UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

For Quarterly Period Ended March 31, 2009          Commission File No. 000-29640


                         COMMUNITY FIRST BANCORPORATION
 -------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


         South Carolina                                   58-2322486
  -------------------------------              ---------------------------------
  (State or other jurisdiction of              (IRS Employer Identification No.)
  incorporation or organization)


                             449 HIGHWAY 123 BYPASS
                          SENECA, SOUTH CAROLINA 29678
--------------------------------------------------------------------------------
               (Address of principal executive offices, zip code)


                                 (864) 886-0206
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

         Yes [X]  No [ ]

         Indicate  by  check  mark   whether  the   registrant   has   submitted
electronically  and posted on its corporate Web site, if any, every  Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T  during  the  preceding  12  months  (or for such  shorter  period  that the
registrant was required to submit and post such files).

         Yes [ ]  No [ ]  (Not yet applicable to Registrant)

         Indicate by check mark whether the  registrant  is a large  accelerated
filer, an accelerated  filer, a  non-accelerated  filer, or a smaller  reporting
company.  See the definitions of "large accelerated filer,"  "accelerated filer"
and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
(Check one):

         Large accelerated filer    [ ]         Accelerated filer          [ ]

         Non-accelerated filer      [ ]         Smaller reporting company  [X]
         (Do not check if a smaller reporting company)

         Indicate by check mark whether the  registrant  is a shell  company (as
defined in Rule 12b-2 of the Exchange Act).

         Yes [  ]  No [X]

         Indicate  the  number of  shares  outstanding  of each of the  issuer's
classes of common stock, as of the latest practicable date: Common Stock, no par
or stated value, 3,609,799 Shares Outstanding on April 30, 2009.



<PAGE>


                         COMMUNITY FIRST BANCORPORATION

                                    FORM 10-Q

                                      Index

<TABLE>
<CAPTION>
                                                                                                                     Page
PART I -          FINANCIAL INFORMATION

Item 1.           Financial Statements

<S>               <C>                                                                                                  <C>
                  Consolidated Balance Sheets ......................................................................    3
                  Consolidated Statements of Income ................................................................    4
                  Consolidated Statements of Changes in Shareholders' Equity .......................................    5
                  Consolidated Statements of Cash Flows ............................................................    6
                  Notes to Unaudited Consolidated Financial Statements .............................................    7

Item 2.           Management's Discussion and Analysis of Financial Condition and Results of Operations ............   12
Item 3.           Quantitative and Qualitative Disclosures About Market Risk .......................................   18
Item 4T.          Controls and Procedures ..........................................................................   19

PART II -         OTHER INFORMATION

Item 4.           Submission of Matters to a Vote of Security Holders ..............................................   19
Item 6.           Exhibits .........................................................................................   19

SIGNATURE ..........................................................................................................   20
</TABLE>



                                       2
<PAGE>


                         PART I - FINANCIAL INFORMATION

Item 1. - Financial Statements

COMMUNITY FIRST BANCORPORATION
Consolidated Balance Sheets
<TABLE>
<CAPTION>
                                                                                                     (Unaudited)
                                                                                                      March 31,        December 31,
                                                                                                        2009               2008
                                                                                                        -----              ----
                                                                                                         (Dollars in thousands)
Assets
<S>                                                                                                  <C>                  <C>
     Cash and due from banks .............................................................           $   6,766            $   9,204
     Interest bearing deposits due from banks ............................................               4,011               12,969
     Federal funds sold ..................................................................                   -               18,793
                                                                                                     ---------            ---------
         Cash and cash equivalents .......................................................              10,777               40,966
     Securities available-for-sale .......................................................             160,871              126,636
     Securities held-to-maturity (fair value $11,651 for 2009
         and $12,238 for 2008) ...........................................................              11,199               11,910
     Other investments ...................................................................               1,340                1,220
     Loans ...............................................................................             275,613              270,413
         Allowance for loan losses .......................................................              (5,470)              (5,475)
                                                                                                     ---------            ---------
            Loans - net ..................................................................             270,143              264,938
     Premises and equipment - net ........................................................               8,677                8,655
     Accrued interest receivable .........................................................               2,759                2,776
     Bank-owned life insurance ...........................................................               8,574                8,483
     Other assets ........................................................................               4,220                3,889
                                                                                                     ---------            ---------

            Total assets .................................................................           $ 478,560            $ 469,473
                                                                                                     =========            =========

Liabilities
     Deposits
         Noninterest bearing .............................................................           $  44,794            $  41,962
         Interest bearing ................................................................             378,465              374,153
                                                                                                     ---------            ---------
            Total deposits ...............................................................             423,259              416,115
     Accrued interest payable ............................................................               3,914                3,045
     Long-term debt ......................................................................               9,500                9,500
     Other liabilities ...................................................................               1,099                  885
                                                                                                     ---------            ---------
            Total liabilities ............................................................             437,772              429,545
                                                                                                     ---------            ---------

Shareholders' equity
     Preferred stock - no par value; 10,000,000 shares authorized;
         None issued and outstanding
     Common stock - no par value; 10,000,000 shares authorized; ..........................                   -                    -
         issued and outstanding - 3,609,811 for 2009 and
         3,564,279 for 2008 ..............................................................              37,570               37,084
     Additional paid-in capital ..........................................................                 748                  748
     Retained earnings ...................................................................               2,183                1,769
     Accumulated other comprehensive income ..............................................                 287                  327
                                                                                                     ---------            ---------
            Total shareholders' equity ...................................................              40,788               39,928
                                                                                                     ---------            ---------

            Total liabilities and shareholders' equity ...................................           $ 478,560            $ 469,473
                                                                                                     =========            =========
</TABLE>

See accompanying notes to unaudited consolidated financial statements.


                                       3
<PAGE>

COMMUNITY FIRST BANCORPORATION
Consolidated Statements of Income
<TABLE>
<CAPTION>
                                                                                                               (Unaudited)
                                                                                                             Three Months Ended
                                                                                                                 March 31,
                                                                                                        2009                 2008
                                                                                                        ----                 ----
                                                                                                          (Dollars in thousands,
                                                                                                           except per share)
Interest income
<S>                                                                                                    <C>                    <C>
     Loans, including fees ...........................................................                 $4,049                 $4,732
     Interest bearing deposits due from banks ........................................                     16                      2
     Securities
       Taxable .......................................................................                  1,506                  1,017
       Tax-exempt ....................................................................                    209                    206
     Other investments ...............................................................                      -                     13
     Federal funds sold ..............................................................                      3                    386
                                                                                                       ------                 ------
         Total interest income .......................................................                  5,783                  6,356
                                                                                                       ------                 ------

Interest expense
     Time deposits $100M and over ....................................................                  1,093                  1,153
     Other deposits ..................................................................                  1,816                  2,396
     Long-term debt ..................................................................                     91                     39
                                                                                                       ------                 ------
         Total interest expense ......................................................                  3,000                  3,588
                                                                                                       ------                 ------

Net interest income ..................................................................                  2,783                  2,768
Provision for loan losses ............................................................                    750                    130
                                                                                                       ------                 ------
Net interest income after provision ..................................................                  2,033                  2,638
                                                                                                       ------                 ------

Other income
     Service charges on deposit accounts .............................................                    323                    360
     ATM interchange and other fees ..................................................                    140                    129
     Credit life insurance commissions ...............................................                      6                      4
     Increase in value of bank-owned life insurance ..................................                     92                     93
     Other income ....................................................................                     10                     23
                                                                                                       ------                 ------
         Total other income ..........................................................                    571                    609
                                                                                                       ------                 ------

Other expenses
     Salaries and employee benefits ..................................................                  1,181                  1,037
     Net occupancy expense ...........................................................                    135                    119
     Furniture and equipment expense .................................................                     93                    110
     Amortization of computer software ...............................................                     95                     75
     ATM interchange and related expenses ............................................                    113                    110
     Other expense ...................................................................                    480                    436
                                                                                                       ------                 ------
         Total other expenses ........................................................                  2,097                  1,887
                                                                                                       ------                 ------

Income before income taxes ...........................................................                    507                  1,360
Income tax expense ...................................................................                     93                    400
                                                                                                       ------                 ------
Net income ...........................................................................                 $  414                 $  960
                                                                                                       ======                 ======

Per share*
     Net income ......................................................................                 $ 0.12                 $ 0.27
     Net income, assuming dilution ...................................................                   0.12                   0.26
</TABLE>
------
* Per share  information has been  retroactively  adjusted to reflect a 5% stock
dividend effective December 20, 2008.

