Communitycorp 10-Q 2002 Q3 Quarterly report

U. S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2002

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the Transition Period from             to            

Commission File Number 33-76644

COMMUNITYCORP

(Exact name of registrant as specified in its charter)

South Carolina	57-1019001
(State or other jurisdiction of incorporation)	(I.R.S. Employer Identification No.)

1100 N. Jefferies Boulevard

Walterboro, SC 29488

(Address of principal executive offices, including zip code)

(843) 549-2265

(Registrant’s telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.  YES  x  NO  ¨

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the date of this filing.

274,529 shares of common stock, $5 par value, as of October 31, 2002

PAGE 1 OF 15

EXHIBIT INDEX ON PAGE 2

COMMUNITYCORP

Index

		Page No.
PART I.    FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets—September 30, 2002 and December 31, 2001	3
	Condensed Consolidated Statements of Income—Nine months ended September 30, 2002 and 2001 and Three months ended September 30, 2002 and 2001	4
	Condensed Consolidated Statements of Shareholders’ Equity and Comprehensive Income—Nine months ended September 30, 2002 and 2001	5
	Condensed Consolidated Statements of Cash Flows—Nine months ended September 30, 2002 and 2001	6
	Notes to Condensed Consolidated Financial Statements	7-8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	9-13
Item 4.	Controls and Procedures	14
PART II.    OTHER INFORMATION
Item 6.	Exhibits and Reports on Form 8-K	15
	(a)    Exhibits	15
	(b)    Reports on Form 8-K	15
Signature		16
Certifications		17-18

COMMUNITYCORP

Condensed Consolidated Balance Sheets

	September 30, 2002			December 31, 2001
	(Unaudited)
Assets:
Cash and cash equivalents:
Cash and due from banks	$	4,503,419		$	3,841,132
Federal funds sold and securities purchased under agreements to resell		15,396,000			18,062,000
Total cash and cash equivalents		19,899,419			21,903,132
Time deposits with other banks		299,000			299,000
Investment securities:
Securities available-for-sale		14,463,074			11,343,473
Nonmarketable equity securities		332,375			330,375
Securities held-to-maturity (estimated market value of $3,182,751 and $3,530,683 at September 30, 2002 and December 31, 2001, respectively)		3,055,902			3,499,225
Total investment securities		17,851,351			15,173,073
Loans receivable		76,113,112			71,358,930
Less allowance for loan losses		(1,298,751	)		(1,231,051	)
Loans, net		74,814,361			70,127,879
Accrued interest receivable		870,287			911,811
Premises, furniture & equipment, net		2,097,994			2,013,147
Other assets		433,809			422,126
Total assets	$	116,266,221		$	110,850,168
Liabilities and Shareholders’ Equity:
Liabilities:
Deposits:
Noninterest-bearing	$	12,655,881		$	9,230,016
Interest-bearing		90,814,830			89,190,295
		103,470,711			98,420,311
Short-term borrowings		310,000			560,000
Accrued interest payable		471,481			717,570
Other liabilities		129,758			150,176
Total liabilities		104,381,950			99,848,057
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		1,731,708			1,731,708
Accumulated other comprehensive income		149,106			51,132
Retained earnings		9,610,128			8,648,977
Treasury stock (25,471 shares in 2002 and 21,594 shares in 2001)		(1,106,671	)		(929,706	)
Total shareholders’ equity		11,884,271			11,002,111
Total liabilities and shareholders’ equity	$	116,266,221		$	110,850,168

See notes to condensed consolidated financial statements

3

COMMUNITYCORP

Condensed Consolidated Statements of Income

(Unaudited)

