1,767       |   |      |   | 4,433      |  
|                                                                                                               |  |              |             |   |      |   |            |  
|Total nonperforming loans                                                                                      |  |              | 550,290     |   |      |   | 284,402    |  
|Other real estate owned                                                                                        |  |              |            |   |      |   |           |  
|                                                                                                               |  |              |             |   |      |   |            |  
|Total nonperforming assets                                                                                     |  | $            | 550,290     |   |      | $ | 284,402    |  
|                                                                                                               |  |              |             |   |      |   |            |  
|Nonperforming assets to year end loans                                                                         |  |              | .52         | % |      |   | .30        | %

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. All of the nonaccrual loans at December 31, 2006 and 2005 were considered to be impaired and were appropriately provided for in the related
computation of the allowance of loan losses as of those dates. No other loans were identified as being impaired at December 31, 2006 and 2005.



15



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COMMUNITYCORP

Managements Discussion and Analysis of

Financial Condition and Results of Operations

PROVISION AND ALLOWANCE FOR LOAN LOSSES(continued)



Potential Problem Loans. The following is a summary of potential problems loans at December 31,
2006 and 2005, which were identified through our internal review mechanisms.



|                 |  |              |           |      |   |          
|---------------- |  | ------------ | --------- | ---- | - | ---------
|                 |  | December 31,
|                 |  | 2006         |           | 2005
|Criticized loans |  | $            | 392,324   |      | $ | 21,978   
|                 |  |             
|Classified loans |  |              | 1,411,827 |      |   | 1,353,249

Criticized loans have potential weaknesses that deserve close attention and could, if uncorrected, result in
deterioration of the prospects for repayment or the Banks credit position at a future date. Classified loans are inadequately protected by the sound worth and paying capacity of the borrower or any collateral and there is a distinct
possibility or probability that the Bank will sustain a loss if the deficiencies are not corrected.

At December 31, 2006 real estate or other
collateral secured practically all of the loans that were criticized and classified. In the event of foreclosure on these loans, there can be no assurance that in liquidation, the collateral can be sold for its estimated fair market value or even
for an amount at least equal to or greater than the loan amount.

The results of this internal review process and applying the allowance model methodology
are the primary determining factors in managements assessment of the adequacy of the allowance for loan losses.

NONINTEREST INCOME
AND EXPENSE

Noninterest Income. Noninterest income for the year ended December 31, 2006 was $713,490, an increase of $114,524 or
19.12% from the comparable period in 2005. Service charges on deposit accounts increased $86,886 or 20.32% from the year ended December 31, 2005 to $514,420 for the comparable period in 2006. During the current year, we became more aggressive
in charging for non-sufficient fund checks. All other categories of noninterest income increased 16.12% to $199,070 for the year ended December 31, 2006 when compared to the year ended December 31, 2005.

Noninterest Expense.Total noninterest expenses for the year ended December 31, 2006 was $3,410,840, an increase of $178,709 or 5.53%, higher when
compared to total noninterest expenses of $3,232,131 for the year ended December 31, 2005. Salaries and employee benefits increased 4.27% from $1,795,361 for the year ended December 31, 2005 to $1,871,945 for the year ended
December 31, 2006. This increase is primarily attributable to normal salary increases plus the increase in the cost of providing our employees health benefits. During the year, the increase in health benefits was approximately $34,000 when
compared to the same period in 2005. Net occupancy and equipment expense increased 2.84% from $538,576 for the year ended December 31, 2005 to $553,891 for the year ended December 31, 2006. Other operating expenses increased $86,710 from
the year ended December 31, 2005 to $984,904 for the year ended December 31, 2006.



16



---

COMMUNITYCORP

Managements Discussion and Analysis of

Financial Condition and Results of Operations

NONINTEREST INCOME AND EXPENSE(continued)



Income Taxes. The Companys income tax expense for 2006 was $822,555, an increase of
$35,055 over the 2005 expense of $787,500. The Companys effective tax rates for the years ended December 31, 2006 and 2005 were 32.07% and 31.53%, respectively.

Net Income.The combination of the above factors resulted in net income for the year ended December 31, 2006 of $1,742,621 as compared to $1,710,424 for the same period in 2005. This
represents an increase of $32,197 or 1.88% over the same period in 2005.

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 approximately $102,207,000 in 2006 compared to approximately $87,756,000 in 2005, an increase of approximately
$14,451,000, or 16.47%. Total loans were $105,840,360 and $97,595,299 at December 31, 2006 and 2005, respectively. Fixed rates loans comprised approximately 98% and 95% of our loan portfolio at December 31, 2006 and 2005, respectively.

The Companys ratio of loans to deposits was 75.18% at December 31, 2006 as compared to 76.57% at December 31, 2005. 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.

The Company extends credit primarily to consumers and small businesses in Walterboro, Ravenel and Ridgeland, 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 and Ridgeland area is expected to come primarily from consumer loans and small businesses in neighboring Charleston and Jasper Counties. No particular category or segment
of the economies previously described is expected to grow or contract disproportionately in 2006. Management believes that the loan portfolio is adequately diversified. There are no significant concentrations of loans in any particular individuals,
industry, or group of related individuals or industries. The loan demand remains strong in the Companys market area.

The Company considers a loan to
be impaired when, based upon current information and events, Management believes it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. The Companys impaired loans
include loans identified as impaired through review of the nonhomogeneous portfolio and troubled debt restructurings. Specific allowances are established on impaired loans, if deemed necessary, for the difference between the loan amount and the fair
market value less estimated selling costs. Impaired loans may be left on accrual status during the period the Company is pursuing repayment of the loan. Impairment losses are recognized through an increase in the allowance for loan losses and a
corresponding charge to the provision for loan losses. Adjustments to impairment losses due to changes in the fair market value of the collateral properties for impaired loans are also recognized through an increase in the allowance for loan losses
and a corresponding charge to the provision for loan losses. When an impaired loan is sold, transferred to other real estate owned, or written-down, any specific allowance is charged-off.



17



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COMMUNITYCORP

Managements Discussion and Analysis of

Financial Condition and Results of Operations

EARNING ASSETS(continued)



The following table sets forth the composition of the loan portfolio by category at December 31, 2006 and 2005
and highlights our general emphasis on commercial and mortgage lending.

Loan Portfolio Composition



|                          |  |        |             |   |                  |        |   |        |   |            |                  |  |        |  
|------------------------- |  | ------ | ----------- | - | ---------------- | ------ | - | ------ | - | ---------- | ---------------- |  | ------ | -
|                          |  | 2006   |             |   | 2005             |       
|                          |  | Amount |             |   | Percent of Total |        |   | Amount |   |            | Percent of Total | 
|Commercial and industrial |  | $      | 57,752,569  |   |                  | 54.57  | % |        | $ | 42,727,235 |                  |  | 43.78  | %
|Real estate               |  |        |             |   |                  |        |   |        |   |            |                  |  |        |  
|Construction              |  |        | 3,234,546   |   |                  | 3.06   |   |        |   | 4,453,312  |                  |  | 4.56   |  
|Mortgage                  |  |        | 33,437,784  |   |                  | 31.59  |   |        |   | 37,478,906 |                  |  | 38.40  |  
|Consumer and other loans  |  |        | 11,415,461  |   |                  | 10.78  |   |        |   | 12,935,846 |                  |  | 13.26  |  
|                          |  |        |             |   |                  |        |   |        |   |            |                  |  |        |  
|Total loans               |  |        | 105,840,360 |   |                  | 100.00 | % |        |   | 97,595,299 |                  |  | 100.00 | %
|                          |  |        |             |   |                  |        |   |        |   |            |                  |  |        |  
|Allowance for loan losses |  |        | (1,856,888  | ) |                  |        |   |        |   | (1,664,948 | )                |  |        |  
|                          |  |        |             |   |                  |        |   |        |   |            |                  |  |        |  
|Net loans                 |  | $      | 103,983,472 |   |                  |        |   |        | $ | 95,930,351 |                  |  |        |  
|                          |  |        |             |   |                  |        |   |        |   |            |                  |  |        |  

Commercial and industrial loans increased $15,025,334 or 35.17% from $42,727,235 at December 31, 2005. Real
estate loans, including construction and mortgage loans, decreased $5,259,888 or 12.54% to $36,672,330 at December 31, 2006. Consumer and all other loans decreased $1,520,385 or 11.75% to $11,415,461 at December 31, 2006.

Maturities and Sensitivity of Loans to Changes in Interest Rates

The
following table summarizes the loan maturity distribution, by type, at December 31, 2006 and related interest rate characteristics:



|                                    |  |                 |            |                                  |   |                 |  |       |           |  |   |            
|----------------------------------- |  | --------------- | ---------- | -------------------------------- | - | --------------- |  | ----- | --------- |  | - | -----------
|                                    |  | One Year orLess |            | Over One Year Through Five
Years |   | Over Five Years |  | Total
|Real estateconstruction            |  | $               | 2,200,094  |                                  | $ | 1,034,452       |  | $     |          |  | $ | 3,234,546  
|Real estate  mortgage              |  |                 | 9,692,821  |                                  |   | 22,695,869      |  |       | 1,049,094 |  |   | 33,437,784 
|Commercial and industrial           |  |                 | 22,401,007 |                                  |   | 33,895,905      |  |       | 1,455,657 |  |   | 57,752,569 
|Consumer and other                  |  |                 | 3,760,821  |                                  |   | 7,482,540       |  |       | 172,100   |  |   | 11,415,461 
|                                    |  |                 |            |                                  |   |                 |  |       |           |  |   |            
|                                    |  | $               | 38,054,743 |                                  | $ | 65,108,766      |  | $     | 2,676,851 |  | $ | 105,840,360
|                                    |  |                 |            |                                  |   |                 |  |       |           |  |   |            
|Loans maturing after one year with: |  |                 |            |                                  |   |                 |  |       |           |  |   |            
|Fixed interest rates                |  |                 |            |                                  |   |                 |  |       |           |  | $ | 66,873,868 
|Floating interest rates             |  |                 |            |                                  |   |                 |  |       |           |  |   | 911,749    
|                                    |  |                 |            |                                  |   |                 |  |       |           |  |   |            
|                                    |  |                 |            |                                  |   |                 |  |       |           |  | $ | 67,785,617 
|                                    |  |                 |            |                                  |   |                 |  |       |           |  |   |            



18



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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 averaged approximately $11,195,000 in 2006, compared to approximately $10,874,000 in 2005. At December 31, 2006, short-term investments totaled $8,363,000. 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 approximately $124,000 in 2006. The total of these time deposits was $100,000 at
December 31, 2006.

Investment Securities. The investment securities portfolio is a significant component of the Companys
total earning assets. Total investment securities, stated at historical cost, averaged approximately $34,323,000 in 2006, compared to approximately $32,052,000 in 2005. At December 31, 2006, the carrying value of the securities portfolio was
$34,385,570. Securities designated as available for sale totaled $32,468,498 and were recorded at estimated fair value. Securities designated as held to maturity totaled $1,574,215 and were recorded at amortized cost. Securities designated as
nonmarketable equity securities totaled $342,857 at December 31, 2006. 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 primarily consist of obligations of government-sponsored enterprises.

Investment
Portfolio. The following tables summarize the carrying value of investment securities at December 31, 2006 and 2005 and the weighted average yields of those securities at December 31, 2006.