See accompanying notes to unaudited consolidated financial statements.


                                       4
<PAGE>

COMMUNITY FIRST BANCORPORATION
Consolidated Statements of Changes in Shareholders' Equity

<TABLE>
<CAPTION>
                                                                (Unaudited)

                                                            Common Stock                                  Accumulated
                                                            ------------           Additional               Other
                                                       Number of                   Paid-in     Retained  Comprehensive
                                                        Shares        Amount       Capital     Earnings   Income (Loss)     Total
                                                        ------        ------       -------     --------   -------------     -----
                                                                              (Dollars in thousands)

<S>                                                    <C>          <C>          <C>          <C>          <C>           <C>
Balance, January 1, 2008 ..........................    3,324,105    $   35,009   $      681   $    2,140   $       80    $   37,910
                                                                                                                         ----------
Comprehensive income:
    Net income ....................................            -             -            -          960            -           960
                                                                                                                         ----------
    Unrealized holding gains and losses
      on available-for-sale securities
      arising during the period, net of
      income taxes of $340 ........................            -             -            -            -          608           608
                                                                                                                         ----------
        Total other comprehensive income ..........                                                                             608
                                                                                                                         ----------
          Total comprehensive income ..............                                                                           1,568
                                                                                                                         ----------
Exercise of employee stock options ................       35,098           180            -            -            -           180
                                                      ----------    ----------   ----------   ----------   ----------    ----------
Balance, March 31, 2008 ...........................    3,359,203    $   35,189   $      681   $    3,100   $      688    $   39,658
                                                      ==========    ==========   ==========   ==========   ==========    ==========



Balance, January 1, 2009 ..........................    3,564,279    $   37,084   $      748   $    1,769   $      327    $   39,928
                                                                                                                         ----------
Comprehensive income:
    Net income ....................................            -             -            -          414            -           414
                                                                                                                         ----------
    Unrealized holding gains and losses
      on available-for-sale securities
      arising during the period, net of
      income taxes of $23 .........................            -             -            -            -          (40)          (40)
                                                                                                                         ----------
        Total other comprehensive income ..........                                                                             (40)
                                                                                                                         ----------
          Total comprehensive income ..............                                                                             374
                                                                                                                         ----------
Exercise of employee stock options ................       45,532           486            -            -            -           486
                                                      ----------    ----------   ----------   ----------   ----------    ----------
Balance, March 31, 2009 ...........................    3,609,811    $   37,570   $      748   $    2,183   $      287    $   40,788
                                                      ==========    ==========   ==========   ==========   ==========    ==========
</TABLE>
















See accompanying notes to unaudited consolidated financial statements.


                                       5
<PAGE>


COMMUNITY FIRST BANCORPORATION
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
                                                                                                               (Unaudited)
                                                                                                            Three Months Ended
                                                                                                                 March 31,
                                                                                                          2009                 2008
                                                                                                          ----                 ----
                                                                                                            (Dollars in thousands)
Operating activities
<S>                                                                                                     <C>                <C>
     Net income ..............................................................................          $    414           $    960
     Adjustments to reconcile net income to net
         cash provided by operating activities
            Provision for loan losses ........................................................               750                130
            Depreciation .....................................................................               112                112
            Amortization of net loan fees and costs ..........................................                 8                (58)
            Securities accretion and premium amortization ....................................               228                  6
            Loss on sale of foreclosed assets ................................................                 -                  6
            Increase in cash surrender value of bank-owned life insurance ....................               (91)               (93)
            Decrease (increase) in interest receivable .......................................                17                (13)
            Increase in interest payable .....................................................               869                442
            Decrease (increase) in prepaid expenses and other assets .........................                58                 (5)
            Increase in other accrued expenses ...............................................               217                347
                                                                                                        --------           --------
                Net cash provided by operating activities ....................................             2,582              1,834
                                                                                                        --------           --------

Investing activities
     Purchases of available-for-sale securities ..............................................           (72,212)           (22,296)
     Maturities, calls and paydowns of securities available-for-sale .........................            35,645             14,627
     Maturities, calls and paydowns of securities held-to-maturity ...........................               709                219
     Proceeds of sales of available-for-sale securities ......................................             2,043                  -
     Purchases of other investments ..........................................................              (125)               (87)
     Disposals of other investments ..........................................................                 5                  -
     Net increase in loans made to customers .................................................            (6,150)            (7,808)
     Purchases of premises and equipment .....................................................              (134)              (370)
     Additional investment in foreclosed assets ..............................................              (209)                 -
     Proceeds of sale of foreclosed assets ...................................................                30                 34
     Investment in bank-owned life insurance .................................................                 -             (1,000)
                                                                                                        --------           --------
                Net cash used by investing activities ........................................           (40,398)           (16,681)
                                                                                                        --------           --------

Financing activities
     Net increase in demand deposits, interest
         bearing transaction accounts and savings accounts ...................................             3,117              5,619
     Net increase in certificates of deposit and other
         time deposits .......................................................................             4,027             13,583
     Cash paid in lieu of issuing fractional shares ..........................................                (3)                 -
     Exercise of employee stock options ......................................................               486                180
                                                                                                        --------           --------
                Net cash provided by financing activities ....................................             7,627             19,382
                                                                                                        --------           --------
Increase in cash and cash equivalents ........................................................           (30,189)             4,535
Cash and cash equivalents, beginning .........................................................            40,966             34,673
                                                                                                        --------           --------
Cash and cash equivalents, ending ............................................................          $ 10,777           $ 39,208
                                                                                                        ========           ========
</TABLE>


See accompanying notes to unaudited consolidated financial statements.


                                       6
<PAGE>



COMMUNITY FIRST BANCORPORATION
Consolidated Statements of Cash Flows - continued
                                                                 (Unaudited)
                                                             Three Months Ended
                                                                  March 31,
                                                             2009          2008
                                                             ----          ----
                                                          (Dollars in thousands)
Supplemental Disclosure of Cash Flow Information
     Cash paid during the period for
         Interest .....................................     $ 2,131      $ 3,145
         Income taxes .................................           -            -
     Net transfers from loans to foreclosed assets ....         187            -
     Noncash investing and financing activities:
         Other comprehensive income ...................         (40)         608

COMMUNITY FIRST BANCORPORATION

Notes to Unaudited Consolidated Financial Statements

Accounting  Policies - A summary of significant  accounting policies is included
in Community First  Bancorporation's  (the "Company") Annual Report on Form 10-K
for the year ended  December  31, 2008 filed with the  Securities  and  Exchange
Commission.   Certain  amounts  in  the  2008  financial  statements  have  been
reclassified to conform to the current presentation.

