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                                  EXHIBIT 10.5

       Employment Agreement dated September 27, 2002 - Jeffrey A. Paolucci

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                                                                    EXHIBIT 10.5

                              EMPLOYMENT AGREEMENT

     This Agreement is made this 15th day of September, 2002, by and between
First Reliance Bank (hereinafter referred to as "Employer" or "Company") and
Jeffrey A. Paolucci (hereinafter referred to as "Employee").

                               W I T N E S S E T H

     WHEREAS, the parties hereto desire to provide for the Employee's employment
by the Employer.

     NOW THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereto agree as follows:

     1. Employment. The Employer agrees to employ the Employee and the Employee
agrees to enter into the employ of the Employer on the terms and conditions
hereinafter set forth.

     2. Capacity and Duties. The Employee is being hired as a full-time employee
of the Employer primarily to perform those duties set forth in the job
description of Senior Vice President, Chief Financial Officer, Bank Executive,
which is incorporated herein as if fully set forth verbatim in this Agreement,
and such duties as assigned by the CEO. However, the Employer and Employee
affirm that the Employee's position and duties may change as dictated by the
needs of the Employer.

     3. Term. The term of the Employee's employment hereunder shall be for a
three year period commencing on the date set forth above, unless such term is
terminated earlier by and/or modified pursuant to Paragraph 8 herein. Upon the
conclusion of the three-year period, the parties may, but are not required to,
extend the Agreement in writing.

     4. Location. The Employee's central office shall be located at 2170 West
Palmetto Street, Florence, South Carolina 29501. However, the employee may be
required to perform tasks for the Employer at other physical locations as deemed
necessary by the Employer.

     5. Compensation. For services rendered by the Employee under this Agreement
during the first year, the Employer shall pay the Employee $95,000 per year
(hereinafter referred to as "Base Salary"). The Employee shall additionally be
entitled to the following benefits:

               .    Moving expenses incurred in relocating once from Chapin,
                    South Carolina to Florence, South Carolina up to $2,500.00
                    upon presentation of proper receipts.

               .    A signing bonus in the amount of $9,500.00.

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               .    Reimbursement for Employee's monthly dues at the Florence
                    Country club.

               .    Benefits including health insurance, dental insurance, life
                    insurance and disability insurance as set forth in the Plan
                    documents outlining the Employee Benefit Plan.* . An annual
                    bonus in an amount to be determined by the Employer.

*Any questions concerning coverage may be directed to the manger of human
resources.

     6. Deductions. Employee agrees and acknowledges that the Base Salary
provided for herein is subject to withholding and other taxes.

     7. Vacation and Sick Leave. After an initial 90 days of employment, the
Employee shall be entitled to three weeks of paid vacation for the first year.
The Employee shall be entitled to three weeks paid vacation in each year
thereafter. The Employee shall additionally be entitled paid holidays in
accordance with the Employer's Policies and Procedures as outlined in the
Employers' Employee Handbook. The Employee shall be entitled to sick days in
accordance with the Employer's Policies and Procedures as outlined in the
Employer's handbook.

     8. Termination. Notwithstanding Section 3 hereof, the term of the
Employee's employment hereunder shall terminate on the earlier of the
termination date provided for under Section 3 or under any of the paragraphs of
this Section 8 hereof.

       (a)    Death. In the event of the Employee's death, the Employee's
              employment shall terminate automatically, effective as of the date
              of death, and the Employer shall pay to the Employee's estate the
              Base Salary which would otherwise be paid to the Employee pursuant
              to the salary provisions of this Agreement up to the end of the
              month in which his death occurs.

       (b)    Disability. If the Employee, due to physical or mental illness,
              shall be unable to perform substantially all of his duties for a
              continuous period of three (3) months, either the Employee or the
              Employer may by notice terminate the Employee's employment under
              this Agreement effective as of a date thirty (30) days after the
              date such notice is given.

       (c)    Change in Control. In the event that a merger, consolidation,
              exchange, acquisition, any change in control as defined by the
              Banking Control Act, or change in beneficial ownership as
              evidenced by an individual or entity holding 50% or more of the
              combined voting power, occurs within three years from the
              effective date of the Agreement and the Employee's employment with
              the Employer has not been terminated pursuant to Paragraphs
              8(a)(b)(d)or (e):

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                     (i) the Agreement shall be renewed by the Employer's
                     successor for an additional three year period effective on
                     the date of the change in control, subject to the terms and
                     provisions set forth herein effective, or

                     (ii) the Employer may terminate the Employee, effective on
                     the date of the change in control, and pay the Employee his
                     most recent Base Salary along with the Benefits and Bonus
                     to which the Employee would otherwise be entitled for a
                     three year period beginning on the date of the change in
                     control.

