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                                          |  | 30-47
|Directors, Officers and Staff                                                       |  | 48   
|Corporate Data                                                                      |  | 49   
|Services                                                                            |  | 50   





Member FDIC



---

COMMUNITYCORP AND SUBSIDIARY

Dear Shareholder,

It is a pleasure to report the progress of Communitycorp and its subsidiary, Bank of Walterboro, during
2007. The Company continued to experience good growth in loans while our deposits declined slightly during the year. More detailed information follows, but we are pleased to report return on average assets of 1.08%, a sound capital to asset ratio of
10.37%, and an allowance for loan losses to loans of 1.68%.

Deposits at year-end were $139,594,312 a decrease of $1,191,952, or 0.85%, from 2006 year-end.
Net loans increased from $103,983,472 to $112,668,059, an increase of $8,684,587, or 8.35%. The allowance for loan losses increased from a December 31, 2006 balance of $1,856,888 to $1,929,319 or 1.68% of gross loans. Total assets increased
from $158,091,986 to a December 31, 2007 total of $161,319,687 an increase of $3,227,701, or 2.04%.

Earnings increased in 2007 for the Company with
net income of $1,761,914, an increase of $19,293, or 1.11%, more than 2006 earnings of $1,742,621. For 2007 we earned $7.32 per share compared to $7.18 for 2006. Our net interest margin decreased from 3.71% in 2006 to 3.64% in 2007.

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 29, 2008.

Very truly yours,



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



2



---

COMMUNITYCORP AND SUBSIDIARY

SELECTED FINANCIAL DATA

The following selected consolidated financial data for the five years
ended December 31, 2007 are derived from our consolidated financial statements and other data. The selected consolidated financial data should be read in conjunction with our consolidated financial statements, including the accompanying notes,
and Managements Discussion and Analysis of Financial Condition and Results of Operations, included elsewhere herein.



|                                                    |  |      |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|--------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------- | - |  | - | ------- | -
|Year Ended December 31,                             |  | 2007 |         |   | 2006 |   |         | 2005 |  |   | 2004    |   |  | 2003 |        
|(Dollars in thousands, except per share)            |  |      |         |   |      |   |         |      |  |   |         |   |  |      |        
|Results of Operations:                              |  |      |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Interest income                                     |  | $    | 10,392  |   |      | $ | 9,358   |      |  | $ | 7,737   |   |  | $    | 6,831   |   |  | $ | 6,537   |  
|Interest expense                                    |  |      | 4,767   |   |      |   | 3,871   |      |  |   | 2,225   |   |  |      | 1,607   |   |  |   | 1,906   |  
|                                                    |  |      |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Net interest income                                 |  |      | 5,625   |   |      |   | 5,487   |      |  |   | 5,512   |   |  |      | 5,224   |   |  |   | 4,631   |  
|Provision for loan losses                           |  |      | 202     |   |      |   | 225     |      |  |   | 381     |   |  |      | 471     |   |  |   | 405     |  
|                                                    |  |      |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Net interest income after provision for loan losses |  |      | 5,423   |   |      |   | 5,262   |      |  |   | 5,131   |   |  |      | 4,753   |   |  |   | 4,226   |  
|Noninterest income                                  |  |      | 666     |   |      |   | 713     |      |  |   | 599     |   |  |      | 579     |   |  |   | 558     |  
|Noninterest expense                                 |  |      | 3,533   |   |      |   | 3,411   |      |  |   | 3,232   |   |  |      | 2,875   |   |  |   | 2,706   |  
|                                                    |  |      |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Income before income taxes                          |  |      | 2,556   |   |      |   | 2,565   |      |  |   | 2,498   |   |  |      | 2,457   |   |  |   | 2,078   |  
|Income tax expense                                  |  |      | 794     |   |      |   | 823     |      |  |   | 788     |   |  |      | 802     |   |  |   | 653     |  
|                                                    |  |      |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Net income                                          |  | $    | 1,762   |   |      | $ | 1,742   |      |  | $ | 1,710   |   |  | $    | 1,655   |   |  | $ | 1,425   |  
|                                                    |  |      |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|                                                    |  |      |         |   |     
|Balance Sheet Data:                                 |  |      |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Securities available-for-sale                       |  | $    | 34,585  |   |      | $ | 32,468  |      |  | $ | 30,856  |   |  | $    | 25,310  |   |  | $ | 16,495  |  
|Securities held-to-maturity                         |  |      | 1,819   |   |      |   | 1,574   |      |  |   | 1,875   |   |  |      | 2,181   |   |  |   | 2,644   |  
|Allowance for loan losses                           |  |      | 1,929   |   |      |   | 1,857   |      |  |   | 1,665   |   |  |      | 1,456   |   |  |   | 1,270   |  
|Net loans                                           |  |      | 112,668 |   |      |   | 103,983 |      |  |   | 95,930  |   |  |      | 81,550  |   |  |   | 78,899  |  
|Premises and equipment, net                         |  |      | 2,989   |   |      |   | 3,131   |      |  |   | 3,266   |   |  |      | 3,441   |   |  |   | 2,517   |  
|Total assets                                        |  |      | 161,320 |   |      |   | 158,092 |      |  |   | 142,220 |   |  |      | 138,408 |   |  |   | 124,755 |  
|Noninterest-bearing deposits                        |  |      | 16,461  |   |      |   | 19,765  |      |  |   | 18,021  |   |  |      | 16,532  |   |  |   | 13,952  |  
|Interest-bearing deposits                           |  |      | 123,133 |   |      |   | 121,021 |      |  |   | 109,437 |   |  |      | 108,379 |   |  |   | 98,631  |  
|Total deposits                                      |  |      | 139,594 |   |      |   | 140,786 |      |  |   | 127,458 |   |  |      | 124,911 |   |  |   | 112,584 |  
|Short-term borrowings                               |  |      | 3,068   |   |      |   | 250     |      |  |   | 370     |   |  |      | 390     |   |  |   | 450     |  
|Total liabilities                                   |  |      | 144,583 |   |      |   | 142,955 |      |  |   | 128,576 |   |  |      | 125,772 |   |  |   | 113,515 |  
|Total shareholders equity                          |  |      | 16,736  |   |      |   | 15,137  |      |  |   | 13,643  |   |  |      | 12,636  |   |  |   | 11,240  |  
|                                                    |  |      |         |   |     
|Per Share Data:                                     |  |      |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Weighted-average common shares outstanding          |  |      | 240,708 |   |      |   | 242,636 |      |  |   | 244,788 |   |  |      | 247,446 |   |  |   | 261,221 |  
|Net income                                          |  | $    | 7.32    |   |      | $ | 7.18    |      |  | $ | 6.99    |   |  | $    | 6.69    |   |  | $ | 5.46    |  
|Cash dividends paid                                 |  | $    | 1.00    |   |      | $ | 0.90    |      |  | $ | 0.82    |   |  | $    | 0.72    |   |  | $ | 0.65    |  
|Period end book value                               |  | $    | 69.60   |   |      | $ | 62.62   |      |  | $ | 56.13   |   |  | $    | 51.26   |   |  | $ | 45.45   |  
|                                                    |  |      |         |   |     
|Equity and Assets Ratios:                           |  |      |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Return on average assets                            |  |      | 1.08    | % |      |   | 1.11    | %    |  |   | 1.23    | % |  |      | 1.29    | % |  |   | 1.18    | %
|Return on average equity                            |  |      | 11.24   | % |      |   | 12.35   | %    |  |   | 13.11   | % |  |      | 14.04   | % |  |   | 13.08   | %
|Equity to assets ratio                              |  |      | 10.37   | % |      |   | 9.58    | %    |  |   | 9.35    | % |  |      | 9.16    | % |  |   | 9.02    | %
|Dividend payout ratio                               |  |      | 13.65   | % |      |   | 12.57   | %    |  |   | 11.79   | % |  |      | 10.85   | % |  |   | 12.52   | %



3



---

COMMUNITYCORP AND SUBSIDIARY

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 the Bank.

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, 2007, the Company had forty
full-time employees and six part time employees.

This discussion and analysis is intended to assist the reader in understanding the financial condition
and results of operations of the Company and its subsidiary, the Bank. 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 POLICIES

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.



4



---

COMMUNITYCORP AND SUBSIDIARY

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, 2007 was $1,761,914 or $7.32 per share, compared to $1,742,621, or $7.18 per share, for the year ended December 31, 2006. Interest income increased $1,033,620 over
the 2006 amount of $9,358,108. Total interest expense also increased $896,498 over the 2006 amount of $3,870,582. Net interest income increased $137,122 from the 2006 amount of $5,487,526. For the year ended December 31, 2007 net interest
margin decreased from 3.71% in 2006 to 3.64% in 2007. Non-interest income decreased $47,069 from the 2006 amount of $713,490. Non-interest expense was $3,533,182, which is an increase of $122,342 over the 2006 amount.



5



---

COMMUNITYCORP AND SUBSIDIARY

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 2007 was $5,624,648 compared to $5,487,526 for 2006, an increase of. 2.50%. The increase was mainly attributable to the increase in the average balances of our earning assets, which increased
by 4.51% while our average interest bearing liabilities increased only 4.03%.

For 2007 average-earning assets totaled approximately $154,524,000 with an
annualized average yield of 6.73% compared to approximately $147,849,000 and 6.33%, respectively, for 2006. Average interest-bearing liabilities totaled approximately $128,153,000 with an annualized average cost of 3.72% for 2007 compared to
approximately $123,188,000 and 3.14%, respectively, for 2006.

Our net interest margin and net interest spread was 3.64% and 3.01%, respectively, for 2007
compared to 3.71% and 3.19% respectively for 2006.

Our annualized yield on average earning assets increased 40 basis points for 2007 compared to 2006,
while our annualized average cost of our interest-bearing liabilities increased 58 basis points for 2007 compared to 2006. These increases were reflective of the increasing interest rate environment during 2007.

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 70.42% and 69.13% of average earning assets for December 31, 2007 and 2006, respectively. Loan interest income for the years ended December 31, 2007 and 2006 was $8,270,237 and $7,454,641,
respectively. The annualized average yield on loans was 7.60% and 7.29% for 2007 and 2006, respectively. Average balances of loans increased to approximately $108,809,000 during 2007, an increase of approximately $6,602,000 over the average of
approximately $102,207,000 during 2006. The increase in the annualized yield on loans is mainly attributable to the increase in the average volume of loans outstanding during 2007.

Investment securities averaged approximately $36,961,000 or 23.92% of average earning assets, for December 31, 2007 compared to approximately $34,323,000 or 23.21% of average earning assets, for 2006. Interest
earned on investment securities amounted to $1,667,782 for the year ended December 31, 2007, compared to $1,336,917 for the same period last year. Investment securities yielded 4.51% and 3.90% for the period ended December 31, 2007 and
2006, respectively.

Total interest expense for the years ended December 31, 2007 and 2006 was $4,767,080 and $3,870,582, respectively. The largest
component of interest expense is interest on deposit accounts. Interest expense on deposit accounts was $4,756,053 and $3,856,669, for the years ended December 31, 2007 and 2006, respectively. The average balance of interest bearing deposits
increased to approximately $127,904,00 for the year ended December 31, 2007 from approximately $122,774,000 during the same period last year. The annualized average cost of deposits was approximately 3.72% for the year ended December 31,
2007 compared to 3.14% for the same period in 2006.

For the year ended December 31, 2007 and 2006, the total annualized average cost of funds was
3.72% and 3.14%, respectively.



6



---

COMMUNITYCORP AND SUBSIDIARY

Managements Discussion and Analysis of

Financial Condition and Results
of Operations

NET INTEREST INCOME(continued)