Management  Opinion - In the opinion of management,  the accompanying  unaudited
consolidated  financial statements of Community First Bancorporation reflect all
adjustments  necessary  for a fair  presentation  of the  results of the periods
presented. Such adjustments were of a normal, recurring nature.

Nonperforming Loans - As of March 31, 2009, there were $14,634,000 in nonaccrual
loans and no loans 90 days or more past due and still accruing interest.

Earnings Per Share - Basic earnings per common share is computed by dividing net
income  applicable  to common  shares by the weighted  average  number of common
shares  outstanding.   Diluted  earnings  per  share  is  computed  by  dividing
applicable  net  income  by  the  weighted   average  number  of  common  shares
outstanding and any dilutive potential common shares and dilutive stock options.
It is assumed that all dilutive  stock options are exercised at the beginning of
each period and that the proceeds are used to purchase  shares of the  Company's
common stock at the average  market price during the period.  All 2008 per share
information  has  been  retroactively  adjusted  to give  effect  to a 5%  stock
dividend  effective  December 20, 2008.  Net income per share and net income per
share, assuming dilution, were computed as follows:



                                       7
<PAGE>

<TABLE>
<CAPTION>
                                                                                                            (Unaudited)
                                                                                                         Three Months Ended
                                                                                                              March 31,
                                                                                                      2009                  2008
                                                                                                      ----                  ----
                                                                                                        (Dollars in thousands,
                                                                                                         except per share amounts)
<S>                                                                                                <C>                    <C>
Net income per share, basic
  Numerator - net income ............................................................              $     414              $      960
                                                                                                   =========              ==========
  Denominator
    Weighted average common shares issued and outstanding ...........................              3,584,647               3,507,319
                                                                                                   =========              ==========
               Net income per share, basic ..........................................              $     .12              $      .27
                                                                                                   =========              ==========

Net income per share, assuming dilution
  Numerator - net income ............................................................              $     414              $      960
                                                                                                   =========              ==========
  Denominator
    Weighted average common shares issued and outstanding ...........................              3,584,647               3,507,319
    Effect of dilutive stock options ................................................                      -                 178,000
                                                                                                   ---------              ----------
               Total shares .........................................................              3,584,647               3,685,319
                                                                                                   =========              ==========
               Net income per share, assuming dilution ..............................              $     .12              $      .26
                                                                                                   =========              ==========
</TABLE>

Stock-Based  Compensation - The Company's  1998 stock option plan  terminated on
March 19, 2008 and no further  options may be issued  under the plan. A total of
346,743  unexpired and non-forfeited  options  outstanding under the plan remain
exercisable until their expiration dates.

New Accounting  Pronouncements - Statement of Financial Accounting Standards No.
160 "Noncontrolling Interests in Consolidated Financial Statements, an amendment
of ARB No.  51"  ("SFAS  No.  160") was  effective  as of January 1, 2009 and is
required  to  be  applied  prospectively  with  retrospective  presentation  and
disclosure requirements for comparative financial statements. Early adoption was
prohibited.  SFAS No.  160 seeks to improve  the  relevance,  comparability  and
transparency of financial  information  that a reporting  entity provides in its
consolidated  financial  statements  by  separately  identifying  and  reporting
several financial statement components into amounts that are attributable to the
reporting entity or that are attributable to noncontrolling  interests. SFAS No.
160  also  specifies  the  conditions  under  which an  entity  is  required  to
deconsolidate  its  interest  in a  subsidiary.  The  Company  currently  has no
consolidated  subsidiaries  that are not  wholly-owned  nor are any transactions
contemplated that would result in such a condition.  Therefore,  the adoption of
SFAS  No.  160 in  January  2009 had no  effect  on the  Company's  consolidated
financial statements.

SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities,"
was effective as of January 1, 2009. This standard requires enhanced  disclosure
about an entity's  derivative and hedging activities to improve the transparency
of financial  reporting.  The Company does not engage in any material derivative
or hedging  activities.  Therefore,  the  implementation  of SFAS No. 161 had no
effect on the Company's consolidated financial statements.

Financial   Accounting  Standards  Board  ("FASB")  Staff  Position  No.  142-3,
"Determination  of the Useful Life of Intangible  Assets" ("FSP 142-3"),  amends
the  factors  that  should be  considered  in  developing  renewal or  extension
assumptions  used to determine the useful life of a recognized  intangible asset
under SFAS No. 142, "Goodwill and Other Intangible  Assets." This Staff Position
was  effective  for the  Company  on  January  1,  2009 and had no impact on the
Company's financial position, results of operations or cash flows.

FASB Staff Position No. APB 14-1,  "Accounting for Convertible  Debt Instruments
That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)"
("FSP APB 14-1") specifies that issuers of convertible debt instruments that may
be settled in cash upon conversion should  separately  account for the liability
and  equity  components  that will  reflect  the  entity's  nonconvertible  debt
borrowing rate when interest cost is recognized in a subsequent period. This FSP
provides   guidance  for  initial  and   subsequent   measurement   as  well  as
derecognition  provisions.  This FSP was effective for the Company on January 1,
2009  and  had no  effect  on  the  Company's  financial  position,  results  of
operations or cash flows.

FASB Staff Position No. EITF 03-6-1, "Determining Whether Instruments Granted in
Share-Based  Payment  Transactions  are  Participating  Securities"  ("FSP  EITF
03-6-1")  provides  that  unvested   share-based  payment  awards  that  contain
non-forfeitable  rights to dividends or dividend  equivalents are  participating
securities and must be included in the earnings per share computation.  FSP EITF
03-6-1 was effective for the Company on January 1, 2009 and had no effect on the
Company's financial position, results of operations or cash flows.

                                       8
<PAGE>

FASB  Staff  Position  SFAS  133-1  and  FIN  45-4  "Disclosures   about  Credit
Derivatives and Certain  Guarantees:  An Amendment of FASB Statement No. 133 and
FASB  Interpretation  No. 45; and  Clarification  of the Effective  Date of FASB
Statement  No.  161" ("FSP SFAS 133-1 and FIN 45-4")  amends SFAS 133 to require
the  seller  of  credit  derivatives  to  disclose  the  nature  of  the  credit
derivative,  the maximum potential amount of future payments,  the fair value of
the derivative,  and the nature of any recourse provisions.  Disclosures must be
made for entire hybrid  instruments that have embedded credit  derivatives.  FSP
SFAS 133-1 and FIN 45-4 also  amends  FASB  Interpretation  No. 45 ("FIN 45") to
require disclosure of the current status of the payment/performance  risk of the
credit derivative guarantee. If an entity utilizes internal groupings as a basis
for the risk,  disclosure  must also be made of how the groupings are determined
and how the  risks  are  managed.  FSP SFAS  133-1  and FIN 45-4  clarifies  the
effective date of SFAS 161 such that required disclosures should be provided for
any reporting period (annual or interim)  beginning after November 15, 2008. The
adoption  of  this  Staff  Position  had no  material  effect  on the  Company's
financial position, results of operations or cash flows.

FSP SFAS 140-4 and FIN 46(R)-8  "Disclosures  by Public  Entities  (Enterprises)
about Transfers of Financial Assets and Interest in Variable Interest  Entities"
was issued in December 2008 to require public  companies to disclose  additional
information  about  transfers  of  financial  assets  and any  involvement  with
variable interest entities. The FSP also requires certain disclosures for public
entities that are sponsors and servicers of qualifying special purpose entities.
The FSP was effective for the Company as of January 1, 2009. Application of this
FSP had no impact on the financial position, results of operations or cash flows
of the Company.