	Nine Months Ended September 30,				Three Months Ended September 30,
	2002		2001		2002		2001
Interest income:
Loans, including fees	$	4,437,450	$	4,813,491	$	1,502,681	$	1,607,171
Securities		538,676		619,965		175,244		163,520
Other interest income		250,416		649,616		84,912		170,404
Total		5,226,542		6,083,072		1,762,837		1,941,095
Interest expense:
Deposit accounts		2,041,371		3,168,829		630,153		981,175
Other interest expense		3,274		16,374		995		3,899
		2,044,645		3,185,203		631,148		985,074
Net interest income		3,181,897		2,897,869		1,131,689		956,021
Provision for loan losses		240,000		192,000		90,000		50,000
Net interest income after provision for loan losses		2,941,897		2,705,869		1,041,689		906,021
Other operating income:
Service charges		270,712		255,768		95,586		100,704
Other income		87,276		96,782		29,227		29,582
Total		357,988		352,550		124,813		130,286
Other operating expenses:
Salaries and benefits		852,751		809,093		291,105		270,114
Net occupancy expense		118,861		117,364		43,277		43,248
Equipment expense		194,726		192,979		64,308		65,049
Other operating expenses		477,450		530,806		163,499		158,737
Total		1,643,788		1,650,242		562,189		537,148
Income before taxes		1,656,097		1,408,177		604,313		499,159
Income tax provision		531,099		445,900		197,000		163,999
Net income	$	1,124,998	$	962,277	$	407,313	$	335,160
Earnings per share:
Weighted average common shares outstanding		277,134		280,710		275,567		279,721
Net income per common share	$	4.06	$	3.43	$	1.48	$	1.20

See notes to condensed consolidated financial statements

4

COMMUNITYCORP

Condensed Consolidated Statement of Shareholders’ Equity and Comprehensive Income

for the nine months ended September 30, 2002 and 2001

(Unaudited)

	Common Stock			Capital Surplus		Accumulated Other Comprehensive Income			Retained Earning			Treasury Stock			Total
	Shares	Amount
Balance, December 31, 2000	300,000	$	1,500,000	$	1,731,708	$	(71,480	)	$	7,500,834		$	(781,206	)	$	9,879,856
Cash dividends declared—$.55 per share										(154,938	)					(154,938	)
Net income for the period										962,277						962,277
Other comprehensive income, net of taxes							172,377									172,377
Comprehensive Income																1,134,654
Purchase of treasury Stock													(90,000	)		(90,000	)
Balance, September 30, 2001	300,000	$	1,500,000	$	1,731,708	$	100,897		$	8,308,173		$	(871,206	)	$	10,769,572
Balance, December 31, 2001	300,000	$	1,500,000	$	1,731,708	$	51,132		$	8,648,977		$	(929,706	)	$	11,002,111
Cash dividends declared—$.59 per share										(163,847	)					(163,847	)
Net income for the period										1,124,998						1,124,998
Other comprehensive income, net of taxes							97,974									97,974
Comprehensive Income																1,222,972
Purchase of treasury stock													(176,965	)		(176,965	)
Balance, September 30, 2002	300,000	$	1,500,000	$	1,731,108	$	149,106		$	9,610,128		$	(1,106,671	)	$	11,884,271

See notes to condensed consolidated financial statements

5

COMMUNITYCORP

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended September 30,
	2002			2001
Cash flows from operating activities:
Net income	$	1,124,998		$	962,277
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		144,091			140,961
Provision for possible loan losses		240,000			192,000
Amortization less accretion on investments		27,690			11,308
Amortization of deferred loan costs		49,951			58,971
Gain on sale of premises and equipment		(13,268	)		—
(Increase) decrease in interest receivable		41,524			182,938
Increase (decrease) in interest payable		(246,090	)		36,238
(Increase) decrease in other assets		(65,285	)		42,400
Increase (decrease) in other liabilities		(20,418	)		43,698
Net cash provided by operating activities		1,283,193			1,670,791
Cash flows from investing activities:
Net increase in loans to customers		(4,976,433	)		(1,696,184	)
Purchases of securities available-for-sale		(15,707,734	)		(11,323,613	)
Maturities of securities available-for-sale		12,712,092			19,208,759
Maturities of securities held-to-maturity		441,251			958,505
Proceeds from disposal of premises and equipment		15,702			—
Purchases of premises and equipment		(231,372	)		(11,697	)
Net cash provided (used) by investing activities		(7,746,494	)		7,135,770
Cash flows from financing activities:
Net increase in demand accounts		5,050,400			4,652,982
(Decrease) increase in short-term borrowings		(250,000	)		(150,000	)
Dividends paid		(163,847	)		(154,938	)
Purchase of treasury stock		(176,965	)		(90,000	)
Net cash provided by financing activities		4,459,588			4,258,044
Net increase in cash and cash equivalents		(2,003,713	)		13,064,605
Cash and cash equivalents, beginning of period		21,903,132			8,825,660
Cash and cash equivalents, end of period	$	19,899,419		$	21,890,265
Cash paid during the period for:
Income taxes	$	755,787		$	494,588
Interest	$	2,290,734		$	3,148,965

