COMMUNITY CAPITAL CORPORATION

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 ~~September~~March 3031, ~~2010~~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 incorporation)	(I.R.S. Employer Identification No.)
(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_~~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~~: 9,988,563~~ ~~shares of common stock, $1.00 par value, as of October 22, 2010~~

-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 - September 30, 2010 and December 31, 2009	3
	Condensed Consolidated Statements of Operations -
	Nine months ended September 30, 2010 and 2009 and three months ended September 30, 2010 and 2009	4
	Condensed Consolidated Statements of Changes in Shareholders' Equity and Comprehensive Income -
	Nine months ended September 30, 2010 and 2009	5
	Condensed Consolidated Statements of Cash Flows - Nine months ended September 30, 2010 and 2009	6
	Notes to Condensed Consolidated Financial Statements	7-16
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	17-38
Item 3.	Quantitative and Qualitative Disclosure About Market Risk	39
Item 4T.	Controls and Procedures	39-40

PART I. - FINANCIAL INFORMATION

Page No.

PART II. - OTHER INFORMATION
Item 1.		Financial Statements (Unaudited)
Item 1.	Legal Proceedings	40
		Condensed Consolidated Balance Sheets – March 31, 2011 and December 31, 2010	3
Item 1A.	Risk Factors	40
		Condensed Consolidated Statements of Operations -
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
		Three months ended March 31, 2011 and 2010	4
Item 3.	Defaults Under Senior Securities	40
		Condensed Consolidated Statements of Changes in Shareholders' Equity and Comprehensive Income -
Item 4.	(Removed and Reserved)	40
		Three months ended March 31, 2011 and 2010	5
Item 5.	Other Information	40
		Condensed Consolidated Statements of Cash Flows - Three months ended March 31, 2011 and 2010	6
Item 6.	Exhibits	40
		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

	September 30,			December 31,
		March 31,			December 31,
(Dollars in thousands, except per share data)	2010			2009
(Dollars in thousands, shares are not in dollars)		2011			2010
Assets:		(Unaudited)
Cash and cash equivalents:
Cash and due from banks	$	11,~~332~~079		$	109,~~141~~315
Interest-bearing deposit accounts		4943,~~237~~580			3827,~~990~~860
Total cash and cash equivalents		6054,~~569~~659			4937,~~131~~175
Investment securities:
Securities available-for-sale		5567,~~422~~197			6874,~~826~~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

Securities held-to-maturity (estimated fair value of $170 at December 31, 2009)		-			160
Nonmarketable equity securities		9,930			10,186
Total investment securities		65,352			79,172
Loans held for sale		5,419			1,103
Loans receivable		504,508			567,178
Less allowance for loan losses		(13,313	)		(14,160	)
Loans, net		491,195			553,018
Other real estate owned		14,452			7,165
Premises and equipment, net		15,521			16,150
Interest receivable		2,435			3,046
Prepaid expenses		3,662			4,873
Intangible assets		1,360			1,663
Cash surrender value of life insurance		17,211			16,689
Deferred tax asset		6,093			6,622
Income tax receivable		-			9,634
Other assets		4,435			1,176
Total assets	$	687,704		$	749,442
Liabilities:
Deposits:
Noninterest-bearing	$	100,965		$	112,333
Interest-bearing		418,673			471,150
Total deposits		519,638			583,483
Advances from the Federal Home Loan Bank		95,400			95,400
Accrued interest payable		802			1,337
Junior subordinated debentures		10,310			10,310
Other liabilities		6,425			5,155
Total liabilities		632,575			695,685

See Notes to Condensed Consolidated Financial Statements

Shareholders’ equity:
Common stock, $1.00 par value; 20,000,000 shares authorized; 10,721,450 shares issued at September 30, 2010 and December 31, 2009		10,721			10,721
Capital surplus		65,244			66,473
Accumulated other comprehensive income		352			909
Accumulated deficit		(10,230	)		(11,705	)
Nonvested restricted stock		(175	)		(364	)
Treasury stock, at cost (742,689 and 845,627 shares in 2010 and 2009, respectively)		(10,783	)		(12,277	)
Total shareholders’ equity		55,129			53,757
Total liabilities and shareholders’ equity	$	687,704		$	749,442

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COMMUNITY CAPITAL CORPORATION

Condensed Consolidated Statements of Operations

(Unaudited)

(Dollars in thousands, except per share data)	Nine Months Ended September 30,					Three Months Ended September 30,
(Dollars in thousands, except for per share data amounts)	Three Months Ended March 31,
	2010		2009			2010			2009
	2011		2010
Interest income:
Loans, including fees	$	216,~~838~~405	$	257,~~077~~500		$	~~6,995~~		$	~~8,186~~
Investment securities:
Taxable		~~1,313~~366		~~1,669~~536			~~296~~			~~536~~
Tax-exempt		~~408~~113		~~844~~169			85			~~232~~
Nonmarketable equity securities		~~107~~41		~~109~~31			41			48
Other interest income		~~126~~16		3222			66			24
Total		236,~~792~~941		278,~~731~~258			~~7,483~~			~~9,026~~
Interest expense:
Deposits		51,~~662~~002		51,~~863~~930			~~1,758~~			~~2,199~~
Federal Home Loan Bank advances		~~2,206~~817		~~4,177~~823			~~749~~			~~1,261~~
Other interest expense		~~554~~195		~~601~~179			~~189~~			~~185~~
Total		82,~~422~~014		102,~~641~~932			~~2,696~~			~~3,645~~
Net interest income		154,~~370~~927		175,~~090~~326			~~4,787~~			~~5,381~~
Provision for loan losses		~~6,350~~600		311,~~800~~600			~~2,750~~			~~24,000~~
Net interest income (loss) after provision for loan losses		9,020		(14,710	)		2,037			(18,619	)
Net interest income after provision for loan losses		4,327		3,726
Other operating income:
Service charges on deposit accounts		~~1,414~~375		~~1,730~~482			~~441~~			~~594~~
Gains on sales of loans held for sale		1,227		1,174			519			359
Gain on sales of loans held for sale		427		298
Fees from brokerage services		~~213~~76		~~185~~64			69			74
Income from fiduciary activities		~~1,428~~530		~~1,172~~472			~~507~~			~~418~~
Gain on sales of securities available-for-sale		1,993		396			728			3
Gain on sale of securities available-for-sale		224		683
Other operating income		~~2,271~~484		1,~~308~~348			~~478~~			~~420~~
Total		82,~~546~~116		53,~~965~~347			~~2,742~~			~~1,868~~
Other operating expenses:
Salaries and employee benefits		72,~~440~~572		72,~~811~~439			~~2,521~~			~~2,601~~
Net occupancy expense		988		956			334			316
Net occupancy		335		322
Amortization of intangible assets		~~303~~97		~~320~~103			~~101~~			~~106~~
Goodwill impairment		-		7,418			-			7,418
Furniture and equipment		168		203
Furniture and equipment expense		559		667			179			212
FDIC banking assessments		479		346
FDIC assessments		1,241		854			516			242
Net cost of operation of other real estate owned		159		295
FHLB prepayment penalties		-		359			-			359
Other operating expenses		1,187		1,079
Write downs on other real estate owned		705		2,443			307			1,205
Total		4,997		4,787
Loss on sales of fixed assets		-		39			-			20
Income before income taxes		1,446		2,286
Net loss on sales of OREO		145		223			49			11
Income tax provision		424		686
Other operating expenses		4,396		3,984			1,644			810
Net income	$	1,022	$	1,600
Total		15,777		25,074			5,651			13,300
Basic net income per share	$	0.10	$	0.16
Income (losses) before income taxes		1,789		(33,819	)		(872	)		(30,051	)
Diluted net income per share	$	0.10	$	0.16
Income tax provision (benefit)		314		(9,956	)		(394	)		(8,266	)
Net income (loss)	$	1,475	$	(23,863	)	$	(478	)	$	(21,785	)
Basic net income (loss) per share	$	0.15	$	(5.14	)	$	(0.05	)	$	(4.35	)
Diluted net income (loss) per share	$	0.15	$	(5.14	)	$	(0.05	)	$	(4.35	)

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 ~~nine~~three months ended ~~September~~March 3031, ~~2010~~2011 and ~~2009~~2010

(Unaudited)

(Dollars in thousands, except for per share	Common Stock					Nonvested Restricted Stock			Capital Surplus			Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Income (loss)			Treasury Stock			Total
(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, 2008		5,666,760		$	5,667	$	(445	)	$	62,405		$	14,218		$	527		$	(17,415	)	$	64,957
	Shares			Amount
Net loss													(23,863	)								(23,863	)
Other comprehensive loss, net of tax benefit																473						473
Comprehensive Income																						(23,390	)
Rights offering issuance		3,186,973			3,187					5,065												8,252
Issuance of restricted stock		49,500			49		(300	)		251												-
Amortizationofdeferred compensation restricted stock							285															285
Forfeitures of restricted stock		(300	)																			-
Sales of treasury shares (319,716 shares)																			917			917
Dividends paid ($0.15 per share)													(678	)								(678	)
Balance, September 30, 2009		8,902,933		$	8,903	$	(460	)	$	67,721		$	(10,323	)	$	1,000		$	(16,498	)	$	50,343
Balance, December 31, 2009		10,721,450		$	10,721	$	(364	)	$	66,473		$	(11,705	)	$	909		$	(12,277	)	$	53,757
Net income													1,~~475~~600									1,~~475~~600
Other comprehensive loss, net of tax benefit																(~~557~~465	)					(~~557~~465	)
Comprehensive Income																						~~918~~1,135
Sales of treasury shares (102,938 shares)										(1,175	)								1,494			319
Sales of treasury shares (45,498 shares)										(531	)								661			130
Capitalized expenses associated with rights offering										(5436	)											(5436	)
Amortization of deferred compensation restricted stock							189															189
Amortization of deferred compensation on restricted stock							71															71
Balance, September 30, 2010		10,721,450		$	10,721	$	(175	)	$	65,244		$	(10,230	)	$	352		$	(10,783	)	$	55,129
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)	~~Nine~~Three Months Ended ~~September~~March 3031,
	2010			2009
	2011			2010
Cash flows from operating activities:
Net income (loss)	$	1,475		$	(23,863	)
Net Income	$	1,022		$	1,600
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Adjustments to reconcile net income to net cash provided
Depreciation		702			678
by operating activities:
Provision for possible loan losses		6,350			31,800
Depreciation		196			243
Deferred income tax expense		529			-
Provision for loan losses		600			1,600
Amortization of intangible assets		303			320
Deferred income tax benefit		523			667
Amortization less accretion on investments		33			16
Amortization of intangible assets		97			103
Amortization of deferred loan costs and fees, net		681			762
Amortization less accretion on investments		308			(53	)
Amortization of deferred compensation on restricted stock		189			285
Amortization of deferred loan costs and fees, net		206			218
Write downs of other real estate owned		705			-
Amortization of deferred compensation on restricted stock		32			71
Net gain on sales of securities available-for-sale		(1,993	)		(478	)
Write downs of other real estate owned		-			40
Net loss on write-off of nonmarketable equity securities		-			82
Net gain on sales of securities available-for-sale		(224	)		(683	)
Loss on write-off of goodwill impairment		-			7,418
Net loss on sale of other real estate owned		82			86
Net loss on sale of other real estate owned		145			2,664
Disbursements for loans held for sale		(9,378	)		(6,853	)
Loss on sale of fixed assets		-			39
Proceeds from sales of loans held for sale		13,113			6,560
Disbursements of loans held for sale		(34,983	)		(34,379	)
Decrease in income tax receivable		54			7,994
Proceeds from sales of loans held for sale		30,667			33,867
Decrease in interest receivable		88			363
Decrease in income tax receivable		9,634			-
Decrease in interest payable		(93	)		(412	)
Decrease in interest receivable		611			440
(Increase) decrease in other assets		240			(1,195	)
Decrease in interest payable		(535	)		(467	)
Increase (decrease) in other liabilities		(10	)		494
Increase in other assets		(2,282	)		(11,826	)
Net cash provided by operating activities		6,856			10,843
Increase in other liabilities		1,270			1,059
Net cash provided by operating activities		13,501			8,417
Cash flows from investing activities:
Net decrease in loans to customers		3910,~~641~~847			2212,~~946~~809
Purchases of securities available-for-sale		(861,~~296~~709	)		(3437,~~991~~228	)
Proceeds from maturities and sales of securities available-for-sale		~~100~~8,~~815~~900			4138,~~587~~321
Proceeds from maturities and sales of securities held-to-maturity		160			-
Purchases of nonmarketable equity securities		-			(178	)
Purchases of nonmarketable equity securities		(327	)		(1,785	)
Proceeds from sales of nonmarketable equity securities		210			-
Proceeds from sales of nonmarketable equity securities		583			2,332
Proceeds from sales of other real estate owned		432			1,605
Proceeds from sales of other real estate		7,014			4,985
Purchases of premises and equipment		(7	)		(24	)
Purchases of premises and equipment		(73	)		(129	)
Net cash provided by investing activities		18,673			15,305
Proceeds from sales of premises and equipment		-			282
Net cash provided by investing activities		61,517			35,227
Cash flows from financing activities:
Increase (decrease) in deposit accounts		(63,845	)		61,269
Net decrease in deposit accounts		(8,167	)		(4,987	)
Net decrease in federal funds purchased and repos		-			(33,838	)
Advances of Federal Home Loan Bank borrowings		-			20,000
Advances of Federal Home Loan Bank borrowings		20,000			39,700
Repayments of Federal Home Loan Bank borrowings		-			(20,000	)
Repayments of Federal Home Loan Bank borrowings		(20,000	)		(95,485	)
Sales of treasury stock		122			130
Dividends paid		-			(678	)
Capitalized expenses associated with rights offering		-			(36	)
Proceeds from rights offering		-			8,252
Net cash used by financing activities		(8,045	)		(4,893	)
Sales of treasury stock		319			917
Net increase in cash and cash equivalents		17,484			21,255
Capitalized expenses associated with rights offering		(54	)		-
Cash and cash equivalents, beginning of period		37,175			49,131
Net cash used by financing activities		(63,580	)		(19,863	)
Cash and cash equivalents, end of period	$	54,659		$	70,386
Net increase in cash and cash equivalents		11,438			23,781
Cash and cash equivalents, beginning of period		49,131			13,612
Cash and cash equivalents, end of period	$	60,569		$	37,393

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 ~~September~~March 3031, ~~2010~~2011 and for the interim periods ended ~~September~~March 3031, ~~2010~~2011 and ~~2009~~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, ~~2009~~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 ~~2009~~2010 Annual Report. In preparing the financial statements, the Company has evaluated events and transactions occurring subsequent to the financial statement date through the ~~filing~~ date ofthe ~~November~~financial ~~10,~~statements ~~2010~~were available to be issued for potential recognition of disclosure.

