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, 2010          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, 3,784,159 Shares Outstanding on April 1, 2010.



<PAGE>


                         COMMUNITY FIRST BANCORPORATION

                                    FORM 10-Q

                                      Index

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

Item 1.           Financial Statements
<S>                                                                                                                    <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 ..........     15
Item 4T.          Controls and Procedures ........................................................................     22

PART II -         OTHER INFORMATION

Item 6.           Exhibits .......................................................................................     22

SIGNATURE ........................................................................................................     23
</TABLE>




                                       2
<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1. - Financial Statements

COMMUNITY FIRST BANCORPORATION
Consolidated Balance Sheets
<TABLE>
<CAPTION>
                                                                                                      (Unaudited)
                                                                                                       March 31,        December 31,
                                                                                                         2010              2009
                                                                                                         ----              ----
                                                                                                        (Dollars in thousands)
Assets
<S>                                                                                                    <C>                <C>
     Cash and due from banks .................................................................         $   2,060          $   1,463
     Interest bearing deposits due from banks ................................................            58,402             46,020
                                                                                                       ---------          ---------
         Cash and cash equivalents ...........................................................            60,462             47,483
     Securities available-for-sale ...........................................................           164,413            141,710
     Securities held-to-maturity (fair value $8,877 for 2010
         and $9,476 for 2009) ................................................................             8,345              9,024
     Other investments .......................................................................             1,307              1,307
     Loans ...................................................................................           267,504            267,248
         Allowance for loan losses ...........................................................            (6,184)            (6,052)
                                                                                                       ---------          ---------
            Loans - net ......................................................................           261,320            261,196
     Premises and equipment - net ............................................................             8,388              8,470
     Accrued interest receivable .............................................................             3,052              2,424
     Foreclosed assets .......................................................................             6,187              6,078
     Bank-owned life insurance ...............................................................             9,381              9,289
     Other assets ............................................................................             4,947              5,916
                                                                                                       ---------          ---------
            Total assets .....................................................................         $ 527,802          $ 492,897
                                                                                                       =========          =========
Liabilities
     Deposits
         Noninterest bearing .................................................................         $  47,323          $  47,067
         Interest bearing ....................................................................           422,448            389,581
                                                                                                       ---------          ---------
            Total deposits ...................................................................           469,771            436,648
     Accrued interest payable ................................................................             2,596              2,043
     Long-term debt ..........................................................................             8,000              8,000
     Other liabilities .......................................................................             1,561              1,388
                                                                                                       ---------          ---------
            Total liabilities ................................................................           481,928            448,079
                                                                                                       ---------          ---------
Shareholders' equity
     Preferred stock - Series A -  non-voting 5% cumulative - $1,000 per share
         liquidation preference; 5,000 shares authorized;
         issued and outstanding - 3,150 shares ...............................................             3,126              3,126
     Preferred stock - no par value; 9,995,000 shares authorized;
         None issued and outstanding .........................................................                 -                  -
     Common stock - no par value; 10,000,000 shares authorized;
         issued and outstanding - 3,784,159 for 2010 and
         3,782,415 for 2009 ..................................................................            38,940             38,923
     Additional paid-in capital ..............................................................               748                748
     Retained earnings .......................................................................             1,602              1,434
     Accumulated other comprehensive income ..................................................             1,458                587
                                                                                                       ---------          ---------
            Total shareholders' equity .......................................................            45,874             44,818
                                                                                                       ---------          ---------
            Total liabilities and shareholders' equity .......................................         $ 527,802          $ 492,897
                                                                                                       =========          =========
</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,
                                                                                                        2010               2009
                                                                                                        ----               ----
                                                                                                         (Dollars in thousands,
                                                                                                         except per share)
Interest income
<S>                                                                                                    <C>                   <C>
     Loans, including fees ..............................................................              $ 4,004               $ 4,049
     Interest bearing deposits due from banks ...........................................                   38                    16
     Securities
       Taxable ..........................................................................                1,285                 1,506
       Tax-exempt .......................................................................                  199                   209
     Other investments ..................................................................                    -                     -
     Federal funds sold .................................................................                    -                     3
                                                                                                       -------               -------
         Total interest income ..........................................................                5,526                 5,783
                                                                                                       -------               -------
Interest expense
     Time deposits $100M and over .......................................................                  733                 1,093
     Other deposits .....................................................................                1,419                 1,816
     Long-term debt .....................................................................                   76                    91
                                                                                                       -------               -------
         Total interest expense .........................................................                2,228                 3,000
                                                                                                       -------               -------
Net interest income .....................................................................                3,298                 2,783
Provision for loan losses ...............................................................                1,125                   750
                                                                                                       -------               -------
Net interest income after provision .....................................................                2,173                 2,033
                                                                                                       -------               -------
Other income
     Service charges on deposit accounts ................................................                  301                   323
     Debit card transaction fees ........................................................                  136                   140
     Credit life insurance commissions ..................................................                    4                     6
     Increase in value of bank-owned life insurance .....................................                   92                    92
     Other income .......................................................................                    3                    10
                                                                                                       -------               -------
         Total other income .............................................................                  536                   571
                                                                                                       -------               -------
Other expenses
     Salaries and employee benefits .....................................................                1,119                 1,181
     Net occupancy expense ..............................................................                  145                   135
     Furniture and equipment expense ....................................................                   90                    93
     Amortization of computer software ..................................................                  112                    95
     FDIC insurance expense .............................................................                  398                    70
     Debit card transaction expenses ....................................................                  100                   113
     Other expense ......................................................................                  521                   410
                                                                                                       -------               -------
         Total other expenses ...........................................................                2,485                 2,097
                                                                                                       -------               -------
Income before income taxes ..............................................................                  224                   507
Income tax expense ......................................................................                   17                    93
                                                                                                       -------               -------
Net income ..............................................................................                  207                   414
Deductions for amounts not available to common shareholders:
     Dividends declared or accumulated on preferred stock ...............................                  (59)                    -
                                                                                                       -------               -------
Net income available to common shareholders .............................................              $   148               $   414
                                                                                                       =======               =======
Per common share*
     Net income .........................................................................              $  0.04               $  0.11
     Net income, assuming dilution ......................................................                 0.04                  0.11
</TABLE>
-------
* Per share  information has been  retroactively  adjusted to reflect a 5% stock
dividend  effective  December  15,  2009.  See  accompanying  notes to unaudited
consolidated financial statements.


