10KSB

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-KSB

(Mark One)

x Annual Report under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2004

or

¨ Transition Report under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from              to             

Commission file no. 33-76644

COMMUNITYCORP

(Name of Small Business Issuer in Its Charter)

South Carolina	57-1019001
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
1100 N. Jefferies Blvd. Walterboro, South Carolina	29488
(Address of Principal Executive Offices)	(Zip Code)

(843) 549-2265

Issuer’s Telephone Number, Including Area Code

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 past 90 days.    Yes  x    No  ¨

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-K in this form, and no disclosure will be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.  ¨

The issuer’s revenues for its most recent fiscal year were $7,409,768.

The aggregate market value of the voting stock held by non-affiliates of the registrant as of March 14, 2005 was $13,529,175. This calculation is based upon $55, the last trade price of the common stock of which the Company is aware. There is no active trading market for the common stock and trades are limited and sporadic.

There were 245,985 shares of the Company’s common stock issued and outstanding as of the record date, March 14, 2005.

Transitional Small Business Disclosure Format. (Check one):    Yes  x    No  ¨

DOCUMENTS INCORPORATED BY REFERENCE

The Company’s 2004 Annual Report to Shareholders - Part II.

Portions of the Company’s Proxy Statement for the 2005 Annual Meeting of Shareholders - Part III.

PART I

FORWARD-LOOKING STATEMENTS

This Report contains statements which constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are based on many assumptions and estimates and are not guarantees of future performance. Our actual results may differ materially from those projected in any forward-looking statements, as they will depend on many factors about which we are unsure, including many factors which are beyond our control. The words “may,” “would,” “could,” “will,” “expect,” “anticipate,” “believe,” “intend,” “plan,” and “estimate,” as well as similar expressions, are meant to identify such forward-looking statements. Potential risks and uncertainties include, but are not limited to:

• significant increases in competitive pressure in the banking and financial services industries;

• changes in the interest rate environment which could reduce anticipated or actual margins;

• changes in political conditions or the legislative or regulatory environment;

• general economic conditions, either nationally or regionally and especially in primary service area, becoming less favorable than expected resulting in, among other things, a deterioration in credit quality;

• changes occurring in business conditions and inflation;

• changes in technology;

• changes in monetary and tax policies;

• changes in the securities markets; and

• other risks and uncertainties detailed from time to time in our filings with the Securities and Exchange Commission.

Item 1. Description of Business

General

Communitycorp was organized in 1995 to serve as a bank holding company for Bank of Walterboro. The bank commenced business on May 1, 1989 as a South Carolina state-chartered bank headquartered in Walterboro, South Carolina. The principal business activity of the Company is to provide banking services to domestic markets, principally in Colleton County, Jasper County and Northern Charleston County, South Carolina. The Company opened an additional branch in 2004 in Ridgeland, South Carolina.

Our primary source of revenue is interest income and fees, which we earn by lending and investing our capital and the funds which are held on deposit. Because loans generally earn higher rates of interest than investments, the bank seeks to employ as many of its deposit funds as possible in the form of loans to individuals and businesses. To ensure sufficient liquidity, we also maintain a portion of the Bank’s deposits in cash, government securities, deposits with other financial institutions, and overnight loans of excess reserves (known as “federal funds sold”) to correspondent banks. The revenue which the bank earns (prior to deducting its overhead expenses) is essentially a function of the amount of the Bank’s loans and deposits, as well as the profit margin (“interest spread”) and fee income.

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Marketing Focus

Our bank primarily serves the city of Walterboro and the surrounding area of Colleton County, South Carolina. The bank’s extended market area also includes the north side of Charleston County, South Carolina where the Ravenel branch is located and Jasper County where the Ridgeland branch is located. The Bank strives to maintain its business in these market areas.

Banking Services

The bank strives to provide its customers with the breadth of products and services comparable to those offered by large regional banks, while maintaining the quick response and personal service of a locally owned and managed bank. We offer a full range of deposit services and originate commercial and personal loans.

• Deposit Services. The bank offers a full range of deposit services that are typically available in most banks and savings and loan associations, including checking accounts, NOW accounts, savings accounts, and other time deposits of various types, ranging from daily money market accounts to longer-term certificates of deposit. The transaction accounts and time certificates are tailored to our principal market area at rates competitive to those offered by other banks in the area. In addition, we offer certain retirement account services, such as Individual Retirement Accounts (IRAs). All deposit accounts are insured by the Federal Deposit Insurance Corporation (the “FDIC”) up to the maximum amount allowed by law. The bank solicits these accounts from individuals, businesses, associations and organizations, and governmental authorities.

• Loan Products. The bank offers a full range of commercial and personal loans. Commercial loans include both secured and unsecured loans for working capital (including loans secured by inventory and accounts receivable), business expansion (including acquisition of real estate and improvements), and purchase of equipment and machinery. Consumer loans include equity lines of credit and secured and unsecured loans for financing automobiles, home improvements, education, and personal investments. The bank also makes real estate construction and acquisition loans. The bank’s lending activities are subject to a variety of lending limits imposed by federal law. While differing limits apply in certain circumstances based on the type of loan or the nature of the borrower (including the borrower’s relationship to us), in general we are subject to a loans-to-one-borrower limit of an amount equal to 15% of the bank’s unimpaired capital and surplus. We may not make any loans to any director, officer, employee, or 10% shareholder of the bank unless the loan is approved by our board of directors and is made on terms not more favorable to such a person than would be available to a person not affiliated with us.

• Other Services. Other bank services include cash management services, safe deposit boxes, travelers checks, direct deposit of payroll and social security checks, and automatic drafts for various accounts. The bank is associated with Honor and Plus networks of automated teller machines that may be used by our customers throughout South Carolina and other regions. The bank also offers VISA credit card services through a correspondent bank as an agent for us. The Bank offers an Internet banking product accessible via the Bank’s custom website at www.bankofwalterboro.com.

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Competition

Banks generally compete with other financial institutions through the selection of banking products and services offered, the pricing of services, the level of service provided, the convenience and availability of services, and the degree of expertise and the personal manner in which services are offered. South Carolina law permits statewide branching by banks and savings institutions, and many financial institutions in the state have branch networks. Consequently, commercial banking in South Carolina is highly competitive. As of December 31, 2004, there were approximately five commercial banks, two savings and loan institutions, and one credit union in the same area as Bank of Walterboro. Many large banking organizations currently operate in the Bank’s market area, several of which are controlled by out-of-state ownership. In addition, competition between commercial banks and thrift institutions (savings institutions and credit unions) has been intensified significantly by the elimination of many previous distinctions between the various types of financial institutions and the expanded powers and increased activity of thrift institutions in areas of banking which previously had been the sole domain of commercial banks. Recent legislation, together with other regulatory changes by the primary regulators of the various financial institutions, has resulted in almost total elimination of practical distinctions between a commercial bank and a thrift institution. Consequently, competition among financial institutions of all types is largely unlimited with respect to legal authority to provide most financial services.

SUPERVISION AND REGULATION

Both the company and the bank are subject to extensive state and federal banking laws and regulations which impose specific requirements or restrictions on and provide for general regulatory oversight of virtually all aspects of operations. These laws and regulations are generally intended to protect depositors, not shareholders. The following summary is qualified by reference to the statutory and regulatory provisions discussed. Changes in applicable laws or regulations may have a material effect on our business and prospects. Beginning with the enactment of the Financial Institution Report Recovery and Enforcement Act in 1989 and following with the FDIC Improvement Act in 1991, numerous additional regulatory requirements have been placed on the banking industry in the past several years, and additional changes have been proposed. Our operations may be affected by legislative changes and the policies of various regulatory authorities. We cannot predict the effect that fiscal or monetary policies, economic control, or new federal or state legislation may have on our business and earnings in the future.

Gramm-Leach-Bliley Act

On November 4, 1999, the U.S. Senate and House of Representatives each passed the Gramm-Leach-Bliley Act, previously known as the Financial Services Modernization Act of 1999. The Act was signed into law on November 12, 1999. Among other things, the Act repeals the restrictions on banks affiliating with securities firms contained in sections 20 and 32 of the Glass-Steagall Act. The Act also permits bank holding companies to engage in a statutorily provided list of financial activities, including insurance and securities underwriting and agency activities, merchant banking, and insurance company portfolio investment activities. The Act also authorizes activities that are “complementary” to financial activities.

The Act is intended to grant to community banks certain powers as a matter of right that larger institutions have accumulated on an ad hoc basis. Nevertheless, the Act may have the result of increasing the amount of competition that we face from larger institutions and other types of companies. In fact, it is not possible to predict the full effect that the Act will have on us. From time to time other changes are proposed to laws affecting the Banking industry, and these changes could have a material effect on our business and prospects. We cannot predict the nature or the extent of the effect on our business and earnings of fiscal or monetary policies, economic controls, or new federal or state legislation.

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SUPERVISION AND REGULATION (continued)

Sarbanes-Oxley Act

The Sarbanes-Oxley Act was signed into law on July 30, 2002, and mandated extensive reforms and requirements for public companies. The SEC has adopted extensive new regulations pursuant to the requirements of the Sarbanes-Oxley Act. The Sarbanes-Oxley Act and the SEC’s new regulations have increased the Company’s cost of doing business, particularly its fees for audit services and legal services, and the law and regulations are expected to continue to do so. However, the Company does not believe that it will be affected by Sarbanes-Oxley and the new SEC regulations in ways that are materially different or onerous than those of other public companies of similar size and in similar businesses

USA Patriot Act

Under the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act, commonly referred to as the “USA Patriot Act” or the “Patriot Act”, financial institutions are subject to prohibitions against specified financial transactions and account relationships, as well as enhanced due diligence standards intended to detect, and prevent, the use of the United States financial system for money laundering and terrorist financing activities. The Patriot Act requires financial institutions, including banks, to establish anti-money laundering programs, including employee training and independent audit requirements, meet minimum standards specified by the act, follow minimum standards for customer identification and maintenance of customer identification records, and regularly compare customer lists against lists of suspected terrorists, terrorist organizations and money launderers. The costs or other effects of the compliance burdens imposed by the Patriot Act or future anti-terrorist, homeland security or anti-money laundering legislation or regulations cannot be predicted with certainty.

Communitycorp

Because it owns the outstanding capital stock of the bank, the company is a bank holding company under the federal Bank Holding Company Act of 1956 and the South Carolina Banking and Branching Efficiency Act.

The Bank Holding Company Act. Under the Bank Holding Company Act, the company is subject to periodic examination by the Federal Reserve and required to file periodic reports of its operations and any additional information that the Federal Reserve may require. Our activities at the bank and holding company level are limited to:

• banking and managing or controlling banks;

• furnishing services to or performing services for its subsidiaries; and

• engaging in other activities that the Federal Reserve determines to be so closely related to banking

• and managing or controlling banks as to be a proper incident thereto.

Investments, Control, and Activities. With certain limited exceptions, the Bank Holding Company Act requires every bank holding company to obtain the prior approval of the Federal Reserve before:

• acquiring substantially all the assets of any bank;

• acquiring direct or indirect ownership or control of any voting shares of any bank if after the acquisition it would own or control more than 5% of the voting shares of such bank (unless it already owns or controls the majority of such shares); or

• merging or consolidating with another bank holding company.

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SUPERVISION AND REGULATION (continued)

Communitycorp (continued)

In addition, and subject to certain exceptions, the Bank Holding Company Act and the Change in Bank Control Act, together with regulations thereunder, require Federal Reserve approval prior to any person or company acquiring “control” of a bank holding company. Control is conclusively presumed to exist if an individual or company acquires 25% or more of any class of voting securities of a bank holding company. Control is reputably presumed to exist if a person acquires 10% or more, but less than 25%, of any class of voting securities and either the company has registered securities under Section 12 of the Securities Exchange Act of 1934 or no other person owns a greater percentage of that class of voting securities immediately after the transaction. The company’s common stock is registered under the Securities Exchange Act of 1934. The regulations provide a procedure for challenge of the rebutable control presumption.

Under the Bank Holding Company Act, a bank holding company is generally prohibited from engaging in, or acquiring direct or indirect control of more than 5% of the voting shares of any company engaged in nonbanking activities unless the Federal Reserve Board, by order or regulation has found those activities to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. Some of the activities that the Federal Reserve Board has determined by regulation to be proper incidents to the business of a bank holding company include:

• making or servicing loans and certain types of leases;

• engaging in certain insurance and discount brokerage activities;

• performing certain data processing services;

• acting in certain circumstances as a fiduciary or investment or financial adviser;

• owning savings associations; and

• making investments in certain corporations or projects designed primarily to promote community welfare.

The Federal Reserve Board imposes certain capital requirements on the company under the Bank Holding Company Act, including a minimum leverage ratio and a minimum ratio of “qualifying” capital to risk-weighted assets. These requirements are described below under “Capital Regulations.” Subject to its capital requirements and certain other restrictions, the company is able to borrow money to make a capital contribution to the bank, and these loans may be repaid from dividends paid from the bank to the company. Our ability to pay dividends is subject to regulatory restrictions as described below in “Bank of Walterboro – Dividends.” The company is also able to raise capital for contribution to the bank by issuing securities without having to receive regulatory approval, subject to compliance with federal and state securities laws.

