UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2011

Commission File Number 0-18460

COMMUNITY CAPITAL CORPORATION

(Exact name of registrant as specified in its charter)

South Carolina	57-0866395
(State or other jurisdiction of	(I.R.S. Employer Identification
incorporation)	No.)

1402C Highway 72 West

Greenwood, SC 29649

(Address of principal executive

offices, including zip code)

(864) 941-8200

(Registrant’s telephone number, including area code)

________________________________________________

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes__ No ___

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

Large Accelerated Filer ( ) Accelerated Filer ( ) Non-Accelerated Filer ( ) Smaller Reporting Company (X)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES__ NO X

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date

10,060,777 shares of common stock, $1.00 par value per share, as of April 29, 2011

COMMUNITY CAPITAL CORPORATION

Index

PART I. - FINANCIAL INFORMATION

Page No.

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Balance Sheets – March 31, 2011 and December 31, 2010	3

	Condensed Consolidated Statements of Operations -
	Three months ended March 31, 2011 and 2010	4

	Condensed Consolidated Statements of Changes in Shareholders' Equity and Comprehensive Income -
	Three months ended March 31, 2011 and 2010	5

	Condensed Consolidated Statements of Cash Flows - Three months ended March 31, 2011 and 2010	6

	Notes to Condensed Consolidated Financial Statements	7-23

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	24-42

Item 3.	Quantitative and Qualitative Disclosure About Market Risk	43

Item 4.	Controls and Procedures	43-44

PART II. - OTHER INFORMATION

Item 1.	Legal Proceedings	45

Item 1A.	Risk Factors	45

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45

Item 3.	Defaults Upon Senior Securities	45

Item 4.	(Removed and Reserved)	45

Item 5.	Other Information	45

Item 6.	Exhibits	45

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COMMUNITY CAPITAL CORPORATION

Condensed Consolidated Balance Sheets

PART I. FINANCIAL STATEMENTS

Item 1. Financial Statements

		March 31,			December 31,
(Dollars in thousands, shares are not in dollars)		2011			2010
Assets:		(Unaudited)
Cash and cash equivalents:
Cash and due from banks	$	11,079		$	9,315
Interest-bearing deposit accounts		43,580			27,860

Total cash and cash equivalents		54,659			37,175

Investment securities:
Securities available-for-sale		67,197			74,025
Nonmarketable equity securities		9,416			9,626
Total investment securities		76,613			83,651
Loans held for sale		1,781			5,516
Loans receivable		464,978			479,393
Less allowance for loan losses		(15,112	)		(17,165	)
Loans, net		449,866			462,228
Other real estate owned		13,691			13,496
Premises and equipment, net		15,153			15,342
Accrued interest receivable		2,201			2,289
Prepaid expenses		2,857			3,349
Intangible assets		1,162			1,259
Cash surrender value of life insurance		17,569			17,397
Deferred tax asset		8,469			8,992
Income tax receivable		3,104			3,158
Other assets		2,010			2,082
Total assets	$	649,135		$	655,934

Liabilities:
Deposits:
Noninterest-bearing	$	108,844		$	103,080
Interest-bearing		378,171			392,102

Total deposits		487,015			495,182
Advances from the Federal Home Loan Bank		95,400			95,400
Accrued interest payable		615			708
Junior subordinated debentures		10,310			10,310
Other liabilities		6,920			6,930
Total liabilities		600,260			608,530

Shareholders’ equity:
Common stock, $1.00 par value; 20,000,000 shares authorized;
10,721,350 shares issued at March 31, 2011 and December 31, 2010		10,721			10,721
Capital surplus		64,160			64,679
Accumulated other comprehensive income (loss)		(165	)		(460	)
Retained earnings (deficit)		(16,167	)		(17,189	)
Nonvested restricted stock		(84	)		(116	)
Treasury stock, at cost (660,573 and 704,702 shares in 2011 and 2010,
respectively)		(9,590	)		(10,231	)

Total shareholders’ equity		48,875			47,404
Total liabilities and shareholders’ equity	$	649,135		$	655,934

See Notes to Condensed Consolidated Financial Statements

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COMMUNITY CAPITAL CORPORATION

Condensed Consolidated Statements of Operations

(Unaudited)

(Dollars in thousands, except for per share data amounts)	Three Months Ended March 31,
	2011		2010
Interest income:
Loans, including fees	$	6,405	$	7,500
Investment securities:
Taxable		366		536
Tax-exempt		113		169
Nonmarketable equity securities		41		31
Other interest income		16		22
Total		6,941		8,258

Interest expense:
Deposits		1,002		1,930
Federal Home Loan Bank advances		817		823
Other interest expense		195		179
Total		2,014		2,932

Net interest income		4,927		5,326
Provision for loan losses		600		1,600
Net interest income after provision for loan losses		4,327		3,726

Other operating income:
Service charges on deposit accounts		375		482
Gain on sales of loans held for sale		427		298
Fees from brokerage services		76		64
Income from fiduciary activities		530		472
Gain on sale of securities available-for-sale		224		683
Other operating income		484		1,348
Total		2,116		3,347

Other operating expenses:
Salaries and employee benefits		2,572		2,439
Net occupancy		335		322
Amortization of intangible assets		97		103
Furniture and equipment		168		203
FDIC banking assessments		479		346
Net cost of operation of other real estate owned		159		295
Other operating expenses		1,187		1,079
Total		4,997		4,787

Income before income taxes		1,446		2,286
Income tax provision		424		686

Net income	$	1,022	$	1,600

Basic net income per share	$	0.10	$	0.16
Diluted net income per share	$	0.10	$	0.16

See Notes to Condensed Consolidated Financial Statements

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COMMUNITY CAPITAL CORPORATION

Condensed Consolidated Statements of Changes in Shareholders' Equity and Comprehensive Income

For the three months ended March 31, 2011 and 2010

(Unaudited)

(Dollars in thousands except for per share	Common Stock				Nonvested Restricted Stock			Capital Surplus			Retained Earnings (loss)			Accumulated Other Comprehensive Income (loss)			Treasury Stock			Total
amounts)
	Shares		Amount
Balance, December 31, 2009		10,721,450	$	10,721	$	(364	)	$	66,473		$	(11,705	)	$	909		$	(12,277	)	$	53,757