Note 2 -– ~~Supplemental~~Pending ~~Cash Flow Information~~Merger

(Dollars in thousands)	Nine Months Ended September 30,
	2010		2009
Cash paid during the period for:
Income taxes	$	1,518	$	990
Interest		8,957		11,108
Noncash investing and financing activities:
Foreclosures on loans	$	15,151	$	8,709

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.

~~Note~~The 3merger -is ~~Shareholders~~expected to close in the third quarter of 2011, and is subject to approval by federal and state regulatory authorities and the Company's ~~Equity~~shareholders and the satisfaction of the closing conditions set forth in the Merger Agreement.

~~During~~Note ~~the~~3 ~~first~~- ~~nine~~Supplemental ~~months~~Cash ofFlow 2010, the Community Capital Corporation (the “Company”) sold 102,938 shares of treasury stock for total proceeds of $319,000. The Company’s 401(k) plan and Dividend Reinvestment and Stock Purchase Plan now purchase 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.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.

-7-

COMMUNITY CAPITAL CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 45 - Earnings ~~(Losses)~~ Per Share

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

(Dollars in thousands, except per share)

~~Nine~~Three Months Ended ~~September~~March 3031, ~~2010~~2011

Income (Numerator)

Shares (Denominator)

Per Share Amount

Basic earnings per share

Income available to common shareholders

1,~~475~~022

910,~~894~~017,~~766~~607

0.1510

Effect of dilutive securities

Unvested restricted stock

3618,~~557~~539

Diluted earnings per share

Income available to common shareholders plus assumed conversions

1,~~475~~022

910,~~931~~036,~~323~~146

0.1510

(Dollars in thousands, except per share)	~~Nine~~Three Months Ended ~~September~~March 3031, ~~2009~~2010
	Income (Numerator)			Shares (Denominator)		Per Share Amount
Basic earnings (losses) per share
Basic earnings per share
Income (losses) available to common shareholders	$	(23,863	)		4,638,143	$	(5.14	)
Income available to common shareholders	$	1,600			9,852,025	$	0.16
Effect of dilutive securities
Unvested restricted stock		-			6042,~~603~~863
Diluted earnings (losses) per share
Diluted earnings per share
Income (losses) available to common shareholders plus assumed conversions	$	(23,863	)		4,698,746	$	(5.14	)
Income available to common shareholders plus assumed conversions	$	1,600			9,894,888	$	0.16

(Dollars in thousands, except per share)	Three Months Ended September 30, 2010
	Income (Numerator)			Shares (Denominator)		Per Share Amount
Basic earnings (losses) per share
Income (losses) available to common shareholders	$	(478	)		9,931,940	$	(0.05	)
Effect of dilutive securities
Unvested restricted stock		-			-
Diluted earnings (losses) per share
Income (losses) available to common shareholders plus assumed conversions	$	(478	)		9,931,940	$	(0.05	)

-8-

COMMUNITY CAPITAL CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 46 - ~~Earnings~~Comprehensive Income (~~Losses~~Loss) ~~Per Share - continued~~

(Dollars in thousands, except per share)	Three Months Ended September 30, 2009
	Income (Numerator)			Shares (Denominator)		Per Share Amount
Basic earnings (losses) per share
Income (losses) available to common shareholders	$	(21,785	)		5,013,726	$	(4.35	)
Effect of dilutive securities
Unvested restricted stock		-			58,537
Diluted earnings (losses) per share
Income (losses) available to common shareholders plus assumed conversions	$	(21,785	)		5,072,263	$	(4.35	)

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

Note 5 - Comprehensive Income (Loss)

	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

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

	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	)

	Nine Months Ended September 30, 2010
(Dollars in thousands)	Pre-tax Amount			(Expense) Benefit			Net-of-tax Amount
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during the period	$	(2,839	)	$	966		$	(1,873	)
Less: reclassification adjustment for gains realized in net income		1,993			(677	)		1,316
Net unrealized gains (losses) on securities		(846	)		289			(557	)
Other comprehensive income (loss)	$	(846	)	$	289		$	(557	)

Note 7 – Stock Based Compensation

	Nine Months Ended September 30, 2009
(Dollars in thousands)	Pre-tax Amount			(Expense) Benefit			Net-of-tax Amount
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during the period	$	1,195		$	(425	)	$	770
Less: reclassification adjustment for gains realized in net income		(478	)		181			(297	)
Net unrealized gains (losses) on securities		717			(244	)		473
Other comprehensive income (loss)	$	717		$	(244	)	$	473

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.

-9-

COMMUNITY CAPITAL CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 58 -– ~~Comprehensive~~Investment ~~Income (Losses) - continued~~Securities

	Three Months Ended September 30, 2010
(Dollars in thousands)	Pre-tax Amount			(Expense) Benefit			Net-of-tax Amount
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during the period	$	(1,222	)	$	416		$	(806	)
Less: reclassification adjustment for gains realized in net income		728			(248	)		480
Net unrealized gains (losses) on securities	$	(494	)	$	168		$	(326	)
Other comprehensive income (loss)	$	(494	)	$	168		$	(326	)

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

	Three Months Ended September 30, 2009
	Amortized			Gross Unrealized						Estimated
(Dollars in thousands)	~~Pre-tax Amount~~Cost			~~(Expense) Benefit~~Gains			~~Net-of-tax Amount~~Losses			Fair Value
Unrealized gains (losses) on securities:
March 31, 2011
Unrealized holding gains (losses) arising during the period	$	1,348		$	(477	)	$	871
Obligations of state and local governments	$	8,800		$	52		$	76		$	8,776
Less: reclassification adjustment for gains (losses) realized in net income		(85	)		47			(38	)
Mortgage-backed securities		58,647			64			290			58,421
Net unrealized gains (losses) on securities	$	1,263		$	(430	)	$	833
Total	$	67,447		$	116		$	366		$	67,197
Other comprehensive income (loss)	$	1,263		$	(430	)	$	833
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

~~Note~~The 6following –table ~~Stock~~shows ~~Based~~gross ~~Compensation~~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.

~~The~~Securities 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 perAvailable-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.~~-Sale

There have been no shares issued during the three and nine month periods ended September 30, 2010. During 2009, we issued 49,500 shares of restricted stock pursuant to the 2004 Equity Incentive Plan. The shares cliff vest in three years and are fully vested on February 1, 2012. The weighted-average fair value of restricted stock issued during 2009 was $6.14. Compensation cost associated with prior issuances of restricted stock was $189,000 and $285,000 for the nine months ended September 30, 2010 and 2009, respectively, and $59,000 and $94,000 for the three months ended September 30, 2010 and 2009, respectively. At September 30, 2010, we had 97,098 stock awards available for grant under the 2004 Equity Incentive Plan.

	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.

-10-

COMMUNITY CAPITAL CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 78 – Investment Securities - continued

~~Securities~~The following table summarizes the maturities of securities available-for-sale atas ~~September~~of 30March 31, ~~2010~~2011, ~~and~~based ~~December~~on ~~31,~~the ~~2009~~contractual ~~consisted~~maturities. Actual ofmaturities may differ from the ~~following:~~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.

	Amortized			Gross Unrealized					Estimated
			Securities
(Dollars in thousands)	Cost			Gains			Losses		Fair Value
			Available-For-Sale
September 30, 2010
			Amortized			Estimated
Obligations of state and local governments	$	12,128		$	321		$	-	$	12,449
(Dollars in thousands)			Cost			Fair Value
		12,128			321			-		12,449
Due in one year or less		$	315		$	316
Mortgage-backed securities		42,722			335			84		42,973
Due after one year but within five years			1,481			1,511
Total	$	54,850		$	656		$	84	$	55,422
Due after five years but within ten years			1,963			1,975
December 31, 2009
Due after ten years			5,041			4,974
Government-sponsored enterprises	$	12,996		$	91		$	-	$	13,087
			8,800			8,776
Obligations of state and local governments		16,167			391			-		16,558
Mortgage-backed securities			58,647			58,421
		29,163			482			-		29,645
Total		$	67,447		$	67,197
Mortgage-backed securities		38,174			1,063			56		39,181
Total	$	67,337		$	1,545		$	56	$	68,826

~~Securities~~Proceeds ~~held~~from maturities and sales of securities available-tofor-~~maturity~~sale asduring the three months ended March 31, 2011 were $8,900,000 which resulted in gross realized gains of ~~September~~$224,000 30during the three months ended March 31, ~~2010~~2011. Proceeds from maturities and ~~December~~sales of securities available-for-sale during the three months ended March 31, ~~2009~~2010 ~~consisted~~were $38,321,000 which resulted in gross realized gains of $683,000 during the ~~following:~~three months ended March 31, 2010.

	Amortized		Gross Unrealized				Estimated
(Dollars in thousands)	Cost		Gains		Losses		Fair Value
September 30, 2010
Obligations of state and local governments	$	-	$	-	$	-	$	-
December 31, 2009
Obligations of state and local governments	$	160	$	10	$	-	$	170

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 ~~following~~Company ~~table~~has ~~shows~~nonmarketable ~~gross~~equity ~~unrealized~~securities ~~losses~~consisting ~~and~~of ~~fair~~investments ~~value,~~in ~~aggregated~~several byfinancial ~~investment~~institutions. These ~~category~~investments totaled $9,416,000 ~~and~~at ~~length~~March of31, ~~time~~2011 ~~that~~and ~~individual~~$9,626,000 ~~securities~~at ~~have~~December ~~been~~31, in2010. aDuring ~~continuous~~the ~~unrealized~~first ~~loss~~three ~~position~~months of 2011, atsales ~~September~~of 30nonmarketable equity securities totaled $210,000, ~~2010~~however there were no losses recorded related to OTTI.

Securities Available-for-Sale
	Less than twelve months				Twelve months or more				Total
(Dollars in thousands)	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
Obligations of state and local	$	-	$	-	$	-	$	-	$	-	$	-
governments
Mortgage-backed securities		31,626		84		-		-		31,626		84
Total	$	31,626	$	84	$	-	$	-	$	31,626	$	84

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.

-11-

COMMUNITY CAPITAL CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

~~Note~~NOTE 79 –- ~~Investment~~LOANS ~~Securities~~RECEIVABLE - continued

~~Securities~~An ~~classified~~analysis asof ~~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~~allowance ~~will~~for ~~not~~loan belosses ~~required~~for ~~to sell~~ the ~~securities~~periods ~~before~~ended ~~recovery~~March of31, ~~its~~2011, ~~amortized~~December ~~cost. The~~31, ~~Company believes~~2010, ~~based on industry analyst reports~~ and ~~credit~~March ~~ratings~~31, ~~that~~2010 ~~the deterioration in value~~ is ~~attributable~~as 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.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

IfAn ~~the~~analysis ~~review~~of ~~determines that there is OTTI, then an impairment loss is recognized in earnings equal to~~ the ~~entire~~allowance ~~difference~~for ~~between~~loan ~~the~~losses ~~investment’s~~for ~~cost and its fair value at~~ the ~~balance~~three ~~sheet~~month ~~date of the reporting~~ period ~~for~~ended ~~which~~March ~~the assessment is made~~31, or2011 ~~may recognize a portion in other comprehensive income. The fair value of investments on which OTTI~~ is ~~recognized~~as ~~then becomes the new cost basis of the investment.~~follows:

The following table summarizes the maturities of securities available-for-sale and held-to-maturity as of September 30, 2010, 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.

(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	$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	-

	Securities Available-For-Sale				Securities Held-To-Maturity
(Dollars in thousands)	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	315	$	316	$	-	$	-
Due after one year but within five years		2,413		2,448		-		-
Due after five years but within ten years		4,357		4,517		-		-
Due after ten years		5,043		5,168		-		-
		12,128		12,449		-		-
Mortgage-backed securities		42,722		42,973		-		-
Total	$	54,850	$	55,422	$	-	$	-

Proceeds from maturities and sales of securities available-for-sale during the nine months ended September 30, 2010 were $100,815,000 which resulted in gross realized gains of $1,993,000 during the nine months ended September 30, 2010.

At September 30, 2010 and December 31, 2009, securities having amortized costs of approximately $30,648,000 and $36,317,000, 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 $9,930,000 at September 30, 2010 and $10,186,000 at December 31, 2009. During the first nine months of 2010, sales of nonmarketable equity securities totaled $583,000, however there were no losses recorded related to OTTI. During the first nine months of 2009, the Company recorded OTTI of $82,000 on its investment in Community Financial Services, Inc. stock.