Source of Strength; Cross-Guarantee. In accordance with Federal Reserve Board policy, the company is expected to act as a source of financial strength to the bank and to commit resources to support the bank in circumstances in which the company might not otherwise do so. Under the Bank Holding Company Act, the Federal Reserve Board may require a bank holding company to terminate any activity or relinquish control of a nonbank subsidiary, other than a nonbank subsidiary of a bank, upon the Federal Reserve Board’s determination that such activity or control constitutes a serious risk to the financial soundness or stability of any subsidiary depository institution of the bank’s holding company. Further, federal bank regulatory authorities have additional discretion to require a bank holding company to divest itself of any bank or nonbank subsidiary if the agency determines that divestiture may aid the depository institution’s financial condition.

South Carolina State Regulation. As a bank holding company registered under the South Carolina Banking and Branching Efficiency Act, we are subject to limitations on sale or merger and to regulation by the South Carolina Board of Financial Institutions. We must receive the Board’s approval prior to engaging in the acquisition of banking or nonbanking institutions or assets, and we must file periodic reports with respect to our financial condition and operations, management, and intercompany relationships between the company and its subsidiaries.

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SUPERVISION AND REGULATION (continued)

Bank of Walterboro

The bank operates as a South Carolina state bank and is subject to examination by the South Carolina Board of Financial Institutions. Deposits in the bank are insured by the FDIC up to a maximum amount, which is generally $100,000 per depositor subject to aggregation rules.

The South Carolina Board of Financial Institutions and the FDIC regulate or monitor virtually all areas of the bank’s operations, including:

• security devices and procedures;

• adequacy of capitalization and loss reserves;

• loans;

• investments;

• borrowings;

• deposits;

• mergers;

• issuances of securities;

• payment of dividends;

• interest rates payable on deposits;

• interest rates or fees chargeable on loans;

• establishment of branches;

• corporate reorganizations;

• maintenance of books and records; and

• adequacy of staff training to carry on safe lending and deposit gathering practices.

The South Carolina Board of Financial Institutions requires the bank to maintain specified capital ratios and imposes limitations on the bank’s aggregate investment in real estate, bank premises, and furniture and fixtures. The FDIC requires the bank to prepare quarterly reports on the bank’s financial condition and to conduct an annual audit of its financial affairs in compliance with its minimum standards and procedures.

Under the FDIC Improvement Act, all insured institutions must undergo regular on site examinations by their appropriate banking agency. The cost of examinations of insured depository institutions and any affiliates may be assessed by the appropriate agency against each institution or affiliate as it deems necessary or appropriate. Insured institutions are required to submit annual reports to the FDIC, their federal regulatory agency, and their state supervisor when applicable. The FDIC Improvement Act directs the FDIC to develop a method for insured depository institutions to provide supplemental disclosure of the estimated fair market value of assets and liabilities, to the extent feasible and practicable, in any balance sheet, financial statement, report of condition or any other report of any insured depository institution. The FDIC Improvement Act also requires the federal banking regulatory agencies to prescribe, by regulation, standards for all insured depository institutions and depository institution holding companies relating, among other things, to the following:

• internal controls;

• information systems and audit systems;

• loan documentation;

• credit underwriting;

• interest rate risk exposure; and

• asset quality.

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SUPERVISION AND REGULATION (continued)

Bank of Walterboro (continued)

Deposit Insurance. Because the Bank’s deposits are insured by the Bank Insurance Fund (BIF), the Bank is subject to insurance assessments imposed by the FDIC. Since January 1, 1997, the assessments imposed on all FDIC deposits for deposit insurance have an effective rate ranging from 0 to 27 basis points per $100 of insured deposits, depending on the institution’s capital position and other supervisory factors. However, because legislation enacted in 1996 requires that both SAIF-insured and BIF-insured deposits pay a pro rata portion of the interest due on those obligations issued by the Financing Corporation (“FICO”). To cover those obligations, during 2002, the FDIC assessed BIF-insured deposits a range of 1.82 to 1.70 basis points per $100 of deposits, and also assessed SAIF-insured deposits a range of 1.82 to 1.70 basis points per $100 of deposits. Currently, the FDIC is assessing BIF-insured and SAIF-insured deposits each 1.68 basis points per $100 of deposits to cover the interest on FICO obligations. The FICO assessment is based on deposit balances and is adjusted quarterly to reflect changes in the assessment bases of the respective funds based on quarterly Call Report and Thrift Financial Report submissions.

Transactions With Affiliates and Insiders. The bank is subject to the provisions of Section 23A of the Federal Reserve Act, which places limits on the amount of loans or extensions of credit to, or investments in, or certain other transactions with, affiliates and on the amount of advances to third parties collateralized by the securities or obligations of affiliates. The aggregate of all covered transactions is limited in amount, as to any one affiliate, to 10% of the bank’s capital and surplus and, as to all affiliates combined, to 20% of the bank ‘s capital and surplus. Furthermore, within the foregoing limitations as to amount, each covered transaction must meet specified collateral requirements. Compliance is also required with certain provisions designed to avoid the taking of low quality assets.

The bank is also subject to the provisions of Section 23B of the Federal Reserve Act which, among other things, prohibits an institution from engaging in certain transactions with certain affiliates unless the transactions are on terms substantially the same, or at least as favorable to such institution or its subsidiaries, as those prevailing at the time for comparable transactions with nonaffiliated companies. The bank is subject to certain restrictions on extensions of credit to executive officers, directors, certain principal shareholders, and their related interests. Such extensions of credit (i) must be made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with third parties and (ii) must not involve more than the normal risk of repayment or present other unfavorable features.

Dividends. The bank is subject to regulatory restrictions on the payment of dividends, including a prohibition of payment of dividends from its capital. All dividends must be paid out of the undivided profits then on hand, after deducting expenses, including losses and bad debts. In addition, under the FDIC Improvement Act, the bank may not pay a dividend if, after paying the dividend, the bank would be undercapitalized. See “Capital Regulations” below.

Branching. Under current South Carolina law, we may open bank branch offices throughout South Carolina with the prior approval of the South Carolina Board of Financial Institutions. In addition, with prior regulatory approval, the bank may acquire existing banking operations in South Carolina. Furthermore, federal legislation has recently been passed which permits interstate branching. The new law permits out-of-state acquisitions by bank holding companies, interstate branching by banks if allowed by state law, interstate merging by banks, and de novo branching by banks if allowed by state law. North Carolina has passed legislation that, in effect, prohibits de novo branching by South Carolina banks into North Carolina.

Community Reinvestment Act. The Community Reinvestment Act requires that, in connection with examinations of financial institutions within their respective jurisdictions, a financial institution’s primary federal regulator (this is the FDIC for our bank) shall evaluate the record of each financial institution in meeting the credit needs of its local community, including low and moderate income neighborhoods. These factors are also considered in evaluating mergers, acquisitions, and applications to open a branch or facility. Failure to adequately meet these criteria could impose additional requirements and limitations on the bank.

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SUPERVISION AND REGULATION (continued)

Bank of Walterboro (continued)

Other Regulations. Interest and other charges collected or contracted for by the bank are subject to state usury laws and federal laws concerning interest rates. The bank’s loan operations are also subject to federal laws applicable to credit transactions, such as:

• the federal Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers;

• the Home Mortgage Disclosure Act of 1975, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves;

• the Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit;

• the Fair Credit Reporting Act of 1978, governing the use and provision of information to credit reporting agencies;

• the Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies; and

• the rules and regulations of the various federal agencies charged with the responsibility of implementing such federal laws.

The deposit operations of the bank also are subject to:

• the Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; and

• the Electronic Funds Transfer Act and Regulation E issued by the Federal Reserve Board to implement that act, which governs automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services.

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SUPERVISION AND REGULATION (continued)

Bank of Walterboro (continued)

Capital Regulations. The federal bank regulatory authorities have adopted risk-based capital guidelines for banks and bank holding companies that are designed to make regulatory capital requirements more sensitive to differences in risk profiles among banks and bank holding companies and account for off-balance sheet items. The guidelines are minimums, and the federal regulators have noted that banks and bank holding companies contemplating significant expansion programs should not allow expansion to diminish their capital ratios and should maintain ratios in excess of the minimums. We have not received any notice indicating that either the company or the bank is subject to higher capital requirements. The current guidelines require all bank holding companies and federally regulated banks to maintain a minimum risk-based total capital ratio equal to 8%, of which at least 4% must be Tier 1 capital. Tier 1 capital includes common shareholders’ equity, qualifying perpetual preferred stock, and minority interests in equity accounts of consolidated subsidiaries, but excludes goodwill and most other intangibles and excludes the allowance for loan and lease losses. Tier 2 capital includes the excess of any preferred stock not included in Tier 1 capital, mandatory convertible securities, hybrid capital instruments, subordinated debt and intermediate term-preferred stock, and general reserves for loan and lease losses up to 1.25% of risk-weighted assets.

Under these guidelines, banks’ and bank holding companies’ assets are given risk-weights of 0%, 20%, 50%, or 100%. In addition, certain off-balance sheet items are given credit conversion factors to convert them to asset equivalent amounts to which an appropriate risk-weight applies. These computations result in the total risk-weighted assets. Most loans are assigned to the 100% risk category, except for first mortgage loans fully secured by residential property and, under certain circumstances, residential construction loans, both of which carry a 50% rating. Most investment securities are assigned to the 20% category, except for municipal or state revenue bonds, which have a 50% rating, and direct obligations of or obligations guaranteed by the United States Treasury or United States Government agencies, which have a 0% rating.

The federal bank regulatory authorities have also implemented a leverage ratio, which is equal to Tier 1 capital as a percentage of average total assets less intangibles, to be used as a supplement to the risk-based guidelines. The principal objective of the leverage ratio is to place a constraint on the maximum degree to which a bank holding company may leverage its equity capital base. The minimum required leverage ratio for top-rated institutions is 3%, but most institutions are required to maintain an additional cushion of at least 100 to 200 basis points.

The FDIC Improvement Act established a new capital-based regulatory scheme designed to promote early intervention for troubled banks which requires the FDIC to choose the least expensive resolution of bank failures. The new capital-based regulatory framework contains five categories of compliance with regulatory capital requirements, including “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized,” and “critically undercapitalized.” To qualify as a “well capitalized” institution, a bank must have a leverage ratio of no less than 5%, a Tier 1 risk-based ratio of no less than 6%, and a total risk-based capital ratio of no less than 10%, and the bank must not be under any order or directive from the appropriate regulatory agency to meet and maintain a specific capital level. Currently, we qualify as “well capitalized.”

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SUPERVISION AND REGULATION (continued)

Bank of Walterboro (continued)

Under the FDIC Improvement Act regulations, the applicable agency can treat an institution as if it were in the next lower category if the agency determines (after notice and an opportunity for hearing) that the institution is in an unsafe or unsound condition or is engaging in an unsafe or unsound practice. The degree of regulatory scrutiny of a financial institution increases, and the permissible activities of the institution decreases, as it moves downward through the capital categories. Institutions that fall into one of the three undercapitalized categories may be required to do some or all of the following:

• submit a capital restoration plan;

• raise additional capital;

• restrict their growth, deposit interest rates, and other activities;

• improve their management;

• eliminate management fees; or

• divest themselves of all or a part of their operations.

Bank holding companies controlling financial institutions can be called upon to boost the institutions’ capital and to partially guarantee the institutions’ performance under their capital restoration plans.

These capital guidelines can affect us in several ways. If we grow at a rapid pace, our capital may be depleted too quickly, and a capital infusion from the holding company may be necessary which could impact our ability to pay dividends. Our capital levels currently are adequate; however, rapid growth, poor loan portfolio performance, poor earnings performance, or a combination of these factors could change our capital position in a relatively short period of time.

Failure to meet these capital requirements would mean that a bank would be required to develop and file a plan with its primary federal banking regulator describing the means and a schedule for achieving the minimum capital requirements. In addition, such a bank would generally not receive regulatory approval of any application that requires the consideration of capital adequacy, such as a branch or merger application, unless the bank could demonstrate a reasonable plan to meet the capital requirement within a reasonable period of time.

Enforcement Powers. The Financial Institution Report Recovery and Enforcement Act expanded and increased civil and criminal penalties available for use by the federal regulatory agencies against depository institutions and certain “institution-affiliated parties.” Institution-affiliated parties primarily include management, employees, and agents of a financial institution, as well as independent contractors and consultants such as attorneys and accountants and others who participate in the conduct of the financial institution’s affairs. These practices can include the failure of an institution to timely file required reports or the filing of false or misleading information or the submission of inaccurate reports. Civil penalties may be as high as $1,000,000 a day for such violations. Criminal penalties for some financial institution crimes have been increased to 20 years. In addition, regulators are provided with greater flexibility to commence enforcement actions against institutions and institution-affiliated parties. Possible enforcement actions include the termination of deposit insurance. Furthermore, banking agencies’ power to issue cease-and-desist orders were expanded. Such orders may, among other things, require affirmative action to correct any harm resulting from a violation or practice, including restitution, reimbursement, indemnification or guarantees against loss. A financial institution may also be ordered to restrict its growth, dispose of certain assets, rescind agreements or contracts, or take other actions as determined by the ordering agency to be appropriate.

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SUPERVISION AND REGULATION (continued)

Bank of Walterboro (continued)

Effect of Governmental Monetary Policies. Our earnings are affected by domestic economic conditions and the monetary and fiscal policies of the United States government and its agencies. The Federal Reserve Bank’s monetary policies have had, and are likely to continue to have, an important impact on the operating results of commercial banks through its power to implement national monetary policy in order, among other things, to curb inflation or combat a recession. The monetary policies of the Federal Reserve Board have major effects upon the levels of bank loans, investments and deposits through its open market operations in United States government securities and through its regulation of the discount rate on borrowings of member banks and the reserve requirements against member bank deposits. It is not possible to predict the nature or impact of future changes in monetary and fiscal policies.