Net income												1,600									1,600

Other comprehensive loss, net of tax benefit															(465	)					(465	)

Comprehensive Income																					1,135
Sales of treasury shares (45,498 shares)									(531	)								661			130
Capitalized expenses associated with rights offering									(36	)											(36	)
Amortization of deferred compensation on restricted stock						71															71

Balance, March 31, 2010		10,721,450	$	10,721	$	(293	)	$	65,906		$	(10,105	)	$	444		$	(11,616	)	$	55,057

Balance, December 31, 2010		10,721,350	$	10,721	$	(116	)	$	64,679		$	(17,189	)	$	(460	)	$	(10,231	)	$	47,404

Net income												1,022									1,022

Other comprehensive income, net of tax effects															295						295

Comprehensive Income																					1,317
Sales of treasury shares (44,129 shares)									(519	)								641			122
Amortization of deferred compensation on restricted stock						32															32

Balance, March 31, 2011		10,721,350	$	10,721	$	(84	)	$	64,160		$	(16,167	)	$	(165	)	$	(9,590	)	$	48,875

See Notes to Condensed Consolidated Financial Statements

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COMMUNITY CAPITAL CORPORATION

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(Dollars in thousands)	Three Months Ended March 31,
	2011			2010
Cash flows from operating activities:
Net Income	$	1,022		$	1,600
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation		196			243
Provision for loan losses		600			1,600
Deferred income tax benefit		523			667
Amortization of intangible assets		97			103
Amortization less accretion on investments		308			(53	)
Amortization of deferred loan costs and fees, net		206			218
Amortization of deferred compensation on restricted stock		32			71
Write downs of other real estate owned		-			40
Net gain on sales of securities available-for-sale		(224	)		(683	)
Net loss on sale of other real estate owned		82			86
Disbursements for loans held for sale		(9,378	)		(6,853	)
Proceeds from sales of loans held for sale		13,113			6,560
Decrease in income tax receivable		54			7,994
Decrease in interest receivable		88			363
Decrease in interest payable		(93	)		(412	)
(Increase) decrease in other assets		240			(1,195	)
Increase (decrease) in other liabilities		(10	)		494
Net cash provided by operating activities		6,856			10,843

Cash flows from investing activities:
Net decrease in loans to customers		10,847			12,809
Purchases of securities available-for-sale		(1,709	)		(37,228	)
Proceeds from maturities and sales of securities available-for-sale		8,900			38,321
Purchases of nonmarketable equity securities		-			(178	)
Proceeds from sales of nonmarketable equity securities		210			-
Proceeds from sales of other real estate owned		432			1,605
Purchases of premises and equipment		(7	)		(24	)
Net cash provided by investing activities		18,673			15,305

Cash flows from financing activities:
Net decrease in deposit accounts		(8,167	)		(4,987	)
Advances of Federal Home Loan Bank borrowings		-			20,000
Repayments of Federal Home Loan Bank borrowings		-			(20,000	)
Sales of treasury stock		122			130
Capitalized expenses associated with rights offering		-			(36	)
Net cash used by financing activities		(8,045	)		(4,893	)

Net increase in cash and cash equivalents		17,484			21,255

Cash and cash equivalents, beginning of period		37,175			49,131

Cash and cash equivalents, end of period	$	54,659		$	70,386

See Notes to Condensed Consolidated Financial Statements

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COMMUNITY CAPITAL CORPORATION

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 that would substantially duplicate those contained in the most recent annual report to shareholders. The financial statements as of March 31, 2011 and for the interim periods ended March 31, 2011 and 2010 are unaudited and include all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation. The financial information as of December 31, 2010 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 our 2010 Annual Report. In preparing the financial statements, the Company has evaluated events and transactions occurring subsequent to the financial statement date through the date the financial statements were available to be issued for potential recognition of disclosure.

Note 2 – Pending Merger

On March 30, 2011, the Company and Park Sterling Corporation ("Park Sterling") entered into an Agreement and Plan of Merger (the "Merger Agreement") pursuant to which the Company will be merged with and into Park Sterling. Under the terms of the Merger Agreement, each outstanding share of the Company's common stock will be converted into the right to receive either (i) $3.30 in cash or (ii) 0.6667 of a share of Park Sterling's common stock. The election of consideration by the holders of the Company's common stock is subject to the limitation that no more than 40% of the shares of the Company's common stock be exchanged for cash.

The merger is expected to close in the third quarter of 2011, and is subject to approval by federal and state regulatory authorities and the Company's shareholders and the satisfaction of the closing conditions set forth in the Merger Agreement.

Note 3 - Supplemental Cash Flow Information

(Dollars in thousands)	Three Months Ended March 31,
	2011		2010
Cash paid during the period for:
Income taxes	$	-	$	-
Interest		2,107		3,248

Noncash investing and financing activities:
Foreclosures on loans	$	709	$	3,399

Note 4 - Shareholders' Equity

During the first quarter of 2011, the Company sold 44,129 shares of treasury stock for total proceeds of $122,000. From April 2009 through March 2011, the Company’s 401(k) plan and Dividend Reinvestment and Stock Purchase Plan purchased shares from treasury versus the open market to generate additional capital for the Company. The purchase prices for these transactions are valued based on the end of day closing market price of the security.

