# U.S. SECURITIES AND EXCHANGE COMMISSION 
Washington, D.C. 20549

# FORM 10-QSB

|[X] | Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934
|--- | ---------------------------------------------------------------------------------
|    | For the quarter ended June 30, 2003                                              

|[   ] | Transition report under Section 13 or 15(d) of the Exchange Act
|----- | ---------------------------------------------------------------
|      | For the transition period from ___________ to _____________    

Commission file number
333-25179

PEOPLE'S COMMUNITY CAPITAL CORPORATION(Exact name of registrant as specified in its charter)

|SOUTH CAROLNA            |  | 58-2287073                          
|------------------------ |  | ------------------------------------
|(State of Incorporation) |  | (I.R.S. Employer Identification No.)

125 PARK AVENUE, S.W., AIKEN, SOUTH CAROLINA 29801
(Address of principal executive offices)   (Zip Code)

(803) 641-0142(Issuer's Telephone Number, Including Area Code)

NOT APPLICABLE(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

State the number of shares  outstanding  of each of the  issuer's  classes of common  equity,  as of the latest
practicable  date:  1,099,483 shares of common stock,  par value $.01 per share,  outstanding as of August 8, 2003.

Transitional Small Business Disclosure
Format (check one):   Yes    NoX

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# PART I  FINANCIAL
INFORMATION

# Item 1. Financial
Statements.

# Peoples
Community Capital Corporation Consolidated Balance Sheets

|                                                                     | June 30, | December 31,
|-------------------------------------------------------------------- | -------- | ------------
|
|
|Assets                                                               |          |             
|Cash and due from banks                                              |          |             
|Federal funds sold                                                   |          |             
|Short-term investments                                               |          |             
|Investment securities - available for sale                           |          |             
|Investment securities - held to maturity (market value of $5,066,878 |          |             
|and $4,988,839 at June 30, 2003 and December 31, 2002, respectively) |          |             
|Loans receivable, net                                                |          |             
|Properties and equipment, net                                        |          |             
|Accrued interest receivable                                          |          |             
|Other real estate owned                                              |          |             
|Other assets                                                         |          |             
|                                                                     |          |             
|Total assets                                                         |          |             
|                                                                     |          |             
|Liabilities and Shareholders' Equity                                 |          |             
|Liabilities:                                                         |          |             
|Non-interest bearing deposits                                        |          |             
|Interest bearing deposits                                            |          |             
|                                                                     |          |             
|Total deposits                                                       |          |             
|Accrued interest payable                                             |          |             
|Federal Home Loan Bank advance                                       |          |             
|Other borrowings                                                     |          |             
|Accrued expenses and other liabilities                               |          |             
|                                                                     |          |             
|Total liabilities                                                    |          |             
|                                                                     |          |             
|Shareholders' equity:                                                |          |             
|Common stock, $.01 par value; 10,000,000 shares authorized,          |          |             
|1,098,283 shares issued at June 30, 2003 and 1,046,193 at            |          |             
|December 31, 2002                                                    |          |             
|Additional paid-in-capital                                           |          |             
|Retained earnings                                                    |          |             
|Accumulated other comprehensive income                               |          |             
|                                                                     |          |             
|Total shareholders' equity                                           |          |             
|                                                                     |          |             
|                                                                    
|Total liabilities and shareholders' equity                           |          |             
|                                                                     |          |             

See accompanying Notes
to Consolidated Financial Statements.

2

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# Peoples
Community Capital Corporation Consolidated Statements of Income (Unaudited)

|                                             | For the three months | For the six months
|-------------------------------------------- | -------------------- | ------------------
|
|
|Interest income:                             |                      |                   
|Loans, including fees                        |                      |                   
|Federal funds sold                           |                      |                   
|Securities, short-term investments, and cash |                      |                   
|                                             |                      |                   
|Total interest income                        |                      |                   
|                                             |                      |                   
|Interest expense:                            |                      |                   
|Deposits                                     |                      |                   
|Other borrowings                             |                      |                   
|                                             |                      |                   
|Total interest expense                       |                      |                   
|                                             |                      |                   
|Net interest income                          |                      |                   
|Provision for loan losses                    |                      |                   
|                                             |                      |                   
|Net interest income after provision          |                      |                   
|for loan losses                              |                      |                   
|                                             |                      |                   
|Non-interest income:                         |                      |                   
|Service charges on deposit accounts          |                      |                   
|Gain on sale of securities                   |                      |                   
|Insurance and brokerage commissions          |                      |                   
|Other                                        |                      |                   
|                                             |                      |                   
|Total non-interest income                    |                      |                   
|                                             |                      |                   
|Non-interest expenses:                       |                      |                   
|Salaries and employee benefits               |                      |                   
|Occupancy and equipment                      |                      |                   
|Consulting and professional fees             |                      |                   
|Customer related                             |                      |                   
|General operating                            |                      |                   
|Other                                        |                      |                   
|                                             |                      |                   
|Total non-interest expenses                  |                      |                   
|                                             |                      |                   
|Income before income taxes                   |                      |                   
|Income tax provision                         |                      |                   
|                                             |                      |                   
|Net income                                   |                      |                   
|                                             |                      |                   
|Weighted average common shares outstanding:  |                      |                   
|Basic                                        |                      |                   
|Diluted                                      |                      |                   
|Earnings per share:                          |                      |                   
|Basic                                        |                      |                   
|Diluted                                      |                      |                   

See accompanying Notes
to Consolidated Financial Statements.