                                       4
<PAGE>


COMMUNITY FIRST BANCORPORATION
Consolidated Statements of Changes in Shareholders' Equity

<TABLE>
<CAPTION>
                                                                 (Unaudited)
                                                                                                              Accumulated
                                             Shares of                             Additional                    Other
                                              Common       Preferred      Common     Paid-in       Retained  Comprehensive
                                               Stock         Stock         Stock     Capital       Earnings   Income (Loss)  Total
                                               -----         -----         -----     -------       --------   -------------  -----
                                                                          (Dollars in thousands)

<S>                                          <C>            <C>           <C>        <C>           <C>         <C>         <C>
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
                                             =========      ========      ========   ========      ========    ========    ========



Balance, January 1, 2010 ..............      3,782,415      $  3,126      $ 38,923   $    748      $  1,434    $    587    $ 44,818
                                                                                                                           --------
Comprehensive income:
   Net income .........................              -             -             -          -           207           -         207
                                                                                                                           --------
   Unrealized holding gains and losses
     on available-for-sale securities
     arising during the period, net of
     income taxes of $487 .............              -             -             -          -             -         871         871
                                                                                                                           --------
       Total other comprehensive income                                                                                         871
                                                                                                                           --------
         Total comprehensive income ...                                                                                       1,078
                                                                                                                           --------
Dividends paid on preferred stock .....              -             -             -          -           (39)          -         (39)
                                                                                                                           --------
Exercise of employee stock options ....          1,744             -            17          -             -           -          17
                                             ---------      --------      --------   --------      --------    --------    --------
Balance, March 31, 2010 ...............      3,784,159      $  3,126      $ 38,940   $    748      $  1,602    $  1,458    $ 45,874
                                             =========      ========      ========   ========      ========    ========    ========
</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,
                                                                                                           2010              2009
                                                                                                           ----              ----
                                                                                                           (Dollars in thousands)
Operating activities
<S>                                                                                                     <C>                <C>
     Net income ..............................................................................          $    207           $    414
     Adjustments to reconcile net income to net
         cash provided by operating activities
            Provision for loan losses ........................................................             1,125                750
            Depreciation .....................................................................                97                112
            Amortization of net loan fees and costs ..........................................               (13)                 8
            Securities accretion and premium amortization ....................................               294                228
            Gain on sale of foreclosed assets ................................................                (2)                 -
            Increase in cash surrender value of bank-owned life insurance ....................               (92)               (91)
            (Increase) decrease in interest receivable .......................................              (628)                17
            Increase in interest payable .....................................................               553                869
            Decrease in prepaid expenses and other assets ....................................               482                 58
            Increase in other accrued expenses ...............................................               173                217
                                                                                                        --------           --------
                Net cash provided by operating activities ....................................             2,196              2,582
                                                                                                        --------           --------

Investing activities
     Purchases of available-for-sale securities ..............................................           (47,927)           (72,212)
     Maturities, calls and paydowns of securities available-for-sale .........................            26,289             35,645
     Maturities, calls and paydowns of securities held-to-maturity ...........................               678                709
     Proceeds of sales of available-for-sale securities ......................................                 -              2,043
     Purchases of other investments ..........................................................                 -               (125)
     Disposals of other investments ..........................................................                 -                  5
     Net increase in loans made to customers .................................................            (1,491)            (6,150)
     Purchases of premises and equipment .....................................................               (15)              (134)
     Additional investment in foreclosed assets ..............................................               (29)              (209)
     Proceeds of sale of foreclosed assets ...................................................               177                 30
                                                                                                        --------           --------
                Net cash used by investing activities ........................................           (22,318)           (40,398)
                                                                                                        --------           --------

Financing activities
     Net increase in demand deposits, interest
         bearing transaction accounts and savings accounts ...................................             1,629              3,117
     Net increase in certificates of deposit and other
         time deposits .......................................................................            31,494              4,027
     Cash paid in lieu of issuing fractional common shares ...................................                 -                 (3)
     Cash dividends paid on preferred stock ..................................................               (39)                 -
     Exercise of employee stock options ......................................................                17                486
                                                                                                        --------           --------
                Net cash provided by financing activities ....................................            33,101              7,627
                                                                                                        --------           --------
Increase (decrease) in cash and cash equivalents .............................................            12,979            (30,189)
Cash and cash equivalents, beginning .........................................................            47,483             40,966
                                                                                                        --------           --------
Cash and cash equivalents, ending ............................................................          $ 60,462           $ 10,777
                                                                                                        ========           ========
</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,
                                                           2010           2009
                                                           ----           ----
                                                          (Dollars in thousands)
Supplemental Disclosure of Cash Flow Information
     Cash paid during the period for
         Interest .....................................   $ 1,675     $ 2,131
         Income taxes .................................         -           -
     Net transfers from loans to foreclosed assets ....       255         187
     Noncash investing and financing activities:
         Other comprehensive income (loss) ............       871         (40)

COMMUNITY FIRST BANCORPORATION

Notes to Unaudited Consolidated Financial Statements
(Dollar amounts in thousands, except per share)

Accounting  Policies - A summary of significant  accounting policies is included
in  Community  First  Bancorporation's  (the  "Company,"  "our," "we," "us," and
similar  references)  Annual Report on Form 10-K for the year ended December 31,
2009 filed with the Securities and Exchange  Commission.  Certain amounts in the
2009  financial  statements  have been  reclassified  to conform to the  current
presentation.  Such  reclassifications  had no effect on net income or  retained
earnings for any period.