See notes to condensed consolidated financial statements

6

COMMUNITYCORP

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 1—BASIS OF PRESENTATION

The accompanying consolidated financial statements have been prepared in accordance with the requirements for interim financial statements and, accordingly, they are condensed and omit disclosures, which would substantially duplicate those contained in the most recent annual report to shareholders. The financial statements as of September 30, 2002 and for the interim periods ended September 30, 2002 and 2001 are unaudited and, in the opinion of management, include all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation. The financial information as of December 31, 2001 has been derived from the audited financial statements as of that date. For further information, refer to the financial statements and the notes included in Communitycorp’s 2001 Annual Report.

NOTE 2—COMPREHENSIVE INCOME

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

	Pre-tax Amount		(Expense) Benefit			Net-of-tax Amount
For the Nine Months Ended September 30, 2002:
Unrealized gains (losses) on securities available-for-sale	$	149,577	$	(51,603	)	$	97,974
Plus: reclassification adjustment for gains (losses) realized in net income		—		—			—
Net unrealized gains (losses) on securities	$	149,577	$	(51,603	)	$	97,974
Other comprehensive income	$	149,577	$	(51,603	)	$	97,974
	Pre-tax Amount		(Expense) Benefit			Net-of-tax Amount
For the Nine Months Ended September 30, 2001:
Unrealized gains (losses) on securities available-for-sale	$	261,626	$	(89,249	)	$	172,377
Plus: reclassification adjustment for gains (losses) realized in net income		—		—			—
Net unrealized gains (losses) on securities		261,626		(89,249	)		172,377
Other comprehensive income	$	261,626	$	(89,249	)	$	172,377

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COMMUNITYCORP

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 2—COMPREHENSIVE INCOME—continued

	Pre-tax Amount		(Expense) Benefit			Net-of-tax Amount
For the Three Months Ended September 30, 2002:
Unrealized gains (losses) on securities available-for-sale	$	59,259	$	(20,444	)	$	38,815
Plus: reclassification adjustment for gains (losses) realized in net income		—		—			—
Net unrealized gains (losses) on securities		59,259		(20,444	)		38,815
Other comprehensive income	$	59,259	$	(20,444	)	$	38,815
	Pre-tax Amount		(Expense) Benefit			Net-of-tax Amount
For the Three Months Ended September 30, 2001:
Unrealized gains (losses) on securities available-for-sale	$	74,824	$	(24,872	)	$	49,952
Plus: reclassification adjustment for gains (losses) realized in net income		—		—			—
Net unrealized gains (losses) on securities		74,824		(24,872	)		49,952
Other comprehensive income	$	74,824	$	(24,872	)	$	49,952

Accumulated other comprehensive income consists solely of the unrealized gain on securities available for sale, net of the deferred tax effects.

8

COMMUNITYCORP

Item 2.    Management’s Discussion and Analysis of Financial Condition

The following is a discussion of our financial condition as of September 30, 2002 compared to December 31, 2001, and the results of operations for the three and nine months ended September 30, 2002 compared to the three and nine months ended September 30, 2001. These comments should be read in conjunction with our condensed consolidated financial statements and accompanying footnotes appearing in this report.

Results of Operations

Net Interest Income

For the nine months ended September 30, 2002, net interest income increased $284,028 or 9.80%, as compared to the same period in 2001. Interest and fees on loans decreased $376,041 or 7.81% to $4,437,450 for the nine months ended September 30, 2002 as compared to the same period in 2001. Other interest income, which includes interest on federal funds sold, decreased $399,200, or 61.45% to $250,416 for the nine months ended September 30, 2002 when compared to the same period in 2001. Interest income on securities decreased $81,289, or 13.11%, to $538,676 for the nine months ended September 30, 2002 when compared to the same nine months ended September 30, 2001. Although the volume of loans and securities increased during the nine months ended September 30, 2002, the decline in interest rates led to the overall decrease in interest earned on these assets. Interest expense on deposits decreased 35.57% from $3,168,829 for the nine months ended September 30, 2001 to $2,041,371 for the same period ended September 30, 2002. This decrease was also attributable to the decline in the cost of funds. The net interest margin realized on earning assets decreased from 3.64% for the nine months ended September 30, 2001 to 2.49% for the same period in 2002. The interest rate spread decreased from 2.90% as of September 30, 2001 to 1.78% at September 30, 2002.