Investment Securities Portfolio Composition



|                                            |  |      |            |      |   |           
|------------------------------------------- |  | ---- | ---------- | ---- | - | ----------
|                                            |  | 2006 |            | 2005
|Available-for-Sale (1)                      |  |      |            |      |   |           
|Government-sponsored enterprises            |  | $    | 22,733,694 |      | $ | 22,932,331
|Obligations of states and local governments |  |      | 6,858,450  |      |   | 4,836,251 
|Other                                       |  |      | 200,000    |      |   | 200,000   
|                                            |  |      |            |      |   |           
|                                            |  |      | 29,792,144 |      |   | 27,968,582
|Mortgage-backed securities                  |  |      | 2,676,354  |      |   | 2,887,178 
|                                            |  |      |            |      |   |           
|Total available-for-sale securities         |  | $    | 32,468,498 |      | $ | 30,855,760
|                                            |  |      |            |      |   |           
|                                            |  |     
|Held-to-Maturity (1)                        |  |      |            |      |   |           
|Obligations of states and local governments |  | $    | 1,574,215  |      | $ | 1,873,966 
|Mortgage-backed securities                  |  |      |           |      |   | 1,167     
|                                            |  |      |            |      |   |           
|Total held-to-maturity securities           |  | $    | 1,574,215  |      | $ | 1,875,133 
|                                            |  |      |            |      |   |           

---

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



19



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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



|                                            |  |                 |        |           |                                 |   |        |                                 |           |  |                |        |  |           |       |  |        |   |           |   |       |  |      |  
|------------------------------------------- |  | --------------- | ------ | --------- | ------------------------------- | - | ------ | ------------------------------- | --------- |  | -------------- | ------ |  | --------- | ----- |  | ------ | - | --------- | - | ----- |  | ---- | -
|December 31, 2006                           |  | Within One Year |        |           | After One But Within Five Years |   |        | After Five But Within Ten Years |           |  | Over Ten Years |       
|(Dollars in thousands)                      |  | Amount          |        | Yield (1) |                                 |   | Amount |                                 | Yield (1) |  |                | Amount |  | Yield (1) |       |  | Amount |   | Yield (1) |  
|Government-sponsored enterprises (2)        |  | $               | 12,243 |           | 4.10                            | % |        | $                               | 9,986     |  | 4.27           | %      |  | $         |      |  |       | % |           | $ | 505   |  | 5.53 | %
|Obligations of states and local governments |  |                 | 417    |           | 6.47                            | % |        |                                 | 2,584     |  | 5.73           | %      |  |           | 1,304 |  | 5.71   | % |           |   | 2,554 |  | 5.57 | %
|Other                                       |  |                 |       |           |                                | % |        |                                 |          |  |               | %      |  |           | 200   |  | 6.25   | % |           |   |      |  |     | %
|                                            |  |                 |        |           |                                 |   |        |                                 |           |  |                |        |  |           |       |  |        |   |           |   |       |  |      |  
|Total available-for-sale securities         |  | $               | 12,660 |           | 4.18                            | % |        | $                               | 12,570    |  | 4.57           | %      |  | $         | 1,504 |  | 5.78   | % |           | $ | 3,059 |  | 5.56 | %
|                                            |  |                 |        |           |                                 |   |        |                                 |           |  |                |        |  |           |       |  |        |   |           |   |       |  |      |  
|Held-to-Maturity                            | 
|December 31, 2006                           |  | Within One Year |        |           | After One But Within Five Years |   |        | After Five But Within Ten Years |           |  | Over Ten Years |       
|(Dollars in thousands)                      |  | Amount          |        | Yield (1) |                                 |   | Amount |                                 | Yield (1) |  |                | Amount |  | Yield (1) |       |  | Amount |   | Yield (1) |  
|Obligations of states and local governments |  | $               | 55     |           | 7.61                            | % |        | $                               | 1,219     |  | 6.60           | %      |  | $         | 300   |  | 6.18   | % |           |   |      |  |     | %
|                                            |  |                 |        |           |                                 |   |        |                                 |           |  |                |        |  |           |       |  |        |   |           |   |       |  |      |  

---

|(1) | Tax equivalent yield has been calculated using an incremental rate of 34%.
|--- | --------------------------------------------------------------------------

|(2) | Excludes mortgage-backed securities totaling $2,676,354 with a yield of 4.10%.
|--- | ------------------------------------------------------------------------------

DEPOSITS AND OTHER INTEREST-BEARING LIABILITIES

Deposits. Deposits account for practically all of our
interest bearing liabilities. Total average deposits increased from approximately $125,488,000 in 2005 to approximately $140,211,000 in 2006. This represents an increase of approximately $14,723,000 or 11.73% over the 2005 amount.

The following table summarizes the Companys deposits for the years ended December 31, 2006 and 2005.



|                                  |  |        |             |                    |        |   |        |   |                    |  |        |  
|--------------------------------- |  | ------ | ----------- | ------------------ | ------ | - | ------ | - | ------------------ |  | ------ | -
|                                  |  | 2006   |             |                    | 2005   |  
|                                  |  | Amount |             | Percent ofDeposits |        |   | Amount |   | Percent ofDeposits | 
|Noninterest bearing demand        |  | $      | 19,764,876  |                    | 14.04  | % |        | $ | 18,020,633         |  | 14.14  | %
|Interest-bearing demand           |  |        | 23,916,250  |                    | 16.99  |   |        |   | 28,958,482         |  | 22.72  |  
|Savings accounts                  |  |        | 16,610,063  |                    | 11.80  |   |        |   | 18,123,425         |  | 14.22  |  
|Time deposits of $100,000 or over |  |        | 48,049,934  |                    | 34.13  |   |        |   | 34,253,375         |  | 26.87  |  
|Other time deposits               |  |        | 32,445,141  |                    | 23.04  |   |        |   | 28,102,391         |  | 22.05  |  
|                                  |  |        |             |                    |        |   |        |   |                    |  |        |  
|Total deposits                    |  | $      | 140,786,264 |                    | 100.00 | % |        | $ | 127,458,306        |  | 100.00 | %
|                                  |  |        |             |                    |        |   |        |   |                    |  |        |  



20



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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 $92,736,330 and $93,204,931 at December 31, 2006 and 2005, 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, 2006, is shown in the following table.



|                                            |  |                    |            |                              |   |                              |  |                    |            |       |   |         |  |   |           
|------------------------------------------- |  | ------------------ | ---------- | ---------------------------- | - | ---------------------------- |  | ------------------ | ---------- | ----- | - | ------- |  | - | ----------
|                                            |  | Within ThreeMonths |            | After ThreeThrough SixMonths |   | After SixThroughTwelveMonths |  | After TwelveMonths |            | Total
|Certificates of deposit of $100,000 or more |  | $                  | 14,309,471 |                              | $ | 18,363,011                   |  | $                  | 14,832,562 |       | $ | 544,890 |  | $ | 48,049,934

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. During 2006 and 2005, the Company did not have any certificates of deposits that were obtained through brokers.

Certificates of deposits include a $9,137,000 deposit that was issued to a local school district on April 14, 2006, bearing an interest rate of 5.10% with a
maturity date of May 14, 2007.

Short-term Borrowings. At December 31, 2006 and 2005, 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
is summarized as follows:



|                                          |  |                          |         |   |      |   |         |  
|----------------------------------------- |  | ------------------------ | ------- | - | ---- | - | ------- | -
|                                          |  | Years ended December 31, |        
|                                          |  | 2006                     |         |   | 2005 |  
|Average balance during the year           |  | $                        | 347,312 |   |      | $ | 324,917 |  
|Average interest rate during the year     |  |                          | 4.01    | % |      |   | 2.33    | %
|Maximum month-end balance during the year |  | $                        | 450,000 |   |      | $ | 620,000 |  

CAPITAL

Total shareholders equity increased by $1,610,062 from $13,527,373 at December 31, 2005 (restated) to $15,137,435 at December 31, 2006. The increase is attributable to the sale of treasury stock of
$185,236, the increase in other comprehensive income of $170,056 and net income of $1,742,621. The increase was offset by the purchase of treasury stock during the period of $268,752, and the payment of dividends of $219,099.



21



---

COMMUNITYCORP

Managements Discussion and Analysis of

Financial Condition and Results of Operations

CAPITAL(continued)



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.

As of December 31, 2006, 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.



|                                         |  |        |            |       |                               |   |        |                                                                 |           |  |      |        |  |       |            |  |       |  
|---------------------------------------- |  | ------ | ---------- | ----- | ----------------------------- | - | ------ | --------------------------------------------------------------- | --------- |  | ---- | ------ |  | ----- | ---------- |  | ----- | -
|                                         |  | Actual |            |       | For Capital Adequacy Purposes |   |        | To Be Well- Capitalized UnderPrompt CorrectiveAction Provisions |          
|                                         |  |        |            |       | Minimum                       |   |        | Minimum                                                         |          
|                                         |  | Amount |            | Ratio |                               |   | Amount |                                                                 | Ratio     |  |      | Amount |  | Ratio |           
|December 31, 2006                        |  |        |            |       |                               |   |        |                                                                 |           |  |      |        |  |       |            |  |       |  
|Total capital (to risk-weighted assets)  |  | $      | 16,658,953 |       | 14.28                         | % |        | $                                                               | 9,335,360 |  | 8.00 | %      |  | $     | 11,669,200 |  | 10.00 | %
|Tier 1 capital (to risk-weighted assets) |  |        | 15,200,303 |       | 13.03                         |   |        |                                                                 | 4,667,680 |  | 4.00 |        |  |       | 7,001,520  |  | 6.00  |  
|Tier 1 capital (to average assets)       |  |        | 15,200,303 |       | 9.46                          |   |        |                                                                 | 6,430,440 |  | 4.00 |        |  |       | 8,038,050  |  | 5.00  |  
|                                         |  |        |            |       |                               |  
|December 31, 2005                        |  |        |            |       |                               |   |        |                                                                 |           |  |      |        |  |       |            |  |       |  
|Total capital (to risk-weighted assets)  |  | $      | 15,138,528 |       | 14.61                         | % |        | $                                                               | 8,287,840 |  | 8.00 | %      |  | $     | 10,359,800 |  | 10.00 | %
|Tier 1 capital (to risk-weighted assets) |  |        | 13,843,553 |       | 13.36                         |   |        |                                                                 | 4,143,920 |  | 4.00 |        |  |       | 6,215,880  |  | 6.00  |  
|Tier 1 capital (to average assets)       |  |        | 13,843,553 |       | 9.80                          |   |        |                                                                 | 5,647,960 |  | 4.00 |        |  |       | 7,059,950  |  | 5.00  |  

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 $500,000,000 in consolidated assets.

LIQUIDITY MANAGEMENT

Liquidity is the ability to meet current and future obligations through liquidation or
maturity of existing assets or the acquisition of additional liabilities. Adequate liquidity is necessary to meet the requirements of customers for loans and deposit withdrawals in the most timely and economical manner. Some liquidity is ensured by
maintaining assets, which may be immediately converted into cash at minimal cost (amounts due from banks and federal funds sold). However, the most manageable sources of liquidity are composed of liabilities, with the primary focus of



22



---

COMMUNITYCORP

Managements Discussion and Analysis of

Financial Condition and Results of Operations

LIQUIDITY MANAGEMENT(continued)



liquidity management being on the ability to obtain deposits within the Companys market area. Core deposits (total deposits, less time deposits of
$100,000 and over) provide a relatively stable funding base. At December 31, 2006 and 2005 core deposits represented 65.87% and 73.13%, respectively of total deposits.

The Bank had available at the end of 2006 an unused short-term line of credit to purchase up to $3,800,000 of federal funds from an unrelated correspondent institution. The Bank 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, 2006, the available credit totaled approximately $23,404,000 and there were no borrowings outstanding. Any
borrowings from the FHLB will be secured by a blanket lien on all of the Banks 1-4 family residential first lien mortgage loans and or investment securities.

Asset liquidity is provided from several sources, including amounts due from banks and federal funds sold. Available for sale securities, particularly those maturing within one year, provide a secondary source of liquidity. In addition,
funds from maturing loans are a source of liquidity.

The Companys ability to meet its cash obligations or to pay any possible future cash dividends
to shareholders is dependent primarily on the successful operation of the Bank and its ability to pay cash dividends to the Company. Any of the Banks cash dividends in an amount exceeding current year-to-date earnings are subject to the prior
approval of the South Carolina Commissioner of Banking and are generally allowable only from its undivided profits. In addition, dividends paid by the Bank to the Company would be prohibited if such payment would cause the Banks capital to be
reduced below applicable minimum regulatory requirements. At December 31, 2006, the Banks available undivided profits totaled $11,968,595. Under Federal Reserve Board regulations, the amounts of loans or advances from the Bank to the
Company are also restricted.

Management believes that the overall liquidity sources of both the Company the Bank are adequate to meet their operating
needs in the ordinary course of business.

IMPACT OF OFF-BALANCE-SHEET INSTRUMENTS

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 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. Management believes that through various sources of liquidity, they 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.

There are no
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.



23



---

COMMUNITYCORP

Managements Discussion and Analysis of

Financial Condition and Results of Operations

IMPACT OF OFF-BALANCE-SHEET INSTRUMENTS(continued)



Through its operations, the Bank has made contractual commitments to extend credit in the ordinary course of its
business activities. These commitments are legally binding agreements to lend money to the Banks customers at predetermined interest rates for a specified period of time. At December 31, 2006, the Bank had issued commitments to extend
credit of $9,388,762 and standby letters of credit of $1,256,978 through various types of commercial lending arrangements. Approximately $140,418 of these commitments to extend credit had variable rates.

The following table sets forth the length of time until maturity for unused commitments to extend credit and standby letters of credit at December 31, 2006.



|                                    |  |                 |         |                               |   |                                  |  |                |           |                       |   |           |  |   |           |  |   |           
|----------------------------------- |  | --------------- | ------- | ----------------------------- | - | -------------------------------- |  | -------------- | --------- | --------------------- | - | --------- |  | - | --------- |  | - | ----------
|                                    |  | Within OneMonth |         | After OneThrough Three Months |   | After ThreeThrough Twelve Months |  | Within OneYear |           | Greater Than One Year |   | Total    
|Unused commitments to extend credit |  | $               | 154,081 |                               | $ | 1,068,794                        |  | $              | 5,592,707 |                       | $ | 6,815,582 |  | $ | 2,573,180 |  | $ | 9,388,762 
|Standby letters of credit           |  |                 | 385,678 |                               |   | 45,000                           |  |                | 826,300   |                       |   | 1,256,978 |  |   |          |  |   | 1,256,978 
|                                    |  |                 |         |                               |   |                                  |  |                |           |                       |   |           |  |   |           |  |   |           
|Totals                              |  | $               | 539,759 |                               | $ | 1,113,794                        |  | $              | 6,419,007 |                       | $ | 8,072,560 |  | $ | 2,573,180 |  | $ | 10,645,740
|                                    |  |                 |         |                               |   |                                  |  |                |           |                       |   |           |  |   |           |  |   |           

The Bank evaluates each customers credit worthiness on a case-by-case basis. The amount of collateral
obtained, if deemed necessary by the Bank upon extension of credit, is based on its credit evaluation of the borrower. Collateral varies but may include accounts receivable, inventory, property, plant and equipment, commercial and residential real
estate.