3

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# Peoples
Community Capital Corporation Consolidated Statements of Comprehensive Income (Unaudited)

|                                                    | For the three months | For the six months
|--------------------------------------------------- | -------------------- | ------------------
|
|
|Net income                                          |                      |                   
|Other comprehensive income, net of tax:             |                      |                   
|Net change in unrealized gain on                    |                      |                   
|securities available for sale                       |                      |                   
|Less reclassification adjustment for realized gains |                      |                   
|                                                    |                      |                   
|Total other comprehensive income                    |                      |                   
|                                                    |                      |                   
|Comprehensive income                                |                      |                   
|                                                    |                      |                   

See accompanying Notes
to Consolidated Financial Statements.

4

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# Peoples
Community Capital Corporation Consolidated Statements of Cash Flows (Unaudited)

|                                                                        | For the six months
|----------------------------------------------------------------------- | ------------------
|
|
|Operating activities:                                                   |                   
|Net income                                                              |                   
|Adjustments to reconcile net income to net cash provided by             |                   
|operating activities:                                                   |                   
|Depreciation and amortization                                           |                   
|Provision for loan losses                                               |                   
|Amortization of held to maturity investments                            |                   
|Changes in deferred and accrued amounts:                                |                   
|Other assets and accrued interest receivable                            |                   
|Accrued expenses and other liabilities                                  |                   
|                                                                        |                   
|                                                                       
|Net cash provided by operating activities                               |                   
|                                                                        |                   
|Investing activities:                                                   |                   
|Activity in securities available for sale:                              |                   
|Sales                                                                   |                   
|Purchases                                                               |                   
|Maturities and calls                                                    |                   
|Net increase in short-term investments                                  |                   
|Purchases of property and equipment                                     |                   
|Loan originations and principal collections - net                       |                   
|Net decrease (increase) in federal funds sold                           |                   
|                                                                        |                   
|                                                                       
|Net cash used for investing activities                                  |                   
|                                                                        |                   
|Financing activities:                                                   |                   
|Issuance of stock                                                       |                   
|Net increase in deposits                                                |                   
|Net (decrease) increase in other borrowings                             |                   
|Cash in lieu of fractional shares                                       |                   
|                                                                        |                   
|                                                                       
|Net cash provided by financing activities                               |                   
|                                                                        |                   
|                                                                       
|Net increase (decrease) in cash and due from banks                      |                   
|Cash and due from banks at beginning of period                          |                   
|                                                                        |                   
|Cash and due from banks at end of period                                |                   
|                                                                        |                   
|                                                                       
|Supplemental disclosure:                                                |                   
|Cash paid during the period for interest                                |                   
|                                                                        |                   
|Income taxes paid                                                       |                   
|                                                                        |                   
|Unrealized net gain on securities available for sale, net of income tax |                   
|                                                                        |                   

See accompanying Notes
to Consolidated Financial Statements.

5

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# Peoples
Community Capital Corporation Notes to Consolidated Financial Statements (Unaudited)

# Note 1. Basis of
presentation

The
accompanying unaudited consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of Amercia for interim
financial information and with the instructions to Form 10-QSB and Item 310(b) of
Regulation S-B of the Securities and Exchange Commission. Accordingly, they do not include
all of the information and footnotes required by generally accepted accounting principles
for complete financial statements. However, in the opinion of management, all adjustments
(consisting of normal recurring adjustments) considered necessary for a fair presentation
have been included. Operating results for the six months ended June 30, 2003 are not
necessarily indicative of the results that may be expected for the year ended December 31,
2003. For further information, please refer to the consolidated financial statements and
footnotes thereto for the Companys fiscal year ended December 31, 2002, included in
the Companys Form 10-KSB for the year ended December 31, 2002.

# Note 2. Summary of
organization

Peoples
Community Capital Corporation was incorporated in South Carolina on February 26, 1997 for
the purpose of operating as a bank holding company. Our wholly-owned subsidiary,
Peoples Community Bank of South Carolina, commenced business on September 22, 1997,
and is primarily engaged in the business of accepting savings and demand deposits and
providing mortgage, consumer and commercial loans to the general public. Our bank operates
two banking centers located in Aiken and one located in North Augusta, South Carolina.

The
second banking center located in Aiken was opened on September 8, 1998 in leased offices
that were the headquarters of the holding company. In May 2001, we moved our banking
center and holding company headquarters to a newly constructed building nearby. At this
time, the downtown Aiken location of our bank became the main office.

In
December 1999, our bank formed a subsidiary, Peoples Financial Services, Inc., for
the purpose of providing comprehensive financial planning services in addition to full
service brokerage, including stocks, bonds, mutual funds, and insurance products.

In
June 2003, we opened a loan production office in rented space in Charleston, South
Carolina. The purpose of this office is to solicit loans, primarily in the real estate
construction market.

# Note 3. Stock option plan

SFAS
No. 123, Accounting for Stock-Based Compensation, encourages all
entities to adopt a fair value based method of accounting for employee stock compensation
plans, whereby compensation cost is measured at the grant date based on the value of the
award and is recognized over the service period, which is usually the vesting period.
However, it also allows an entity to continue to measure compensation cost for those plans
using the intrinsic value based method of accounting prescribed by Accounting Principles
Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees,
whereby compensation cost is the excess, if any, of the quoted market price of the stock
at the grant date (or other measurement date) over the amount an

6

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employee  must pay to acquire the stock.  Stock  options  issued  under our stock  option plan have no intrinsic  value at the grant date,  and under  Opinion No. 25, no
compensation cost is recognized.