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.

Investment Securities - The following table presents information about amortized
cost,  unrealized  gains,  unrealized  losses,  and  estimated  fair  values  of
securities:


                                       7
<PAGE>

<TABLE>
<CAPTION>
                                                             March 31, 2010                          December 31, 2009
                                                             --------------                          -----------------
                                                            Gross      Gross                           Gross      Gross
                                                         Unrealized Unrealized Estimated            Unrealized Unrealized  Estimated
                                              Amortized    Holding   Holding     Fair      Amortized  Holding    Holding     Fair
                                                 Cost       Gains     Losses     Value       Cost      Gains      Losses     Value
                                                 ----       -----     ------     -----       ----      -----      ------     -----
                                                                                  (Dollars in thousands)
Available-for-sale
<S>                                            <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
Mortgage-backed securities
     issued by US Government agencies ......   $  1,354   $     67   $      -   $  1,421   $  1,426   $     49   $      -   $  1,475
Government sponsored
     enterprises (GSEs) ....................    111,321        898        144    112,075     87,143        643        823     86,963
Mortgage-backed securities
     issued by GSEs ........................     29,955      1,299          1     31,253     32,707      1,005         10     33,702
State, county and municipal ................     19,508        290        134     19,664     19,517        241        188     19,570
                                               --------   --------   --------   --------   --------   --------   --------   --------
           Total ...........................   $162,138   $  2,554   $    279   $164,413   $140,793   $  1,938   $  1,021   $141,710
                                               ========   ========   ========   ========   ========   ========   ========   ========

Held-to-maturity
Mortgage-backed securities
     issued by US Government agencies ......   $      -   $      -   $      -   $      -   $      -   $      -   $      -   $      -
Government sponsored
     enterprises ...........................          -          -          -          -          -          -          -          -
Mortgage-backed securities
     issued by GSEs ........................      8,345        532          -      8,877      9,024        452          -      9,476
State, county and municipal ................          -          -          -          -          -          -          -          -
                                               --------   --------   --------   --------   --------   --------   --------   --------
           Total ...........................   $  8,345   $    532   $      -   $  8,877   $  9,024   $    452   $      -   $  9,476
                                               ========   ========   ========   ========   ========   ========   ========   ========
</TABLE>

The  amortized  cost and  estimated  fair  value of  securities  by  contractual
maturity are shown below:


                                       8
<PAGE>

<TABLE>
<CAPTION>
                                                                                   March 31, 2010
                                                                                   --------------
                                                                            Due after one  Due after five
                                                             Due within one  through five    through ten   Due after ten
Available-for-sale at fair value                                  year           years          years          years         Total
                                                                  ----           -----          -----          -----         -----
                                                                                (Dollars in thousands)
<S>                                                             <C>            <C>            <C>            <C>            <C>
Non-mortgage-backed securities issued by GSEs .........         $  1,508       $ 26,092       $ 37,010       $ 47,465       $112,075
State, county and municpal issuers ....................              301          1,230          2,437         15,696         19,664
                                                                --------       --------       --------       --------       --------
                                                                   1,809         27,322         39,447         63,161        131,739
Mortgage-backed securities issued by:
     US Government agencies ...........................                                                                        1,421
     GSEs .............................................                                                                       31,253
                                                                                                                            --------
        Total available-for-sale ......................                                                                     $164,413
                                                                                                                            ========

Held-to-maturity at amortized cost
Mortgage-backed securities issued by:
     GSEs .............................................                                                                     $  8,345
                                                                                                                            --------
        Total held-to-maturity ........................                                                                     $  8,345
                                                                                                                            ========
</TABLE>

<TABLE>
<CAPTION>
                                                                                 December 31, 2009
                                                                                 -----------------
                                                                            Due after one  Due after five
                                                             Due within one  through five    through ten   Due after ten
Available-for-sale at fair value                                  year           years          years          years         Total
                                                                  ----           -----          -----          -----         -----
                                                                                (Dollars in thousands)
<S>                                                             <C>            <C>             <C>            <C>           <C>
Non-mortgage-backed securities issued by GSEs .........         $  1,520       $ 10,032        $ 32,832       $ 42,579      $ 86,963
State, county and municpal issuers ....................              301          1,000           2,656         15,613        19,570
                                                                --------       --------        --------       --------      --------
                                                                   1,821         11,032          35,488         58,192       106,533
Mortgage-backed securities issued by:
     US Government agencies ...........................                                                                        1,475
     GSEs .............................................                                                                       33,702
                                                                                                                            --------
        Total available-for-sale ......................                                                                     $141,710
                                                                                                                            ========

Held-to-maturity at amortized cost
Mortgage-backed securities issued by:
     GSEs .............................................                                                                     $  9,024
                                                                                                                            --------
        Total held-to-maturity ........................                                                                     $  9,024
                                                                                                                            ========
</TABLE>

The estimated  fair values and gross  unrealized  losses of all of the Company's
investment  securities  whose fair  values were less than  amortized  cost as of
March  31,  2010  which  had not been  determined  to be  other-than-temporarily
impaired are  presented  below.  The Company  evaluates  all  available-for-sale
securities and all held-to-maturity securities for impairment as of each balance
sheet date.  The  securities  have been  segregated  in the table by  investment
category  and the  length  of time  that  individual  securities  have been in a
continuous unrealized loss position.