Legislative Proposals. Proposed legislation, which could significantly affect the business of banking, is introduced in Congress from time to time. Management of the Company cannot predict the future course of such legislative proposals or their impact on the Company and the Bank should they be adopted.

Employees

As of December 31, 2004, the Bank had forty full-time and seven part-time employees. The Company had no employees.

Item 2. Description of Property

The Company owns a 5,400 square foot facility located at 1100 North Jefferies Boulevard, Walterboro, South Carolina, which is its corporate banking office. Construction on this facility was completed in 1989 at a total cost, including land, furniture and fixtures of $775,345. All corporate headquarters as well as normal banking services and operations are housed at this location. The facility has a second floor which would allow for expansion consisting of 2,700 square feet. The existing building was built to adequately serve the anticipated needs of the Bank for the foreseeable future.

The Company opened its second banking location at 6225 Savannah Highway, Ravenel, South Carolina. This 3,622 square foot facility opened for business on October 6, 1997 and provides traditional banking services. The total cost of this facility, including land, and furniture and fixtures was $930,344.

The Company acquired a 5500 square foot building at 110 Forest Hills Road in Walterboro, South Carolina on November 16, 2000 and began using it as a branch location in 2001. The total cost of the facility, including land, was $485,000.

The Company opened its fourth banking location at 398 East Main street Ridgeland, South Carolina. This 3,800 square foot facility opened for business on December 6, 2004 and provides traditional banking services. The total cost of this facility, including land, and furniture and fixtures was $1,105,257.

Item 3. Legal Proceedings

The Company may from time to time be a party to various legal proceedings arising in the ordinary course of business, but management of the Company is not aware of any pending or threatened litigation or unasserted claims or assessments that are expected to result in losses, if any, that would be material to the Company’s business and operations.

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Part II

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

No matter was submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this report.

Item 5. Market for Common Equity and Related Stockholder Matters

In response to this Item, the information contained on page 50 of the Company’s Annual Report to Shareholders for the year ended December 31, 2004 is incorporated herein by reference.

Item 6. Management’s Discussion and Analysis or Plan of Operation

In response to this Item, the information contained on pages 8 through 25 of the Company’s Annual Report to Shareholders for the year ended December 31, 2004 is incorporated herein by reference.

Item 7. Financial Statements

In response to this Item, the information contained on pages 26 through 48 of the Company’s Annual Report to Shareholders for the year ended December 31, 2004 is incorporated herein by reference.

Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

N/A

Item 8A. Control and Procedures

Based on the evaluation required by 17 C.F.R. Section 240.13a-15(B) of the Company’s disclosure controls and procedures (as defined in 17 C.F.R. Sections 240.13a-15(e)), the Company’s chief executive officer and chief financial officer concluded that the effectiveness of such controls and procedures, as of the end of the year covered by this annual report, was adequate.

No disclosure is required under 17 C.F.R. Section 228.308

Item 8B. Other Information

No disclosure is required.

13

Part III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act

In response to this Item, the information contained on pages 2 through 3 of the company’s Proxy Statement for the Annual Meeting of Shareholders to be held on April 27, 2005 is incorporated herein by reference.

Item 10. Executive Compensation

In response to this Item, the information contained on page 7 of the Company’s Proxy Statement for the Annual Meeting of Shareholders to be held on April 27, 2005 is incorporated herein by reference.

Item 11. Security Ownership of Certain Beneficial Owners and Management

In response to this Item, the information contained on page 6 of the Company’s Proxy Statement for the Annual Meeting of Shareholders to be held on April 27, 2005 is incorporated herein by reference.

Item 12. Certain Relationships and Related Transactions

In response to this Item, the information contained on page 5 of the Company’s Proxy Statement for the Annual Meeting of Shareholders to be held on April 27, 2005 is incorporated herein by reference.

Item 13. Exhibits, List and Reports on Form 8-K

(a) The following documents are filed as part of this report:

13 Annual Report of Shareholders for the year ended December 31, 2004 (Incorporated by reference)

21.1 Subsidiaries of the Company

31.1 Rule 15d-14(a) Certifications

31.2 Rule 15d-14(a) Certifications

32 Section 1350 Certifications

(b) Reports on Form 8-K

No reports on Form 8-K were filed during the fourth quarter of 2004.

Item 14. Principal Accountant Fees and Services.

In response to this Item, the information contained on page 4 of the Company’s Proxy Statement for the Annual Meeting of Shareholders to be held on April 27, 2005 is incorporated herein by reference.

14

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	BANK OF WALTERBORO
Date: March 22, 2005	By:	/s/ W. Roger Crook
		W. Roger Crook.
		President and Chief Executive Officer

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints W. Roger Crook, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-KSB, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.

Signature	Title	Date
/s/ W. Roger Crook	President, Director (CEO)	March 22, 2005
W. Roger Crook
/s/ Gwendolyn P. Bunton	Vice President (CFO)	March 22, 2005
Gwendolyn P. Bunton
/s/ Peden B. McLeod	Director & Chairman of the Board	March 22, 2005
Peden B. McLeod
/s/ George W. Cone	Director & Corporate Secretary	March 22, 2005
George W. Cone
/s/ J. Barnwell Fishburne	Director	March 22, 2005
J. Barnwell Fishburne
/s/ Harry L. Hill	Director	March 22, 2005
Harry L. Hill
/s/ Steven D. Murdaugh	Director	March 22, 2005
Steven D. Murdaugh
/s/ Harold M. Robertson	Director	March 22, 2005
Harold M. Robertson

15

Index To Exhibits

Exhibit No.	Description
13	Annual Report of Shareholders for the year ended December 31, 2004 (Incorporated by reference)
21.1	Subsidiaries of the Company
31.1	Rule 15d-14(a) Certifications
31.2	Rule 15d-14(a) Certifications
32	Section 1350 Certifications

16

EX-13

Exhibit 13

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

Contents:
Shareholder Letter	2
Summary of Selected Financial Data	3
Financial Charts	4-7
Management’s Discussion and Analysis	8-25
Report of Independent Registered Public Accounting Firm	26
Consolidated Balance Sheets	27
Consolidated Statements of Income	28
Consolidated Statements of Changes in Shareholders’ Equity and Comprehensive Income	29
Consolidated Statements of Cash Flows	30
Notes to Consolidated Financial Statements	31-48
Directors, Officers and Staff	49
Corporate Data	50
Services	51

Member FDIC

COMMUNITYCORP

Dear Shareholder,

It is a pleasure to report the progress of Communitycorp and its subsidiary, Bank of Walterboro, during 2004. The Company continued to experience good growth in deposits and loans during the year. More detailed information follows, but we are pleased to report return on average assets of 1.29%, a sound capital to asset ratio of 9.13%, and reserve for loan losses of 1.75%.

Deposits at year-end were $124,911,327, an increase of $12,327,501, or 10.95%, over 2003 year-end. Net loans increased from $78,899,252 to $81,549,925, an increase of $2,650,673, or 3.36%. The reserve for loan losses increased from a December 31, 2003 balance of $1,270,062 to $1,456,326 or 1.75% of gross loans. Total assets increased from $124,755,498 to a December 31, 2004 total of $138,407,723 an increase of $13,652,225, or 10.94%.

Earnings increased in 2004 for the Company with net income of $1,655,257, an increase of $230,216, or 16.16%, more than 2003 earnings of $1,425,041. Earnings of $6.69 per share increased over $5.46 per share in 2003. Our net interest margin increased from 4.04% in 2003 to 4.32% in 2004.

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

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

We invite and encourage you to attend our Annual Meeting on Wednesday, April 27, 2005.

Very truly yours,

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

2

COMMUNITYCORP

SELECTED FINANCIAL DATA

The following table sets forth certain selected financial data concerning the Company. The selected financial data has been derived from the consolidated financial statements which should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Year Ended December 31, (Dollars in thousands, except per share)	2004			2003			2002			2001			2000
Results of Operations:
Interest income	$	6,831		$	6,537		$	7,000		$	7,897		$	7,511
Interest expense		1,607			1,906			2,640			4,030			3,579
Net interest income		5,224			4,631			4,360			3,867			3,932
Provision for loan losses		471			405			405			257			290
Net interest income after provision for loan losses		4,753			4,226			3,955			3,610			3,642
Other income		579			558			492			493			480
Other expense		2,875			2,706			2,224			2,183			1,974
Income before income taxes		2,457			2,078			2,223			1,920			2,148
Income tax expense		802			653			715			617			692
Net income	$	1,655		$	1,425		$	1,508		$	1,303		$	1,456
Balance Sheet Data:
Securities available-for-sale	$	25,310		$	16,495		$	12,661		$	11,343		$	18,867
Securities held-to-maturity		2,181			2,644			3,050			3,499			4,598
Allowance for loan losses		1,456			1,270			1,319			1,231			1,174
Net loans		81,550			78,899			73,856			70,128			66,621
Premises and equipment, net		3,441			2,517			2,169			2,013			2,160
Total assets		138,408			124,755			115,775			110,850			103,069
Noninterest-bearing deposits		16,532			13,952			9,304			9,230			9,800
Interest-bearing deposits		108,379			98,631			93,316			89,190			81,997
Total deposits		124,911			112,584			102,620			98,420			91,797
Short-term borrowings		390			450			400			560			530
Total liabilities		125,772			113,515			103,526			99,848			93,189
Total shareholders’ equity		12,636			11,240			12,249			11,002			9,880
Per Share Data:
Weighted-average common shares outstanding		247,446			261,221			276,473			280,330			283,194
Net income	$	6.69		$	5.46		$	5.46		$	4.65		$	5.14
Cash dividends paid	$	0.72		$	0.65		$	0.59		$	0.55		$	0.50
Period end book value	$	51.26		$	45.45		$	44.62		$	39.52		$	35.07
Return on Equity and Assets:
Return on average assets		1.29	%		1.18	%		1.31	%		1.18	%		1.30	%
Return on average equity		14.04	%		13.08	%		13.04	%		12.45	%		16.17	%
Equity to assets ratio		9.16	%		9.02	%		10.04	%		9.46	%		9.29	%
Dividend payout ratio		10.85	%		12.52	%		10.86	%		11.89	%		9.72	%

3

COMMUNITYCORP

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

GENERAL

Communitycorp is a South Carolina corporation organized on March 13, 1995 to be a bank holding company (the Company). The Company’s subsidiary, Bank of Walterboro, (the Bank) is a state-chartered commercial bank with four banking locations. The Bank’s main office and operations center is in Walterboro, South Carolina. In addition, the Bank also has branches in Ravenel, and Ridgeland, South Carolina. The Company’s primary market area includes Colleton, Jasper and Charleston Counties. Depository accounts are insured by the Federal Deposit Insurance Corporation up to the maximum amount permitted by law. The Bank, which received its charter on October 11, 1988 and opened for business on May 1, 1989, is dedicated to providing prompt, efficient, personal service to its customers. The Bank offers a full range of deposit services for individuals and businesses. Deposit products include checking accounts, savings accounts, certificates of deposit, money market accounts, and IRA’s.

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

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

As of December 31, 2004, the Company had forty full-time employees and seven part time employees in all offices.

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

CRITICAL ACCOUNTING POLICY

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

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

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

8

COMMUNITYCORP

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

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

RESULTS OF OPERATIONS

OVERVIEW

Net income for the year ended December 31, 2004 was $1,655,257 or $6.69 per share, compared to $1,425,041, or $5.46 per share, for the year ended December 31, 2003. The increase in net income for 2004 resulted primarily from the increase in interest income of $294,374 over the 2003 amount of $6,536,838. Total interest expense decreased $298,962 over the 2003 amount of $1,905,706. Net interest income increased $593,336 over the 2003 amount of $4,631,132, while noninterest income increased $20,411 over the 2003 amount of $558,145. For the year ended December 31, 2004 net interest margin increased from 4.04% in 2003 to 4.32% in 2004.

9

COMMUNITYCORP

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

NET INTEREST INCOME

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

Net interest income for 2004 was $5,224,468 compared to $4,631,132 for 2003, an increase of 12.81%. The increase was mainly attributable to the increase in the average balances of our earning assets and the impact of lower interest rates paid on our interest-bearing liabilities.

For 2004 average-earning assets totaled approximately $120,949,000 with an annualized average yield of 5.65% compared to $114,754,000 and 5.70%, respectively, for 2003. Average interest-bearing liabilities totaled approximately $101,590,000 with an annualized average cost of 1.58% for 2004 compared to $97,012,000 and 1.96%, respectively, for 2003.

Our net interest margin and net interest spread was 4.32% and 4.07% for 2004 compared to 4.04% and 3.74% respectively for 2003.

Our annualized yield on average earning assets declined 5 basis points for 2004 compared to 2003, while our annualized average cost of our interest-bearing liabilities declined 38 basis points for 2004 compared to 2003. These reductions were reflective of the declining interest rate environment during 2004.

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

Because loans often provide a higher yield than other types of earning assets, one of our goals it to maintain our loan portfolio as the largest component of total earning assets. Loans comprised approximately 66.03% and 67.71% of average earning assets for December 31, 2004 and 2003, respectively. Loan interest income for December 31, 2004 and 2003 was $5,877,205 and 5,742,205 respectively. The annualized average yield on loans was 7.36% and 7.39% for 2004 and 2003, respectively. Average balances of loans increased to approximately $79,865,000 during 2004, an increase of approximately $2,168,000 over the average of approximately $77,697,000 during 2003.