The
Company sponsors a stock option plan (the Plan) for the benefit of the directors, officers
and employees. The Board may grant up to 289,406 options (adjusted for 5% stock dividends
issued March 2001, January 2002, and January 2003). During the first quarter of 2003, the
Board granted 15,000 stock options at an exercise price of $12.90 that vest over the next
two years and expire in 2013. During the second quarter of 2003, the Board granted 1,500
stock options at an exercise price of $15.00 which vest over three years and expire in
2013. The Company has adopted the disclosure-only provisions of SFAS No. 123,
Accounting for Stock-Based Compensation. Accordingly, no compensation
cost has been recognized for the stock option plan. Had compensation cost been
determined based on the fair value at the grant date for the above stock option awards
consistent with the provisions of SFAS No. 123, the Companys net income and earnings
per share would have been adjusted to the proforma amounts indicated below:

|                                 | For the three months ended | For the six months ended
|-------------------------------- | -------------------------- | ------------------------
|
|
|Net income - As reported         |                            |                         
|Net income - Proforma            |                            |                         
|Earnings per share - As reported |                            |                         
|Basic                            |                            |                         
|Diluted                          |                            |                         
|Earnings per share - Proforma    |                            |                         
|Basic                            |                            |                         
|Diluted                          |                            |                         

The
fair value of the option grant is estimated on the date of grant using the Black-Scholes
option pricing model. The risk free interest rate used was 4.77%, the expected option life
was ten years, the assumed dividend rate was zero and the expected volatility was 8.0%.

# Note 4. Recently issued
accounting standards

In
December 2002, the FASB issued SFAS No. 148, Accounting for Stock-based
CompensationTransition and Disclosure, an amendment of FASB Statement No. 123,
Accounting for Stock-Based Compensation, to provide alternative methods of
transition for a voluntary change to the fair value based method of accounting for
stock-based employee compensation. SFAS No. 148 also amends the disclosure provisions
of SFAS No. 123 and Accounting Pronouncement Board (APB) Opinion
No. 28, Interim Financial Reporting, to require disclosure in the summary
of significant accounting policies of the effects of an entitys accounting policy
with respect to stock-based employee compensation on reported net income and earnings per
share in annual and interim financial statements. While SFAS No. 148 does not amend
SFAS No. 123 to require companies to account for employee stock options using the
fair value method, the disclosure provisions of SFAS No. 148 are applicable to all
companies with stock-based employee compensation, regardless of whether they account for
that compensation using the fair value method of SFAS No. 123 or the intrinsic value
method of APB Opinion No. 25. The provisions of SFAS No. 148 are effective for
annual financial statements for fiscal years ending after December 15, 2002, and for
financial reports containing condensed financial statements for interim period beginning
after December 15, 2002. The Company has

7

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adopted the disclosure provisions of
SFAS No. 148 which had no impact on the financial condition or operating results of
the Company.

In
April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. SFAS No. 149 amends and
clarifies accounting for derivative instruments, including certain derivative instruments
embedded in other contracts and loan commitments that relate to the origination of
mortgage loans held for sale, and for hedging activities under SFAS No. 133. SFAS
No. 149 is generally effective for contracts entered into or modified after
June 30, 2003. The adoption of SFAS No. 149 did not have a material impact on
the financial condition or operating results of the Company.

In
May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. SFAS No. 150
establishes standards for how an issuer classifies and measures certain financial
instruments with characteristics of both liabilities and equity. It requires that an
issuer classify a financial instrument that is within its scope as a liability (or an
asset in some circumstances.) Many of those instruments were previously classified as
equity. SFAS No. 150 is generally effective for financial instruments entered into or
modified after May 31, 2003, and otherwise is effective at the beginning of the first
interim period beginning after June 15, 2003. The adoption of SFAS No. 150 did
not have a material impact on the financial condition or operating results of the Company.

In
June 2003, the American Institute of Certified Public Accountants (AICPA) issued an
exposure draft of a proposed Statement of Position (SOP), Allowance for Credit
Losses. The proposed SOP addresses the recognition and measurement by creditors of the
allowance for credit losses related to all loans, as that term is defined in SFAS No. 114,
Accounting by Creditors for Impairment of a Loan. The proposed SOP provides that
the allowance for credit losses reported on a creditors balance sheet should consist
only of (1) a component for individual loan impairment recognized and measured pursuant to
FASB Statement No. 114 and (2) one or more components of collective loan impairment
recognized pursuant to FASB Statement No. 5, Accounting for Contingencies, and
measured in accordance with the guidance in the proposed SOP. The provisions of the
proposed SOP would be effective for financial statements for fiscal years beginning after
December 15, 2003, with earlier application permitted. The effect of initially applying
the provisions of the proposed SOP would be reported as a change in accounting estimate.
Comments on the exposure draft are due by September 19, 2003. The effect on the financial
condition or operating results of the Company related to the adoption of this proposed SOP
have not been determined, but would most likely be material.

8

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# Item 2.
Managements Discussion and Analysis.

This
discussion and analysis is intended to assist the reader in understanding our financial
condition and results of operations.