IMPACT OF INFLATION

The
consolidated financial statements and related financial data presented herein have been prepared in accordance with accounting principles generally accepted in the United States of America 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
interest paid on liabilities vary directly with each other. Also, increases in the price of goods and services will generally result in increased operating expenses.

IMPACT OF RECENT ACCOUNTING CHANGES

For a summary of recent authoritative pronouncements that affect accounting,
reporting, and disclosure of financial information by the Company see Note 1 of the consolidated financial statements.



24



---

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors

Communitycorp and
Subsidiary

Walterboro, South Carolina

We have audited the accompanying consolidated balance sheets of Communitycorp and Subsidiary, (the Company) as of December 31, 2006 and 2005, and the related consolidated statements of income, changes in
shareholders equity and comprehensive income, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated 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 significant estimates made by management, as well as evaluating
the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our
opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Communitycorp and Subsidiary as of December 31, 2006 and 2005 and the results of their operations
and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

As described in Note 17 to the financial statements, retained earnings as of January 1, 2006, have been adjusted to reflect the adoption of SEC Staff Accounting Bulletin No. 108.

Greenville, South Carolina

March , 2007



25



---

COMMUNITYCORP

Consolidated Balance Sheets



|                                                                                                |  |              |             |   |      |   |             |  
|----------------------------------------------------------------------------------------------- |  | ------------ | ----------- | - | ---- | - | ----------- | -
|                                                                                                |  | December 31, |            
|                                                                                                |  | 2006         |             |   | 2005 |  
|Assets:                                                                                         |  |              |             |   |      |   |             |  
|Cash and cash equivalents:                                                                      |  |              |             |   |      |   |             |  
|Cash and due from banks                                                                         |  | $            | 6,041,317   |   |      | $ | 5,089,462   |  
|Federal funds sold                                                                              |  |              | 8,363,000   |   |      |   | 2,773,000   |  
|                                                                                                |  |              |             |   |      |   |             |  
|Total cash and cash equivalents                                                                 |  |              | 14,404,317  |   |      |   | 7,862,462   |  
|                                                                                                |  |              |             |   |      |   |             |  
|Time deposits with other banks                                                                  |  |              | 100,000     |   |      |   | 300,000     |  
|                                                                                                |  |             
|Investment securities:                                                                          |  |              |             |   |      |   |             |  
|Securities available-for-sale                                                                   |  |              | 32,468,498  |   |      |   | 30,855,760  |  
|Securities held-to-maturity (estimated fair value of $1,596,065 in 2006 and $1,908,781 in 2005) |  |              | 1,574,215   |   |      |   | 1,875,133   |  
|Nonmarketable equity securities                                                                 |  |              | 342,857     |   |      |   | 339,657     |  
|                                                                                                |  |              |             |   |      |   |             |  
|Total investment securities                                                                     |  |              | 34,385,570  |   |      |   | 33,070,550  |  
|                                                                                                |  |              |             |   |      |   |             |  
|Loans receivable                                                                                |  |              | 105,840,360 |   |      |   | 97,595,299  |  
|Less allowance for loan losses                                                                  |  |              | (1,856,888  | ) |      |   | (1,664,948  | )
|                                                                                                |  |              |             |   |      |   |             |  
|Loans, net                                                                                      |  |              | 103,983,472 |   |      |   | 95,930,351  |  
|Premises and equipment, net                                                                     |  |              | 3,130,914   |   |      |   | 3,265,920   |  
|Accrued interest receivable                                                                     |  |              | 1,216,414   |   |      |   | 989,582     |  
|Other assets                                                                                    |  |              | 871,299     |   |      |   | 800,871     |  
|                                                                                                |  |              |             |   |      |   |             |  
|Total assets                                                                                    |  | $            | 158,091,986 |   |      | $ | 142,219,736 |  
|                                                                                                |  |              |             |   |      |   |             |  
|Liabilities:                                                                                    |  |              |             |   |      |   |             |  
|Deposits:                                                                                       |  |              |             |   |      |   |             |  
|Noninterest-bearing transaction accounts                                                        |  | $            | 19,764,876  |   |      | $ | 18,020,633  |  
|Interest-bearing transaction accounts                                                           |  |              | 23,916,250  |   |      |   | 28,958,482  |  
|Money market savings accounts                                                                   |  |              | 1,737,592   |   |      |   | 3,417,278   |  
|Savings                                                                                         |  |              | 14,872,471  |   |      |   | 14,706,147  |  
|Time deposits $100,000 and over                                                                 |  |              | 48,049,934  |   |      |   | 34,253,375  |  
|Other time deposits                                                                             |  |              | 32,445,141  |   |      |   | 28,102,391  |  
|                                                                                                |  |              |             |   |      |   |             |  
|Total deposits                                                                                  |  |              | 140,786,264 |   |      |   | 127,458,306 |  
|Short-term borrowings                                                                           |  |              | 250,000     |   |      |   | 370,000     |  
|Accrued interest payable                                                                        |  |              | 1,534,531   |   |      |   | 584,352     |  
|Other liabilities                                                                               |  |              | 383,756     |   |      |   | 163,705     |  
|                                                                                                |  |              |             |   |      |   |             |  
|Total liabilities                                                                               |  |              | 142,954,551 |   |      |   | 128,576,363 |  
|                                                                                                |  |              |             |   |      |   |             |  
|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                                                                                 |  |              | 1,720,382   |   |      |   | 1,716,455   |  
|Retained earnings                                                                               |  |              | 15,632,119  |   |      |   | 14,224,597  |  
|Accumulated other comprehensive loss                                                            |  |              | (95,015     | ) |      |   | (265,071    | )
|Treasury stock (58,251 shares in 2006 and 56,952 shares in 2005)                                |  |              | (3,620,051  | ) |      |   | (3,532,608  | )
|                                                                                                |  |              |             |   |      |   |             |  
|Total shareholders equity                                                                      |  |              | 15,137,435  |   |      |   | 13,643,373  |  
|                                                                                                |  |              |             |   |      |   |             |  
|Total liabilities and shareholders equity                                                      |  | $            | 158,091,986 |   |      | $ | 142,219,736 |  
|                                                                                                |  |              |             |   |      |   |             |  

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



26



---

COMMUNITYCORP

Consolidated Statements of Income



|                                                                       |  |                          |           |      |   |          
|---------------------------------------------------------------------- |  | ------------------------ | --------- | ---- | - | ---------
|                                                                       |  | Years Ended December 31,
|                                                                       |  | 2006                     |           | 2005
|Interest income:                                                       |  |                          |           |      |   |          
|Loans, including fees                                                  |  | $                        | 7,454,641 |      | $ | 6,313,934
|Investment securities:                                                 |  |                          |           |      |   |          
|Taxable                                                                |  |                          | 1,063,657 |      |   | 835,296  
|Tax-exempt                                                             |  |                          | 263,926   |      |   | 249,117  
|Nonmarketable equity securities                                        |  |                          | 9,334     |      |   | 5,652    
|Federal funds sold and securities purchased under agreements to resell |  |                          | 555,376   |      |   | 315,865  
|Time deposits with other banks                                         |  |                          | 11,174    |      |   | 16,775   
|                                                                       |  |                          |           |      |   |          
|Total interest income                                                  |  |                          | 9,358,108 |      |   | 7,736,639
|                                                                       |  |                          |           |      |   |          
|Interest expense:                                                      |  |                          |           |      |   |          
|Deposits                                                               |  |                          | 3,856,669 |      |   | 2,216,939
|Short-term borrowings                                                  |  |                          | 13,913    |      |   | 7,594    
|                                                                       |  |                          |           |      |   |          
|Total interest expense                                                 |  |                          | 3,870,582 |      |   | 2,224,533
|                                                                       |  |                          |           |      |   |          
|Net interest income                                                    |  |                          | 5,487,526 |      |   | 5,512,106
|                                                                       |  |                         
|Provision for loan losses                                              |  |                          | 225,000   |      |   | 381,017  
|                                                                       |  |                          |           |      |   |          
|Net interest income after provision for loan losses                    |  |                          | 5,262,526 |      |   | 5,131,089
|                                                                       |  |                          |           |      |   |          
|Noninterest income:                                                    |  |                          |           |      |   |          
|Service charges on deposit accounts                                    |  |                          | 514,420   |      |   | 427,534  
|Commissions on credit life insurance                                   |  |                          | 11,402    |      |   | 13,760   
|Other charges, fees, and commissions                                   |  |                          | 120,550   |      |   | 107,361  
|Other                                                                  |  |                          | 67,118    |      |   | 50,311   
|                                                                       |  |                          |           |      |   |          
|Total noninterest income                                               |  |                          | 713,490   |      |   | 598,966  
|                                                                       |  |                          |           |      |   |          
|Noninterest expenses:                                                  |  |                          |           |      |   |          
|Salaries and employee benefits                                         |  |                          | 1,871,945 |      |   | 1,795,361
|Net occupancy                                                          |  |                          | 241,236   |      |   | 221,479  
|Equipment                                                              |  |                          | 312,655   |      |   | 317,097  
|Other operating                                                        |  |                          | 985,004   |      |   | 898,194  
|                                                                       |  |                          |           |      |   |          
|Total noninterest expenses                                             |  |                          | 3,410,840 |      |   | 3,232,131
|                                                                       |  |                          |           |      |   |          
|Income before income taxes                                             |  |                          | 2,565,176 |      |   | 2,497,924
|Income tax expense                                                     |  |                          | 822,555   |      |   | 787,500  
|                                                                       |  |                          |           |      |   |          
|Net income                                                             |  | $                        | 1,742,621 |      | $ | 1,710,424
|                                                                       |  |                          |           |      |   |          
|Earnings per share:                                                    |  |                          |           |      |   |          
|Weighted-average common shares outstanding                             |  |                          | 242,636   |      |   | 244,788  
|Basic                                                                  |  | $                        | 7.18      |      | $ | 6.99     

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



27



---

COMMUNITYCORP

Consolidated Statements of Changes in Shareholders Equity and Comprehensive Income