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

Average Balances, Income, Expenses, and Rates



|                                           |  |                |         |   |                |   |            |  |       |                |  |   |                |   |            |   |       |  |      |  
|------------------------------------------ |  | -------------- | ------- | - | -------------- | - | ---------- |  | ----- | -------------- |  | - | -------------- | - | ---------- | - | ----- |  | ---- | -
|                                           |  | 2007           |         |   | 2006           |  
|(Dollars in thousands)                     |  | AverageBalance |         |   | Income/Expense |   | Yield/Rate |  |       | AverageBalance |  |   | Income/Expense |   | Yield/Rate |  
|Assets:                                    |  |                |         |   |                |   |            |  |       |                |  |   |                |   |            |   |       |  |      |  
|Earning assets:                            |  |                |         |   |                |   |            |  |       |                |  |   |                |   |            |   |       |  |      |  
|Securities, taxable (1)                    |  | $              | 27,684  |   |                | $ | 1,305      |  | 4.71  | %              |  | $ | 27,129         |   |            | $ | 1,064 |  | 3.92 | %
|Securities, tax-exempt (1)                 |  |                | 8,937   |   |                |   | 344        |  | 3.85  |                |  |   | 6,858          |   |            |   | 264   |  | 3.85 |  
|Nonmarketable equity securities            |  |                | 340     |   |                |   | 19         |  | 5.59  |                |  |   | 336            |   |            |   | 9     |  | 2.68 |  
|Federal funds sold                         |  |                | 8,683   |   |                |   | 444        |  | 5.11  |                |  |   | 11,195         |   |            |   | 555   |  | 4.96 |  
|Time deposits with other banks             |  |                | 71      |   |                |   | 10         |  | 14.08 |                |  |   | 124            |   |            |   | 11    |  | 8.87 |  
|Loans (2)                                  |  |                | 108,809 |   |                |   | 8,270      |  | 7.60  |                |  |   | 102,207        |   |            |   | 7,455 |  | 7.29 |  
|                                           |  |                |         |   |                |   |            |  |       |                |  |   |                |   |            |   |       |  |      |  
|Total earning assets                       |  |                | 154,524 |   |                |   | 10,392     |  | 6.73  |                |  |   | 147,849        |   |            |   | 9,358 |  | 6.33 |  
|                                           |  |                |         |   |                |   |            |  |       |                |  |   |                |   |            |   |       |  |      |  
|Cash and due from banks                    |  |                | 5,268   |   |                |   |            |  |       |                |  |   | 5,265          |   |            |   |       |  |      |  
|Allowance for loan losses                  |  |                | (1,896  | ) |                |   |            |  |       |                |  |   | (1,764         | ) |            |   |       |  |      |  
|Premises and equipment                     |  |                | 3,064   |   |                |   |            |  |       |                |  |   | 3,185          |   |            |   |       |  |      |  
|Accrued interest and other assets          |  |                | 1,962   |   |                |   |            |  |       |                |  |   | 1,873          |   |            |   |       |  |      |  
|                                           |  |                |         |   |                |   |            |  |       |                |  |   |                |   |            |   |       |  |      |  
|Total assets                               |  | $              | 162,922 |   |                |   |            |  |       |                |  | $ | 156,408        |   |            |   |       |  |      |  
|                                           |  |                |         |   |                |   |            |  |       |                |  |   |                |   |            |   |       |  |      |  
|Liabilities and Shareholders Equity:      |  |                |         |   |                |   |            |  |       |                |  |   |                |   |            |   |       |  |      |  
|Interest-bearing liabilities:              |  |                |         |   |                |   |            |  |       |                |  |   |                |   |            |   |       |  |      |  
|Interest-bearing deposits                  |  | $              | 127,904 |   |                |   | 4,756      |  | 3.72  | %              |  | $ | 122,774        |   |            |   | 3,857 |  | 3.14 | %
|Short-term borrowings                      |  |                | 249     |   |                |   | 11         |  | 4.42  |                |  |   | 414            |   |            |   | 14    |  | 3.38 |  
|                                           |  |                |         |   |                |   |            |  |       |                |  |   |                |   |            |   |       |  |      |  
|Total interest-bearing liabilities         |  |                | 128,153 |   |                |   | 4,767      |  | 3.72  |                |  |   | 123,188        |   |            |   | 3,871 |  | 3.14 |  
|                                           |  |                |         |   |                |   |            |  |       |                |  |   |                |   |            |   |       |  |      |  
|Noninterest-bearing deposits               |  |                | 17,495  |   |                |   |            |  |       |                |  |   | 17,437         |   |            |   |       |  |      |  
|Accrued interest and other liabilities     |  |                | 1,603   |   |                |   |            |  |       |                |  |   | 1,666          |   |            |   |       |  |      |  
|Shareholders equity                       |  |                | 15,671  |   |                |   |            |  |       |                |  |   | 14,117         |   |            |   |       |  |      |  
|                                           |  |                |         |   |                |   |            |  |       |                |  |   |                |   |            |   |       |  |      |  
|Total liabilities and shareholders equity |  | $              | 162,922 |   |                |   |            |  |       |                |  | $ | 156,408        |   |            |   |       |  |      |  
|                                           |  |                |         |   |                |   |            |  |       |                |  |   |                |   |            |   |       |  |      |  
|Net interest spread                        |  |                |         |   |                |   |            |  | 3.01  | %              |  |   |                |   |            |   |       |  | 3.19 | %
|Net interest income                        |  |                |         |   |                | $ | 5,625      |  |       |                |  |   |                |   |            | $ | 5,487 |  |      |  
|                                           |  |                |         |   |                |   |            |  |       |                |  |   |                |   |            |   |       |  |      |  
|Net interest margin                        |  |                |         |   |                |   |            |  | 3.64  | %              |  |   |                |   |            |   |       |  | 3.71 | %



|(1) | Averages for securities are stated at historical cost.
|--- | ------------------------------------------------------

|(2) | The effect of loans in nonaccrual status and fees collected is not significant to the computations. All loans and deposits are domestic.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------



7



---

COMMUNITYCORP AND SUBSIDIARY

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



|                                |                            |                         |      |                            |                         |   |             |   |  |       |     |   |        |   |       |      |  |   |             |   |  |       |       |   |  |   |      |   |  |   |       |  
|------------------------------- | -------------------------- | ----------------------- | ---- | -------------------------- | ----------------------- | - | ----------- | - |  | ----- | --- | - | ------ | - | ----- | ---- |  | - | ----------- | - |  | ----- | ----- | - |  | - | ---- | - |  | - | ----- | -
|(Dollars in thousands)          |                            | 2007 Compared With 2006 |      |                            | 2006 Compared With 2005 |  
|                                | Variance Due to Changes in |                         |      | Variance Due to Changes in |                        
|                                | Volume                     |                         |      | Rate                       |                         |   | Volume/Rate |   |  | Total |     |   | Volume |   |       | Rate |  |   | Volume/Rate |   |  | Total |      
|Earning Assets                  |                            |                         |      |                            |                         |   |             |   |  |       |     |   |        |   |       |      |  |   |             |   |  |       |       |   |  |   |      |   |  |   |       |  
|Securities, taxable             |                            | $                       | 22   |                            |                         | $ | 215         |   |  | $     | 4   |   |        | $ | 241   |      |  | $ | 42          |   |  | $     | 178   |   |  | $ | 9    |   |  | $ | 229   |  
|Securities, tax-exempt          |                            |                         | 80   |                            |                         |   |            |   |  |       |    |   |        |   | 80    |      |  |   | 41          |   |  |       | (22   | ) |  |   | (4   | ) |  |   | 15    |  
|Nonmarketable equity securities |                            |                         |     |                            |                         |   | 10          |   |  |       |    |   |        |   | 10    |      |  |   |             |   |  |       | 3     |   |  |   |      |   |  |   | 3     |  
|Federal funds sold              |                            |                         | (125 | )                          |                         |   | 17          |   |  |       | (3  | ) |        |   | (111  | )    |  |   | 9           |   |  |       | 223   |   |  |   | 7    |   |  |   | 239   |  
|Time deposits with other banks  |                            |                         | (5   | )                          |                         |   | 6           |   |  |       | (2  | ) |        |   | (1    | )    |  |   | (12         | ) |  |       | 22    |   |  |   | (16  | ) |  |   | (6    | )
|Loans                           |                            |                         | 482  |                            |                         |   | 313         |   |  |       | 20  |   |        |   | 815   |      |  |   | 1,040       |   |  |       | 86    |   |  |   | 15   |   |  |   | 1,141 |  
|                                |                            |                         |      |                            |                         |   |             |   |  |       |     |   |        |   |       |      |  |   |             |   |  |       |       |   |  |   |      |   |  |   |       |  
|Total interest income           |                            |                         | 454  |                            |                         |   | 561         |   |  |       | 19  |   |        |   | 1,034 |      |  |   | 1,120       |   |  |       | 490   |   |  |   | 11   |   |  |   | 1,621 |  
|                                |                            |                         |      |                            |                         |   |             |   |  |       |     |   |        |   |       |      |  |   |             |   |  |       |       |   |  |   |      |   |  |   |       |  
|Interest-Bearing Liabilities    |                            |                         |      |                            |                         |   |             |   |  |       |     |   |        |   |       |      |  |   |             |   |  |       |       |   |  |   |      |   |  |   |       |  
|Interest-bearing deposits       |                            |                         | 161  |                            |                         |   | 708         |   |  |       | 30  |   |        |   | 899   |      |  |   | 292         |   |  |       | 1,191 |   |  |   | 157  |   |  |   | 1,640 |  
|Short-term borrowings           |                            |                         | (6   | )                          |                         |   | 4           |   |  |       | (1  | ) |        |   | (3    | )    |  |   | 2           |   |  |       | 3     |   |  |   | 1    |   |  |   | 6     |  
|                                |                            |                         |      |                            |                         |   |             |   |  |       |     |   |        |   |       |      |  |   |             |   |  |       |       |   |  |   |      |   |  |   |       |  
|Total interest expense          |                            |                         | 155  |                            |                         |   | 712         |   |  |       | 29  |   |        |   | 896   |      |  |   | 294         |   |  |       | 1,194 |   |  |   | 158  |   |  |   | 1,646 |  
|                                |                            |                         |      |                            |                         |   |             |   |  |       |     |   |        |   |       |      |  |   |             |   |  |       |       |   |  |   |      |   |  |   |       |  
|Net interest income             |                            | $                       | 299  |                            |                         | $ | (151        | ) |  | $     | (10 | ) |        | $ | 138   |      |  | $ | 826         |   |  | $     | (704  | ) |  | $ | (147 | ) |  | $ | (25   | )
|                                |                            |                         |      |                            |                         |   |             |   |  |       |     |   |        |   |       |      |  |   |             |   |  |       |       |   |  |   |      |   |  |   |       |  

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 manage the risk and minimize the impact on net interest income of rising or falling interest rates.



8



---

COMMUNITYCORP AND SUBSIDIARY

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, 2007. The
table may not be indicative of the Companys rate sensitivity position at other points in time.

Interest Sensitivity Analysis



|                                                                       |  |                   |         |    |                                |   |         |                           |  |   |                      |   |  |       |        |   |  |   |        
|---------------------------------------------------------------------- |  | ----------------- | ------- | -- | ------------------------------ | - | ------- | ------------------------- |  | - | -------------------- | - |  | ----- | ------ | - |  | - | -------
|(Dollars in thousands)                                                 |  | WithinThreeMonths |         |    | After ThreeThroughTwelveMonths |   |         | After OneThroughFiveYears |  |   | GreaterThanFiveYears |   |  | Total
|Assets                                                                 |  |                   |         |    |                                |   |         |                           |  |   |                      |   |  |       |        |   |  |   |        
|Earning assets:                                                        |  |                   |         |    |                                |   |         |                           |  |   |                      |   |  |       |        |   |  |   |        
|Federal funds sold and securities purchased under agreements to resell |  | $                 | 1,991   |    |                                | $ |        |                           |  | $ |                     |   |  | $     |       |   |  | $ | 1,991  
|Investment securities                                                  |  |                   | 5,396   |    |                                |   | 3,648   |                           |  |   | 16,936               |   |  |       | 10,772 |   |  |   | 36,752 
|Loans (1)                                                              |  |                   | 17,882  |    |                                |   | 32,522  |                           |  |   | 62,831               |   |  |       | 547    |   |  |   | 113,782
|                                                                       |  |                   |         |    |                                |   |         |                           |  |   |                      |   |  |       |        |   |  |   |        
|Total earning assets                                                   |  |                   | 25,269  |    |                                |   | 36,170  |                           |  |   | 79,767               |   |  |       | 11,319 |   |  |   | 152,525
|                                                                       |  |                   |         |    |                                |   |         |                           |  |   |                      |   |  |       |        |   |  |   |        
|Liabilities                                                            |  |                   |         |    |                                |   |         |                           |  |   |                      |   |  |       |        |   |  |   |        
|Interest-bearing liabilities:                                          |  |                   |         |    |                                |   |         |                           |  |   |                      |   |  |       |        |   |  |   |        
|Interest-bearing deposits:                                             |  |                   |         |    |                                |   |         |                           |  |   |                      |   |  |       |        |   |  |   |        
|Demand                                                                 |  |                   | 20,841  |    |                                |   |        |                           |  |   |                     |   |  |       |       |   |  |   | 20,841 
|Savings and money market                                               |  |                   | 14,271  |    |                                |   |        |                           |  |   |                     |   |  |       |       |   |  |   | 14,271 
|Time                                                                   |  |                   | 21,497  |    |                                |   | 62,530  |                           |  |   | 2,985                |   |  |       | 1,009  |   |  |   | 88,021 
|                                                                       |  |                   |         |    |                                |   |         |                           |  |   |                      |   |  |       |        |   |  |   |        
|Total interest-bearing deposits                                        |  |                   | 56,609  |    |                                |   | 62,530  |                           |  |   | 2,985                |   |  |       | 1,009  |   |  |   | 123,133
|Short-term borrowings                                                  |  |                   | 3,068   |    |                                |   |        |                           |  |   |                     |   |  |       |       |   |  |   | 3,068  
|                                                                       |  |                   |         |    |                                |   |         |                           |  |   |                      |   |  |       |        |   |  |   |        
|Total interest-bearing liabilities                                     |  |                   | 59,677  |    |                                |   | 62,530  |                           |  |   | 2,985                |   |  |       | 1,009  |   |  |   | 126,201
|                                                                       |  |                   |         |    |                                |   |         |                           |  |   |                      |   |  |       |        |   |  |   |        
|Period gap                                                             |  | $                 | (34,408 | )  |                                | $ | (26,360 | )                         |  | $ | 76,782               |   |  | $     | 10,310 |   |  |   |        
|                                                                       |  |                   |         |    |                                |   |         |                           |  |   |                      |   |  |       |        |   |  |   |        
|Cumulative gap                                                         |  | $                 | (34,408 | )  |                                | $ | (60,768 | )                         |  | $ | 16,014               |   |  | $     | 26,324 |   |  |   |        
|                                                                       |  |                   |         |    |                                |   |         |                           |  |   |                      |   |  |       |        |   |  |   |        
|Ratio of cumulative gap to total earning assets                        |  |                   | (22.56  | )% |                                |   | (39.84  | )%                        |  |   | 10.50                | % |  |       | 17.26  | % |  |   |        



|(1) | Excludes nonaccrual loans.
|--- | --------------------------

The above table reflects the balances of
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.