This
report contains forward-looking statements relating to, without limitation,
future economic performance, plans and objectives of management for future operations, and
projections of revenues and other financial items that are based on the beliefs of our
management, as well as assumptions made by and information currently available to our
management. The words expect, anticipate, and believe,
as well as similar expressions, are intended to identify forward-looking statements. Our
actual results may differ materially from the results discussed in the forward-looking
statements, and our operating performance each quarter is subject to various risks and
uncertainties that are discussed in detail in our filings with the Securities and Exchange
Commission.

| | o | significant increases in competitive pressure in the banking and financial services industries;
| | - | -----------------------------------------------------------------------------------------------

| | o | changes in the interest rate environment which could reduce anticipated or actual margins;
| | - | ------------------------------------------------------------------------------------------

| | o | changes in political conditions or the legislative or regulatory environment;
| | - | -----------------------------------------------------------------------------

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

| | o | changes occurring in business conditions and inflation;
| | - | -------------------------------------------------------

| | o | changes in technology;
| | - | ----------------------

| | o | changes in monetary and tax policies;
| | - | -------------------------------------

| | o | the level of allowance for loan loss;
| | - | -------------------------------------

| | o | the rate of delinquencies and amounts of charge-offs;
| | - | -----------------------------------------------------

| | o | the rates of loan growth;
| | - | -------------------------

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

| | o | changes in the securities markets; and
| | - | --------------------------------------

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

9

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CRITICAL ACCOUNTING
POLICIES

We
have adopted various accounting policies which govern the application of accounting
principles generally accepted in the United States in the preparation of our financial
statements. The significant accounting policies of the company are described in the
footnotes to the consolidated financial statements at December 31, 2002 as filed on our
10-KSB for that date.

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

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 discussion under Allowance for Loan Losses section of this report
for a detailed description of our estimation process and methodology related to the
allowance for loan losses.

FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

EARNINGS REVIEW  Comparison of
the three months ended June 30, 2003 to the three months ended June 30, 2002

Our
net income for the second quarter of 2003 was $296,494 compared to $249,150 for the same
period last year, an increase of 19%. The basic income per share increased to $.27
compared to $.23 for the same period in 2002. Weighted shares outstanding have been
adjusted for the effects of stock dividends paid in 2002 and 2003. The improvement in
earnings between the two quarters under comparison can be attributed to a decrease in the
provision for loan losses, an increase in non-interest income and a decrease in
non-interest expense. The net interest income for the two periods remained substantially
unchanged even though the earning assets have increased. The level of average earning
assets was $101.4 million for the three months ended June 30, 2003 as compared to $87.4
million for the three months ended June 30, 2002 while the average rate on earning assets
fell from 6.08% to 4.98% for the two periods under comparison.

Net
interest income represents the difference between interest received or accrued on interest
earning assets and interest paid or accrued on interest bearing liabilities. The following
presents, in a tabular form, average balance sheets that highlight the main components of
interest earning assets and interest bearing liabilities, on an annualized basis, for the
three month periods ended June 30, 2003 and 2002. Yields are derived by dividing income or
expense by the average balance of the corresponding assets or liabilities. Average
balances have been derived from daily averages.

10

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|                                   | Three months ended June 30, 2003 | Three months ended June 30, 2002
|---------------------------------- | -------------------------------- | --------------------------------
|
|
|ASSETS                             |                                  |                                 
|Federal funds sold                 |                                  |                                 
|Cash & short-term investments      |                                  |                                 
|Securities                         |                                  |                                 
|Loans                              |                                  |                                 
|                                   |                                  |                                 
|Total earnings assets              |                                  |                                 
|                                   |                                  |                                 
|                                   |                                  |                                 
|Cash and due from banks            |                                  |                                 
|Premises and equipment             |                                  |                                 
|Other assets                       |                                  |                                 
|Allowance for loan losses          |                                  |                                 
|                                   |                                  |                                 
|Total assets                       |                                  |                                 
|                                   |                                  |                                 
|LIABILITIES & EQUITY               |                                  |                                 
|Interest-bearing deposits:         |                                  |                                 
|Transaction accounts               |                                  |                                 
|Money market accounts              |                                  |                                 
|Savings deposits                   |                                  |                                 
|Time deposits                      |                                  |                                 
|                                   |                                  |                                 
|Total interest bearing deposits    |                                  |                                 
|Interest-bearing borrowings        |                                  |                                 
|                                   |                                  |                                 
|Total interest bearing liabilities |                                  |                                 
|                                   |                                  |                                 
|Demand deposits                    |                                  |                                 
|Other liabilities                  |                                  |                                 
|Shareholders' equity               |                                  |                                 
|                                   |                                  |                                 
|Total liabilities &                |                                  |                                 
|shareholders'equity                |                                  |                                 
|                                   |                                  |                                 
|Net interest spread                |                                  |                                 
|Net interest income/margin         |                                  |                                 
|                                   |                                  |                                 

Net
interest income was $906,512 for the three months ended June 30, 2003 as compared to
$907,942 for the three months ended June 30, 2002. The net interest margin (net interest
income divided by average earning assets) was 3.59% for the three months ended June 30,
2003 compared to the net interest margin of 4.16% for the three months ended June 30,
2002. The decline in net interest margin is the result of the lower net yield realized as
the prime rate of interest has decreased from 9.00% beginning in early 2001 to current
rate of 4.00% as of July 30, 2003.

Interest
income for the second quarter of 2003 was $1,257,810 compared to $1,328,054 for the same
period in 2002. The volume of total earnings assets increased by approximately $14 million
between the two periods, however the average rate earned on assets decreased from 6.08% to
4.98%. The largest component of interest income was interest and fees on loans amounting
to $1,011,849 for the quarter ended June 30, 2003 compared to $1,023,223 for the
comparable prior year period. The average balance in loans outstanding increased by $5.8
million. The overall rate on the loan portfolio decreased from 7.33% for the three months
ended June 30, 2002 to 6.58% for the three-month period ended June 30, 2003. The
securities portfolio earned $198,474 for the second quarter of 2003 with a yield of 2.83%.
For the second quarter of 2002, the portfolio

11

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earned $267,717 with a yield of
4.38%. The average balance outstanding increased from $24,444,375 to $28,132,797, an
increase of $3.7 million.