In April,  2009 FASB issued FSP No. FAS 107-1 and APB 28-1 "Interim  Disclosures
about Fair Value of Financial  Instruments."  This FSP amends FASB  Statement No
107 to require disclosures about fair value of financial instruments for interim
reporting  periods of publicly traded  companies as well as in annual  financial
statements  and  amends  APB  Opinion  No. 28 to require  those  disclosures  in
summarized  financial  information  at interim  reporting  periods.  This FSP is
effective for interim  reporting periods ending after June 15, 2009. The Company
will adopt this FSP as of its mandatory adoption date.

In April,  2009 FASB issued FSP No. FAS 157-4  "Determining  Fair Value When the
Volume  and Level of  Activity  for the Asset or  Liability  Have  Significantly
Decreased and Identifying  Transactions That Are Not Orderly." This FSP provides
additional  guidance for estimating fair value in accordance with FASB Statement
No. 157 when the volume and level of activity  for the asset or  liability  have
significantly   decreased.   The  FSP  also  includes  guidance  on  identifying
circumstances that indicate a transaction is not orderly.  This FSP is effective
for interim and annual reporting periods ending after June 15, 2009 and is to be
applied prospectively. Early adoption for periods ending after March 15, 2009 is
permitted  in limited  circumstances.  The Company will adopt this FSP as of its
mandatory adoption date.

In April,  2009 FASB  issued  FSP No. FAS 115-2 and FAS 124-2  "Recognition  and
Presentation  of   Other-Than-Temporary   Impairments."   This  FSP  amends  the
other-than-temporary  guidance in U.S. Generally Accepted Accounting  Principles
for debt  securities  to make the guidance more  operational  and to improve the
presentation  and  disclosure of  other-than-temporary  impairments  on debt and
equity securities in the financial  statements.  The FSP does not amend existing
recognition and measurement guidance related to other-than-temporary impairments
of equity  securities.  The FSP requires that entities disclose  information for
interim  and  annual  periods to enable  users of its  financial  statements  to
understand the types of available-for-sale  and held-to-maturity debt and equity
securities held,  including  information about investments in an unrealized loss
position  for  which  an  other-than-temporary  impairment  has or has not  been
recognized and information  that enables users to understand the reasons that an
other-than-temporary  impairment  of a  debt  security  was  not  recognized  in
earnings and the  methodology  and inputs used to  calculate  the portion of the
total other-than-temporary  impairment that was recognized in earnings. This FSP
is  effective  for interim and annual  periods  ending  after June 15, 2009 with
early  adoption  for periods  ending  after March 15, 2009  permitted in limited
circumstances.  The  Company  will adopt this FSP as of its  mandatory  adoption
date.

Fair  Value  Measurements  - Fair  value is  defined  as the price that would be
received to sell an asset or paid to transfer a liability in an orderly  fashion
between market participants at the measurement date. A three-level  hierarchy is
used for fair value  measurements  based upon the  transparency of the inputs to
the valuation of an asset or liability as of the measurement date. In developing
estimates  of the fair values of assets and  liabilities,  no  consideration  of
large position  discounts for financial  instruments quoted in active markets is
allowed.  However,  an entity is required to consider  its own  creditworthiness
when valuing its liabilities.  For disclosure  purposes,  fair values for assets
and liabilities are shown in the level of the hierarchy that correlates with the

                                       9
<PAGE>

lowest  level input that is  significant  to the fair value  measurement  in its
entirety.

The three levels of the fair value input hierarchy are described as follows:

Level 1 inputs reflect  quoted prices in active markets for identical  assets or
liabilities.

Level 2 inputs  reflect  observable  inputs  that may  consist of quoted  market
prices for  similar  assets or  liabilities,  quoted  prices  that are not in an
active  market,  or other  inputs that are  observable  in the market and can be
corroborated by observable  market data for  substantially  the full term of the
assets or liabilities being valued.

Level 3 inputs  reflect the use of pricing  models and/or  discounted  cash flow
methodologies using other than contractual  interest rates or methodologies that
incorporate a significant amount of management judgment, use of the entity's own
data, or other forms of unobservable data.

The following is a summary of the  measurement  attributes  applicable to assets
and liabilities that are measured at fair value on a recurring basis:

<TABLE>
<CAPTION>
                                                                        Fair Value Measurement at Reporting Date Using
                                                                        ----------------------------------------------
                                                                      Quoted Prices
                                                                        in Active         Significant
                                                                       Markets for           Other           Significant
                                                                        Identical         Observable        Unobservable
                                                                          Assets            Inputs             Inputs
Description                                        March 31, 2009       (Level 1)         (Level 2)          (Level 3)
                                                   --------------       ---------         ---------          ---------
                                                                           (Dollars in thousands)
<S>                                                                     <C>               <C>                <C>
Securities available-for-sale                                           $       -         $ 160,871          $       -
</TABLE>

Pricing for the  Company's  securities  available-for-sale  is obtained  from an
independent  third-party that uses a process that may incorporate current market
prices,  benchmark  yields,  broker/dealer  quotes,  issuer  spreads,  two-sided
markets,  benchmark securities,  bids, offers, other reference data and industry
and  economic  events  that a market  participant  would be  expected  to use in
valuing the  securities.  Not all of the inputs listed apply to each  individual
security at each measurement  date. The independent third party assigns specific
securities  into an "asset  class" for the purpose of assigning  the  applicable
level of the fair value hierarchy used to value the  securities.  The techniques
used  after  adoption  of SFAS No.  157 are  consistent  with the  methods  used
previously.

In February 2008,  the Financial  Accounting  Standards  Board Staff issued FASB
Staff  Position  No. FAS 157-2  ("FSP  157-2")  which  delayed  for one year the
effective date of the application of Statement of Financial Accounting Standards
No. 157 "Fair Value  Measurements"  ("SFAS No. 157") to nonfinancial  assets and
liabilities,  except for items that are recognized or disclosed at fair value in
the financial statements on a recurring basis (at least annually). In accordance
with FSP 157-2,  the  Company  only  partially  applied  SFAS No. 157 in periods
ending prior to March 31, 2009.  The  following is a summary of the  measurement
attributes  applicable  to assets and  liabilities  measured  at fair value on a
non-recurring basis during the three month period ended March 31, 2009 and which
remained  outstanding  at the end of the period and the related gains and losses
recognized during the period:

<TABLE>
<CAPTION>
                                                                 Fair Value Measurement at Reporting Date Using
                                                                 ----------------------------------------------
                                                               Quoted Prices
                                                                 in Active         Significant
                                                                Markets for           Other           Significant
                                                                 Identical         Observable        Unobservable          Total
                                                                   Assets            Inputs             Inputs             Gains
Description                                 March 31, 2009       (Level 1)         (Level 2)          (Level 3)          (Losses)
                                            --------------       ---------         ---------          ---------          --------
                                                                           (Dollars in thousands)
<S>                                                              <C>               <C>                <C>                <C>
Collateral-dependent impaired loans                              $       -         $    4,162         $        -         $     (1)
Other real estate                                                        -                177                  -              (83)
Repossessions                                                            -                280                  -                -
</TABLE>


                                       10
<PAGE>

The  fair  value  measurements  shown  above  were  made  to  adjust  cost-based
measurements to fair value  measurements due to changes in the  circumstances of
individual  assets  during the  period.  With  respect  to  collateral-dependent
impaired loans, the measurements  reflect  management's  belief that the Company
will receive repayment solely from the liquidation of the underlying collateral.
As a practical expedient,  SFAS No. 114, "Accounting by Creditors for Impairment
of a Loan,"  allows such loans to be valued by  comparing  the fair value of the
collateral  securing the loan with the loan's  carrying  value.  If the carrying
value  exceeds  the fair value of the  collateral,  the excess is charged to the
allowance  for loan  losses.  If the fair value of the  collateral  exceeds  the
loan's  carrying  amount,  no  adjustment  is made and the loan  continues to be
carried at historical cost. Accordingly,  any such loans are not included in the
table.