9



---

COMMUNITYCORP AND SUBSIDIARY

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 in the consolidated statement of income. 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 1.68% and 1.75%
of total loans on December 31, 2007 and 2006, respectively. Although there has been an increase in classified loans from December 31, 2006 to December 31, 2007, we believe the allowance for loan losses at December 31, 2007 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, 2007 is adequate, based on our assessment of probable losses, and available facts and circumstances then prevailing.



10



---

COMMUNITYCORP AND SUBSIDIARY

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, |            
|                                                            | 2007 |                         |             | 2006 | 
|Total loans outstanding at end of year                      |      | $                       | 114,597,378 |      |  | $ | 105,840,360 |  
|                                                            |      |                         |             |      |  |   |             |  
|Average loans outstanding                                   |      | $                       | 108,808,888 |      |  | $ | 102,207,241 |  
|                                                            |      |                         |             |      |  |   |             |  
|Balance of allowance for loan losses at beginning of period |      | $                       | 1,856,888   |      |  | $ | 1,664,948   |  
|Loan losses:                                                |      |                         |             |      |  |   |             |  
|Real estate - construction                                  |      |                         |            |      |  |   |            |  
|Real estate - mortgage                                      |      |                         |            |      |  |   |            |  
|Commercial and industrial                                   |      |                         | 110,508     |      |  |   | 70,028      |  
|Consumer                                                    |      |                         | 41,191      |      |  |   | 35,014      |  
|                                                            |      |                         |             |      |  |   |             |  
|Total loan losses                                           |      |                         | 151,699     |      |  |   | 105,042     |  
|                                                            |      |                         |             |      |  |   |             |  
|Recoveries of previous loan losses:                         |      |                         |             |      |  |   |             |  
|Real estate - construction                                  |      |                         |            |      |  |   |            |  
|Real estate - mortgage                                      |      |                         |            |      |  |   |            |  
|Commercial and industrial                                   |      |                         | 10,537      |      |  |   | 52,987      |  
|Consumer                                                    |      |                         | 11,593      |      |  |   | 18,995      |  
|                                                            |      |                         |             |      |  |   |             |  
|Total recoveries                                            |      |                         | 22,130      |      |  |   | 71,982      |  
|                                                            |      |                         |             |      |  |   |             |  
|Net charge-offs                                             |      |                         | (129,569    | )    |  |   | (33,060     | )
|Provision charged to operations                             |      |                         | 202,000     |      |  |   | 225,000     |  
|                                                            |      |                         |             |      |  |   |             |  
|Balance of allowance for loan losses at end of year         |      | $                       | 1,929,319   |      |  | $ | 1,856,888   |  
|                                                            |      |                         |             |      |  |   |             |  
|Ratios:                                                     |      |                         |             |      |  |   |             |  
|Net charge-offs to average loans outstanding                |      |                         | 0.12        | %    |  |   | 0.03        | %
|Net charge-offs to loans at end of year                     |      |                         | 0.11        | %    |  |   | 0.03        | %
|Allowance for loan losses to average loans                  |      |                         | 1.77        | %    |  |   | 1.82        | %
|Allowance for loan losses to loans at end of year           |      |                         | 1.68        | %    |  |   | 1.75        | %
|Net charge-offs to allowance for loan losses                |      |                         | 6.72        | %    |  |   | 1.78        | %
|Net charge-offs to provisions for loan losses               |      |                         | 64.14       | %    |  |   | 14.69       | %

Nonperforming Assets.

The following table sets forth the Companys nonperforming assets at the dates indicated:



|                                                           |      |              |         |      |  |   |         |  
|---------------------------------------------------------- | ---- | ------------ | ------- | ---- |  | - | ------- | -
|                                                           |      | December 31, |        
|                                                           | 2007 |              |         | 2006 | 
|Nonaccrual loans (considered impaired)                     |      | $            | 814,874 |      |  | $ | 548,523 |  
|Loans 90 days or more past due and still accruing interest |      |              | 3,433   |      |  |   | 1,767   |  
|                                                           |      |              |         |      |  |   |         |  
|Total nonperforming loans                                  |      |              | 818,307 |      |  |   | 550,290 |  
|Other real estate owned                                    |      |              |        |      |  |   |        |  
|                                                           |      |              |         |      |  |   |         |  
|Total nonperforming assets                                 |      | $            | 818,307 |      |  | $ | 550,290 |  
|                                                           |      |              |         |      |  |   |         |  
|Nonperforming assets to year end loans                     |      |              | .71     | %    |  |   | .52     | %

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. At December 31, 2007 and 2006 the only loans considered to be impaired were the nonaccrual loans totaling $814,874 and $548,523, respectively.
These loans had related valuation allowances of $122,146 and $82,278 at December 31, 2007 and 2006, respectively. The average balances of impaired loans during 2007 and 2006 were $808,868 and $492,985, respectively.



11



---

COMMUNITYCORP AND SUBSIDIARY

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, 2007 and 2006, which were
identified through our internal review mechanisms.



|                 |      |              |           |  |   |          
|---------------- | ---- | ------------ | --------- |  | - | ---------
|                 |      | December 31,
|                 | 2007 |              | 2006     
|Criticized loans |      | $            | 90,586    |  | $ | 392,324  
|                 |      |             
|Classified loans |      |              | 1,480,047 |  |   | 1,411,827

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, 2007 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, 2007 was $666,421, a decrease of $47,069 or
6.60% from the comparable period in 2006. Service charges on deposit accounts decreased $36,017 or 7.00% from the year ended December 31, 2006 to $478,403 for the comparable period in 2007. This decrease in service charges is mainly
attributable to the closing of problem accounts and to being more selective in opening new accounts that could potentially be problematic. All other categories of noninterest income decreased 5.55% to $188,018 for the year ended December 31,
2007 when compared to the year ended December 31, 2006.

Noninterest Expense.Total noninterest expenses for the year ended
December 31, 2007 were $3,533,182, an increase of $122,342 or 3.59%, higher when compared to total noninterest expenses of $3,410,840 for the year ended December 31, 2006. Salaries and employee benefits increased 2.82% from $1,871,945 for
the year ended December 31, 2006 to $1,924,825 for the year ended December 31, 2007. This increase is primarily attributable to normal salary increases. Net occupancy and equipment expense increased 3.15% from $553,891 for the year ended
December 31, 2006 to $571,313 for the year ended December 31, 2007. Other operating expenses increased $52,040 from the year ended December 31, 2006 to $1,037,044 for the year ended December 31, 2007.



12



---

COMMUNITYCORP AND SUBSIDIARY

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 2007 was
$793,973, a decrease of $28,582 over the 2006 expense of $822,555. The Companys effective tax rates for the years ended December 31, 2007 and 2006 were 31.06% and 32.07%, respectively.

Net Income.The combination of the above factors resulted in net income for the year ended December 31, 2007 of $1,761,914 as compared
to $1,742,621 for the same period in 2006. This represents an increase of $19,293 or 1.11% over the same period in 2006.

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 $108,809,000 in 2007 compared to approximately $102,207,000 in 2006, an
increase of approximately $6,602.000 or 6.46%. Total loans were $114,597,378 and $105,840,360 at December 31, 2007 and 2006, respectively. Fixed rates loans comprised approximately 99% and 98% of our loan portfolio at December 31, 2007 and
2006, respectively.

The Companys ratio of loans to deposits was 82.09% at December 31, 2007 as compared to 75.18% at December 31,
2006. 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 2008. 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, the loan is removed from the portfolio through a charge-off to the
allowance for loan losses.



13



---

COMMUNITYCORP AND SUBSIDIARY

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, 2007 and 2006 and highlights our
general emphasis on commercial and mortgage lending.

Loan Portfolio Composition



|                          |  |        |             |   |                 |        |   |        |   |             |                 |  |        |  
|------------------------- |  | ------ | ----------- | - | --------------- | ------ | - | ------ | - | ----------- | --------------- |  | ------ | -
|                          |  | 2007   |             |   | 2006            |       
|                          |  | Amount |             |   | Percentof Total |        |   | Amount |   |             | Percentof Total | 
|Commercial and industrial |  | $      | 65,995,943  |   |                 | 57.59  | % |        | $ | 57,752,569  |                 |  | 54.57  | %
|Real estate               |  |        |             |   |                 |        |   |        |   |             |                 |  |        |  
|Construction              |  |        | 4,791,125   |   |                 | 4.18   |   |        |   | 3,234,546   |                 |  | 3.06   |  
|Mortgage                  |  |        | 32,249,064  |   |                 | 28.14  |   |        |   | 33,437,784  |                 |  | 31.59  |  
|Consumer and other loans  |  |        | 11,561,246  |   |                 | 10.09  |   |        |   | 11,415,461  |                 |  | 10.78  |  
|                          |  |        |             |   |                 |        |   |        |   |             |                 |  |        |  
|Total loans               |  |        | 114,597,378 |   |                 | 100.00 | % |        |   | 105,840,360 |                 |  | 100.00 | %
|                          |  |        |             |   |                 |        |   |        |   |             |                 |  |        |  
|Allowance for loan losses |  |        | (1,929,319  | ) |                 |        |   |        |   | (1,856,888  | )               |  |        |  
|                          |  |        |             |   |                 |        |   |        |   |             |                 |  |        |  
|Net loans                 |  | $      | 112,668,059 |   |                 |        |   |        | $ | 103,983,472 |                 |  |        |  
|                          |  |        |             |   |                 |        |   |        |   |             |                 |  |        |  

Commercial and industrial loans increased $8,243,374 or 14.27% from $57,752,569 at December 31, 2006. Real
estate loans, including construction and mortgage loans, increased $367,859 or 1.00% to $37,040,189 at December 31, 2007. Consumer and all other loans increased $145,785 or 1.28% to $11,561,246 at December 31, 2007.

Maturities and Sensitivity of Loans to Changes in Interest Rates

The
following table summarizes the loan maturity distribution, by type, at December 31, 2007 and related interest rate characteristics:



|                                    |  |                 |            |                                |   |                |  |       |           |  |   |            
|----------------------------------- |  | --------------- | ---------- | ------------------------------ | - | -------------- |  | ----- | --------- |  | - | -----------
|                                    |  | One Year orLess |            | Over One YearThrough FiveYears |   | Over FiveYears |  | Total
|Real estate - construction          |  | $               | 3,512,184  |                                | $ | 1,278,941      |  | $     |          |  | $ | 4,791,125  
|Real estate - mortgage              |  |                 | 9,324,509  |                                |   | 21,953,997     |  |       | 970,558   |  |   | 32,249,064 
|Commercial and industrial           |  |                 | 27,931,420 |                                |   | 37,317,472     |  |       | 747,051   |  |   | 65,995,943 
|Consumer and other                  |  |                 | 4,421,407  |                                |   | 6,890,019      |  |       | 249,820   |  |   | 11,561,246 
|                                    |  |                 |            |                                |   |                |  |       |           |  |   |            
|                                    |  | $               | 45,189,520 |                                | $ | 67,440,429     |  | $     | 1,967,429 |  | $ | 114,597,378
|                                    |  |                 |            |                                |   |                |  |       |           |  |   |            
|Loans maturing after one year with: |  |                 |            |                                |   |                |  |       |           |  |   |            
|Fixed interest rates                |  |                 |            |                                |   |                |  |       |           |  | $ | 68,482,278 
|Floating interest rates             |  |                 |            |                                |   |                |  |       |           |  |   | 925,580    
|                                    |  |                 |            |                                |   |                |  |       |           |  |   |            
|                                    |  |                 |            |                                |   |                |  |       |           |  | $ | 69,407,858 
|                                    |  |                 |            |                                |   |                |  |       |           |  |   |            



14



---

COMMUNITYCORP AND SUBSIDIARY

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 $8,683,000 in 2007, compared to approximately $11,195,000 in 2006. At December 31, 2007, short-term investments totaled $1,991,000. 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 in short-term investments are time deposits with other banks, which averaged approximately $71,000 in 2007. There were no investments in time deposits at
December 31, 2007.

Investment Securities. The investment securities portfolio is a significant component of the Companys
total earning assets. Total investment securities, stated at carrying amount, averaged approximately $36,961,000 in 2007, compared to approximately $34,323,000 in 2006. At December 31, 2007, the carrying value of the securities portfolio was
$36,751,811. Securities designated as available-for-sale totaled $34,585,073 and were recorded at estimated fair value. Securities designated as held-to-maturity totaled $1,819,481 and were recorded at amortized cost. Securities designated as
nonmarketable equity securities totaled $347,257 at December 31, 2007. 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, 2007 and 2006 and the weighted average yields of those securities at December 31, 2007.