-12-

COMMUNITY CAPITAL CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

~~Note~~NOTE 89 –- ~~Other~~LOANS ~~Real~~RECEIVABLE ~~Estate~~- ~~Owned~~continued

~~CapitalBank~~An ~~(the~~analysis ~~“Bank”)~~of ~~possessed~~the ~~$14,452,000~~allowance ~~and~~for ~~$7,165,000~~loan inlosses ~~other real estate owned at September 30, 2010 and December 31, 2009, respectively. Transactions in other real estate owned~~ for the ~~nine~~year ~~months~~ ended ~~September~~December 3031, 2010 ~~are~~is ~~summarized~~as ~~below~~follows:

		September 30,
(Dollars in thousands)					Commercial			Commercial
(Dollars in thousands)		2010
Allowance for credit					Real Estate			Real Estate
Balance, December 31, 2009		$	7,165
losses:		Commercial			Construction			Other			Consumer			Residential			HELOC			Unallocated			Total
Additions			15,151
Beginning balance	$	248		$	4,375		$	98		$	59		$	1,718		$	386		$	7,276		$	14,160
Sales			(7,159	)
Chargeoffs		(493	)		(8,902	)		(1,309	)		(36	)		(4,481	)		(546	)		-			(15,767	)
Write downs			(705	)
Recoveries		1			104			61			25			226			5			-			422
Balance, September 30, 2010		$	14,452
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	$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	-

~~Note~~Credit 9Quality ~~– Fair Value Measurements~~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.

~~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.19-

-13-

COMMUNITY CAPITAL CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

~~Note~~NOTE 911- –FAIR ~~Fair~~VALUE ~~Value~~OF ~~Measurements~~FINANCIAL -INSTRUMENTS – continued

~~Junior~~Advances ~~Subordinated~~from ~~Debentures~~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 ~~junior~~borrowings ~~subordinated debentures~~ are estimated using a discounted cash flow calculation that applies the Company’s current borrowing rate~~. The~~ ~~carrying~~from ~~amounts~~the ofFederal ~~variable~~Home ~~rate~~Loan ~~borrowings are reasonable estimates of fair value because they can be repriced frequently~~Bank.

~~Off-Balance-Sheet~~Junior ~~Financial~~Subordinated ~~Instruments~~ Debentures – ~~Fair~~The ~~values~~fair ~~for~~value ~~off-balance~~of ~~sheet,~~fixed ~~credit-related~~rate ~~financial~~junior ~~instruments~~subordinated debentures are ~~based~~estimated onusing ~~fees~~a ~~currently~~discounted ~~charged~~cash toflow ~~enter~~calculation ~~into~~that ~~similar~~applies ~~agreements,~~the ~~taking~~Company’s ~~into~~current ~~account~~borrowing ~~the~~rate. The ~~remaining~~carrying ~~terms~~amounts of ~~the~~variable ~~agreements~~rate ~~and~~borrowings ~~the~~are ~~counterparties’~~reasonable ~~credit~~estimates ~~standing~~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:

	September 30, 2010				December 31, 2009
		March 31, 2011				December 31, 2010
(Dollars in thousands)	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
		Carrying		Estimated		Carrying		Estimated
(Dollars in thousands)		Amount		Fair Value		Amount		Fair Value
Financial Assets:
Cash and due from banks	$	11,~~332~~079	$	11,~~332~~079	$	109,~~141~~315	$	109,~~141~~315
Interest-bearing deposit accounts		4943,~~237~~580		4943,~~237~~580		3827,~~990~~860		3827,~~990~~860
Securities available-for-sale		5567,~~422~~197		5567,~~422~~197		6874,~~826~~025		6874,~~826~~025
Securities held-to-maturity		-		-		160		170
Nonmarketable equity securities		9,416		9,416		9,626		9,626
Nonmarketable equity securities		9,930		9,930		10,186		10,186
Cash surrender value of life insurance		17,569		17,569		17,397		17,397
Cash surrender value of life insurance		17,211		17,211		16,689		16,689
Loans and loans held for sale		466,759		465,680		484,909		483,885
Loans and loans held for sale		509,927		509,010		568,281		562,072
Accrued interest receivable		2,201		2,201		2,289		2,289
Accrued interest receivable		2,435		2,435		3,046		3,046

Financial Liabilities:

Demand deposit, interest bearing

transaction, and savings accounts

~~352~~346,~~318~~627

~~345~~341,~~226~~994

Certificates of deposit and other time deposits

~~167~~140,~~320~~388

~~168~~141,~~429~~020

~~238~~153,~~257~~188

~~240~~154,~~729~~187

Advances from the Federal Home Loan Bank

95,400

88100,~~698~~042

95,400

90100,~~478~~753

Junior subordinated debentures

10,310

10,~~505~~371

10,310

10,~~740~~422

Accrued interest payable

~~802~~615

~~1,337~~708

Notional Amount

Estimated Fair Value

Notional Amount

Estimated Fair Value

Notional

Estimated

Notional

Estimated

Amount

Fair Value

Amount

Fair Value

Off-Balance Sheet Financial Instruments:

Commitments to extend credit

5245,~~397~~421

6649,~~933~~961

Letters of credit

1,~~706~~705

21,~~518~~647

~~-14-~~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~~NOTE 911- –FAIR ~~Fair~~VALUE ~~Value~~OF ~~Measurements~~FINANCIAL -INSTRUMENTS – continued

~~Accounting~~The ~~standards~~Company ~~require~~utilizes ~~disclosure that establishes a framework for measuring~~ fair value, ~~and~~measurements ~~requires~~to ~~disclosure~~record ~~about~~ fair value ~~measurements~~adjustments ~~for~~to ~~all~~certain assets and ~~liabilities~~to ~~that~~determine ~~are measured and reported on a~~ fair value ~~basis~~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:~~

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.

InFollowing ~~determining~~is ~~the appropriate levels, the Company performs~~ a ~~detailed~~description ~~analysis~~ of ~~the~~valuation ~~assets~~methodologies ~~and~~used ~~liabilities~~for ~~that are subject to fair value measurement. At each reporting period, all~~ assets and liabilities ~~for~~recorded ~~which~~at ~~the~~ fair value ~~measurement is based on significant unobservable inputs are classified as Level 3~~.

~~The~~Investment ~~table~~Securities ~~below~~Available-for-Sale ~~presents~~– ~~the~~Investment ~~balances~~securities ofavailable-for-sale ~~assets~~are ~~and~~recorded ~~liabilities measured~~ at fair value on a recurring basis. Fair byvalue ~~level~~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 ~~September~~cash 30flows, ~~2010~~adjusted for the security’s rating, prepayment assumptions and ~~December~~other 31factors such as credit loss assumptions. Level 1 securities includes those traded on an active exchange such as the New York Stock Exchange, ~~2009~~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.

September 30, 2010 (Dollars in thousands)	Quoted market price in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Mortgage-backed securities	$	-	$	42,972	$	-
State and municipal obligations		-		12,450
Available-for-sale securities		-		55,422		-
Loans held for sale		-		5,419		-
Total	$	-	$	60,841	$	-
December 31, 2009
(Dollars in thousands)
Mortgage-backed securities	$	-	$	39,181	$	-
State and municipal obligations		-		16,559		-
Government-sponsored enterprises		-		13,086		-
Available-for-sale securities				68,826
Loans held for sale		-		1,103		-
Total	$		$	69,929	$	-

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

~~-15-~~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~~NOTE 911- –FAIR ~~Fair~~VALUE ~~Value~~OF ~~Measurements~~FINANCIAL -INSTRUMENTS – continued

~~Certain~~Other ~~assets~~Real ~~and~~Estate ~~liabilities~~Owned – Foreclosed assets are ~~measured~~adjusted atto fair value onupon atransfer ~~nonrecurring~~of ~~basis;~~the ~~that~~loans to other real estate owned. Real estate acquired in settlement of loans is, recorded initially at estimated fair value of the ~~instruments~~property ~~are~~less ~~not~~estimated ~~measured~~selling costs at ~~fair~~the date of foreclosure. The initial recorded value onmay anbe ~~ongoing~~subsequently ~~basis~~reduced ~~but~~by additional allowances, which are ~~subject~~charges to earnings if the estimated fair value ~~adjustments~~of inthe ~~certain~~property ~~circumstances~~less ~~(for~~estimated ~~example,~~seling ~~when~~costs ~~there~~declines isbelow ~~evidence~~the ofinitial ~~impairment)~~recorded value. ~~The~~Fair ~~following~~value ~~table~~is ~~presents~~based upon independent market prices, appraised values of the ~~assets~~collateral ~~and~~or ~~liabilities~~management’s ~~carried~~estimation onof the ~~balance~~value ~~sheet~~of bythe ~~caption~~collateral. When ~~and~~the byfair ~~level~~value ~~within~~of the ~~valuation~~collateral ~~hierarchy~~is ~~(as~~based ~~described~~on ~~above)~~an asobservable ofmarket ~~September~~price 30or a current appraised value, ~~2010~~the ~~for~~Company ~~which~~records athe foreclosed asset as nonrecurring ~~change~~Level in2. When an appraised value is not available or management determines the fair value ~~has~~of ~~been~~the ~~recorded~~collateral ~~during~~is further impaired below the ~~nine~~appraised ~~months~~value ~~ended~~and ~~September~~there 30is no observable market price, ~~2010~~the Company records the foreclosed asset as nonrecurring Level 3.

~~Assets~~The table below presents the balances of assets and liabilities measured at fair value on a ~~nonrecurring~~recurring basis ~~are~~by aslevel ~~follows~~within asthe ~~of September 30, 2010 and December 31, 2009:~~hierarchy.

(Dollars in thousands) September 30, 2010	Quoted market price in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
March 31, 2011	Quoted market price in active markets		Significant other observable inputs		Significant unobservable inputs
Intangible assets	$	-	$	-	$	1,360
(Dollars in thousands)	(Level 1)		(Level 2)		(Level 3)
Other real estate owned		-		14,452		-
Mortgage-backed securities	$	-	$	58,421	$	-
Impaired loans		-		57,444		20,591
State and municipal obligations		-		8,776
Total	$	-	$	71,896	$	21,951
Available-for-sale securities		-		67,197		-
Loans held for sale		-		1,781		-
Total	$	-	$	68,978	$	-

December 31, 2009
December 31, 2010
Intangible assets	$	-	$	-	$	1,663
(Dollars in thousands)
Other real estate owned		-		7,165		-
Mortgage-backed securities	$	-	$	63,229	$	-
Impaired loans		-		66,735		5,221
State and municipal obligations		-		10,796		-
Total	$	-	$	73,900	$	6,884
Available-for-sale securities		-		74,025		-
Loans held for sale		-		5,516		-
Total	$	-	$	79,541	$	-

~~The~~There ~~table~~were ~~below~~no ~~presents~~liabilities ~~reconciliation~~measured ~~for~~at ~~all~~fair ~~Level~~value ~~3 assets and liabilities measured~~ on a ~~nonrecurring~~recurring basis ~~during~~for the ~~nine~~periods ~~months~~ ended ~~September~~March 3031, 2011 and December 31, 2010.

(Dollars in thousands)	Intangible Assets			Impaired Loans
Balance, December 31, 2009	$	1,663		$	5,221
Amortization of core deposit premium		(303	)		-
Change in impaired loans measured with present value of cash flows		-			15,370
Balance, September 30, 2010	$	1,360		$	20,591

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

~~-16-~~the year.

-22-

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.

-23-

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, ~~2009~~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~~, including the effect of recent financial reform legislation on the banking industry~~;

· significant increases in competitive pressure in ~~the Bank~~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 ~~recent~~ 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. Additionally, on July 21, 2010, the U.S. President signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, a comprehensive regulatory framework that will affect every financial institution in the U.S. Over the next 6 to 18 months, regulatory agencies will begin to implement new regulations which will establish the parameters of the new regulatory framework and provide a clearer understanding of the legislation's effect on our bank and the banking industry in general.

All forward-17looking 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.

-24-

COMMUNITY CAPITAL CORPORATION

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

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.

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.

Like most community banks, we derive the majority of our income from interest we receive on our loans and investments. Our primary source of funds for making these loans and investments is our deposits, on which we pay interest. Consequently, one of the key measures of our success is our amount of net interest income, or the difference between the income earned on our interest-earning assets, such as loans and investments, and the expense cost of our interest-bearing liabilities, such as deposits. Another key measure is the spread between the yield we earn on these interest-earning assets and the rate we pay on our interest-bearing liabilities.

There are risks inherent in all loans, so we maintain an allowance for loan losses to absorb probable losses on existing loans that may become uncollectible. We establish and maintain this allowance by charging a provision for loan losses against our operating earnings. In the following section we have included a detailed discussion of this process.

In addition to earning interest on our loans and investments, we earn income through fees and other expenses we charge to our customers. We describe the various components of this non-interest income, as well as our non-interest expenses, in the following discussion.

As of ~~September~~March 3031, ~~2010~~2011, we had total consolidated assets of approximately $~~688~~649 million, total deposits of approximately $~~520~~487 million, total consolidated liabilities, including deposits, of approximately $~~633~~600 million, and total consolidated shareholders’ equity of approximately $5549 million. While the majority of our loan portfolio continues to perform well, ~~the~~ real estate, construction and land development portion of our portfolio has been negatively impacted by current economic climate and the deterioration in the residential real estate sector. We continue to actively manage our non-performing assets and we may sell assets and take advantage of other market opportunities to dispose of problem assets. Recently, we have emphasized cost controls throughout our organization, which have been an important focus as economic growth has slowed.

