<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-KSB

              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                   For the Fiscal Year ended December 31, 2000

                         Commission File Number 0-25972

                           FIRST COMMUNITY CORPORATION
                 (Name of Small Business Issuer in its charter)

                    Tennessee                         62-1562541
        (State or other jurisdiction of            (I.R.S. Employer
         incorporation or organization)           Identification No.)

  809 West Main Street, Rogersville, Tennessee          37857
    (Address of principal executive offices)          (Zip Code)

                                 (423) 272-5800
                           (Issuer's telephone number)

         Securities registered under Section 12(g) of the Exchange Act:
                           Common Stock, no par value
                          Common Stock Purchase Rights
                                (Title of Class)

         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 [ ]

         Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB [X]

    The issuer's revenues for the fiscal year ending December 31, 2000 were:
                                   $10,993,056
<PAGE>   2

         The aggregate market value of the issuer's voting stock held by
non-affiliates, computed by reference to the price at which the stock was sold
as of February 28, 2001, is $27,046,723 for 1,545,527 shares, at an estimated
$17.50 per share.

         As of February 28, 2001, 1,961,706 shares of the issuer's Common Stock
were outstanding.

           Transitional Small Business Disclosure Format (check one):

                                YES [ ]   NO [X]

                       DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the Registrant's definitive proxy statement, which will be
filed with the Securities and Exchange Commission not later than March 28, 2001,
are incorporated by reference into Part III of this annual report on Form
10-KSB.
<PAGE>   3

                              CROSS REFERENCE INDEX
                                       TO
                                   FORM 10-KSB

         Certain information required by Form 10-KSB is incorporated by
reference from the annual report to shareholders as indicated below. Only that
information expressly incorporated by reference is deemed filed with the
Commission.

<TABLE>
<S>                                                                         <C>
                                PART I

ITEM 1.     DESCRIPTION OF BUSINESS.....................................    *
ITEM 2.     DESCRIPTION OF PROPERTY.....................................    *
ITEM 3.     LEGAL PROCEEDINGS ..........................................    *
ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF
            SECURITY HOLDERS ...........................................    None

                                PART II

ITEM 5.     MARKET FOR COMMON EQUITY AND RELATED
            STOCKHOLDER MATTERS ........................................    *
ITEM 6.     MANAGEMENT'S DISCUSSION AND ANALYSIS OR
            PLAN OF OPERATION ..........................................    *
ITEM 7.     FINANCIAL STATEMENTS........................................    *
ITEM 8.     CHANGES IN AND DISAGREEMENTS WITH
            ACCOUNTANTS ON ACCOUNTING AND
            FINANCIAL DISCLOSURE .......................................    None

                               PART III

ITEM 9.     DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
            AND CONTROL PERSONS; COMPLIANCE WITH
            SECTION 16(a) OF THE EXCHANGE ACT ..........................    **
ITEM 10.    EXECUTIVE COMPENSATION .....................................    **
ITEM 11.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
            OWNERS AND MANAGEMENT ......................................    **
ITEM 12.    CERTAIN RELATIONSHIPS AND RELATED
            TRANSACTIONS ...............................................    **
ITEM 13.    EXHIBITS AND REPORTS ON FORM 8-K ...........................    *
</TABLE>

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

*This information is included in this annual report on Form 10-KSB and is not
incorporated by reference from the Company's definitive proxy statement.

** The material required by Items 9 through 12 is incorporated by reference from
the Company's definitive proxy statement pursuant to Instruction E(3) of Form
10-KSB. The Company will file a definitive proxy statement with the Securities
and Exchange Commission not later than March 28, 2001.

                        CAUTIONARY STATEMENT CONCERNING
<PAGE>   4

                           FORWARD-LOOKING INFORMATION

         This Annual Report on Form 10-KSB of First Community Corporation, a
Tennessee corporation (the "Company") contains or incorporates by reference
certain "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which are
intended to be covered by the "safe harbors" created thereby. Those statements
include, but may not be limited to, the discussions of the Company's
expectations concerning its future profitability, operating performance, growth
strategy and its assumptions regarding other matters. Also, when any of the
words "believes", "expects", "anticipates", "intends", "estimates", "plans", or
similar terms or expressions, are used in this Annual Report on Form 10-KSB,
forward-looking statements are being made.

         You should be aware that, while the Company believes the expectations
reflected in those forward-looking statements are reasonable, they are
inherently subject to risks and uncertainties which could cause the Company's
future results and stockholder values to differ materially from the Company's
expectations. These factors are disclosed in "Management's Discussion and
Analysis of Financial Condition and Results of Operation" set forth herein.
Because of these factors, there can be no assurance that the forward-looking
statements included or incorporated by reference herein will prove to be
accurate. In light of the significant uncertainties inherent in the
forward-looking statements included or incorporated by reference herein, you
should not regard the inclusion of such information as a representation by the
Company or any other person that the objectives and plans of the Company will be
achieved. In addition, the Company does not intend to, and is not obligated to,
update these forward-looking statements after the date of this Annual Report on
Form 10-KSB, even if new information, future events or other circumstances have
made them incorrect or misleading as of any future date.

PART I

ITEM 1.  DESCRIPTION OF BUSINESS

General

         First Community Corporation (the "Company" or "FCC") is a registered
bank holding company which was incorporated under Tennessee law in 1994. The
Company's activities are conducted through its wholly-owned subsidiary, First
Community Bank of East Tennessee (the "Bank"), which began business in 1993 and
was acquired by the Company in 1994. The Bank is a Tennessee state bank, which
was organized in late 1992 shortly after the last locally-owned bank
headquartered in Hawkins County was acquired. From the time of its opening in
April, 1993 until December 31, 2000, the Bank has grown to total assets of more
than $123,000,000.

         The Bank's primary trade area is Hawkins County, Tennessee, which had a
population of 44,565 according to the 1990 Census. At the end of 1996 (the most
recent information available) the population was 48,388.

         During 2000, the Bank opened a branch in Greeneville (Greene County),
Tennessee. The population of Greeneville is approximately 14,000.

         Operating as a full service commercial bank, the Bank provides a range
of customary services which include checking, NOW accounts, money market and
savings accounts, certificates of deposit, individual retirement accounts, money
transfers, and safe deposit facilities. Lending services include loans for
business, agriculture, real estate, personal use, home improvements, and
automobiles. In addition, the Bank offers various uninsured, non-deposit
products including annuities and mutual funds, brokerage services, and secondary
market mortgage processing services. The Bank is not authorized to provide trust
services.

         The Bank considers its primary market for loans and deposits to be
individuals, small-to-medium size businesses and professionals in Hawkins
County, Tennessee. The Bank is actively soliciting business in this target
market and considers the potential growth opportunities to be favorable. No
material portion of the Bank's deposits have been obtained from any single
person or group of persons.
<PAGE>   5

         The Bank is subject to the regulatory authority of the Department of
Financial Institutions of the State of Tennessee and the Federal Deposit
Insurance Corporation (the "FDIC") which currently insures the depositors of
each member bank to a maximum of $100,000 per depositor. For this protection,
each bank pays a quarterly statutory assessment and is subject to the rules and
regulations of the FDIC.

         The Bank has three full-service offices in two communities in Hawkins
County (two in Rogersville and one in Church Hill) and one full-service office
in Greeneville, Tennessee. A full-service office in Rogersville was completed in
August, 1998. The additional office increased customer convenience and product
marketability in the east Rogersville area. The Church Hill office was opened in
December of 1994, and provides the Bank with a state-of- the-art banking
facility in the center of Church Hill's commercial district. Management of the
Bank was able to secure access for this branch onto U.S. Highway 11-W, which
required several governmental approvals, and such access affords the Church Hill
branch with exceptional customer convenience. The Church Hill branch positions
the Company and the Bank to serve the densely populated east Hawkins County and
Kingsport markets with a full range of deposit and loan services.

         During 2000, First Community Bank (FCB) and a group of individuals
(organizers) from Greene County opened a full-service branch in Greeneville. The
organizers have applied for a state bank charter and, upon receiving approvals
from regulatory authorities, plan to begin operations as a state-chartered bank
in 2001.

         The organizers have an agreement with FCB to purchase the assets and
liabilities of FCB's branch when the new bank charter is approved. The purchase
price will be based on FCB's book value causing FCB to incur no gain or loss on
the sale of the branch.

         The Bank had approximately 50 full-time equivalent employees (excluding
maintenance employees) as of December 31, 2000. The Company has no employees who
are not also employed by the Bank. Although the Bank has been in existence only
seven years, the Bank believes that its staff possesses a high degree of
experience and expertise. Coming primarily from other East Tennessee banking
institutions, staff members have banking experience ranging from one to
thirty-five years.

Competition

         Competition for consumer demand and savings deposits is quite intense
in Hawkins County. Such competition is heightened by the fact that Tennessee law
now permits any bank or savings association located in Tennessee to branch in
any county in Tennessee. The Bank currently competes in the Hawkins County area
with five commercial banks and two savings associations. The Bank also competes
generally with insurance companies, credit unions, and other financial
institutions, and institutions which have expanded into the quasi-financial
market, including some institutions that are much larger than the Bank. Many of
the institutions with which the Bank competes have been located in Hawkins
County for many years and have much greater resources, deposit strength and
expertise than the Bank and they offer services which the Bank does not provide
to its customers.

Loans

         Various types of secured and unsecured commercial, consumer and real
estate loans are offered by the Bank. The Bank's current policy is to make loans
primarily to borrowers who maintain depository relationships with the Bank or
reside or work in the Bank's market areas. Real estate loans usually are made
only when such loans are secured by real property located in Hawkins or Sullivan
Counties. In addition, the Bank purchases sales finance contracts for motor
vehicles.

         The Bank provides each lending officer with written loan guidelines.
Lending authority is delegated by the Board of Directors to loan officers, each
of whom has limited authority to extend secured and unsecured credit. Any credit
in excess of $150,000 must have the approval of the Loan Committee of the Board
of Directors (the "Loan Committee"), which consists of both management and
non-management directors of the Bank. All unsecured loans in excess of $10,000
must receive, prior to the issuance of any loan commitment, the approval of a
senior lending officer.
<PAGE>   6

Loan Review

         The Bank continually reviews its loan portfolio to determine
deficiencies and the corrective actions to be taken. The review process is
handled internally independent of loan origination responsibilities. A minimum
of 30% of total loans is reviewed annually and 100% of borrowers with aggregate
indebtedness in excess of $100,000. Past due loans are reviewed by an internal
loan officer committee, and a summary report of such loans is reviewed monthly
by the Board of Directors. A report of loan review findings is presented
quarterly to the Bank's Board of Directors.