The value of other real estate  obtained  through loan  foreclosure is accounted
for  under  the  provisions  of  Statement  of  Accounting   Standards  No.  144
"Accounting  for the Impairment or Disposal of Long Lived Assets."  Accordingly,
the values of such properties are adjusted upon the acquisition of each property
to the lower of the  recorded  investment  in the loan or the fair  value of the
property as determined by a recently  performed  independent  appraisal less the
estimated costs to sell. Similarly,  the fair value of repossessions is measured
by reference to dealers' quotes or other market information believed to reliably
reflect the value of the specific property held.  Immaterial  adjustments may be
made  by  management  to  reflect  property-specific  factors  such  as  age  or
condition.  Losses  recognized  when  loans  are  initially  transferred  to  or
otherwise  included in any of the  categories  shown above are  reported as loan
losses. Subsequent to initial recognition, changes in fair value measurements of
other real  estate  and  repossessions  are  included  in other  income or other
expenses, as applicable.


CAUTIONARY NOTICE WITH RESPECT TO FORWARD-LOOKING STATEMENTS

         This report contains "forward-looking statements" within the meaning of
the  securities  laws.  The  Private  Securities  Litigation  Reform Act of 1995
provides a safe harbor for forward-looking  statements.  In order to comply with
the terms of the safe harbor,  the Company notes that a variety of factors could
cause the Company's actual results and experience to differ  materially from the
anticipated   results  or  other   expectations   expressed  in  the   Company's
forward-looking statements.

         All statements that are not historical  facts are statements that could
be  "forward-looking   statements."  You  can  identify  these   forward-looking
statements  through the use of words such as "may," "will,"  "should,"  "could,"
"would," "expect,"  "anticipate,"  "assume," indicate,"  "contemplate,"  "seek,"
"plan,"  "predict,"  "target,"  "potential,"  "believe,"  "intend,"  "estimate,"
"project,"  "continue,"  or  other  similar  words.  Forward-looking  statements
include,  but are not limited to,  statements  regarding  the  Company's  future
business  prospects,   revenues,  working  capital,  liquidity,  capital  needs,
interest costs, income, business operations and proposed services.

         These  forward-looking  statements  are based on current  expectations,
estimates and projections about the banking industry,  management's beliefs, and
assumptions made by management.  Such information includes,  without limitation,
discussions  as to estimates,  expectations,  beliefs,  plans,  strategies,  and
objectives  concerning  future  financial  and  operating   performance.   These
statements  are not guarantees of future  performance  and are subject to risks,
uncertainties and assumptions that are difficult to predict.  Therefore,  actual
results  may  differ  materially  from those  expressed  or  forecasted  in such
forward-looking  statements.  The risks and uncertainties  include,  but are not
limited to:

          o    future economic and business conditions;
          o    lack of sustained  growth and disruptions in the economies of the
               Company's market areas;
          o    government monetary and fiscal policies;
          o    the  effects  of  changes  in  interest   rates  on  the  levels,
               composition and costs of deposits, loan demand, and the values of
               loan collateral,  securities,  and interest  sensitive assets and
               liabilities;
          o    the  effects  of  competition  from  a  wide  variety  of  local,
               regional, national and other providers of financial,  investment,
               and insurance services, as well as competitors that offer banking
               products and  services by mail,  telephone,  computer  and/or the
               Internet;
          o    credit risks;
          o    higher than anticipated levels of defaults on loans;
          o    perceptions by depositors  about the safety of their deposits;
          o    capital adequacy;
          o    the failure of assumptions  underlying the  establishment  of the
               allowance  for loan  losses and other  estimates,  including  the
               value of collateral securing loans;
          o    ability to weather the current economic downturn;
          o    loss of consumer or investor confidence;
          o    availability of liquidity sources;


                                       11
<PAGE>

          o    the risks of opening new offices, including,  without limitation,
               the related costs and time of building customer relationships and
               integrating operations as part of these endeavors and the failure
               to achieve expected gains,  revenue growth and/or expense savings
               from such endeavors;
          o    changes  in laws and  regulations,  including  tax,  banking  and
               securities laws and regulations;
          o    changes in accounting policies, rules and practices;
          o    changes  in  technology  or  products  may be more  difficult  or
               costly, or less effective, than anticipated;
          o    the effects of war or other conflicts, acts of terrorism or other
               catastrophic  events that may affect general economic  conditions
               and economic confidence; and
          o    other factors and information described in this report and in any
               of the  other  reports  that  we file  with  the  Securities  and
               Exchange Commission under the Securities Exchange Act of 1934.

         All  forward-looking   statements  are  expressly  qualified  in  their
entirety by this cautionary notice. The Company has no obligation,  and does not
undertake,  to update,  revise or correct any of the forward-looking  statements
after the date of this  report.  The Company  has  expressed  its  expectations,
beliefs and projections in good faith and believes they have a reasonable basis.
However,  there is no assurance that these expectations,  beliefs or projections
will result or be achieved or accomplished.


Item 2. -  Management's  Discussion  and  Analysis of  Financial  Condition  and
           Results of Operations


Changes in Financial Condition

         During the first three months of 2009, the Company  invested heavily in
securities   available-for-sale.   Securities   purchased   were   composed   of
approximately   $63,000,000   of  debt   obligations   of   government-sponsored
enterprises and approximately $9,000,000 of mortgage-backed securities issued by
government-sponsored  enterprises.  Approximately $36,000,000 of securities were
called during the  three-month  period and sales  approximated  $2,000,000.  The
$34,000,000 net increase in securities  available-for-sale during the period was
financed  principally by reducing the amounts of cash and cash  equivalents held
from  $40,966,000  as of December 31, 2008 to  $10,777,000 as of March 31, 2009.
Interest rates associated with holdings of federal funds sold,  reserve balances
held at the  Federal  Reserve  bank and other  short-term  earning  assets  were
extremely low during the 2009 period because  continuing central bank efforts to
stabilize  credit  markets  and  restore  confidence  in  the  financial  system
generally took the form of lowering interest rates. However, the Federal Reserve
announced recently that it would change its principal strategy in the short-term
to one of "quantitative  easing," or increasing the money supply  principally by
repurchasing U. S. Treasury or other debt obligations,  primarily from banks and
other financial intermediaries.

         Loan demand during the 2009 three-month  period was comparatively  weak
and loans outstanding increased by only $5,200,000,  or 1.9%. Deposits increased
$7,144,000, or 1.7%, during the period.

Results of Operations

         The Company  recorded  consolidated  net income of $414,000 or $.12 per
share for the first quarter of 2009 compared  with  $960,000,  or $.27 per share
for the first quarter of 2008. Net income per share,  assuming dilution was $.12
for the 2009 period and $.26 for the 2008 period.  Net income per share  amounts
for 2008 have been  retroactively  adjusted  to  reflect  a five  percent  stock
dividend effective December 20, 2008.