For the
years ended December 31, 2006 and 2005



|                                                                                      |  |              |  |         |           |         |          |           |          |             |   |            |          |  |         |               |   |        |   |            |   |  |   |            |  
|------------------------------------------------------------------------------------- |  | ------------ |  | ------- | --------- | ------- | -------- | --------- | -------- | ----------- | - | ---------- | -------- |  | ------- | ------------- | - | ------ | - | ---------- | - |  | - | ---------- | -
|                                                                                      |  |              |  |         |           |         |          |           |          | Accumulated |   |            |          |  |         |               |  
|                                                                                      |  |              |  |         |           |         |          |           |          | other       |   |            |          |  |         |               |  
|                                                                                      |  |              |  |         |           |         |          |           |          | compre-     |   |            |          |  |         |               |  
|                                                                                      |  |              |  |         |           |         |          |           |          | hensive     |   |            | Treasury |  |         | Total         |  
|                                                                                      |  | Common stock |  | Capital |           |         | Retained |           |          | income      |   |            | stock,   |  |         | shareholders |  
|                                                                                      |  | Shares       |  | Amount  |           | surplus |          |           | earnings |             |   | (loss)     |          |  | at cost |               |   | equity |  
|Balance, December 31, 2004                                                            |  | 300,000      |  | $       | 1,500,000 |         | $        | 1,721,023 |          |             | $ | 12,715,882 |          |  | $       | 32,129        |   |        | $ | (3,332,906 | ) |  | $ | 12,636,128 |  
|                                                                                      |  |              |  |         |           |         |         
|Net income                                                                            |  |              |  |         |           |         |          |           |          |             |   | 1,710,424  |          |  |         |               |   |        |   |            |   |  |   | 1,710,424  |  
|                                                                                      |  |              |  |         |           |         |         
|Other comprehensive loss, net of tax benefit of $156,541                              |  |              |  |         |           |         |          |           |          |             |   |            |          |  |         | (297,200      | ) |        |   |            |   |  |   | (297,200   | )
|                                                                                      |  |              |  |         |           |         |          |           |          |             |   |            |          |  |         |               |   |        |   |            |   |  |   |            |  
|Comprehensive income                                                                  |  |              |  |         |           |         |          |           |          |             |   |            |          |  |         |               |   |        |   |            |   |  |   | 1,413,224  |  
|                                                                                      |  |              |  |         |           |         |         
|Cash dividends paid ($.82 per share)                                                  |  |              |  |         |           |         |          |           |          |             |   | (201,709   | )        |  |         |               |   |        |   |            |   |  |   | (201,709   | )
|                                                                                      |  |              |  |         |           |         |         
|Purchase of treasury stock                                                            |  |              |  |         |           |         |          |           |          |             |   |            |          |  |         |               |   |        |   | (246,920   | ) |  |   | (246,920   | )
|                                                                                      |  |              |  |         |           |         |         
|Sale of treasury stock                                                                |  |              |  |         |           |         |          | (4,568    | )        |             |   |            |          |  |         |               |   |        |   | 47,218     |   |  |   | 42,650     |  
|                                                                                      |  |              |  |         |           |         |          |           |          |             |   |            |          |  |         |               |   |        |   |            |   |  |   |            |  
|Balance, December 31, 2005, As previously reported                                    |  | 300,000      |  |         | 1,500,000 |         |          | 1,716,455 |          |             |   | 14,224,597 |          |  |         | (265,071      | ) |        |   | (3,532,608 | ) |  |   | 13,643,373 |  
|                                                                                      |  |              |  |         |           |         |         
|Adjustment to reflect the Adoption of SEC Staff Accounting Bulletin No. 108 (Note 17) |  |              |  |         |           |         |          |           |          |             |   | (116,000   | )        |  |         |               |   |        |   |            |   |  |   | (116,000   | )
|                                                                                      |  |              |  |         |           |         |          |           |          |             |   |            |          |  |         |               |   |        |   |            |   |  |   |            |  
|Balance, December 31, 2005, Restated                                                  |  | 300,000      |  |         | 1,500,000 |         |          | 1,716,455 |          |             |   | 14,108,597 |          |  |         | (265,071      | ) |        |   | (3,532,608 | ) |  |   | 13,527,373 |  
|                                                                                      |  |              |  |         |           |         |         
|Net income                                                                            |  |              |  |         |           |         |          |           |          |             |   | 1,742,621  |          |  |         |               |   |        |   |            |   |  |   | 1,742,621  |  
|                                                                                      |  |              |  |         |           |         |         
|Other comprehensive income, net of tax expense of $(89,571)                           |  |              |  |         |           |         |          |           |          |             |   |            |          |  |         | 170,056       |   |        |   |            |   |  |   | 170,056    |  
|                                                                                      |  |              |  |         |           |         |          |           |          |             |   |            |          |  |         |               |   |        |   |            |   |  |   |            |  
|Comprehensive income                                                                  |  |              |  |         |           |         |          |           |          |             |   |            |          |  |         |               |   |        |   |            |   |  |   | 1,912,677  |  
|                                                                                      |  |              |  |         |           |         |         
|Cash dividends paid ($.90 per share)                                                  |  |              |  |         |           |         |          |           |          |             |   | (219,099   | )        |  |         |               |   |        |   |            |   |  |   | (219,099   | )
|                                                                                      |  |              |  |         |           |         |         
|Purchase of treasury stock                                                            |  |              |  |         |           |         |          |           |          |             |   |            |          |  |         |               |   |        |   | (268,752   | ) |  |   | (268,752   | )
|                                                                                      |  |              |  |         |           |         |         
|Sale of treasury stock                                                                |  |              |  |         |           |         |          | 3,927     |          |             |   |            |          |  |         |               |   |        |   | 181,309    |   |  |   | 185,236    |  
|                                                                                      |  |              |  |         |           |         |          |           |          |             |   |            |          |  |         |               |   |        |   |            |   |  |   |            |  
|Balance, December 31, 2006                                                            |  | 300,000      |  | $       | 1,500,000 |         | $        | 1,720,382 |          |             | $ | 15,632,119 |          |  | $       | (95,015       | ) |        | $ | (3,620,051 | ) |  | $ | 15,137,435 |  
|                                                                                      |  |              |  |         |           |         |          |           |          |             |   |            |          |  |         |               |   |        |   |            |   |  |   |            |  

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



28



---

COMMUNITYCORP

Consolidated Statements of Cash Flows



|                                                                                            |  |                          |            |   |      |   |             |  
|------------------------------------------------------------------------------------------- |  | ------------------------ | ---------- | - | ---- | - | ----------- | -
|                                                                                            |  | Years Ended December 31, |           
|                                                                                            |  | 2006                     |            |   | 2005 |  
|Cash flows from operating activities:                                                       |  |                          |            |   |      |   |             |  
|Net income                                                                                  |  | $                        | 1,742,621  |   |      | $ | 1,710,424   |  
|Adjustments to reconcile net income to net cash provided by operating activities:           |  |                          |            |   |      |   |             |  
|Provision for loan losses                                                                   |  |                          | 225,000    |   |      |   | 381,017     |  
|Depreciation expense                                                                        |  |                          | 216,214    |   |      |   | 210,242     |  
|Premium amortization less discount accretion on investment securities                       |  |                          | 19,679     |   |      |   | 32,545      |  
|Deferred income tax expense                                                                 |  |                          | (47,574    | ) |      |   | 8,970       |  
|Amortization of loan fees and costs                                                         |  |                          | (2,845     | ) |      |   | (2,992      | )
|Gain on sale of other real estate owned                                                     |  |                          |           |   |      |   | (27,270     | )
|Increase in accrued interest receivable                                                     |  |                          | (226,832   | ) |      |   | (167,342    | )
|Increase in accrued interest payable                                                        |  |                          | 950,179    |   |      |   | 288,922     |  
|(Increase) Decrease in other assets                                                         |  |                          | (62,426    | ) |      |   | 193,076     |  
|Increase (Decrease) in other liabilities                                                    |  |                          | 54,051     |   |      |   | (11,133     | )
|                                                                                            |  |                          |            |   |      |   |             |  
|Net cash provided by operating activities                                                   |  |                          | 2,868,067  |   |      |   | 2,616,459   |  
|                                                                                            |  |                          |            |   |      |   |             |  
|Cash flows from investing activities:                                                       |  |                          |            |   |      |   |             |  
|Proceeds from maturities of securities available-for-sale                                   |  |                          | 6,257,429  |   |      |   | 2,530,455   |  
|Purchases of securities available-for-sale                                                  |  |                          | (7,632,468 | ) |      |   | (8,562,922  | )
|Proceeds from maturities of securities held-to-maturity                                     |  |                          | 303,168    |   |      |   | 505,745     |  
|Purchases of securities held-to-maturity                                                    |  |                          |           |   |      |   | (200,000    | )
|Purchases of nonmarketable equity securities                                                |  |                          | (3,200     | ) |      |   | (34,481     | )
|Proceeds from the sale of other real estate owned                                           |  |                          |           |   |      |   | 736,650     |  
|Decrease in time deposits with other banks                                                  |  |                          | 200,000    |   |      |   | 199,000     |  
|Net increase in loans to customers                                                          |  |                          | (8,275,276 | ) |      |   | (14,765,951 | )
|Purchases of premises and equipment                                                         |  |                          | (81,208    | ) |      |   | (34,828     | )
|                                                                                            |  |                          |            |   |      |   |             |  
|Net cash used for investing activities                                                      |  |                          | (9,231,555 | ) |      |   | (19,626,332 | )
|                                                                                            |  |                          |            |   |      |   |             |  
|Cash flows from financing activities:                                                       |  |                          |            |   |      |   |             |  
|Net decrease in demand deposits, interest-bearing transaction accounts and savings accounts |  |                          | (4,811,351 | ) |      |   | (2,657,075  | )
|Net increase in time deposits                                                               |  |                          | 18,139,309 |   |      |   | 5,204,054   |  
|Net decrease in short-term borrowings                                                       |  |                          | (120,000   | ) |      |   | (20,000     | )
|Cash dividends paid                                                                         |  |                          | (219,099   | ) |      |   | (201,709    | )
|Purchase of treasury stock                                                                  |  |                          | (268,752   | ) |      |   | (246,920    | )
|Sale of treasury stock                                                                      |  |                          | 185,236    |   |      |   | 42,650      |  
|                                                                                            |  |                          |            |   |      |   |             |  
|Net cash provided by financing activities                                                   |  |                          | 12,905,343 |   |      |   | 2,121,000   |  
|                                                                                            |  |                          |            |   |      |   |             |  
|Net increase (decrease) in cash and cash equivalents                                        |  |                          | 6,541,855  |   |      |   | (14,888,873 | )
|                                                                                            |  |                         
|Cash and cash equivalents, beginning of year                                                |  |                          | 7,862,462  |   |      |   | 22,751,335  |  
|                                                                                            |  |                          |            |   |      |   |             |  
|Cash and cash equivalents, end of year                                                      |  | $                        | 14,404,317 |   |      | $ | 7,862,462   |  
|                                                                                            |  |                          |            |   |      |   |             |  

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



29



---

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, Charleston, and Jasper 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.

Disclosure Regarding SegmentsThe Company reports as one
operating segment, as the chief operating decision-maker reviews the results of operations of the Company as a single enterprise.

Managements
EstimatesThe preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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 income 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 allowance 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 allowance 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 allowance for losses on loans and foreclosed real estate. Such agencies may require the Company
to recognize additions to the allowance based on their judgments about information available to them at the time of their examination. Because of these factors, it is possible that the allowance for losses on loans and foreclosed real estate may
change in the near term.

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.

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.

Nonmarketable Equity
SecuritiesAt December 31, 2006 and 2005, nonmarketable equity securities consist of the following:



|                                  |  |              |         |      |   |        
|--------------------------------- |  | ------------ | ------- | ---- | - | -------
|                                  |  | December 31,
|                                  |  | 2006         |         | 2005
|Federal Home Loan Bank            |  | $            | 280,000 |      | $ | 276,800
|Community Financial Services, Inc |  |              | 56,857  |      |   | 56,857 
|Other Community Banks             |  |              | 6,000   |      |   | 6,000  
|                                  |  |              |         |      |   |        
|Total                             |  | $            | 342,857 |      | $ | 339,657
|                                  |  |              |         |      |   |        



30



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COMMUNITYCORP

Notes to Consolidated Financial Statements

NOTE 1SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued)

Nonmarketable Equity Securitiescontinued

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 these stocks are included as a separate component of interest income.

Loans Receivable and Interest IncomeLoans are stated at the amount of unpaid principal reduced by an allowance for loan losses. 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 Company determines a loan to be
delinquent when payments have not been made according to contractual terms, typically evidenced by nonpayment of a monthly installment by the due date. 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 (the Allowance)The Company
provides for loan losses using the allowance method. Increases to the Allowance are charged by recording a provision for loan losses. Loan losses and recoveries are charged to the Allowance. Charge-offs to the Allowance are made when all or a
portion of the loan is confirmed as a loss based on Managements review of the loan, through possession of the underlying security, or through a troubled debt restructuring transaction. Likewise, recoveries offset these increases through
credits to the Allowance.

The Allowance is maintained at a level that Management believes is sufficient to cover losses in the loan portfolio at a
specific point in time. Assessing the adequacy of the Allowance is inherently subjective as it requires estimates that are susceptible to significant revision as information becomes available. The adequacy of the Allowance is analyzed on a monthly
basis using an internal analysis model. For purposes of this analysis, adequacy is defined as a level sufficient to absorb probable losses in the portfolio. This methodology relies upon managements judgment. Managements judgments are
based on its assessment of various issues, including, but not limited to, the pace of loan growth, emerging portfolio concentrations, the risk management system relating to lending activities, entry into new markets, new product offerings, loan
portfolio growth and quality trends, and uncertainty in current economic and business conditions. An Allowance model is used that takes into account factors including the composition of the loan portfolio such as risk grade classifications,
historical asset quality trends including, but not limited to, previous loss experience ratios, managements assessment of current economic conditions, and reviews of specific high risk sectors of the portfolio. Loans are graded at inception
and are reviewed on a periodic basis to ensure that assigned risk grades are proper based on the definition of such classification. The value of underlying collateral is also considered during such analysis. The resulting monthly model and the
related conclusions are reviewed and approved by senior management. The Companys analysis of Allowance adequacy includes consideration for loan impairment. While management uses the best information available to make evaluations, future
adjustments to the Allowance may be necessary if results differ substantially from the assumptions used in making the evaluations.



31



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COMMUNITYCORP

Notes to Consolidated Financial Statements

NOTE 1SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued)

Allowance for Loan Losses (the Allowance)continued

The methodology for assessing the adequacy of the Allowance establishes both an allocated and unallocated component of the Allowance. The allocated component is based
principally on current loan grades and historical loss rates. The unallocated component is the result of the portion of the assessment that estimates probable losses in the portfolio that are not fully captured in the allocated Allowance. This
analysis includes, but is not necessarily limited to, industry concentrations, future market expansions, model imprecision, and the estimated impact of current economic conditions on historical loss rates. On a continual basis, management monitors
trends within the portfolio, both quantitative and qualitative, and assesses the reasonableness of the unallocated component.

The Allowance is subject to
examination and adequacy testing by regulatory agencies. In addition, such regulatory agencies could require Allowance adjustments based on information available to them at the time of their examination.

Impaired LoansThe Bank accounts for its impaired loans in accordance with Financial Accounting Standards Board (FASB) Statement of
Financial Accounting Standards (SFAS) No. 114, Accounting by Creditors for Impairment of a Loan, as amended by SFAS No. 118, Accounting by Creditors for Impairment of a Loan-Income Recognition and
Disclosuresan amendment of FASB Statement No. 114, which requires that creditors value all specifically reviewed nonhomogeneous loans for which it is probable that the creditors will be unable to collect all amounts due according to
the terms of the loan agreements, at their respective fair market values. Fair market value may be determined based upon the present value of expected cash flows, market price of the loan, if available, or value of the underlying collateral.
Expected cash flows are required to be discounted at the loans effective interest rate. SFAS No. 114 was amended by SFAS No. 118 to allow a creditor to use existing methods for recognizing interest income on impaired loans and by
requiring additional disclosures about the manner in which a creditor recognizes interest income related to impaired loans.