Investment Securities Portfolio Composition



|                                            |  |      |            |      |   |           
|------------------------------------------- |  | ---- | ---------- | ---- | - | ----------
|                                            |  | 2007 |            | 2006
|Available-for-Sale (1)                      |  |      |            |      |   |           
|Government-sponsored enterprises            |  | $    | 21,028,089 |      | $ | 22,733,694
|Obligations of states and local governments |  |      | 7,803,335  |      |   | 6,858,450 
|Other                                       |  |      | 202,160    |      |   | 200,000   
|                                            |  |      |            |      |   |           
|                                            |  |      | 29,033,584 |      |   | 29,792,144
|Mortgage-backed securities                  |  |      | 5,551,489  |      |   | 2,676,354 
|                                            |  |      |            |      |   |           
|Total available-for-sale securities         |  | $    | 34,585,073 |      | $ | 32,468,498
|                                            |  |      |            |      |   |           
|Held-to-Maturity (1)                        |  |      |            |      |   |           
|Government-sponsored enterprises            |  | $    | 300,000    |      | $ |          
|Obligations of states and local governments |  |      | 1,519,481  |      |   | 1,574,215 
|                                            |  |      |            |      |   |           
|Total held-to-maturity securities           |  | $    | 1,819,481  |      | $ | 1,574,215 
|                                            |  |      |            |      |   |           



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



15



---

COMMUNITYCORP AND SUBSIDIARY

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, 2007                           |  | Within One Year |        |  | After One ButWithin Five Years |   |  | After Five ButWithin Ten Years |        |  | Over Ten Years |  
|(Dollars in thousands)                      |  |                 | Amount |  | Yield (1)                      |   |  |                                | Amount |  | Yield (1)      |   |  |   | Amount |  | Yield (1) |   |  |   | Amount |  | Yield (1) |  
|Government-sponsored enterprises (2)        |  | $               | 7,480  |  | 4.53                           | % |  | $                              | 12,545 |  | 5.04           | % |  | $ | 1,004  |  | 5.63      | % |  | $ |       |  |          |  
|Obligations of states and local governments |  |                 | 607    |  | 5.62                           | % |  |                                | 2,183  |  | 5.80           | % |  |   | 2,802  |  | 5.67      | % |  |   | 2,211  |  | 5.54      | %
|Other                                       |  |                 |       |  |                               | % |  |                                |       |  |               | % |  |   | 202    |  | 6.25      | % |  |   |       |  |          |  
|                                            |  |                 |        |  |                                |   |  |                                |        |  |                |   |  |   |        |  |           |   |  |   |        |  |           |  
|Total available-for-sale securities         |  | $               | 8,087  |  | 4.61                           | % |  | $                              | 14,728 |  | 5.15           | % |  | $ | 4,008  |  | 5.69      | % |  | $ | 2,211  |  | 5.54      | %
|                                            |  |                 |        |  |                                |   |  |                                |        |  |                |   |  |   |        |  |           |   |  |   |        |  |           |  

Held-to-Maturity



|                                            |  |                 |        |  |                                |   |  |                                |        |  |                |   |  |   |        |  |           |   |  |   |        |  |           |  
|------------------------------------------- |  | --------------- | ------ |  | ------------------------------ | - |  | ------------------------------ | ------ |  | -------------- | - |  | - | ------ |  | --------- | - |  | - | ------ |  | --------- | -
|December 31, 2007                           |  | Within One Year |        |  | After One ButWithin Five Years |   |  | After Five ButWithin Ten Years |        |  | Over Ten Years |  
|(Dollars in thousands)                      |  |                 | Amount |  | Yield (1)                      |   |  |                                | Amount |  | Yield (1)      |   |  |   | Amount |  | Yield (1) |   |  |   | Amount |  | Yield (1) |  
|Government-sponsored enterprises            |  | $               | 300    |  | 5.25                           | % |  | $                              |       |  |               |   |  | $ |       |  |          |   |  | $ |       |  |          |  
|Obligations of states and local governments |  | $               | 200    |  | 6.13                           | % |  |                                | 1,020  |  | 6.69           | % |  |   | 300    |  | 6.18      | % |  |   |       |  |          | %
|                                            |  |                 |        |  |                                |   |  |                                |        |  |                |   |  |   |        |  |           |   |  |   |        |  |           |  
|Total available-for-sale securities         |  | $               | 500    |  | 5.60                           | % |  | $                              | 1,020  |  | 6..69          | % |  | $ | 300    |  | 6.18      | % |  | $ |        |  |           |  
|                                            |  |                 |        |  |                                |   |  |                                |        |  |                |   |  |   |        |  |           |   |  |   |        |  |           |  



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

|(2) | Excludes mortgage-backed securities totaling $5,551,489 with a yield of 5.06%.
|--- | ------------------------------------------------------------------------------

DEPOSITS AND OTHER INTEREST-BEARING LIABILITIES

Deposits. Deposits account for practically all of our
interest bearing liabilities. Total average deposits increased from approximately $140,211,000 in 2006 to approximately $145,399,000 in 2007. This represents an increase of approximately $5,188,000 or 3.70% over the 2006 amount.

The following table summarizes the Companys deposits for the years ended December 31, 2007 and 2006.



|                                  |        |      |                    |  |        |        |  |                    |             |  |        |  
|--------------------------------- | ------ | ---- | ------------------ |  | ------ | ------ |  | ------------------ | ----------- |  | ------ | -
|                                  |        | 2007 |                    |  | 2006   |       
|                                  | Amount |      | Percent ofDeposits |  |        | Amount |  | Percent ofDeposits |            
|Noninterest-bearing demand        |        | $    | 16,461,238         |  | 11.79  | %      |  | $                  | 19,764,876  |  | 14.04  | %
|Interest-bearing demand           |        |      | 20,840,913         |  | 14.93  |        |  |                    | 23,916,250  |  | 16.99  |  
|Savings accounts                  |        |      | 14,270,926         |  | 10.22  |        |  |                    | 16,610,063  |  | 11.80  |  
|Time deposits of $100,000 or over |        |      | 55,118,795         |  | 39.48  |        |  |                    | 48,049,934  |  | 34.13  |  
|Other time deposits               |        |      | 32,902,440         |  | 23.57  |        |  |                    | 32,445,141  |  | 23.04  |  
|                                  |        |      |                    |  |        |        |  |                    |             |  |        |  
|Total deposits                    |        | $    | 139,594,312        |  | 100.00 | %      |  | $                  | 140,786,264 |  | 100.00 | %
|                                  |        |      |                    |  |        |        |  |                    |             |  |        |  



16



---

COMMUNITYCORP AND SUBSIDIARY

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 $84,475,517 and $92,736,330 at December 31, 2007 and 2006, 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,
2007, is shown in the following table.



|                                            |  |                    |            |                              |   |                              |  |                    |            |       |   |           |  |   |           
|------------------------------------------- |  | ------------------ | ---------- | ---------------------------- | - | ---------------------------- |  | ------------------ | ---------- | ----- | - | --------- |  | - | ----------
|                                            |  | Within ThreeMonths |            | After ThreeThrough SixMonths |   | After SixThroughTwelveMonths |  | After TwelveMonths |            | Total
|Certificates of deposit of $100,000 or more |  | $                  | 13,907,726 |                              | $ | 20,861,013                   |  | $                  | 18,345,061 |       | $ | 2,004,995 |  | $ | 55,118,795

Large balance certificates 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 2007 and 2006, the Company did not have any certificates of deposits that were obtained through brokers.

Short-term Borrowings. At December 31, 2007 and 2006, 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, |          
|                                          | 2007 |                          |           | 2006 | 
|Average balance during the year           |      | $                        | 249,074   |      |  | $ | 347,312 |  
|Average interest rate during the year     |      |                          | 4.29      | %    |  |   | 4.01    | %
|Maximum month-end balance during the year |      | $                        | 3,068,000 |      |  | $ | 450,000 |  
|End of period average interest rate       |      |                          | 4.72      | %    |  |   | 4.35    | %

CAPITAL

Total shareholders equity increased by $1,598,966 from $15,137,435 at December 31, 2006 to $16,736,401 at December 31, 2007. The increase is attributable to the sale of treasury stock of $31,552, the
increase in other comprehensive income of $165,943 and net income of $1,761,914. The increase was offset by the purchase of treasury stock during the period of $119,900, and the payment of dividends of $240,543.



17



---

COMMUNITYCORP AND SUBSIDIARY

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, 2007, 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 since this notification.

The following table summarizes the capital amounts and ratios of the Bank and the regulatory minimum requirements.



|                                         |        |        |            |  |                              |         |  |                                                                |           |       |      |   |  |   |            |  |       |  
|---------------------------------------- | ------ | ------ | ---------- |  | ---------------------------- | ------- |  | -------------------------------------------------------------- | --------- | ----- | ---- | - |  | - | ---------- |  | ----- | -
|                                         |        | Actual |            |  | For CapitalAdequacy Purposes |         |  | To Be Well-Capitalized UnderPrompt
CorrectiveAction Provisions |          
|                                         | Amount |        | Ratio      |  |                              | Minimum |  |                                                                | Minimum   |      
|                                         |        |        | Amount     |  | Ratio                        |         |  | Amount                                                         |           | Ratio |     
|December 31, 2007                        |        |        |            |  |                              |         |  |                                                                |           |       |      |   |  |   |            |  |       |  
|Total capital (to risk-weighted assets)  |        | $      | 18,058,801 |  | 15.08                        | %       |  | $                                                              | 9,578,000 |       | 8.00 | % |  | $ | 11,972,500 |  | 10.00 | %
|Tier 1 capital (to risk-weighted assets) |        |        | 16,562,238 |  | 13.83                        |         |  |                                                                | 4,789,000 |       | 4.00 |   |  |   | 7,183,500  |  | 6.00  |  
|Tier 1 capital (to average assets)       |        |        | 16,562,238 |  | 10.19                        |         |  |                                                                | 6,499,360 |       | 4.00 |   |  |   | 8,124,200  |  | 5.00  |  
|                                         |        |        |            |  |                              |        
|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  |  

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



18



---

COMMUNITYCORP AND SUBSIDIARY

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, 2007 and 2006 core deposits represented 60.52% and 65.87%, respectively of total deposits.

The Bank had available at the end of 2007 unused short-term lines of credit to purchase up to $4,300,000 of federal funds from unrelated correspondent institutions. The Bank also has a credit availability agreement
with the Federal Home Loan Bank totaling 15 percent of the Banks qualifying assets as of any quarter end. As of December 31, 2007, the available credit totaled approximately $24,197,000 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, 2007, the Banks available undivided profits totaled $13,330,531. 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.



19



---

COMMUNITYCORP AND SUBSIDIARY

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, 2007, the Bank had issued commitments to extend credit of $11,335,642 and
standby letters of credit of $978,332 through various types of commercial lending arrangements. Approximately $147,507 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, 2007.



|                                    |  |                 |         |                             |   |                                |  |                |           |                     |   |            |  |   |           |  |   |           
|----------------------------------- |  | --------------- | ------- | --------------------------- | - | ------------------------------ |  | -------------- | --------- | ------------------- | - | ---------- |  | - | --------- |  | - | ----------
|                                    |  | Within OneMonth |         | After OneThroughThreeMonths |   | After ThreeThroughTwelveMonths |  | Within OneYear |           | GreaterThanOne Year |   | Total     
|Unused commitments to extend credit |  | $               | 398,884 |                             | $ | 1,948,755                      |  | $              | 7,095,274 |                     | $ | 9,442,913  |  | $ | 1,892,729 |  | $ | 11,335,642
|Standby letters of credit           |  |                 |        |                             |   | 45,000                         |  |                | 911,200   |                     |   | 956,200    |  |   | 22,132    |  |   | 978,332   
|                                    |  |                 |         |                             |   |                                |  |                |           |                     |   |            |  |   |           |  |   |           
|Totals                              |  | $               | 398,884 |                             | $ | 1,993,755                      |  | $              | 8,006,474 |                     | $ | 10,399,113 |  | $ | 1,914,861 |  | $ | 12,313,974
|                                    |  |                 |         |                             |   |                                |  |                |           |                     |   |            |  |   |           |  |   |           

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 to the consolidated financial statements.



20



---

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 as of December 31, 2007 and 2006 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 audit 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 financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for
our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of
Communitycorp and subsidiary as of December 31, 2007 and 2006 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.