                                       9
<PAGE>

<TABLE>
<CAPTION>
                                                                                 March 31, 2010
                                                                                 --------------
                                                            Continuously in Unrealized Loss Position for a Period of
                                                            --------------------------------------------------------
                                                     Less than 12 Months          12 Months or more                  Total
                                                     -------------------          -----------------                  -----
                                                  Estimated       Unrealized   Estimated    Unrealized    Estimated       Unrealized
                                                 Fair Value         Loss       Fair Value      Loss       Fair Value        Loss
                                                 ----------         ----       ----------      ----       ----------        ----
                                                                                     (Dollars in thousands)
Available-for-sale
<S>                                               <C>             <C>           <C>          <C>            <C>             <C>
US Government agencies .....................      $     -         $     -       $     -      $     -        $     -         $     -
Government-sponsored
  enterprises (GSEs) .......................       26,494             144             -            -         26,494             144
Mortgage-backed securities
  issued by GSEs ...........................          450               1             -            -            450               1
State, county and
  municipal securities .....................        4,152             134             -            -          4,152             134
                                                  -------         -------       -------      -------        -------         -------
                  Total ....................      $31,096         $   279       $     -      $     -        $31,096         $   279
                                                  =======         =======       =======      =======        =======         =======

Held-to-maturity
GSEs .......................................      $     -         $     -       $     -      $     -        $     -         $     -
                                                  -------         -------       -------      -------        -------         -------
                  Total ....................      $     -         $     -       $     -      $     -        $     -         $     -
                                                  =======         =======       =======      =======        =======         =======

<CAPTION>
                                                                               December 31, 2009
                                                                               -----------------
                                                            Continuously in Unrealized Loss Position for a Period of
                                                            --------------------------------------------------------
                                                     Less than 12 Months          12 Months or more                  Total
                                                     -------------------          -----------------                  -----
                                                  Estimated       Unrealized   Estimated    Unrealized    Estimated       Unrealized
                                                 Fair Value         Loss       Fair Value      Loss       Fair Value        Loss
                                                 ----------         ----       ----------      ----       ----------        ----
                                                                                     (Dollars in thousands)
Available-for-sale
<S>                                              <C>             <C>           <C>           <C>             <C>             <C>
GSEs .......................................     $40,430         $   823       $     -       $     -         $40,430         $   823
Mortgage-backed securities
  issued by GSEs ...........................       2,811              10             -             -           2,811              10
State, county and
  municipal securities .....................       6,220             188             -             -           6,220             188
                                                 -------         -------       -------       -------         -------         -------
                  Total ....................     $49,461         $ 1,021       $     -       $     -         $49,461         $ 1,021
                                                 =======         =======       =======       =======         =======         =======

Held-to-maturity
GSEs .......................................     $     -         $     -       $     -       $     -         $     -         $     -
                                                 -------         -------       -------       -------         -------         -------
                                                 $     -         $     -       $     -       $     -         $     -         $     -
                                                 =======         =======       =======       =======         =======         =======
</TABLE>

As of March 31, 2010, 33 securities had been  continuously in an unrealized loss
position for less than 12 months and no securities had been  continuously  in an
unrealized  loss  position  for 12  months  or more.  We do not  consider  these
investments to be other-than-temporarily  impaired because the unrealized losses
involve  primarily  issuances  of  government-sponsored  enterprises  and state,
county and municipal  government  issuers.  We also believe that the impairments
resulted from current credit market  conditions.  There have been no defaults or
failures by any of the issuers to remit periodic  interest payments as required,
nor are we aware that any such  issuer has given  notice that it expects it will
be unable to make any such  future  payment  according  to the terms of its bond
agreement.  Although  we  classify a majority of our  investment  securities  as
available-for-sale,  management has not determined that any specific  securities
will be disposed of prior to maturity and believes that we have both the ability
and the  intent  to hold  those  investments  until a  recovery  of fair  value,
including  until  maturity.  Furthermore,  we do not  believe  that  we  will be
required to sell any such securities prior to recovery of the unrealized losses.
Substantially  all of the state,  county and municipal  securities were rated at
least  "investment  grade" by either S&P or  Moody's,  or both,  as of March 31,
2010.

Our  subsidiary  bank is a member  of the  Federal  Home  Loan  Bank of  Atlanta
("FHLB")  and,  accordingly,  is  required  to  own  restricted  stock  in  that
institution  in amounts that may vary from time to time.  These  securities  are
carried in the "other investments"  category in the Consolidated Balance Sheets.
Because of the restrictions imposed, the stock may not be sold to other parties,

                                       10
<PAGE>

but is redeemable by the FHLB at the same price as that at which it was acquired
by the Company's  subsidiary.  We evaluate this security for impairment based on
the probability of ultimate  recovery of the acquisition cost. No impairment has
been recognized based on this evaluation.

During the first three months of 2010, we did not sell any securities,  nor were
there any transfers of available-for-sale securities to other categories.

Nonperforming  Loans - As of March 31, 2010,  there were  $16,445 in  nonaccrual
loans and no loans 90 days or more past due and still accruing interest.

Earnings  Per Common  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 common 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 2009 per share
information  has  been  retroactively  adjusted  to give  effect  to a 5%  stock
dividend effective December 15, 2009. Net income per common share and net income
per common share, assuming dilution, were computed as follows:

<TABLE>
<CAPTION>
                                                                                                         Three Months Ended
                                                                                                              March 31,
                                                                                                              ---------
                                                                                                      2010                  2009
                                                                                                      ----                  ----
                                                                                                        (Dollars in thousands,
                                                                                                      except per share amounts)

Net income per common share, basic
<S>                                                                                                 <C>                   <C>
  Numerator - net income available to common shareholders .............................             $     148             $      414
                                                                                                    =========             ==========
  Denominator
    Weighted average common shares issued and outstanding .............................             3,783,287              3,763,879
                                                                                                    =========             ==========
               Net income per common share, basic .....................................             $     .04             $      .11
                                                                                                    =========             ==========

Net income per common share, assuming dilution
    Numerator - net income available to common shareholders ...........................             $     148             $      414
                                                                                                    =========             ==========
Denominator
    Weighted average common shares issued and outstanding .............................             3,783,287              3,763,879
    Effect of dilutive stock options ..................................................                     -                      -
                                                                                                    ---------             ----------
               Total shares ...........................................................             3,783,287              3,763,879
                                                                                                    =========             ==========
               Net income per common share, assuming dilution .........................             $     .04             $      .11
                                                                                                    =========             ==========
</TABLE>

Stock-Based  Compensation  - Our 1998 stock option plan  terminated on March 19,
2008 and no further  options  may be issued  under the plan.  A total of 362,267
unexpired  and   non-forfeited   options   outstanding  under  the  plan  remain
exercisable until their expiration dates.