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COMMUNITY CAPITAL CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 5 - Earnings Per Share

A reconciliation of the numerators and denominators used to calculate basic and diluted earnings per share are as follows:

(Dollars in thousands, except per share)	Three Months Ended March 31, 2011
	Income (Numerator)		Shares (Denominator)		Per Share Amount
Basic earnings per share
Income available to common shareholders	$	1,022		10,017,607	$	0.10
Effect of dilutive securities
Unvested restricted stock		-		18,539
Diluted earnings per share
Income available to common shareholders plus assumed conversions	$	1,022		10,036,146	$	0.10

(Dollars in thousands, except per share)	Three Months Ended March 31, 2010
	Income (Numerator)		Shares (Denominator)		Per Share Amount
Basic earnings per share
Income available to common shareholders	$	1,600		9,852,025	$	0.16
Effect of dilutive securities
Unvested restricted stock		-		42,863
Diluted earnings per share
Income available to common shareholders plus assumed conversions	$	1,600		9,894,888	$	0.16

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COMMUNITY CAPITAL CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 6 - Comprehensive Income (Loss)

The following tables set forth the amounts of other comprehensive income (loss) included in equity along with the related tax effects:

	Three Months Ended March 31, 2011
(Dollars in thousands)	Pre-tax Amount		(Expense) Benefit			Net-of-tax Amount
Unrealized gains (losses) on securities:
Unrealized holding losses arising during the period	$	223	$	(76	)	$	147
Less: reclassification adjustment for gains realized in net income		224		(76	)		148
Net unrealized losses on securities		447		(152	)		295

Other comprehensive loss	$	447	$	(152	)	$	295

	Three Months Ended March 31, 2010
(Dollars in thousands)	Pre-tax Amount			(Expense) Benefit			Net-of-tax Amount
Unrealized gains on securities:
Unrealized holding gains arising during the period	$	(1,388	)	$	472		$	(916	)
Less: reclassification adjustment for gains realized in net income		683			(232	)		451
Net unrealized gains on securities		(705	)		240			(465	)

Other comprehensive income	$	(705	)	$	240		$	(465	)

Note 7 – Stock Based Compensation

The 2004 Equity Incentive Plan provides for the granting of restricted stock, statutory incentive stock options within the meaning of Section 422 of the Internal Revenue Code as well as nonstatutory stock options, or stock appreciation rights of up to 258,750 shares of our common stock, to officers, employees, and directors. Awards may be granted for a term of up to ten years from the effective date of grant. Under this Plan, our Board of Directors has sole discretion as to the exercise date of any awards granted. The per-share exercise price of incentive stock options may not be less than the fair value of a share of common stock on the date the option is granted. The per-share exercise price of nonqualified stock options may not be less than 50% of the fair value of a share on the effective date of grant. Any options that expire unexercised or are canceled become available for reissuance. No awards may be made on or after May 19, 2014.

There have been no shares of restricted stock issued during the first quarter of 2011 or during the year ending December 31, 2010. Compensation cost associated with prior issuances of restricted stock was $32,000 and $71,000 for the three months ended March 31, 2011 and 2010, respectively. At March 31, 2011, we had 97,198 stock awards available for grant under the 2004 Equity Incentive Plan.

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COMMUNITY CAPITAL CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 8 – Investment Securities

Securities available-for-sale at March 31, 2011 and December 31, 2010 consisted of the following:

	Amortized		Gross Unrealized				Estimated
(Dollars in thousands)	Cost		Gains		Losses		Fair Value
March 31, 2011
Obligations of state and local governments	$	8,800	$	52	$	76	$	8,776
Mortgage-backed securities		58,647		64		290		58,421
Total	$	67,447	$	116	$	366	$	67,197

December 31, 2010
Obligations of state and local governments	$	10,853	$	133	$	190	$	10,796
Mortgage-backed securities		63,869		157		797		63,229
Total	$	74,722	$	290	$	987	$	74,025

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 March 31, 2011.

Securities Available-for-Sale

	Less than				Twelve months
	twelve months				or more				Total
			Unrealized				Unrealized				Unrealized
(Dollars in thousands)	Fair value		losses		Fair value		losses		Fair value		losses
Obligations of state and local	$	3,600	$	76	$	-	$	-	$	3,600	$	76
governments
Mortgage-backed securities		37,520		290		-		-		37,520		290

Total	$	41,120	$	366	$	-	$	-	$	41,120	$	366

Securities classified as available-for-sale are recorded at fair market value. The Company does not intend to sell these securities and it is more likely than not that the Company will not be required to sell the securities before recovery of its amortized cost. The Company believes, based on industry analyst reports and credit ratings, that the deterioration in value is attributable to changes in market rates and is not in the credit quality of the issuer and therefore, these losses are not considered other-than-temporary. The Company did not have any securities in a continuous loss position for twelve months or more.

The Company reviews its investment portfolio at least quarterly and more frequently when economic conditions warrant, assessing whether there is any indication of other-than-temporary impairment (“OTTI”). Factors considered in the review include estimated cash flows, length of time and extent to which market value has been less than cost, the financial condition and near term prospects of the issuer, and our intent and ability to retain the security to allow for an anticipated recovery in market value.

If the review determines that there is OTTI, then an impairment loss is recognized in earnings equal to the entire difference between the investment’s cost and its fair value at the balance sheet date of the reporting period for which the assessment is made, or may recognize a portion in other comprehensive income. The fair value of investments on which OTTI is recognized then becomes the new cost basis of the investment.

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COMMUNITY CAPITAL CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 8 – Investment Securities - continued

The following table summarizes the maturities of securities available-for-sale as of March 31, 2011, based on the contractual maturities. Actual maturities may differ from the contractual maturities because borrowers may have the right to call or prepay obligations with or without penalty. Mortgage-backed securities are presented as a separate line item since paydowns are expected before the contractual maturity dates.

		Securities
		Available-For-Sale
		Amortized		Estimated
(Dollars in thousands)		Cost		Fair Value

Due in one year or less	$	315	$	316
Due after one year but within five years		1,481		1,511
Due after five years but within ten years		1,963		1,975
Due after ten years		5,041		4,974
		8,800		8,776
Mortgage-backed securities		58,647		58,421
Total	$	67,447	$	67,197

Proceeds from maturities and sales of securities available-for-sale during the three months ended March 31, 2011 were $8,900,000 which resulted in gross realized gains of $224,000 during the three months ended March 31, 2011. Proceeds from maturities and sales of securities available-for-sale during the three months ended March 31, 2010 were $38,321,000 which resulted in gross realized gains of $683,000 during the three months ended March 31, 2010.

At March 31, 2011 and December 31, 2010, securities having amortized costs of approximately $44,594,000 and $32,681,000, respectively, were pledged as collateral for short-term borrowings, to secure public and trust deposits, and for other purposes as required and permitted by law.