~~-18-~~On March 30, 2011, we entered into an Agreement and Plan of Merger with Park Sterling Corporation ("Park Sterling") pursuant to which our Company will merge with and into Park Sterling, with Park Sterling as the surviving entity, in a cash and stock transaction valued at approximately $32.4 million. Under the terms of the Merger Agreement, our shareholders will receive for each share of common stock owned one of the following: (i) $3.30 in cash; or (ii) 0.6667 of a share of Park Sterling common stock. In total, 60% of our outstanding shares of common stock will be exchanged for shares of Park Sterling and 40% of our outstanding shares of common stock will be exchanged for cash. The merger is currently expected to be completed in the third quarter of 2011, pending receipt of the approvals of our shareholders and regulatory approvals. The merger agreement also provides that we must pay to Park Sterling a cash fee of $2,000,000 and up to $500,000 in respect of Park Sterling’s legal and due diligence expenses if the merger agreement is terminated under certain conditions.

-25-

COMMUNITY CAPITAL CORPORATION

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

Recent Regulatory Developments

As previously reported, we entered into a written agreement with the Federal Reserve on July 28, 2010, which requires the Bank to take certain actions, including, but not limited to, designing a plan to improve the Bank's position on certain problem loans, reviewing and revising its allowance for loan and lease losses ("ALLL") methodology, strengthening its credit risk management and lending program, enhancing its written liquidity and contingency funding plan, and submitting a capital plan to maintain the Bank's capital ratios in excess of the minimum thresholds required to be well-capitalized. The written agreement also prohibits the Company and the Bank from declaring or paying any dividends, without the prior written approval of the Federal Reserve and the South Carolina Board of Financial Institutions, respectively.

The written agreement does not contain any provisions to increase capital and will not result in any change to financial results. We intend to take all actions necessary to enable the Bank to comply with the requirements of this agreement, and as of the date hereof we have submitted all documentation required to the Federal Reserve. Nevertheless, there can be no assurance that the Bank will be able to fully comply with the provisions of the agreement, and the determination of our compliance will be made by the Federal Reserve. If we were to fail to comply with the requirements of the written agreement, we could be subject to further regulatory action by the Federal Reserve.

Financial Condition

The following is a discussion of our financial condition as of ~~September~~March 3031, ~~2010~~2011 compared to December 31, ~~2009~~2010 and the results of operations for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2010~~2011 compared to the three ~~and nine~~ months ended ~~September~~March 3031, ~~2009~~2010. We encourage you to read this discussion and analysis in conjunction with our financial statements and the other statistical information included in this Quarterly Report.

Critical Accounting Policies

We have adopted various accounting policies that govern the application of accounting principles generally accepted in the United States in the preparation of our financial statements. Our significant accounting policies are described in the footnotes to the consolidated financial statements at December 31, ~~2009~~2010 as filed on our Annual Report on Form 10-K. Certain accounting policies involve significant judgments and assumptions by us that have a material impact on the carrying value of certain assets and liabilities. We consider these accounting policies to be critical accounting policies. The judgments and assumptions we use are based on historical experience and other factors, which we believe to be reasonable under the circumstances. Because of the nature of the judgments and assumptions we make, actual results could differ from these judgments and estimates, which could have a material impact on our carrying values of assets and liabilities and our results of operations.

We believe the allowance for loan losses is a critical accounting policy that requires the most significant judgments and estimates used in preparation of our consolidated financial statements. Refer to the portion of this discussion that addresses our allowance for loan losses for a description of our processes and methodology for determining our allowance for loan losses.

WeThe ~~believe~~Allowance for Loan Losses represents our estimate of probable losses inherent in the ~~accounting~~lending ~~for~~portfolio. ~~Other~~See ~~Real~~Provision ~~Estate~~and ~~Owned~~Allowance ~~(“OREO”)~~for isLosses afor ~~critical~~additional ~~accounting~~discussion ~~policy~~including ~~that~~factors ~~requires~~impacting ~~judgments~~the Allowance and ~~estimates~~the ~~used~~methodology infor ~~preparation~~analyzing ofthe ~~our~~adequacy ~~consolidated~~of ~~financial~~the ~~statements~~Allowance. ~~OREO~~ isThis ~~initially~~methodology ~~recorded~~relies atupon ~~fair~~our ~~value,~~judgment. ~~less~~Our ~~any~~judgments ~~costs~~are tobased ~~sell. If~~on ~~the~~an ~~fair~~assessment ~~value~~of various issues, ~~less~~including, ~~cost~~but tonot ~~sell~~limited atto, the ~~time~~pace of ~~foreclosure~~loan growth, isemerging ~~less~~portfolio ~~than~~concentrations, the risk management system relating to lending activities, entry into new markets, new product offerings, loan ~~balance~~portfolio quality trends, ~~the~~and ~~deficiency~~uncertainty isin ~~charged~~current ~~against~~economic and business conditions. We consider the ~~allowance~~year-end ~~for~~Allowance ~~loan~~appropriate and adequate to cover probable losses~~. If~~ in the ~~fair~~loan ~~value~~portfolio. However, ~~less~~our ~~cost~~judgment is based upon a number of assumptions about current events, which are believed to ~~sell~~be reasonable, ofbut ~~the~~which ~~OREO~~may ~~decreases~~or ~~during~~may ~~the~~not ~~holding~~prove ~~period~~valid. Thus, athere ~~valuation~~can ~~allowance~~be isno ~~established~~assurance ~~with~~that aloan ~~charge~~losses toin ~~foreclosed~~future ~~property~~periods ~~costs. When~~will ~~the~~not ~~OREO~~exceed isthe ~~sold,~~current aAllowance ~~gain~~amount or ~~loss~~that isfuture ~~recognized~~increases onin the ~~sale~~Allowance ~~for~~will ~~the~~not ~~difference~~be ~~between~~required. ~~the~~No ~~sales~~assurance ~~proceeds~~can ~~and~~be ~~the~~given ~~carrying~~that ~~amount~~our ongoing evaluation of the ~~property. Financed~~loan ~~sales~~portfolio, in light of ~~OREO~~changing ~~are~~economic ~~accounted~~conditions ~~for~~and inother ~~accordance~~relevant ~~with~~circumstances, ~~Accounting~~will ~~Standards~~not ~~Codification~~require ~~(“ASC”)~~significant ~~360-20~~future additions to the Allowance, ~~Real~~thus ~~Estate~~adversely ~~Sales~~impacting the results of operations of the Company.

~~-19-~~We believe the accounting for OREO is a critical accounting policy that requires judgments and estimates used in preparation of our consolidated financial statements. OREO is initially recorded at fair value, less any costs to sell. If the fair value, less cost to sell at the time of foreclosure, is less than the loan balance, the deficiency is charged against the allowance for loan losses. If

-26-

COMMUNITY CAPITAL CORPORATION

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

~~Critical~~the ~~Accounting~~fair ~~Policies~~value, less cost to sell, of the OREO decreases during the holding period, a valuation allowance is established with a charge to foreclosed property costs. When the OREO is sold, a gain or loss is recognized on the sale for the difference between the sales proceeds and the carrying amount of the property. Financed sales of OREO are accounted for in accordance with ASC 360-20, ~~continued~~Real Estate Sales.

We ~~use~~evaluate ~~assumptions~~securities ~~and~~for ~~estimates~~other-than-temporary inimpairment ~~determining~~at ~~income~~least ~~taxes~~on ~~payable~~a orquarterly ~~refundable~~basis, ~~for~~and ~~the~~more ~~current~~frequently ~~year,~~when ~~deferred~~economic ~~income~~or ~~tax~~market ~~liabilities~~concerns ~~and~~warrant ~~assets~~such ~~for~~evaluation. Consideration ~~events~~is ~~recognized~~given ~~differently~~to inthe ~~its~~length ~~financial~~of ~~statements~~time and ~~income~~the ~~tax~~extent ~~returns,~~to ~~and~~which ~~income~~the ~~tax~~fair ~~expense.~~value ~~Determining~~has ~~these~~been ~~amounts~~less ~~requires~~than ~~analysis~~cost, ofthe ~~certain~~financial ~~transactions~~condition ~~and interpretation~~ of ~~tax~~the ~~laws~~issuer,the ~~and~~outlook ~~regulations.~~for Wereceiving ~~exercise considerable judgment in evaluating~~ the ~~amount~~contractual ~~and~~cash ~~timing~~flows of ~~recognition of~~ the ~~resulting~~investments, ~~tax liabilities~~ and ~~assets.~~anticipated ~~These~~outlook ~~judgments~~for ~~and~~changes ~~estimates~~in ~~are~~the ~~reevaluated~~general onlevel aof ~~continual~~interest ~~basis~~rates, ~~as regulatory~~ and ~~business~~our ~~factors~~intent ~~change. No~~and ~~assurance~~ability ~~can~~to beretain ~~given~~our ~~that~~investment ~~either~~in the ~~tax~~issuer ~~returns~~for ~~submitted~~a byperiod usof ortime ~~the~~sufficient ~~income~~to ~~tax~~allow ~~reported~~for onany ~~the~~anticipated ~~Consolidated~~recovery ~~Financial~~in ~~Statements~~fair ~~will~~value ~~not~~or befor ~~adjusted~~a bydebt ~~either~~security ~~adverse~~whether ~~rulings~~it byis ~~the~~more-likely-than-not ~~United~~that ~~States Tax~~the ~~Court,~~Company ~~changes~~will inbe ~~the~~required ~~tax~~to ~~code,~~sell orthe ~~assessments~~debt ~~made~~security byprior ~~the~~to ~~Internal~~recovering ~~Revenue~~its ~~Service~~fair value.

We use assumptions and estimates in determining income taxes payable or refundable for the current year, deferred income tax liabilities and assets for events recognized differently in its financial statements and income tax returns, and income tax expense. Determining these amounts requires analysis of certain transactions and interpretation of tax laws and regulations. We exercise considerable judgment in evaluating the amount and timing of recognition of the resulting tax liabilities and assets. These judgments and estimates are reevaluated on a continual basis as regulatory and business factors change. No assurance can be given that either the tax returns submitted by us or the income tax reported on the Consolidated Financial Statements will not be adjusted by either adverse rulings by the United States

Tax Court, changes in the tax code, or assessments made by the Internal Revenue Service. We are subject to potential adverse adjustments, including, but not limited to, an increase in the statutory federal or state income tax rates, the permanent nondeductibility of amounts currently considered deductible either now or in future periods, and the dependency on the generation of future taxable income, including capital gains, in order to ultimately realize deferred income tax assets. Historically, our estimated income taxes have been materially correct, and we are not aware of any reason that a material change will occur in the future. See Note 20 of Notes to Consolidated Financial Statements contained in Item 8 herein that summarizes current period income tax expense as well as future tax liabilities associated with differences in the timing of expenses and income recognition for book and tax accounting purposes.

Recent Developments

Markets in the United States and elsewhere have experienced extreme volatility and disruption over the past three plus years. These circumstances have exerted significant downward pressure on prices of equity securities and virtually all other asset classes, and have resulted in substantially increased market volatility, severely constrained credit and capital markets, particularly for financial institutions, and an overall loss of investor confidence. Loan portfolio performances have deteriorated at many institutions resulting from, among other factors, a weak economy and a decline in the value of the collateral supporting their loans. Dramatic slowdowns in the housing industry, due in part to falling home prices and increasing foreclosures and unemployment, have created strains on financial institutions. Many borrowers are now unable to repay their loans, and the collateral securing these loans has, in some cases, declined below the loan balance. In response to the challenges facing the financial services sector, ~~several~~beginning in 2008 a multitude of new regulatory and governmental actions have been announced, ~~since~~including the Emergency Economic Stabilization Act ("EESA"), approved by Congress and signed by President Bush on October 3, 2008~~. Below~~ isand athe ~~description~~American Recovery and Reinvestment Act on February 17, 2009, amonth others. Some of the ~~most~~more recent ~~developments~~actions include:

· On July 21, 2010, the U.S. President signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "“Dodd-Frank Act"”), a comprehensive regulatory framework that will ~~affect~~likely ~~every~~result ~~financial institution~~ in ~~the~~dramatic ~~U.S.~~changes ~~U.S.~~across the financial ~~regulators~~regulatory ~~will~~system, ~~begin~~some ~~the~~of ~~rulemaking~~which ~~process~~became ~~over~~effective ~~the~~immediately ~~next~~and 6some toof ~~18 months~~ which will ~~set~~not ~~the~~become ~~parameters~~effective ofuntil ~~the~~various ~~new~~future ~~regulatory~~dates. ~~framework~~Implementation ~~and provide a clearer understanding~~ of the ~~legislation's effect on banks. The~~ Dodd-Frank Act ~~requires~~will ~~the~~require ~~FDIC~~many tonew ~~provide~~rules ~~unlimited~~to ~~deposit~~be ~~insurance~~made ~~for~~by ~~all~~various ~~deposits~~federal inregulatory ~~noninterest-bearing~~agencies ~~transaction~~over ~~accounts~~the ~~beginning~~next onseveral ~~December 31, 2010 until December 31, 2012~~years. ~~This~~Uncertainty ~~unlimited~~remains ~~deposit~~as ~~insurance does not apply~~ to ~~NOW~~the ~~accounts~~ultimate orimpact ~~IOLTAs~~of ~~and~~the ~~will~~Dodd-Frank beAct ~~funded~~until ~~through~~final ~~general~~rulemaking ~~FDIC~~is ~~assessments~~complete, ~~not~~which ~~special~~could ~~assessments.~~have ~~The~~a ~~Dodd-Frank~~material ~~Act~~adverse ~~also~~impact ~~permanently~~either ~~raises~~on the ~~current~~financial ~~standard~~services ~~maximum~~industry ~~deposit~~as ~~insurance~~a ~~amount~~whole toor ~~$250,000.~~on ~~The~~our ~~FDIC~~business, ~~insurance~~financial ~~coverage~~condition, ~~limit~~results ~~applies~~of ~~per depositor~~operations, ~~per~~and ~~insured~~cash ~~depository~~flows. ~~institution~~Provisions ~~for~~in ~~each~~the ~~account~~legislation ~~ownership category.~~that

~~· On September~~ -27, 2010, the U.S. President signed into law the Small Business Jobs and Credit Act which, among other things, creates a $30 billion fund to provide capital for banks with assets under $10 billion to increase their small-business lending. The U.S. Treasury is currently working to finalize terms of participation for this fund. Management is currently evaluating the merits of this program and whether we are eligible to participate and, if so, whether we will participate.