We were not engaged to examine managements assertion about the effectiveness of Communitycorp and subsidiarys internal control over financial
reporting as of December 31, 2007, included in the accompanying Managements Report on Internal Controls Over Financial Reporting, and, accordingly, we do not express an opinion thereon.



|                          
|--------------------------
|/s/ Elliott Davis, LLC    
|                          
|Greenville, South Carolina
|March 24, 2008            



21



---

COMMUNITYCORP AND SUBSIDIARY

Consolidated Balance Sheets



|                                                                                                |      |              |             |      |  |   |             |  
|----------------------------------------------------------------------------------------------- | ---- | ------------ | ----------- | ---- |  | - | ----------- | -
|                                                                                                |      | December 31, |            
|                                                                                                | 2007 |              |             | 2006 | 
|Assets:                                                                                         |      |              |             |      |  |   |             |  
|Cash and cash equivalents:                                                                      |      |              |             |      |  |   |             |  
|Cash and due from banks                                                                         |      | $            | 4,929,768   |      |  | $ | 6,041,317   |  
|Federal funds sold                                                                              |      |              | 1,991,000   |      |  |   | 8,363,000   |  
|                                                                                                |      |              |             |      |  |   |             |  
|Total cash and cash equivalents                                                                 |      |              | 6,920,768   |      |  |   | 14,404,317  |  
|                                                                                                |      |              |             |      |  |   |             |  
|Time deposits with other banks                                                                  |      |              |            |      |  |   | 100,000     |  
|                                                                                                |      |             
|Investment securities:                                                                          |      |              |             |      |  |   |             |  
|Securities available-for-sale                                                                   |      |              | 34,585,073  |      |  |   | 32,468,498  |  
|Securities held-to-maturity (estimated fair value of $1,836,967 in 2007 and $1,596,065 in 2006) |      |              | 1,819,481   |      |  |   | 1,574,215   |  
|Nonmarketable equity securities                                                                 |      |              | 347,257     |      |  |   | 342,857     |  
|                                                                                                |      |              |             |      |  |   |             |  
|Total investment securities                                                                     |      |              | 36,751,811  |      |  |   | 34,385,570  |  
|                                                                                                |      |              |             |      |  |   |             |  
|Loans receivable                                                                                |      |              | 114,597,378 |      |  |   | 105,840,360 |  
|Less allowance for loan losses                                                                  |      |              | (1,929,319  | )    |  |   | (1,856,888  | )
|                                                                                                |      |              |             |      |  |   |             |  
|Loans receivable, net                                                                           |      |              | 112,668,059 |      |  |   | 103,983,472 |  
|Premises and equipment, net                                                                     |      |              | 2,989,119   |      |  |   | 3,130,914   |  
|Accrued interest receivable                                                                     |      |              | 1,297,946   |      |  |   | 1,216,414   |  
|Other assets                                                                                    |      |              | 691,984     |      |  |   | 871,299     |  
|                                                                                                |      |              |             |      |  |   |             |  
|Total assets                                                                                    |      | $            | 161,319,687 |      |  | $ | 158,091,986 |  
|                                                                                                |      |              |             |      |  |   |             |  
|Liabilities:                                                                                    |      |              |             |      |  |   |             |  
|Deposits:                                                                                       |      |              |             |      |  |   |             |  
|Noninterest-bearing transaction accounts                                                        |      | $            | 16,461,238  |      |  | $ | 19,764,876  |  
|Interest-bearing transaction accounts                                                           |      |              | 20,840,913  |      |  |   | 23,916,250  |  
|Money market savings accounts                                                                   |      |              | 2,437,697   |      |  |   | 1,737,592   |  
|Savings                                                                                         |      |              | 11,833,229  |      |  |   | 14,872,471  |  
|Time deposits $100,000 and over                                                                 |      |              | 55,118,795  |      |  |   | 48,049,934  |  
|Other time deposits                                                                             |      |              | 32,902,440  |      |  |   | 32,445,141  |  
|                                                                                                |      |              |             |      |  |   |             |  
|Total deposits                                                                                  |      |              | 139,594,312 |      |  |   | 140,786,264 |  
|Short-term borrowings                                                                           |      |              | 3,068,000   |      |  |   | 250,000     |  
|Accrued interest payable                                                                        |      |              | 1,767,670   |      |  |   | 1,534,531   |  
|Other liabilities                                                                               |      |              | 153,304     |      |  |   | 383,756     |  
|                                                                                                |      |              |             |      |  |   |             |  
|Total liabilities                                                                               |      |              | 144,583,286 |      |  |   | 142,954,551 |  
|                                                                                                |      |              |             |      |  |   |             |  
|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                  |      |              | 1,500,000   |      |  |   | 1,500,000   |  
|Capital surplus                                                                                 |      |              | 1,723,196   |      |  |   | 1,720,382   |  
|Retained earnings                                                                               |      |              | 17,153,490  |      |  |   | 15,632,119  |  
|Accumulated other comprehensive income (loss)                                                   |      |              | 70,928      |      |  |   | (95,015     | )
|Treasury stock (59,537 shares in 2007 and 58,251 shares in 2006)                                |      |              | (3,711,213  | )    |  |   | (3,620,051  | )
|                                                                                                |      |              |             |      |  |   |             |  
|Total shareholders equity                                                                      |      |              | 16,736,401  |      |  |   | 15,137,435  |  
|                                                                                                |      |              |             |      |  |   |             |  
|Total liabilities and shareholders equity                                                      |      | $            | 161,319,687 |      |  | $ | 158,091,986 |  
|                                                                                                |      |              |             |      |  |   |             |  

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



22



---

COMMUNITYCORP AND SUBSIDIARY



Consolidated Statements of Income



|                                                    |      |                          |            |  |   |          
|--------------------------------------------------- | ---- | ------------------------ | ---------- |  | - | ---------
|                                                    |      | Years Ended December 31,
|                                                    | 2007 |                          | 2006      
|Interest income:                                    |      |                          |            |  |   |          
|Loans, including fees                               |      | $                        | 8,270,237  |  | $ | 7,454,641
|Investment securities:                              |      |                          |            |  |   |          
|Taxable                                             |      |                          | 1,305,174  |  |   | 1,063,657
|Tax-exempt                                          |      |                          | 343,968    |  |   | 263,926  
|Nonmarketable equity securities                     |      |                          | 18,640     |  |   | 9,334    
|Federal funds sold                                  |      |                          | 443,588    |  |   | 555,376  
|Time deposits with other banks                      |      |                          | 10,121     |  |   | 11,174   
|                                                    |      |                          |            |  |   |          
|Total interest income                               |      |                          | 10,391,728 |  |   | 9,358,108
|                                                    |      |                          |            |  |   |          
|Interest expense:                                   |      |                          |            |  |   |          
|Deposits                                            |      |                          | 4,756,053  |  |   | 3,856,669
|Short-term borrowings                               |      |                          | 11,027     |  |   | 13,913   
|                                                    |      |                          |            |  |   |          
|Total interest expense                              |      |                          | 4,767,080  |  |   | 3,870,582
|                                                    |      |                          |            |  |   |          
|Net interest income                                 |      |                          | 5,624,648  |  |   | 5,487,526
|                                                    |      |                         
|Provision for loan losses                           |      |                          | 202,000    |  |   | 225,000  
|                                                    |      |                          |            |  |   |          
|Net interest income after provision for loan losses |      |                          | 5,422,648  |  |   | 5,262,526
|                                                    |      |                          |            |  |   |          
|Noninterest income:                                 |      |                          |            |  |   |          
|Service charges on deposit accounts                 |      |                          | 478,403    |  |   | 514,420  
|Commissions on credit life insurance                |      |                          | 10,289     |  |   | 11,402   
|Other charges, fees, and commissions                |      |                          | 115,953    |  |   | 120,550  
|Other                                               |      |                          | 61,776     |  |   | 67,118   
|                                                    |      |                          |            |  |   |          
|Total noninterest income                            |      |                          | 666,421    |  |   | 713,490  
|                                                    |      |                          |            |  |   |          
|Noninterest expenses:                               |      |                          |            |  |   |          
|Salaries and employee benefits                      |      |                          | 1,924,825  |  |   | 1,871,945
|Net occupancy                                       |      |                          | 238,474    |  |   | 241,236  
|Equipment                                           |      |                          | 332,839    |  |   | 312,655  
|Other operating                                     |      |                          | 1,037,044  |  |   | 985,004  
|                                                    |      |                          |            |  |   |          
|Total noninterest expenses                          |      |                          | 3,533,182  |  |   | 3,410,840
|                                                    |      |                          |            |  |   |          
|Income before income taxes                          |      |                          | 2,555,887  |  |   | 2,565,176
|                                                    |      |                         
|Income tax expense                                  |      |                          | 793,973    |  |   | 822,555  
|                                                    |      |                          |            |  |   |          
|Net income                                          |      | $                        | 1,761,914  |  | $ | 1,742,621
|                                                    |      |                          |            |  |   |          
|Earnings per share:                                 |      |                          |            |  |   |          
|Weighted-average common shares outstanding          |      |                          | 240,708    |  |   | 242,636  
|Basic                                               |      | $                        | 7.32       |  | $ | 7.18     

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



23



---

COMMUNITYCORP AND SUBSIDIARY



Consolidated Statements of Changes in Shareholders Equity and Comprehensive Income

For the years ended December 31, 2007 and 2006



|                                                          |        |              |        |                |           |                  |   |           |                                            |   |            |                       |  |   |                          |   |  |   |            |   |  |   |            |  
|--------------------------------------------------------- | ------ | ------------ | ------ | -------------- | --------- | ---------------- | - | --------- | ------------------------------------------ | - | ---------- | --------------------- |  | - | ------------------------ | - |  | - | ---------- | - |  | - | ---------- | -
|                                                          |        | Common stock |        | Capitalsurplus |           | Retainedearnings |   |           | Accumulatedothercomprehensiveincome (loss) |   |            | Treasurystock,at cost |  |   | Totalshareholdersequity |  
|                                                          | Shares |              | Amount |                |           |                  |   |          
|Balance, December 31, 2005                                |        | 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 $86,571 |        |              |        |                |           |                  |   |           |                                            |   |            |                       |  |   | 170,056                  |   |  |   |            |   |  |   | 170,056    |  
|                                                          |        |              |        |                |           |                  |   |           |                                            |   |            |                       |  |   |                          |   |  |   |            |   |  |   |            |  
|Comprehensive income                                      |        |              |        |                |           |                  |   |           |                                            |   |            |                       |  |   |                          |   |  |   |            |   |  |   | 1,912,677  |  
|Cash dividends paid ($.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 |  
|Net income                                                |        |              |        |                |           |                  |   |           |                                            |   | 1,761,914  |                       |  |   |                          |   |  |   |            |   |  |   | 1,761,914  |  
|Other comprehensive income, net of tax expense of $84,196 |        |              |        |                |           |                  |   |           |                                            |   |            |                       |  |   | 165,943                  |   |  |   |            |   |  |   | 165,943    |  
|                                                          |        |              |        |                |           |                  |   |           |                                            |   |            |                       |  |   |                          |   |  |   |            |   |  |   |            |  
|Comprehensive income                                      |        |              |        |                |           |                  |   |           |                                            |   |            |                       |  |   |                          |   |  |   |            |   |  |   | 1,927,857  |  
|Cash dividends paid ($1.00 per share)                     |        |              |        |                |           |                  |   |           |                                            |   | (240,543   | )                     |  |   |                          |   |  |   |            |   |  |   | (240,543   | )
|Purchase of treasury stock                                |        |              |        |                |           |                  |   |           |                                            |   |            |                       |  |   |                          |   |  |   | (119,900   | ) |  |   | (119,900   | )
|Sale of treasury stock                                    |        |              |        |                |           |                  |   | 2,814     |                                            |   |            |                       |  |   |                          |   |  |   | 28,738     |   |  |   | 31,552     |  
|                                                          |        |              |        |                |           |                  |   |           |                                            |   |            |                       |  |   |                          |   |  |   |            |   |  |   |            |  
|Balance, December 31, 2007                                |        | 300,000      |        | $              | 1,500,000 |                  | $ | 1,723,196 |                                            | $ | 17,153,490 |                       |  | $ | 70,928                   |   |  | $ | (3,711,213 | ) |  | $ | 16,736,401 |  
|                                                          |        |              |        |                |           |                  |   |           |                                            |   |            |                       |  |   |                          |   |  |   |            |   |  |   |            |  

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



24



---

COMMUNITYCORP AND SUBSIDIARY



Consolidated Statements of Cash Flows



|                                                                                            |      |                          |             |      |  |   |            |  
|------------------------------------------------------------------------------------------- | ---- | ------------------------ | ----------- | ---- |  | - | ---------- | -
|                                                                                            |      | Years Ended December 31, |            
|                                                                                            | 2007 |                          |             | 2006 | 
|Cash flows from operating activities:                                                       |      |                          |             |      |  |   |            |  
|Net income                                                                                  |      | $                        | 1,761,914   |      |  | $ | 1,742,621  |  
|Adjustments to reconcile net income to net cash provided by operating activities:           |      |                          |             |      |  |   |            |  
|Provision for loan losses                                                                   |      |                          | 202,000     |      |  |   | 225,000    |  
|Depreciation expense                                                                        |      |                          | 225,292     |      |  |   | 216,214    |  
|Premium amortization less discount accretion on investment securities                       |      |                          | (107,045    | )    |  |   | 19,679     |  
|Deferred income tax benefit                                                                 |      |                          | (77,305     | )    |  |   | (47,574    | )
|Amortization of loan fees and costs                                                         |      |                          | (2,956      | )    |  |   | (2,845     | )
|Increase in accrued interest receivable                                                     |      |                          | (81,532     | )    |  |   | (226,832   | )
|Increase in accrued interest payable                                                        |      |                          | 233,139     |      |  |   | 950,179    |  
|(Increase) decrease in other assets                                                         |      |                          | 172,424     |      |  |   | (62,426    | )
|Increase (decrease) in other liabilities                                                    |      |                          | (230,452    | )    |  |   | 54,051     |  
|                                                                                            |      |                          |             |      |  |   |            |  
|Net cash provided by operating activities                                                   |      |                          | 2,095,479   |      |  |   | 2,868,067  |  
|                                                                                            |      |                          |             |      |  |   |            |  
|Cash flows from investing activities:                                                       |      |                          |             |      |  |   |            |  
|Proceeds from maturities of securities available-for-sale                                   |      |                          | 30,824,513  |      |  |   | 6,257,429  |  
|Purchases of securities available-for-sale                                                  |      |                          | (32,584,170 | )    |  |   | (7,632,468 | )
|Proceeds from maturities of securities held-to-maturity                                     |      |                          | 55,000      |      |  |   | 303,168    |  
|Purchases of securities held-to-maturity                                                    |      |                          | (300,000    | )    |  |   |            |  
|Purchases of nonmarketable equity securities                                                |      |                          | (4,400      | )    |  |   | (3,200     | )
|Decrease in time deposits with other banks                                                  |      |                          | 100,000     |      |  |   | 200,000    |  
|Net increase in loans to customers                                                          |      |                          | (8,883,631  | )    |  |   | (8,275,276 | )
|Purchases of premises and equipment                                                         |      |                          | (83,497     | )    |  |   | (81,208    | )
|                                                                                            |      |                          |             |      |  |   |            |  
|Net cash used for investing activities                                                      |      |                          | (10,876,185 | )    |  |   | (9,231,555 | )
|                                                                                            |      |                          |             |      |  |   |            |  
|Cash flows from financing activities:                                                       |      |                          |             |      |  |   |            |  
|Net decrease in demand deposits, interest-bearing transaction accounts and savings accounts |      |                          | (8,718,112  | )    |  |   | (4,811,351 | )
|Net increase in time deposits                                                               |      |                          | 7,526,160   |      |  |   | 18,139,309 |  
|Net Increase (decrease) in short-term borrowings                                            |      |                          | 2,818,000   |      |  |   | (120,000   | )
|Cash dividends paid                                                                         |      |                          | (240,543    | )    |  |   | (219,099   | )
|Purchase of treasury stock                                                                  |      |                          | (119,900    | )    |  |   | (268,752   | )
|Sale of treasury stock                                                                      |      |                          | 31,552      |      |  |   | 185,236    |  
|                                                                                            |      |                          |             |      |  |   |            |  
|Net cash provided by financing activities                                                   |      |                          | 1,297,157   |      |  |   | 12,905,343 |  
|                                                                                            |      |                          |             |      |  |   |            |  
|Net increase (decrease) in cash and cash equivalents                                        |      |                          | (7,483,549  | )    |  |   | 6,541,855  |  
|Cash and cash equivalents, beginning of year                                                |      |                          | 14,404,317  |      |  |   | 7,862,462  |  
|                                                                                            |      |                          |             |      |  |   |            |  
|Cash and cash equivalents, end of year                                                      |      | $                        | 6,920,768   |      |  | $ | 14,404,317 |  
|                                                                                            |      |                          |             |      |  |   |            |  