The Company has nonmarketable equity securities consisting of investments in several financial institutions. These investments totaled $9,416,000 at March 31, 2011 and $9,626,000 at December 31, 2010. During the first three months of 2011, sales of nonmarketable equity securities totaled $210,000, however there were no losses recorded related to OTTI.

NOTE 9- LOANS RECEIVABLE

Loans receivable are summarized as follows:

(Dollars in thousands)	March 31, 2011		December 31, 2010
Commercial	$	50,510	$	51,112
Commercial real estate – construction		70,622		79,762
Commercial real estate – other		164,125		162,367
Residential		133,010		137,618
Home equity		40,764		42,167
Consumer		5,947		6,367
Total gross loans	$	464,978	$	479,393

At March 31, 2011 and December 31, 2010, the Company had sold participations in loans aggregating $3,658,000 and $3,665,000, respectively, to other financial institutions on a nonrecourse basis. Collections on loan participations and remittances to participating institutions conform to customary banking practices.

At March 31, 2011 and December 31, 2010, the Company had pledged approximately $96,474,000 and $101,870,000, respectively, of loans on residential and commercial real estate as collateral for advances from the Federal Home Loan Bank.

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COMMUNITY CAPITAL CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 9 - LOANS RECEIVABLE - continued

An analysis of the allowance for loan losses for the periods ended March 31, 2011, December 31, 2010, and March 31, 2010 is as follows:

(Dollars in thousands)	March 31, 2011			December 31, 2010			March 31, 2010
Balance, beginning of year	$	17,165		$	14,160		$	14,160
Provision charged to operations		600			18,350			1,600
Recoveries on loans previously charged-off		51			422			176
Loans charged-off		(2,704	)		(15,767	)		(1,918	)
Balance, end of year	$	15,112		$	17,165		$	14,018

An analysis of the allowance for loan losses for the three month period ended March 31, 2011 is as follows:

(Dollars in thousands)					Commercial			Commercial
Allowance for credit					Real Estate			Real Estate
losses:		Commercial			Construction			Other			Consumer			Residential			HELOC			Unallocated			Total
Beginning balance	$	438		$	7,041		$	1,317		$	28		$	4,102		$	530		$	3,709		$	17,165
Chargeoffs		(20	)		(1,830	)		(339	)		(4	)		(447	)		(64	)		-			(2,704	)
Recoveries		11			1			-			5			33			1			-			51
Provisions		(19	)		1,850			332			(6	)		(798	)		35			(794	)		600
Ending balance	$	410		$	7,062		$	1,310		$	23		$	2,890		$	502		$	2,915		$	15,112

Ending balance: Individually evaluated for impairment	$	7		$	-		$	22		$	-		$	-		$	-		$	-		$	29
Ending balance: Collectively evaluated for impairment	$	403		$	7,062		$	1,288		$	23		$	2,890		$	502		$	2,915		$	15,083
Ending balance: Loans acquired with deteriorated credit quality	$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	-

Loans receivable:
Ending balance	$	50,510		$	70,622		$	164,125		$	5,947		$	133,010		$	40,764		$	-		$	464,978
Ending balance: Individually evaluated for impairment	$	666		$	14,007		$	8,495		$	-		$	11,095		$	157		$	-		$	34,420
Ending balance: Collectively evaluated for impairment	$	49,844		$	56,615		$	155,630		$	5,947		$	121,915		$	40,607		$	-		$	430,558
Ending balance: Loans acquired with deteriorated credit quality	$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	-

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COMMUNITY CAPITAL CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 9 - LOANS RECEIVABLE - continued

An analysis of the allowance for loan losses for the year ended December 31, 2010 is as follows:

(Dollars in thousands)					Commercial			Commercial
Allowance for credit					Real Estate			Real Estate
losses:		Commercial			Construction			Other			Consumer			Residential			HELOC			Unallocated			Total
Beginning balance	$	248		$	4,375		$	98		$	59		$	1,718		$	386		$	7,276		$	14,160
Chargeoffs		(493	)		(8,902	)		(1,309	)		(36	)		(4,481	)		(546	)		-			(15,767	)
Recoveries		1			104			61			25			226			5			-			422
Provisions		682			11,464			2,467			(20	)		6,639			685			(3,567	)		18,350
Ending balance	$	438		$	7,041		$	1,317		$	28		$	4,102		$	530		$	3,709		$	17,165

Ending balance: Individually evaluated for impairment	$	7		$	229		$	142		$	-		$	336		$	-		$	-		$	714
Ending balance: Collectively evaluated for impairment	$	431		$	6,812		$	1,175		$	28		$	3,766		$	530		$	3,709		$	16,451
Ending balance: Loans acquired with deteriorated credit quality	$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	-

Loans receivable:
Ending balance	$	51,112		$	79,762		$	162,367		$	6,367		$	137,618		$	42,167		$	-		$	479,393
Ending balance: Individually evaluated for impairment	$	690		$	17,430		$	8,993		$	-		$	12,218		$	54		$	-		$	39,385
Ending balance: Collectively evaluated for impairment	$	50,422		$	62,332		$	153,374		$	6,367		$	125,400		$	42,113		$	-		$	440,008
Ending balance: Loans acquired with deteriorated credit quality	$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	-

Credit Quality Indicators

The Company segments its commercial loans into risk categories based on relevant information about the ability of the borrowers and guarantors (if any) to service their debt. Relevant items include but are not limited to current financial information, historical payment and loan performance experience, credit documentation, public information and current economic trends. The Company analyzes loans individually by classifying the loans as to credit risk. Loans classified as substandard or special mention are reviewed quarterly by the Company for further signs of improvement or deterioration and to determine if the loan remains properly classified and what impairment may be required, if any. Other loans rated Pass, where the total credit exposure to one borrower is $500,000 or more, are reviewed at least annually to validate the assigned loan grade. In addition, any consumer or commercial unsecured loan or lines of $5,000 or more are specifically reviewed annually to validate the loan grade, if any. Further, during the renewal process of any loan, as well as if a loan becomes past due, or for any Home Equity Lines that have a loan-to-value greater than 80% and either are past due more than 30 days or are funded at 90% or more, the Company will evaluate the loan grade.