In response to the financial crisis of 2008 and 2009, Congress has taken actions that are intended to strengthen confidence and encourage liquidity in financial institutions, and the FDIC has taken actions to increase insurance coverage on deposit accounts. The Dodd-Frank Act provides for the creation of Bureau of Consumer Financial Protection as an independent entity of the Federal Reserve that will have broad authority to issue regulations governing the services and products we provide consumers. This additional regulation could increase our compliance costs and otherwise adversely impact our operations. The Dodd-Frank Act also contains provisions that, over time, could result in higher regulatory capital requirements and loan loss provisions for the Company and the Bank and may increase interest expense due to the ability in July 2011 to pay interest on all demand deposits. There have also been proposals made by members of Congress and others that would reduce the amount delinquent borrowers are otherwise contractually obligated to pay under their mortgage loans and limit an institution’s ability to foreclose on mortgage collateral. Recent regulatory changes impose limits on our ability to change overdraft fees, which may decrease our non-interest income as compared to more recent prior periods. In addition, the potential exists for additional federal or state laws and regulations, or changes in policy, affecting lending funding practices and liquidity standards. We cannot determine the full impact of the Dodd-Frank Act on our business and operations at this time, and any legislative or regulatory changes in the future could adversely affect our operations and financial condition.

-20-

COMMUNITY CAPITAL CORPORATION

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

affect consumer financial protection regulations, deposit insurance assessments, payment of interest on demand deposits, and interchange fees could increase the costs associated with deposits and place limitations on certain revenues those deposits may generate. The Dodd-Frank Act includes provisions that, among other things, will:

o	Centralize responsibility for consumer financial protection by creating a new agency, the Bureau of Consumer Financial Protection, responsible for implementing, examining, and enforcing compliance with federal consumer financial laws;

o	Create the Financial Stability Oversight Council that will recommend to the Federal Reserve increasingly strict rules for capital, leverage, liquidity, risk management and other requirements as companies grow in size and complexity;

Provide mortgage reform provisions regarding a customer’s ability to repay, restricting variable-rate lending by requiring that the ability to repay variable-rate loans be determined by using the maximum rate that will apply during the first five years of a variable-rate loan term, and making more loans subject to provisions for higher cost loans, new disclosures, and certain other revisions;

Change the assessment base for federal deposit insurance from the amount of insured deposits to consolidated assets less tangible capital, eliminate the ceiling on the size of the Deposit Insurance Fund (“DIF”), and increase the floor on the size of the DIF, which generally will require an increase in the level of assessments for institutions with assets in excess of $10 billion;

o	Make permanent the $250,000 limit for federal deposit insurance and provide unlimited federal deposit insurance until December 31, 2012 for noninterest-bearing demand transaction accounts at all insured depository institutions;

o	Implement corporate governance revisions, including with regard to executive compensation and proxy access by shareholders, which apply to all public companies, not just financial institutions;

o	Repeal the federal prohibitions on the payment of interest on demand deposits, thereby permitting depository institutions to pay interest on business transactions and other accounts;

Amend the Electronic Fund Transfer Act (“EFTA”) to, among other things, give the Federal Reserve the authority to establish rules regarding interchange fees charged for electronic debit transactions by payment card issuers having assets over $10 billion and to enforce a new statutory requirement that such fees be reasonable and proportional to the actual cost of a transaction to the issuer;

Eliminate the Office of Thrift Supervision (“OTS”) one year from the date of the new law’s enactment. The Office of the Comptroller of the Currency, which is currently the primary federal regulator for national banks, will become the primary federal regulator for federal thrifts. In addition, the Federal Reserve will supervise and regulate all savings and loan holding companies that were formerly regulated by the OTS.

On September 27, 2010, the U.S. President signed into law the Small Business Jobs Act of 2010 (the “Act”). The Small Business Lending Fund (the “SBLF”), which was enacted as part of the Act, is a $30 billion fund that encourages lending to small businesses by providing Tier 1 capital to qualified community banks with assets of less than $10 billion. On December 21, 2010, the U.S. Treasury published the application form, term sheet and other guidance for participation in the SBLF. Under the terms of the SBLF, the Treasury will purchase shares of senior preferred stock from banks, bank holding companies, and other financial institutions that will qualify as Tier 1 capital for regulatory purposes and rank senior to a participating institution’s common stock. The application deadline for participating in the SBLF is May 16, 2011. Based on the program criteria, we do not plan to participate in the SBLF.

-28-

COMMUNITY CAPITAL CORPORATION

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

Internationally, both the Basel Committee on Banking Supervision (the “Basel Committee”) and the Financial Stability Board (established in April 2009 by the Group of Twenty (“G-20”) Finance Ministers and Central Bank Governors to take action to strengthen regulation and supervision of the financial system with greater international consistency, cooperation, and transparency) have committed to raise capital standards and liquidity buffers within the banking system (“Basel III”). On September 12, 2010, the Group of Governors and Heads of Supervision agreed to the calibration and phase-in of the Basel III minimum capital requirements (raising the minimum Tier 1 common equity ratio to 4.5% and minimum Tier 1 equity ratio to 6.0%, with full implementation by January 2015) and introducing a capital conservation buffer of common equity of an additional 2.5% with full implementation by January 2019. The U.S. federal banking agencies support this agreement. In December 2010, the Basel Committee issued the Basel III rules text, outlining the details and time-lines of global regulatory standards on bank capital adequacy and liquidity. According to the Basel Committee, the framework sets out higher and better-quality capital, better risk coverage, the introduction of a leverage ratio as a backstop to the risk-based requirement, measures to promote the build-up of capital that can be drawn down in periods of stress, and the introduction of two global liquidity standards.

In November 2010, the Federal Reserve's monetary policymaking committee, the Federal Open Market Committee (“FOMC”), decided that further support to the economy was needed. With short-term interest rates already nearing 0%, the FOMC agreed to deliver that support by committing to purchase additional longer-term securities, as it did in 2008 and 2009. The FOMC intends to buy an additional $600 billion of longer-term U.S. Treasury securities by mid-2011 and will continue to reinvest repayments of principal on its holdings of securities, as it has been doing since August 2010.

In November 2010, the FDIC approved two proposals that amend the deposit insurance assessment regulations. The first proposal implements a provision in the Dodd-Frank Act that changes the assessment base from one based on domestic deposits (as it has been since 1935) to one based on assets. The assessment base changes from adjusted domestic deposits to average consolidated total assets minus average tangible equity. The second proposal changes the deposit insurance assessment system for large institutions in conjunction with the guidance given in the Dodd-Frank Act. In February 2011, the FDIC approved the final rules that change the assessment base from domestic deposits to average assets minus average tangible equity, adopt a new scorecard-based assessment system for financial institutions with more than $10 billion in assets, and finalize the designated reserve ratio target size at 2.0% of insured deposits. We elected to voluntarily participate in the unlimited deposit insurance component of the Treasury’s Transaction Account Guarantee Program (“TAGP”) through December 31, 2010. Coverage under the program was in addition to and separate from the basic coverage available under the FDIC’s general deposit insurance rules. As a result of the Dodd-Frank Act that was signed into law on July 21, 2010, the program ended on December 31, 2010, and all institutions are now required to provide full deposit insurance on noninterest-bearing transaction accounts until December 31, 2012. There will not be a separate assessment for this as there was for institutions participating in the deposit insurance component of the TAGP.

On December 16, 2010, the Federal Reserve Board issued a proposal to implement a provision in the Dodd-Frank Act that requires the Federal Reserve Board to set debit card interchange fees. The proposed rule, if implemented in its current form, would result in a significant reduction in debit-card interchange revenue. Though the rule technically does not apply to institutions with less than $10 billion in assets, there is concern that the price controls may harm community banks, which could be pressured by the marketplace to lower their own interchange rates.

On April 19, 2011, the Federal Reserve Board issued a proposed rule under Regulation Z that would require creditors to determine a consumer’s ability to repay a mortgage before making the loan and would establish minimum mortgage underwriting standards. The proposal is being made pursuant to the Dodd-Frank Act. The proposed rule, if implemented in its current form, provides four options for complying with the ability-to-repay requirement and would apply to all consumer mortgages, except home equity lines of credit, timeshare plans, reverse mortgages, or temporary loans. The proposal would also implement the Dodd-Frank Act’s limits on prepayment penalties, lengthen the time creditors must retain records that evidence compliance with the ability

to-repay and prepayment penalty provisions, and prohibit evasion of the rule by structuring a closed-end extension of credit as an open-end plan.

-29-

COMMUNITY CAPITAL CORPORATION

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

Although it is likely that further regulatory actions will arise as the Federal government attempts to address the economic situation, we cannot predict the effect that fiscal or monetary policies, economic control, or new federal or state legislation may have on our business and earnings in the future.

Results of Operations

Net Interest Income

The largest component of our net income is our net interest income, which is the difference between the income earned on assets and interest paid on deposits and borrowings used to support such assets. Net interest income is determined by the yields earned on our interest-earning assets and the rates paid on our interest-bearing liabilities, the relative amounts of interest-earning assets and interest-bearing liabilities and the degree of mismatch and the maturity and repricing characteristics of our interest-earning assets and interest-bearing liabilities. Net interest income divided by average interest-earning assets represents our net interest margin.

The following table sets forth, for the periods indicated, certain information related to our average balance sheet and our average yields on assets and average costs of liabilities. Such yields are derived by dividing income or expense by the average balance of the corresponding assets or liabilities. Average balances have been derived from the daily balances throughout the periods indicated.

Average Balances, Income and Expenses, and Rates

	Average Balances, Income and Expenses, and Rates
	For the Three Months Ended
	March 31, 2011							March 31, 2010
(Dollars in thousands)	Average Balance		Income/ Expense		Yield/ Rate (1)			Average Balance		Income/ Expense		Yield/ Rate (1)
Assets:
Earning Assets:
Loans(2)(4)	$	475,989	$	6,411		5.46	%	$	560,249	$	7,506		5.43	%
Securities, taxable (3)		62,630		365		2.36	%		54,697		536		3.97	%
Securities, nontaxable (3)(4)		10,407		157		6.12	%		15,827		233		5.97	%
Nonmarketable equity securities		9,495		41		1.75	%		10,267		31		1.22	%
Fed funds sold and other		31,708		16		0.20	%		43,968		22		0.20	%
Total earning assets		590,229		6,990		4.80	%		685,008		8,328		4.93	%
Non-earning assets		60,152							64,760
Total assets	$	650,381						$	749,768

Liabilities:
Interest bearing liabilities:
Interest bearing transaction accounts		192,505		396		0.83	%		190,446		552		1.18	%
Savings accounts		42,814		81		0.77	%		43,175		138		1.30	%
Time deposits		146,291		525		1.46	%		237,570		1,240		2.12	%
Federal Home Loan Bank advances		95,400		817		3.47	%		95,400		823		3.50	%
Junior subordinated debentures		10,310		195		7.67	%		10,310		179		7.04	%
Total interest bearing liabilities		487,320		2,014		1.67	%		576,901		2,932		2.06	%
Non-interest bearing liabilities		114,512							118,471
Shareholders’ equity		48,549							54,396
Total liabilities and shareholders’equity	$	650,381						$	749,768
Net interest spread						3.13	%						2.87	%
Net interest income/margin			$	4,976		3.42	%			$	5,396		3.19	%

	For the Three Months Ended
	September 30, 2010							September 30, 2009
(Dollars in thousands)	Average Balance		Income/ Expense		Yield/ Rate (1)			Average Balance		Income/ Expense		Yield/ Rate (1)
Assets:
Earning Assets:
Loans(2)(4)	$	517,941		7,001		5.36	%	$	609,033		8,194		5.34	%
Securities, taxable (3)		42,711		296		2.75	%		47,186		536		4.51	%
Securities, nontaxable (3)(4)		12,475		117		3.72	%		21,842		320		5.81	%
Nonmarketable equity securities		10,103		41		1.61	%		10,186		48		1.87	%
Fed funds sold and other		90,162		66		0.29	%		35,254		24		0.24	%
Total earning assets		673,392		7,521		4.43	%		723,501		9,122		5.00	%
Non-earning assets		61,564							56,919
Total assets	$	734,956						$	780,420
Liabilities:
Interest bearing liabilities:
Interest bearing transaction accounts		203,434		532		1.04	%		186,265		473		1.01	%
Savings accounts		45,784		137		1.19	%		41,999		174		1.64	%
Time deposits		211,543		1,089		2.04	%		246,454		1,551		2.50	%
Other short-term borrowings		-		-		0.00	%		359		-		0.00	%
Federal Home Loan Bank borrowings		95,400		749		3.11	%		119,096		1,262		4.20	%
Junior subordinated debentures		10,310		189		7.27	%		10,310		185		7.12	%
Total interest bearing liabilities		566,471		2,696		1.89	%		604,483		3,645		2.39	%
Non-interest bearing liabilities		112,509							112,261
Shareholders’ equity		55,976							63,676
Total liabilities and shareholders’equity	$	734,956						$	780,420
Net interest spread						2.54	%						2.61	%
Net interest income/margin			$	4,825		2.84	%			$	5,477		3.00	%

(1) Annualized for the three-month period.

(1) Annualized for the three month period.

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

All loans and deposits are domestic.

(3) Average investment securities exclude the valuation allowance on securities available-for-sale.