Net interest income increased $175,668, or 18.37%, to $1,131,689 for the quarter ending September 30, 2002 when compared to the same quarter ended September 30, 2001. Interest on loans and fees decreased $104,490 or 6.50% to $1,502,681 for the quarter ended September 30, 2002 when compared to the same period in 2001. Other interest income decreased $85,492, or 50.17% from $170,404 for the quarter ended September 30, 2001 to $84,912 for the quarter ended September 30, 2002. The interest income on securities for the quarter ending September 30, 2002 increased $11,724, or 7.17% to $175,244 when compared to the same period in 2001. Interest expense decreased $353,926 to $631,148 for the quarter ended September 30, 2002 when compared to the same period in 2001. This decrease in the cost of funds during the quarter led to the increase in net interest income when comparing the two quarters. The net interest margin realized on earning assets increased from 3.5% for the quarter ended September 30, 2001 to 4.06% for the quarter ended September 30, 2002. The interest rate spread increased to 3.62% for the quarter ended September 30, 2002 from 2.69% for the quarter ended September 30, 2001.

Provision and Allowance for Loan Losses

The provision for loan losses is the charge to operating earnings that management feels is necessary to maintain the allowance for possible loan losses at an adequate level. For the nine months ended September 30, 2002, the provision charged to expense was $240,000. This was $48,000 more than for the comparable period in 2001. The provision charged to expense for the quarter ended September 30, 2002 was $90,000 as compared to $50,000 for the same quarter a year ago. The increases in the provision for the quarter and the nine months are attributable to growth in the loan portfolio and an increase in charged-off loans. Based on present information, management believes the allowance for loan losses is adequate at September 30, 2002 to meet presently known and inherent risks in the loan portfolio. The allowance for loan losses is 1.71% of total loans at September 30, 2002, as compared to 1.77% at September 30, 2001.

Noninterest Income

Noninterest income during the nine months ended September 30, 2002 was $357,988 an increase of $5,438 or 1.54% from the comparable period in 2001. Service charges on deposit accounts increased $14,944 or 5.84% from the period ended September 30, 2001 to $270,712 for the period ended September 30, 2002. Other income decreased 9.82% to $87,276 for the nine months ended September 30, 2002 when compared to the same period ended September 30, 2001.

For the quarter ended September 30, 2002, noninterest income decreased $5,473 or 4.20% over the same period in 2001. This decrease is primarily due to service charges, which decreased 5.08% from the quarter ended September 30, 2001 to $95,586 for the quarter ended September 30, 2002.

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COMMUNITYCORP

Item 2.    Management’s Discussion and Analysis of Financial Condition—continued

Noninterest Expense

Total noninterest expense for the nine months ended September 30, 2002 was $1,643,788, or .39%, lower than the nine months ended September 30, 2001. Salaries and employee benefits increased from $809,093 for the nine months ended September 30, 2001 to $852,751 for the nine months ended September 30, 2002. This increase is primarily attributable to the addition of several full time employees and a loan officer. Other operating expenses decreased $53,356, or 10.05%, to $477,450 for the nine months ended September 30, 2002 when compared to the same period in 2001. Included in 2001 other operating expenses was $20,983 related to the writedown on a parcel of real estate. There were no writedowns in 2002.

For the quarter ended September 30, 2002, noninterest expense increased $25,041, or 4.66%, over the same period in 2001. Salaries and employee benefits increased $20,991, or 7.77%, from $270,114 for the quarter ended September 30, 2001 to $291,105 for the quarter ended September 30, 2002. The increase was due to the same reasons discussed above.

Income Taxes

The income tax provision for the nine months ended September 30, 2002 was $531,099 as compared to $445,900 for the same period in 2001. This increase was primarily as a result of a increase in income before taxes. The effective tax rates were 32.07% and 31.67% for the nine months ended September 30, 2002 and September 30, 2001, respectively. The effective tax rates were 32.60% and 32.86% for the quarter ended September 30, 2002 and September 30, 2001, respectively.

Net Income

The combination of the above factors resulted in net income for the nine months ended September 30, 2002 of $1,124,998 as compared to $962,277 for the same period in 2001. This represents a increase of $162,721, or 16.91%, over the same period in 2001. Net income for the quarter ended September 30, 2002 was $407,313, or 21.53% higher than for the same period in 2001. The increase in net interest income is primarily due to the decrease in the cost of funds.