Investment securities averaged approximately $23,151,000 or 19.14% of average earning assets, for December 31, 2004 compared to approximately $17,029,000 or 14.83% of average earning assets, for the same period in 2003. Interest earned on investment securities amount to $717,620 for December 31, 2004, compared to $572,363 for the same period last year. Investment securities yielded 3.10% and 3.36% for the period ended December 31, 2004 and 2003, respectively.

Total interest expense for the period December 31, 2004 and 2003 was $1,606,744 and $1,905,706 respectively. The largest component of interest expense is interest on deposit accounts. Interest expense on deposit accounts was $1,605,442 and $1,904,900, for December 31, 2004 and 2003, respectively. The average balance of interest bearing deposits increased to approximately $101,268,000 during the period December 31, 2004 from approximately $96,642,000 during the same period last year. The annualized average cost of deposits was approximately 1.59% for the period December 31, 2004 compared to 1.97% for the same period in 2003.

For the year ended December 31, 2004 and 2003, the total annualized average cost of funds was 1.58% and 1.96%, respectively.

10

COMMUNITYCORP

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

NET INTEREST INCOME (continued)

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

Average Balances, Income, Expenses, and Rates

	2004							2003
(Dollars in thousands)	Average Balance			Income/ Expense		Yield/ Rate		Average Balance			Income/ Expense		Yield/ Rate
Assets:
Earning Assets:
Securities, taxable (1)	$	17,531		$	499	2.85	%	$	11,414		$	340	2.98	%
Securities, tax-exempt (1)		5,420			213	3.93			5,353			221	4.13
Nonmarketable equity securities		200			5	2.50			262			11	4.20
Federal funds sold		17,323			218	1.26			19,605			205	1.05
Time deposits with other banks		610			19	3.11			423			17	4.02
Loans (2)		79,865			5,877	7.36			77,697			5,742	7.39
Total earning assets		120,949			6,831	5.65			114,754			6,536	5.70
Cash and due from banks		4,261							3,469
Allowance for loan losses		(1,366	)						(1,298	)
Premises and equipment		2,778							2,262
Other assets		2,141							1,688
Total assets	$	128,763						$	120,875
Liabilities:
Interest-bearing liabilities:
Interest-bearing deposits	$	101,268			1,606	1.59	%	$	96,642			1,904	1.97	%
Short-term borrowings		322			1	0.31			370			1	0.27
Total interest-bearing liabilities		101,590			1,607	1.58			97,012			1,905	1.96
Noninterest-bearing deposits		14,918							11,680
Accrued interest and other liabilities		463							1,286
Shareholders’ equity		11,792							10,897
Total liabilities and shareholders’ equity	$	128,763						$	120,875
Net interest spread						4.07	%						3.74	%
Net interest income				$	5,224						$	4,631
Net interest margin						4.32	%						4.04	%

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

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

11

COMMUNITYCORP

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

NET INTEREST INCOME (continued)

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

Analysis of Changes in Net Interest Income

	2004 Compared With 2003												2003 Compared With 2002
	Variance Due to												Variance Due to
(Dollars in thousands)	Volume			Rate			Volume/ Rate			Total			Volume			Rate			Volume/ Rate			Total
Earning Assets
Securities, taxable	$	182		$	(15	)	$	(8	)	$	159		$	29		$	(127	)	$	(8	)	$	(106	)
Securities, tax-exempt		3			(11	)		—			(8	)		(14	)		(1	)		—			(15	)
Nonmarketable equity securities		(3	)		(4	)		1			(6	)		(4	)		(3	)		1			(6	)
Federal funds sold		(24	)		42			(5	)		13			10			(98	)		(3	)		(91	)
Time deposits with other banks		8			(4	)		(2	)		2			6			(3	)		(1	)		2
Loans		161			(25	)		(1	)		135			338			(553	)		(31	)		(246	)
Total interest income		327			(17	)		(15	)		295			365			(785	)		(42	)		(462	)
Interest-Bearing Liabilities
Interest-bearing deposits		89			(369	)		(18	)		(298	)		49			(765	)		(13	)		(729	)
Short-term borrowings		—			—			—			—			(1	)		(3	)		1			(3	)
Total interest expense		89			(369	)		(18	)		(298	)		48			(768	)		(12	)		(732	)
Net interest income	$	238		$	352		$	3		$	593		$	317		$	(17	)	$	(30	)	$	270

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

12

COMMUNITYCORP

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

NET INTEREST INCOME (continued)

The following table presents the Company’s rate sensitivity at each of the time intervals indicated as of December 31, 2004. The table may not be indicative of the Company’s rate sensitivity position at other points in time.

Interest Sensitivity Analysis

(Dollars in thousands)	Within Three Months			After Three Through Twelve Months			After One Through Five years			Greater Than Five Years or Non- Sensitive			Total
Assets
Earning Assets:
Federal funds sold and securities purchased under agreements to resell	$	19,046		$	—		$	—		$	—		$	19,046
Time deposits with other banks		499			—			—			—			499
Investment securities		300			606			20,243			6,647			27,796
Loans (1)		16,726			20,757			44,341			418			82,242
Total earning assets		36,571			21,363			64,584			7,065			129,583
Liabilities
Interest-bearing liabilities:
Interest-bearing deposits:
Demand deposits		27,152			—			—			—			27,152
Savings deposits		24,076			—			—			—			24,076
Time deposits		17,938			34,897			3,844			473			57,152
Total interest-bearing deposits		69,166			34,897			3,844			473			108,380
Short-term borrowings		390			—			—			—			390
Total interest-bearing deposits		69,556			34,897			3,844			473			108,770
Period gap	$	(32,985	)	$	(13,534	)	$	60,740		$	6,592
Cumulative gap	$	(32,985	)	$	(46,519	)	$	14,221		$	20,813
Ratio of cumulative gap to total earning assets		(25.46	)%		(35.90	)%		10.97	%		16.06	%

(1) Excludes nonaccrual loans.

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

13

COMMUNITYCORP

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

NET INTEREST INCOME (continued)

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

PROVISION AND ALLOWANCE FOR LOAN LOSSES

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

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

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

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

The allowance for loan losses was 1.75% and 1.58% of total loans on December 31, 2004 and 2003, respectively. While we experienced a significant decline in net charge-offs, nonperforming loans and potential problem loans in 2004 compared to 2003, the allowance for loan losses at December 31, 2004 is reflective of the results of our allowance model methodology. We monitor and evaluate the adequacy of the allowance and loss exposure in the loan portfolio by considering the borrowers’ financial conditions and other factors in the unallocated component of the allowance model methodology. Accordingly, we believe the allowance as of December 31, 2004 is adequate, based on our assessment of probable losses, and available facts and circumstances then prevailing.

14

COMMUNITYCORP

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

PROVISION AND ALLOWANCE FOR LOAN LOSSES (continued)

Allowance for Loan Losses

Year ended December 31,	2004			2003
Total loans outstanding at end of year	$	83,006,251		$	80,169,314
Average loans outstanding	$	79,864,534		$	77,697,588
Balance of allowance for loan losses at beginning of period	$	1,270,062		$	1,319,202
Loan losses:
Real estate - construction		—			—
Real estate - mortgage		—			—
Commercial and industrial		215,635			243,893
Consumer		111,811			242,893
Total loan losses		327,446			486,786
Recoveries of previous loan losses:
Real estate - construction		—			—
Real estate - mortgage		—			—
Commercial and industrial		9,944			3,957
Consumer		32,815			28,689
Total recoveries		42,759			32,646
Net charge-offs		284,687			454,140
Provision charged to operations		470,951			405,000
Balance of allowance for loan losses at end of year	$	1,456,326		$	1,270,062
Ratios:
Net charge-offs to average loans outstanding		0.36	%		0.58	%
Net charge-offs to loans at end of year		0.34	%		0.57	%
Allowance for loan losses to average loans		1.82	%		1.63	%
Allowance for loan losses to loans at end of year		1.75	%		1.58	%
Net charge-offs to allowance for loan losses		19.55	%		35.76	%
Net charge-offs to provisions for loan losses		60.45	%		112.13	%
Nonperforming Assets. The following table sets forth the Company’s nonperforming assets at the dates indicated:
	December 31,
	2004			2003
Nonaccrual loans (considered impaired)	$	764,275		$	2,352,253
Restructure or other impaired loans		—			—
Loans 90 days or more past due and still accruing interest		5,479			—
Total nonperforming loans		769,754			2,352,253
Other real estate owned		701,880			725,035
Total nonperforming assets	$	1,471,634		$	3,077,288
Nonperforming assets to year end loans		1.77	%		3.84	%

Loans on the Company’s problem loan watch list are considered potentially impaired loans. These loans are evaluated in determining whether all outstanding principal and interest are expected to be collected. All of the nonaccrual loans at December 31, 2004 and 2003 were considered to be impaired and were appropriately provided for in the related computation of the allowance of loan losses as of those dates. No other loans were identified as being impaired at December 31, 2004 and 2003.

15

COMMUNITYCORP

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

PROVISION AND ALLOWANCE FOR LOAN LOSSES (continued)

Potential Problem Loans. The following is a summary of potential problems loans at December 31, 2004 and 2003, which were identified through our internal review mechanisms.

	December 31,
	2004		2003
Criticized loans	$	118,348	$	654,624
Classified loans		2,611,306		2,772,556

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

At December 31, 2004 real estate or other collateral secured practically all of the loans that were criticized and classified. In the event of foreclosure on these loans, there can be no assurance that in liquidation, the collateral can be sold for its estimated fair market value or even for an amount at least equal to or greater than the loan amount.

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

NONINTEREST INCOME AND EXPENSE

Noninterest Income. Noninterest income for the year ended December 31, 2004 was $578,556, an increase of $20,411 or 3.66% from the comparable period in 2003. Service charges on deposit accounts increased $16,177 or 3.86% from the year ended December 31, 2003 to $434,854 for the comparable period in 2004. The increase is mainly attributable to the increase in demand deposit accounts. All other categories of noninterest income increased 3.04% to $143,702 for the year ended December 31, 2004 when compared to the year ended December 31, 2003.

Noninterest Expense. Total noninterest expenses for the year ended December 31, 2004 was $2,874,816, an increase of $168,505 or 6.23%, higher when compared to total noninterest expenses of $2,706,311 for the year ended December 31, 2003. Salaries and employee benefits increased 10.78% from $1,413,196 for the year ended December 31, 2003 to $1,565,587 for the year ended December 31, 2004. This increase is primarily attributable to the addition of a branch manager and a mortgage loan processor plus normal salary increases. The increase in salaries and employee benefits expense was reduced by the decrease in net occupancy and equipment expense of $18,594. Other operating expenses increased $34,708 from the year ended December 31, 2003 to $841,827 for the year ended December 31, 2004.

16

COMMUNITYCORP

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

NONINTEREST INCOME AND EXPENSE - (continued)

Income Taxes. The Company’s income tax expense for 2004 was $802,000, an increase of $149,075 over the 2003 expense of $652,925. The increase in expense resulted primarily from the increase in the income before taxes. The Company’s effective tax rates for the years ended December 31, 2004 and 2003 were 32.64% and 31.42%, respectively.

Net Income. The combination of the above factors resulted in net income for the year ended December 31, 2004 of $1,655,257 as compared to $1,425,041 for the same period in 2003. This represents an increase of $230,216 or 16.16% over the same period in 2003.

EARNING ASSETS

Loans. Loans are the largest category of earning assets and typically provide higher yields than other types of earning assets. Associated with the higher loan yields are the inherent credit and liquidity risks which management attempts to control and counterbalance. Loans averaged $79,864,534 in 2004 compared to $77,697,588 in 2003, an increase of $2,166,946, or 2.79%. At December 31, 2004, total loans were $83,006,251 compared to $80,169,314 at December 31, 2003.

The Company’s ratio of loans to deposits was 66.45% at December 31, 2004 as compared to 71.21% at December 31, 2003. The loan to deposit ratio is used to monitor a financial institution’s potential profitability and efficiency of asset distribution and utilization. Generally, a higher loan to deposit ratio is indicative of higher interest income since loans yield a higher return than alternative investment vehicles. Management has concentrated on maintaining quality in the loan portfolio while continuing to increase the deposit base.

The Company extends credit primarily to consumers and small businesses in Walterboro, Ravenel and Ridgeland, South Carolina, and to customers in surrounding areas. The Company’s service area is mixed in nature. Walterboro is a regional business center whose economy contains elements of medium and light manufacturing, higher education, regional health care, and distribution facilities. Outside the incorporated city limits of Walterboro, the economy includes manufacturing, agriculture, timber, and recreational activities. Loan growth in the Ravenel and Ridgeland area is expected to come primarily from consumer loans and small businesses in neighboring Charleston and Jasper Counties. No particular category or segment of the economies previously described is expected to grow or contract disproportionately in 2005. Management believes that the loan portfolio is adequately diversified. There are no significant concentrations of loans in any particular individuals, industry, or group of related individuals or industries. The loan demand remains strong in the Company’s market area.

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

17

COMMUNITYCORP

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

EARNING ASSETS (continued)

The following table sets forth the composition of the loan portfolio by category at December 31, 2004 and 2003 and highlights our general emphasis on commercial and mortgage lending.

Loan Portfolio Composition

	2004					2003
	Amount			Percent of Total		Amount			Percent of Total
Commercial and industrial	$	27,991,611		33.72	%	$	30,668,580		38.25	%
Real estate
Construction		4,695,143		5.66			2,011,177		2.51
Mortgage		39,203,590		47.23			36,813,674		45.92
Consumer and other loans		11,115,907		13.39			10,675,883		13.32
Total loans		83,006,251		100.00	%		80,169,314		100.00	%
Allowance for loan losses		(1,456,326	)				(1,270,062	)
Net loans	$	81,549,925				$	78,899,252

Real estate loans, including construction and mortgage loans, increased $5,073,882 or 13.07% to $43,898,733 at December 31, 2004. Consumer and all other loans increased $440,024 or 4.12% to $11,115,907 at December 31, 2004. Commercial and industrial loans decreased $2,676,969 or 8.73% from $30,668,580 at December 31, 2003.