Consumer loans are not assigned a risk rating at loan origination. If a consumer loan becomes past due and shows signs of deterioration in the creditworthiness of the borrower, a rating classification will then be assigned for monitoring purposes and the loan will be monitored quarterly with the commercial loans indicated above.

-13-

COMMUNITY CAPITAL CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 9- LOANS RECEIVABLE - continued

Loans excluded from the scope of the annual review process are generally classified as pass credits until: (a) they become past due; (b) management becomes aware of deterioration in the credit worthiness of the borrower; or (c) the customer contacts the Company for a modified repayment plan. In these circumstances, the loan is specifically evaluated for potential classification as to special mention, substandard, doubtful or loss.

The Company utilizes an asset risk classification system in compliance with guidelines established by the Federal Reserve as part of its efforts to improve commercial asset quality. “Special Mention” loans are defined as loans that in management’s opinion are subject to potential future ratings downgrades, where market conditions may unfavorably affect the borrower in the future or where there are declining trends in the borrowers operations or where market conditions may unfavorably affect the borrower in the future. “Substandard” assets have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt and that the Company may experience a loss if the weakness(es) are not corrected. Assets that are rated “Doubtful” have the same characteristics of a substandard asset with an additional weakness that make collection or liquidation of the asset highly questionable, and there is a high probability of loss based on currently existing facts, conditions or values.

The following table summarizes the credit risk profile of the company’s commercial loan portfolio for the periods ending March 31, 2011 and December 31, 2010 based on the company’s internally assigned grade:

Commercial Credit Exposure

(Dollars in thousands)

					Commercial Real Estate				Commercial Real Estate
	Commercial				Construction				Other
	March 31, 2011		December 31, 2010		March 31, 2011			December 31, 2010	March 31, 2011			December 31, 2010
Grade:
Pass	$	45,944	$	46,959	$	49,535	$	57,003	$	146,993	$	142,598
Special mention		2,546		2,093		1,319		843		6,404		8,676
Substandard		2,020		2,060		18,119		20,250		10,728		11,093
Doubtful		-		-		1,649		1,666		-		-
Total	$	50,510	$	51,112	$	70,622	$	79,762	$	164,125	$	162,367

Consumer Credit Exposure

(Dollars in thousands)

The following table summarizes the credit risk profile of the company’s residential loan portfolio for the periods ending March 31, 2011 and December 31, 2010 based on the company’s internally assigned grade. In determining the classification of a subprime loan, the company utilizes the definition supplied by the Federal Home Loan Bank.

		Residential Prime				Residential Subprime
		March 31, 2011		December 31, 2010		March 31, 2011		December 31, 2010
Grade:
Pass	$	103,727	$	108,000	$	3,459	$	2,731
Special mention		6,448		5,834		801		672
Substandard		17,266		19,110		1,309		1,271
Doubtful		-		-		-		-
Total	$	127,441	$	132,944	$	5,569	$	4,674

-14-

COMMUNITY CAPITAL CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 9- LOANS RECEIVABLE - continued

The following table summarizes the credit risk profile of the company’s consumer loan portfolio for the periods ending March 31, 2011 and December 31, 2010 based on payment activity:

(Dollars in thousands)

		Consumer
		Overdraft Protection				HELOC				Consumer Other
		March 31,		December 31,		March 31,		December 31,		March 31,		December 31,
		2011		2010		2011		2010		2011		2010
Performing	$	1,172	$	1,228	$	40,606	$	42,113	$	4,774	$	5,139
Nonperforming		-		-		158		54		1		-
Total	$	1,172	$	1,228	$	40,764	$	42,167	$	4,775	$	5,139

Impaired Loans

The following is a summary of information relating to impaired loans at March 31, 2011:

(Dollars in thousands)			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized
With no related allowance recorded:
Commercial	$	515	$	538	$	-	$	535	$	9
Commercial real estate – construction		14,007		25,668		-		15,710		23
Commercial real estate – other		8,001		8,690		-		8,319		90
Residential – prime		9,814		11,829		-		10,223		20
Residential – subprime		1,281		1,362		-		1,226		2
HELOC		157		168		-		167		-

With an allowance recorded:
Commercial		151		151		7		152		2
Commercial real estate – construction		-		-		-		-		-
Commercial real estate – other		494		494		22		495		7
Residential – prime		-		-		-		-		-

Total:
Commercial	$	666	$	689	$	7	$	687	$	11
Commercial real estate – construction		14,007		25,668		-		15,710		23
Commercial real estate – other		8,495		9,184		22		8,814		97
Residential – prime		9,814		11,829		-		10,223		20
Residential – subprime		1,281		1,362		-		1,226		2
HELOC		157		168		-		167		-
Totals	$	34,420	$	48,900	$	29	$	36,827	$	153

-15-

COMMUNITY CAPITAL CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 9- LOANS RECEIVABLE - continued

The following is a summary of information relating to impaired loans at December 31, 2010:

(Dollars in thousands)			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
	Investment		Balance		Allowance		Investment		Recognized
With no related allowance recorded:
Commercial	$	538	$	539	$	-	$	365	$	10
Commercial real estate – construction		12,908		22,552		-		19,163		398
Commercial real estate – other		7,393		7,885		-		7,892		356
Residential – prime		9,363		11,377		-		10,935		143
Residential – subprime		1,189		1,229		-		1,163		31
HELOC		54		71		-		71		1

With an allowance recorded:
Commercial		152		152		7		157		11
Commercial real estate – construction		4,522		4,743		229		4,689		2
Commercial real estate – other		1,600		1,601		142		1,615		96
Residential – prime		1,666		1,667		336		1,681		49

Total:
Commercial	$	690	$	691	$	7	$	522	$	21
Commercial real estate – construction		17,430		27,295		229		23,852		400
Commercial real estate – other		8,993		9,486		142		9,507		452
Residential – prime		9,363		11,377		-		10,935		143
Residential – subprime		2,855		2,896		336		2,844		80
HELOC		54		71		-		71		1
Totals	$	39,385	$	51,816	$	714	$	47,731	$	1,097