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



25



---

COMMUNITYCORP AND SUBSIDIARY

Notes to Consolidated Financial Statements

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES

Basis of Presentation - 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 value of 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, 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. 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 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, 2007
and 2006, non-marketable equity securities consist of the following:



|                                  |      |              |         |  |   |        
|--------------------------------- | ---- | ------------ | ------- |  | - | -------
|                                  |      | December 31,
|                                  | 2007 |              | 2006   
|Federal Home Loan Bank            |      | $            | 284,400 |  | $ | 280,000
|Community Financial Services, Inc |      |              | 56,857  |  |   | 56,857 
|Other Community Banks             |      |              | 6,000   |  |   | 6,000  
|                                  |      |              |         |  |   |        
|Total                             |      | $            | 347,257 |  | $ | 342,857
|                                  |      |              |         |  |   |        



26



---

COMMUNITYCORP AND SUBSIDIARY

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 allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charger to earnings. Loan losses are charged
against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management and is based upon managements periodic review of the collectibility of the loans in light of historical experience, the nature and volume of the loan
portfolio, adverse situations that may affect the borrowers ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are
susceptible to significant revision as more information becomes available.

The allowance consists of specific, general, and unallocated components. The
specific component relates to loans that are classified as either doubtful, substandard or special mention. For such loans that are also classified as impaired, an allowance is established when the discounted cash flows (or collateral value or
observable market price) of the impaired loan is lower than the carrying value of that loan. The general component covers non-classified loans and is based on historical loss experience adjusted for qualitative factors. An unallocated component is
maintained to cover uncertainties that could affect managements estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for
estimating specific and general losses in the portfolio.

A loan is considered impaired when, based on current information and events, it is probable that
the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral
value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance
of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrowers prior
payment record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis for commercial and construction loans by either the present value of expected future cash flows discounted
at the loans effective interest rate, the loans obtainable market price, or the fair value of the collateral if the loan is collateral dependent.



27



---

COMMUNITYCORP AND SUBSIDIARY

Notes to Consolidated Financial Statements

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)



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



Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company
does not separately identify individual consumer and residential loans for impairment disclosures, unless such loans are the subject of a restructuring agreement.

All cash receipts on impaired loans are applied to principal until such time as the principal is brought current. After principal has been satisfied, future cash receipts are applied to interest income, to the extent that any interest has
been foregone.

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. At of December 31, 2007 and 2006 the Bank did not have any loans held for sale.
Recognition of deferred fees and costs is discontinued on nonaccrual loans until they return to accrual status or are charged-off.

Concentrations of
Credit Risk - Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of loans receivable, investment securities, federal funds sold and amounts due from banks.

The Company makes loans to individuals and small businesses for various personal and commercial purposes principally in Colleton, Charleston, and Jasper counties South
Carolina. The Companys loan portfolio is not concentrated in loans to any single borrower or 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 from 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. Management has determined that there is no concentration of credit risk associated with its lending policies or practices. 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. Therefore, management believes that these particular practices do not subject the Company to unusual credit
risk.

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. Management believes credit risk associated with correspondent accounts is not significant.



28



---

COMMUNITYCORP AND SUBSIDIARY

Notes to Consolidated Financial Statements

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)



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

Other Real Estate Owned - Other real estate owned includes real estate acquired
through foreclosure. 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 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
$35,793 and $38,745 at December 31, 2007 and 2006, respectively.

Income Taxes - Deferred income taxes are computed using the asset and
liability approach. The tax effects of differences between the tax and financial accounting bases of assets and liabilities are reflected in the balance sheet at the tax rates expected to be in effect when the differences reverse. A valuation
allowance is provided against deferred tax assets when realization is deemed not to be likely. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.

Uncertainty in Income Taxes applies to all tax positions within the scope of SFAS 109. The Company applies a more-likely-than-not threshold
for initial recognition of a tax benefit in the financial statements, and requires measurement of the amount of benefit to be recognized based upon the larger amount of benefit that is greater than 50% likely of being realized upon ultimate
settlement with the taxing authority.

In July 2006, the FASB issued Financial Interpretation No. 48, Accounting for Uncertainty in Income
Taxes-an interpretation of FASB Statement No. 109(FIN 48), which is a change in accounting for income taxes. FIN 48 specifies how tax benefits for uncertain tax positions are to be recognized, measured, and derecognized in
financial statements; requires certain disclosures of uncertain tax matters; specifies how reserves for uncertain tax positions should be classified on the balance sheet; and provides transition and interim period guidance, among other provisions.
FIN 48 is effective for fiscal years beginning after December 15, 2006 and as a result, was effective for the Company in the first quarter of fiscal 2007. The adoption of FIN 48 did not have any impact on the Companys Consolidated
Financial Statements.



29



---

COMMUNITYCORP AND SUBSIDIARY

Notes to Consolidated Financial Statements

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)



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 $82,055 and $74,633 in 2007 and 2006, 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.

Additionally, 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 $344,357 and $312,729 at December 31, 2007 and 2006, respectively. Expenses charged to
earnings for the salary deferral plan were $27,000 and $27,000 in 2007 and 2006, 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.

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 2007 and 2006, the Company paid $4,533,941 and $2,920,403, respectively,
for interest. Cash paid for income taxes was $915,280 and $857,700 in 2007 and 2006, respectively.

There were no supplemental noncash investing activities
due to reclassification of loans during 2007 or 2006.

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, |        
|                                                             | 2007 |                         |         | 2006 | 
|Net unrealized gains on available-for-sale securities        |      | $                       | 250,139 |      |  | $ | 259,627 |  
|Reclassification adjustment for gains realized in net income |      |                         |        |      |  |   |        |  
|                                                             |      |                         |         |      |  |   |         |  
|Net unrealized gains on securities                           |      |                         | 250,139 |      |  |   | 259,627 |  
|                                                             |      |                        
|Tax effect                                                   |      |                         | (84,196 | )    |  |   | (89,571 | )
|                                                             |      |                         |         |      |  |   |         |  
|Net-of-tax amount                                            |      | $                       | 165,943 |      |  | $ | 170,056 |  
|                                                             |      |                         |         |      |  |   |         |  



30



---

COMMUNITYCORP AND SUBSIDIARY

Notes to Consolidated Financial Statements

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)



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 September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards, Fair Value Measurements (SFAS 157). 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 eliminates inconsistencies found in various prior pronouncements but does not require any new fair value measurements. SFAS 157 is effective for the Company on January 1, 2008 and will not impact the Companys
accounting measurements but it is expected to result in additional disclosures.

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 (SFAS 159). 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. The Company is currently
analyzing the fair value option that is permitted, but not required, under SFAS 159.

In November 2007, the Securities and Exchange Commission
(SEC) issued Staff Accounting Bulletin No. 109, Written Loan Commitments Recorded at Fair Value Through Earnings (SAB 109). SAB 109 expresses the current view of the SEC staff that the expected net future
cash flows related to the associated servicing of the loan should be included in the measurement of all written loan commitments that are accounted for at fair value through earnings. SEC registrants are expected to apply this guidance on a
prospective basis to derivative loan commitments issued or modified in the first quarter of 2008 and thereafter. At December 31, 2007, the Company did not have any loans held for sale.

In December 2007, the FASB issued SFAS No. 141(R), Business Combinations, (SFAS 141(R)) which replaces SFAS 141. SFAS 141(R) establishes
principles and requirements for how an acquirer in a business combination recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any controlling interest; recognizes and measures goodwill
acquired in the business combination or a gain from a bargain purchase; and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. FAS 141(R) is
effective for acquisitions by the Company taking place on or after January 1, 2009. Early adoption is prohibited. Accordingly, a calendar year-end company is required to record and disclose business combinations following existing accounting
guidance until January 1, 2009. The Company will assess the impact of SFAS 141(R) if and when a future acquisition occurs.

In December 2007, the FASB
issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements  an amendment of ARB No. 51 (SFAS 160). SFAS 160 establishes new accounting and reporting standards for the noncontrolling
interest in a subsidiary and for the deconsolidation of a subsidiary. Before this statement, limited guidance existed for reporting noncontrolling interests (minority interest). As a result, diversity in practice exists. In some cases minority
interest is reported as a liability and in others it is reported in the mezzanine section between liabilities and equity. Specifically, SFAS 160 requires the recognition of a noncontrolling interest (minority interest) as equity in the consolidated
financials statements and separate from the parents equity. The amount of net income



31



---

COMMUNITYCORP AND SUBSIDIARY

Notes to Consolidated Financial Statements

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)



Recent Accounting Pronouncements  (continued)



attributable to the noncontrolling interest will be included in consolidated net income on the face of the income statement. SFAS 160 clarifies that changes
in a parents ownership interest in a subsidiary that do not result in deconsolidation are equity transactions if the parent retains its controlling financial interest. In addition, this statement requires that a parent recognize gain or loss
in net income when a subsidiary is deconsolidated. Such gain or loss will be measured using the fair value of the noncontrolling equity investment on the deconsolidation date. SFAS 160 also includes expanded disclosure requirements regarding the
interests of the parent and its noncontrolling interests. SFAS 160 is effective for the Company on January 1, 2009. Earlier adoption is prohibited. The Company is currently evaluating the impact, if any, the adoption of SFAS 160 will have on
its consolidated financial statements.

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 2006 were reclassified to conform with the 2007 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, 2007 and 2006 were approximately $702,000 and $1,083,000 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:



|                                           |  |               |            |                  |   |            |  |   |         |  |   |           
|------------------------------------------ |  | ------------- | ---------- | ---------------- | - | ---------- |  | - | ------- |  | - | ----------
|                                           |  | AmortizedCost |            | Gross Unrealized |   | Fair Value
|                                           |  | Gains         |            | Losses           |  
|December 31, 2007                          |  |               |            |                  |   |            |  |   |         |  |   |           
|Government-sponsored enterprises           |  | $             | 26,487,264 |                  | $ | 118,945    |  | $ | 26,631  |  | $ | 26,579,578
|Obligations of state and local governments |  |               | 7,792,731  |                  |   | 37,713     |  |   | 27,109  |  |   | 7,803,335 
|Other                                      |  |               | 200,000    |                  |   | 2,160      |  |   |        |  |   | 202,160   
|                                           |  |               |            |                  |   |            |  |   |         |  |   |           
|Total                                      |  | $             | 34,479,995 |                  | $ | 158,818    |  | $ | 53,740  |  | $ | 34,585,073
|                                           |  |               |            |                  |   |            |  |   |         |  |   |           
|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
|                                           |  |               |            |                  |   |            |  |   |         |  |   |           



32



---

COMMUNITYCORP AND SUBSIDIARY

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, 2007 and 2006.



|                                           |            |                     |                  |                   |            |        |                  |   |            |  |                  |         |  |   |            |  |   |        
|------------------------------------------ | ---------- | ------------------- | ---------------- | ----------------- | ---------- | ------ | ---------------- | - | ---------- |  | ---------------- | ------- |  | - | ---------- |  | - | -------
|                                           |            | Less Than 12 Months |                  | 12 Months Or More |            | Total 
|                                           | Fair Value |                     | UnrealizedLosses |                   | Fair Value |        | UnrealizedLosses |   | Fair Value |  | UnrealizedLosses
|December 31, 2007                          |            |                     |                  |                   |            |        |                  |   |            |  |                  |         |  |   |            |  |   |        
|Government-sponsored enterprises           |            | $                   | 4,853,173        |                   | $          | 7,965  |                  | $ | 4,980,800  |  | $                | 18,667  |  | $ | 9,833,973  |  | $ | 26,632 
|Obligations of state and local governments |            |                     | 1,861,500        |                   |            | 23,121 |                  |   | 1,405,575  |  |                  | 3,987   |  |   | 3,267,075  |  |   | 27,108 
|                                           |            |                     |                  |                   |            |        |                  |   |            |  |                  |         |  |   |            |  |   |        
|Total                                      |            | $                   | 6,714,673        |                   | $          | 31,086 |                  | $ | 6,386,375  |  | $                | 22,654  |  | $ | 13,101,048 |  | $ | 53,740 
|                                           |            |                     |                  |                   |            |        |                  |   |            |  |                  |         |  |   |            |  |   |        
|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
|                                           |            |                     |                  |                   |            |        |                  |   |            |  |                  |         |  |   |            |  |   |        