       (d)    By The Employer For Cause. The Employee's employment may be
              terminated effective immediately by the Employer for "cause" by
              notice of termination to the Employee. "Cause" for such
              termination shall include, but not be limited to, the following:

              i)     Commission by the Employee of any fraud, misappropriation,
                     embezzlement or other dishonest act that may reasonably be
                     expected to have injurious effect on the Employer;

              ii)    The failure and/or refusal of the Employee to perform any
                     duties reasonably required of him, which is intended to
                     injure and/or injures the reputation, business or business
                     relationships of the Employer after written notification by
                     the Employer of such failure or refusal and the failure of
                     the Employee within thirty (30) business days of such
                     notification to correct such failure or refusal (other than
                     failure by reason of incapacity due to physical or mental
                     illness);

              iii)   Conviction of a crime involving dishonest or fraudulent
                     conduct; or

              iv)    Willful breach by the Employee of any of the covenants
                     contained in this Agreement.

       (e)    By the Employee or the Employer. During the term of this
              Agreement, either the Employee or the Employer may terminate the
              Agreement, for any or no reason, upon two weeks written notice to
              the other party. Employee shall be paid his Base Salary during the
              designated notice period, whether or not the Employer requires the
              Employee to work during the entire period and without regard to
              which party terminated the Agreement. Both the Employee and
              Employer agree that payment of this salary shall constitute an

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              agreed-upon termination and severance payment and that, based on
              the nature of Employee's duties, the notice period is reasonable
              and will provide for a proper and orderly transition of Employee's
              management responsibilities.

       (f).   Compensation Upon Termination. Except as provided in paragraphs
              8(a) and 8(c) hereof, all compensation shall cease immediately on
              termination of the Employee's employment hereunder.

       (g).   Reimbursement Upon Termination. Both the Employee and Employer
              agree that if the employment relationship is terminated pursuant
              to paragraphs 8(a)(b) or (d) prior to the conclusion of the three
              year term set forth in paragraph 3, the Employee shall be required
              to reimburse the Employer for the signing bonus set forth in
              paragraph 5 as follows:

                     (i)    if the employment relationship is terminated by
                            either party within the first year, the Employee
                            shall be required to reimburse the Employer in the
                            amount of $6,333.33.

                     (ii)   if the employment relationship is terminated by
                            either party during the second year, the Employee
                            shall be required to reimburse the Employer in the
                            amount of $3,166.66.

                     (iii)  if the employment relationship is terminated between
                            the second and third years, the Employee will be
                            required to reimburse the Employer for a pro-rata
                            share of the remaining $3,166.66.

     9. Assignment. This Agreement is personal and shall in no way be subject to
assignment by the Employee. It shall be binding upon and shall inure to the
benefit of the Employer and its successors and assigns, and its economic rights
and benefits shall inure to the benefit of the Employee or his heirs or duly
constituted legal representatives subject to Paragraph 17.

     10. Solicitations/Non-raid. Employee agrees for a period of one (1) year
after the termination or cessation of employment for any reason, he shall not
directly or indirectly as an individual proprietor, partner, stockholder,
officer, employee, director, joint venturer, consultant, lender, or in any other
capacity whatsoever engage in the following activity or activities:

       (a)    Solicit Employees. The Employee shall not recruit, solicit or
              induce, or attempt to induce, any employee or employees of the
              Company to terminate their employment with, or otherwise cease
              their relationship with, the Company. The restrictions set forth
              in this section shall apply to any geographic area, market, or
              territory

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              covered by the Employee where the Company is actively conducting
              business or attempting to conduct business by engaging in
              activities such as contacting, serving, soliciting, selling, or
              marketing to customers, suppliers, or creditors.

       (b)    Solicit Customers. The Employee shall not solicit, divert or take
              away, or attempt to divert or to take away, the business or
              patronage of any of the Company's clients, customers or accounts
              which the Company conducted business with and the Employee
              personally dealt with during his employment with the Company. The
              restrictions set forth in this section shall apply to any
              geographic area, market, or territory covered by the Employee
              where the Company is actively conducting business or attempting to
              conduct business by engaging in activities such as contacting,
              serving, soliciting, selling, or marketing to customers,
              suppliers, or creditors.