Modifications

The following is a summary of information relating to modifications and troubled debt restructurings at March 31, 2011:

			Pre-Modification		Post-Modification
	Number of		Outstanding Recorded		Outstanding Recorded
(Dollars in thousands)	Contracts		Investments		Investments
Troubled debt restructuring:
Commercial		1	$	151	$	151
Commercial real estate – construction		4		4,850		4,850
Commercial real estate – other		4		1,852		1,852
Residential – prime		6		6,525		6,525
Residential – subprime		3		883		883

Troubled debt restructuring that subsequently defaulted	Number of Contracts	Recorded Investment
Commercial real estate – construction	1		$	83
Residential – prime	2		$	2,462

-16-

COMMUNITY CAPITAL CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 9- LOANS RECEIVABLE - continued

The following is a summary of information relating to modifications and troubled debt restructurings at December 31, 2010:

			Pre-Modification		Post-Modification
	Number of		Outstanding Recorded		Outstanding Recorded
(Dollars in thousands)	Contracts		Investments		Investments
Troubled debt restructuring:
Commercial		1	$	152	$	152
Commercial real estate – construction		3		640		640
Commercial real estate – other		2		1,572		1,572
Residential – prime		7		7,097		7,097
Residential – subprime		2		790		790

Troubled debt restructuring that subsequently defaulted	Number of Contracts	Recorded Investment
Commercial real estate – construction	1		$	83
Residential – prime	2		$	2,758

The following is a summary of information pertaining to TDRs:

(Dollars in thousands)	March 31, 2011		December 31, 2010
Nonperforming TDRs	$	13,314	$	6,815
Performing TDRs:
Commercial	$	151	$	152
Commercial real estate - construction		141		143
Residential		655		3,141
Total performing TDRs	$	947	$	3,436
Total TDRs	$	14,261	$	10,251

Analysis of Past Due Loans Receivable

The following is a summary of information relating to analysis of past due loans receivable at March 31, 2011:

													Recorded
(Dollars in thousands)					Greater						Total		Investment
	30 – 59 days		60 – 89 days		Than		Total				Loans		> 90 days and
	Past Due		Past Due		90 days		Past Due		Current		Receivable		Accruing
Commercial	$	459	$	-	$	72	$	531	$	49,979	$	50,510	$	-
Commercial RE - Construction		48		-		12,676		12,724		57,898		70,622		-
Commercial RE – Other		877		-		2,807		3,684		159,781		164,125		660
Residential – prime		1,005		77		9,053		10,135		116,924		127,441		382
Residential - subprime		458		-		1,157		1,615		3,954		5,569		-
HELOC		-		20		157		177		40,587		40,764		-
Consumer – OD Protection		2		1		-		3		1,169		1,172		-
Consumer – Other		29		-		-		29		4,746		4,775		-
Total	$	2,878	$	98	$	25,922	$	28,898	$	435,038	$	464,978	$	1,042

-17-

COMMUNITY CAPITAL CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 9- LOANS RECEIVABLE - continued

The following is a summary of information relating to analysis of past due loans receivable at December 31, 2010:

													Recorded
(Dollars in thousands)					Greater						Total		Investment
	30 – 59 days		60 – 89 days		Than		Total				Loans		> 90 days and
	Past Due		Past Due		90 days		Past Due		Current		Receivable		Accruing
Commercial	$	255	$	14	$	44	$	313	$	50,799	$	51,112	$	-
Commercial RE - Construction		76		-		14,615		14,691		65,071		79,762		-
Commercial RE – Other		223		233		2,198		2,654		159,053		162,367		660
Residential – prime		146		302		9,180		9,628		122,934		132,944		382
Residential - subprime		164		-		398		562		4,112		4,674		-
HELOC		-		113		54		167		42,000		42,167		-
Consumer – OD Protection		5		-		-		5		1,223		1,228		-
Consumer – Other		16		-		-		16		5,123		5,139		-
Total	$	885	$	662	$	26,489	$	28,036	$	450,315	$	479,393	$	1,042

Loans Receivable on Nonaccrual Status

The following is a summary of information relating to loans receivable on nonaccrual status for the periods ended March 31, 2011 and December 31, 2010:

	March 31,		December 31,
(Dollars in thousands)	2011		2010
Commercial	$	72	$	44
Commercial RE - Construction		12,781		14,615
Commercial RE – Other		2,807		2,198
Residential – prime		8,947		8,553
Residential - subprime		1,120		1,025
HELOC		157		54
Total	$	25,884	$	26,489

In the normal course of business, the Company is a party to financial instruments with off-balance-sheet risk. These financial instruments are commitments to extend credit, commitments under credit card arrangements and letters of credit and have elements of risk in excess of the amount recognized in the balance sheet. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and 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 consolidated 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. 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. The Company uses the same credit policies in making commitments to extend credit as it does for on-balance-sheet instruments.

-18-

COMMUNITY CAPITAL CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 10– OTHER REAL ESTATE OWNED

The Bank possessed $13,691,000 in other real estate owned at March 31, 2011. Transactions in other real estate owned for the periods ended March 31, 2011 and December 31, 2010 are summarized below:

	March 31,			December 31,
(Dollars in thousands)	2011			2010
Balance, beginning of period	$	13,496		$	7,165
Additions		709			16,460
Sales		(432	)		(8,938	)
Write downs		(82	)		(1,191	)
Balance, end of period	$	13,691		$	13,496

The following is a summary of information relating to analysis of other real estate owned at March 31, 2011 and December 31, 2010:

	March 31,		December 31,
(Dollars in thousands)	2011		2010
Construction, land development and other land	$	12,442	$	12,111
Commercial RE – Other		987		1,020
Residential		262		365
Total	$	13,691	$	13,496

NOTE 11- FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of a financial instrument is the amount at which an 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 and Interest-Bearing Deposit Accounts - The carrying amount is a reasonable estimate of fair value.

Investment Securities - The fair values of 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.

Nonmarketable Equity Securities - Cost is a reasonable estimate of fair value for nonmarketable equity securities because no quoted market prices are available and the securities are not readily marketable. The carrying amount is adjusted for any permanent declines in value.