There were a total of forty-five available-for-sale securities that were in a loss position at December 31,
2007. Of these securities, thirty were in a loss position of twelve months or more, which consisted of 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, 2007 and 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, 2007
|                                          | AmortizedCost |                   | Fair Value
|Due in one year or less                   |               | $                 | 8,090,350  |  | $ | 8,086,443 
|Due after one year but within five years  |               |                   | 14,634,118 |  |   | 14,727,712
|Due after five years but within ten years |               |                   | 3,985,288  |  |   | 4,008,012 
|Due after ten years                       |               |                   | 2,236,376  |  |   | 2,211,417 
|                                          |               |                   |            |  |   |           
|                                          |               |                   | 28,946,132 |  |   | 29,033,584
|Mortgage-backed securities                |               |                   | 5,533,863  |  |   | 5,551,489 
|                                          |               |                   |            |  |   |           
|Total                                     |               | $                 | 34,479,995 |  | $ | 34,585,073
|                                          |               |                   |            |  |   |           



33



---

COMMUNITYCORP AND SUBSIDIARY

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:



|                                           |  |               |           |                  |   |            |  |   |   |  |   |          
|------------------------------------------ |  | ------------- | --------- | ---------------- | - | ---------- |  | - | - |  | - | ---------
|                                           |  | AmortizedCost |           | Gross Unrealized |   |           
|                                           |  | Gains         |           | Losses           |   | Fair Value
|December 31, 2007                          |  |               |           |                  |   |            |  |   |   |  |   |          
|Government-sponsored enterprises           |  | $             | 300,000   |                  | $ | 189        |  | $ |   |  | $ | 300,189  
|Obligations of state and local governments |  |               | 1,519,481 |                  |   | 17,297     |  |   |  |  |   | 1,536,778
|                                           |  |               |           |                  |   |            |  |   |   |  |   |          
|Total                                      |  | $             | 1,819,481 |                  | $ | 17,486     |  | $ |  |  | $ | 1,836,967
|                                           |  |               |           |                  |   |            |  |   |   |  |   |          
|December 31, 2006 -                        |  |               |           |                  |   |            |  |   |   |  |   |          
|Obligations of state and local governments |  | $             | 1,574,215 |                  | $ | 21,850     |  | $ |   |  | $ | 1,596,065
|                                           |  |               |           |                  |   |            |  |   |   |  |   |          

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, 2007
|                                          | AmortizedCost |                   | Fair Value
|Due in one year or less                   |               | $                 | 499,978    |  | $ | 500,505  
|Due after one year but within five years  |               |                   | 1,019,728  |  |   | 1,031,101
|Due after five years but within ten years |               |                   | 299,775    |  |   | 305,361  
|                                          |               |                   |            |  |   |          
|Total                                     |               | $                 | 1,819,481  |  | $ | 1,836,967
|                                          |               |                   |            |  |   |          

At December 31, 2007 and 2006, investment securities with an amortized cost of $29,659,673 and $28,886,610,
respectively, and a fair value of $30,250,496 and $29,169,683, 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, 2007 and
2006.

NOTE 4 - LOANS RECEIVABLE

Loans consisted of
the following:



|                           |      |              |             |  |   |            
|-------------------------- | ---- | ------------ | ----------- |  | - | -----------
|                           |      | December 31,
|                           | 2007 |              | 2006       
|Real estate - construction |      | $            | 4,791,125   |  | $ | 3,234,546  
|Real estate - mortgage     |      |              | 32,249,064  |  |   | 33,437,784 
|Commercial and industrial  |      |              | 65,995,943  |  |   | 57,752,569 
|Consumer and other         |      |              | 11,561,246  |  |   | 11,415,461 
|                           |      |              |             |  |   |            
|Total gross loans          |      | $            | 114,597,378 |  | $ | 105,840,360
|                           |      |              |             |  |   |            

As of December 31, 2007 and 2006, management had placed loans totaling $814,874 and $548,523, respectively,
in nonaccrual status, because the loans were not performing as originally contracted. For 2007 and 2006 the total amount of interest earned on nonaccrual loans was approximately $53,000 and $15,000, respectively. The gross interest income which
would have been recorded under the original terms of the nonaccrual loans amounted to approximately $52,000 and $20,000 for 2007 and 2006, respectively.



34



---

COMMUNITYCORP AND SUBSIDIARY

Notes to Consolidated Financial Statements

NOTE 4  LOANS RECEIVABLE(continued)



Loans ninety days or more past due and still accruing interest were $3,433 and $1,767 at December 31, 2007 and
2006, respectively.

At December 31, 2007 and 2006 the only loans considered to be impaired were the nonaccrual loans totaling $814,874 and $548,523,
respectively. These loans had related valuation allowances of $122,146 and $82,278 at December 31, 2007 and 2006, respectively. The average balances of impaired loans during 2007 and 2006 were $808,868 and $492,985, respectively.

Transactions in the allowance for loan losses are summarized below:



|                                           |      |                          |           |      |  |   |           |  
|------------------------------------------ | ---- | ------------------------ | --------- | ---- |  | - | --------- | -
|                                           |      | Years ended December 31, |          
|                                           | 2007 |                          |           | 2006 | 
|Balance, beginning of year                 |      | $                        | 1,856,888 |      |  | $ | 1,664,948 |  
|Provision charged to operations            |      |                          | 202,000   |      |  |   | 225,000   |  
|Recoveries on loans previously charged-off |      |                          | 22,130    |      |  |   | 71,983    |  
|Loans charged-off                          |      |                          | (151,699  | )    |  |   | (105,043  | )
|                                           |      |                          |           |      |  |   |           |  
|Balance, end of year                       |      | $                        | 1,929,319 |      |  | $ | 1,856,888 |  
|                                           |      |                          |           |      |  |   |           |  

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,
|                             | 2007 |              | 2006      
|Commitments to extend credit |      | $            | 11,335,642 |  | $ | 9,388,762
|Standby letters of credit    |      |              | 978,332    |  |   | 1,256,978



35



---

COMMUNITYCORP AND SUBSIDIARY

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, 2007, 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, |           
|                               | 2007 |              |            | 2006 | 
|Land                           |      | $            | 710,605    |      |  | $ | 710,605    |  
|Building and land improvements |      |              | 2,611,083  |      |  |   | 2,611,083  |  
|Furniture and equipment        |      |              | 2,033,966  |      |  |   | 1,983,325  |  
|                               |      |              |            |      |  |   |            |  
|Total                          |      |              | 5,355,654  |      |  |   | 5,305,013  |  
|Less, accumulated depreciation |      |              | (2,366,535 | )    |  |   | (2,174,099 | )
|                               |      |              |            |      |  |   |            |  
|Premises and equipment, net    |      | $            | 2,989,119  |      |  | $ | 3,130,914  |  
|                               |      |              |            |      |  |   |            |  

Depreciation expense totaled $225,292 and $216,214 in 2007 and 2006, respectively.

NOTE 6 - DEPOSITS

At December 31, 2007, the scheduled
maturities of time deposits were as follows:



|                 |  |        |           
|---------------- |  | ------ | ----------
|Maturing in      |  | Amount
|2008             |  | $      | 84,028,027
|2009             |  |        | 2,549,248 
|2010             |  |        | 290,350   
|2011             |  |        | 112,061   
|2012             |  |        | 33,007    
|After five years |  |        | 1,008,542 
|                 |  |        |           
|Total            |  | $      | 88,021,235
|                 |  |        |           

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 $5,169,310 and $4,726,866 at December 31, 2007 and 2006, respectively. During 2007, $2,211,748 of new loans was made to related parties, and repayments totaled
$1,769,304.

Legal services were provided to the Company in the ordinary course of business by a law firm in which two of the partners are directors of the
Company. The amount paid to this law firm for services rendered during 2007 was $431. There were no payments made to this law firm for services rendered for the year ended December 31, 2006.



36



---

COMMUNITYCORP AND SUBSIDIARY

Notes to Consolidated Financial Statements



NOTE 8 - SHORT-TERM BORROWINGS

At December 31, 2007 and 2006, 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, |          
|                                          |  | 2007                     |           |   | 2006 |  
|Average balance during the year           |  | $                        | 249,074   |   |      | $ | 347,312 |  
|Average interest rate during the year     |  |                          | 4.29      | % |      |   | 4.01    | %
|Maximum month-end balance during the year |  | $                        | 3,068,000 |   |      | $ | 450,000 |  
|End of period average interest rate       |  |                          | 4.72      | % |      |   | 4.35    | %

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, 2007, the par value and fair value of the securities underlying the agreements were $525,000 and $525,551, respectively.

NOTE 9 - UNUSED LINES OF CREDIT

The Bank had available at the end of
2007 unused short-term lines of credit to purchase up to $4,300,000 of federal funds from unrelated correspondent institutions. The Bank also has a credit availability agreement with the Federal Home Loan Bank totaling 15 percent of the Banks
qualifying assets as of any quarter end. As of December 31, 2007, the available credit totaled approximately $24,197,000 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, 2007, 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 and should be disclosed.

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.



37



---

COMMUNITYCORP AND SUBSIDIARY

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.

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, 2007 and
2006, the Company had 59,537 and 58,251 shares, respectively held in treasury stock. During 2007 and 2006, the Company purchased 1,750 and 4,221 shares respectively, and sold 464 and 2,922 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, 2007, the Banks undivided profits were
$13,330,531. 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,
|                                  |  | 2007                     |           | 2006
|Stationary, printing, and postage |  | $                        | 206,138   |      | $ | 200,003
|Advertising and promotion         |  |                          | 35,793    |      |   | 38,745 
|Professional fees                 |  |                          | 226,119   |      |   | 190,152
|Directors fees                   |  |                          | 65,800    |      |   | 65,800 
|Telephone expenses                |  |                          | 65,910    |      |   | 70,925 
|ATM surcharges                    |  |                          | 31,628    |      |   | 49,015 
|ACH charges                       |  |                          | 41,600    |      |   | 38,729 
|Armored Car/Courier Services      |  |                          | 54,565    |      |   | 50,881 
|Membership Dues/Subscriptions     |  |                          | 30,069    |      |   | 27,621 
|Other                             |  |                          | 279,422   |      |   | 253,133
|                                  |  |                          |           |      |   |        
|Total                             |  | $                        | 1,037,044 |      | $ | 985,004
|                                  |  |                          |           |      |   |        



38



---

COMMUNITYCORP AND SUBSIDIARY

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, |        
|                            |  | 2007                     |         |   | 2006 |  
|Currently payable:          |  |                          |         |   |      |   |         |  
|Federal                     |  | $                        | 791,991 |   |      | $ | 791,705 |  
|State                       |  |                          | 79,287  |   |      |   | 78,424  |  
|                            |  |                          |         |   |      |   |         |  
|Total current               |  |                          | 871,278 |   |      |   | 870,129 |  
|Deferred income tax benefit |  |                          | (77,305 | ) |      |   | (47,574 | )
|                            |  |                          |         |   |      |   |         |  
|Income tax expense          |  | $                        | 793,973 |   |      | $ | 822,555 |  
|                            |  |                          |         |   |      |   |         |  

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



|                                |  |              |          |   |      |   |          |  
|------------------------------- |  | ------------ | -------- | - | ---- | - | -------- | -
|                                |  | December 31, |         
|                                |  | 2007         |          |   | 2006 |  
|Deferred tax assets:            |  |              |          |   |      |   |          |  
|Allowance for loan losses       |  | $            | 565,723  |   |      | $ | 535,899  |  
|Deferred compensation           |  |              | 117,081  |   |      |   | 106,328  |  
|Nonaccrual loan interest income |  |              | 16,513   |   |      |   | 16,946   |  
|Securities available-for-sale   |  |              |         |   |      |   | 49,321   |  
|Other                           |  |              | 29,184   |   |      |   |         |  
|                                |  |              |          |   |      |   |          |  
|Total deferred tax assets       |  |              | 728,501  |   |      |   | 658,494  |  
|                                |  |              |          |   |      |   |          |  
|Deferred tax liabilities:       |  |              |          |   |      |   |          |  
|Securities available for sale   |  |              | (34,150  | ) |      |   |         |  
|Accumulated depreciation        |  |              | (134,129 | ) |      |   | (119,754 | )
|Other                           |  |              |         |   |      |   | (10,394  | )
|                                |  |              |          |   |      |   |          |  
|Total deferred tax liabilities  |  |              | (168,279 | ) |      |   | (130,148 | )
|                                |  |              |          |   |      |   |          |  
|Net deferred tax asset          |  | $            | 560,222  |   |      | $ | 578,346  |  
|                                |  |              |          |   |      |   |          |  

The net deferred tax assets are included in other assets in the consolidated balance sheets at December 31,
2007 and 2006.