Assets and Liabilities

During the first nine months of 2002, total assets increased $5,416,053, or 4.89% when compared to December 31, 2001. Total investment securities increased $2,678,278 from December 31, 2001 to $17,851,351 at September 30, 2002. Loans increased $4,754,182, or 6.66%, to $76,113,112 at September 30, 2002. Total deposits also increased by 5.13%, or $5,050,400, from December 31, 2001 to $103,470,711 at September 30, 2002. Noninterest-bearing deposits increased 37.11% from December 31, 2001 to $12,655,881. Interest-bearing deposits increased $1,624,535, or 1.82%, to $90,814,830 at September 30, 2002. This increase was attributable to additional funds received from Charleston County and to normal growth of the Bank.

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COMMUNITYCORP

Item 2.    Management’s Discussion And Analysis Of Financial Condition—continued

Loans

The demand for loans was strong in the Bank of Walterboro marketplace during the first nine months of 2002. Gross loans increased $4,754,182 or 6.66% during the period. Balances within the major loans receivable categories as of September 30, 2002 and December 31, 2001 are as follows:

	September 30, 2002		December 31, 2001
Real estate – construction	$	5,423,694	$	6,312,748
Real estate – mortgage		30,102,503		24,844,649
Commercial and industrial		27,397,011		25,868,360
Consumer and other		13,189,904		14,333,173
	$	76,113,112	$	71,358,930

Risk Elements in the Loan Portfolio

The following is a summary of risk elements in the loan portfolio:

		September 30,		December 31
	2002		2001
Loans: Nonaccrual loans	$	2,985,548	$	1,096,532
Accruing loans more than 90 days past due	$	—	$	3,000
Loans identified by the internal review mechanism:
Criticized	$	136,433	$	—
Classified	$	3,597,648	$	1,764,786

Activity in the Allowance for Loan Losses is as follows:

	September 30,
	2002			2001
Balance, January 1,	$	1,231,051		$	1,173,832
Provision for loan losses for the period		240,000			192,000
Net loans (charged-off) recovered for the period		(172,300	)		(143,194	)
Balance, end of period	$	1,298,751		$	1,222,638
Gross loans outstanding, end of period	$	76,113,112		$	69,288,742
Allowance for loan losses to loans outstanding		1.71	%		1.77	%

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COMMUNITYCORP

Item 2.    Management’s Discussion And Analysis Of Financial Condition—continued

Deposits

Total deposits increased $5,050,400 or 5.13% from December 31, 2001. The largest change was an increase in savings deposits. Savings deposits increased $6,514,743 or 38.74% at September 30, 2002. Certificates of deposit decreased $6,032,878 or 10.46% to at September 30, 2002. Expressed in percentages, interest-bearing deposits increased 7.78%. Noninterest-bearing demand deposits increased $3,425,865 or 37.12%. The increase in noninterest-bearing demand deposits was attributable to normal growth of the Bank. The increase in savings deposits is partially attributable to the movement of funds from certificates of deposit to savings deposits anticipating rate increases. The decrease in certificates of deposits is also partially attributable to the withdrawal of certain Colleton County funds.

Balances within the major deposit categories as of September 30, 2002 and December 31, 2001 are as follows:

	September 30, 2002		December 31, 2001
Noninterest-bearing demand deposits	$	12,655,881	$	9,230,016
Interest-bearing demand deposits		15,834,800		14,692,130
Savings deposits		23,330,160		16,815,417
Certificates of deposit		51,649,870		57,682,748
	$	103,470,711	$	98,420,311

Liquidity

Liquidity needs are met by us through scheduled maturities of loans and investments on the asset side and through pricing policies on the liability side for interest-bearing deposit accounts. The level of liquidity is measured by the loan-to-total funds ratio, which was at 73.34% at September 30, 2002 and 72.09% at December 31, 2001.

Securities available-for-sale, which totaled $14,463,074 at September 30, 2002, serves as a ready source of liquidity. The Company also has lines of credit available with correspondent banks to purchase federal funds. At September 30, 2002, unused lines of credit totaled $3,000,000.

Capital Resources

Total shareholders’ equity increased from $11,002,111 at December 31, 2001 to $11,884,271 at September 30, 2002. The increase of $882,160 is partially attributed to earnings for the period of $1,124,998. Equity was negatively affected by the purchase of treasury stock of $176,965 during the period.