Cash Surrender Value of Life Insurance - The carrying amount is a reasonable estimate of fair value.

Loans Receivable and Loans Held for Sale - For certain categories of loans, 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.

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

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.

-19-

COMMUNITY CAPITAL CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 11- FAIR VALUE OF FINANCIAL INSTRUMENTS – continued

Advances from the Federal Home Loan Bank - The carrying amounts of variable rate borrowings are reasonable estimates of fair value because they can be repriced frequently. The fair values of fixed rate borrowings are estimated using a discounted cash flow calculation that applies the Company’s current borrowing rate from the Federal Home Loan Bank.

Junior Subordinated Debentures – The fair value of fixed rate junior subordinated debentures are estimated using a discounted cash flow calculation that applies the Company’s current borrowing rate. The carrying amounts of variable rate borrowings are reasonable estimates of fair value because they can reprice frequently.

Off-Balance-Sheet Financial Instruments – Fair values of off-balance sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing.

Commitments to Extend Credit and Commercial Letters of Credit – Because commitments to expand credit and commercial letters of credit are made using variable rates, or are recently executed, the contract value is a reasonable estimate of fair value.

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

		March 31, 2011				December 31, 2010
		Carrying		Estimated		Carrying		Estimated
(Dollars in thousands)		Amount		Fair Value		Amount		Fair Value

Financial Assets:
Cash and due from banks	$	11,079	$	11,079	$	9,315	$	9,315
Interest-bearing deposit accounts		43,580		43,580		27,860		27,860
Securities available-for-sale		67,197		67,197		74,025		74,025
Nonmarketable equity securities		9,416		9,416		9,626		9,626
Cash surrender value of life insurance		17,569		17,569		17,397		17,397
Loans and loans held for sale		466,759		465,680		484,909		483,885
Accrued interest receivable		2,201		2,201		2,289		2,289

Financial Liabilities:
Demand deposit, interest bearing
transaction, and savings accounts	$	346,627	$	346,627	$	341,994	$	341,994
Certificates of deposit and other time deposits		140,388		141,020		153,188		154,187
Advances from the Federal Home Loan Bank		95,400		100,042		95,400		100,753
Junior subordinated debentures		10,310		10,371		10,310		10,422
Accrued interest payable		615		615		708		708

	Notional		Estimated		Notional		Estimated
	Amount		Fair Value		Amount		Fair Value
Off-Balance Sheet Financial Instruments:
Commitments to extend credit	$	45,421	$	-	$	49,961	$	-
Letters of credit		1,705		-		1,647		-

Accounting standards provide a framework for measuring and disclosing fair value which require disclosure about the fair value of assets and liabilities recognized on the balance sheet, whether the measurements are made on a recurring basis or on a nonrecurring basis. Fair value is defined as the exchange in price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Accounting standards also establish a fair value hierarchy, which requires an entity to maximize the use of unobservable inputs when measuring fair value.

-20-

COMMUNITY CAPITAL CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 11- FAIR VALUE OF FINANCIAL INSTRUMENTS – continued

The Company utilizes fair value measurements to record fair value adjustments to certain assets and to determine fair value disclosures. The objective is to enable the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values.

Assets and liabilities carried at fair value are classified and disclosed in one of the following three categories:

Level 1	Quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities include debt and equity securities and derivative contracts that are traded in an active exchange market, as well as U.S. Treasuries, and money market funds.

Level 2	Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets and liabilities include debt securities with quoted prices that are traded less frequently than exchange-traded instruments, mortgage-backed securities, municipal bonds, corporate debt securities, and derivative contracts whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. This category generally includes certain derivative contracts and impaired loans.

Level 3	Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. For example, this category generally includes certain private equity investments, retained residual interests in securitizations, residential mortgage servicing rights, and highly-structured or long-term derivative contracts.

Following is a description of valuation methodologies used for assets and liabilities recorded at fair value.

Investment Securities Available-for-Sale – Investment securities available-for-sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of cash flows, adjusted for the security’s rating, prepayment assumptions and other factors such as credit loss assumptions. Level 1 securities includes those traded on an active exchange such as the New York Stock Exchange, Treasury securities that are traded by dealers or brokers in active over-the-counter market and money market funds. Level 2 securities include mortgage backed securities issued by government sponsored entities, municipal bonds and corporate debt securities. Securities classified as Level 3 include asset-backed securities in less liquid markets.

Loans Held- for-Sale-The carrying amount of loans held for sale is a reasonable estimate of fair value.

Loans – The Company does not record loans at fair value on a recurring basis, however, from time to time, a loan is considered impaired and an allowance for loan loss is established. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan are considered impaired. Once a loan is identified as individually impaired, management measures impairment. The fair value of impaired loans is estimated using one of several methods, including the collateral value, market value of similar debt, enterprise value, liquidation value and discounted cash flows. Those impaired loans not requiring a specific allowance represent loans for which the fair value of expected repayments or collateral exceed the recorded investment in such loans. Impaired loans where an allowance is established based on the fair value of collateral require classification in the fair value hierarchy. When the fair value of the collateral is based on an observable market price or a current appraised value, the Company records the loan as nonrecurring Level 2. When an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the Company records the loan as nonrecurring Level 3.

-21-

COMMUNITY CAPITAL CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 11- FAIR VALUE OF FINANCIAL INSTRUMENTS – continued

Other Real Estate Owned – Foreclosed assets are adjusted to fair value upon transfer of the loans to other real estate owned. Real estate acquired in settlement of loans is recorded initially at estimated fair value of the property less estimated selling costs at the date of foreclosure. The initial recorded value may be subsequently reduced by additional allowances, which are charges to earnings if the estimated fair value of the property less estimated seling costs declines below the initial recorded value. Fair value is based upon independent market prices, appraised values of the collateral or management’s estimation of the value of the collateral. When the fair value of the collateral is based on an observable market price or a current appraised value, the Company records the foreclosed asset as nonrecurring Level 2. When an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the Company records the foreclosed asset as nonrecurring Level 3.