(4) Fully tax-equivalent basis at 38% tax rate for nontaxable securities and loans.

-2130-

COMMUNITY CAPITAL CORPORATION

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

Net Interest Income -– continued

The tax-effected net interest spread and net interest margin were 23.5413% and 23.8442%, respectively, for the three -month period ended ~~September~~March 3031, ~~2010~~2011, compared to 2.6187% and 3.0019%, respectively, for the three -month period ended ~~September~~March 3031, ~~2009~~2010. The ~~decline~~increase in net interest margin ~~was~~is ~~primarily~~ due to ~~our~~management’s ~~increased~~strategy ~~level~~to ofallow ~~nonaccrual~~approximately ~~loans~~$60 ~~and~~million ~~our~~in ~~desire~~high cost certificates to ~~maintain~~run ~~cash~~off ~~liquidity~~during 2010. During the three months ended ~~September~~March 3031, ~~2010~~2011, earning assets averaged $~~673~~590,~~392~~229,000, compared to $~~723~~685,~~501~~008,000 for the three months ended ~~September~~March 3031, ~~2009~~2010. ~~Average~~Interest ~~interest~~ earning assets exceeded ~~average~~ interest ~~bearing~~earning liabilities by $~~106~~102,~~921~~909,000, and $~~119~~108,~~018~~107,000 for the three -month periods ended ~~September~~March 3031, ~~2010~~2011 and ~~September~~March 3031, ~~2009~~2010, respectively.

For the three months ended ~~September~~March 3031, ~~2010~~2011, our tax-effected net interest income, the major component of our net income, was $4,~~825~~976,000 compared to $5,~~477~~396,000 for the same period of ~~2009~~2010, a decrease of $~~652~~420,000 or 117.9078%. The decline in net interest income is a result of a decline in volume of earning assets and the movement of assets on the balance sheet out of higher yielding loans in to lower yielding, more liquid investments and interest bearing bank balances. The average rate realized on interest-earning assets decreased to 4.4380% from 54.0093%, while the average rate paid on interest-bearing liabilities ~~also~~ decreased to 1.8967% from 2.3906% for the three month periods ended ~~September~~March 3031, ~~2010~~2011 and ~~2009~~2010, respectively.

Our tax-effected interest income for the three months ended ~~September~~March 3031, ~~2010~~2011 was $76,~~521~~990,000, which consisted of $76,~~001~~411,000 on loans, $~~454~~563,000 on investments, and $6616,000 on ~~fed~~federal funds sold and interest bearing deposits with correspondent banks. The tax-effected interest income for the three months ended ~~September~~March 3031, ~~2009~~2010 was $98,~~122~~328,000, which consisted of $87,~~194~~506,000 on loans, $~~904~~800,000 on investments, and $2422,000 on ~~fed~~federal funds sold and interest bearing deposits with correspondent banks. Interest on loans for the three months ended ~~September~~March 3031, ~~2010~~2011 and ~~September~~March 3031, ~~2009~~2010, represented 9391.0972% and 8990.8313%, respectively, of total interest income. Average loans represented 7680.9264% and 8481.1879% of average earning assets for the three -month periods ended ~~September~~March 3031, ~~2010~~2011 and ~~September~~March 3031, ~~2009~~2010, respectively.

Interest expense for the three months ended ~~September~~March 3031, ~~2010~~2011 was $2,~~696~~014,000, which consisted of $1,~~758~~002,000 related to deposits and $~~938~~1,012,000 related to other borrowings. Interest expense for the three months ended ~~September~~March 3031, ~~2009~~2010 was $32,~~645~~932,000, which consisted of $21,~~198~~930,000 related to deposits and $1,~~447~~002,000 related to other borrowings. Interest expense on deposits for the three months ended ~~September~~March 3031, ~~2010~~2011 and ~~September~~March 3031, ~~2009~~2010 represented 6549.2175% and 6065.3083%, respectively, of total interest expense. Average interest bearing deposits represented 8178.3431% and 7881.5368% of average interest bearing liabilities for the three months ended ~~September~~March 3031, ~~2010~~2011 and ~~September~~March 3031, ~~2009~~2010, respectively.

-2231-

COMMUNITY CAPITAL CORPORATION

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

Net Interest Income -– continued

Average Balances, Income and Expenses, and Rates

	For the Nine Months Ended
	September 30, 2010							September 30, 2009
(Dollars in thousands)	Average Balance		Income/ Expense		Yield/ Rate (1)			Average Balance		Income/ Expense		Yield/ Rate (1)
Assets:
Earning Assets:
Loans(2)(4)	$	538,800		21,859		5.42	%	$	624,327		25,101		5.38	%
Securities, taxable (3)		49,850		1,313		3.52	%		45,531		1,669		4.90	%
Securities, nontaxable (3)(4)		14,175		563		5.31	%		25,025		1,165		6.22	%
Nonmarketable equity securities		10,252		107		1.40	%		4,753		109		3.07	%
Fed funds sold and other		71,160		126		0.24	%		19,357		32		0.22	%
Total earning assets		684,237		23,968		4.68	%		718,993		28,076		5.22	%
Non-earning assets		61,300							63,335
Total assets	$	745,537						$	782,328
Liabilities:
Interest bearing liabilities:
Interest bearning transaction accounts		198,960		1,663		1.12	%		194,066		1,092		0.75	%
Savings accounts		44,790		419		1.25	%		39,452		504		1.71	%
Time deposits		227,191		3,580		2.11	%		211,878		4,266		2.69	%
Other short-term borrowings		-		-		0.00	%		23,935		57		0.32	%
Federal Home Loan Bank borrowings		95,400		2,206		3.09	%		134,271		4,177		4.16	%
Junior subordinated debentures		10,310		554		7.18	%		10,310		545		7.07	%
Total interest bearing liabilities		576,651		8,422		1.95	%		613,912		10,641		2.32	%
Non-interest bearing liabilities		113,601							104,127
Shareholders’ equity		55,285							64,289
Total liabilities and shareholders’ equity	$	745,537						$	782,328
Net interest spread						2.73	%						2.90	%
Net interest income/margin			$	15,546		3.04	%			$	17,435		3.24	%

(1)	Annualized for the nine month period.
(2)	The effect of loans in nonaccrual status and fees collected is not significant to the computations.
	All loans and deposits are domestic.
(3)	Average investment securities exclude the valuation allowance on securities available-for-sale.
(4)	Fully tax-equivalent basis at 38% tax rate for nontaxable securities and loans.

The tax-effected net interest spread and net interest margin were 2.73% and 3.04%, respectively, for the nine month period ended September 30, 2010, compared to 2.90% and 3.24% for the nine month period ended September 30, 2009. During the nine months ended September 30, 2010, earning assets averaged $684,237,000, compared to $718,993,000 for the nine months ended September 30, 2009. Average interest earning assets exceeded average interest bearing liabilities by $107,586,000, and $105,081,000 for the nine month periods ended September 30, 2010 and September 30, 2009, respectively.

For the nine months ended September 30, 2010, our tax-effected net interest income, the major component of our net income, was $15,546,000 compared to $17,435,000 for the same period of 2009, a decrease of $1,889,000 or 10.83%. The average rate realized on interest-earning assets decreased to 4.68% from 5.22%, while the average rate paid on interest-bearing liabilities decreased to 1.95% from 2.32% for the nine month periods ended September 30, 2010 and 2009, respectively.

-23-

COMMUNITY CAPITAL CORPORATION

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

Net Interest Income - continued

Our tax-effected interest income for the nine months ended September 30, 2010 was $23,968,000, which consisted of $21,859,000 on loans, $1,983,000 on investments, and $126,000 on fed funds sold and interest bearing deposits with correspondent banks. The tax-effected income for the nine months ended September 30, 2009 was $28,076,000, which consisted of $25,101,000 on loans, $2,943,000 on investments, and $32,000 on fed funds sold and interest bearing deposits with correspondent banks. Interest on loans for the nine months ended September 30, 2010 and September 30, 2009, represented 91.20% and 89.40%, respectively, of total interest income. Average loans represented 78.74% and 86.83% of average earning assets for the nine month periods ended September 30, 2010 and September 30, 2009, respectively.

Interest expense for the nine months ended September 30, 2010 was $8,422,000, which consisted of $5,662,000 related to deposits and $2,760,000 related to other borrowings. Interest expense for the nine months ended September 30, 2009 was $10,641,000 which consisted of $5,862,000 related to deposits and $4,779,000 related to other borrowings. Interest expense on deposits for the nine months ended September 30, 2010 and September 30, 2009 represented 67.23% and 55.09%, respectively, of total interest expense. Average interest bearing deposits represented 81.67% and 72.55% of average interest bearing liabilities for the nine months ended September 30, 2010 and September 30, 2009, respectively.

Analysis of Changes in Net Interest Income

The following table sets forth the effect that the varying levels of earning assets and interest-bearing liabilities and the applicable rates have had on changes in net interest income for the time periods indicated.

	Three Months Ended
	September 30, 2010 vs. 2009										September 30, 2009 vs. 2008
	March 31, 2011 vs. 2010										March 31, 2010 vs. 2009
	Variance Due to										Variance Due to
(Dollars in thousands)	Volume (1)				Rate (1)			Total			Volume (1)				Rate (1)			Total
Earning Assets
Loans		$	(1,~~231~~135	)	$	3840		$	(1,~~193~~095	)		$	(~~508~~1,032	)	$	~~(779~~39	)	$	(~~1,287~~993	)
Securities, taxable			~~(47~~70	)		(~~193~~241	)		(~~240~~171	)			8688			(71167	)		15(79	)
Securities, nontaxable			(~~110~~82	)		~~(93~~6	)		(~~203~~76	)			(~~112~~184	)		(136	)		(~~113~~220	)
Nonmarketable equity securities			-(2	)		(712	)		(710	)			(141	)		(4340	)		~~(44~~1	)
Federal funds sold and other			40(6	)		2-			42(6	)			2521			(21	)		2320
Total interest income			(1,~~348~~155	)		(~~253~~183	)		(1,~~601~~338	)			(~~510~~1,066	)		(~~896~~205	)		(1,~~406~~271	)
Interest-Bearing Liabilities
Interest-bearing deposits:
Interest-bearing transaction accounts			456			14(162	)		59(156	)			(7625	)		~~(84~~287	)		~~(160~~262	)
Savings accounts			15(1	)		(5256	)		(3757	)			2624			(4954	)		(2330	)
Time deposits			(~~202~~394	)		(~~260~~321	)		(~~462~~715	)			~~419~~318			(~~463~~462	)		(44144	)
Total interest-bearing deposits			(~~142~~389	)		(~~298~~539	)		(~~440~~928	)			~~369~~317			(~~596~~229	)		~~(227~~88	)
Other short-term borrowings			-			-			-				(~~122~~17	)		(~~122~~17	)		(~~244~~34	)
Federal Home Loan Bank advances			~~(223~~-	)		(~~290~~6	)		(~~513~~6	)			(~~322~~461	)		23(173	)		(~~299~~634	)
Junior subordinate debt			-			416			416				-			4(2	)		4(2	)
Total interest expense			(~~365~~389	)		(~~584~~529	)		(~~949~~918	)			(75161	)		(~~691~~421	)		(~~766~~582	)
Net interest income		$	(~~983~~766	)	$	~~331~~346		$	(~~652~~420	)		$	(~~435~~905	)	$	~~(205~~216	)	$	(~~640~~689	)

-------------------------

(1)	Volume-rate changes have been allocated to each category based on the percentage of the total change.

-24-

COMMUNITY CAPITAL CORPORATION

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

Net Interest Income – continued

	Nine Months Ended
	September 30, 2010 vs. 2009										September 30, 2009 vs. 2008
	Variance Due to										Variance Due to
(Dollars in thousands)	Volume (1)				Rate (1)			Total			Volume (1)				Rate (1)			Total
Earning Assets
Loans		$	(3,468	)	$	226		$	(3,242	)		$	(1,243	)	$	(4,013	)	$	(5,256	)
Securities, taxable			147			(503	)		(356	)			213			(88	)		125
Securities, nontaxable			(450	)		(152	)		(602	)			(201	)		67			(134	)
Nonmarketable equity securities			79			(81	)		(2	)			(150	)		(114	)		(264	)
Federal funds sold and other			92			2			94				36			(9	)		27
Total interest income			(3,600	)		(508	)		(4,108	)			(1,345	)		(4,157	)		(5,502	)
Interest-Bearing Liabilities
Interest-bearing deposits:
Interest-bearing transaction accounts			29			542			571				(332	)		(1,092	)		(1,424	)
Savings accounts			62			(147	)		(85	)			51			(185	)		(134	)
Time deposits			291			(977	)		(686	)			579			(1,711	)		(1,132	)
Total interest-bearing deposits			382			(582	)		(200	)			298			(2,988	)		(2,690	)
Other short-term borrowings			(29	)		(29	)		(58	)			(341	)		(583	)		(924	)
Federal Home Loan Bank advances			(1,045	)		(926	)		(1,971	)			(194	)		(147	)		(341	)
Junior subordinate debt			-			-			-				-			-			-
Total interest expense			(692	)		(1,537	)		(2,229	)			(237	)		(3,718	)		(3,955	)
Net interest income		$	(2,908	)	$	1,029		$	(1,879	)		$	(1,108	)	$	(439	)	$	(1,547	)

(1) Volume-rate changes have been allocated to each category based on the percentage of the total change.