The Company considers a loan
to be impaired when, based upon current information and events, management believes it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. The Companys impaired loans
include loans identified as impaired through review of the nonhomogeneous portfolio and troubled debt restructurings. Specific allowances are established on impaired loans, if deemed necessary, for the difference between the loan amount and the fair
market value less estimated selling costs. Impaired loans may be left on accrual status during the period the Company is pursuing repayment of the loan. Impairment losses are recognized through an increase in the Allowance and a corresponding charge
to the provision for loan losses. Adjustments to impairment losses due to changes in the fair market value of the collateral properties for impaired loans are also recognized through an increase in the Allowance and a corresponding charge to the
provision for loan losses. When an impaired loan is sold, transferred to other real estate owned, or written-down, any specific allowance is charged-off.

Loan Fees and CostsNonrefundable fees and certain direct costs associated with the origination of loans are deferred and recognized as a yield adjustment over the contractual life of the related loans, or if the related
loan is held for resale, until such time that the loan is sold. Recognition of deferred fees and costs is discontinued on nonaccrual loans until they return to accrual status or are charged-off.

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.



32



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COMMUNITYCORP

Notes to Consolidated Financial Statements

NOTE 1SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued)

Other Real Estate OwnedOther real estate owned includes real estate acquired through foreclosure. 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.

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.

AdvertisingAdvertising, promotional, and other business development costs generally are expensed as incurred. External costs incurred in producing
media advertising are expensed the first time the advertising takes place. External costs relating to direct mailing costs are expensed in the period in which the direct mailings are sent. Expenses charged for advertising were $38,745 and $49,591 at
December 31, 2006 and 2005, respectively.

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 an asset and 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 $74,633 and $65,139 in 2006 and 2005, respectively. The Companys policy is to fund contributions to the profit-sharing plan in the amount approved by the Board of Directors. 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 makes no matching
contributions to this plan.

In addition, the Company has a nonqualified voluntary salary deferral plan for certain officers of the Company. Under the
plan, these officers may defer up to 25% of their compensation and earn interest on the deferred amount. Upon retirement, the total amount deferred and interest earned is to be paid to each participant over a period not to exceed fifteen years. The
total amount deferred and unpaid under this plan was $312,729 and $268,500 at December 31, 2006 and 2005, respectively. Expenses charged to earnings for the salary deferral plan were $27,000 and $32,250 in 2006 and 2005, 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. The Company has no instruments which are considered common stock equivalents and therefore, dilutive earnings per share is not presented.



33



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COMMUNITYCORP

Notes to Consolidated Financial Statements

NOTE 1SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued)

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 2006 and 2005, the Company paid $2,920,403 and $1,935,611, respectively, for interest. Cash paid for income taxes was $857,700 and $605,120 in 2006 and 2005,
respectively.

There were no supplemental noncash investing activities due to reclassification of loans during 2006 or 2005.

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 accepted in the United States of America 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.

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



|                                                                      |  |                         |         |   |      |   |          |  
|--------------------------------------------------------------------- |  | ----------------------- | ------- | - | ---- | - | -------- | -
|                                                                      |  | Year Ended December 31, |        
|                                                                      |  | 2006                    |         |   | 2005 |  
|Net unrealized gains (losses) on available-for-sale securities        |  | $                       | 259,627 |   |      | $ | (453,741 | )
|Reclassification adjustment for gains (losses) realized in net income |  |                         |        |   |      |   |         |  
|                                                                      |  |                         |         |   |      |   |          |  
|Net unrealized gains (losses) on securities                           |  |                         | 259,627 |   |      |   | (453,741 | )
|                                                                      |  |                        
|Tax effect                                                            |  |                         | (89,571 | ) |      |   | 156,541  |  
|                                                                      |  |                         |         |   |      |   |          |  
|Net-of-tax amount                                                     |  | $                       | 170,056 |   |      | $ | (297,200 | )
|                                                                      |  |                         |         |   |      |   |          |  

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 standby letters of credit. These financial instruments are recorded in the financial statements when they become payable by the customer.

Recent Accounting PronouncementsThe following is a summary of recent authoritative pronouncements that affect accounting, reporting, and
disclosure of financial information by the Company:

In February 2006, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting (SFAS) No. 155, Accounting for Certain Hybrid Financial Instrumentsan amendment of FASB Statements No. 133 and 140. This Statement amends SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, and SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. This Statement resolves issues addressed in SFAS No. 133 Implementation
Issue No. D1, Application of Statement 133 to Beneficial Interests in Securitized Financial Assets. FAS 155 permits fair value re-measurement for any hybrid financial instrument that contains an embedded derivative that otherwise would
require bifurcation, clarifies which interest only-strips and principal-only strips are not subject to the requirements of Statement 133, establishes a requirement to evaluate interests in securitized financial assets to identify interests that are
freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation, clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives, and amends Statement
140 to eliminate the prohibition on a qualifying special purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. SFAS No. 155 is effective for all
financial instruments acquired or issued after the beginning of an entitys first fiscal year that begins after September 15, 2006. The Company does not believe that the adoption of SFAS No. 155 will have a material impact on its
financial position, results of operations or cash flows.



34



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COMMUNITYCORP

Notes to Consolidated Financial Statements

NOTE 1SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)

Recent Accounting Pronouncements(continued)

In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial Assetsan amendment of FASB Statement No. 140. This
Statement amends FASB No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, with respect to the accounting for separately recognized servicing assets and servicing liabilities.

SFAS No. 156 requires an entity to recognize a servicing asset or servicing liability each time it undertakes an obligation to service a financial
asset by entering into a servicing contract; requires all separately recognized servicing assets and servicing liabilities to be initially measured at fair value, if practicable; permits an entity to choose its subsequent measurement methods for
each class of separately recognized servicing assets and servicing liabilities; at its initial adoption, permits a one-time reclassification of available-for-sale securities to trading securities by entities with recognized servicing rights, without
calling into question the treatment of other available-for-sale securities under Statement 115, provided that the available-for-sale securities are identified in some manner as offsetting the entitys exposure to changes in fair value of
servicing assets or servicing liabilities that a servicer elects to subsequently measure at fair value; and requires separate presentation of servicing assets and servicing liabilities subsequently measured at fair value in the statement of
financial position and additional disclosures for all separately recognized servicing assets and servicing liabilities. An entity should adopt SFAS No. 156 as of the beginning of its first fiscal year that begins after September 15, 2006.
The Company does not believe the adoption of SFAS No. 156 will have a material impact on its financial position, results of operations or cash flows.

In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial Assetsan amendment of FASB Statement No. 140. This Statement amends FASB No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities, with respect to the accounting for separately recognized servicing assets and servicing liabilities. SFAS No. 156 requires an entity to recognize a servicing asset or
servicing liability each time it undertakes an obligation to service a financial asset by entering into a servicing contract; requires all separately recognized servicing assets and servicing liabilities to be initially measured at fair value, if
practicable; permits an entity to choose its subsequent measurement methods for each class of separately recognized servicing assets and servicing liabilities; at its initial adoption, permits a one-time reclassification of available-for-sale
securities to trading securities by entities with recognized servicing rights, without calling into question the treatment of other available-for-sale securities under Statement 115, provided that the available-for-sale securities are identified in
some manner as offsetting the entitys exposure to changes in fair value of servicing assets or servicing liabilities that a servicer elects to subsequently measure at fair value; and requires separate presentation of servicing assets and
servicing liabilities subsequently measured at fair value in the statement of financial position and additional disclosures for all separately recognized servicing assets and servicing liabilities. An entity should adopt SFAS No. 156 as of the
beginning of its first fiscal year that begins after September 15, 2006. The Company does not believe the adoption of SFAS No. 156 will have a material impact on its financial position, results of operations or cash flows.

In July 2006, the FASB issued FASB Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes. FIN 48 clarifies the
accounting for uncertainty in income taxes recognized in enterprises financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement
attributable for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim
periods, disclosures and transitions. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company is currently analyzing the effects of FIN 48 on its financial position, results of operations and cash flows.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS 157 defines fair value, establishes a framework for measuring fair
value in generally accepted accounting principles, and expands disclosures about fair value measurements. This standard does not require any new fair value measurements, but rather eliminates inconsistencies found in various prior pronouncements.
SFAS 157 is effective for the Company on January 1, 2008 and is not expected to have a significant impact on the Companys financial statements.



35



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COMMUNITYCORP

Notes to Consolidated Financial Statements

NOTE 1SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)

Recent Accounting Pronouncements(continued)

In September 2006, the FASB issued SFAS No. 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans (SFAS 158), which
amends SFAS 87 and SFAS 106 to require recognition of the overfunded or underfunded status of pension and other postretirement benefit plans on the balance sheet. Under SFAS 158, gains and losses, prior service costs and credits, and any remaining
transition amounts under SFAS 87 and SFAS 106 that have not yet been recognized through net periodic benefit cost will be recognized in accumulated other comprehensive income, net of tax effects, until they are amortized as a component of net
periodic cost. The measurement date  the date at which the benefit obligation and plan assets are measured  is required to be the companys fiscal year end. SFAS 158 is effective for publiclyheld companies for fiscal years
ending after December 15, 2006, except for the measurement date provisions, which are effective for fiscal years ending after December 15, 2008. The Company does not have a defined benefit pension plan. Therefore, SFAS 158 will not impact
the Companys financial position results of operations or cash flows.

In September 2006, The FASB ratified the consensuses reached by the FASBs
Emerging Issues Task Force (EITF) relating to EITF 06-4 Accounting for the Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements. EITF 06-4 addresses employer
accounting for endorsement split-dollar life insurance arrangements that provide a benefit to an employee that extends to postretirement periods should recognize a liability for future benefits in accordance with SFAS No. 106,
Employers Accounting for Postretirement Benefits Other Than Pensions, or Accounting Principles Board (APB) Opinion No. 12, Omnibus Opinion1967. EITF 06-4 is effective for fiscal years beginning
after December 15, 2007. Entities should recognize the effects of applying this Issue through either (a) a change in accounting principle through a cumulative-effect adjustment to retained earnings or to other components of equity or net
assets in the statement of financial position as of the beginning of the year of adoption or (b) a change in accounting principle through retrospective application to all prior periods. The Company does not have a split dollar life insurance
arrangement, therefore EITF06-4 will not impact the Companys financial condition, results of operations or cash flows.

In September 2006, the FASB
ratified the consensus reached related to EITF 06-5, Accounting for Purchases of Life InsuranceDetermining the Amount That Could Be Realized in Accordance with FASB Technical Bulletin No. 85-4, Accounting for Purchases of Life
Insurance. EITF 06-5 states that a policyholder should consider any additional amounts included in the contractual terms of the insurance policy other than the cash surrender value in determining the amount that could be realized under
the insurance contract. EITF 06-5 also states that a policyholder should determine the amount that could be realized under the life insurance contract assuming the surrender of an individual-life by individual-life policy (or certificate by
certificate in a group policy). EITF 06-5 is effective for fiscal years beginning after December 15, 2006. The Company does not believe the adoption of EITF 06-5 will have a material impact on its financial position, results of operations
and cash flows.

In September 2006, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulleting No. 108 (SAB 108). SAB
108 provides interpretive guidance on how the effects of the carryover or reversal of prior year misstatements should be considered in quantifying a potential current year misstatement. Prior to SAB 108, Companies might evaluate the materiality of
financial statement misstatements using either the income statement or balance sheet approach, with the income statement approach focusing on new misstatements added in the current year, and the balance sheet approach focusing on the cumulative
amount of misstatement present in a companys balance sheet. Misstatements that would be material under one approach could be viewed as immaterial under another approach, and not be corrected. SAB 108 now requires that companies view financial
statement misstatements as material if they are material according to either the income statement or balance sheet approach. Note 17 contains additional information about the Companys adoption of SAB 108.



36



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COMMUNITYCORP

Notes to Consolidated Financial Statements

NOTE 1SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)

Recent Accounting Pronouncements(continued)

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities  Including an amendment of FASB
Statement No. 115. This statement permits, but does not require, entities to measure many financial instruments at fair value. The objective is to provide entities with an opportunity to mitigate volatility in reported earnings caused by
measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. Entities electing this option will apply it when the entity first recognizes an eligible instrument and will report unrealized gains
and losses on such instruments in current earnings. This statement 1) applies to all entities, 2) specifies certain election dates, 3) can be applied on an instrument-by-instrument basis with some exceptions, 4) is irrevocable and 5) applies only to
entire instruments. One exception is demand deposit liabilities which are explicitly excluded as qualifying for fair value. With respect to SFAS 115, available-for-sale and held-to-maturity securities at the effective date are eligible for the fair
value option at that date. If the fair value option is elected for those securities at the effective date, cumulative unrealized gains and losses at that date shall be included in the cumulative-effect adjustment and thereafter, such securities will
be accounted for as trading securities. SFAS 159 is effective for the Company on January 1, 2008. Earlier adoption is permitted in 2007 if the Company also elects to apply the provisions of SFAS 157, Fair Value Measurement. The
Company is currently analyzing the fair value option provided under SFAS 159.