Investment Policy

         The Bank's general investment portfolio policy is to maximize income
consistent with liquidity, asset quality and regulatory constraints and to
maintain assets which can be pledged to secure government deposits. This policy
is reviewed from time to time by both the Bank's Investment Committee and the
Board of Directors. Individual transactions, portfolio composition and
performance are reviewed and approved quarterly by the Board of Directors or a
committee thereof. The President of the Bank implements the policy and reports
to the full Board of Directors on a monthly basis information as to maturities,
sales, purchases, resultant gains or losses, average maturity, federal taxable
equivalent yields and appreciation or depreciation by investment category.

Monetary Policies

         The result of operations of the Bank and the Company are affected by
credit policies of monetary authorities, particularly the Federal Reserve Board.
The instruments of monetary policy employed by the Federal Reserve Board include
open market operations in U.S. government securities, changes in the discount
rate on bank borrowings and changes in reserve requirements against bank
deposits. In view of changing conditions in the national economy and in the
money markets, as well as the effects of actions by monetary and fiscal
authorities, including the Federal Reserve Board, no prediction can be made as
to possible future changes in interest rates, deposit levels, loan demand or the
effect of such matters on the business and earnings of the Company.

Personnel

         At December 31, 2000, the Company had approximately 50 full-time
equivalent employees. The Company is not a party to any collective bargaining
agreement and believes that its employee relations generally are good and
provides for them several employee benefit programs, including a 401(k) plan,
group life and health insurance, an annual bonus program, paid vacations, and
sick leave.

Supervision and Regulation

         General. The Company and the Bank are subject to extensive regulation
under state and federal statutes and regulations. The discussion in this
section, which briefly summarizes certain of such statutes, does not purport to
be complete, and is qualified in its entirety by reference to such statutes.
Other state and federal legislation and regulations directly and indirectly
affecting banks and other financial institutions likely are to be enacted or
implemented in the future; however, such legislation and regulations and their
effect on the business of the Company and the Bank cannot be predicted.

First Community Corporation

         The Company is a bank holding company subject to the supervision of the
Board of Governors of the Federal Reserve System (the "Federal Reserve") under
the Bank Holding Company Act of 1956, as amended. As a bank holding company, the
Company is required to file financial information with the Federal Reserve
periodically and is subject to periodic examination by the Federal Reserve.
<PAGE>   7

First Community Bank of East Tennessee

         The Bank is incorporated under the banking laws of the State of
Tennessee, and as such, is subject to provisions of the Tennessee Banking Act
and the supervision of and regular examination by the Tennessee Department of
Financial Institutions (the "Department"). The Bank is a member of the FDIC and,
therefore, also is subject to the provisions of the Federal Deposit Insurance
Act and to supervision and examination by the FDIC.

         Capital. The Federal Reserve Board and the FDIC have adopted final
risk-based capital guidelines for bank holding companies. The minimum guidelines
for the ratio of total capital ("Total Capital") to risk weighted assets
(including certain off balance sheet activities, such as standby letters of
credit) is 8.00%. At least half of the Total Capital must be composed of "Tier 1
or core capital," which consists of common stockholders' equity, minority
interests in the equity accounts of consolidated subsidiaries non-cumulative
perpetual preferred stock and a limited amount of cumulative perpetual preferred
stock, less goodwill ("Tier 1 Capital"). The remainder, Tier 2 Capital, may
consist of subordinated debt, other preferred stock and a limited amount of loan
loss reserves. At December 31, 2000, the Company's subsidiary bank's risk-based
Tier 1 Capital and risk-based Total Capital ratios were 11.64% and 12.73%,
respectively.

         Failure to meet FDIC capital requirements can subject an FDIC-insured
state bank to a variety of enforcement remedies, including issuance of a capital
directive, termination of deposit insurance and a prohibition on the taking of
brokered deposits. Substantial additional restrictions can be imposed under the
"prompt corrective action" regulations, as described below.

         Payment of Dividends. The Company is a legal entity separate and
distinct from the Bank. The principal source of the Company's revenues, however,
is from dividends declared by the Bank. Under Tennessee law, the Bank can only
pay dividends out of its undivided profits, which at December 31, 2000 were
approximately $1,800,000. This amount will be increased by the Bank's net
earnings and decreased by any losses. Any transfer from the Bank's surplus
account to undivided profits requires the prior approval of the Commissioner of
the Department. The Bank's ability to pay dividends also may depend on its
ability to meet minimum capital levels established from time to time by FDIC.
Under such regulations, FDIC-insured state banks are prohibited from paying
dividends, making other distributions or paying any management fee to a parent
if, after such payment, the Bank would fail to have a risk-based Tier 1 Capital
ratio of 4%, a risk-based Total Capital ratio of 8% and a Tier 1 leverage
capital ratio of 4%.

         Under Tennessee law, the Company may pay common stock dividends if,
after giving effect to the dividends, the Company can pay its debts as they
become due in the ordinary course of business and the Company's total assets
exceed its total liabilities. The payment of dividends by the Company also may
be affected or limited by certain factors, such as the requirements to maintain
adequate capital above regulatory guidelines. In addition, if, in the opinion of
the applicable regulatory authority, a bank holding company or a bank under its
jurisdiction is engaged in or is about to engage in an unsafe or unsound
practice (which, depending on the financial condition of the bank, could include
the payment of dividends), such authority may take various supervisory actions
to prevent such action, including a cease and desist order prohibiting such
practice. In 1998, the Company declared dividends to its shareholders in the
amount of $.28 per share.

         The Company's Support of the Bank. Under Federal Reserve Board policy,
the Company is expected to act as a source of financial strength and to commit
resources to the Bank. Such support may be required at times when, absent such
Federal Reserve Board policy, the Company may not be inclined to provide it.

         Under the Financial Institutions Reform, Recovery, and Enforcement Act
of 1989 ("FIRREA"), a depository institution insured by the FDIC can be held
liable for any loss incurred by, or reasonably expected to be incurred by, the
FDIC in connection with (i) the default of a commonly controlled FDIC-insured
depository institution or (ii) any assistance provided by the FDIC to any
commonly controlled FDIC-insured depository institution "in danger of default."
"Default" is defined generally as the appointment of a conservator or receiver
and "in danger of default" is defined generally as the existence of certain
conditions indicating that a default is likely to occur in the absence of
regulatory assistance.
<PAGE>   8

         Any capital loans by a bank holding company to any of its subsidiary
banks are subordinate in right of payment to deposits and to certain other
indebtedness of such subsidiary banks. In the event of a bank holding company's
bankruptcy, any commitment by the bank holding company to a federal bank
regulatory agency to maintain the capital of a subsidiary bank must be assumed
by the bankruptcy trustee and entitled to a priority of payment over certain
other creditors.

         Prompt Corrective Action. The Federal Deposit Insurance Corporation
Improvement Act of 1991 ("FDICIA") requires the Federal banking regulators to
assign to each insured institution one of five capital categories ("well
capitalized", "adequately capitalized" or one of three under-capitalized
categories) and to take progressively more restrictive regulatory actions
depending upon the assigned category. Under the "prompt corrective action"
regulations adopted pursuant to FDICIA, in order to be considered "adequately
capitalized", national banks must have a risk-based Tier 1 Capital ratio of at
least 4%, a risk-based Total Capital ratio of 8% and a Tier 1 leveraged capital
ratio of at least 4%. Well-capitalized institutions are those which have a
risk-based Tier 1 Capital ratio above 6%, a risk-based Total Capital ratio above
10% and a Tier 1 leveraged capital ratio above 5%, and which are not subject to
a written agreement, order or capital directive to maintain capital at a
specific level. As of December 31, 2000, the Bank was considered a "well
capitalized" institution under these definitions.

         All institutions, regardless of their capital levels, are restricted
from making any capital distribution or paying any management fees that would
cause the institution to fail to satisfy the minimum levels to be considered
adequately capitalized. An institution that fails to meet the minimum level for
any relevant capital measure (an "undercapitalized institution") is: (i) subject
to increased monitoring by the appropriate federal banking regulator, (ii)
required to submit an acceptable capital restoration plan within 45 days; (iii)
subject to asset growth limits; and (iv) required to obtain prior regulatory
approval for acquisitions, branching and new lines of business. The capital
restoration plan must include a guarantee by the institution's holding company
that the institution will comply with the plan until it has been adequately
capitalized on average for four consecutive quarters. Pursuant to the guarantee,
the institution's holding company would be liable up to the lesser of 5% of the
institution's total assets or the amount necessary to bring the institution into
capital compliance as of the date it failed to comply with its capital
restoration plan. If the controlling bank holding company fails to fulfill its
obligations under the guarantee and files (or has filed against it) a petition
under the Federal Bankruptcy Code, the appropriate federal banking regulator
could have a claim as a general creditor of the bank holding company, and, if
the guarantee were deemed to be a commitment to maintain capital under the
Federal Bankruptcy Code, the claim would be entitled to priority in such
bankruptcy proceeding over third-party creditors and shareholders of the bank
holding company.

         The bank regulatory agencies have discretionary authority to reclassify
well-capitalized institutions as adequately capitalized or to impose on
adequately capitalized institutions requirements or actions specified for
undercapitalized institutions if the agency determines after notice and an
opportunity for hearing that the institution is in an unsafe or unsound
condition or is engaging in an unsafe or unsound practice, which can consist of
the receipt of an unsatisfactory examination rating if the deficiencies cited
are not corrected. A significantly undercapitalized institution, as well as any
undercapitalized institution that did not submit an acceptable capital
restoration plan, may be subject to regulatory demands for recapitalization,
broader applications of restrictions on transactions with affiliates,
limitations on interest rates paid on deposits, asset growth and other
activities, possible placement of directors and officers, and restrictions on
capital distributions by any bank holding company controlling the institution.
Any company controlling the institution could also be required to divest the
institution or the institution could be required to divest subsidiaries. The
senior executive officers of a significantly undercapitalized institution may
not receive bonuses or increases in compensation without prior approval and the
institution is prohibited from making payments of principal or interest on its
subordinated debt. If an institution's ratio of tangible capital to total assets
falls below a level established by the appropriate federal banking regulator
(the "Critical capital level"), which may not be less than 2% nor more than 65%
of the minimum tangible capital level otherwise required, the institution will
be subject to conservatorship or receivership within 90 days unless periodic
determinations are made that forbearance from such action would better protect
the deposit insurance fund. Unless appropriate findings and certifications are
made by the appropriate federal bank regulatory agencies, a critically
undercapitalized institution must be placed in receivership if it remains
critically undercapitalized on average during the calendar quarter beginning 270
days after the date it became critically undercapitalized.
<PAGE>   9

         Acquisition and Expansion. The Bank Holding Company Act requires any
bank holding company to obtain the prior approval of the Federal Reserve Board
before it may acquire substantially all the assets of any bank, or ownership or
control of any voting shares of any bank, if, after acquiring such shares, it
would own or control directly or indirectly, more then 5% of the voting shares
of such bank. Effective September 29, 1995, the Tennessee Bank Structure Act of
1974 was amended to, among other things, prohibit (subject to certain
exceptions) a bank holding company from acquiring a bank for which the home
state is Tennessee if, upon consummation, the company would directly or
indirectly control 30% or more of the total deposits in insured depository
institutions in Tennessee. As of December 31, 2000, the Company estimates it
held less than 1% of such deposits. Subject to certain exceptions, the Tennessee
Bank Structure Act prohibits a bank holding company from acquiring a bank in
Tennessee which has been in operation for less than five years. Tennessee banks
may open additional branches in any county in the state.