Maturities and Sensitivity of Loans to Changes in Interest Rates

The following table summarizes the loan maturity distribution, by type, at December 31, 2004 and related interest rate characteristics:

	One Year or Less		Over One Year Through Five Years		Over Five Years		Total
Real estate - construction	$	3,401,167	$	1,293,976	$	—	$	4,695,143
Real estate – mortgage		10,237,945		26,636,749		2,328,896		39,203,590
Commercial and industrial		11,466,385		15,509,922		1,015,304		27,991,611
Consumer and other		2,970,609		7,927,280		218,018		11,115,907
	$	28,076,106	$	51,367,927	$	3,562,218	$	83,006,251
Loans maturing after one year with:
Fixed interest rates							$	51,571,217
Floating interest rates								3,358,928
							$	54,930,145

18

COMMUNITYCORP

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

EARNING ASSETS (continued)

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

Short-Term Investments. Short-term investments, which consist of federal funds sold averaged $17,323,163 in 2004, compared to $19,604,570 in 2003. At December 31, 2004, short-term investments totaled $19,046,000. These funds are a primary source of the Company’s liquidity and are generally invested in an earning capacity on an overnight basis. Also included are time deposits with other banks, which averaged $609,929 in 2004. The total of these time deposits was $499,000 at December 31, 2004.

Investment Securities. The investment securities portfolio is a significant component of the Company’s total earning assets. Total investment securities, stated at historical cost, averaged $23,151,357 in 2004, compared to $17,029,835 in 2003. At December 31, 2004, the total securities portfolio was $27,795,633. Securities designated as available for sale totaled $25,309,730 and were recorded at estimated fair value. Securities designated as held to maturity totaled $2,180,728 and were recorded at amortized cost. Securities designated as nonmarketable equity securities totaled $305,175 at December 31, 2004. The investment objectives of the Company include maintaining and investing in a portfolio of high quality and highly liquid investments with competitive returns. Based on these objectives, the Company’s investments are primarily in obligations of U.S. government agencies and corporations.

Investment Portfolio. The following tables summarize the carrying value of investment securities at December 31, 2004 and 2003 and the weighted average yields of those securities at December 31, 2004.

Investment Securities Portfolio Composition

	2004		2003
Available-for-Sale (1)
U.S. government agencies and corporations	$	18,442,019	$	10,950,450
Obligations of states and local governments		3,475,297		3,071,635
Other		200,000		200,000
		22,117,316		14,222,085
Mortgage-backed securities		3,192,414		2,272,553
Total available-for-sale securities	$	25,309,730	$	16,494,638
	2004		2003
Held-to-Maturity (1)
Obligations of states and local governments	$	2,173,836	$	2,624,204
Mortgage-backed securities		6,892		20,294
Total held-to-maturity securities	$	2,180,728	$	2,644,498

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

19

COMMUNITYCORP

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

EARNING ASSETS (continued)

Investment Securities Maturity Distribution and Yields

Available-for-Sale

December 31, 2004 (Dollars in thousands)	Within One Year				After One But Within Five Years				After Five But Within Ten Years				Over Ten Years
	Amount		Yield (1)		Amount		Yield (1)		Amount		Yield (1)		Amount		Yield (1)
U.S. government agencies (3)	$	—	—		$	17,544	2.72	%	$	898	3.11	%	$	—	—	%
Obligations of states and local governments		100	4.37	%		1,890	5.16	%		682	5.63	%		803	5.69	%
Other		—	—			—	—			—	—			200	6.25	%
Total available-for-sale securities	$	100	4.37	%	$	19,434	2.95	%	$	1,580	4.20	%	$	1,003	5.80	%
Held-to-Maturity
December 31, 2004 (Dollars in thousands)	Within One Year				After One But Within Five Years				After Five But Within Ten Years				Over Ten Years
	Amount		Yield (1)		Amount		Yield (1)		Amount		Yield (1)		Amount		Yield (1)
U.S. government agencies (2)	$	—		%	$	—		%	$	—		%	$	—		%
Obligations of states and local governments		500	5.68	%		809	5.83	%		865	6.05	%		—		%
Total available-for-sale securities	$	500	5.68	%	$	809	5.83	%	$	865	6.05	%	$	—		%

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

(2) Excludes mortgage-backed securities totaling $6,892 with a yield of 7.31%.

(3) Excludes mortgage-backed securities totaling $3,192,414 with a yield of 3.62%.

DEPOSITS AND OTHER INTEREST-BEARING LIABILITIES

Deposits. During 2004, the Company experienced significant growth in overall deposits. Total average deposits increased from $108,321,637 in 2003 to $116,186,380 in 2004. This represents an increase of $7,864,743 or 7.26% over the 2003 amount. The following table summarizes the Company’s deposits for the years ended December 31, 2004 and 2003.

	2004				2003
	Amount		Percent of Deposits		Amount		Percent of Deposits
Noninterest bearing demand	$	16,531,784	13.23	%	$	13,952,334	12.39	%
Interest-bearing demand		27,151,995	21.74			22,836,817	20.28
Savings accounts		24,075,836	19.27			21,945,671	19.49
Time deposits of $100,000 or over		28,598,107	22.89			25,434,140	22.59
Other time deposits		28,553,605	22.87			28,414,864	25.25
Total deposits	$	124,911,327	100.00	%	$	112,583,826	100.00	%

20

COMMUNITYCORP

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

DEPOSITS AND OTHER INTEREST-BEARING LIABILITIES (continued)

Core deposits, which exclude certificates of deposit of $100,000 or more, provide a relatively stable funding source for the Company’s loan portfolio and other earning assets. The Company’s core deposits were $96,313,220 and $87,149,686 at December 31, 2004 and 2003, respectively. A stable base of deposits is expected to be the Company’s primary source of funding to meet both its short-term and long-term liquidity needs in the future.

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

The maturity distribution of the Company’s time deposits of $100,000 or more at December 31, 2004, is shown in the following table.

	Within Three Months		After Three Through Six Months		After Six Through Twelve Months		After Twelve Months		Total
Certificates of deposit of $100,000 or more	$	9,727,639	$	7,089,385	$	9,816,525	$	1,964,558	$	28,598,107

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

Short-term Borrowings. At December 31, 2004 and 2003, the Company had securities sold under agreements to repurchase, which are classified as secured borrowings and generally mature within one to seven day periods. Either party may cancel the arrangement without penalty. Information concerning securities sold under agreements to repurchase is summarized as follows:

	Years ended December 31,
	2004			2003
Average balance during the year	$	322,227		$	369,671
Average interest rate during the year		0.43	%		0.22	%
Maximum month-end balance during the year	$	390,000		$	510,000

CAPITAL

Total shareholders’ equity increased by $1,395,905 from $11,240,223 at December 31, 2003 to $12,636,128 at December 31, 2004. The increase is attributable to the sale of treasury stock of $42,600 and net income of $1,655,257. The increase was offset by the purchase of treasury stock during the period of $91,115, the payment of dividends of $178,421, and the decline in other comprehensive income of $32,416.

On June 30, 2003, the Company purchased and redeemed 27,454 shares of its common stock, $5.00 par value from a former director, a corporation controlled by this individual and members of this individual’s family, for $80.00 per share or $2,196,320 in the aggregate. The 27,454 shares repurchased by the Company represented 9.92% of the 276,734 shares of common stock outstanding immediately prior to the purchase. An outside consultant reported to the Board that the repurchase of these shares would be accretive as to all other Company shareholders in terms of earning per share.

21

COMMUNITYCORP

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

CAPITAL (continued)

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

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

As of December 31, 2004, the most recent notification from the Bank’s primary regulator categorized the Bank as well-capitalized under the regulatory framework for prompt-corrective action. There are no conditions or events that management believes have changed the Bank’s category.

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

	Actual				For Capital Adequacy Purposes				To Be Well- Capitalized Under Prompt Corrective Action Provisions
					Minimum				Minimum
	Amount		Ratio		Amount		Ratio		Amount		Ratio
December 31, 2004
Total capital (to risk-weighted assets)	$	13,710,543	14.51	%	$	7,561,040	8.00	%	$	9,451,300	10.00	%
Tier 1 capital (to risk-weighted assets)		12,529,130	13.26			3,780,520	4.00			5,670,780	6.00
Tier 1 capital (to average assets)		12,529,130	9.38			5,344,800	4.00			6,681,000	5.00
December 31, 2003
Total capital (to risk-weighted assets)	$	12,191,536	13.83	%	$	7,050,500	8.00	%	$	8,813,125	10.00	%
Tier 1 capital (to risk-weighted assets)		11,089,896	12.58			3,525,250	4.00			5,287,875	6.00
Tier 1 capital (to average assets)		11,089,896	9.05			4,901,080	4.00			6,126,350	5.00

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

LIQUIDITY MANAGEMENT

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

22

COMMUNITYCORP

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

LIQUIDITY MANAGEMENT –(continued)

liquidity management being on the ability to obtain deposits within the Company’s market area. Core deposits (total deposits, less time deposits of $100,000 and over) provide a relatively stable funding base. At December 31, 2004 and 2003 core deposits represented 77.11% and 77.41%, respectively of total deposits.

The Bank had available at the end of 2004 unused short-term lines of credit to purchase up to $3,800,000 of federal funds from an unrelated correspondent institution. The Bank also has a credit availability agreement with the Federal Home Loan Bank totaling 15 percent of the Bank’s assets as of any quarter end. As of December 31, 2004, the available credit totaled approximately $20,800,000 and there were no borrowings outstanding. Any borrowings from the FHLB will be secured by liens on all of the Bank’s 1-4 family residential first lien mortgage loans.

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

The Company’s ability to meet its cash obligations or to pay any possible future cash dividends to shareholders is dependent primarily on the successful operation of the bank and its ability to pay cash dividends to the Company. Any of the Bank’s cash dividends in an amount exceeding current year-to-date earnings are subject to the prior approval of the South Carolina Commissioner of Banking and are generally allowable only from its undivided profits. In addition, dividends paid by the Bank to the Company would be prohibited if such payment would cause the Bank’s capital to be reduced below applicable minimum regulatory requirements. At December 31, 2004, the Bank’s available undivided profits totaled $9,297,422. Under Federal Reserve Board regulations, the amounts of loans or advances from the Bank to the Company are also restricted.

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

IMPACT OF OFF-BALANCE-SHEET INSTRUMENTS

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

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

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

23

COMMUNITYCORP

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

IMPACT OF OFF-BALANCE-SHEET INSTRUMENTS (continued)

Through its operations, the Bank was made contractual commitments to extend credit in the ordinary course of its business activities. These commitments are legally binding agreements to lend money to the Bank’s customers at predetermined interest rates for a specified period of time. At December 31, 2004, the Bank had issued commitments to extend credit of $8,554,442 and standby letters of credit of $1,095,000 through various types of commercial lending arrangements. Approximately $576,809 of these commitments to extend credit had variable rates.

The following table sets forth the length of time until maturity for unused commitments to extend credit and standby letters of credit at December 31, 2004.

	Within One Month		After One Through Three Months		After Three Through Twelve Months		Within One Year		Greater Than One Year		Total
Unused commitments to extend credit	$	1,017,802	$	488,569	$	5,612,356	$	7,118,727	$	1,435,715	$	8,554,442
Standby letters of credit		20,000		600,000		475,000		1,095,000		—		1,095,000
Totals	$	1,037,802	$	1,088,569	$	6,087,356	$	8,213,727	$	1,435,715	$	9,649,442

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

IMPACT OF INFLATION

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

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

IMPACT OF RECENT ACCOUNTING CHANGES

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

In December 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (“SFAS No. 123(R)”). SFAS No. 123(R) will require companies to measure all employee stock-based compensation awards using a fair value method and record such expense in its financial statements. In addition, the adoption of SFAS No. 123(R) requires additional accounting and disclosure related to the income tax and cash flow effects resulting from share-based payment arrangements.

24

COMMUNITYCORP

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

IMPACT OF RECENT ACCOUNTING CHANGES – (continued)

SFAS No. 123(R) is effective beginning as of the first interim or annual reporting period beginning after December 15, 2005. The Company currently does not have any stock-based compensation. The adoption of SFAS No.123 (R) is not expected to have any impact on the Company’s financial position or results of operations.

In December 2003, the FASB issued FASB Interpretation (“FIN”) No. 46 (revised), “Consolidation of Variable Interest Entities” (“FIN No. 46(R)”), which addresses consolidation by business enterprises of variable interest entities. FIN No. 46(R) requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity’s activities or entitled to receive a majority of the entity’s residual returns, or both. FIN No. 46(R) also requires disclosures about variable interest entities that a company is not required to consolidate, but in which it has a significant variable interest. FIN No. 46(R) provides guidance for determining whether an entity qualifies as a variable interest entity by considering, among other considerations, whether the entity lacks sufficient equity or its equity holders lack adequate decision-making ability. The consolidation requirements of FIN No. 46(R) applied immediately to variable interest entities created after January 31, 2003. The consolidation requirements applied to the Company’s existing variable interest entities in the first reporting period ending after December 15, 2004. Certain of the disclosure requirements applied to all financial statements issued after December 31, 2003, regardless of when the variable interest entity was established. The adoption of FIN No. 46(R) did not have any impact on the Company’s financial position or results of operations.