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 |         
|                                                    |  | 2007                    |          |   | 2006 |  
|Tax expense at statutory rate                       |  | $                       | 869,002  |   |      | $ | 872,160 |  
|State income tax, net of federal income tax benefit |  |                         | 52,329   |   |      |   | 51,760  |  
|Tax-exempt interest income                          |  |                         | (122,151 | ) |      |   | (97,543 | )
|Disallowed interest expense                         |  |                         | 20,569   |   |      |   | 17,305  |  
|Other, net                                          |  |                         | (25,776  | ) |      |   | (21,127 | )
|                                                    |  |                         |          |   |      |   |         |  
|Total                                               |  | $                       | 793,973  |   |      | $ | 822,555 |  
|                                                    |  |                         |          |   |      |   |         |  

The Company adopted the provisions of FASB Interpretation No. 48 (FIN 48). There was no
material impact from the adoption of FIN 48. It is the Companys policy to recognize interest and penalties associated with uncertain tax positions as components of income taxes. There were no interest or penalties accrued during the
year. The Companys federal and state tax returns are subject to examination for the years 2004, 2005 and 2006.



39



---

COMMUNITYCORP AND SUBSIDIARY

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. Certain items are specifically excluded in accordance with SFAS No. 107,
including premise and equipment, accrued interest receivable, other assets, accrued interest payable and other liabilities. 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.

Demand Deposits - The
fair value of demand deposits, interestbearing transaction, savings, and money market accounts is the amount payable on demand at the reporting date. The fair values of time deposits 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 to seven days.

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.



40



---

COMMUNITYCORP AND SUBSIDIARY

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,  
|                                                                                 |  | 2007           |             | 2006               
|                                                                                 |  | CarryingAmount |             | EstimatedFair Value |   | CarryingAmount |  | EstimatedFair Value
|Financial Assets:                                                                |  |                |             |                     |   |                |  |                     |             |  |   |            
|Cash and due from banks                                                          |  | $              | 4,929,768   |                     | $ | 4,929,768      |  | $                   | 6,041,317   |  | $ | 6,041,317  
|Federal funds sold                                                               |  |                | 1,991,000   |                     |   | 1,991,000      |  |                     | 8,363,000   |  |   | 8,363,000  
|Time deposits with other banks                                                   |  |                |            |                     |   |                |  |                     | 100,000     |  |   | 100,000    
|Securities available-for-sale                                                    |  |                | 34,585,073  |                     |   | 34,585,073     |  |                     | 32,468,498  |  |   | 32,468,498 
|Securities held-to-maturity                                                      |  |                | 1,819,481   |                     |   | 1,836,967      |  |                     | 1,574,215   |  |   | 1,596,065  
|Nonmarketable equity securities                                                  |  |                | 347,257     |                     |   | 347,257        |  |                     | 342,857     |  |   | 342,857    
|Loans receivable, gross                                                          |  |                | 114,597,378 |                     |   | 113,009,843    |  |                     | 105,840,360 |  |   | 104,269,918
|                                                                                 |  |                |             |                    
|Financial Liabilities:                                                           |  |                |             |                     |   |                |  |                     |             |  |   |            
|Demand deposit, interest-bearing transaction, money market, and savings accounts |  | $              | 51,573,077  |                     | $ | 51,573,077     |  | $                   | 60,291,189  |  | $ | 60,291,189 
|Time deposits                                                                    |  |                | 88,021,235  |                     |   | 88,534,485     |  |                     | 80,495,075  |  |   | 81,137,885 
|Short-term borrowings                                                            |  |                | 3,068,000   |                     |   | 3,068,000      |  |                     | 250,000     |  |   | 250,000    

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.



41



---

COMMUNITYCORP AND SUBSIDIARY

Notes to Consolidated Financial Statements

NOTE 15 - REGULATORY MATTERS(continued)



As of December 31, 2007, 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 since this notification.

The following table summarizes the capital amounts and ratios of the Bank and the regulatory minimum requirements.



|                                         |  |        |            |        |                              |       |         |                                                                |           |         |       |   |  |   |            |  |       |  
|---------------------------------------- |  | ------ | ---------- | ------ | ---------------------------- | ----- | ------- | -------------------------------------------------------------- | --------- | ------- | ----- | - |  | - | ---------- |  | ----- | -
|                                         |  | Actual |            |        | For CapitalAdequacy Purposes |       |         | To Be Well-Capitalized UnderPrompt CorrectiveAction
Provisions |          
|                                         |  | Amount |            | Ratio  |                              |       | Minimum |                                                                |           | Minimum |      
|                                         |  |        |            | Amount |                              | Ratio |         |                                                                | Amount    |         | Ratio |  
|December 31, 2007                        |  |        |            |        |                              |       |         |                                                                |           |         |       |   |  |   |            |  |       |  
|Total capital (to risk-weighted assets)  |  | $      | 18,058,801 |        | 15.08                        | %     |         | $                                                              | 9,578,000 |         | 8.00  | % |  | $ | 11,972,500 |  | 10.00 | %
|Tier 1 capital (to risk-weighted assets) |  |        | 16,562,238 |        | 13.83                        |       |         |                                                                | 4,789,000 |         | 4.00  |   |  |   | 7,183,500  |  | 6.00  |  
|Tier 1 capital (to average assets)       |  |        | 16,562,238 |        | 10.19                        |       |         |                                                                | 6,499,360 |         | 4.00  |   |  |   | 8,124,200  |  | 5.00  |  
|                                         |  |        |            |        |                              |      
|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  |  

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,
|                                 |  | 2007         |            | 2006
|Assets                           |  |              |            |      |   |           
|Cash                             |  | $            | 93,614     |      | $ | 22,553    
|Investment in banking subsidiary |  |              | 16,633,166 |      |   | 15,105,288
|Non-marketable equity securities |  |              | 6,000      |      |   | 6,000     
|Other assets                     |  |              | 3,621      |      |   | 3,594     
|                                 |  |              |            |      |   |           
|Total assets                     |  | $            | 16,736,401 |      | $ | 15,137,435
|                                 |  |              |            |      |   |           
|Shareholders equity             |  | $            | 16,736,401 |      | $ | 15,137,435
|                                 |  |              |            |      |   |           



42



---

COMMUNITYCORP AND SUBSIDIARY

Notes to Consolidated Financial Statements

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



Condensed Statements of Income



|                                                                                      |  |                          |           |   |      |   |           |  
|------------------------------------------------------------------------------------- |  | ------------------------ | --------- | - | ---- | - | --------- | -
|                                                                                      |  | Years ended December 31, |          
|                                                                                      |  | 2007                     |           |   | 2006 |  
|Income                                                                                |  |                          |           |   |      |   |           |  
|Dividends from banking subsidiary                                                     |  | $                        | 400,000   |   |      | $ | 270,000   |  
|Other income                                                                          |  |                          | 47        |   |      |   | 1         |  
|                                                                                      |  |                          |           |   |      |   |           |  
|Total income                                                                          |  |                          | 400,047   |   |      |   | 270,001   |  
|                                                                                      |  |                         
|Expenses                                                                              |  |                          | 95        |   |      |   | 155       |  
|                                                                                      |  |                          |           |   |      |   |           |  
|Income before income taxes and equity in undistributed earnings of banking subsidiary |  |                          | 399,952   |   |      |   | 269,846   |  
|                                                                                      |  |                         
|Income tax benefit                                                                    |  |                          | (27       | ) |      |   | (45       | )
|                                                                                      |  |                         
|Equity in undistributed earnings of banking subsidiary                                |  |                          | 1,361,935 |   |      |   | 1,472,730 |  
|                                                                                      |  |                          |           |   |      |   |           |  
|Net income                                                                            |  | $                        | 1,761,914 |   |      | $ | 1,742,621 |  
|                                                                                      |  |                          |           |   |      |   |           |  

Condensed Statements of Cash Flows



|                                                                                  |  |                          |            |   |      |   |            |  
|--------------------------------------------------------------------------------- |  | ------------------------ | ---------- | - | ---- | - | ---------- | -
|                                                                                  |  | Years ended December 31, |           
|                                                                                  |  | 2007                     |            |   | 2006 |  
|Cash flows from operating activities                                              |  |                          |            |   |      |   |            |  
|Net income                                                                        |  | $                        | 1,761,914  |   |      | $ | 1,742,621  |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                          |            |   |      |   |            |  
|Equity in undistributed earnings of banking subsidiary                            |  |                          | (1,361,935 | ) |      |   | (1,472,730 | )
|Increase in other assets                                                          |  |                          | (27        | ) |      |   | (42        | )
|                                                                                  |  |                          |            |   |      |   |            |  
|Net cash provided by operating activities                                         |  |                          | 399,952    |   |      |   | 269,849    |  
|                                                                                  |  |                          |            |   |      |   |            |  
|Cash flows from financing activities                                              |  |                          |            |   |      |   |            |  
|Cash dividends paid                                                               |  |                          | (240,543   | ) |      |   | (219,099   | )
|Purchases of treasury stock                                                       |  |                          | (119,900   | ) |      |   | (268,752   | )
|Sale of treasury stock                                                            |  |                          | 31,552     |   |      |   | 185,236    |  
|                                                                                  |  |                          |            |   |      |   |            |  
|Net cash used by financing activities                                             |  |                          | (328,891   | ) |      |   | (302,615   | )
|                                                                                  |  |                          |            |   |      |   |            |  
|Increase (decrease) in cash                                                       |  |                          | 71,061     |   |      |   | (32,766    | )
|                                                                                  |  |                         
|Cash, beginning of year                                                           |  |                          | 22,553     |   |      |   | 55,319     |  
|                                                                                  |  |                          |            |   |      |   |            |  
|Cash, ending of year                                                              |  | $                        | 93,614     |   |      | $ | 22,553     |  
|                                                                                  |  |                          |            |   |      |   |            |  



43



---

COMMUNITYCORP AND SUBSIDIARY



|                                                      |  |                  |  |                               
|----------------------------------------------------- |  | ---------------- |  | ------------------------------
|BOARD OF DIRECTORS                                    |  |                  |  |                               
|                                                      |  |                 
|George W. Cone                                        |  |                  |  | J. Barnwell Fishburne         
|Attorney                                              |  |                  |  | Owner, Fishburne & Co.        
|McLeod, Fraser & Cone                                 |  |                  |  | Real Estate                   
|                                                      |  |                 
|W. Roger Crook                                        |  |                  |  | Peden B. McLeod               
|Chief Executive Officer and President                 |  |                  |  | Chairman of the Board Attorney
|Bank of Walterboro                                    |  |                  |  | McLeod, Fraser & Cone         
|                                                      |  |                 
|Steven Murdaugh                                       |  |                  |  | Harry L. Hill                 
|Certified Public Accountant                           |  |                  |  | Retired                       
|                                                      |  |                 
|Harold M. Robertson                                   |  |                  |  | Calvert Huffines              
|Retired                                               |  |                  |  | President, Huffines Co        
|                                                      |  |                  |  | Real Estate Broker            
|OFFICERS                                             
|W. Roger Crook                                        |  | Cynthia Mills    |  | James M. Bunton Jr.           
|Chief Executive Officer and President                 |  | Branch Manager   |  | Loan Officer                  
|                                                      |  |                 
|Gwendolyn P. Bunton                                   |  | M. Ellison Young |  | Lawton Huggins                
|Vice President and Cashier                            |  | Vice President   |  | Loan Officer                  
|                                                      |  |                 
|Lynn H. Murdaugh                                      |  |                  |  | Joanne Herndon                
|Assistant Vice President and Administrative Assistant |  |                  |  | Branch Manager                
|                                                      |  |                 
|Bruce Tate                                            |  |                  |  | William Fowler                
|Loan Officer                                          |  |                  |  | Loan Officer                  
|                                                     
|STAFF MEMBERS                                        
|Annette Lyons                                         |  |                  |  |                               
|Melissa Connelly                                      |  |                  |  | Sharon Milligan               
|Danielle Mock                                         |  |                  |  | Melanie Todd                  
|Casey Beach                                           |  |                  |  | Lauren Pauls                  
|Carolyn Brant                                         |  |                  |  | Lynn Hiott                    
|Dorothy Brunson                                       |  |                  |  | Lindsey Turner                
|Natalie Powers                                        |  |                  |  | Cathy Groves                  
|Jennifer Crosby                                       |  |                  |  | Pam OQuinn                   
|Betty Ford                                            |  |                  |  | Kelly Strickland              
|Melissa T. Smyly                                      |  |                  |  | Jeanne Raven                  
|Sarah Herndon                                         |  |                  |  | Tracy Valentine               
|Sharon Hillier                                        |  |                  |  | Candice Kubik                 
|Carolyn Rahn                                          |  |                  |  | Rose Walker                   
|Stephanie Kelly                                       |  |                  |  | Nichole Espisito              
|Kathy Breland                                         |  |                  |  | Bonnie Dempsey                
|Stephanie Strickland                                  |  |                  |  | Louie Whidden                 
|Melissa McMillan                                      |  |                  |  | Joy Koth                      
|Pam Nelson                                            |  |                  |  | Tracy Wilson                  
|Kinloch Smith                                         |  |                  |  | Melanie Tanner                



44



---

COMMUNITYCORP AND SUBSIDIARY

CORPORATE DATA

ANNUAL MEETING:

The Annual Meeting of Shareholders of Communitycorp will be held at 6 p.m. on Tuesday, April 29, 2008 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 
|                           |  | 
|                           |  |  |  | INDEPENDENT REGISTERED 
|STOCK TRANSFER DEPARTMENT: |  |  |  | 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 $68.00 to $77.00 during the past two years. There were approximately 555 shareholders of record as of December 31, 2007.

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.



45



---

COMMUNITYCORP AND SUBSIDIARY

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



46