Other accounting standards that have been issued or proposed by the FASB or
other standards-setting bodies are not expected to have a material impact on the Companys financial position, results of operations and cash flows.

ReclassificationsCertain captions and amounts in the consolidated financial statements of 2005 were reclassified to conform with the 2006 presentation. These reclassifications had no effect on previously reported net
income or shareholders equity.

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, 2006 and 2005 were
approximately $1,083,000 and $1,109,000 respectively. These requirements were satisfied by vault cash.

NOTE 3INVESTMENT SECURITIES

Securities Available-for-Sale

The amortized cost
and estimated fair values of securities available-for-sale were:



|                                           |  |                |            |                  |   |                      |  |   |         |  |   |           
|------------------------------------------ |  | -------------- | ---------- | ---------------- | - | -------------------- |  | - | ------- |  | - | ----------
|                                           |  | Amortized Cost |            | Gross Unrealized |   | Estimated Fair Value
|                                           |  | Gains          |            | Losses           |  
|December 31, 2006                          |  |                |            |                  |   |                      |  |   |         |  |   |           
|Government-sponsored enterprises           |  | $              | 25,574,090 |                  | $ | 12,047               |  | $ | 176,089 |  | $ | 25,410,048
|Obligations of state and local governments |  |                | 6,839,470  |                  |   | 39,371               |  |   | 20,391  |  |   | 6,858,450 
|Other                                      |  |                | 200,000    |                  |   |                     |  |   |        |  |   | 200,000   
|                                           |  |                |            |                  |   |                      |  |   |         |  |   |           
|Total                                      |  | $              | 32,613,560 |                  | $ | 51,418               |  | $ | 196,480 |  | $ | 32,468,498
|                                           |  |                |            |                  |   |                      |  |   |         |  |   |           
|December 31, 2005                          |  |                |            |                  |   |                      |  |   |         |  |   |           
|Government-sponsored enterprises           |  | $              | 26,220,690 |                  | $ | 4,050                |  | $ | 405,231 |  | $ | 25,819,509
|Obligations of state and local governments |  |                | 4,839,759  |                  |   | 35,989               |  |   | 39,497  |  |   | 4,836,251 
|Other                                      |  |                | 200,000    |                  |   |                     |  |   |        |  |   | 200,000   
|                                           |  |                |            |                  |   |                      |  |   |         |  |   |           
|Total                                      |  | $              | 31,260,449 |                  | $ | 40,039               |  | $ | 444,728 |  | $ | 30,855,760
|                                           |  |                |            |                  |   |                      |  |   |         |  |   |           



37



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COMMUNITYCORP

Notes to Consolidated Financial Statements

NOTE 3INVESTMENT SECURITIES(continued)

The following table shows gross unrealized losses and fair value, aggregated by investment category, and length of time that individual securities have
been in a continuous unrealized loss position, at December 31, 2006 and 2005.



|                                           |  |                     |            |                   |   |            |  |                  |            |            |   |                  |  |   |            |  |   |        
|------------------------------------------ |  | ------------------- | ---------- | ----------------- | - | ---------- |  | ---------------- | ---------- | ---------- | - | ---------------- |  | - | ---------- |  | - | -------
|                                           |  | Less Than 12 Months |            | 12 Months Or More |   | Total     
|                                           |  | Fair Value          |            | UnrealizedLosses  |   | Fair Value |  | UnrealizedLosses |            | Fair Value |   | UnrealizedLosses
|December 31, 2006                          |  |                     |            |                   |   |            |  |                  |            |            |   |                  |  |   |            |  |   |        
|Government-sponsored enterprises           |  | $                   | 893,813    |                   | $ | 329        |  | $                | 18,655,727 |            | $ | 175,760          |  | $ | 19,549,540 |  | $ | 176,089
|Obligations of state and local governments |  |                     | 1,106,257  |                   |   | 6,987      |  |                  | 1,187,188  |            |   | 13,404           |  |   | 2,293,445  |  |   | 20,391 
|                                           |  |                     |            |                   |   |            |  |                  |            |            |   |                  |  |   |            |  |   |        
|Total                                      |  | $                   | 2,000,070  |                   | $ | 7,316      |  | $                | 19,842,915 |            | $ | 189,164          |  | $ | 21,842,985 |  | $ | 196,480
|                                           |  |                     |            |                   |   |            |  |                  |            |            |   |                  |  |   |            |  |   |        
|December 31, 2005                          |  |                     |            |                   |   |            |  |                  |            |            |   |                  |  |   |            |  |   |        
|Government-sponsored enterprises           |  | $                   | 7,631,515  |                   | $ | 99,336     |  | $                | 17,653,331 |            | $ | 305,895          |  | $ | 25,284,846 |  | $ | 405,231
|Obligations of state and local governments |  |                     | 2,596,130  |                   |   | 29,041     |  |                  | 468,021    |            |   | 10,456           |  |   | 3,064,151  |  |   | 39,497 
|                                           |  |                     |            |                   |   |            |  |                  |            |            |   |                  |  |   |            |  |   |        
|Total                                      |  | $                   | 10,227,645 |                   | $ | 128,377    |  | $                | 18,121,352 |            | $ | 316,351          |  | $ | 28,348,997 |  | $ | 444,728
|                                           |  |                     |            |                   |   |            |  |                  |            |            |   |                  |  |   |            |  |   |        

There were a total of seventy-six available-for-sale securities that were in a loss position at December 31,
2006. Of these securities, seventy were in a loss position of twelve months or more, which consisted of forty-nine government-sponsored enterprises, eight obligations of state and local governments, and thirteen mortgage-backed securities. The
mortgage-backed securities are protected by mortgage insurance as well as the direct credit to the related agencies. The Company believes that the deterioration in value is attributable to changes in market interest rates and not in credit quality
and considers these losses to be temporary. The Company has the ability and intent to hold these securities until such time as the value recovers. At December 31, 2006 there were no held-to-maturity securities that were in a continuous loss
position for twelve or more months.

The amortized cost and estimated fair values of securities available-for-sale 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.



|                                          |  |                   |            |                      |   |           
|----------------------------------------- |  | ----------------- | ---------- | -------------------- | - | ----------
|                                          |  | December 31, 2006
|                                          |  | Amortized Cost    |            | Estimated Fair Value
|Due in one year or less                   |  | $                 | 12,710,326 |                      | $ | 12,659,628
|Due after one year but within five years  |  |                   | 12,647,889 |                      |   | 12,569,926
|Due after five years but within ten years |  |                   | 1,492,072  |                      |   | 1,503,542 
|Due after ten years                       |  |                   | 3,053,202  |                      |   | 3,059,048 
|                                          |  |                   |            |                      |   |           
|                                          |  |                   | 29,903,489 |                      |   | 29,792,144
|Mortgage-backed securities                |  |                   | 2,710,070  |                      |   | 2,676,354 
|                                          |  |                   |            |                      |   |           
|Total                                     |  | $                 | 32,613,559 |                      | $ | 32,468,498
|                                          |  |                   |            |                      |   |           



38



---

COMMUNITYCORP

Notes to Consolidated Financial Statements

NOTE 3INVESTMENT SECURITIES(continued)

Securities Held-To-Maturity

The amortized cost and estimated fair
values of securities held-to-maturity were:



|                                           |  |                |           |                  |   |                      |  |   |     |  |   |          
|------------------------------------------ |  | -------------- | --------- | ---------------- | - | -------------------- |  | - | --- |  | - | ---------
|                                           |  | Amortized Cost |           | Gross Unrealized |   | Estimated Fair Value
|                                           |  | Gains          |           | Losses           |  
|December 31, 2006                          |  |                |           |                  |   |                      |  |   |     |  |   |          
|Obligations of state and local governments |  | $              | 1,574,215 |                  | $ | 21,850               |  | $ |    |  | $ | 1,596,065
|                                           |  |                |           |                  |   |                      |  |   |     |  |   |          
|December 31, 2005                          |  |                |           |                  |   |                      |  |   |     |  |   |          
|Government-sponsored enterprises           |  | $              | 1,167     |                  | $ | 9                    |  | $ |    |  | $ | 1,176    
|Obligations of state and local governments |  |                | 1,873,966 |                  |   | 34,245               |  |   | 606 |  |   | 1,907,605
|                                           |  |                |           |                  |   |                      |  |   |     |  |   |          
|Total                                      |  | $              | 1,875,133 |                  | $ | 34,254               |  | $ | 606 |  | $ | 1,908,781
|                                           |  |                |           |                  |   |                      |  |   |     |  |   |          

The amortized cost and estimated fair values of securities held-to-maturity 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.



|                                          |  |                   |           |                      |   |          
|----------------------------------------- |  | ----------------- | --------- | -------------------- | - | ---------
|                                          |  | December 31, 2006
|                                          |  | Amortized Cost    |           | Estimated Fair Value
|Due in one year or less                   |  | $                 | 55,000    |                      | $ | 55,121   
|Due after one year but within five years  |  |                   | 1,219,476 |                      |   | 1,234,786
|Due after five years but within ten years |  |                   | 299,739   |                      |   | 306,158  
|                                          |  |                   |           |                      |   |          
|Total                                     |  | $                 | 1,574,215 |                      | $ | 1,596,065
|                                          |  |                   |           |                      |   |          

At December 31, 2006 and 2005, investment securities with an amortized cost of $28,886,610 and $16,272,368
and a fair value of $29,169,683 and $16,102,415, respectively, were pledged as collateral to secure public deposits and short-term borrowings. There were no sales of investment securities for the years ended December 31, 2006 and 2005.

NOTE 4LOANS RECEIVABLE

Loans consisted of the
following:



|                          |  |              |             |      |   |           
|------------------------- |  | ------------ | ----------- | ---- | - | ----------
|                          |  | December 31,
|                          |  | 2006         |             | 2005
|Real estateconstruction  |  | $            | 3,234,546   |      | $ | 4,453,312 
|Real estatemortgage      |  |              | 33,437,784  |      |   | 37,478,906
|Commercial and industrial |  |              | 57,752,569  |      |   | 42,727,235
|Consumer and other        |  |              | 11,415,461  |      |   | 12,935,846
|                          |  |              |             |      |   |           
|Total gross loans         |  | $            | 105,840,360 |      | $ | 97,595,299
|                          |  |              |             |      |   |           

As of December 31, 2006 and 2005, management had placed loans totaling $548,523 and $279,969, respectively,
in nonaccrual status because the loans were not performing as originally contracted. For 2006 and 2005 the total amount of interest earned on nonaccrual loans was approximately $15,000 and $31,000, respectively. The gross interest income which would
have been recorded under the original terms of the nonaccrual loans amounted to approximately $20,000 and $38,000 for 2006 and 2005, respectively.



39



---

COMMUNITYCORP

Notes to Consolidated Financial Statements

NOTE 4LOANS RECEIVABLE(continued)

Loans ninety days or more past due and still accruing interest were $1,767 and $4,433 at December 31, 2006 and 2005, respectively.

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. All of the nonaccrual loans at December 31, 2006 and 2005 were considered to be impaired and were
appropriately provided for in the related computation of the allowance of loan losses as of those dates. No other loans were identified as being impaired at December 31, 2006 and 2005.

Transactions in the allowance for loan losses are summarized below:



|                                           |  |                          |           |   |      |   |           |  
|------------------------------------------ |  | ------------------------ | --------- | - | ---- | - | --------- | -
|                                           |  | Years ended December 31, |          
|                                           |  | 2006                     |           |   | 2005 |  
|Balance, beginning of year                 |  | $                        | 1,664,948 |   |      | $ | 1,456,326 |  
|Provision charged to operations            |  |                          | 225,000   |   |      |   | 381,017   |  
|Recoveries on loans previously charged-off |  |                          | 71,983    |   |      |   | 42,997    |  
|Loans charged-off                          |  |                          | (105,043  | ) |      |   | (215,392  | )
|                                           |  |                          |           |   |      |   |           |  
|Balance, end of year                       |  | $                        | 1,856,888 |   |      | $ | 1,664,948 |  
|                                           |  |                          |           |   |      |   |           |  

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. Standby 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.

The following table summarizes the Companys off-balance-sheet financial instruments whose
contractual amounts represent credit risk:



|                             |  |              |           |      |   |           
|---------------------------- |  | ------------ | --------- | ---- | - | ----------
|                             |  | December 31,
|                             |  | 2006         |           | 2005
|Commitments to extend credit |  | $            | 9,388,762 |      | $ | 10,960,770
|Standby letters of credit    |  |              | 1,256,978 |      |   | 844,803   



40



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COMMUNITYCORP

Notes to Consolidated Financial Statements

NOTE 4LOANS RECEIVABLE(continued)

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, 2006, 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:



|                               |  |              |            |   |      |   |            |  
|------------------------------ |  | ------------ | ---------- | - | ---- | - | ---------- | -
|                               |  | December 31, |           
|                               |  | 2006         |            |   | 2005 |  
|Land                           |  | $            | 710,605    |   |      | $ | 710,605    |  
|Building and land improvements |  |              | 2,611,083  |   |      |   | 2,611,083  |  
|Furniture and equipment        |  |              | 1,983,325  |   |      |   | 1,935,223  |  
|                               |  |              |            |   |      |   |            |  
|Total                          |  |              | 5,305,013  |   |      |   | 5,256,911  |  
|Less, accumulated depreciation |  |              | (2,174,099 | ) |      |   | (1,990,991 | )
|                               |  |              |            |   |      |   |            |  
|Premises and equipment, net    |  | $            | 3,130,914  |   |      | $ | 3,265,920  |  
|                               |  |              |            |   |      |   |            |  

Depreciation expense totaled $216,214 and $210,242 in 2006 and 2005, respectively.