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
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.


                                       11
<PAGE>


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, 2010       (Level 1)         (Level 2)        (Level 3)
-----------                                                    --------------       ---------         ---------        ---------
Securities available-for-sale                                                         (Dollars in thousands)
<S>                                                                <C>             <C>                <C>             <C>
Mortgage-backed securities
  issued by US Government agencies ........................        $  1,421        $         -        $  1,421        $         -
Government sponsored enterprises (GSEs) ...................         112,075                  -         112,075                  -
Mortgage-backed securities issued by GSEs .................          31,253                  -          31,253                  -
State, county and municipal ...............................          19,664                  -          19,664                  -
                                                                   --------        -----------        --------        -----------
    Total securities available-for-sale ...................        $164,413        $         -        $164,413        $         -
                                                                   ========        ===========        ========        ===========
<CAPTION>

                                                                                   Fair Value Measurement at Reporting Date Using
                                                                                   ----------------------------------------------
                                                                                  Quoted Prices
                                                                                   in Active        Significant
                                                                                  Markets for          Other         Significant
                                                                                   Identical        Observable       Unobservable
                                                                                     Assets           Inputs            Inputs
Description                                                  December 31, 2009      (Level 1)         (Level 2)        (Level 3)
-----------                                                  -----------------      ---------         ---------        ---------
                                                                                      (Dollars in thousands)
<S>                                                                <C>             <C>                <C>               <C>
Securities available-for-sale ............................         $141,710        $        -         $141,710          $      -
</TABLE>


Level 2  inputs  for our  securities  available-for-sale  are  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.  At March 31,
2010, those securities were valued using Level 2 inputs, as described above.

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, 2010 and the twelve month period ended December 31,
2009 and which remained outstanding at the end of each period:


                                       12
<PAGE>

<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, 2010       (Level 1)         (Level 2)        (Level 3)
-----------                                                    --------------       ---------         ---------        ---------
                                                                                       (Dollars in thousands)
<S>                                                                 <C>              <C>              <C>              <C>
Collateral-dependent impaired loans ...................             $2,006           $      -         $2,006           $       -
</TABLE>

Gains and (losses) recognized during the three months ended:

                                           March 31, 2010
                                           --------------
                                         (Dollars in thousands)
Collateral-dependent impaired loans ....        $ (301)

<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                                                 December 31, 2009       (Level 1)         (Level 2)        (Level 3)
-----------                                                    --------------       ---------         ---------        ---------
                                                                                    (Dollars in thousands)
<S>                                                            <C>                  <C>                <C>             <C>
Collateral-dependent impaired loans .................          $11,219              $       -          $11,219         $        -
Foreclosed assets ...................................            6,078                      -            6,078                  -
</TABLE>


The  fair  value  measurements  shown  above  were  made  to  reduce  cost-based
measurements  to fair value  measurements at initial  recognition,  or to adjust
fair value based measurements subsequent to initial recognition,  due to changes
in  the   circumstances   of   individual   assets   during  the   period.   For
collateral-dependent impaired loans, the measurements reflect our belief that we
will receive repayment solely from the liquidation of the underlying collateral.
As a practical  expedient,  such loans may 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,  the loan  continues to be
carried at historical cost, and the loan is not included in the table.

The value of other real estate obtained through loan foreclosure is adjusted, if
needed,  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.

The  following  table  presents  the  carrying  amounts  and fair  values of our
financial instruments:


                                       13
<PAGE>


<TABLE>
<CAPTION>
                                                                              March 31, 2010                 December 31, 2009
                                                                              --------------                 -----------------
                                                                         Carrying       Estimated        Carrying        Estimated
                                                                         Amount         Fair Value       Amount          Fair Value
                                                                         ------         ----------       ------          ----------
                                                                                          (Dollars in thousands)
Financial assets
<S>                                                                   <C>               <C>               <C>               <C>
   Cash and due from banks .................................          $  2,060          $  2,060          $  1,463          $  1,463
   Interest bearing deposits due from banks ................            58,402            58,402            46,020            46,020
   Securities available-for-sale ...........................           164,413           164,413           141,710           141,710
   Securities held-to-maturity .............................             8,345             8,877             9,024             9,476
   Federal Home Loan Bank stock ............................             1,307             1,307             1,307             1,307
   Loans - net .............................................           261,320           262,430           261,196           262,308
   Accrued interest receivable .............................             3,052             3,052             2,424             2,424
Financial liabilities
   Deposits ................................................           469,771           469,404           436,648           436,444
   Accrued interest payable ................................             2,596             2,596             2,043             2,043
   Long-term debt ..........................................             8,000             8,005             8,000             8,005
</TABLE>

The following is a summary of the notional or contractual  amounts and estimated
fair values of our off-balance-sheet financial instruments:

<TABLE>
<CAPTION>
                                                                           March 31, 2010                    December 31, 2009
                                                                           --------------                    -----------------
                                                                      Notional/       Estimated            Notional/       Estimated
                                                                      Contract          Fair               Contract          Fair
                                                                       Amount           Value               Amount           Value
                                                                       ------           -----               ------           -----
                                                                                       (Dollars in thousands)
Off-balance sheet commitments
<S>                                                                   <C>              <C>                  <C>             <C>
  Loan commitments .....................................              $27,775          $     -              $28,527         $     -
  Standby letters of credit ............................                  823                -                  873               -
</TABLE>