         The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
(the "IBBEA") authorizes interstate acquisitions of banks and bank holding
companies without geographic limitation beginning one year after enactment. In
addition, beginning June 1, 1997, a bank may merge with a bank in another state
as long as neither of the states has opted out of interstate branching between
the date of enactment of the IBBEA and May 31, 1997. The IBBEA further provides
that states may enact laws permitting interstate merger transactions prior to
June 1, 1997. A bank may establish and operate a de novo branch in a state in
which the bank does not maintain a branch if that state expressly permits de
novo branching. Once a bank has established branches in a state through an
interstate merger transaction, the bank may establish and acquire additional
branches at any location in the state where any bank involved in the interstate
merger transaction could have established or acquired branches under applicable
federal or state law. A bank that has established a branch in a state through de
novo branching may establish and acquire additional branches in such state in
the same manner and to the same extent as a bank having a branch in such state
as a result of an interstate merger. If a state opts out of interstate branching
within the specified time period, no bank in any other state may establish a
branch in the opting out of state, whether through an acquisition or de novo.
Tennessee law allows banks and bank holding companies in any state to acquire
banks and bank holding companies in Tennessee provided that the state in which
such acquiror is headquartered also permits Tennessee banks and bank holding
companies to acquire banks and bank holding companies in that state.
Acquisitions of banks or bank holding companies in Tennessee require the
approval of the Commissioner of Financial Institutions.

         The Bank Holding Company Act also prohibits a bank holding company,
with certain exceptions, from acquiring more than 5% of the voting shares of any
company that is not a bank and from engaging in any business other than banking
or managing or controlling banks. The Federal Reserve Board is authorized to
approve ownership of shares by a bank holding company in any company, the
activities of which the Federal Reserve Board has determined to be so closely
related to banking or to managing or controlling banks as to be a proper
incident thereto. Certain activities have been found to be closely related to
banking by Federal Reserve Board regulations, including operating a trust
company, mortgage company, finance company or factoring company; performing data
processing operations; providing investment advice; and engaging in certain
kinds of credit-related insurance activities.

         FDIC Insurance Assessments; DIFA. The FDIC reduced the insurance
premiums it charges on bank deposits insured by the Bank Insurance Fund ("BIF")
to the statutory minimum of $2,000.00 for "well capitalized" banks, effective
January 1, 1996. Premiums related to deposits assessed by the Savings
Association Insurance Fund ("SAIF"), including savings association deposits
acquired by banks, continued to be assessed at a rate of between 23 cents and 31
cents per $100.00 of deposits. On September 30, 1996, the Deposit Insurance
Funds Act of 1996 ("DIFA") was enacted and signed into law. DIFA provided for a
special assessment to recapitalize the SAIF to bring the SAIF up to statutory
required levels. The assessment imposed a one-time fee to banks that own
previously acquired thrift deposits of $.526 per $100 of thrift deposits they
held at March 31, 1995. This assessment did not apply to the Company. DIFA
further provides for assessments to be imposed on insured depository
institutions with respect to deposits insured by the BIF (in addition to
assessments currently imposed on depository institutions with respect to
SAIF-insured deposits) to pay for the cost of Financing Corporation ("FICO")
bonds. All banks were assessed to pay the interest due on FICO bonds beginning
January 1, 1997. The Company considers the cost to the Company to be immaterial.

         Under the FDICIA, insurance of deposits may be terminated by the FDIC
upon a finding that the institution has engaged in unsafe and unsound practices,
is in an unsafe or unsound condition to continue operations or has violated any
applicable law, regulation, rule, order or condition imposed by a federal bank
regulatory agency.
<PAGE>   10

         Certain Transactions by the Company with its Affiliates. There also are
various legal restrictions on the extent to which the Company and any nonbank
subsidiary can borrow or otherwise obtain credit from its bank subsidiaries. An
insured bank and its subsidiaries are limited in engaging in "covered
transactions" with its nonbank or nonsavings bank affiliates to the following
amounts: (i) in the case of any such affiliate, the aggregate amount of covered
transactions of the insured bank and its subsidiaries will not exceed 10% of the
capital stock and surplus of the insured bank; and (ii) in the case of all
affiliates, the aggregate amount of covered transactions of the insured bank and
its subsidiaries will not exceed 20% of the capital stock and surplus of the
Bank. "Covered transactions" are defined by statute to include a loan or
extension of credit, as well as purchase of securities issued by an affiliate, a
purchase of assets (unless otherwise exempted by the Federal Reserve Board), the
acceptance of securities issued by the affiliate as a collateral for a loan and
the issuance of a guarantee, acceptance, or letter of credit on behalf of an
affiliate. Further, a bank holding company and its subsidiaries are prohibited
from engaging in certain tie-in arrangements in connection with any extension of
credit, lease or sale of property or furnishing of services.

         Recent Banking Legislation. In addition to the matters discussed above,
FDICIA made other extensive changes to the federal banking laws.

         Standards for Safety and Soundness. FDICIA requires the federal bank
regulatory agencies to prescribe, by regulation, standards for all insured
depository institutions and depository institution holding companies relating
to: (i) internal controls, information systems and audit systems; (ii) loan
documentation; (iii) credit underwriting; (iv) interest rate risk exposure; (v)
asset growth; and (vi) compensation, fees and benefits. The compensation
standards must prohibit employment contracts, compensation or benefit
arrangements, stock option plans, fee arrangements or other compensatory
arrangements that would provide excessive compensation, fees or benefits or
could lead to material financial loss, but (subject to certain exceptions) may
not prescribe specific compensation levels or ranges for directors, officers or
employees. In addition, the federal banking regulatory agencies would be
required to prescribe by regulation standards specifying: (i) maximum classified
assets to capital ratios; (ii) minimum earnings sufficient to absorb losses
without impairing capital; and (iii) to the extent feasible, a minimum ratio of
market value to book value for publicly- traded shares of depository
institutions and depository institution holding companies.

         Brokered Deposits. FDICIA amends the Federal Deposit Insurance Act to
prohibit insured depository institutions that are not well-capitalized from
accepting brokered deposits unless a waiver has been obtained from the FDIC.
Deposit brokers will be required to register with FDIC.

         Consumer Protection Provisions. FDICIA seeks to encourage enforcement
of existing consumer protection laws and enacts new consumer-oriented provisions
including a requirement of notice to regulators and customers for any proposed
branch closing and provisions intended to encourage the offering of "lifeline"
banking accounts and lending in distressed communities. FDICIA also requires
depository institutions to make additional disclosures to depositors with
respect to the rate of interest and the terms of their deposit accounts.

         Miscellaneous. FDICIA extends the deadline for the mandatory use of
state-certified and state-licensed appraisers and authorizes acquisitions of
banks by savings associations on the same terms as savings associations may be
acquired by banks. With certain exceptions, state-chartered banks are limited to
the activities of national banks. Within nine months of the date of enactment of
FDICIA, the federal bank regulatory agencies are required to adopt uniform
regulations for real estate mortgage and construction loans. The federal bank
regulatory agencies are required to biannually review risk-based capital
standards to ensure that they adequately address interest rate risk,
concentration of credit risk and risks from non-traditional activities.

         FDICIA also made extensive changes in the applicable rules regarding
audit, examinations and accounting. FDICIA generally requires annual on-site
full-scope examinations by each bank's primary federal regulator. FDICIA also
imposes new responsibilities on management, the independent audit committee and
outside accountants to develop, approve or attest to reports regarding the
effectiveness of internal controls, legal compliance and off-balance-sheet
liabilities and assets.

         On November 12, 1999, the President signed into law comprehensive
legislation that modernizes the financial services industry for the first time
in decades. The Gramm-Leach-Bliley Act ("GLBA") permits bank holding
<PAGE>   11

companies to conduct essentially unlimited securities and insurance activities,
in addition to other activities determined by the Federal Reserve to be related
to financial services. As a result of the GLBA, the Registrant may underwrite
and sell securities and insurance. It may acquire, or be acquired by, brokerage
firms and insurance underwriters. The Registrant does not anticipate significant
changes in its products or services as a result of the GLBA.

         Interest Rate Limitations. The maximum permissible rates of interest on
most commercial and consumer loans made by the Bank are governed by Tennessee's
general usury law. Certain other usury laws affect limited classes of loans, but
the laws referenced above are by far the most significant. Tennessee's general
usury law authorizes a floating rate of 4% per annum over a statutorily defined
base rate and also allows certain loan charges, generally on a more liberal
basis than does the general usury law.

         Effect of Government Policies. The earnings and business of the Company
are and will be affected by the policies of various regulatory authorities of
the United States, especially by the Federal Reserve Board. The Federal Reserve
Board, among other functions, regulates the supply of credit and deals with
general economic conditions within the United States. The instruments of
monetary policy employed by the Federal Reserve Board for these purposes
influence in various ways the overall level of investments, loans, other
extensions of credit and deposits, and the interest rates paid on liabilities
and received on assets.

ITEM 2.  DESCRIPTION OF PROPERTY

         The Company's main office is located at 809 West Main Street in
Rogersville in an 8,400 square foot one-story brick building owned by the
Company with an additional drive-through facility on property adjacent to the
main office. In addition, the Bank owns and operates a 4,800 square foot branch
facility in Church Hill, Tennessee. The Bank developed an acre of commercial
property adjoining the Church Hill branch and extra property was sold by the
Bank in February 1998.

         During 1997, property with an existing structure was purchased in East
Rogersville. The building was remodeled to house a new operations center which
relocated from the Main Office in November, 1997. Construction was completed in
August, 1998, on a third branch office consisting of a 3,500 square foot
building with a four lane drive-through facility on East Main Street in
Rogersville. The Bank owns additional properties on West Main Street in
Rogersville that could be used for future expansion. The Bank owns an ATM at
each of the Rogersville and Church Hill locations. During 2000, the Bank opened
a branch in Greeneville, Tennessee. The branch is located in a 2,600 square foot
modular building and includes drive-through facilities and an ATM.

ITEM 3.  LEGAL PROCEEDINGS

         From time to time the Bank is named as a defendant in suits arising
from the ordinary conduct of its affairs. In the opinion of management, the
ultimate outcome of the litigation to which the Bank is a party as of the date
of this Form 10-KSB will not adversely affect its financial condition.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS

         No matter was submitted to a vote of security holders during the fourth
quarter of the Company's fiscal year ending December 31, 2000.

PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

The Company's common stock is not traded on an exchange nor is there a known
active trading market. Based solely on information made available to the Company
from a limited number of buyers and sellers, management of the Company believes
that the following table sets forth the high and low sales prices for the
Company's common stock during 2000 and 1999:
<PAGE>   12

<TABLE>
<CAPTION>
                                                              High         Low
                                                             ------       -----
<S>                                                          <C>          <C>
2000

    First quarter.....................................       $19.00       19.00
    Second quarter....................................        19.00       19.00
    Third quarter.....................................        19.00       19.00
    Fourth quarter....................................        19.00       17.50

1999

    First quarter.....................................       $18.00       16.00
    Second quarter....................................        18.00       18.00
    Third quarter.....................................        19.00       18.00
    Fourth quarter....................................        19.00       19.00
</TABLE>

         The most recent trade of the Company's common stock known to the
Company occurred on December 28, 2000 at a price of $17.50 per share (no stock
has been offered since that date). These sales are isolated transactions and,
given the small volume of trading in the Company's stock, may not be indicative
of its present value. As of December 31, 2000, there were approximately 876
holders of record of the Company's common stock. The Company's dividend policy
is designed to retain sufficient amounts for healthy financial ratios,
considering anticipated asset growth and other prudent financial management
principles. The Company declared dividends of $.28 per share in 2000, $.26 per
share in 1999, and $.25 per share in 1998.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

GENERAL

         The purpose of this discussion is to provide readers with information
relevant to understanding and assessing the financial condition and results of
operations of First Community Corporation (the Company). The Company's business
activity is currently limited to holding the stock of its wholly-owned
subsidiary, First Community Bank. Accordingly, the discussion that follows
relates primarily to the financial condition and results of operations of First
Community Bank. This discussion should be read in conjunction with the
consolidated financial statements and accompanying notes.

         First Community Bank is a locally owned independent bank with its
primary market in Hawkins County, Tennessee and the adjoining counties. The Bank
provides a wide range of financial services including commercial and consumer
loans, residential mortgage loans, a wide range of deposit products, letters of
credit and safe deposit facilities.

FINANCIAL CONDITION

         At December 31, 2000 earning assets were $114 million, compared to $104
million at December 31, 1999. This increase is due to a $8 million, or 8.5%,
increase in loans.

         Economic growth in the local market has enabled the Bank to achieve
continued loan growth. Real estate lending increased $18 million (31%). Total
loans for December 31, 2000 were 82.3% of total assets compared to 80.2% of
assets for December 31, 1999. Management attributes the increasing trend in loan
composition to their focus on shifting asset mix to improve profitability in
combination with strong loan demand.

         FUNDING SOURCES. Management relies upon local area deposits as a stable
source of funding. The Bank had total deposits of $95.7 million as of December
31, 2000, compared to $86.7 million of December 31, 1999. Average 2000 deposits
increased 8.8%, or $7.1 million to $88.7 million from $81.4 million in 1999.
Certificates of deposit and interest-bearing demand accounts accounted for most
of the deposit growth in 2000, 1999 and 1998. During 200 and 1999, to fund loan
growth, management increased marketing efforts and offered attractive rates for
certificates of
<PAGE>   13

deposit. Average 2000 certificates of deposit increased 10.4%, or $4.9 million
to $52.4 million from $47.4 million in 1999. Average certificate of deposit
growth for 1999 was $4.8 million (11.3%). The Bank has no brokered deposits.

         The deposit base is supplemented with alternative funding sources such
as Federal funds purchased, securities sold under agreement to repurchase and
Federal Home Loan Bank (FHLB) advances to fund loan growth. The average balances
of Federal funds purchased, securities sold under agreement to repurchase and
FHLB advances amounted to $16.7 million, $13.4 million and $8.4 million for the
years ended December 31, 2000, 1999, and 1998, respectively. Due to the highly
competitive local market for deposits, management anticipates the continued use
of alternative funding sources to partially fund loans growth.

         NONPERFORMING ASSETS AND RISK ELEMENTS. Nonperforming assets consist of
(1) nonaccrual loans where the recognition of interest income was discontinued,
(2) loans which have been restructured to provide for a reduction or deferral of
interest or principal because the borrower's financial condition deteriorated,
and (3) foreclosed and repossessed assets. Nonperforming assets at December 31,
2000 were .09% ($96,000) of total loans and foreclosed and repossessed assets,
up from $77,000 at December 31, 1999.

         Past due loans are loans contractually past due 90 days or more as to
interest or principal payments, but have not yet been placed on nonaccrual
status. Past due loans were $164,000 or .16% of total loans at December 31,
2000, as compared to $245,000 or .26% of total loans at December 31, 1999.

         Management's policy is to maintain the allowance for loan losses at a
level sufficient to absorb all estimated losses inherent in the loan portfolio.
The allowance for loan losses was 1.00% of outstanding loans at December 31,
2000, compared to 1.01% at December 31, 1999.

         CAPITAL. Management believes that a strong capital position is vital to
continued profitability of the Company because it promotes depositor and
investor confidence and provides a solid foundation for the future growth of the
organization. Shareholders' equity was $9.2 million or 7.45% of total assets at
December 31, 2000, and $9.5 million or 8.14% of total assets at December 31,
1999.

         During 2000, the Company purchased and retired common stock totaling
$1.1 million, including $803,000 of stock owned by the former president of the
Company.

         More volatility has been introduced into equity balances with the
approval of Financial Accounting Standard 115, which specifies that investments
which are categorized as available for sale must be periodically marked to
market, with the adjustment included in equity, net of applicable taxes. To
provide maximum flexibility in the management of investment securities, the Bank
elected to categorize all securities as available for sale. Consequently, the
Bank's equity balances are subject to a relatively greater incidence of
volatility. To record the fair value of securities held for sale, shareholders'
equity was increased by $17,000 at December 31, 2000 compared to a decrease of
$64,000 as of December 31, 1999 and an increase of $14,000 as of December 31,
1998.

         First Community Bank's earnings performance over the past two years
allowed the board of directors to declare a dividend of $.28 per share in 2000,
$.26 per share in 1999 and $.25 per share in 1998. Additionally, the board of
directors develops and reviews the capital goals of First Community Corporation
and the Bank. The Company's dividend policy is designed to retain sufficient
amounts for healthy financial ratios, considering anticipated asset growth and
other prudent financial management principles.

         Capital adequacy in the banking industry is evaluated primarily by the
use of ratios which measure capital against assets that are weighted based on
risk characteristics. These "risk-based" capital ratios are presented in Note 12
to the consolidated financial statements. First Community Bank's capital ratios
substantially exceed regulatory minimums and compare favorably to industry
averages.
<PAGE>   14

LIQUIDITY AND INTEREST RATE RISK

         Liquidity management involves planning to meet depositors' and
borrowers' cash flow requirements at a reasonable cost, as well as developing
contingency plans to meet unanticipated funding needs or a loss of funding
sources. Liquidity is immediately available from three major sources: (1) cash
on hand and on deposit at other banks, (2) the outstanding balance of federal
funds sold and (3) the available for sale securities portfolio. In addition, the
Bank has federal fund lines of credit totaling $14 million established with
their correspondent banks and is a member of the Federal Home Loan Bank (FHLB).
As a member of the FHLB, both short and long term advances can be obtained based
primarily upon the level of mortgage financing in the Bank's loan portfolio. The
Bank's current borrowing capacity is approximately $7 million at the FHLB.

         Interest rate risk is the risk that future changes in interest rates
will reduce the Bank's net interest income and the market value of its portfolio
equity. A movement in interest rates and the corresponding effect on net
interest income may significantly affect profitability. The degree of any
potential consequences of such interest rate changes can be mitigated by
maintaining a balance between interest rate sensitive assets and liabilities
within given time frames. Management endeavors to maintain consistently strong
earnings with minimal interest rate risk by closely monitoring the sensitivity
and repricing of assets and liabilities to interest rate fluctuations.

         The difference between assets and liabilities within a given repricing
period is expressed as a ratio and as a dollar amount known as the "gap", both
of which are used as a measure of interest rate risk. A ratio of 100% suggests a
balanced position between rate sensitive assets and liabilities within a given
repricing period. The table below reflects the Bank's interest rate sensitivity
position both individually and within specified time periods and cumulatively,
over various time horizons. In the table, assets and liabilities are placed in
categories based on their actual or expected repricing date. As indicated, at
December 31, 2000, the ratio of rate-sensitive assets to rate-sensitive
liabilities maturing or repricing within one year or less is (45%), a negative
one-year gap position. In a period of generally falling interest rates, this gap
position will normally result in a increase in net interest income. Whereas, in
a period of generally rising interest rates, this gap position will normally
result in an decrease in net interest income.


                           INTEREST RATE GAP ANALYSIS
                         REPRICEABLE OR MATURITY WITHIN
<TABLE>
<CAPTION>
                                           0-3             3-12           TOTAL            1-5            OVER
                                          MONTHS          MONTHS           1 YR.          YEARS           5 YRS.           TOTAL
                                          (000)           (000)           (000)           (000)           (000)            (000)
<S>                                     <C>             <C>             <C>             <C>             <C>             <C>
ASSETS
Federal funds sold                      $   2,460       $      --       $   2,460       $      --       $      --       $    2,460
Investment securities                          --              --              --           4,573           5,026            9,599
Loans                                      21,039          16,031          37,070          57,158           7,029          101,257
                                        ---------       ---------       ---------       ---------       ---------       ----------
Total interest-earning assets           $  23,499       $  16,031       $  39,530       $  61,731       $  12,055       $  113,316


LIABILITIES
Interest-bearing deposits               $  51,478       $  28,544       $  80,022       $   5,859       $      --       $   85,881
Other term borrowings                          --          10,500          10,500              --           2,000           12,500
                                        ---------       ---------       ---------       ---------       ---------       ----------
Total interest-bearing
liabilities                             $  51,478       $  39,044       $  90,522       $   5,859       $   2,000       $   98,381
                                        ---------       ---------       ---------       ---------       ---------       ----------
Assets (liability) GAP                  $ (27,979)      $ (23,013)      $ (50,992)      $  55,872       $  10,055       $   14,935
Cumulative asset
(liability) GAP                         $ (27,979)      $ (50,992)      $ (50,992)      $  (4,880)      $  14,935           14,935
                                        =========       =========       =========       =========       =========       ==========
Cumulative as a percentage
of interest-bearing assets                  (24.7)%         (45.0)%         (45.0)%          (4.3)%         (13.2)%          (13.2)%
                                        =========       =========       =========       =========       =========       ==========
</TABLE>
<PAGE>   15

         Included in interest-bearing deposits subject to rate change within
three months are NOW, savings, and money market deposits. These types of
deposits historically have not repriced coincidentally with or in the same
proportion as general market indicators. Therefore, in addition to monitoring
the interest sensitivity position, or gap, which addresses only the magnitude of
timing differences and does not address earnings or market value, management
utilizes an earnings simulation model to prepare, on a regular basis, earnings
projections based on a range of interest rate scenarios to more accurately
evaluate the level of risk involved.