NOTE 6DEPOSITS

At December 31, 2006, the scheduled
maturities of time deposits were as follows:



|            |  |        |           
|----------- |  | ------ | ----------
|Maturing in |  | Amount
|2007        |  | $      | 78,771,398
|2008        |  |        | 1,306,281 
|2009        |  |        | 279,127   
|2010        |  |        | 135,215   
|2011        |  |        | 3,054     
|            |  |        |           
|Total       |  | $      | 80,495,075
|            |  |        |           

Certificates of deposits include a $9,137,000 deposit that was issued to a local school district on April 14,
2006, bearing an interest rate of 5.10% with a maturity date of May 14, 2007.

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 $4,726,866 and $4,619,909 at December 31, 2006 and 2005, respectively. During 2006, $2,851,782 of new loans were made to
related parties, and repayments totaled $2,744,825.

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. There were no payments made to this law firm for services rendered for the year ended December 31, 2006. The amount paid to this law firm for services rendered was $2,593 for the year ended
December 31, 2005.



41



---

COMMUNITYCORP

Notes to Consolidated Financial Statements

NOTE 8SHORT-TERM BORROWINGS

At December 31, 2006 and 2005, the Company had securities sold under agreements to repurchase, which are classified as short term 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 is summarized as follows:



|                                          |  |                          |         |   |      |   |         |  
|----------------------------------------- |  | ------------------------ | ------- | - | ---- | - | ------- | -
|                                          |  | Years ended December 31, |        
|                                          |  | 2006                     |         |   | 2005 |  
|Average balance during the year           |  | $                        | 347,312 |   |      | $ | 324,917 |  
|Average interest rate during the year     |  |                          | 4.01    | % |      |   | 2.33    | %
|Maximum month-end balance during the year |  | $                        | 450,000 |   |      | $ | 620,000 |  

The Company has an agreement with its safekeeping agent (an independent third party) to pledge certain of the
Companys U.S. Government obligation securities as collateral for the agreements. As of December 31, 2006, the par value and fair value of the securities underlying the agreements were $525,000 and $521,447, respectively.

NOTE 9UNUSED LINES OF CREDIT

The Bank had available at the end
of 2006 an unused short-term line of credit to purchase up to $3,800,000 of federal funds from an unrelated correspondent institution. The Bank 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, 2006, the available credit totaled approximately $23,404,000 and there were no borrowings outstanding. Any borrowings from the FHLB will be secured by a blanket lien on all of the
Banks 1-4 family residential first lien mortgage loans and or investment securities.

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, 2006, 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.

The Company
makes loans to individuals and small businesses for various personal and commercial purposes. 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, Charleston, and Jasper counties and surrounding areas. The Companys loan portfolio is not concentrated in loans to any single borrower or in a relatively small number of borrowers.
Additionally, management is not aware of any concentrations of loans to classes of borrowers or industries that would be similarly affected by economic conditions.

In addition to monitoring potential concentrations of loans to particular borrowers or groups of borrowers, industries and geographic regions, management monitors exposure to credit risk that could arise from potential concentrations of
lending products and practices such as loans that subject borrowers to substantial payment increases (e.g. principal deferral periods, loans with initial interest-only periods, etc), and loans with high loan-to-value ratios. Additionally, there are
industry practices that could subject the Company to increased credit risk should economic conditions change over the course of a loans life. For example, the Company makes variable rate loans and fixed rate principal-amortizing loans with
maturities prior to the loan being fully paid (i.e. balloon payment loans). These loans are underwritten and monitored to manage the associated risks. Management has determined that there is no concentration of credit risk associated with its
lending policies or practices.



42



---

COMMUNITYCORP

Notes to Consolidated Financial Statements

NOTE 10COMMITMENTS AND CONTINGENCIES(continued)

The Companys investment portfolio consists principally of obligations of the United States, its agencies or its corporations and general
obligation municipal securities. In the opinion of management, there is no concentration of credit risk in its investment portfolio.

The Company places
its deposits and correspondent accounts with and sells its federal funds to high 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.

NOTE 11SHAREHOLDERS EQUITY

At December 31, 2006 and 2005, the Company had 58,251 and 56,952 shares, respectively held in treasury stock. During 2006 and 2005, the Company purchased 4,221 and
4,207 shares respectively, and sold 2,922 and 760 shares respectively.

The ability of the Company to pay cash dividends is dependent upon receiving cash
in the form of dividends from the Bank. However, certain restrictions exist regarding the ability of the Bank to transfer funds to Communitycorp in the form of cash dividends. Dividends to the Company are payable only from the undivided profits of
the Bank. At December 31, 2006, the Banks undivided profits were $12,084,596. 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 S.C. 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.

NOTE 12OTHER OPERATING EXPENSES

Other operating expenses are summarized as follows:



|                                  |  |                          |         |      |   |        
|--------------------------------- |  | ------------------------ | ------- | ---- | - | -------
|                                  |  | Years ended December 31,
|                                  |  | 2006                     |         | 2005
|Stationary, printing, and postage |  | $                        | 200,003 |      | $ | 186,248
|Advertising and promotion         |  |                          | 38,745  |      |   | 49,591 
|Professional fees                 |  |                          | 190,152 |      |   | 150,044
|Directors fees                   |  |                          | 65,800  |      |   | 60,200 
|Telephone expenses                |  |                          | 70,925  |      |   | 67,432 
|ATM surcharges                    |  |                          | 49,015  |      |   | 52,869 
|ACH charges                       |  |                          | 38,729  |      |   | 41,417 
|Armored Car/Courier Services      |  |                          | 50,881  |      |   | 44,295 
|Membership Dues/Subscriptions     |  |                          | 27,621  |      |   | 26,345 
|Other                             |  |                          | 253,133 |      |   | 219,753
|                                  |  |                          |         |      |   |        
|Total                             |  | $                        | 985,004 |      | $ | 898,194
|                                  |  |                          |         |      |   |        



43



---

COMMUNITYCORP

Notes to Consolidated Financial Statements

NOTE 13INCOME TAXES

Income tax expense included in the consolidated statements of operations is summarized as follows:



|                                      |  |                          |         |   |      |   |        
|------------------------------------- |  | ------------------------ | ------- | - | ---- | - | -------
|                                      |  | Years ended December 31,
|                                      |  | 2006                     |         |   | 2005
|Currently payable:                    |  |                          |         |   |      |   |        
|Federal                               |  | $                        | 791,705 |   |      | $ | 701,561
|State                                 |  |                          | 78,424  |   |      |   | 76,969 
|                                      |  |                          |         |   |      |   |        
|Total current                         |  |                          | 870,129 |   |      |   | 778,530
|                                      |  |                         
|Deferred income tax (benefit) expense |  |                          | (47,574 | ) |      |   | 8,970  
|                                      |  |                          |         |   |      |   |        
|Income tax expense                    |  | $                        | 822,555 |   |      | $ | 787,500
|                                      |  |                          |         |   |      |   |        

The gross amounts of deferred tax assets and deferred tax liabilities were as follows:



|                                |  |              |          |   |      |   |          |  
|------------------------------- |  | ------------ | -------- | - | ---- | - | -------- | -
|                                |  | December 31, |         
|                                |  | 2006         |          |   | 2005 |  
|Deferred tax assets:            |  |              |          |   |      |   |          |  
|Allowance for loan losses       |  | $            | 535,899  |   |      | $ | 454,079  |  
|Deferred compensation           |  |              | 106,328  |   |      |   | 90,931   |  
|Nonaccrual loan interest income |  |              | 16,946   |   |      |   | 35,151   |  
|Securities available-for-sale   |  |              | 49,321   |   |      |   | 149,735  |  
|Other                           |  |              |         |   |      |   | 26,589   |  
|                                |  |              |          |   |      |   |          |  
|Total deferred tax assets       |  |              | 658,494  |   |      |   | 756,485  |  
|                                |  |              |          |   |      |   |          |  
|Deferred tax liabilities:       |  |              |          |   |      |   |          |  
|Accumulated depreciation        |  |              | (119,754 | ) |      |   | (125,299 | )
|Other                           |  |              | (10,394  | ) |      |   |         |  
|                                |  |              |          |   |      |   |          |  
|Total deferred tax liabilities  |  |              | (130,148 | ) |      |   | (125,299 | )
|                                |  |              |          |   |      |   |          |  
|Net deferred tax asset          |  | $            | 578,346  |   |      | $ | 631,186  |  
|                                |  |              |          |   |      |   |          |  

The net deferred tax assets are included in other assets in the consolidated balance sheets at December 31,
2006 and 2005. 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, 2006 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:



|                                                    |  |                         |         |   |      |   |         |  
|--------------------------------------------------- |  | ----------------------- | ------- | - | ---- | - | ------- | -
|                                                    |  | Years ended December 31 |        
|                                                    |  | 2006                    |         |   | 2005 |  
|Tax expense at statutory rate                       |  | $                       | 872,160 |   |      | $ | 849,294 |  
|State income tax, net of federal income tax benefit |  |                         | 51,760  |   |      |   | 50,800  |  
|Tax-exempt interest income                          |  |                         | (97,543 | ) |      |   | (80,450 | )
|Disallowed interest expense                         |  |                         | 17,305  |   |      |   | 7,425   |  
|Other, net                                          |  |                         | (21,127 | ) |      |   | (39,569 | )
|                                                    |  |                         |         |   |      |   |         |  
|Total                                               |  | $                       | 822,555 |   |      | $ | 787,500 |  
|                                                    |  |                         |         |   |      |   |         |  



44



---

COMMUNITYCORP

Notes to Consolidated Financial Statements

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:

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

Federal Funds SoldFederal funds sold 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 ReceivableFor
certain categories of loans receivable, 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 notional amount represents the amounts of loan commitments and letters of credit, which are
off-balance-sheet financial instruments. The fair value of these instruments is not material.



45



---

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 were as follows:



|                                                                   |  |                 |             |                      |   |                 |  |                      |            |  |   |           
|------------------------------------------------------------------ |  | --------------- | ----------- | -------------------- | - | --------------- |  | -------------------- | ---------- |  | - | ----------
|                                                                   |  | December 31,   
|                                                                   |  | 2006            |             | 2005                
|                                                                   |  | Carrying Amount |             | Estimated Fair Value |   | Carrying Amount |  | Estimated Fair Value
|Financial Assets:                                                  |  |                 |             |                      |   |                 |  |                      |            |  |   |           
|Cash and due from banks                                            |  | $               | 6,041,317   |                      | $ | 6,041,317       |  | $                    | 5,089,462  |  | $ | 5,089,462 
|Federal funds sold                                                 |  |                 | 8,363,000   |                      |   | 8,363,000       |  |                      | 2,773,000  |  |   | 2,773,000 
|Time deposits with other banks                                     |  |                 | 100,000     |                      |   | 100,000         |  |                      | 300,000    |  |   | 300,000   
|Securities available-for-sale                                      |  |                 | 32,468,498  |                      |   | 32,468,498      |  |                      | 30,855,760 |  |   | 30,855,760
|Securities held-to-maturity                                        |  |                 | 1,574,215   |                      |   | 1,596,065       |  |                      | 1,875,133  |  |   | 1,908,781 
|Nonmarketable equity securities                                    |  |                 | 342,857     |                      |   | 342,857         |  |                      | 339,657    |  |   | 339,657   
|Loans receivable, gross                                            |  |                 | 105,840,360 |                      |   | 104,269,918     |  |                      | 97,595,299 |  |   | 97,055,135
|Accrued interest receivable                                        |  |                 | 1,216,414   |                      |   | 1,216,414       |  |                      | 989,582    |  |   | 989,582   
|                                                                   |  |                 |             |                     
|Financial Liabilities:                                             |  |                 |             |                      |   |                 |  |                      |            |  |   |           
|Demand deposit, interest-bearing transaction, and savings accounts |  | $               | 60,291,189  |                      | $ | 60,291,189      |  | $                    | 65,102,540 |  | $ | 65,102,540
|Time deposits                                                      |  |                 | 80,495,075  |                      |   | 81,137,885      |  |                      | 62,355,766 |  |   | 62,550,049
|Short-term borrowings                                              |  |                 | 250,000     |                      |   | 250,000         |  |                      | 370,000    |  |   | 370,000   
|Accrued interest payable                                           |  |                 | 1,534,531   |                      |   | 1,534,531       |  |                      | 584,352    |  |   | 584,352   
|                                                                   |  |                 |             |                     
|                                                                   |  | Notional Amount |             | Estimated Fair Value |   | Notional Amount |  | Estimated Fair Value
|Off-Balance Sheet Financial Instruments:                           |  |                 |             |                      |   |                 |  |                      |            |  |   |           
|Commitments to extend credit                                       |  | $               | 9,388,762   |                      | $ |                |  | $                    | 10,960,770 |  | $ |          
|Standby letters of credit                                          |  |                 | 1,256,978   |                      |   |                |  |                      | 844,803    |  |   |          

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.