                                       12
<PAGE>

<TABLE>
<CAPTION>
                                                                        Summary Income Statement
                                                                        ------------------------
                                                                         (Dollars in thousands)
For the Three Months Ended March 31,                2009                2008             Dollar Change     Percentage Change
                                                    ----                ----             -------------     -----------------
<S>                                                <C>                 <C>                 <C>                  <C>
Interest income ..............................     $5,783              $6,356              $ (573)               -9.0%
Interest expense .............................      3,000               3,588                (588)              -16.4%
                                                   ------              ------              ------
Net interest income ..........................      2,783               2,768                  15                 0.5%
Provision for loan losses ....................        750                 130                 620               476.9%
Noninterest income ...........................        571                 609                 (38)               -6.2%
Noninterest expenses .........................      2,097               1,887                 210                11.1%
Income tax expense ...........................         93                 400                (307)              -76.8%
                                                   ------              ------              ------
Net income ...................................     $  414              $  960              $ (546)              -56.9%
                                                   ======              ======              ======
</TABLE>

Net Interest Income

         Net interest income is the principal source of the Company's  earnings.
For the first  quarter of 2009,  net  interest  income  totaled  $2,783,000,  an
increase  of $15,000 or .5% over the  amount  for the same  period of 2008.  The
yield  on  interest  earning  assets  decreased  to 5.05%  for the 2009  period,
compared  with 6.26% for the 2008 period and the average rates paid for interest
bearing liabilities were 3.02% and 4.09%, respectively. Accordingly, the average
interest  rate spread for the 2009 period was 14 basis points lower than for the
2008 period.  Net yield on earning assets  decreased to 2.43% in the 2009 period
from 2.73% for the 2008 period.

         Average  loans in the 2009  period  were  $272,379,000,  an increase of
$22,124,000, or 8.8%, over the amount for the same period of 2008. A decrease in
the yield  earned on loans to 6.03% for the 2009  three-month  period from 7.61%
for the 2008 three month period was the primary cause of a $683,000 reduction in
interest income on loans.  Management  estimates that approximately  $174,000 of
previously  accrued  interest  income  related to nonaccrual  loans was reversed
against income during the 2009 period.

         Average taxable  securities for the 2009 quarter were  $51,864,000 more
than for the same period of 2008.  The effects of this increase more than offset
the  negative  effects  of a  reduction  in the  average  yield  earned on these
investments from 4.64% for the 2008 quarter to 4.36% for the 2009 quarter.

         As  mentioned  previously,  yields  on  federal  funds  sold and  other
short-term  investments  were  extremely  low in the 2009 period.  The Company's
investment in such  instruments  during the 2009 quarter  resulted in a yield of
only .15%  compared  with a yield of 3.23%  for the 2008  quarter.  The  earning
potential of these instruments currently is so unattractive that the Company has
shifted funds into other more productive earning assets categories.

         Interest rates paid for  interest-bearing  deposits  decreased to 3.00%
for the 2009 period from 4.10% for the 2008 period due to the Company's response
to prevailing lower rates  generally.  Rates paid for long-term debt in the 2009
period were  slightly  higher than for the 2008 period due to higher  rates paid
for additional amounts borrowed and outstanding for the 2009 period.



                                       13
<PAGE>

<TABLE>
<CAPTION>
                                                                           Average Balances, Yields and Rates
                                                                              Three Months Ended March 31,
                                                                              ----------------------------
                                                                      2009                                     2008
                                                                      ----                                     ----
                                                                    Interest                                 Interest
                                                       Average      Income/     Yields/         Average      Income/     Yields/
                                                       Balances     Expense      Rates (1)      Balances     Expense    Rates (1)
                                                       --------     -------      ---------      --------     -------    ---------
                                                                                 (Dollars in thousands)
<S>                                                    <C>            <C>           <C>         <C>            <C>           <C>
Assets
Interest-bearing deposits due from banks ..........    $   21,975     $    16       0.30%       $      415     $     2       1.94%
Securities
     Taxable ......................................       139,934       1,506       4.36%           88,070       1,017       4.64%
     Tax exempt (2) ...............................        20,488         209       4.14%           20,613         206       4.02%
                                                       ----------     -------                   ----------     -------
         Total investment securities ..............       160,422       1,715       4.34%          108,683       1,223       4.53%
Other investments .................................         1,221           -       0.00%              846          13       6.18%
Federal funds sold ................................         8,034           3       0.15%           48,050         386       3.23%
Loans (2) (3) .....................................       272,379       4,049       6.03%          250,255       4,732       7.61%
                                                       ----------     -------                   ----------     -------
         Total interest earning assets ............       464,031       5,783       5.05%          408,249       6,356       6.26%
Cash and due from banks ...........................         8,568                                    8,250
Allowance for loan losses .........................        (5,419)                                  (2,581)
Unrealized securities gains (losses) ..............         1,414                                      778
Premises and equipment ............................         8,766                                    8,842
Other assets ......................................        14,095                                   12,196
                                                       ----------                               ----------
         Total assets .............................    $  491,455                               $  435,734
                                                       ==========                               ==========

Liabilities and shareholders' equity
Interest bearing deposits
     Interest bearing transaction accounts ........    $   59,355        $ 98       0.67%         $ 59,745     $   335       2.26%
     Savings ......................................        29,076          23       0.32%           42,225         209       1.99%
     Time deposits $100M and over .................       135,504       1,093       3.27%          103,047       1,153       4.50%
     Other time deposits ..........................       169,246       1,695       4.06%          143,297       1,852       5.20%
                                                       ----------     -------                   ----------     -------
         Total interest bearing deposits ..........       393,181       2,909       3.00%          348,314       3,549       4.10%
Long-term debt ....................................         9,500          91       3.88%            4,500          39       3.49%
                                                       ----------     -------                   ----------     -------
         Total interest bearing liabilities .......       402,681       3,000       3.02%          352,814       3,588       4.09%
Noninterest bearing demand deposits ...............        44,192                                   39,777
Other liabilities .................................         4,004                                    4,327
Shareholders' equity ..............................        40,578                                   38,816
                                                       ----------                               ----------
Total liabilities and shareholders'  equity .......    $  491,455                               $  435,734
                                                       ==========                               ==========
Interest rate spread ..............................                                 2.03%                                    2.17%
Net interest income and net yield
     on earning assets ............................                   $ 2,783       2.43%                      $ 2,768       2.73%
Interest free funds supporting earning assets .....    $   61,350                               $   55,435
</TABLE>
-----------------------------------------
(1)  Yields and rates are annualized.
(2)  Yields on tax exempt instruments have not been adjusted to a tax-equivalent
     basis.
(3)  Nonaccruing  loans are  included  in the loan  balance and income from such
     loans is recognized on a cash basis.


                                       14
<PAGE>


         The  Company  continues  to  pursue  strategies  that are  expected  to
increase  its market  share in its local  market  areas in  Anderson  and Oconee
Counties of South  Carolina.  The Company serves Oconee County from four offices
which are located in Seneca,  Walhalla and  Westminster.  The Company serves the
Anderson County market from offices in Anderson and Williamston.