Interest
expense decreased from $420,112 for the three months ended June 30, 2002 to $351,298 for
the three months ended June 30, 2003. The decrease was the direct result of the decrease
in rates paid on deposits and other liabilities, from an average of 2.38% for the second
quarter last year to an average rate of 1.74% this year. Actual interest-bearing
liabilities, primarily deposits, increased from $70,586,696 to $80,828,894, an increase of
15%.

Non-interest Income

Non-interest
income for the three-month period ended June 30, 2003 was $276,546 compared to $258,919
for the same period in 2002. Of this total, $144,619 represented service charges on
deposit accounts for the three months ended June 30, 2003 compared to $116,375 for the
comparable period in 2002. The increase in income from deposit service charges is due to
the increase in the number of deposit accounts. We had net gains on sale of securities of
$41,282 for the period ended June 30, 2003 compared to a net gain of $11,338 in the same
period last year. Fees from our financial services subsidiary decreased in the
period from $75,595 in the second quarter of 2002 to $15,340 in the same quarter this
year. Low interest rates had a direct bearing on the annuity products sales. The
$75,305 of other non-interest income for the second quarter of 2003 was income generated
from other fees charged, the largest of which was brokered mortgage fees amounting to
$43,435. For the same period in 2002, other income amounted to $55,611, of which $29,196
was brokered mortgage fees.

Non-interest Expense

Non-interest
expense for the quarters ended June 30, 2003 and 2002 were $699,772 and $716,850,
respectively, a difference of $17,078, or 2%. Salaries and employee benefits, the largest
component of noninterest expense, totaled $396,430 for the second quarter of 2003 compared
to $442,924 for the second quarter of 2002, a decrease of $46,494, or 12%. This decrease
for the quarter was due primarily to temporarily unfilled positions within the bank,
however, on a year to date basis, salaries and employee benefits are basically unchanged
from the previous year to date period under comparison. Other non-interest expenses were
higher due to the continued growth of the bank.

EARNINGS REVIEW  Comparison of
the six months ended June 30, 2003 to the six months ended June 30, 2002

Our
net income for the six months ended June 30, 2003 was $528,672 compared to $442,443 for
the same period last year. The basic income per share increased to $.48 compared to $.40
for the same period in 2002, as adjusted for the stock dividends paid in 2002 and 2003.
This improvement in earnings is primarily the result of lesser provisions in 2003 to the
loan loss reserve and improvements in non-interest income. The level of average earning
assets was $98.9 million for the six months ended June 30, 2003 as compared to $84.4
million for the six months ended June 30, 2002. However, the average yield on earning
assets fell from 6.15% to 5.04% between the two periods under comparison as market
interest rates continued to decline.

The
following presents, in a tabular form, yield and rate data for interest-bearing balance
sheet components during the six month periods ended June 30, 2003 and 2002, along with
average balances and the related interest income and interest expense amounts.

12

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|                                   | Six months ended June 30, 2003 | Six months ended June 30, 2002
|---------------------------------- | ------------------------------ | ------------------------------
|
|
|ASSETS                             |                                |                               
|Federal funds sold                 |                                |                               
|Cash and short-term investments    |                                |                               
|Securities                         |                                |                               
|Loans                              |                                |                               
|                                   |                                |                               
|Total earning assets               |                                |                               
|                                   |                                |                               
|                                   |                                |                               
|Cash and due from banks            |                                |                               
|Premises and equipment             |                                |                               
|Other assets                       |                                |                               
|Allowance for loan losses          |                                |                               
|                                   |                                |                               
|Total assets                       |                                |                               
|                                   |                                |                               
|LIABILITIES & EQUITY               |                                |                               
|Interest-bearing deposits:         |                                |                               
|Transaction accounts               |                                |                               
|Money market accounts              |                                |                               
|Savings deposits                   |                                |                               
|Time deposits                      |                                |                               
|                                   |                                |                               
|Total interest bearing deposits    |                                |                               
|Interest-bearing borrowings        |                                |                               
|                                   |                                |                               
|Total interest-bearing liabilities |                                |                               
|                                   |                                |                               
|Demand deposits                    |                                |                               
|Other liabilities                  |                                |                               
|Shareholders' equity               |                                |                               
|                                   |                                |                               
|Total liabilities &                |                                |                               
|shareholders equity                |                                |                               
|                                   |                                |                               
|Net interest spread                |                                |                               
|Net interest income/margin         |                                |                               
|                                   |                                |                               

Net
interest income was $1,758,158 for the six months ended June 30, 2003 as compared to
$1,708,456 for the six months ended June 30, 2002. The net interest margin (net interest
income divided by average earning assets) was 3.59% for the six months ended June 30, 2003
compared to the net interest margin of 4.05% for the six months ended June 30, 2002.

Interest
income for the first six months of 2003 was $2,469,857 compared to $2,595,288 for the same
period in 2002. The volume of total earning assets increased from $84.4 million at June
30, 2002 to $98.9 million at June 30, 2003, however the average rate earned on assets
decreased from 6.15% to 5.04%. The largest component of interest income was interest and
fees on loans amounting to $2,011,147 for the six months ended June 30, 2003 compared to
$2,004,073 for the comparable prior year period. The overall rate on the loan portfolio
decreased from 7.43% for the six months ended June 30, 2002 to 6.66% for the six month
period ended June 30, 2003 as we encountered a period of falling interest rates. Average
loan balances, however, increased by approximately $7 million. The balance in federal
funds sold increased by approximately $3 million, but the average yield fell from 1.68% to
1.17% resulting in very little change in interest earned on federal funds sold. Interest
income on securities decreased between the two periods as the average balances were higher
by about $3 million, but the yield fell from 4.37% to 2.76%.