Provision and Allowance for Loan Losses

The allowance for loan losses represents management’s estimate of probable losses inherent in the loan portfolio. We have developed policies and procedures for evaluating the overall quality of our ~~loan~~credit portfolio and the timely identification of potential problem ~~loans~~credits. ~~The~~CapitalBank’s Board of Directors reviews and approves the appropriate level for ~~the~~its ~~Bank’s~~ allowance for loan losses quarterly based upon management’s recommendations, the results of the internal monitoring and reporting system, analysis of economic conditions in our markets, and a review of historical statistical data for both us and other financial institutions. Additions to the allowance for loan losses, which are expensed as the provision for loan losses on our income statement, are periodically made to maintain the allowance at an appropriate level based on our analysis of the potential risk in the loan portfolio. Loan losses, which include write downs and charge- offs, and recoveries are charged or credited directly to the allowance. The amount of the provision is a function of the level of loans outstanding, the level of nonperforming loans, historical loan loss experience, the amount of loan losses actually charged against the reserve during a given period, and current and anticipated economic conditions.

Our allowance for loan losses is based upon judgments and assumptions of risk elements in the portfolio, future economic conditions, and other factors affecting borrowers. The process includes identification and analysis of loss potential in various portfolio segments utilizing a credit risk grading process and specific reviews and evaluations of significant problem ~~loans~~credits. In addition, we monitor overall portfolio quality through observable trends in delinquency, charge offs, and general and economic conditions in the service area. Risks are inherent in making all loans, including risks with respect to the period of time over which loans may be repaid, risks resulting from changes in economic and industry conditions, risks inherent in dealing with individual borrowers, and, in the case of a collateralized loan, risks resulting from uncertainties about the future value of the collateral.

-2532-

COMMUNITY CAPITAL CORPORATION

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

Provision and Allowance for Loan Losses –- continued

Inwhich ~~developing our general reserve estimate, we have segmented the loan portfolio into ten risk categories: consumer~~ loans, ~~home~~may ~~equity~~be ~~lines~~repaid, ~~overdraft~~risks ~~protection~~resulting ~~lines,~~from ~~1-4~~changes ~~residential~~in ~~loans,~~economic ~~commercial loans, commercial real estate loans, cash secured loans, mortgages held for resale, government guaranteed portions of loans,~~ and ~~demand~~industry ~~deposit account (“DDA”) overdrafts. Loss experience on each of the risk categories is compiled over the previous three-year period. From this segmentation~~conditions, werisks ~~have~~inherent identified several homogeneous pools and applied the corresponding three year loss factor for the reserve allocation. The homogeneous pools we have identified include consumer installment loans, home equity lines of credit, overdraft protection lines, cash secured loans, mortgages held for resale, government guaranteed portions of loans, and DDA overdrafts in ~~excess~~dealing ofwith 60individual ~~days. The remaining segments of the loan portfolio~~borrowers, ~~which include 1-4 residential loans, commercial loans,~~ and ~~commercial real estate loans~~, ~~are~~in ~~analyzed with~~ the ~~entire~~case ~~loan portfolio for progressions through our risk rating system. We then apply the results generated from the three year historical loss migration analysis to each~~ of ~~these segments. When~~ a ~~particular~~collateralized loan ~~is identified as impaired~~, itrisks isresulting ~~removed~~ from ~~the~~uncertainties ~~corresponding~~about ~~segment~~the ~~and~~future ~~individually~~value ~~analyzed~~of ~~and~~the ~~measured for specific reserve allocation~~collateral.

~~Qualitative~~In determining our allowance for loan loss, we regularly review loans for specific and ~~environmental~~impaired ~~factors~~reserves ~~include~~based ~~external~~on ~~risk~~the ~~factors~~appropriate ~~that~~impairment weassessment ~~believe~~methodology. Pooled reserves are ~~representative~~determined ofusing ~~our~~historical ~~overall~~loss ~~lending~~trends ~~environment~~measured over an eight quarter rolling average applied to risk rated loans grouped by Federal Financial Examination Council (“FFIEC”) call code and segmented by impairment status. WeThe ~~have~~pooled ~~identified~~reserves are calculated by applying the ~~following~~appropriate ~~factors~~historical inloss ~~establishing~~ratio ato ~~more~~the ~~comprehensive~~loan ~~system~~categories. Impaired ofloans ~~controls~~greater inthan ~~which~~a weminimum ~~can~~threshold ~~monitor~~established ~~the~~by ~~quality~~management ~~the~~are ~~quality~~excluded from this analysis. The sum of ~~the~~all ~~loan~~such ~~portfolio:~~amounts determines our pooled reserves.

·We ~~Portfolio~~track our portfolio and analyze loans grouped by FFIEC call code categories. The first step in this process is to risk; grade each and every loan in the portfolio based on one common set of parameters. These parameters include items like debt-to-worth ratio, liquidity of the borrower, net worth, experience in a particular field and other factors such as underwriting exceptions. Weight is also given to the relative strength of any guarantors on the loan.

·After ~~Loan~~risk ~~policy~~grading each loan, ~~procedures~~we then segment the portfolio by FFIEC call code groupings, separating out substandard or impaired loans. The remaining loans are grouped into “performing loan pools”. The loss history for each performing loan pool is measured over an eight quarter rolling average to create a loss factor. The loss factor is then applied to the pool balance and ~~monitoring~~the ~~risk~~reserve per pool calculated. Loans deemed to be substandard but not impaired are segregated and a loss factor is applied to this pool as well. Finally, impaired loans are segmented based upon size; smaller impaired loans are pooled and loss factor applied, while larger impaired loans are assessed individually using the appropriate impairment measuring methodology.

·In ~~National~~developing ~~and~~our ~~local~~ASC ~~economic~~450-20 ~~trends~~general ~~and~~reserve ~~conditions;~~estimate, we have segmented the loan portfolio into 12 risk categories:

·§ ~~Concentration~~installment ~~risk;~~loans

·§ ~~Acquisition~~home ~~and~~equity ~~development~~lines ~~loan~~of ~~portfolio risks; and~~credit

·§ ~~Impaired~~DDA ~~loan~~overdraft ~~portfolio additional risks.~~loans

~~Certain~~§ problem loans are reviewed individually for impairment. An impaired loan may not represent an expected loss; however a loan is considered impaired when, based on current information and events, it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. In determining if a loan is impaired, the Bank considers all non-accrual loans, loans whose terms are modified in a troubled debt restructuring, and any other loan that is individually evaluated and determined to be impaired based on risk ratings and loan amounts of certain segments of the Bank’s loan portfolio. If a loan is individually evaluated and identified as impaired, it is measured by using either the fair value of the collateral, less expected costs to sell, present value of expected future cash ~~flows,~~secured ~~discounted at the~~ loans effective interest rate, or observable market price of the loan. Management chooses a method on a loan-by-loan basis. Measuring impaired loans requires judgment and estimates and the eventual outcomes may differ from those estimates.

~~-26-~~§ mortgage loans for resale

§	1-4 family residential loans

§	1-4 family residential construction loans

§	commercial real estate loans including (other construction and land loans, multi-family, commercial real estate owner-occupied, commercial real estate other and commercial and farm land)

Loss experience on each of the risk categories is compiled over the previous four quarters (or 12 months). Each of the segments of the loan portfolio is analyzed for historical loss percentages. We then apply the results generated from the four quarter loss history analysis to each of these segments. When a particular loan is identified as impaired, it is removed from the corresponding segment and individually analyzed and measured for specific reserve allocation.

Qualitative and environmental factors include external risk factors that we believe are representative of our overall lending environment. We have identified the following factors in establishing a more comprehensive system of controls in which we can monitor the quality of the loan portfolio:

·	Portfolio risk

·	Loan policy, procedures and monitoring risk

·	National and local economic trends and conditions

·	Concentration risk

·	Acquisition and development loan portfolio risks

·	Impaired loan portfolio additional risks

-33-

COMMUNITY CAPITAL CORPORATION

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

Provision and Allowance for Loan Losses – continued

~~Activity~~Certain problem loans are reviewed individually for impairment. An impaired loan may not represent an expected loss; however a loan is considered impaired when, based on current information and events, it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. In determining if a loan is impaired, the bank considers all non-accrual loans, loans whose terms are modified in a troubled debt restructuring, and any other loan that is individually evaluated and determined to be impaired based on risk ratings and loan amounts of certain segments of the ~~Allowance~~bank’s ~~for~~loan ~~Loan~~portfolio. If ~~Losses~~a loan is individually evaluated and identified as ~~follows:~~impaired, it is measured by using either the fair value of the collateral, less expected costs to sell, present value of expected future cash flows, discounted at the loans effective interest rate, or observable market price of the loan. Management chooses a method on a loan-by-loan basis. Measuring impaired loans requires judgment and estimates and the eventual outcomes may differ from those estimates. At March 31, 2011, impaired loans totaled $34.4 million, all of which are valued on a nonrecurring basis at the lower of cost or market value of the underlying collateral.

(Dollars in thousands)		September 30,
		2010			2009
Balance, January 1,	$	14,160		$	13,617
Provision for loan losses for the period		6,350			31,800
Charge-offs:
Commercial and agricultural		35			278
Real estate - construction		3,273			5,401
Real estate – mortgage and commercial		3,605			1,662
Home equity		529			126
Consumer installment and other		26			36
Total charge-offs	$	7,468		$	7,503
Recoveries:
Commercial and agricultural		1			1
Real estate - construction		247			-
Real estate – mortgage and commercial		7			10
Home equity		2			2
Consumer installment and other		14			16
Total recoveries		271			29
Net charge-offs	$	7,197		$	7,474
Balance, end of period	$	13,313		$	37,943
Gross loans outstanding, end of period	$	504,508		$	601,846
Allowance for loan losses to loans outstanding		2.64	%		6.30	%

Total provision expense for the three months ended March 31, 2011 was $600,000, compared to $1.6 million for the three months ended March 31, 2010. The allowance for loan losses was 3.25% of total loans at March 31, 2011 compared to 2.55% at March 31, 2010.

For the nine months ended September 30, 2010, total provision expense was $6,350,000, compared to $31,800,000 for the nine months ended September 30, 2009. For the three months ended September 30, 2010, total provision expense was $2,750,000, compared to $24,000,000 for the three-month period ended September 30, 2009. The decrease in provision was due to a decrease in charge-offs for the comparable periods, and a reduction in nonaccrual loans and adversely classified loans. The allowance for loan losses was 2.64% of total loans at September 30, 2010, as compared to 6.30% at September 30, 2009.

Based on present information and an ongoing evaluation, management considers the allowance for loan losses to be adequate to meet presently known and inherent losses in the loan portfolio. However, underlying assumptions may be impacted in future periods by changes in economic conditions, the impact of regulatory examinations, and the discovery of information with respect to borrowers, which was not known to management at the time of the issuance of the Company’s consolidated financial statements. Therefore, management’s assumptions may or may not prove valid. Thus, there can be no assurance that charge-offs in future periods will not exceed the allowance for loan losses or that additional increases in the allowance for loan losses will not be required, especially considering the overall weakness in the real estate market in our market areas. Additionally, no assurance can be given that management’s ongoing evaluation of the loan portfolio, in light of changing economic conditions and other relevant factors, will not require significant future additions to the allowance for loan losses, thus adversely impacting the Company’s business, financial condition, results of operations, and cash flows.

Please see our risk factors that appear in Part I – Item 1A – Risk Factors of this Annual Report on Form 10-~~27-~~K.

-34-

COMMUNITY CAPITAL CORPORATION

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

Provision and Allowance for Loan Losses - continued

The following table sets forth certain information with respect to our allowance for loan losses and the composition of charge offs and recoveries as of March 31, 2011 and March 31, 2010.

Allowance for Loan Losses

(Dollars in thousands)


	March 31,
	2011			2010
Total loans outstanding	$	464,978		$	549,010
Average loans outstanding	$	475,989		$	560,249
Balance of allowance for loan losses
at beginning of period	$	17,165		$	14,160
Loan losses:
Commercial and industrial		20			35
Real estate - mortgage		2,679			1,869
Consumer		5			14
Total loan losses		2,704			1,918
Recoveries of previous loan losses:
Commercial and industrial		11			-
Real estate - mortgage		35			168
Consumer		5			8
Total recoveries		51			176
Net loan losses		2,653			1,742
Provision for loan losses		600			1,600
Balance of allowance for loan losses
at end of period	$	15,112		$	14,018
Allowance for loan losses to period end loans		3.25	%		2.55	%
Net charge offs to average loans		0.56	%		0.31	%

Nonperforming Assets. The following table sets forth our nonperforming assets for the dates indicated.

Nonperforming Assets

(Dollars in thousands)

		March 31,
		2011			2010
Nonaccrual loans	$	25,884		$	32,628
Other real estate owned		13,691			8,833
Total nonperforming assets	$	39,575		$	41,461
Loans 90 days or more past due and
still accruing interest	S	1,042			1,294
Impaired loans still accruing interest	$	8,536			44,841
Nonperforming assets to period end assets		6.10	%		5.56	%

Accrual of interest is discontinued on a loan when we believe, after considering economic and business conditions and collection efforts that the borrower’s financial condition is such that the collection of interest is doubtful. A delinquent loan is generally placed in nonaccrual status when it becomes 90 days or more past due. When a loan is placed in nonaccrual status, all interest that has been accrued on the loan but remains unpaid is reversed and deducted from current earnings as a reduction of reported interest income. No additional interest is accrued on the loan balance until the collection of both principal and interest becomes reasonably certain. When a problem loan is finally resolved, we may ultimately write-down or charge off the principal balance of the loan that would necessitate additional charges to earnings. For all periods presented, the additional interest income, which would have been recognized into earnings if our nonaccrual loans had been current in accordance with their original terms, is immaterial.