In November 2003, the Emerging Issues Task Force (“EITF”) reached a consensus that certain quantitative and qualitative disclosures should be required for debt and marketable equity securities classified as available for sale or held to maturity under SFAS No. 115 and SFAS No. 124 that are impaired at the balance sheet date but for which other-than-temporary impairment has not been recognized. Accordingly the EITF issued EITF No. 03-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments.” This issue addresses the meaning of other-than-temporary impairment and its application to investments classified as either available for sale or held to maturity under SFAS No. 115 and provides guidance on quantitative and qualitative disclosures. The disclosure requirements of EITF No. 03-1 are effective for annual financial statements for fiscal years ending after June 15, 2004. The effective date for the measurement and recognition guidance of EITF No. 03-1 has been delayed. The FASB staff has issued a proposed Board-directed FASB Staff Position (“FSP”), FSP EITF 03-1-a, “Implementation Guidance for the Application of Paragraph 16 of Issue No. 03-1.” The proposed FSP would provide implementation guidance with respect to debt securities that are impaired solely due to interest rates and/or sector spreads and analyzed for other-than-temporary impairment under the measurement and recognition requirements of EITF No. 03-1. The delay of the effective date for the measurement and recognition requirements of EITF No. 03-1 will be superseded concurrent with the final issuance of FSP EITF 03-1-a. Adopting the disclosure provisions of EITF No. 03-1 did not have any impact on the Company’s financial position or results of operations.

In March 2004, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin (“SAB”) No. 105, “Application of Accounting Principles to Loan Commitments,” to inform registrants of the Staff’s view that the fair value of the recorded loan commitments should not consider the expected future cash flows related to the associated servicing of the future loan. The provisions of SAB No. 105 must be applied to loan commitments accounted for as derivatives that are entered into after March 31, 2004. The Staff will not object to the application of existing accounting practices to loan commitments accounted for as derivatives that are entered into on or before March 31, 2004, with appropriate disclosures. The Company adopted the provisions of SAB No. 105 on April 1, 2004. The adoption of SAB No. 105 did not have any impact on the Company’s financial condition or results of operations.

Other accounting standards that have been issued or proposed by the Public Company Accounting Oversight Board (“PCAOB”) or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.

25

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors

Communitycorp and Subsidiary

Walterboro, South Carolina

We have audited the accompanying consolidated balance sheets of Communitycorp and Subsidiary, (the “Company”) as of December 31, 2004 and 2003, and the related consolidated statements of income, changes in shareholders’ equity and comprehensive income, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Communitycorp and Subsidiary as of December 31, 2004 and 2003 and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

/s/ Elliot Davis, LLC

Greenville, South Carolina

February 18, 2005

26

COMMUNITYCORP

Consolidated Balance Sheets

	December 31,
	2004			2003
Assets:
Cash and cash equivalents:
Cash and due from banks	$	3,705,335		$	4,862,983
Federal funds sold		19,046,000			16,367,000
Total cash and cash equivalents		22,751,335			21,229,983
Time deposits with other banks		499,000			499,000
Investment securities:
Securities available-for-sale		25,309,730			16,494,638
Securities held-to-maturity (estimated fair value of $2,269,336 in 2004 and $2,764,762 in 2003)		2,180,728			2,644,498
Nonmarketable equity securities		305,175			214,375
Total investment securities		27,795,633			19,353,511
Loans receivable		83,006,251			80,169,314
Less allowance for loan losses		(1,456,326	)		(1,270,062	)
Loans, net		81,549,925			78,899,252
Premises and equipment, net		3,441,334			2,517,479
Accrued interest receivable		822,240			817,309
Other real estate owned		701,880			725,035
Other assets		846,376			713,929
Total assets	$	138,407,723		$	124,755,498
Liabilities:
Deposits:
Noninterest-bearing transaction accounts	$	16,531,784		$	13,952,334
Interest-bearing transaction accounts		27,151,995			22,836,817
Money market savings accounts		3,070,070			3,483,021
Savings		21,005,766			18,462,650
Time deposits $100,000 and over		28,598,107			25,434,140
Other time deposits		28,553,605			28,414,864
Total deposits		124,911,327			112,583,826
Short-term borrowings		390,000			450,000
Accrued interest payable		295,430			295,934
Other liabilities		174,838			185,515
Total liabilities		125,771,595			113,515,275
Commitments and contingencies - Notes 4 and 10
Shareholders’ Equity:
Preferred stock, $5 par value, 3,000,000 shares authorized and unissued		—			—
Common stock, $5 par value, 3,000,000 shares authorized; 300,000 shares issued and outstanding		1,500,000			1,500,000
Capital surplus		1,721,023			1,731,708
Retained earnings		12,715,882			11,239,046
Accumulated other comprehensive income		32,129			64,545
Treasury stock (53,505 shares in 2004 and 52,664 shares in 2003)		(3,332,906	)		(3,295,076	)
Total shareholders’ equity		12,636,128			11,240,223
Total liabilities and shareholders’ equity	$	138,407,723		$	124,755,498

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

27

COMMUNITYCORP

Consolidated Statements of Income

	Years Ended December 31,
	2004		2003
Interest income:
Loans, including fees	$	5,877,205	$	5,742,205
Investment securities:
Taxable		499,150		339,589
Tax-exempt		213,258		221,384
Nonmarketable equity securities		5,212		11,390
Federal funds sold and securities purchased under agreements to resell		217,629		204,962
Time deposits with other banks		18,758		17,308
Total interest income		6,831,212		6,536,838
Interest expense:
Deposits		1,605,442		1,904,900
Short-term borrowings		1,302		806
Total interest expense		1,606,744		1,905,706
Net interest income		5,224,468		4,631,132
Provision for loan losses		470,951		405,000
Net interest income after provision for loan losses		4,753,517		4,226,132
Noninterest income:
Service charges on deposit accounts		434,854		418,677
Commissions on credit life insurance		12,130		14,414
Other charges, fees, and commissions		88,233		87,541
Other		43,339		37,513
Total noninterest income		578,556		558,145
Noninterest expenses:
Salaries and employee benefits		1,565,587		1,413,196
Net occupancy		185,584		172,857
Equipment		281,818		313,139
Other operating		841,827		807,119
Total noninterest expenses		2,874,816		2,706,311
Income before income taxes		2,457,257		2,077,966
Income tax expense		802,000		652,925
Net income	$	1,655,257	$	1,425,041
Earnings per share:
Weighted-average common shares outstanding		247,446		261,221
Basic	$	6.69	$	5.46

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

28

COMMUNITYCORP

Consolidated Statements of Changes in Shareholders’ Equity and Comprehensive Income

For the years ended December 31, 2004 and 2003

	Common stock			Capital surplus			Retained earnings			Accumulated other comprehensive income			Treasury stock, at cost			Total shareholders’ equity
	Shares	Amount
Balance, December 31, 2002	300,000	$	1,500,000	$	1,731,708		$	9,993,521		$	128,119		$	(1,104,171	)	$	12,249,177
Net income								1,425,041									1,425,041
Other comprehensive loss, net of tax benefit of $33,454											(63,574	)					(63,574	)
Comprehensive income																	1,361,467
Cash dividends paid ($.65 per share)								(179,516	)								(179,516	)
Purchase of treasury stock														(2,358,620	)		(2,358,620	)
Sale of treasury stock														167,715			167,715
Balance, December 31, 2003	300,000		1,500,000		1,731,708			11,239,046			64,545			(3,295,076	)		11,240,223
Net income								1,655,257									1,655,257
Other comprehensive loss, net of tax benefit of $17,074											(32,416	)					(32,416	)
Comprehensive income																	1,622,841
Cash dividends paid ($.72 per share)								(178,421	)								(178,421	)
Purchase of treasury stock														(91,115	)		(91,115	)
Sale of treasury stock					(10,685	)								53,285			42,600
Balance, December 31, 2004	300,000	$	1,500,000	$	1,721,023		$	12,715,882		$	32,129		$	(3,332,906	)	$	12,636,128

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

29

COMMUNITYCORP

Consolidated Statements of Cash Flows

	Years Ended December 31,
	2004			2003
Cash flows from operating activities:
Net income	$	1,655,257		$	1,425,041
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		470,951			405,000
Depreciation expense		191,560			243,996
Premium amortization less discount accretion on investment securities		142,148			59,473
Deferred income tax expense (benefit)		12,056			(17,233	)
Amortization of loan fees and costs		1,629			107
Loss on sale of other real estate owned		—			23,888
Increase in accrued interest receivable		(4,931	)		(28,643	)
Decrease in accrued interest payable		(504	)		(126,568	)
Increase in other assets		(127,429	)		(218,653	)
Increase (decrease) in other liabilities		(10,677	)		135,174
Net cash provided by operating activities		2,330,060			1,901,582
Cash flows from investing activities:
Proceeds from maturities of securities available-for-sale		11,902,730			15,160,229
Purchases of securities available-for-sale		(20,909,177	)		(19,150,714	)
Proceeds from maturities of securities held-to-maturity		463,487			405,781
(Purchases) sales of nonmarketable equity securities		(90,800	)		120,500
Proceeds from the sale of other real estate owned		31,655			58,380
Increase in time deposits with other banks		—			(200,000	)
Net increase in loans to customers		(3,131,753	)		(5,942,095	)
Purchases of premises and equipment		(1,115,415	)		(592,324	)
Net cash used for investing activities		(12,849,273	)		(10,140,243	)
Cash flows from financing activities:
Net increase in demand deposits, interest-bearing transaction accounts and savings accounts		9,024,793			12,439,932
Net increase (decrease) in time deposits		3,302,708			(2,475,865	)
Net increase (decrease) in short-term borrowings		(60,000	)		50,000
Cash dividends paid		(178,421	)		(179,516	)
Purchase of treasury stock		(91,115	)		(2,358,620	)
Sale of treasury stock		42,600			167,715
Net cash provided by financing activities		12,040,565			7,643,646
Net increase (decrease) in cash and cash equivalents		1,521,352			(595,015	)
Cash and cash equivalents, beginning of year		21,229,983			21,824,998
Cash and cash equivalents, end of year	$	22,751,335		$	21,229,983

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

30

COMMUNITYCORP

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

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

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

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

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

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

31

COMMUNITYCORP

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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

At December 31, 2004 and 2003, the investment in Federal Home Loan Bank stock was $250,100 and $159,300 respectively. At December 31, 2004 and 2003, the investment in Community Financial Services, Inc. stock was $50,575 and the investment in the Enterprise Bank was $4,500.

Loans Receivable and Interest Income – Loans are stated at the amount of unpaid principal reduced by an allowance for loan losses. Interest income on all loans is computed based upon the unpaid principal balance. Interest income is computed using the simple interest method and is recorded in the period earned.

The Company determines a loan to be delinquent when payments have not been made according to contractual terms, typically evidenced by nonpayment of a monthly installment by the due date. The accrual of interest income is discontinued when a loan becomes 90 days past due as to principal or interest. Management may elect to continue the accrual of interest when the estimated net realizable value of collateral exceeds the principal balance and accrued interest.

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

Allowance for Loan Losses (the “Allowance”) - The Company provides for loan losses using the allowance method. Increases to the Allowance are charged by recording a provision for loan losses. Loan losses and recoveries are charged to the Allowance. Charge-offs to the Allowance are made when all or a portion of the loan is confirmed as a loss based on Management’s review of the loan, through possession of the underlying security, or through a troubled debt restructuring transaction. Likewise, recoveries offset these increases through credits to the Allowance.

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

32

COMMUNITYCORP

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Allowance for Loan Losses (the “Allowance”) (continued)

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

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

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

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

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

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

33

COMMUNITYCORP

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Other Real Estate Owned - Other real estate owned includes real estate acquired through foreclosure. Other real estate owned is initially recorded at the lower of cost (principal balance of the former loan plus costs of improvements) or estimated fair value. Any write-downs at the dates of acquisition are charged to the allowance for possible loan losses. Expenses to maintain such assets, subsequent write-downs and gains and losses on disposal are included in other expenses.

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

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

Retirement and Deferred Compensation Plans - The Company has a trusteed noncontributory profit-sharing plan which provides retirement and other benefits to all full-time employees who have worked 1,000 or more hours during the calendar year and have put in one year of service. All eligible employees must be at least age 21. Contributions are determined annually by the Board of Directors. Expenses charged to earnings for the profit-sharing plan were $51,265 and $48,765 in 2004 and 2003, respectively. The Company’s policy is to fund contributions to the profit-sharing plan in the amount approved by the Board of Directors. In addition, the plan includes a “salary reduction” feature pursuant to Section 401(k) of the Internal Revenue Code. Under the plan and present policies, participants are permitted to make discretionary contributions up to 10% of annual compensation. The Company makes no matching contributions to this plan.

In addition, the Company has a nonqualified voluntary salary deferral plan for certain officers of the Company. Under the plan, these officers may defer up to 25% of their compensation and earn interest on the deferred amount. Upon retirement, the total amount deferred and interest earned is to be paid to each participant over a period not to exceed fifteen years. Expenses charged to earnings for the salary deferral plan were $26,500 and $34,280 in 2004 and 2003, respectively.

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

Earnings Per Share - Earnings per share is calculated by dividing earnings by the weighted-average number of common shares outstanding during the year. The Company has no instruments which are considered common stock equivalents and therefore, dilutive earnings per share is not presented.