New  Accounting  Pronouncements  - In January  2010,  the  Financial  Accounting
Standards Board ("FASB") updated Accounting Standards Codification ("ASC") Topic
820, "Fair Value  Measurements and  Disclosures," to require enhanced fair value
disclosures.  Specifically,  we are or will be  required  to provide  additional
information  about fair values and fair value  measurements  as follows:  (1) We
must provide a description  of the reasons for, and the amounts of,  significant
transfers in and out of Level 1 or Level 2 fair value measurements,  and (2) for
fair value measurements using significant unobservable (Level 3) inputs, we will
be required to present separately information about purchases,  sales, issuances
and settlements  (that is, on a gross basis rather than as one net number).  The
update requires that we expand our fair value measurement disclosures to provide
information for each class of assets and  liabilities.  Classes are described as
subsets of line items that appear in our Consolidated Balance Sheets. The update
further  requires  that we provide  additional  disclosures  about the valuation
techniques  and  inputs  used to  measure  fair  value  for both  recurring  and
non-recurring  fair value  measurements  when the  measurement  bases are either
Level 2 or Level 3 inputs. The requirements  relative to presenting  information
about  purchases,  sales,  issuances and settlements of fair value  measurements
using Level 3 inputs, will be effective for interim and annual periods of fiscal
years  beginning  after December 15, 2010. The other  enhanced  disclosures  are
required to be presented in interim and annual periods  beginning after December
15, 2009.


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,"


                                       14
<PAGE>

"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;
          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 the requirements of regulatory authorities;
          o    changes in accounting policies, rules and practices;
          o    cost and  difficulty of  implementing  changes in technology  and
               products;
          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. We have no obligation, and do not undertake,
to update,  revise or correct any of the  forward-looking  statements  after the
date of this report. We have expressed our expectations, beliefs and projections
in good faith and believe 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
(Dollar amounts, except per share data, are in thousands)


Changes in Financial Condition

         During  the first  three  months of 2010,  our  deposits  increased  by
$33,123,  or 7.6%.  We invested  those  funds  primarily  in  available-for-sale
investment  securities  and liquid  interest-earning  accounts with other banks.
Market  interest  rates  continue to be low and the yields we are realizing from
recent  purchases of  investment  securities  generally  are lower than those we
realized  from the  securities  held  previously.  We  lengthened  the  maturity
structure of the recently purchased investments in order to obtain better yields
but also increased short-term  investments in other banks to provide us with the
ability to reposition  the  portfolio in the event that interest  rates begin to
rise in the future.  Similarly, the lower interest rates paid on deposits in the
2010 period  allowed us to decrease  the  overall  rate on our  interest-bearing
deposits  compared  with the same  period  last  year.  Meanwhile,  loan  demand
continues to be weak in our market areas.  Loans  outstanding  increased by only


                                       15
<PAGE>

$256 during the first three months of 2010.  Credit  quality  also  continues to
present problems. Net loan charge-offs in the first quarter of 2010 totaled $993
compared with $755 for the 2009 three-month period.

Results of Operations

         We recorded  consolidated net income of $207 for the first three months
of 2010 compared with $414 for the same period of 2009. After deducting  amounts
applicable  to preferred  stock and not  available to common  shareholders,  net
income per common  share was $.04 for the first  three  months of 2010  compared
with $.11 per common share for the first quarter of 2009.  Net income per common
share,  assuming  dilution  was $.04 for the 2010 three  months and $.11 for the
2009  period.   Net  income  per  common  share   amounts  for  2009  have  been
retroactively  adjusted  to  reflect a five  percent  stock  dividend  effective
December 15, 2009.

<TABLE>
<CAPTION>
                                                                                         Summary Income Statement
                                                                                         ------------------------
                                                                                          (Dollars in thousands)
                                                                                                             Dollar       Percentage
For the Three Months Ended March 31,                                       2010              2009            Change         Change
                                                                           ----              ----            ------         ------
<S>                                                                      <C>               <C>              <C>             <C>
Interest income ...............................................          $ 5,526           $ 5,783          $  (257)         -4.4%
Interest expense ..............................................            2,228             3,000             (772)        -25.7%
                                                                         -------           -------           ------
Net interest income ...........................................            3,298             2,783              515          18.5%
Provision for loan losses .....................................            1,125               750              375          50.0%
Noninterest income ............................................              536               571              (35)         -6.1%
Noninterest expenses ..........................................            2,485             2,097              388          18.5%
Income tax expense ............................................               17                93              (76)        -81.7%
                                                                         -------           -------           ------
Net income ....................................................              207               414             (207)        -50.0%
Preferred stock dividends paid or accumulated .................              (59)                -              (59)           NA
                                                                         -------           -------           ------
Net income available to common shareholders ...................          $   148           $   414          $  (266)        -64.3%
                                                                         =======           =======           ======
</TABLE>

Net Interest Income

         Net interest  income is the principal  source of our earnings.  For the
first quarter of 2010, net interest income totaled  $3,298,  an increase of $515
or 18.5%  over the  amount for the same  period of 2009.  The yield on  interest
earning assets  decreased to 4.51% for the 2010 period,  compared with 5.05% for
the 2009 period,  and the average  rates paid for interest  bearing  liabilities
were 2.09% and 3.02%,  respectively.  We reduced  the  average  cost of interest
bearing time  deposits in the 2010  three-month  period to 2.50%  compared  with
3.71% for the same period of 2009. As a result, the average interest rate spread
for the 2010 period was 39 basis points  higher than for the 2009 period and net
yield on earning assets increased to 2.69% in the 2010 period from 2.43% for the
2009 period.