46



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COMMUNITYCORP

Notes to Consolidated Financial Statements

NOTE 15REGULATORY MATTERS(continued)

As of December 31, 2006, 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.



|                                         |  |        |            |       |                              |   |        |                                                                |           |  |      |        |  |       |            |  |       |  
|---------------------------------------- |  | ------ | ---------- | ----- | ---------------------------- | - | ------ | -------------------------------------------------------------- | --------- |  | ---- | ------ |  | ----- | ---------- |  | ----- | -
|                                         |  | Actual |            |       | For CapitalAdequacy Purposes |   |        | To Be Well- CapitalizedUnderPrompt CorrectiveAction Provisions |          
|                                         |  |        |            |       | Minimum                      |   |        | Minimum                                                        |          
|                                         |  | Amount |            | Ratio |                              |   | Amount |                                                                | Ratio     |  |      | Amount |  | Ratio |           
|December 31, 2006                        |  |        |            |       |                              |   |        |                                                                |           |  |      |        |  |       |            |  |       |  
|Total capital (to risk-weighted assets)  |  | $      | 16,658,953 |       | 14.28                        | % |        | $                                                              | 9,335,360 |  | 8.00 | %      |  | $     | 11,669,200 |  | 10.00 | %
|Tier 1 capital (to risk-weighted assets) |  |        | 15,200,303 |       | 13.03                        |   |        |                                                                | 4,667,680 |  | 4.00 |        |  |       | 7,001,520  |  | 6.00  |  
|Tier 1 capital (to average assets)       |  |        | 15,200,303 |       | 9.46                         |   |        |                                                                | 6,430,440 |  | 4.00 |        |  |       | 8,038,050  |  | 5.00  |  
|                                         |  |        |            |       |                              |  
|December 31, 2005                        |  |        |            |       |                              |   |        |                                                                |           |  |      |        |  |       |            |  |       |  
|Total capital (to risk-weighted assets)  |  | $      | 15,138,528 |       | 14.61                        | % |        | $                                                              | 8,287,840 |  | 8.00 | %      |  | $     | 10,359,800 |  | 10.00 | %
|Tier 1 capital (to risk-weighted assets) |  |        | 13,843,553 |       | 13.36                        |   |        |                                                                | 4,143,920 |  | 4.00 |        |  |       | 6,215,880  |  | 6.00  |  
|Tier 1 capital (to average assets)       |  |        | 13,843,553 |       | 9.80                         |   |        |                                                                | 5,647,960 |  | 4.00 |        |  |       | 7,059,950  |  | 5.00  |  

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 $500,000,000 in consolidated assets.

NOTE 16COMMUNITYCORP (PARENT COMPANY ONLY)

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

Condensed Balance Sheets



|                                 |  |              |            |      |   |           
|-------------------------------- |  | ------------ | ---------- | ---- | - | ----------
|                                 |  | December 31,
|                                 |  | 2006         |            | 2005
|Assets                           |  |              |            |      |   |           
|Cash                             |  | $            | 22,553     |      | $ | 55,319    
|Investment in banking subsidiary |  |              | 15,105,288 |      |   | 13,578,504
|Nonmarketable equity securities  |  |              | 6,000      |      |   | 6,000     
|Other assets                     |  |              | 3,594      |      |   | 3,550     
|                                 |  |              |            |      |   |           
|Total assets                     |  | $            | 15,137,435 |      | $ | 13,643,373
|                                 |  |              |            |      |   |           
|Shareholders equity             |  | $            | 15,137,435 |      | $ | 13,643,373
|                                 |  |              |            |      |   |           



47



---

COMMUNITYCORP

Notes to Consolidated Financial Statements

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

Condensed Statements of Income



|                                                                                      |  |                          |           |   |      |   |          
|------------------------------------------------------------------------------------- |  | ------------------------ | --------- | - | ---- | - | ---------
|                                                                                      |  | Years ended December 31,
|                                                                                      |  | 2006                     |           |   | 2005
|Income                                                                                |  |                          |           |   |      |   |          
|Dividends from banking subsidiary                                                     |  | $                        | 270,000   |   |      | $ | 396,000  
|Other income                                                                          |  |                          | 1         |   |      |   | 1        
|                                                                                      |  |                          |           |   |      |   |          
|Total income                                                                          |  |                          | 270,001   |   |      |   | 396,001  
|Expenses                                                                              |  |                          | 155       |   |      |   |         
|                                                                                      |  |                          |           |   |      |   |          
|Income before income taxes and equity in undistributed earnings of banking subsidiary |  |                          | 269,846   |   |      |   | 396,001  
|Income tax benefit                                                                    |  |                          | (45       | ) |      |   |         
|Equity in undistributed earnings of banking subsidiary                                |  |                          | 1,472,730 |   |      |   | 1,314,423
|                                                                                      |  |                          |           |   |      |   |          
|Net income                                                                            |  | $                        | 1,742,621 |   |      | $ | 1,710,424
|                                                                                      |  |                          |           |   |      |   |          

Condensed Statements of Cash Flows



|                                                                                  |  |                          |            |   |      |   |            |  
|--------------------------------------------------------------------------------- |  | ------------------------ | ---------- | - | ---- | - | ---------- | -
|                                                                                  |  | Years ended December 31, |           
|                                                                                  |  | 2006                     |            |   | 2005 |  
|Cash flows from operating activities                                              |  |                          |            |   |      |   |            |  
|Net income                                                                        |  | $                        | 1,742,621  |   |      | $ | 1,710,424  |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                          |            |   |      |   |            |  
|Equity in undistributed earnings of banking subsidiary                            |  |                          | (1,472,730 | ) |      |   | (1,314,423 | )
|Increase in other assets                                                          |  |                          | (42        | ) |      |   |           |  
|                                                                                  |  |                          |            |   |      |   |            |  
|Net cash provided by operating activities                                         |  |                          | 269,849    |   |      |   | 396,001    |  
|                                                                                  |  |                          |            |   |      |   |            |  
|Cash flows from investing activities                                              |  |                          |            |   |      |   |            |  
|Purchase of nonmaketable equity securities                                        |  |                          |           |   |      |   | (1,500     | )
|                                                                                  |  |                          |            |   |      |   |            |  
|Net cash provided by investing activities                                         |  |                          |           |   |      |   | (1,500     | )
|                                                                                  |  |                          |            |   |      |   |            |  
|Cash flows from financing activities                                              |  |                          |            |   |      |   |            |  
|Cash dividends paid                                                               |  |                          | (219,099   | ) |      |   | (201,709   | )
|Purchases of treasury stock                                                       |  |                          | (268,752   | ) |      |   | (246,920   | )
|Sale of treasury stock                                                            |  |                          | 185,236    |   |      |   | 42,650     |  
|                                                                                  |  |                          |            |   |      |   |            |  
|Net cash used by financing activities                                             |  |                          | (302,615   | ) |      |   | (405,979   | )
|                                                                                  |  |                          |            |   |      |   |            |  
|Decrease in cash                                                                  |  |                          | (32,766    | ) |      |   | (11,478    | )
|                                                                                  |  |                         
|Cash, beginning of year                                                           |  |                          | 55,319     |   |      |   | 66,797     |  
|                                                                                  |  |                          |            |   |      |   |            |  
|Cash, ending of year                                                              |  | $                        | 22,553     |   |      | $ | 55,319     |  
|                                                                                  |  |                          |            |   |      |   |            |  



48



---

COMMUNITYCORP

Notes to Consolidated Financial Statements

NOTE 17ADOPTION OF SEC STAFF ACCOUNTING BULLETIN NO. 108

The Company has adopted SEC Staff Accounting Bulletin No. 108 (SAB 108), Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements. SAB 108 states that registrants must quantify the impact of correcting all misstatements, including both the carryover (iron curtain method) and reversing (rollover method) effects of
prior-year misstatements on the current-year financial statements, and evaluate misstatements measured under each method in light of quantitative and qualitative factors. Under SAB 108, prior-year misstatements that are material to the current year
must be corrected, even though such correction previously was and continues to be immaterial to the prior-year financial statements. Correcting prior-year financial statements for such immaterial errors does not require previously filed
reports to be amended. Such corrections can be made the next time the Company files the prior-year financial statements.

In adopting the requirements of
SAB 108, the Company adjusted its income tax accruals, which had been understated by $116,000 as of January 1, 2006. Such understatement resulted from the under accrual of income taxes payable in each of the prior three years, which were
previously evaluated as being immaterial under the rollover method. The Company has reported the cumulative effect of the initial application of SAB 108 by reducing retained earnings as of January 1, 2006 by $116,000, and increasing by the same
amount, its income tax expense accruals. The adjustment of the quarterly financial results for 2006 will be accomplished by adjusting the applicable financial statement line items when such information is next presented. Reports previously filed
with the SEC will not be amended.



49



---

COMMUNITYCORP

BOARD OF DIRECTORS



|                                                                        |  |                                                                     
|----------------------------------------------------------------------- |  | --------------------------------------------------------------------
|George W. Cone Attorney McLeod, Fraser & Cone                           |  | J. Barnwell Fishburne Owner, Fishburne
& Co. Real Estate            
|                                                                       
|                                                                       
|                                                                        | 
|W. Roger Crook Chief Executive Officer and
President Bank of Walterboro |  | Peden B. McLeod Chairman of the Board
Attorney McLeod, Fraser & Cone
|                                                                       
|                                                                       
|                                                                        | 
|Steven Murdaugh Certified Public
Accountant                             |  | Harry L. Hill Retired                                               
|                                                                       
|                                                                        | 
|Harold M. Robertson Retired                                             |  | Calvert Huffines President, Huffines
Co Real Estate Broker          
|                                                                       
|                                                                       

---

OFFICERS



|                                                                       |  |                                                      |  |                                         
|---------------------------------------------------------------------- |  | ---------------------------------------------------- |  | ----------------------------------------
|W. Roger Crook Chief Executive Officer
and President                   |  | Mildred N. Whidden Assistant Cashier and
Head Teller |  | William S. Crook Loan
Officer           
|                                                                       | 
|                                                                       |  |                                                     
|Gwendolyn P. Bunton Vice President and
Cashier                         |  | Andrea M. Davis Branch
Manager                       |  | Lawton Huggins Loan
Officer             
|                                                                       | 
|                                                                       |  |                                                     
|Lynn H. Murdaugh Assistant Vice
President and Administrative Assistant |  | M. Ellison Young Vice
President                      |  | Joanne Copeland Mortgage Loan
Originator
|                                                                       | 
|                                                                       |  |                                                     
|Bruce Tate Loan Officer                                                |  |                                                      |  | William Fowler Loan
Officer             
|                                                                       |  |                                                     

STAFF MEMBERS



|                    |  |  |  |                 
|------------------- |  |  |  | ----------------
|Annette Lyons       |  |  |  |                 
|Cindy Ackerman      |  |  |  | Sharon Milligan 
|James M. Bunton Jr. |  |  |  | Brandy Ackerman 
|Casey Beach         |  |  |  | Tanya Hickman   
|Carolyn Brant       |  |  |  | Lynn Hiott      
|Dorothy Brunson     |  |  |  | Angela Keen     
|Natalie Powers      |  |  |  | Cathy Groves    
|Jennifer Crosby     |  |  |  | Pam OQuinn     
|Betty Ford          |  |  |  | Kelly Strickland
|Melissa T. Smyly    |  |  |  | Jeanne Raven    
|Krystal Thomas      |  |  |  | Cynthia Mills   
|Sharon Hillier      |  |  |  | Candice Kubik   
|Carolyn Rahn        |  |  |  | Rose Walker     
|Stephanie Kelly     |  |  |  | Nichole Espisito
|Rochelle Black      |  |  |  | Bonnie Dempsey  
|Austin Williams     |  |  |  | Louie Whidden   
|Dianne Downey       |  |  |  | Joy Koth        
|Pam Nelson          |  |  |  | Tracy Wilson    



50



---

COMMUNITYCORP

CORPORATE DATA

ANNUAL MEETING:

The Annual Meeting of Shareholders of Communitycorp will be held at 6 p.m. on Tuesday, April 24, 2007 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 REGISTERED PUBLIC ACCOUNTING
FIRM:
|                           | 
|Bank of Walterboro         |  | Elliott Davis, LLC                            
|P.O. Box 1707              |  | 200 East Broad Street                         
|Walterboro, S.C. 29488     |  | Greenville, SC 29601                          

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 $55.00 to $66.00 during the past two years. There were approximately 562 shareholders of record as of December 31, 2006.

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-KSB

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-KSB)
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.



51



---

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

Internet Banking

Letters of Credit

Money Market Accounts

Money Orders

Mortgage Loans

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

§

110 Forest Hills Road, Walterboro, S.C. 29488

1100 North Jefferies Boulevard, Walterboro, S.C. 29488

6225 Savannah Highway, Ravenel, S.C. 29470

8058 East Main Street, Ridgeland, SC 29936

Member FDIC



52