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

During 2004 and 2003, the Company paid $1,607,248 and $2,032,274, respectively, for interest. Cash paid for income taxes was $947,500 and $697,489 in 2004 and 2003, respectively.

Supplemental noncash investing activities are as follows: The Bank reclassified loans totaling $8,500 and $494,155 as foreclosures of real estate and repossessed assets in 2004 and 2003, respectively.

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

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COMMUNITYCORP

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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

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

	Year Ended December 31,
	2004			2003
Unrealized losses on available-for-sale securities	$	(49,490	)	$	(97,028	)
Reclassification adjustment for gains (losses) realized in net income		—			—
Net unrealized losses on securities		(49,490	)		(97,028	)
Tax effect		17,074			33,454
Net-of-tax amount	$	(32,416	)	$	(63,574	)

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

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

In December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 123 (revised 2004), “Share-Based Payment” (“SFAS No. 123(R)”). SFAS No. 123(R) will require companies to measure all employee stock-based compensation awards using a fair value method and record such expense in its financial statements. In addition, the adoption of SFAS No. 123(R) requires additional accounting and disclosure related to the income tax and cash flow effects resulting from share-based payment arrangements. SFAS No. 123(R) is effective beginning as of the first interim or annual reporting period beginning after December 15, 2005. The Company currently does not have any stock-based compensation. The adoption of SFAS No.123 (R) is not expected to have any impact on the Company’s financial position or results of operations.

In December 2003, the FASB issued FASB Interpretation (“FIN”) No. 46 (revised), “Consolidation of Variable Interest Entities” (“FIN No. 46(R)”), which addresses consolidation by business enterprises of variable interest entities. FIN No. 46(R) requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity’s activities or entitled to receive a majority of the entity’s residual returns, or both. FIN No. 46(R) also requires disclosures about variable interest entities that a company is not required to consolidate, but in which it has a significant variable interest. FIN No. 46(R) provides guidance for determining whether an entity qualifies as a variable interest entity by considering, among other considerations, whether the entity lacks sufficient equity or its equity holders lack adequate decision-making ability. The consolidation requirements of FIN No. 46(R) applied immediately to variable interest entities created after January 31, 2003. The consolidation requirements applied to the Company’s existing variable interest entities in the first reporting period ending after December 15, 2004. Certain of the disclosure requirements applied to all financial statements issued after December 31, 2003, regardless of when the variable interest entity was established. The adoption of FIN No. 46(R) did not have any impact on the Company’s financial position or results of operations.

35

COMMUNITYCORP

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Recent Accounting Pronouncements (continued)

In November 2003, the Emerging Issues Task Force (“EITF”) reached a consensus that certain quantitative and qualitative disclosures should be required for debt and marketable equity securities classified as available for sale or held to maturity under SFAS No. 115 and SFAS No. 124 that are impaired at the balance sheet date but for which other-than-temporary impairment has not been recognized. Accordingly the EITF issued EITF No. 03-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments.” This issue addresses the meaning of other-than-temporary impairment and its application to investments classified as either available for sale or held to maturity under SFAS No. 115 and provides guidance on quantitative and qualitative disclosures. The disclosure requirements of EITF No. 03-1 are effective for annual financial statements for fiscal years ending after June 15, 2004. The effective date for the measurement and recognition guidance of EITF No. 03-1 has been delayed. The FASB staff has issued a proposed Board-directed FASB Staff Position (“FSP”), FSP EITF 03-1-a, “Implementation Guidance for the Application of Paragraph 16 of Issue No. 03-1.” The proposed FSP would provide implementation guidance with respect to debt securities that are impaired solely due to interest rates and/or sector spreads and analyzed for other-than-temporary impairment under the measurement and recognition requirements of EITF No. 03-1. The delay of the effective date for the measurement and recognition requirements of EITF No. 03-1 will be superseded concurrent with the final issuance of FSP EITF 03-1-a. Adopting the disclosure provisions of EITF No. 03-1 did not have any impact on the Company’s financial position or results of operations.

In March 2004, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin (“SAB”) No. 105, “Application of Accounting Principles to Loan Commitments,” to inform registrants of the Staff’s view that the fair value of the recorded loan commitments should not consider the expected future cash flows related to the associated servicing of the future loan. The provisions of SAB No. 105 must be applied to loan commitments accounted for as derivatives that are entered into after March 31, 2004. The Staff will not object to the application of existing accounting practices to loan commitments accounted for as derivatives that are entered into on or before March 31, 2004, with appropriate disclosures. The Company adopted the provisions of SAB No. 105 on April 1, 2004. The adoption of SAB No. 105 did not have any impact on the Company’s financial condition or results of operations.

Other accounting standards that have been issued or proposed by the PCAOB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.

Reclassifications - Certain captions and amounts in the consolidated financial statements of 2003 were reclassified to conform with the 2004 presentation. These reclassifications had no effect on previously reported net income or shareholders’ equity.

NOTE 2 - CASH AND DUE FROM BANKS

The Company is required by regulation to maintain an average cash reserve balance based on a percentage of deposits. The average amounts of the cash reserve balances at December 31, 2004 and 2003 were approximately $873,000 and $697,000 respectively. These requirements were satisfied by vault cash.

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COMMUNITYCORP

NOTE 3 - INVESTMENT SECURITIES

Securities Available-for-Sale

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

	Amortized Cost		Gross Unrealized				Estimated Fair Value
			Gains		Losses
December 31, 2004
U.S. government agencies and corporations	$	21,700,085	$	19,624	$	85,275	$	21,634,434
Obligations of state and local governments		3,360,592		115,704		1,000		3,475,296
Other		200,000		—		—		200,000
Total	$	25,260,677	$	135,328	$	86,275	$	25,309,730
December 31, 2003
U.S. government agencies and corporations	$	13,242,492	$	39,916	$	59,406	$	13,223,002
Obligations of state and local governments		2,953,604		119,775		1,743		3,071,636
Other		200,000		—		—		200,000
Total	$	16,396,096	$	159,691	$	61,149	$	16,494,638

The following table shows gross unrealized losses and fair value, aggregated by investment category, and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2004.

	Less Than 12 Months				12 Months Or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U. S. Government agencies and corporations	$	16,105,989	$	78,153	$	569,490	$	7,122	$	16,675,479	$	85,275
Obligations of state and Local governments		385,580		1,000		—		—		385,580		1,000
Total	$	16,491,569	$	79,153	$	569,490	$	7,122	$	17,061,059	$	86,275

Securities classified as available for sale are recorded at fair market value. At December 31, 2004, the amounts included in the category “twelve months or more” in the above table consisted of three mortgage-backed securities issued by the Federal Home Loan Mortgage Corporation (“FHLMC”) which were in a continuous loss position for twelve months. These mortgage-backed securities are protected by mortgage insurance as well as the direct credit to the FHLMC. The Company believes that the deterioration in value is attributable to changes in market interest rates and not in credit quality and considers these losses to be temporary. The Company has the ability and intent to hold these securities until such time as the value recovers.

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COMMUNITYCORP

NOTE 3 - INVESTMENT SECURITIES (continued)

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

	December 31, 2004
	Amortized Cost		Estimated Fair Value
Due in one year or less	$	100,051	$	100,244
Due after one year but within five years		19,425,476		19,433,977
Due after five years but within ten years		1,552,090		1,580,457
Due after ten years		989,560		1,002,638
		22,067,177		22,117,316
Mortgage-backed securities		3,193,500		3,192,414
Total	$	25,260,677	$	25,309,730

Securities Held-To-Maturity

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

	Amortized Cost		Gross Unrealized				Estimated Fair Value
			Gains		Losses
December 31, 2004
U.S. government agencies and corporations	$	6,892	$	182	$	—	$	7,074
Obligations of state and local governments		2,173,836		88,426		—		2,262,262
Total	$	2,180,728	$	88,608	$	—	$	2,269,336
December 31, 2003
U.S. government agencies and corporations	$	20,294	$	1,046	$	—	$	21,340
Obligations of state and local governments		2,624,204		119,218		—		2,743,422
Total	$	2,644,498	$	120,264	$	—	$	2,764,762

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

	December 31, 2004
	Amortized Cost		Estimated Fair Value
Due in one year or less	$	500,132	$	505,343
Due after one year but within five years		809,468		843,434
Due after five years but within ten years		864,225		913,474
		2,173,825		2,262,251
Mortgage-backed securities		6,903		7,085
Total	$	2,180,728	$	2,269,336

At December 31, 2004 and 2003, investment securities with an amortized cost of $17,167,850 and $13,705,677 and a fair value of $17,275,203 and $13,913,099, respectively, were pledged as collateral to secure public deposits and short-term borrowings.

There were no sales of investment securities for the years ended December 31, 2004 and 2003.

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COMMUNITYCORP

NOTE 4 - LOANS RECEIVABLE

Loans consisted of the following:

	December 31,
	2004		2003
Real estate - construction	$	4,695,143	$	2,011,177
Real estate - mortgage		39,203,590		36,813,674
Commercial and industrial		27,991,611		30,668,580
Consumer and other		11,115,907		10,675,883
Total gross loans	$	83,006,251	$	80,169,314

As of December 31, 2004 and 2003, management had placed loans totaling $764,375 and $2,352,253, respectively, in nonaccrual status because the loans were not performing as originally contracted. For 2004 and 2003 the total amount of interest earned on nonaccrual loans was approximately $95,000 and $55,000, respectively. The gross interest income which would have been recorded under the original terms of the nonaccrual loans amounted to approximately $115,000 and $189,000 for 2004 and 2003, respectively.

Loans ninety days or more past due and still accruing interest were $5,479 at December 31, 2004. There were no loans ninety days or more past due and still accruing interest at December 31, 2003.

The Company identifies impaired loans through its normal internal loan review process. Loans on the Company’s problem loan watch list are considered potentially impaired loans. These loans are evaluated in determining whether all outstanding principal and interest are expected to be collected. All of the nonaccrual loans at December 31, 2004 and 2003 were considered to be impaired and were appropriately provided for in the related computation of the allowance of loan losses as of those dates. No other loans were identified as being impaired at December 31, 2004 and 2003.

Transactions in the allowance for loan losses are summarized below:

	Years ended December 31,
	2004			2003
Balance, beginning of year	$	1,270,062		$	1,319,202
Provision charged to operations		470,951			405,000
Recoveries on loans previously charged-off		42,759			32,646
Loans charged-off		(327,446	)		(486,786	)
Balance, end of year	$	1,456,326		$	1,270,062

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COMMUNITYCORP

NOTE 4 – LOANS RECEIVABLE (continued)

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

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

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

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

	December 31,
	2004		2003
Commitments to extend credit	$	8,554,442	$	7,158,562
Standby letters of credit		1,095,000		1,142,411

Management is not aware of any significant concentrations of loans to classes of borrowers or industries that would be affected similarly by economic conditions. At December 31, 2004, the Company was not committed to lend additional funds to borrowers having loans in nonaccrual status.

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COMMUNITYCORP

NOTE 5 - PREMISES AND EQUIPMENT

Premises and equipment consisted of the following:

	December 31,
	2004			2003
Land	$	710,605		$	710,605
Building and land improvements		2,594,297			1,708,464
Furniture and equipment		1,899,391			1,669,809
Total		5,204,293			4,088,878
Less, accumulated depreciation		(1,762,959	)		(1,571,399	)
Premises and equipment, net	$	3,441,334		$	2,517,479

Depreciation expense totaled $191,560 and $243,996 in 2004 and 2003, respectively.

NOTE 6 - DEPOSITS

At December 31, 2004, the scheduled maturities of time deposits were as follows:

	Amount
Maturing in
2005	$	52,835,421
2006		1,950,052
2007		1,893,484
2009		122,660
2010		350,095
Total	$	57,151,712

NOTE 7 - RELATED PARTY TRANSACTIONS

Certain parties (principally certain directors and officers of the Company, their immediate families and business interests) were loan customers of, and had other transactions in the normal course of business with the Company. Related party loans are made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with unrelated persons and do not involve more than normal risk of collectibility. The aggregate dollar amount of loans to related parties was $3,133,790 and $2,990,249 at December 31, 2004 and 2003, respectively. During 2004, $2,028,312 of new loans were made to related parties, and repayments totaled $1,884,771.

Legal services were provided to the Company in the ordinary course of business by a law firm in which two of the partners are directors of the Company. The amount paid to this law firm for services rendered was $1,362, and $2,276 for the years ended December 31, 2004 and 2003, respectively.

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COMMUNITYCORP

NOTE 8 - SHORT-TERM BORROWINGS

At December 31, 2004 and 2003, the Company had securities sold under agreements to repurchase, which are classified as secured borrowings and generally mature within one to seven day periods. Either party may cancel the arrangement without penalty. Information concerning securities sold under agreements to repurchase is summarized as follows:

	Years ended December 31,
	2004			2003
Average balance during the year	$	322,227		$	369,671
Average interest rate during the year		0.43	%		0.22	%
Maximum month-end balance during the year	$	390,000		$	510,000

The Company has an agreement with its safekeeping agent (an independent third party) to pledge certain of their U.S. Government obligation securities as collateral for the agreements. As of December 31, 2004, the par value and fair value of the securities underlying the agreements were $525,000 and $524,642, respectively.

NOTE 9 - UNUSED LINES OF CREDIT

As of December 31, 2004, the Company had unused lines of credit to purchase federal funds from other financial institutions totaling $3,800,000. These lines of credit are available on a one to seven day basis for general corporate purposes. The lenders have reserved the right to withdraw these lines at their option. The Company also has a credit availability agreement with the Federal Home Loan Bank totaling 15 percent of the Bank’s assets as of any quarter end. As of December 31, 2004, the available credit totaled approximately $20,800,000 and there were no borrowings outstanding on this line.