The table below presents the balances of assets and liabilities measured at fair value on a recurring basis by level within the hierarchy.

March 31, 2011	Quoted market price in active markets		Significant other observable inputs		Significant unobservable inputs
(Dollars in thousands)	(Level 1)		(Level 2)		(Level 3)
Mortgage-backed securities	$	-	$	58,421	$	-
State and municipal obligations		-		8,776
Available-for-sale securities		-		67,197		-
Loans held for sale		-		1,781		-
Total	$	-	$	68,978	$	-

December 31, 2010
(Dollars in thousands)
Mortgage-backed securities	$	-	$	63,229	$	-
State and municipal obligations		-		10,796		-
Available-for-sale securities		-		74,025		-
Loans held for sale		-		5,516		-
Total	$	-	$	79,541	$	-

There were no liabilities measured at fair value on a recurring basis for the periods ended March 31, 2011 and December 31, 2010.

Certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). The following table presents the assets and liabilities carried on the balance sheet by caption and by level within the valuation hierarchy (as described above) for which a nonrecurring change in fair value has been recorded during

the year.

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COMMUNITY CAPITAL CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE 11- FAIR VALUE OF FINANCIAL INSTRUMENTS – continued

March 31, 2011	Quoted market price in active markets		Significant other observable inputs		Significant unobservable inputs
(Dollars in thousands)	(Level 1)		(Level 2)		(Level 3)
Other real estate owned	$	-	$	9,365	$	4,326
Impaired loans		-		33,022		1,369
Total	$	-	$	42,387	$	5,695
December 31, 2010
(Dollars in thousands)
Other real estate owned	$	-	$	8,781	$	4,715
Impaired loans		-		35,498		3,173
Total	$	-	$	44,279	$	7,888

There were no liabilities measured at fair value on a nonrecurring basis for the periods ended March 31, 2011 and December 31, 2010.

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COMMUNITY CAPITAL CORPORATION

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

In this quarterly report on Form 10-Q, or this “Quarterly Report,” we refer to Community Capital Corporation as “we,” “us,” “our,” or the “Company,” unless we specifically state otherwise or the context indicates otherwise, and we refer to our bank subsidiary, CapitalBank, as our “Bank,” unless we specifically state otherwise or the context indicates otherwise .

Cautionary Note Regarding Forward-Looking Statements

Some of our statements contained in, or incorporated by reference into, this Quarterly Report are "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 (the “Exchange Act”). Forward-looking statements may relate to our financial condition, results of operation, plans, objectives, or future performance. Forward-looking statements are based on many assumptions and estimates and are not guarantees of future performance. Our actual results may differ materially from those anticipated 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,” “should,” “will,” “expect,” “anticipate,” “predict,” “project,” “potential,” “believe,” “continue,” “assume,” “believe,” “intend,” “plan,” and “estimate,” as well as similar expressions, are meant to identify such forward-looking statements. Potential risks and uncertainties that could cause our actual results to differ from those anticipated in any forward-looking statements include, but are not limited to, those described in our Annual Report on Form 10-K for the year ended December 31, 2010 under Item 1A “Risk Factors” and the following:

reduced earnings due to higher credit losses generally and specifically because losses in the sectors of our loan portfolio secured by real estate are greater than expected due to economic factors, including, but not limited to, declining real estate values, increasing interest rates, increasing unemployment, or changes in payment behavior or other factors;

·	reduced earnings due to higher credit losses because our loans are concentrated by loan type, industry segment, borrower type, or location of the borrower or collateral;

·	high concentration of our real estate-based loans collateralized by real estate in a weak commercial real estate market;

·	adequacy of the level of our allowance for loan losses;

·	the rate of delinquencies and amounts of charge-offs;

·	challenges, costs, and complications associated with the continued development of our branches;

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

·	significant increases in competitive pressure in CapitalBank’s banking and financial services industries;

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

·	adverse conditions in the stock market, the public debt market, and other capital markets;

·	changes occurring in business conditions and inflation;

·	changes in technology;

·	changes in monetary and tax policies;

·	the rates of loan growth;

·	adverse changes in asset quality and resulting credit risk-related losses and expenses;

·	loss of consumer confidence and economic disruptions resulting from terrorist activities;

·	changes in the securities markets; and

·	other risks and uncertainties detailed from time to time in our filings with the Securities and Exchange Commission (the “SEC”).

These risks are exacerbated by the developments over the past two years in national and international financial markets, and we are unable to predict what effect these uncertain market conditions will have on our Company. During 2008 and 2009, the capital and credit markets experienced unprecedented levels of extended volatility and disruption. There can be no assurance that these unprecedented recent developments will not materially and adversely affect our business, financial condition and results of operations.

All forward-looking statements in this report are based on information available to us as of the date of this report. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee you that these expectations will be achieved. We undertake no obligation to publicly update or otherwise revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

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COMMUNITY CAPITAL CORPORATION

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

Overview

We are a bank holding company headquartered in Greenwood, South Carolina with 18 banking offices located in 13 different cities throughout South Carolina. Since our formation in 1988, we have grown in our core markets through organic growth, and to expand our market presence from central South Carolina to the upstate region of South Carolina, we have made selective acquisitions and formed de novo banking operations. We continuously evaluate our branch network to determine how to best serve our customers efficiently and to improve our profitability.

We operate a general commercial and retail banking business through our bank subsidiary, CapitalBank. We believe our commitment to quality and personalized banking services is a factor that contributes to our competitiveness and success. Through the Bank, we provide a full range of lending services, including real estate, consumer and commercial loans to individuals and small to medium-sized businesses in our market areas, as well as residential mortgage loans. Our primary focus has been on real estate construction loans, commercial mortgage loans and residential mortgage loans. We complement our lending services with a full range of retail and commercial banking products and services, including checking, savings and money market accounts, certificates of deposit, credit card accounts, individual retirement accounts, safe deposit accounts, money orders and electronic funds transfer services. In addition to our traditional banking services, we also offer customers trust and fiduciary services. We make discount securities brokerage services available through a third-party brokerage service that has contracted with CapitalBank.

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COMMUNITY CAPITAL CORP /SC/ 10-Q