Provision and Allowance for Loan Losses

         The Company provided $750,000 and $130,000 for loan losses in the first
quarters of 2009 and 2008, respectively. As of March 31, 2009, the allowance for
loan losses was 1.98% of loans compared with 2.02% of loans at December 31, 2008
and  1.03% as of March  31,  2008.  During  the 2009  three  month  period,  net
charge-offs  totaled $755,000,  compared with $106,000 in net charge offs during
the same  period  of 2008.  As of  March  31,  2009,  nonaccrual  loans  totaled
$14,634,000  and there were no loans 90 days or more past due and still accruing
interest.  Approximately  90% of those  nonaccrual  loans  were  secured by real
estate.  As of March 31, 2008,  nonaccrual loans totaled $444,000 and there were
no loans 90 days or more past due and still accruing  interest.  The activity in
the allowance for loan losses is summarized in the table below:

<TABLE>
<CAPTION>
                                                                           Three Months                                Three Months
                                                                               Ended              Year Ended              Ended
                                                                             March 31,           December 31,           March 31,
                                                                               2009                  2008                  2008
                                                                               ----                  ----                  ----
                                                                                              (Dollars in thousands)
<S>                                                                          <C>                   <C>                   <C>
Allowance at beginning of period .................................           $   5,475             $   2,574             $   2,574
Provision for loan losses ........................................                 750                 4,550                   130
Net charge-offs ..................................................                (755)               (1,649)                 (106)
                                                                             ---------             ---------             ---------
Allowance at end of period .......................................           $   5,470             $   5,475             $   2,598
                                                                             =========             =========             =========
Allowance as a percentage of loans outstanding
  at period end ..................................................                1.98%                 2.02%                 1.03%
Loans at end of period ...........................................           $ 275,613             $ 270,413             $ 251,891
                                                                             =========             =========             =========
</TABLE>

                                       15
<PAGE>

Non-Performing and Potential Problem Loans

<TABLE>
<CAPTION>
                                                        90 Days or
                                                      More Past Due        Total        Percentage                      Percentage
                                      Non-accrual       and Still      Non-Performing    of Total        Potential       of Total
                                         Loans           Accruing          Loans          Loans        Problem Loans       Loans
                                         -----           --------          -----          -----        -------------       -----
                                                                           (Dollars in thousands)
<S>                                      <C>               <C>             <C>             <C>              <C>             <C>
January 1, 2008 ...................      $    625          $     -         $    625        0.26%            $ 3,088         1.26%
Net change ........................          (181)               -             (181)                            962
                                         --------          -------         --------                         -------
March 31, 2008 ....................           444                -              444        0.18%              4,050         1.61%
Net change ........................         1,436                -            1,436                           1,338
                                         --------          -------         --------                         -------
June 30, 2008 .....................         1,880                -            1,880        0.73%              5,388         2.10%
Net change ........................         2,845                -            2,845                           1,194
                                         --------          -------         --------                         -------
September 30, 2008 ................         4,725                -            4,725        1.77%              6,582         2.46%
Net change ........................         7,074                -            7,074                             328
                                         --------          -------         --------                         -------
December 31, 2008 .................        11,799                -           11,799        4.36%              6,910         2.56%
Net change ........................         2,835                -            2,835                           2,367
                                         --------          ---- --         --------                         -------
March 31, 2009 ....................      $ 14,634          $     -         $ 14,634        5.31%            $ 9,277         3.37%
                                         ========          =======         ========                         =======
</TABLE>

         Potential problem loans include loans, other than non-performing loans,
that management has identified as having possible credit problems  sufficient to
cast  doubt upon the  abilities  of the  borrowers  to comply  with the  current
repayment terms. However, the amount of potential problem loans does not reflect
management's  expectations  of losses,  if any,  that may be realized from those
loans.  As of March  31,  2009,  approximately  76.9% of the  dollar  amount  of
potential  problem loans had real estate as  collateral,  19.5% had vehicles and
other items as collateral, and approximately 3.6% represented unsecured loans.

         South Carolina's 11.4%  unemployment rate was the third highest rate of
unemployment  of the 50 states as of March 31, 2009. The  unemployment  rate for
Oconee and Anderson Counties was about 14% and 12%, respectively as of March 31,
2009.  Worsening  of this  condition  or a prolonged  period at or near  current
levels,  continuing  increases in prices for fuel and food,  declining values of
homes and other real  properties,  declining  demand for  products  manufactured
locally,  and other events could continue to have adverse effects on those areas
and potentially lead to further  deterioration of the abilities of the Company's
loan  customers to repay their debts.  These events could lead to higher amounts
of nonaccrual,  past due and potential problem loans and higher loan losses, all
of which could result in higher provisions for loan losses.

Noninterest Income

         Noninterest  income  totaled  $571,000  for the first  quarter of 2009,
compared with $609,000 for the first quarter of 2008. Service charges on deposit
accounts  in the 2009 period were  $323,000  representing  a decrease of $37,000
from the prior year period.  ATM  interchange and other fees for the 2009 period
increased by $11,000 over the 2008 amount.  Other income for the 2009 period was
$13,000 less than for the 2008 period.

Noninterest Expenses

         Noninterest  expenses totaled $2,097,000 for the first quarter of 2009,
compared with $1,887,000 for the first quarter of 2008, representing an increase
of $210,000 or 11.1%.  Salaries and employee benefits increased by $144,000,  or
13.9%,  to  $1,181,000.  Amounts  accrued in  recognition  of  certain  deferred
compensation and other benefits  totaled  $172,000 in the 2009 period,  compared
with $139,000 in the 2008 period. In addition,  the Bank's staff increased to 93
full-time  equivalent  employees  as of March  31,  2009 from 88 as of March 31,
2008. Among those new staff positions was a special assets officer who was hired
late in the 2009 period to provide  assistance in identifying and  administering
distressed loans.

         Other expense  increased by $44,000 over the 2008 including an increase
in FDIC  insurance  expense to $70,000 for the 2009 period from  $15,000 for the
2008 period.  Expenses  related to FDIC  insurance are expected to increase more
significantly  through the  remainder of 2009 due to a higher  assessment  base,
projected increases in the assessment rate, and a special assessment proposed by
the Federal Deposit Insurance Corporation.



                                       16
<PAGE>

         Income tax expense for the first quarter of 2009  decreased by $307,000
from the  amount  for the same  period  of 2008 due to lower net  income  before
income taxes and proportionally  higher amounts of tax-exempt investment income.
Tax-exempt  interest  income was 41.2% of income before income taxes in the 2009
period compared with 15.1% of income before income taxes for the 2008 period.

Liquidity

         Liquidity is the ability to meet current and future obligations through
the  liquidation or maturity of existing assets or the acquisition of additional
liabilities.  The  Company  manages  both  assets  and  liabilities  to  achieve
appropriate  levels  of  liquidity.  Cash  and  short-term  investments  are the
Company's  primary  sources of asset  liquidity.  These funds  provide a cushion
against  short-term  fluctuations  in cash flow from both  deposits  and  loans.
Securities   available-for-sale   provide  the  Company's  principal  source  of
secondary  asset  liquidity.   However,  the  availability  of  this  source  is
influenced  by  market  conditions  to  a  significant  extent.  Individual  and
commercial  deposits  are the  Company's  primary  source  of funds  for  credit
activities.  The Company  also has  significant  amounts of credit  availability
under its FHLB lines of credit and federal funds purchased facilities.

         As of March 31, 2009,  the ratio of loans to total  deposits was 65.1%,
compared with 65.0% as of December 31, 2008. Total deposits as of March 31, 2009
were  $423,259,000,  an  increase  of  $7,144,000  or 1.7% over the amount as of
December 31, 2008.  Management believes that the Company's liquidity sources are
adequate to meet its operating needs.

Capital Resources

         The Company's  capital base  increased by $860,000  since  December 31,
2008 as the result of net income of $414,000 for the first three months of 2009,
minus a $40,000  change in  unrealized  gains and  losses on  available-for-sale
securities,  net of deferred income tax effects,  and $486,000 from the exercise
of employee stock options.