NOTE 10 - COMMITMENTS AND CONTINGENCIES

The Company is subject to claims and lawsuits which arise primarily in the ordinary course of business. At December 31, 2004, management is not aware of any pending or threatened litigation or unasserted claims that could result in losses, if any that would be material to the financial statements.

NOTE 11 - SHAREHOLDERS’ EQUITY

In 2000, the Board of Directors approved the repurchase of shares of the Company’s outstanding stock. At December 31, 2004 and 2003, the Company had 53,505 and 52,664 shares, respectively held in treasury stock. During 2004 and 2003, the Company purchased 1,693 and 30,920 shares respectively, and sold 852 and 3,727 shares respectively.

The ability of the Company to pay cash dividends is dependent upon receiving cash in the form of dividends from the Bank. However, certain restrictions exist regarding the ability of the Bank to transfer funds to Communitycorp in the form of cash dividends. All of the Bank’s dividends to the Company are payable only from the undivided profits of the Bank. At December 31, 2004, the Bank’s undivided profits were $9,297,422. The Bank is authorized to pay cash dividends up to 100% of net income in any calendar year without obtaining the prior approval of the Commissioner of Banking provided that the Bank received a composite rating of one or two at the last Federal or State regulatory examination. Under Federal Reserve Board regulations, the amounts of loans or advances from the Bank to the parent company are also restricted.

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COMMUNITYCORP

NOTE 12 - OTHER OPERATING EXPENSES

Other operating expenses are summarized as follows:

	Years ended December 31,
	2004		2003
Stationary, printing, and postage	$	198,557	$	178,087
Advertising and promotion		33,662		26,561
Professional fees		166,316		154,851
Directors’ fees		50,100		46,500
Telephone expenses		54,509		53,970
ATM surcharges		52,323		60,018
ACH charges		33,245		40,704
Armored Car/Courier Services		30,220		24,675
Membership Dues/Subscriptions		32,422		22,397
Other		190,473		199,356
Total	$	841,827	$	807,119

NOTE 13 - INCOME TAXES

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

	Years ended December 31,
	2004		2003
Currently payable:
Federal	$	715,457	$	606,024
State		74,487		64,134
Total current		789,944		670,158
Deferred income tax expense (benefit)		12,056		(17,233	)
Income tax expense	$	802,000	$	652,925

Deferred income taxes are included in other assets at December 31, 2004 and 2003.

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COMMUNITYCORP

NOTE 13 - INCOME TAXES (continued)

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

	December 31,
	2004			2003
Deferred tax assets:
Allowance for loan losses	$	394,875		$	342,077
Deferred compensation		82,100			84,265
Nonaccrual loan interest income		81,795			124,065
Other		13,370			11,467
Total deferred tax assets		572,140			561,874
Deferred tax liabilities:
Accumulated depreciation		(81,719	)		(59,397	)
Securities available-for-sale		(16,923	)		(33,997	)
Total deferred tax liabilities		(98,642	)		(93,394	)
Net deferred tax asset	$	473,498		$	468,480

The net deferred tax assets are included in other assets in the consolidated balance sheets. Deferred tax assets represent the future tax benefit of deductible differences and, if it is more likely than not that a tax asset will not be realized, a valuation allowance is required to reduce the recorded deferred tax assets to net realizable value. Management has determined that it is more likely than not that the entire deferred tax asset at December 31, 2004 will be realized, and accordingly, has not established a valuation allowance.

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

	Years ended December 31
	2004			2003
Tax expense at statutory rate	$	835,467		$	706,508
State income tax, net of federal income tax benefit		49,161			37,307
Tax-exempt interest income		(72,508	)		(79,111	)
Disallowed interest expense		7,880			10,110
Other, net		(18,000	)		(21,889	)
Total	$	802,000		$	652,925

NOTE 14 - FAIR VALUE OF FINANCIAL INSTRUMENTS

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

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

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COMMUNITYCORP

NOTE 14 - FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)

Federal Funds Sold - Federal funds sold are typically for a term of one day, and the carrying amount approximates the fair value.

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

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

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

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

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

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

Off-Balance-Sheet Financial Instruments - The notional amount represents the amounts of loan commitments and letters of credit, which are off-balance-sheet financial instruments. The fair value of these instruments is not material.

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COMMUNITYCORP

NOTE 14 - FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)

The carrying values and estimated fair values of the Company’s financial instruments were as follows:

	December 31,
	2004				2003
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial Assets:
Cash and due from banks	$	3,705,335	$	3,705,335	$	4,862,983	$	4,862,983
Federal funds sold		19,046,000		19,046,000		16,367,000		16,367,000
Time deposits with other banks		499,000		499,000		499,000		499,000
Securities available-for-sale		25,309,730		25,309,730		16,494,638		16,494,638
Securities held-to-maturity		2,180,728		2,269,336		2,644,498		2,764,762
Nonmarketable equity securities		305,175		305,175		214,375		214,375
Loans receivable, gross		83,006,251		82,635,590		80,169,314		80,001,777
Accrued interest receivable		822,240		822,240		817,309		817,309
Financial Liabilities:
Demand deposit, interest-bearing transaction, and savings accounts	$	67,759,615	$	67,759,615	$	58,734,822	$	58,734,822
Time deposits		57,151,712		57,341,084		53,849,004		53,980,229
Short-term borrowings		390,000		390,000		450,000		450,000
Accrued interest payable		295,430		295,430		295,934		295,934

	Notional Amount		Notional Amount
Off-Balance Sheet Financial Instruments:
Commitments to extend credit	$	8,554,442	$	7,158,562
Standby letters of credit		1,095,000		1,142,411

NOTE 15 - REGULATORY MATTERS

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

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

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COMMUNITYCORP

NOTE 15 - REGULATORY MATTERS (continued)

As of December 31, 2004, the most recent notification from the Bank’s primary regulator categorized the Bank as well-capitalized under the regulatory framework for prompt-corrective action. There are no conditions or events that management believes have changed the Bank’s category.

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

	Actual				For Capital Adequacy Purposes				To Be Well- Capitalized Under Prompt Corrective Action Provisions
					Minimum				Minimum
	Amount		Ratio		Amount		Ratio		Amount		Ratio
December 31, 2004
Total capital (to risk-weighted assets)	$	13,710,543	14.51	%	$	7,561,040	8.00	%	$	9,451,300	10.00	%
Tier 1 capital (to risk-weighted assets)		12,529,130	13.26			3,780,520	4.00			5,670,780	6.00
Tier 1 capital (to average assets)		12,529,130	9.38			5,344,800	4.00			6,681,000	5.00
December 31, 2003
Total capital (to risk-weighted assets)	$	12,191,536	13.83	%	$	7,050,500	8.00	%	$	8,813,125	10.00	%
Tier 1 capital (to risk-weighted assets)		11,089,896	12.58			3,525,250	4.00			5,287,875	6.00
Tier 1 capital (to average assets)		11,089,896	9.05			4,901,080	4.00			6,126,350	5.00

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

NOTE 16 - COMMUNITYCORP (PARENT COMPANY ONLY)

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

Condensed Balance Sheets

	December 31,
	2004		2003
Assets
Cash	$	66,797	$	77,732
Investment in banking subsidiary		12,561,281		11,154,441
Nonmarketable equity securities		4,500		4,500
Other assets		3,550		3,550
Total assets	$	12,636,128	$	11,240,223
Shareholders’ equity	$	12,636,128	$	11,240,223

47

COMMUNITYCORP

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

Condensed Statements of Income

	Years ended December 31,
	2004		2003
Income
Dividends from banking subsidiary	$	216,000	$	2,391,321
Other income		1		1
Total income		216,001		2,391,322
Expenses		—		225
Income before income taxes and equity in undistributed earnings of banking subsidiary		216,001		2,391,097
Income tax benefit		—		75
Equity in undistributed earnings of banking subsidiary		1,439,256		(966,131	)
Net income	$	1,655,257	$	1,425,041

Condensed Statements of Cash Flows

	Years ended December 31,
	2004			2003
Cash flows from operating activities
Net income	$	1,655,257		$	1,425,041
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in undistributed earnings of banking subsidiary		(1,439,256	)		966,131
Increase in other assets		—			(117	)
Net cash provided by operating activities		216,001			2,391,055
Cash flows from financing activities
Cash dividends paid		(178,421	)		(179,516	)
Purchases of treasury stock		(91,115	)		(2,358,620	)
Sale of treasury stock		42,600			167,715
Net cash used by financing activities		(226,936	)		(2,370,421	)
Increase (decrease) in cash		(10,935	)		20,634
Cash, beginning of year		77,732			57,098
Cash, ending of year	$	66,797		$	77,732

48

COMMUNITYCORP

BOARD OF DIRECTORS

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

OFFICERS

W. Roger Crook	Mildred N. Whidden	William Steadman
Chief Executive Officer and President	Assistant Cashier     and Head Teller	Executive Vice President
Gwendolyn P. Bunton	Andrea M. Davis	D.A. Strickland
Vice President and Cashier	Branch Manager	Branch Manager
Lynn H. Murdaugh	M. Ellison Young	Joanne Copeland
Assistant Vice President     and Administrative Assistant	Vice President	Mortgage Loan Originator
Bruce Tate		Paulette M. Masters
Loan Officer		Branch Manager

STAFF MEMBERS

Annette Lyons
Cindy Ackerman	Sharon Milligan
Angela Adams	Amy Avant
Kimber Alderman	Aubrey Davis
Kristen Barrineau	Telie Etheridge
Casey Beach	Tanya Hickman
Carolyn Brant	Lynn Hiott
Dorothy Brunson	Angela Keen
William S. Crook	Natalie Powers
Jennifer Crosby	Pam O’Quinn
Melissa Dandridge	Amy Bunton
Betty Ford	Kelly Smith
Elizabeth Gray	Melissa T. Smyly
Krystal Thomas	Cynthia Mills
Sharon Hillier	Candice Kubik
Carolyn Rahn	Rose Walker
Stephanie Kelly	Nichole Espisito
Joy Koth	Louie Whidden
Pam Nelson

49

COMMUNITYCORP

CORPORATE DATA

ANNUAL MEETING:

The Annual Meeting of Shareholders of Communitycorp will be held at 6 p.m. on Wednesday, April 27, 2005 at Bank of Walterboro, 1100 North Jefferies Boulevard, Walterboro, South Carolina.

CORPORATE OFFICE:	GENERAL COUNSEL:
P.O. Box 1707	McLeod, Fraser & Cone
1100 North Jefferies Blvd.	P.O. Box 230
Walterboro, S.C. 29488	Washington Street
(843) 549-2265	Walterboro, S.C. 29488
STOCK TRANSFER DEPARTMENT:	INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM:
Bank of Walterboro	Elliott Davis, LLC
P.O. Box 1707	200 East Broad Street
Walterboro, S.C. 29488	Greenville, SC 29601

STOCK INFORMATION:

The Common Stock of Communitycorp is not listed on any exchange, nor is there a recognized or established market. There is limited trading in the Company’s shares of Common Stock. Management believes that the Common Stock has traded for a price per share of $50.00 to $55.00 during the past two years. There were approximately 569 shareholders of record as of December 31, 2004.

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

FORM 10-KSB

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

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

50

COMMUNITYCORP

SERVICES

All Day Banking

American Express Travelers Checks

ATM Service

Bank By Mail

Bond Coupon Redemption

Business Checking

Canceled Checks Returned with Statement

Cashiers Checks

Certificates of Deposit

Christmas Clubs

Collection Items

Commercial Loans

Direct Deposits

Discount Brokerage Service

Drive-In Service

Individual Retirement Accounts

Interest Checking

Internet Banking

Letters of Credit

Money Market Accounts

Money Orders

Mortgage Loans

Night Depository

Overdraft Protection

Personal Checking

Personal Lines of Credit

Personal Loans

Regular Savings

Safe Deposit Boxes

Senior Checking

Treasury, Tax & Loan Deposits

U.S. Savings Bonds

Visa and Master Card

Wire Transfers

§

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

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

6225 Savannah Highway, Ravenel, S.C. 29470

398 East Main Street, Ridgeland, SC 29936

Member FDIC

51

EX-21.1

Exhibit 21.1

COMMUNITYCORP

Subsidiaries of the Company

Bank of Walterboro

EX-31.1

Exhibit 31.1

CERTIFICATION

I, W. Roger Crook, president and chief executive officer, certify that:

1. I have reviewed this annual report on Form 10-KSB of Communitycorp;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

4. The small business issuer’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and

5. The small business issuer’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

Date: March 22, 2005	By:	/s/ W. Roger Crook
		W. Roger Crook
		President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Gwendolyn P. Bunton, Vice President and Cashier, certify that:

1. I have reviewed this annual report on Form 10-KSB of Communitycorp;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

4. The small business issuer’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and

5. The small business issuer’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

Date: March 22, 2005	By:	/s/ Gwendolyn P. Bunton
		Gwendolyn P. Bunton
		Vice President and Cashier

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, the Chief Executive Officer and the Vice President and Cashier of Communitycorp (the “Company”), each certify that, to his or her knowledge on the date of this certification:

1. The annual report of the Company for the period ended December 31, 2004 as filed with the Securities and Exchange Commission on this date (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: March 22, 2005	By:	/s/ W. Roger Crook
		W. Roger Crook
		President and Chief Executive Officer

Date: March 22, 2005	By:	/s/ Gwendolyn P. Bunton
		Gwendolyn P. Bunton
		Vice President and Cashier