13

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Interest
expense decreased from $886,832 for the six months ended June 30, 2002 to $711,699 for the
six months ended June 30, 2003 due to a decrease in average rates paid on liabilities from
2.59% to 1.81%. This decrease occurred even though the size of interest-bearing
liabilities, primarily deposits, increased from $68.5 million to $79.2 million, an
increase of 16%.

Non-interest Income

Non-interest
income for the six month period ended June 30, 2003 was $562,856 compared to $485,909 for
the same period in 2002. Of this total, $284,927 represented service charges on deposit
accounts for the six months ended June 30, 2003 compared to $252,756 for the comparable
period in 2002. The increase in income from deposit service charges is due to the increase
in the number of deposit accounts. We had a gain on sale of securities of $67,994 this
year compared to a gain of $11,338 during the same period last year. Fees generated from
our financial services subsidiary declined from $110,246 for the first half of 2002
to $44,458 for the first half of 2003. Low interest rates had a direct bearing on the
annuity products sales. The remaining $165,477 of other non-interest income for the
first half of 2003 consisted of income generated from other fees charged such as brokered
mortgage origination fees, check cashing fees, internet fees, and commissions on sale of
checks to customers. The comparable amount for last year was $111,569. The leading cause
of increase between the two periods is fees earned on brokered mortgage transactions which
were $87,339 for the six months ended June 30, 2003 compared to $56,035 for the same
period in 2002.

Non-interest Expense

Non-interest
expense for the six month periods ended June 30, 2003 and 2002 were $1,471,467 and
$1,413,400, respectively, a 4% increase. The largest component of non-interest expense,
salaries and employee benefits, increased only slightly from $840,438 for the six months
ended June 30, 2002 to $846,210 for the six months ended June 30, 2003. Other non-interest
expenses increased due to the continued growth of the bank.

Provision for Loan Losses

The
provision for loan losses was $59,197 and $120,497, respectively, for the first six months
of 2003 and 2002, bringing the total reserve balance to $900,000 and $755,000 at June 30,
2003 and 2002, respectively. This amount represents 1.42% of gross loans at June 30, 2003,
compared to 1.34% at June 30, 2002. It reflects our estimate of the amounts necessary to
maintain the allowance for loan losses at a level believed to be adequate in relation to
the current size, mix and quality of the loan portfolio. The reserve has specifically been
increased in relation to gross loans due to the uncertainty that may exist in our
portfolio with regards to current economic conditions existing in our market. See the
description of the allowance for loan losses below. However, our judgment as to the
adequacy of the allowance is based upon a number of assumptions about future events that
we believe to be reasonable, but which may or may not be accurate. Because of the inherent
uncertainty of assumptions made during the evaluation process, 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 loan loss allowance will not be required. We had $1,861 in
loans that were classified as non-accrual at June 30, 2003 compared to $511,707 in
non-accrual loans at June 30, 2002. The non-accrual balance at June 30, 2002 consisted
primarily of loans that were either secured by real estate or guaranteed by a governmental
agency. The non-accrual balance at June 30, 2002 resulted in part in a foreclosure of real
estate now shown on the balance sheet as other real estate owned in the amount of
$378,880. There were net recoveries of $802 for the six months ended June 30, 2003 and
$2,497 of net charge-offs for the six months ended June 30, 2002.

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BALANCE SHEET REVIEW

Total
consolidated assets grew by $7.5 million from $102,015,141 at December 31, 2002 to
$109,485,152 at June 30, 2003. The increase was generated primarily through an increase of
$7.2 million in deposits. This increase in funds allowed for the growth in net loans of
$2.3 million and the growth in the securities portfolio of $4.4 million.

Loans

Outstanding
loans represent the largest component of earning assets as of June 30, 2003 at
$62,287,720, or approximately 61% of total earning assets. Net loans increased $2,338,663,
or 4%, since December 31, 2002.

The
interest rates charged on loans vary with the degree of risk, maturity and amount of the
loan. Competitive pressures, money market rates, availability of funds, and government
regulations also influence interest rates. The average yield on our loans for the six
months ended June 30, 2003 was 6.66% as compared to a yield of 7.24% for the year ended
December 31, 2002.

The
principal components of our loan portfolio at June 30, 2003 and December 31, 2002,
consisted of real estate loans comprising approximately 86.6% and 86.7% of total loans,
respectively. Real estate loan means any loan secured by real estate, regardless of the
purpose of the loan. It is common practice for financial institutions in our market area
to obtain a security interest in real estate whenever possible, in addition to any other
available collateral. This collateral is taken to reinforce the likelihood of the ultimate
repayment of the loan and tends to increase the magnitude of the real estate portfolio
component. The following table shows the composition of the loan portfolio by category.

|                          | June 30, 2003 | December 31, 2002
|------------------------- | ------------- | -----------------
|
|Commercial and industrial |               |                  
|Real estate               |               |                  
|Mortgage - residential    |               |                  
|Mortgage - commercial     |               |                  
|Mortgage - other          |               |                  
|Consumer and other        |               |                  
|Other                     |               |                  
|                          |               |                  
|Total loans               |               |                  
|Allowance for loan losses |               |                  
|Unearned fees             |               |                  
|                          |               |                  
|Total net loans           |               |                  
|                          |               |                  

Allowance for Loan Losses

The
allowance for loan losses at June 30, 2003 was $900,000, or 1.42% of loans outstanding,
compared to an allowance of $840,000, or 1.38% of loans outstanding, at December 31, 2002.
The allowance for loan losses is based upon our continuing evaluation of the
collectibility of loans based somewhat on historical loan loss experience, but primarily
on current economic conditions affecting the ability of borrowers to repay, the