         Average loans in the 2010 period were  $266,325,  a decrease of $6,054,
or 2.2%,  from the amount for the same period of 2009. This volume decrease more
than offset a 7 basis point  increase in the yield  earned on loans and interest
income on loans decreased to $4,004 for the 2010 period from $4,049 for the 2009
period.  Management  estimates  that  approximately  $220 of previously  accrued
interest income related to nonaccrual  loans was reversed  against income during
the 2010 period.

         Average  taxable  securities for the 2010 quarter were $1,586 more than
for the same period of 2009.  A 68 basis point  reduction  in the rate earned on
such securities led to the $221 reduction in income from such securities for the
2010 period.

         As mentioned previously, yields on other short-term investments such as
interest-bearing  deposits due from banks and federal funds sold were  extremely
low in both the 2010 and the 2009  periods.  The  Company  did not sell  federal
funds during the first quarter of 2010 and the yield on such instruments  during
the 2009 quarter  resulted in a yield of only .15%.  Despite  their  current low
earning  potential,  we  believe  that it is  prudent  at this time to  maintain
relatively  large  amounts  of  such  assets  that  can be  shifted  into  other
categories of earning assets when it is advantageous to do so.

         Interest rates paid for  interest-bearing  deposits  decreased to 2.06%
for the 2010 period, compared with 3.00% for the 2009 period due to our response
to prevailing lower rates  generally.  The majority of our time deposit accounts


                                       16
<PAGE>

are issued with  original  maturities  of 12 months or less.  Consequently,  the
rates we pay for such  deposits  generally  follow the trends of overall  market
rates.

<TABLE>
<CAPTION>
                                                                                 Average Balances, Yields and Rates
                                                                                   Three Months Ended March 31,
                                                                                   ----------------------------
                                                                             2010                                     2009
                                                                             ----                                     ----
                                                                           Interest                                 Interest
                                                         Average      Income/     Yields/         Average      Income/     Yields/
                                                         Balances     Expense      Rates (1)      Balances     Expense    Rates (1)
                                                         --------     -------      ---------      --------     -------    ---------
                                                                                   (Dollars in thousands)
Assets
<S>                                                      <C>            <C>           <C>         <C>            <C>           <C>
Interest-bearing deposits due from banks ............    $   68,712     $    38       0.22%       $   21,975     $    16       0.30%
Securities
     Taxable ........................................       141,520       1,285       3.68%          139,934       1,506       4.36%
     Tax exempt (2) .................................        19,514         199       4.14%           20,488         209       4.14%
                                                         ----------     -------                   ----------     -------
         Total investment securities ................       161,034       1,484       3.74%          160,422       1,715       4.34%
Other investments ...................................         1,307           -       0.00%            1,221           -       0.00%
Federal funds sold ..................................             -           -       0.00%            8,034           3       0.15%
Loans (2) (3) (4) ...................................       266,325       4,004       6.10%          272,379       4,049       6.03%
                                                         ----------     -------                   ----------     -------
         Total interest earning assets ..............       497,378       5,526       4.51%          464,031       5,783       5.05%
Cash and due from banks .............................         1,987                                    8,568
Allowance for loan losses ...........................        (5,969)                                  (5,419)
Unrealized securities gains (losses) ................         1,610                                    1,414
Premises and equipment ..............................         8,563                                    8,766
Other assets ........................................        23,418                                   14,095
                                                         ----------                               ----------
         Total assets ...............................    $  526,987                               $  491,455
                                                         ==========                               ==========

Liabilities and shareholders' equity
Interest bearing deposits
     Interest bearing transaction accounts ..........    $   56,450     $    84       0.60%       $   59,355     $    98       0.67%
     Savings ........................................        36,235          27       0.30%           29,076          23       0.32%
     Time deposits $100M and over ...................       141,530         733       2.10%          135,504       1,093       3.27%
     Other time deposits ............................       189,113       1,308       2.81%          169,246       1,695       4.06%
                                                         ----------     -------                   ----------     -------
         Total interest bearing
           deposits .................................       423,328       2,152       2.06%          393,181       2,909       3.00%
Long-term debt ......................................         8,000          76       3.85%            9,500          91       3.88%
                                                         ----------     -------                   ----------     -------
         Total interest bearing
           liabilities ..............................       431,328       2,228       2.09%          402,681       3,000       3.02%
Noninterest bearing demand deposits .................        46,419                                   44,192
Other liabilities ...................................         4,036                                    4,004
Shareholders' equity ................................        45,204                                   40,578
                                                         ----------                               ----------
Total liabilities and shareholders'
     equity .........................................    $  526,987                               $  491,455
                                                         ==========                               ==========
Interest rate spread ................................                                 2.42%                                    2.03%
Net interest income and net yield
     on earning assets ..............................                   $ 3,298       2.69%                      $ 2,783       2.43%
Interest free funds supporting earning
     assets .........................................     $ 66,050                                $  61,350
</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.
(4)  Includes immaterial amounts of loan fees.



                                       17
<PAGE>

         We continue to pursue  strategies  that we believe  will  increase  our
market share in our local market areas in Anderson and Oconee  Counties of South
Carolina.  We serve Oconee County from four offices which are located in Seneca,
Walhalla and  Westminster  and the Anderson County market is served from offices
in Anderson and Williamston.