       (c)    Solicit Potential Customers. The Employee shall not solicit,
              divert or take away, or attempt to divert or to take away, the
              business or patronage of any of the Company's prospective clients,
              customers or accounts, which the Employee personally had dealt
              with, contacted, solicited, or served, for the purpose of
              obtaining business for the Company, while he was employed with the
              Company. The restrictions set forth in this section shall apply to
              any geographic area, market, or territory covered by the Employee
              where the Company is actively conducting business or attempting to
              conduct business by engaging in activities such as contacting,
              serving, soliciting, selling, or marketing to customers,
              suppliers, or creditors.

     11. Disclosure of Financial Information. Employer recognizes Employee's
need for access to financial data and other related financial information.
Employer will provide any necessary financial, statistical, or other related
information to the Employee within a reasonable period of time. Employee will
treat financial and other information related to Employer as confidential.

     12. Severability. The parties agree that the Company can choose to enforce
the foregoing provisions (just as with all the provisions, sections, paragraphs,
and sentences of this Agreement) while enforcing or not enforcing any other
provision, section, paragraph, or sentence of this Agreement. Similarly, a court
can interpret or reform the foregoing provision (just as with all the
provisions, sections, paragraphs, and sentences of the Agreement) to make it
legally enforceable. Alternatively, a court can enforce or refuse to enforce the
foregoing provision (just as with all the provisions, sections, paragraphs, and
sentences of this Agreement) without affecting the legality or validity of the
remainder of the Agreement.

     13. Enforceability. If any portion or provision of this Agreement shall to
any extent be declared illegal or unenforceable by a duly authorized court of
competent

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jurisdiction, then the remainder of this Agreement, or the application
of such portion or provision in circumstances other than those as to which it is
so declared illegal or unenforceable, shall not be affected thereby and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.

     14. Notices. All notices and communications required or permitted to be
given hereunder shall be given by delivering the same in hand or by mailing the
same by certified or registered mail, return receipt requested, postage prepaid.
Notice shall be sent to the Employee at an address which is to be provided by
him to the Director of Human Resources, and which initially shall be:

         Jeffrey A. Paolucci
         612 Harborview Point
         Chapin, South Carolina 29036

         If to the Employer:

         F.R (Rick) Saunders, Jr.
         First Reliance Bank
         2710 West Palmetto Street
         Florence, South Carolina 29501

or such other address as either party shall have furnished to the other by like
notice. Notices shall be effective as of the date of such delivery or mailing.

     15. Entire Agreement. This Agreement constitutes the entire Agreement and
understanding between the parties in relation to the subject matter hereof.
There are no promises, representations, conditions, provisions, or terms related
thereto other than those set forth herein. This Agreement supersedes all
previous understandings, agreements, and representations between the Employer
and the Employee regarding the Employee's employment by the Employer, written or
oral. The Employer and the Employee further agree that any modification to the
Agreement must be in writing and signed by the Employer.

     16. Governing Law. This contract shall be construed under and be governed
in all respects by the laws of the State of South Carolina.

     17. Enforcement. In the event that a dispute arises between the Employer
and the Employee, the parties agree that each party shall be responsible for any
attorney's fees incurred in enforcing this Agreement. In the event there is a
change in control pursuant to paragraph 8(c), and a dispute arises between the
Employee and the Employer's successor, the losing party shall be responsible for
any attorney's fees incurred in enforcing the Agreement.

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     18. Drafting. Employer and Employee affirm that this Agreement is a result
of negotiations between the Employer and the Employee and neither party shall be
construed as the drafter.

     19. Waiver; Amendment. No waiver in any instance by any party of any
provision of this Agreement shall be deemed a waiver by such party of such
provision in any other instance or a waiver of any other provision hereunder in
any instance. This Agreement cannot be modified except in writing signed by the
party to be charged.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date forth above written.

                                              FIRST RELIANCE BANK


                                       By:    /s/ F. R. Saunders, Jr.
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                                       Title: President and CEO


                                              JEFFREY A. PAOLUCCI, EMPLOYEE


                                              /s/ Jeffrey A. Paolucci
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                                              Social Security Number:
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