RESULTS OF OPERATIONS

         COMPARISON OF YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998. The Company
recorded net income in 2000 of $1,188,947, an increase of 1% over 1999 net
income of $1,178,695. Net income for the year ended December 31, 1999 ("1999"),
increased 2% from $1,157,407 at December 31, 1998 ("1998"). Net income increased
during 2000 and 1999 because of a higher volume of average earning assets
especially in higher yielding loans.

         Return on average shareholders' equity for the years ended December 31,
2000, 1999, and 1998 was 11.43%, 12.03%, and 13.4%, respectively. Return on
average assets for the years ended December 31, 2000, 1999, and 1998 was 1.0%,
1.1%, and 1.3%, respectively.

         NET INTEREST INCOME. Net interest income, the Bank's largest single
source of earnings, represents the difference between interest and fees earned
on loans, investments, and other earning assets and the interest paid on
deposits and other liabilities obtained to fund them. The net interest margin is
this difference expressed on a taxable equivalent basis as a percentage of
average earning assets. The margin is influenced by a number of factors, such as
the volume and mix of earning assets and funding sources, the interest rate
environment and income tax rates. The margin is also affected by the level of
earning assets funded by interest free funding sources (primarily
noninterest-bearing demand deposits and equity capital).

         Net interest income increased $140,000 (2.8%) in 2000 and $659,000
(13.6%) in 1999. The increase was attributable to the increase in average
earning assets of $10 million (10.4%) in 2000 and $13.5 million (16%) in 1999.
The effect of the increase in average earning assets in 2000 was substantially
offset by the effect of increased rates on deposits.

         PROVISION FOR LOAN LOSSES. The Bank makes monthly provisions for loan
losses in amounts estimated to be sufficient to maintain the allowance for loan
losses at a level considered necessary by management to absorb estimated losses
in the loan portfolio. The provision for loan losses was $207,000, $256,000, and
$212,500 in 2000, 1999 and 1998, respectively. Net chargeoffs to average loans
outstanding was .13% (133,000), .24% (187,000), and .13% (94,000) for 2000, 1999
and 1998, respectively. The allowance for loan losses was 1.0%, 1.01%, and 1.07%
of outstanding portfolio loans at December 31, 2000, 1999 and 1998,
respectively.

         NON-INTEREST INCOME. Non-interest income increased 9.2% in 2000,
decreased 25.8% in 1999 and increased 47.6% in 1998. As a percentage of average
assets, non-interest income was .90%, .91%, and 1.41% for 2000, 1999 and 1998,
respectively. Included in other income in 1998 is a gain of $175,000 on the sale
of land adjoining the Church Hill office. Service charges on deposit accounts
increased $12,000 (2%) in 2000, decreased $76,435 (10.9%) in 1999 and increased
$164,264 (30.7%) in 1998. Opportunities to improve such fee income are
continuously reviewed and weighed against competitive pressures in the local
market.

         NON-INTEREST EXPENSES. Non-interest expenses increased $280,000 (7.6%),
$253,000 (7.3%), and $453,000 (15%) in 2000, 1999 and 1998, respectively. The
ratio of non-interest expense as a percentage of average assets was 3.4%, 3.5%,
and 3.75% for 2000, 1999, and 1998, respectively. Salaries and employee
benefits, which comprise almost 50% of total noninterest expense, increased 3.0%
in 2000, 7.6% in 1999, and 19.0% in 1998. The ratio of personnel expense has
decreased slightly as a percentage of average total assets and was 1.65% in
2000, 1.78% in 1999 and 1.90% in 1998. Also, in early 2000, the Bank, which had
been using an outside processor for data processing, converted to an in-house
system causing a significant decrease in data processing fees for 2000.

         Most other expense categories increased in 2000, 1999, and 1998. These
increases are the result of the Bank's rapid growth, opening of new branches in
2000 and 1999, and costs related to generating other income.
<PAGE>   16

         PROVISION FOR INCOME TAXES. The Company records a provision for income
taxes currently payable and for taxes payable in the future because of
differences in the timing of recognition of certain items for financial
statement and income tax purposes. The major difference between the effective
tax rate applied to the Company's financial statement income and the federal
statutory rate is caused by state income taxes, net of federal tax benefit. The
Company's effective tax rate was 36.2% in 2000, 36.8% in 1999 and 37% in 1998.
See Note 8 to the consolidated financial statements for additional details of
the Company's income tax provision.
<PAGE>   17
                   FIRST COMMUNITY CORPORATION AND SUBSIDIARY
         CONSOLIDATED AVERAGE BALANCE SHEETS, NET INTEREST REVENUE AND
                CHANGES IN INTEREST INCOME AND INTEREST EXPENSE

The following table shows the consolidated average monthly balances of each
principal category of assets, liabilities and stockholders' equity of the
Company, and an analysis of net interest revenue, and the change in interest
income and interest expense segregated into amounts attributable to changes in
volume and changes in rates. The table is presented on a taxable equivalent
basis (4).

<TABLE>
<CAPTION>
                                                                      IN THOUSANDS OF DOLLARS
                                     -----------------------------------------------------------------------------------------
                                           DECEMBER 31, 2000                DECEMBER 31, 1999             2000/1999 CHANGE
                                     ------------------------------   -----------------------------   ------------------------
                                     AVERAGE    INTEREST   REVENUE/   AVERAGE   INTEREST   REVENUE/   DUE TO   DUE TO
                                     BALANCE      RATE     EXPENSE    BALANCE     RATE     EXPENSE    VOLUME   RATE(1)   TOTAL
                                     --------   --------   --------   -------   --------   --------   ------   -------   -----
<S>                                  <C>        <C>        <C>       <C>        <C>        <C>        <C>      <C>       <C>
Net loans (2, 3 and 4)               $ 95,502     9.63%      9,201    87,603      9.33%      8,177      737      287     1,024
                                     --------     ----      ------   -------      ----      ------     ----     ----     -----
Investment securities (4)               9,379     6.99%        656     5,300      6.74%        357      275       24       299
                                     --------     ----      ------   -------      ----      ------     ----     ----     -----
Time deposits                             327     5.50%         18        40      5.00%          2       14        2        16
                                     --------     ----      ------   -------      ----      ------     ----     ----     -----
Federal funds sold                      1,405     5.91%         83     3,609      4.74%        171     (104)      16       (88)
                                     --------     ----      ------   -------      ----      ------     ----     ----     -----
        Total earning assets, net
          of allowance for loan
          losses                      106,613     9.34%      9,958    96,552      9.02%      8,707      922      329     1,251
                                                  ====      ======                ====      ======     ====     ====     =====
Cash and due from banks                 3,509                          3,943
Other assets                            7,107                          5,301
                                     --------                        -------
        Total assets                 $117,229                        105,796
                                     ========                        =======
Deposits:
  NOW and money market investments   $ 16,360     3.64%        595    13,681      2.97%        406       80      109       189
  Savings                               8,825     2.97%        262     9,141      2.95%        270       (9)       1        (8)
  Time deposits $100,000 and over      14,403     6.07%        874    11,679      5.45%        637      149       88       237
  Other time deposits                  38,080     5.68%      2,164    35,856      5.07%      1,817      113      234       347
                                     --------     ----      ------   -------      ----      ------     ----     ----     -----
        Total interest-bearing
          deposits                     77,668     5.01%      3,895    70,357      4.45%      3,130      333      432       765
Non interest-bearing demand
  deposits                             11,054       --          --    11,174        --          --       --       --        --
                                     --------     ----      ------   -------      ----      ------     ----     ----     -----
        Total deposits                 88,722     4.39%      3,895    81,531      3.84%      3,130      276      432       765
Other borrowings                       16,739     6.27%      1,050    13,357      5.20%        694      176      180       356
                                     --------     ----      ------   -------      ----      ------     ----     ----     -----
        Total deposits and borrowed
          funds                       105,461     4.69%      4,945    94,888      4.03%      3,824      452      612     1,121
                                                  ----      ------                ----      ------     ----     ----     -----
Other liabilities                       1,351                          1,812
Stockholders' equity                   10,417                          9,096
                                     --------                        -------
        Total liabilities and
          stockholders' equity       $117,229                        105,796
                                     ========                        =======
Net interest income                                         $5,013                          $4,883      470     (283)      130
                                                            ======                          ======     ====     ====     =====
Net yield on earning assets                       4.70%                           5.06%
                                                  ====                            ====
</TABLE>

(1) Changes in interest income and expense not due solely to balance or rate
    changes are included in the rate category.
(2) Interest income includes fees on loans of $521,000 in 2000 and $484,000 in
    1999.
(3) Nonaccrual loans are included in average loan balances and the associated
    income (recognized on a cash basis) is included in interest.
(4) Tax-exempt loans and securities are presented on a taxable equivalent basis.
    FHLB dividends are included in this category.
<PAGE>   18

                   FIRST COMMUNITY CORPORATION AND SUBSIDIARY
         CONSOLIDATED AVERAGE BALANCE SHEETS, NET INTEREST REVENUE AND
                    CHANGES IN INTEREST AND INTEREST EXPENSE

The following table shows the consolidated average monthly balances of each
principal category of assets, liabilities and stockholders' equity of the
Company, and an analysis of net interest revenue, and the change in interest
income and interest expense segregated into amounts attributable to changes in
volume and changes in rates. The table is presented on a taxable equivalent
basis (4).