Bank holding companies, such as the Company, and their banking subsidiaries are required by banking regulators to meet certain minimum levels of capital adequacy, which are expressed in the form of certain ratios. Capital is separated into Tier 1 capital (essentially common shareholders’ equity less intangible assets) and Tier 2 capital (essentially the allowance for loan losses limited to 1.25% of risk-weighted assets). The first two ratios, which are based on the degree of credit risk in the Company’s assets, provide the weighting of assets based on assigned risk factors and include off-balance sheet items such as loan commitments and stand-by letters of credit. The ratio of Tier 1 capital to risk-weighted assets must be at least 4.0% and the ratio of total capital (Tier 1 capital plus Tier 2 capital) to risk-weighted assets must be at least 8.0%. The capital leverage ratio supplements the risk-based capital guidelines. Banks and bank holding companies are required to maintain a minimum ratio of Tier 1 capital to adjusted quarterly average total assets of 3.0%.

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COMMUNITYCORP

Item 2.    Management’s Discussion And Analysis Of Financial Condition—continued

Capital Resources—continued

The following table summarizes the Bank’s risk-based capital at September 30, 2002:

Shareholders’ equity	$	11,821,741
Less: net unrealized gains on securities available-for-sale		149,577
Tier 1 capital		11,672,164
Plus: allowance for loan losses (1)		1,016,000
Total capital	$	12,688,164
Risk-weighted assets	$	80,971,000
Risk-based capital ratios
Tier 1 capital (to risk-weighted assets)		14.42	%
Total capital (to risk-weighted assets)		15.67	%
Tier 1 capital (to total average assets)		10.03	%

(1) limited to 1.25% of risk-weighted assets

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 of less than $150,000,000 in consolidated assets.

Off-Balance Sheet Risk

Through the operations of our Bank, we have made contractual commitments to extend credit in the ordinary course of our business activities. These commitments are legally binding agreements to lend money to our customers at predetermined interest rates for a specified period of time. At September 30, 2002, we had issued commitments to extend credit of $5,469,000 and standby letters of credit of $446,000 through various types of commercial lending agreements. We evaluate each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by us upon extension of credit, is based on our credit evaluation of the borrower. Collateral varies but may include accounts receivable, inventory, property, plant and equipment, commercial and residential real estate.

Regulatory Matters

The management of the Company is not aware of any current recommendations by regulatory authorities which, if they were to be implemented, would have a material effect on liquidity, capital resources or operations.

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COMMUNITYCORP

Item 4.    Controls and Procedures

(a)    Based on their evaluation of the issuer’s disclosure controls and procedures (as defined in 17 C.F.R. Sections 240.13a-14(c) and 240.15d-14(c)) as of a date within 90 days prior to the filing of this quarterly report, the issuer’s chief executive officer and chief financial officer concluded that the effectiveness of such controls and procedures was adequate.

(b)    There were no significant changes in the issuer’s internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

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COMMUNITYCORP

PART II—OTHER INFORMATION

Item 6.    Exhibits and Reports on Form 8-K

(a	)	Exhibits
(b	)	Reports on Form 8-K—No reports on Form 8-K were filed during the quarter ended September 30, 2002.

Items 1, 2, 3, 4, and 5 are not applicable.

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COMMUNITYCORP

SIGNATURE

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

COMMUNITYCORP

By:	/s/    W. ROGER CROOK
	W. Roger Crook President & Chief Executive Officer

Date: November 12, 2002	By:	/s/    GWEN P. BUNTON
		Gwen P. Bunton Chief Financial Officer

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COMMUNITYCORP

CERTIFICATIONS

I, W. Roger Crook, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Communitycorp;

2. Based on my knowledge, this quarterly 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 quarterly report;

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

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: November 12, 2002	/s/    W. ROGER CROOK
	W. Roger Crook President and Chief Executive Officer

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COMMUNITYCORP

CERTIFICATIONS

I, Gwendolyn P. Bunton, certify that:

7. I have reviewed this quarterly report on Form 10-Q of Communitycorp;

8. Based on my knowledge, this quarterly 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 quarterly report;

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

10. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

d) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

e) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

f) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

11. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

c) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

d) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

12. The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: November 12, 2002	/s/    GWEN P. BUNTON
	Gwen P. Bunton Vice President and Cashier

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