         The  Company  and its banking  subsidiary  (the  "Bank") are subject to
regulatory  risk-based capital adequacy standards.  Under these standards,  bank
holding  companies and banks are required to maintain  certain minimum ratios of
capital to risk-weighted  assets and average total assets.  Under the provisions
of the Federal Deposit Insurance  Corporation  Improvement Act of 1991 (FDICIA),
federal bank regulatory authorities are required to implement prescribed "prompt
corrective actions" upon the deterioration of the capital position of a bank. If
the  capital  position  of an affected  institution  were to fall below  certain
levels, increasingly stringent regulatory corrective actions are mandated.

         The March 31,  2009 risk based  capital  ratios for the Company and the
Bank are presented in the following table,  compared with the "well capitalized"
(Bank only) and minimum ratios under the regulatory definitions and guidelines:

                                                            Total
                                              Tier 1       Capital     Leverage
                                              ------       -------     --------
Community First Bancorporation ...........     13.0%        14.3%         8.3%
Community First Bank .....................     12.2%        13.5%         7.8%
Minimum "well-capitalized" requirement ...      6.0%        10.0%         6.0%
Minimum requirement ......................      4.0%         8.0%         5.0%

Off-Balance-Sheet Arrangements

In the normal course of business,  the Bank is a party to financial  instruments
with  off-balance-sheet  risk including commitments to extend credit and standby
letters of credit.  Such  instruments  have elements of credit risk in excess of
the amount  recognized in the balance sheet.  The exposure to credit loss in the
event of  nonperformance  by the other parties to the financial  instruments for
commitments to extend credit and standby letters of credit is represented by the
contractual  notional amount of those  instruments.  Generally,  the same credit
policies  used for  on-balance-sheet  instruments,  such as  loans,  are used in
extending loan commitments and standby letters of credit.

Following are the off-balance-sheet financial instruments whose contract amounts
represent credit risk:

                                       17
<PAGE>

                                                  March 31, 2009
                                                  --------------
                                                    (Dollars in
                                                    thousands)
Loan commitments ..............................      $ 28,750
Standby letters of credit .....................           915

Loan commitments involve agreements to lend to a customer 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 some  involve
payment of a fee. Many of the  commitments  are expected to expire without being
fully  drawn;  therefore,   the  total  amount  of  loan  commitments  does  not
necessarily represent future cash requirements. Each customer's creditworthiness
is evaluated on a case-by-case basis. The amount of collateral obtained, if any,
upon  extension  of credit is based on  management's  credit  evaluation  of the
borrower. Collateral held varies but may include commercial and residential real
properties, accounts receivable, inventory and equipment.

Standby  letters  of  credit  are  conditional   commitments  to  guarantee  the
performance of a customer to a third party.  The credit risk involved in issuing
standby  letters  of  credit  is the  same  as  that  involved  in  making  loan
commitments to customers. Many letters of credit will expire without being drawn
upon  and do not  necessarily  represent  future  cash  requirements.  The  Bank
receives fees for loan commitments and standby letters of credit.  The amount of
such fees was not material for the three months ended March 31, 2009.

As described under "Liquidity,"  management believes that its various sources of
liquidity  provide  the  resources  necessary  for the  Bank to  fund  the  loan
commitments and to perform under standby letters of credit,  if the need arises.
Neither  the  Company  nor the  Bank is  involved  in  other  off-balance  sheet
contractual  relationships or transactions  that could result in liquidity needs
or other commitments or significantly impact earnings.

Item 3.  - Quantitative and Qualitative Disclosures About Market Risk

The Company's  exposure to market risk is primarily  related to the risk of loss
from adverse  changes in market prices and rates.  This risk arises  principally
from interest rate risk inherent in the Company's lending, deposit gathering and
borrowing activities. Management actively monitors and manages its interest rate
risk exposure.  Although the Company manages other risks, such as credit quality
and  liquidity  risk in the  normal  course of  business,  management  considers
interest  rate risk to be its most  significant  market risk and this risk could
potentially  have  the  largest  material  effect  on  the  Company's  financial
condition  and  results  of  operations.  Other  types of market  risk,  such as
commodity  price risk and foreign  currency  exchange  risk, do not arise in the
normal course of the Company's community banking operations.

The Company uses a simulation model to assist in achieving  consistent growth in
net interest income while managing interest rate risk. As of March 31, 2009, the
model indicates that net interest income would decrease  $109,000 and net income
would  decrease  $70,000 in the next twelve months if interest rates rose by 100
basis points.  Conversely,  net interest income would increase  $208,000 and net
income  would  increase  $133,000  in the next twelve  months if interest  rates
declined by 100 basis  points.  In the current  interest  rate  environment,  it
appears  unlikely that there will be any large changes in interest  rates in the
immediate future. The prospective effects of hypothetical  interest rate changes
are based on a number of  assumptions,  including the relative  levels of market
interest rates and prepayment  assumptions  affecting  loans,  and should not be
relied on as indicative of actual future results.  The prospective  effects also
do not  contemplate  potential  actions that the Company,  its customers and the
issuers of its investment  securities  could undertake in response to changes in
interest rates.

As of March 31, 2009,  there was no  significant  change from the interest  rate
sensitivity  analysis for the various changes in interest rates calculated as of
December 31, 2008.  The foregoing  disclosures  related to the Company's  market
risk should be read in conjunction with Management's  Discussion and Analysis of
Financial Condition and Results of Operations included in the 2008 Annual Report
on Form 10-K filed with the Securities and Exchange Commission.


                                       18
<PAGE>


Item 4T. - Controls and Procedures

Based  on  the  evaluation  required  by  17  C.F.R.  Section  240.13a-15(b)  or
240.15d-15(b) of the issuer's  disclosure controls and procedures (as defined in
17  C.F.R.  Sections  240.13a-15(e)  and  240.15d-15(e)),   the  issuer's  chief
executive  officer and chief  financial  officer  concluded  such  controls  and
procedures, as of the end of the period covered by this report, were effective.

There  has been no change  in the  Company's  internal  control  over  financial
reporting during the most recent fiscal quarter that has materially affected, or
is reasonably likely to materially  affect,  the Company's internal control over
financial reporting.


                           PART II - OTHER INFORMATION

Item 4.  Submission of Matters to a Vote of Security Holders

On January 27, 2009, the Company held a special meeting of shareholders  for the
purpose of voting on an amendment to the Company's  Articles of Incorporation to
authorize  the  issuance  of 10  million  shares of  preferred  stock  with such
preferences, limitations and relative rights, within legal limits, of the class,
or one or more series  within the class,  as are set by the Board of  Directors.
The requisite number of shares were voted in favor of the amendment. The results
of the voting were as follows:
<TABLE>
<CAPTION>

    Number of Shares Voted FOR          Number of Shares Voted AGAINST          Abstentions            Broker Non-Votes
    --------------------------          ------------------------------          -----------            ----------------
<S>          <C>                                    <C>                              <C>                   <C>
             2,555,468                              21,020                           0                     548,936
</TABLE>


Item 6. - Exhibits

Exhibits             3.1  Articles of Incorporation, as amended

                     31. Rule 13a-14(a)/15d-14(a) Certifications

                     32.  Certifications  Pursuant  to 18  U.S.C. Section 1350





                                       19
<PAGE>


SIGNATURE

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                  COMMUNITY FIRST BANCORPORATION

May 14, 2009                      /s/ Frederick D. Shepherd, Jr.
-----------------                 ----------------------------------------------
     Date                          Frederick D. Shepherd, Jr., Chief Executive
                                   Officer and Chief Financial Officer


                                       20
<PAGE>

                                  EXHIBIT INDEX


            3.1  Articles of Incorporation, as amended

            31.  Rule 13a-14(a)/15d-14(a) Certifications

            32.  Certifications  Pursuant  to 18  U.S.C. Section 1350






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