<TABLE>
<CAPTION>
                                                                  IN THOUSANDS OF DOLLARS
                                -------------------------------------------------------------------------------------------
                                       DECEMBER 31, 1999                DECEMBER 31, 1998              1999/1998 CHANGE
                                -------------------------------   ------------------------------   ------------------------
                                AVERAGE    INTEREST    REVENUE/   AVERAGE   INTEREST    REVENUE/   DUE TO   DUE TO
                                BALANCE      RATE      EXPENSE    BALANCE     RATE      EXPENSE    VOLUME   RATE(1)   TOTAL
                                --------   --------    --------   -------   --------    --------   ------   -------   -----
<S>                             <C>        <C>         <C>        <C>       <C>         <C>        <C>      <C>       <C>
Net loans (2, 3 and 4)          $ 87,603     9.34%       8,179    70,708      9.91%       7,004    1,674     (499)    1,175
                                --------     ----       ------    ------      ----       ------    -----     ----     -----
Investment securities (4)          5,300     6.74%         357     6,802      6.57%         447      (99)       9       (90)
                                --------     ----       ------    ------      ----       ------    -----     ----     -----
Federal funds sold                 3,609     4.74%         171     4,714      5.11%         241      (55)     (14)      (70)
                                --------     ----       ------    ------      ----       ------    -----     ----     -----
        Total earning assets,
          net of allowance for
          loan losses             96,512     9.02%       8,707    82,224      9.35%       7,692    1,519     (504)    1,015
                                             ====       ======                ====       ======    =====     ====     =====
Cash and due from banks            3,983                           3,834
Other assets                       5,301                           5,610
                                --------                          ------
        Total assets            $105,796                          91,668
                                ========                          ======
Deposits:
  NOW and money market in-
    vestments                   $ 13,681     2.97%         406    11,267      3.09%         348       75      (17)       58
  Savings                          9,141     2.95%         270     8,863      2.97%         263        8       (1)        7
  Time deposits $100,000 and
    over                          11,679     5.45%         637     9,519      5.66%         556      105      (24)       81
  Other time deposits             35,856     5.07%       1,817    32,823      5.65%       1,856      172     (211)      (39)
                                --------     ----       ------    ------      ----       ------    -----     ----     -----
        Total interest-bearing
          deposits                70,357     4.45%       3,130    62,772      4.82%       3,023      360     (253)      107
Non interest-bearing demand
  deposits                        11,174       --           --    10,793        --           --       --       --        --
                                --------     ----       ------    ------      ----       ------    -----     ----     -----
        Total deposits            81,531     3.84%       3,130    73,565      4.11%       3,023      327     (253)      107
Other borrowings                  13,357     5.20%         694     8,435      5.17%         436      254        4       258
                                --------     ----       ------    ------      ----       ------    -----     ----     -----
        Total deposits and
          borrowed funds          94,888     4.03%       3,824    82,000      4.22%       3,459      581     (249)      365
                                             ----       ------                ----       ------    -----     ----     -----
Other liabilities                  1,812                           1,010
Stockholders' equity               9,096                           8,658
                                --------                          ------
        Total liabilities and
          stockholders' equity  $105,796                          91,668
                                ========                          ======
Net interest income                                     $4,883                           $4,223      938     (255)      650
                                                        ======                           ======    =====     ====     =====
Net yield on earning assets                  5.08%                            5.15%
                                             ====                             ====
</TABLE>

1. Changes in interest income and expense not due solely to balance or rate
   changes are included in the rate category.
2. Interest income includes fees on loans of $484,000 in 1999 and $461,000 in
   1988.
3. Nonaccrual loans are included in average loan balances and the associated
   income (recognized on a cash basis) is included in interest.
4. Tax-exempt loans and securities are presented on a taxable equivalent basis.
<PAGE>   19
II.      INVESTMENT PORTFOLIO

         The carrying value of securities at December 31 is summarized as
follows:

<TABLE>
<CAPTION>
         ($ In Thousands)                                        DECEMBER 31
                                                            --------------------
         CATEGORY                                             2000         1999
         --------                                           --------     -------
         <S>                                                <C>          <C>

         Available for sale:

         U.S. Agency securities                             $  7,089       6,385

         Mortgage-backed                                         172         248

         Tax exempt                                              971         938

         Equity securities                                     1,367       1,276
                                                            --------     -------

         Total                                              $  9,599       8,847
                                                            ========     =======
</TABLE>

         The following table presents the carrying value by maturity
         distribution of debt securities along with weighted average yields
         thereon as of December 31, 2000:

<TABLE>
<CAPTION>
($ in thousands)
                                                           Within           1-5           Beyond
                                                           1 Year           Years         5 Years          Total
                                                           ------          ------          ------          ------
         <S>                                               <C>             <C>             <C>             <C>
         U.S. Agency securities                            $   --          $4,110          $2,978          $7,089

         Tax exempt securities                                 --             463             508             971
                                                           ------          ------          ------          ------

                                                           $   --           4,573           3,486           8,060
                                                           ======          ======          ======          ======

         Weighted average yield (tax equivalent)               --            6.30%           6.91%           6.60%
                                                           ======          ======          ======          ======

         Mortgage-backed securities                                                                        $  172
                                                                                                           ======

         Weighted average yield                                                                              6.60%
                                                                                                           ======
</TABLE>
<PAGE>   20

III.     LOAN PORTFOLIO

         The following table presents various categories of loans contained in
         the Bank's loan portfolio for the periods indicated and the total
         amount of all loans for such period:

         ($ in thousands)

<TABLE>
<CAPTION>
                                                                                          AS OF DECEMBER 31,
                                                                                       -----------------------
                                  TYPE OF LOAN                                           2000            1999
                                  ------------                                         ---------        ------
                  <S>                                                                  <C>              <C>
                  Domestic:

                          Commercial, financial and agricultural                       $  20,245        19,902

                          Real estate-construction                                         3,413         5,070

                          Real estate-1 to 4 family residential                           36,990        34,564

                          Real estate-other                                               25,674        18,979

                          Consumer loans                                                  14,935        14,795
                                                                                       ---------        ------

                                   Total loans                                           101,257        93,310

                          Allowance for possible loan losses                              (1,012)         (938)
                                                                                       ---------        ------

                  Total (net of allowance)                                             $ 100,245        92,372
                                                                                       =========        ======
</TABLE>

         The following is a presentation of an analysis of maturities of loans
as of December 31, 2000:

<TABLE>
<CAPTION>
                                                                                     (IN THOUSANDS)

                                                                    DUE IN 1      DUE IN 1 TO    DUE AFTER
         TYPE OF LOAN                                             YEAR OR LESS      5 YEARS       5 YEARS        TOTAL
         ------------                                             ------------    -----------    ---------       ------
                                                                                     (In Thousands)
         <S>                                                      <C>             <C>            <C>             <C>

         Commercial, financial, and agricultural                     $ 7,611         6,050         6,584         20,245

         Real estate-construction                                      3,413            --            --          3,413
                                                                     -------         -----         -----         ------

         Total                                                       $11,024         6,050         6,584         23,658
                                                                     =======         =====         =====         ======
</TABLE>

         The following is a presentation of an analysis of sensitivities of
         loans to changes in interest rates as of December 31, 2000 (in
         thousands):

<TABLE>
                  <S>                                                                    <C>
                  Loans due after 1 year with predetermined interest rates               $19,684

                  Loans due after 1 year with variable interest rates                    $25,153
</TABLE>
<PAGE>   21

The following table presents information regarding nonaccrual, past due and
restructured loans at the dates indicated:

<TABLE>
<CAPTION>
                                                                           DECEMBER 31, 2000   DECEMBER 31, 1999
                                                                           -----------------   -----------------
         <S>                                                               <C>                 <C>
         Loans accounted for on a non-accrual basis:

                  Number                                                                 4                  6

                  Amount                                                        $   96,000          $  77,000

         Accruing loans (including consumer loans) which
         are contractually past due 90 days or more as to
         principal and interest payments:

                  Number                                                                24                 24

                  Amount                                                        $  164,000          $ 245,000

         Loans defined as "troubled debt restructurings"

                  Number                                                                 0                  0

                  Amount                                                        $        0          $       0
</TABLE>

         As of December 31, 2000, there are no loans classified for regulatory
         purposes as doubtful or substandard that have not been disclosed in the
         above table, which (i) represent or result from trends or uncertainties
         which management reasonably expects will materially impact future
         operating results, liquidity, or capital resources, or (ii) represent
         material credits about which management is aware of any information
         which causes management to have serious doubts as to the ability of
         such borrowers to comply with the loan repayment terms.

         Accrual of interest is discontinued on a loan when management of the
         Bank determines upon consideration of economic and business factors
         affecting collection efforts that collection of interest is doubtful.

         There are no other loans which are not disclosed above, but where known
         information about possible credit problems of borrowers causes
         management to have serious doubts as to the ability of such borrowers
         to comply with the present loan repayment terms.
<PAGE>   22

IV.      SUMMARY OF LOAN LOSS EXPERIENCE

         An analysis of the Bank's loss experience is furnished in the following
         table for the periods indicated, as well as a breakdown of the
         allowance for possible loan losses:

<TABLE>
<CAPTION>
                                                                                YEARS ENDED DECEMBER 31,
                                                                                ------------------------
                                                                                  2000              1999
                                                                                -------            -----
         <S>                                                                    <C>                <C>
         Balance at beginning of period                                         $   938            $ 869

         Charge-offs: Real estate                                                    20                0

                      Consumer                                                     (116)            (194)
                                                                                -------            -----

                                                                                   (136)            (194)
                                                                                -------            -----

         Recoveries                                                                   3                7

         Net Charge-offs                                                           (133)            (187)
                                                                                -------            -----

         Additions charged to operations                                            207              256
                                                                                -------            -----

         Balance at end of period                                               $ 1,012            $ 938
                                                                                =======            =====

         Ratio of net charge-offs during the period to average loans
         outstanding during the period                                                              0.13%
                                                                                                   =====
</TABLE>

At December 31, 2000 the allowance was allocated as follows:    ($ in thousands)

<TABLE>
<CAPTION>
                                                                                           PERCENT OF LOANS IN EACH
                                                                                 AMOUNT    CATEGORY TO TOTAL LOANS
                                                                                -------    ------------------------
<S>                                                                             <C>        <C>
         Commercial, financial and agricultural                                 $   300               20%

         Real estate-construction                                                   100                3%

         Real estate-mortgage                                                       100               37%

         Real estate-other                                                          125               25%

         Consumer loans                                                             387               15%
                                                                                -------              ---

                  Total                                                         $ 1,012              100%
                                                                                =======              ===
</TABLE>
<PAGE>   23

At December 31, 2000 the allowance was allocated as follows:    ($ in thousands)

<TABLE>
<CAPTION>
                                                                                           Percent of loans in each
                                                                                 Amount    category to total loans
                                                                                -------    ------------------------
<S>                                                                             <C>        <C>
         Commercial, financial and agricultural                                 $   313               21%

         Real estate-construction                                                    54                5%

         Real estate-mortgage                                                       100               38%

         Real estate-other                                                          100               20%

         Consumer loans                                                             371               16%
                                                                                -------              ---

                  Total                                                         $   938              100%
                                                                                =======              ===
</TABLE>

         Allowance For Loan Losses

         In considering the adequacy of the Company's allowance for loan losses,
         management has focused on the fact that as of December 31, 2000, 12% of
         outstanding loans are in the category of commercial loans. Commercial
         loans are generally considered by management as having greater risk
         than other categories of loans in the Company's loan portfolio.
         However, approximately 90% of these commercial loans at December 31,
         2000 were made on a secured basis. Management believes that the secured
         condition of the preponderant portion of its commercial loan portfolio
         greatly reduces any risk of loss inherently present in commercial
         loans.

         The Company's consumer loan portfolio is also well secured, and as
         such, does not, in management's opinion involve more than normal credit
         risk. The same is true for the Company's real estate mortgage
         portfolio, approximately 60% of which is secured by first mortgages on
         1-4 family residential properties.

         Although the Company's loan portfolio is concentrated in upper East
         Tennessee, primarily Hawkins County, management does not believe this
         geographic concentration presents an abnormally high risk.