15

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volume of loans, the quality of
collateral securing non-performing and problem loans, and other factors deserving
recognition. The current downward trend in economic conditions that could potentially
affect our borrowers and their ability to pay are of particular concern at present and our
reserve reflects this concern. The banks policy has been to review the allowance for
loan losses using a reserve factor for each type of loan since there have been few
delinquencies and little charge-off activity since the banks inception. The overall
objective is to apply percentages to the loans based on the relative inherent risk for
that loan type and grade. Reserve factors are based on peer group data, information from
regulatory agencies, and on the experience of our banks lenders. The reserve factors
will change depending on trends in national and local economic conditions, the depth of
experience of our banks lenders, delinquency trends, and other factors. The
banks general strategy is to maintain a minimum coverage of a certain percentage of
gross loans until it has sufficient historical data and trends available.

Short-Term Investments
and Securities

Short-term
investments and securities represented 32% of earning assets at June 30, 2003, or
$32,737,027. This represented an increase of $5.3 million from the December 31, 2002
balance of $27,393,094. The combined yield on short-term investments and securities was
2.79% for the six months ended June 30, 2003 compared to 3.97% for the year ended December
31, 2002. Short-term investments at June 30, 2003 and at December 31, 2002 consisted of
commercial paper in another financial institution with balances of $2,924,850 and
$1,989,500, respectively. Included in available-for-sale securities is $274,200 of stock
purchased in the Federal Home Loan Bank of Atlanta. This purchase was a requirement from
the FHLB in order to secure borrowings from them in the future.

Deposits and Other
Borrowings

Our
primary source of funds for loans and investments is deposits. Deposits grew $7.2 million,
or 8%, since year-end 2002 for a total of $93,890,327 at June 30, 2003. The average rates
paid on interest-bearing deposits were 1.75% and 2.31% at June 30, 2003 and December 31,
2002, respectively. In pricing deposits, we consider our liquidity needs, the direction
and levels of interest rates, and local market conditions. We have seen a decrease in the
price of our deposits due to declining rates in the general economy and in the local
market.

In
April 2002, we secured an advance of $2,500,000 with the Federal Home Loan Bank (FHLB) at
a rate of 3.65%. The loan has a five year maturity with an early conversion option as of
April 2004 and each quarter thereafter. If the FHLB exercises its conversion option, the
advance will be converted to a floating rate or can be repaid without penalty. If the FHLB
does not exercise its option, the advance will continue at the original rate.

Shareholders Equity

The
Board of Directors declared a 5% stock dividend which was paid on January 29, 2003 to
shareholders of record on January 15, 2003. The number of shares issued was 52,090 with a
market value of $11.80 for a total decrease in retained earnings of $614,662. Cash paid in
lieu of stock for fractional shares totaled $2,593.

Since
the end of the second quarter, an employee has exercised stock options for which 1,200
shares of stock have been issued.

16

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Liquidity and Sources of
Capital

At
June 30, 2003, our liquid assets, consisting of cash and due from banks and Federal funds
sold, amounted to $10,436,913, representing 9.5% of total assets. Short-term investments
and securities equaled $32,737,027, or 29.9% of total assets. These securities provide a
secondary source of liquidity because they can be converted into cash in a timely manner.
Our ability to maintain and expand our deposit base and borrowing capabilities also serves
as a source of liquidity. For the six-month period ended June 30, 2003, total deposits
increased by $7,238,836 representing an increase of 8%, or 16% on an annualized basis.
Growth for the first half of the year is not necessarily indicative of expected growth for
the remainder of the year. We closely monitor and seek to maintain appropriate levels of
interest-earning assets and interest-bearing liabilities so that maturities of assets are
such that adequate funds are provided to meet customer withdrawals and loan demand.

We
plan to meet future cash needs through the liquidation of temporary investments,
maturities of loans and investment securities, and generation of deposits. In addition,
the bank maintains two unsecured lines of credit from correspondent banks, one in the
amount of $2,400,000 and another for $1,800,000. The bank is also a member of the Federal
Home Loan Bank (FHLB), from which additional applications may be made for borrowing
capabilities, if needed.

The
bank currently maintains a level of capitalization in excess of the minimum capital
requirements set by the regulatory agencies. Despite anticipated asset growth, we expect
capital ratios to continue to be adequate for the next two to three years. However, no
assurances can be given in this regard, as rapid growth, deterioration in loan quality,
and operating losses, or a combination of these factors, could change our capital position
in a relatively short period of time.

Below
is a table that reflects the leverage and risk-based regulatory capital ratios of the bank
at June 30, 2003:

|                      |  | Well-Capitalized | Minimum
|--------------------- |  | ---------------- | -------
|
|Tier 1 capital        |  |                  |        
|Total capital         |  |                  |        
|Tier 1 leverage ratio |  |                  |        

Off-Balance Sheet Risk

Through
the operations of our bank, we have made contractual commitments to extend credit in the
ordinary course of our business activities. These commitments are legally binding
agreements to lend money to our customers at predetermined interest rates for a specified
period of time. At June 30, 2003, we had issued commitments to extend credit of
$15,581,000 through various types of commercial lending arrangements and we had $515,000
in letters of credit issued. We evaluate each customers credit worthiness on a
case-by-case basis. The amount of collateral obtained, if deemed necessary by us upon
extension of credit, is based on our credit evaluation of the borrower. Collateral varies
but may include accounts receivable, inventory, property, plant and equipment, commercial
and residential real estate. We manage the credit risk on these commitments by subjecting
them to normal underwriting and risk management processes.