-35-

COMMUNITY CAPITAL CORPORATION

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

Provision and Allowance for Loan Losses - continued

Total nonperforming assets totaled $39.6 million at March 31, 2011 and $41.5 million at March 31, 2010. This amount consists primarily of nonaccrual loans that totaled $25.9 million and $32.6 million at March 31, 2011 and 2010, respectively. The decrease in nonaccrual loans is primarily due to their migration into other real estate owned status and our efforts of selling these assets. Nonperforming assets were 8.51% of total loans at March 31, 2011. The allowance for loan losses to period end nonperforming assets was 38.19% at March 31, 2011. A significant portion, or 99.7%, of nonperforming loans at March 31, 2011 were secured by real estate. We have evaluated the underlying collateral on these loans and believe that the collateral on these loans is sufficient to minimize future losses. However, the recent downturn in the real estate market has resulted in increased loan delinquencies, defaults and foreclosures, and we believe that these trends are likely to continue. In some cases, this downturn has resulted in a significant impairment to the value of the collateral used to secure these loans and the ability to sell the collateral upon foreclosure. These conditions have adversely affected our loan portfolio. The real estate collateral in each case provides an alternate source of repayment in the event of default by the borrower and may deteriorate in value during the time the credit is extended. If real estate values continue to decline, it is also more likely that we would be required to increase our allowance for loan losses. If during a period of reduced real estate values we are required to liquidate the property collateralizing a loan to satisfy the debt or to increase the allowance for loan losses, this could materially reduce our profitability and adversely affect our financial condition.

Potential Problem Loans. At March 31, 2011, through our internal review mechanisms, we had identified $18.3 million of criticized loans and $56.2 million of classified loans. The results of this internal review process are the primary determining factor in our assessment of the adequacy of the allowance for loan losses.

Our criticized loans decreased from $18.9 million at December 31, 2010 to $18.3 million at March 31, 2011. Total classified loans decreased from $56.6 million at December 31, 2010 to $52.4 million at March 31, 2011. The $4.8 million decrease in criticized and classified loans from December 31, 2010 to March 31, 2011 were primarily due to real estate development and single family construction loans, all of which are secured by real estate.

The continued elevated level of criticized and classified loans is primarily due to the current economic downturn and related decline in demand for residential real estate. As a result of the slowing demand, several real estate developers are having significant cash flow issues. Furthermore, residential real estate values are declining further exacerbating these cash flow issues.

Impaired loans primarily consist of nonperforming loans and troubled debt restructurings (“TDRs”), but can include other loans identified by management as being impaired. Historically, we considered all loans identified as “substandard” assets to be “impaired” assets. A regulatory external audit identified the need to separate these categories per the actual regulatory definition for each classification. A bank asset may meet the definition of “substandard” while not also meeting the definition of “impaired”. However, all assets meeting the definition of “impaired” are automatically “substandard”. Accordingly, we evaluated those loans identified as substandard and separated “substandard” assets from “substandard and impaired” assets.

Loans are classified as TDRs by the Company when certain modifications are made to the loan terms and concessions are granted to the borrowers due to financial difficulty experienced by those borrowers. The Company only restructures loans for borrowers in financial difficulty that have designed a viable business plan to fully pay off all obligations, including outstanding debt, interest and fees, either by generating additional income from the business or through liquidation of assets. Generally, these loans are restructured to provide the borrower additional time to execute upon their plans. With respect to restructured loans, the Company grants concessions by (1) reduction of the stated interest rate for the remaining original life of the debt, or (2) extension of the maturity date at a stated interest rate lower than the current market rate for new debt with similar risk. The Company does not generally grant concessions through forgiveness of principal or accrued interest. Restructured loans where a concession has been granted through extension of the maturity date generally include extension of payments in an interest only period, extension of payments with capitalized interest and extension of payments through a forbearance agreement. These extended payment terms are also combined with a reduction of the stated interest rate in certain cases. Success in restructuring loans has been mixed but it has proven to be a useful tool in certain situations to protect collateral values and allow certain borrowers additional time to execute upon defined business plans. In situations where a TDR is unsuccessful and the borrower is unable to follow through with terms of the restricted agreement, the loan is placed on nonaccrual status and continues to be written down to the underlying collateral value. The Company’s policy with respect to accrual of interest on loans restructured in a TDR follows relevant supervisory guidance. That is, if a borrower has

-36-

COMMUNITY CAPITAL CORPORATION

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

Provision and Allowance for Loan Losses - continued

demonstrated performance under the previous loan terms and shows capacity to perform under the restructured loan terms; continued accrual of interest at the restructured interest rate is likely. If a borrower was materially delinquent on payments prior to the restructuring but shows capacity to meet the restructured loan terms, the loan will likely continue as nonaccrual going forward. Lastly, if the borrower does not perform under the restructured terms, the loan is placed on nonaccrual status. The Company will continue to closely monitor these loans and will cease accruing interest on them if management believes that the borrowers may not continue performing based on the restructured note terms. If, after previously being classified as a TDR, a loan is restructured a second time, then that loan is automatically placed on nonaccrual status. The Company’s policy with respect to nonperforming loans requires the borrower to make a minimum of six consecutive payments in accordance with the loan terms before that loan can be placed back on accrual status. Further, the borrower must show capacity to continue performing into the future prior to restoration of accrual status. To date, the Company has not restored any nonaccrual loan classified as a TDR to accrual status.

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

Noninterest Income

Total noninterest income for the ~~nine~~three months ended ~~September~~March 3031, ~~2010~~2011 was $82,~~546~~116,000, ana ~~increase~~decrease of $21,~~581~~231,000, or 4336.2778% compared to $53,~~965~~347,000 for the ~~nine~~three months ended ~~September~~March 3031, 2009. This increase was attributable in part to income received as a result of the settlement of a lawsuit related to the management of a participation loan. Proceeds of $912,000 were received during the first quarter of 2010 ~~in the settlement~~. ~~Including~~Other ~~the litigation settlement, other~~ operating income ~~increased~~decreased $~~963~~864,000, or 7364.6209%, to $2484,~~271,~~000 for the ~~nine~~three months ended ~~September~~March 3031, ~~2010~~2011 compared to $1,~~308~~348,000 for the ~~nine~~three months ended ~~September~~March 3031, ~~2009. Total noninterest income for the quarter ended September 30,~~ 2010 ~~increased $874~~,~~000,~~ orprimarily ~~46.79%~~due to ~~$2,742,000,~~a ~~compared~~payment toof $1912,~~868,~~000 atwe ~~September~~received ~~30,~~during ~~2009. Other~~the ~~operating~~first ~~income~~quarter ~~increased~~of ~~$58,000,~~2010 ~~or 13.81%,~~ for the ~~three~~settlement ~~months~~of ~~ended~~a ~~September~~lawsuit ~~30,~~regarding ~~2010 compared to~~ the ~~three~~management ~~months~~of ~~ended~~a ~~September~~participation ~~30, 2009~~loan.

We also recognized gains on the ~~sales~~sale of securities available-for-sale in the amount of $1224,~~993,~~000 for the ~~nine~~three months ended ~~September~~March 3031, ~~2010~~2011, ~~which~~compared ~~were the results of management’s decision~~ to ~~shorten the duration of the portfolio. We realized~~ gains of $~~396~~683,000 ~~during the nine months ended September 30, 2009. Gains on the sale of securities available-~~for~~-sale~~ ~~for~~ the three months ended ~~September~~March 3031, 2010 ~~were $728,000 compared to $3,000 for the three months ended September 30, 2009~~.

Service charges on deposit accounts, decreased $~~316~~107,000, or 1822.2720%, from the ~~nine~~three months ended ~~September~~March 3031, ~~2009~~2010 to the ~~nine months ended September 30, 2010 and $153,000, or 25.76%, from the~~ three months ended ~~September~~March 3031, ~~2009 to the three months September 30, 2010~~2011. Gains on ~~the~~ sales of loans held for sale increased $53129,000, or 443.5129%, tofrom $1298,~~227,~~000 ~~from~~to $1427,~~174,~~000 for the ~~nine~~three months ended ~~September~~March 3031, ~~2010,~~2011 compared to the ~~nine~~three months ended ~~September~~March 3031, ~~2009~~2010. The ~~and~~income from fiduciary activities increased $~~160~~58,000, or 4412.5729%, from ~~$359,000 to $519,000 for~~ the three-month ~~months~~period ended ~~September~~March 3031, 2010, ~~compared~~ to the three-month ~~months~~period ended ~~September~~March 3031, ~~2009~~2011. The increase inis ~~gains~~primarily ondue ~~sales~~to growth of ~~loans~~new ~~held~~accounts ~~for~~as ~~sale~~well isas ~~primarily~~increased ~~due~~market tovalue ~~the~~of ~~increase~~assets inunder ~~mortgage~~management. Fees ~~origination~~from ~~fees~~brokerage ~~resulting~~services increased $12,000, or 18.75%, from the ~~high~~three ~~demand~~months ~~for~~ended ~~refinance~~March ~~transactions~~31, 2010 to the three months ended March 31, 2011.

The income from fiduciary activities increased $256,000, or 21.84% from the nine month period ended September 30, 2009 to the nine month period ended September 30, 2010, and $89,000, or 21.29% from the three month period ended September 30, 2009 to the three month period ended September 30, 2010. The increase is primarily due to new business development efforts as well as improving capital market conditions. Fees from brokerage services increased $28,000, or 15.14% from the nine months ended September 30, 2009 to the nine months ended September 30, 2010 and decreased $5,000, or 6.76% for the three months ended September 30, 2009 to the three months ended September 30, 2010.-37-

The Dodd-Frank Act calls for new limits on interchange transaction fees that banks receive from merchants via card networks like Visa, Inc. and MasterCard, Inc. when a customer uses a debit card. The results of this proposed legislation may impact our interchange income from debit card transactions in the future.

Noninterest Expense

Total noninterest expense for the first nine months of 2010 was $15,777,000, a decrease of $9,297,000, or 37.08%, when compared to $25,074,000 for the first nine months of 2009. For the quarter ended September 30, 2010, noninterest expense was $5,651,000, a decrease of $7,649,000, or 57.51%, over the comparable period of 2009. The decrease is primarily the result of the goodwill impairment charge of $7,418,000 during the third quarter of 2009, and also expenses associated with other real estate owned and the elimination of director fees as of July 2009. We also incurred $359,000 in Federal Home Loan Bank prepayment penalties during the three months ended September 30, 2009.

Write downs on other real estate owned decreased $1,743,000, or 71.14%, from $2,443,000 for the nine months ended September 30, 2009 to $705,000 for the nine months ended September 30, 2010, and decreased $898,000, or 74.52%, from $1,205,000 for the three months ended September 30, 2009 to $307,000 for the three months ended September 30, 2010. Net losses on sales of other real estate owned were $145,000 for the nine months ended September 30, 2010, a decrease of $78,000, or 34.98%, from $223,000 for the nine months ended September 30, 2009. For the three months ended September 30, 2010, net losses on other real estate owned increased $38,000, or 345.45% to $49,000 compared to $11,000 for the three months ended September 30, 2009.

-28-

COMMUNITY CAPITAL CORPORATION

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

Noninterest Expense ~~- continued~~

WeTotal ~~realized~~noninterest anexpense ~~increase in FDIC assessments of $387,000, or 45.32%, from $854,000~~ for the ~~nine-month~~first ~~period~~three ~~ended~~months ~~September~~of ~~30,~~2011 ~~2009~~was to $14,~~241~~997,000 ~~for the nine-month period ended September 30~~, ~~2010. FDIC~~an ~~assessments~~increase ~~increased~~of $~~274~~210,000, or ~~113~~4.2239%, ~~from~~when ~~$242,000~~compared ~~for the three-month period ended September 30, 2009~~ to $~~516~~4,787,000 for the first three~~-month~~ ~~period~~months ~~ended~~of ~~September 30,~~ 2010. ~~This increase was due, in large part, to industry wide increased in general assessment rates.~~

~~Net~~The ~~occupancy~~primary ~~expense~~component ~~increased~~of ~~$32,000~~noninterest ~~for~~expense ~~the~~is ~~nine~~salaries ~~month~~and ~~period ended September 30~~benefits, ~~2010,~~which ~~or 3.35% over the related period in 2009, and~~ increased $18133,000, or 5.7045% ~~for the three months ended September 30~~, ~~2010~~from ~~compared to the same period in 2009. The amortization of intangible assets decreased~~ $172,~~000~~439, ~~or 5.31% to $303,~~000 ~~from~~for the ~~nine~~three ~~month~~months ~~period~~ ended ~~September~~March 3031, ~~2009~~2010 to ~~the nine month period ended September 30, 2010, and decreased~~ $52,~~000~~572,000 orfor ~~4.72% from~~ the three ~~month period ended September 30, 2009 to the three~~ months ended ~~September~~March 3031, ~~2010~~2011. ~~Furniture~~Net ~~and~~occupancy ~~equipment~~ expense ~~decreased~~increased $~~108~~13,000, orfor ~~16.19% from~~ the ~~nine~~ three-month period ended ~~September~~March 3031, ~~2009 to the nine month period ended September 30~~2011, ~~2010,~~an ~~and~~increase ~~decreased~~of ~~$33,000, or 15~~4.5704% ~~from~~over the ~~three~~related ~~month~~ period ~~ended~~in ~~September 30, 2009 to the three month period ended September 30,~~ 2010. WeThe ~~realized~~amortization ~~a loss on sales~~ of ~~fixed~~intangible assets ofdecreased $396,000, ~~for~~or ~~nine months ended September 30~~5.83%, ~~2009,~~to ~~of which~~ $2097,000 ~~was~~from ~~during~~ the three -month period ended ~~September~~March 3031, ~~2009,~~2010 ~~compared~~ to ~~no losses for~~ the three ~~and nine~~ -month period ended ~~September~~March 3031, ~~2010~~2011. ~~Other~~Furniture ~~operating~~and ~~expenses~~equipment ~~were~~expense

Filing Compare · COMMUNITY CAPITAL CORP /SC/