V.       DEPOSITS

         The following tables present, for the periods indicated, the average
         amount of and average rate paid on each of the following deposit
         categories:    ($ in thousands)


<TABLE>
<CAPTION>
                                                                             YEAR ENDED
                                                                          DECEMBER 31, 2000
                                                                          -----------------

                  DEPOSIT CATEGORY                                          AVERAGE AMOUNT     AVERAGE RATE PAID
                  ----------------                                          --------------     -----------------
         <S>                                                                <C>                <C>
         Non interest-bearing demand deposits                                   $11,054          Not applicable

         NOW deposits                                                            16,360               3.64%

         Savings deposits                                                         8,825               2.97%

         Time deposits                                                           52,483               5.79%
</TABLE>
<PAGE>   24

<TABLE>
<CAPTION>
                                                                             YEAR ENDED
                                                                          DECEMBER 31, 2000
                                                                          -----------------

                  DEPOSIT CATEGORY                                          AVERAGE AMOUNT     AVERAGE RATE PAID
                  ----------------                                          --------------     -----------------
         <S>                                                                <C>                <C>
         Non-interest-bearing demand deposits                                   $11,174          Not Applicable

         NOW deposits                                                           $13,681               2.97%

         Savings deposits                                                       $ 9,141               2.95%

         Time deposits                                                          $47,535               5.16%
</TABLE>

         The following table indicates amount outstanding of time certificates
         of deposit of $100,000 or more and respective maturities for the year
         ended December 31, 2000 (in thousands):

<TABLE>
<CAPTION>
                                                           TIME CERTIFICATES OF DEPOSIT
                                                           ----------------------------
         <S>                                               <C>
         3 months or less                                            $ 9,927

         3-12 months                                                   7,262

         over 12 months                                                1,038
                                                                     -------

         Total                                                       $18,227
                                                                     =======
</TABLE>

VI.      RETURN ON EQUITY AND ASSETS

         Returns on average consolidated assets and average consolidated equity
         for the periods indicated are as follows:

<TABLE>
<CAPTION>
                                                                                YEARS ENDED DECEMBER 31,
                                                                                ------------------------
                                                                                 2000               1999
                                                                                -------            -----
         <S>                                                                    <C>                <C>
         Return on average assets                                                 1.0%               1.1%

         Return on average equity                                                11.4%             12.96%

         Average equity to average assets ratio                                   8.9%               8.6%

         Dividend payout ratio                                                   47.2%              45.0%
</TABLE>

VII.     SHORT-TERM BORROWINGS

         The following table summarizes short-term borrowings (securities sold
         under agreements to repurchase) at December 31, 2000 and 1999:

<TABLE>
<CAPTION>
                                                                                   (IN THOUSANDS)
                                                                                 2000          1999
                                                                                ------        ------
         <S>                                                                    <C>           <C>
         Amount outstanding at December 31                                      $2,257        $3,372

         Weighted average interest rate at year end                               5.47%         4.99%

         Maximum month-end balance during the year                               2,596         3,372

         Average amount outstanding during the year                              1,931         1,676

         Weighted average interest rate during the year                           5.48%         4.60%
</TABLE>

<PAGE>   25

ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<PAGE>   26
                           FIRST COMMUNITY CORPORATION
                                 AND SUBSIDIARY

                        CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 2000 AND 1999


<PAGE>   27
                          INDEPENDENT AUDITORS' REPORT



The Board of Directors
First Community Corporation and Subsidiary

We have audited the consolidated balance sheets of First Community Corporation
and Subsidiary as of December 31, 2000 and 1999, and the related consolidated
statements of operations, changes in shareholders' equity, and cash flows for
the each of the three years in the period ended December 31, 2000. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of First Community
Corporation and Subsidiary as of December 31, 2000 and 1999, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 2000, in conformity with generally
accepted accounting principles.





Heathcott & Mullaly, P.C.
Brentwood, Tennessee
February 23, 2001

<PAGE>   28
                   FIRST COMMUNITY CORPORATION AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2000 AND 1999


<TABLE>
<CAPTION>
                              ASSETS                                        2000                  1999
                                                                       -------------         ------------
<S>                                                                    <C>                   <C>
Cash and due from banks                                                $   3,424,530            6,517,019
Interest-bearing deposits                                                         --            1,000,000
Federal funds sold                                                         2,460,000            1,100,000
Securities, available for sale                                             8,310,097            7,648,326
Loans                                                                    101,257,131           93,310,868
Allowance for loan losses                                                 (1,012,403)            (938,486)
                                                                       -------------         ------------

                              NET LOANS                                  100,244,728           92,372,382
                                                                       -------------         ------------

Premises and equipment                                                     3,953,786            4,212,108
Accrued interest receivable                                                1,605,669            1,291,881
Federal Home Loan Bank stock                                               1,288,900            1,198,600
Cash surrender value of life insurance                                       603,328              543,491
Computer software, net of amortization                                       585,498              303,384
Other assets                                                                 499,084              290,850
                                                                       -------------         ------------

                              TOTAL ASSETS                             $ 122,975,620          116,478,041
                                                                       =============         ============


                      LIABILITIES AND SHAREHOLDERS' EQUITY

DEPOSITS:
       Noninterest-bearing                                             $  12,029,129           10,665,984
       Interest-bearing                                                   83,625,282           76,012,544
                                                                       -------------         ------------

                          TOTAL DEPOSITS                                  95,654,411           86,678,528
                                                                       -------------         ------------

Federal funds purchased and securities sold
  under agreement to repurchase                                            2,256,613            3,372,282
Borrowings from Federal Home Loan Bank                                    12,500,000           15,100,000
Note payable                                                               1,823,305              593,305
Accrued interest payable                                                   1,018,916              744,933
Dividends payable                                                            137,320              141,454
Other liabilities                                                            420,536              345,765
                                                                       -------------         ------------

                      TOTAL LIABILITIES                                  113,811,101          106,976,267
                                                                       -------------         ------------

SHAREHOLDERS' EQUITY:
       Preferred stock, no par value. Authorized
         1,000,000 shares; none issued                                          --                   --
       Common stock, no par value. Authorized
         10,000,000 shares; issued 1,961,706 shares
         in 2000 and 2,020,755 shares in 1999                              7,386,357            7,672,775
       Retained earnings                                                   1,761,341            1,892,962
       Accumulated other comprehensive income, net                            16,821              (63,963)
                                                                       -------------         ------------

                      TOTAL SHAREHOLDERS' EQUITY                           9,164,519            9,501,774
                                                                       -------------         ------------

                      TOTAL LIABILITIES AND SHAREHOLDERS'
                        EQUITY                                         $ 122,975,620          116,478,041
                                                                       =============         ============


</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>   29


                   FIRST COMMUNITY CORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                       THREE YEARS ENDED DECEMBER 31, 2000


<TABLE>
<CAPTION>

                                                                          2000             1999             1998
                                                                       ----------        ---------        ---------
<S>                                                                    <C>               <C>              <C>
INTEREST INCOME:
  Loans, including fees                                                $9,201,183        8,170,398        6,993,125
  Securities:
   Taxable                                                                498,507          224,783          299,822
   Non-taxable                                                             45,409           39,289           54,322
  Federal funds sold                                                       83,748          171,359          240,876
  Interest-bearing deposits                                                18,904            1,716            2,165
Dividends on FHLB stock                                                    90,300           69,924           63,480
                                                                       ----------        ---------        ---------

                                      TOTAL INTEREST INCOME             9,938,051        8,677,469        7,653,790
                                                                       ----------        ---------        ---------

INTEREST EXPENSE
  Deposits                                                              3,894,506        3,130,098        3,023,223
 Other                                                                  1,050,314          694,481          436,286
                                                                       ----------        ---------        ---------

                                      TOTAL INTEREST EXPENSE            4,944,820        3,824,579        3,459,509
                                                                       ----------        ---------        ---------

                                      NET INTEREST INCOME               4,993,231        4,852,890        4,194,281

PROVISION FOR LOAN LOSSES                                                 206,861          256,141          212,500
                                                                       ----------        ---------        ---------

                                      NET INTEREST INCOME AFTER
                                      PROVISION FOR LOAN LOSSES         4,786,370        4,596,749        3,981,781
                                                                       ----------        ---------        ---------

NONINTEREST INCOME:
 Service charges on deposit accounts                                      636,048          623,760          700,195
 Credit life insurance commissions                                         58,431           64,328           95,970
 Mortgage banking activities                                               82,926          120,996          171,510
 Net securities gains                                                          --               --           41,697
 Gain on sale of land                                                      74,675               --          175,000
 Other                                                                    202,925          156,755          116,787
                                                                       ----------        ---------        ---------

                                      TOTAL NONINTEREST INCOME          1,055,005          965,839        1,301,159
                                                                       ----------        ---------        ---------

NONINTEREST EXPENSES:
  Salaries and employee benefits                                        1,932,736        1,876,741        1,744,891
  Occupancy                                                               332,442          312,480          275,911
  Furniture and equipment                                                 347,908          271,409          232,888
  Data processing fees                                                     27,023          166,234          160,641
  Advertising and public relations                                         81,271           84,622          107,802
  Operating supplies                                                      209,559          126,050          163,962
  Other operating                                                       1,047,506          860,431          758,939
                                                                       ----------        ---------        ---------

                                     TOTAL NONINTEREST EXPENSES         3,978,445        3,697,967        3,445,034
                                                                       ----------        ---------        ---------

                                     INCOME BEFORE INCOME TAXES         1,862,930        1,864,621        1,837,906

INCOME TAXES                                                              673,983          685,926          680,882
                                                                       ----------        ---------        ---------

NET INCOME                                                             $1,188,947        1,178,695        1,157,024
                                                                       ==========        =========        =========

EARNINGS PER COMMON SHARE:
 BASIC                                                                       0.59             0.58             0.61
 DILUTED                                                               $     0.58             0.57             0.58
                                                                       ==========        =========        =========

AVERAGE COMMON SHARES OUTSTANDING:
 BASIC                                                                  2,015,665        2,041,981        1,891,212
 DILUTED                                                                2,048,268        2,076,669        1,995,383
                                                                       ==========        =========        =========
</TABLE>


See accompanying notes to consolidated financial statements.