Provision and Allowance for Loan Losses

         We provided  $1,125 and $750 for loan  losses in the first  quarters of
2010 and 2009, respectively. As of March 31, 2010, the allowance for loan losses
was 2.31% of loans  compared  with 2.26% of loans at December 31, 2009 and 1.98%
as of March 31,  2009.  During  the 2010 three  month  period,  net  charge-offs
totaled  $993,  compared  with $755 in net charge offs during the same period of
2009. As of March 31, 2010,  nonaccrual  loans totaled $16,445 and there were no
loans 90 days or more past due and still accruing interest. Approximately 82% of
those  nonaccrual  loans were  secured  by real  estate.  As of March 31,  2009,
nonaccrual  loans  totaled  $14,634 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,
                                                                                2010                   2009                2009
                                                                                ----                   ----                ----
                                                                                              (Dollars in thousands)
<S>                                                                          <C>                   <C>                   <C>
Allowance at beginning of period .................................           $   6,052             $   5,475             $   5,475
Provision for loan losses ........................................               1,125                 4,355                   750
Net charge-offs ..................................................                (993)               (3,778)                 (755)
                                                                             ---------             ---------             ---------
Allowance at end of period .......................................           $   6,184             $   6,052             $   5,470
                                                                             =========             =========             =========
Allowance as a percentage of loans outstanding
    at period end ................................................                2.31%                 2.26%                 1.98%
Loans at end of period ...........................................           $ 267,504             $ 267,248             $ 275,613
                                                                             =========             =========             =========
</TABLE>




                                       18
<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>             <C>
January 1, 2009 ....................     $ 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%
Net change .........................        2,882                -            2,882                           (1,511)
                                         --------         --------         --------                          -------
June 30, 2009 ......................       17,516                -           17,516         6.41%              7,766         2.84%
Net change .........................       (2,632)               -           (2,632)                           3,490
                                         --------         --------         --------                          -------
September 30, 2009 .................       14,884                -           14,884         5.52%             11,256         4.17%
Net change .........................       (1,014)               -           (1,014)                          (3,951)
                                         --------         --------         --------                          -------
December 31, 2009 ..................       13,870                -           13,870         5.19%              7,305         2.73%
Net change .........................        2,575                -            2,575                           (3,844)
                                         --------         --------         --------                          -------
March 31, 2010 .....................     $ 16,445         $      -         $ 16,445         6.15%            $ 3,461         1.29%
                                         ========         ========         ========                          =======

</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, 2010, approximately 90% of the dollar amount of potential
problem loans had real estate as collateral,  9% had vehicles and other items as
collateral, and approximately 1% represented unsecured loans.

         South Carolina's 12.2%  unemployment rate was the sixth highest rate of
unemployment of the 50 states as of March 31, 2010 compared with 11.4% for March
2009.  The  unemployment  rates  for  Oconee  and  Anderson  Counties  were each
approximately  13% for March 2010 compared with 14% and 12%,  respectively,  for
March 31,  2009.  Worsening of this  condition or a prolonged  period at or near
current levels,  significant  increases in prices for fuel and food,  continuing
declines in the 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 our 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 was $536 for the first  quarter  of 2010,  compared
with $571 for the first quarter of 2009.  Service charges on deposit accounts in
the 2010  period  were $301  representing  a decrease of $22 from the prior year
period. Debit card transaction fees for the 2010 period decreased by $4 from the
2009  amount.  Other  income  for the 2010  period was $7 less than for the 2009
period.  These  decreases are the result of lower volumes of chargeable  account
activity by our customers.

Noninterest Expenses

         Noninterest  expenses  were  $2,485  for the  first  quarter  of  2010,
compared with $2,097 for the first quarter of 2009,  representing an increase of
$388 or 18.5%.  Salaries and  employee  benefits  decreased by $62, or 5.2%,  to
$1,119.  We have chosen not to hire  replacements  for some departing  employees
until general economic conditions begin to improve.

         FDIC insurance  expense  increased to $398 for the 2010 period from $70
for the 2009 period due to significant  changes in the FDIC's  assessment  bases
and the rates  applied.  Expenses  related to FDIC  insurance  have increased in
recent  periods due to a higher  assessment  base,  increases in the  assessment
rate,  and  special   assessments  imposed  by  the  Federal  Deposit  Insurance
Corporation.  We believe that future deposit  insurance  expenses will be higher
than we experienced previously.

         Income tax expense for the first quarter of 2010  decreased by $76 from
the amount for the same  period of 2009 due to lower net  income  before  income


                                       19
<PAGE>

taxes  and  proportionally  higher  amounts  of  tax-exempt  investment  income.
Tax-exempt  interest  income was 88.8% of income before income taxes in the 2010
period compared with 41.2% of income before income taxes for the 2009 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. We manage both assets and liabilities to achieve appropriate levels
of liquidity.  Cash and short-term  investments are our 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 our
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  primary  sources  of  funds  for our  credit
activities.  We also have significant  amounts of credit  availability under our
FHLB lines of credit.

         As of March 31, 2010,  the ratio of loans to total  deposits was 56.9%,
compared with 61.2% as of December 31, 2009. Total deposits as of March 31, 2010
were $469,771, an increase of $33,123 or 7.6% over the amount as of December 31,
2009.  Management believes that we have liquidity sources sufficient to meet our
operating needs.

Capital Resources

         Our capital base has increased by $1,056 since December 31, 2009 as the
result of net income of $207 for the first  three  months of 2010,  plus an $871
change in net unrealized gains on available-for-sale securities, net of deferred
income tax effects,  and $17 from the exercise of employee stock  options,  less
$39 cash dividends paid on our preferred stock.

         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,  2010 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 ............     14.2%       15.4%        8.5%
Community First Bank ......................     12.6%       13.9%        7.5%
Minimum "well-capitalized" requirement ....      6.0%       10.0%        5.0%
Minimum requirement .......................      4.0%        8.0%        4.0%

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:

                                                 March 31, 2010
                                                  (Dollars in
                                                  thousands)
                                                  ----------
Loan commitments ..............................     $ 27,775
Standby letters of credit .....................          823

                                       20
<PAGE>

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, 2010.

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.





                                       21
<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 6. - Exhibits

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

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





                                       22
<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, 2010                        /s/ Frederick D. Shepherd, Jr.
-----------------                  ---------------------------------------------
    Date                            Frederick D. Shepherd, Jr., Chief Executive
                                    Officer and Chief Financial Officer



                                       23
<PAGE>


                                  EXHIBIT INDEX


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

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







                                       24