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Industry Developments

In
October 2001, the USA Patriot Act of 2001 was enacted in response to the terrorist attacks
in New York, Pennsylvania and Washington D.C. which occurred on September 11, 2001. The
Patriot Act is intended to strengthen U.S. law enforcements and the intelligence
communities abilities to work cohesively to combat terrorism on a variety of fronts.
The potential impact of the Patriot Act on financial institutions of all kinds is
significant and wide ranging. The Patriot Act contains sweeping anti-money laundering and
financial transparency laws and imposes various regulations, including standards for
verifying client identification at account opening, and rules to promote cooperation among
financial institutions, regulators and law enforcement entities in identifying parties
that may be involved in terrorism or money laundering.

From
time to time, various bills are introduced in the United States Congress with respect to
the regulation of financial institutions. Certain of these proposals, if adopted, could
significantly change the regulation of banks and the financial services industry. We
cannot predict whether any of these proposals will be adopted or, if adopted, how these
proposals would affect us.

# Item 3. Internal
Controls and Procedures

As
of the end of the period covered by this report, we carried out an evaluation, under the
supervision and with the participation of our management, including our Chief Executive
Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and
procedures as defined in Exchange Act Rule 13a-15(e). Based upon that evaluation, our
Chief Executive Officer and Chief Financial Officer have concluded that our current
disclosure controls and procedures are effective as of June 30, 2003.

The
design of any system of controls and procedures is based in part upon certain assumptions
about the likelihood of future events. There can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions, regardless of
how remote.

18

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# PART II  OTHER
INFORMATION

# Item 1. Legal Proceedings

Not Applicable

# Item 2. Changes in
Securities and Use of Proceeds

Not Applicable

# Item 3. Defaults Upon
Senior Securities

Not Applicable

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

The annual meeting of shareholders
was held on April 30, 2003 for which there were two matters submitted to a vote of
security holders. The following describes the matters voted upon at the annual meeting and
sets forth the number of votes cast for, against or withheld and the number of abstentions
as to each such matter (except as provided below, there were no broker non-votes).

The first matter submitted for a vote
of security holders was the election of certain directors. Our board of directors is
divided into three classes with each class to be as nearly equal in number as possible.
The three classes of directors have staggered terms, so that the terms of only
approximately one-third of the board members expire at each annual meeting of
shareholders. The current Class I directors are Margaret Holley-Taylor, Clark D. Moore,
M.D., Donald W. Thompson, and John B. Tomarchio, M.D. The current Class II directors are
Raymond D. Brown and Anthony E. Jones. The current Class III directors are Thomas H.
Lyles, James D. McNair, Russell D. Phelon, and Tommy B. Wessinger. The current terms of
the Class I directors expired at this years annual meeting held April 30, 2003
therefore leaving the Class I directors up for reelection for a three year term. The
number of votes for the election of the Class I directors was as follows: There were
903,543 votes for the election of Margaret Holley-Taylor, 788 votes withheld, and 0 votes
against Ms. Holley-Taylors election. There were 894,286 votes for the reelection of
Clark D. Moore, 10,045 votes withheld, and 0 votes against Dr. Moores reelection.
There were 903,543 votes for Donald W. Thompson, 788 votes withheld, and 0 votes against
Mr. Thompsons reelection. There were 902,965 votes for John B. Tomarchio, 1,366
votes withheld, and 0 votes against Dr.Tomarchios reelection. The terms of the Class
II directors will expire at the 2004 Annual Meeting of Shareholders, and the terms of the
Class III directors will expire at the 2005 Annual Meeting of Shareholders.

The second matter submitted for a
vote to security holders was the ratification of Elliott Davis, LLC as our independent
public accountants. There were 898,616 votes for the ratification of Elliott Davis, LLC,
5,022 votes withheld, and 693 votes against their ratification.

Both of the above matters were
approved and recorded in the Companys minute book from the annual meeting of
shareholders. There were no other matters voted on by the Companys shareholders at
our annual meeting held on April 30, 2003.

19

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# Item 5. Other Information

None.

# Item 6. Exhibits and
Report on Form 8-K

(a)  Exhibits:

Exhibit            Description

31     Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
         2002.

32     Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section
906 of the Sarbanes-Oxley Act of          2002. This exhibit is not filed for purposes
of Section 18 of the Securities Exchange Act of 1934 but is instead furnished          as provided
by applicable rules of the Securities and Exchange Commission.

(b)    Reports on Form 8-K 

The
following reports were filed on Form 8-K during the quarter ended June 30, 2003:

The
Company filed a Form 8-K on April 28, 2003 to disclose the issuance of a press release
announcing its financial results         for the first quarter ended March 31, 2003.

20

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# SIGNATURES

In
accordance with the requirements of the Exchange Act, the registrant caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

| |  | Peoples' Community Capital Corporation(Registrant)
| |  | --------------------------------------------------

|Date:  August 11, 2003 |  | By:   /s/  Tommy B. Wessinger
|---------------------- |  | -----------------------------
|                       |  | Tommy B. Wessinger           
|                       |  | Chief Executive Officer      

|Date:  August 11, 2003 |  | By:   /s/  Jean H. Covington                            
|---------------------- |  | --------------------------------------------------------
|                       |  | Jean H. Covington                                       
|                       |  | Principal Accounting Officer and Chief Financial Officer

21

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INDEX TO EXHIBITS

Exhibit Number   
        Description

| | 31 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.
| | -- | -------------------------------------------------------------------------------------------------------------------------------

| | 32 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002. This exhibit is not filed for purposes
of Section 18 of the Securities Exchange Act of 1934 but is instead furnished as provided
by applicable rules of the Securities and Exchange Commission.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

22