<PAGE>   30

                   FIRST COMMUNITY CORPORATION AND SUBSIDIARY
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                       THREE YEARS ENDED DECEMBER 31, 2000

<TABLE>
<CAPTION>
                                                                                        ACCUMULATED
                                                                                            OTHER          TOTAL
                                                          COMMON          RETAINED     COMPREHENSIVE    SHAREHOLDERS'
                                                          STOCK           EARNINGS         INCOME          EQUITY
                                                       ------------      ----------    -------------    -------------

<S>                                                    <C>               <C>           <C>              <C>
BALANCE, DECEMBER 31, 1997                             $  7,031,954       1,041,280          38,877       8,112,111

    Issuance of 157,581 common shares in
      connection with stock option plans                    713,616              --              --         713,616

    Dividends - $.25 per share                                   --        (509,300)             --        (509,300)

    Comprehensive income:
      Net income                                                 --       1,157,024              --       1,157,024

    Change in unrealized gains on securities
       available for sale, net of taxes of $200                  --              --             356             356

        Less reclassification adjustment, net of
          deferred income tax benefit of $7,600                  --              --         (25,000)        (25,000)

          Total comprehensive income                                                                      1,132,380
                                                       ------------      ----------      ----------      ----------


BALANCE, DECEMBER 31, 1998                                7,745,570       1,689,004          14,233       9,448,807

    Purchase and retirement of common stock                (154,833)       (444,072)                       (598,905)

    Issuance of 15,075 common shares in
      connection with stock option plans                     82,038              --              --          82,038

    Dividends - $.26 per share                                   --        (530,665)             --        (530,665)

    Comprehensive income:
      Net income                                                 --       1,178,695              --       1,178,695

      Change in unrealized gains (losses) on
       securities available for sale, net of tax
       benefit of $47,700                                        --              --         (78,196)        (78,196)

           Total comprehensive income                                                                     1,100,499
                                                       ------------      ----------      ----------      ----------

BALANCE, DECEMBER 31, 1999                                7,672,775       1,892,962         (63,963)      9,501,774

    Purchase and retirement of common stock                (292,468)       (758,777)             --      (1,051,245)

    Issuance of 975 common shares in
      connection with stock option plans                      6,050              --              --           6,050

    Dividends - $.28 per share                                   --        (561,791)             --        (561,791)

    Comprehensive income:
      Net income                                                 --       1,188,947              --       1,188,947

      Change in unrealized gains (losses) on
        securities available for sale, net of tax
        of $50,000                                               --              --          80,784          80,784

           Total comprehensive income                                                                     1,269,731
                                                       ------------      ----------      ----------      ----------

BALANCE, DECEMBER 31, 2000                             $  7,386,357       1,761,341          16,821       9,164,519
                                                       ============      ==========      ==========      ==========
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>   31
                   FIRST COMMUNITY CORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                       THREE YEARS ENDED DECEMBER 31, 2000

<TABLE>
<CAPTION>


                                                                              2000                 1999                 1998
                                                                           -----------         -----------         -----------
<S>                                                                        <C>                 <C>                 <C>
INCREASE (DECREASE) IN CASH
CASH FLOWS FROM OPERATING ACTIVITIES:
       NET INCOME                                                          $ 1,188,947           1,178,695           1,157,024
       Adjustments to reconcile net income to
         net cash provided by operating activities:
           Depreciation and amortization                                       503,274             381,739             318,554
           Provision for loan losses                                           206,861             256,141             212,500
           Net securities gains                                                     --                  --             (41,697)
           Gain on sale of land                                                (74,675)                 --            (175,000)
           Deferred income taxes                                                40,000              49,000              16,000
           Increase in accrued interest receivable                            (313,788)           (253,048)           (116,610)
           Increase (decrease) in accrued interest payable                     273,983              (4,323)              3,395
           Increase (decrease) in other liabilities                             74,771            (115,417)            (68,187)
           Other, net                                                         (224,031)           (145,430)           (186,715)
                                                                           -----------         -----------         -----------

       NET CASH PROVIDED BY OPERATING ACTIVITIES                             1,675,342           1,347,357           1,119,264
                                                                           -----------         -----------         -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
       Decrease (increase) in interest bearing deposits                      1,000,000            (962,206)            (17,069)
       Decrease (increase) in federal funds sold                            (1,360,000)         10,023,000          (6,245,000)
       Purchases of securities available for sale                             (830,491)         (6,961,000)         (2,500,000)
       Proceeds from maturities and redemptions of
         securities available for sale                                          78,420           1,435,224           6,761,485
       Proceeds from sales of securities available for sale                         --                  --           3,121,000
       Net increase in  loans                                               (8,079,207)        (12,599,267)        (16,149,660)
       Proceeds from sale of land                                               90,000                  --             225,000
       Purchases of fixed assets and computer software                        (545,647)           (637,251)         (1,093,783)
                                                                           -----------         -----------         -----------

       NET CASH USED BY INVESTING ACTIVITIES                                (9,646,925)         (9,701,500)        (15,898,027)
                                                                           -----------         -----------         -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
       Cash dividends                                                         (565,925)           (898,511)           (413,515)
       Proceeds from (repayments of) note payable                            1,230,000             593,305            (250,000)
       Proceeds from (repayments of) FHLB advances                          (2,600,000)          7,100,000           6,000,000
       Increase in deposits                                                  8,975,883           3,217,078          10,966,253
       Increase (decrease) in federal funds
         purchased and securities sold under
         agreement to repurchase                                            (1,115,669)          1,844,218          (2,589,929)
       Purchase and retirement of common stock                              (1,051,245)           (598,905)                 --
       Proceeds from issuance of common stock                                    6,050              82,038             713,616
                                                                           -----------         -----------         -----------

       NET CASH PROVIDED BY FINANCING ACTIVITIES                             4,879,094          11,339,223          14,426,425
                                                                           -----------         -----------         -----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                        (3,092,489)          2,985,080            (352,338)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                             6,517,019           3,531,939           3,884,277
                                                                           -----------         -----------         -----------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                 $ 3,424,530           6,517,019           3,531,939
                                                                           ===========         ===========         ===========


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
    Cash paid during period for:
            Interest                                                       $ 4,670,837           3,828,902           3,456,114
            Income taxes                                                       671,565             732,375             950,407
                                                                           ===========         ===========         ===========
</TABLE>


See accompanying notes to consolidated financial statements.

<PAGE>   32
                   FIRST COMMUNITY CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2000 AND 1999


(1)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         GENERAL
         First Community Corporation, through its subsidiary, First Community
         Bank, provides a variety of banking services to individuals and
         businesses from its banking offices in Rogersville and Church Hill and
         Greeneville, Tennessee. Its primary deposit products are demand and
         savings deposits and certificates of deposit, and its primary lending
         products are commercial, real estate mortgage and installment loans.
         The accounting principles followed and the methods of applying those
         principles conform with generally accepted accounting principles and to
         general practices in the banking industry. The significant policies are
         summarized as follows:

         BASIS OF PRESENTATION
         The accompanying consolidated financial statements include the accounts
         of First Community Corporation (the Company), a one-bank holding
         company and its wholly-owned subsidiary First Community Bank of East
         Tennessee (the Bank). All material intercompany balances and
         transactions have been eliminated in consolidation.

         USE OF ESTIMATES
         The preparation of financial statements in accordance with generally
         accepted accounting principles requires management to make estimates
         and assumptions that affect the reported amounts of assets and
         liabilities and disclosure of contingent assets and liabilities at the
         date of the financial statements and the reported amounts of revenues
         and expenses during the reporting periods. Actual results could differ
         from those estimates.

         STATEMENTS OF CASH FLOWS
         Cash and cash equivalents as presented in the statements include cash
         and due from banks.

         CASH AND DUE FROM BANKS
         Included in cash and due from banks are legal reserve requirements
         which must be maintained on an average basis in the form of cash and
         balances due from the Federal Reserve and other banks.

         SECURITIES
         Securities are classified into three categories: held to maturity,
         available for sale, and trading. Securities classified as held to
         maturity, which are those the Company has the positive intent and
         ability to hold to maturity, are reported at amortized cost. Securities
         classified as available for sale may be sold in response to changes in
         interest rates, liquidity needs, and for other purposes. These
         securities are reported at fair value and include securities not
         classified as held to maturity or trading. Trading securities are those
         held principally for the purpose of selling in the near future and are
         carried at fair value. The Company currently has no held to maturity or
         trading securities.

         Unrealized holding gains and losses for available for sale securities
         are reported in other comprehensive income. Realized gains (losses) on
         securities available for sale are included in other income (expense)
         and, when applicable, are reported as a reclassification adjustment,
         net of tax, in other comprehensive income. Gains and losses on sales of
         securities are determined on the specific-identification method.



<PAGE>   33
                   FIRST COMMUNITY CORPORATION AND SUBSIDIARY
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED



(1)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

         LOANS
         Loans which management has the intent and ability to hold for the
         foreseeable future are reported at their outstanding principal balance.
         Interest on loans is computed daily based on the principal amount
         outstanding. Loan origination fees in excess of related direct costs
         are deferred and recognized as an adjustment of yield on the interest
         method.

         A loan is considered impaired when it is probable that the Company will
         be unable to collect the scheduled payments of principal and interest
         due under the contractual terms of the loan agreement. Impaired loans
         are measured at the present value of expected future cash flows
         discounted at the loan's effective interest rate, at the loan's
         observable market price, or at the fair value of the collateral if the
         loan is collateral dependent. If the measure of the impaired loan is
         less than the recorded investment in the loan, the Company recognizes
         an impairment by creating or adjusting a valuation allowance with a
         corresponding charge or credit to the provision for loan losses.

         The Company considers all loans on non-accrual status to be impaired.
         Interest accrual on loans are discontinued when, in the opinion of
         management, it is not reasonable to expect that such interest will be
         collected, or generally, when collection of principal or interest
         becomes 90 days or more past due. Management may make exceptions to
         this policy when the estimated net realizable value of the collateral
         is sufficient to recover the principal and interest balance. When
         interest accrual is discontinued, all unpaid accrued interest is
         reversed. Interest income is subsequently recognized only to the extent
         cash payments are received.

         ALLOWANCE FOR LOAN LOSSES
         The allowance for loan losses is established by charges to operations
         based on management's evaluation of the assets, economic conditions and
         other factors considered necessary to maintain the allowance at an
         adequate level. In evaluating the adequacy of the allowance, management
         makes certain estimates and assumptions which are susceptible to change
         in the near term. While management uses available information to
         recognize losses on loans, future additions to the allowance may be
         necessary based on changes in economic conditions. Uncollectible loans
         are charged to the allowance account in the period such determination
         is made. Recoveries on loans previously charged off are credited to the
         allowance account in the period received. Allowances for impaired loans
         are generally determined based on collateral values or the present
         value of estimated cash flows, as discussed above.

         PREMISES AND EQUIPMENT
         Premises and equipment are stated at cost, less accumulated
         depreciation and amortization. The provision for depreciation is
         computed principally on the straight-line method over the estimated
         useful lives of the assets, which range as follows: building-40 years,
         equipment-5 to 7 years.

         OTHER REAL ESTATE
         Other real estate, which consists of properties acquired through
         foreclosure is recorded at the lower of the outstanding loan amount or
         fair value, determined by appraisal, at the date of foreclosure.
         Declines in value resulting from reappraisals, as well as losses
         resulting from disposition are charged to operations.






<PAGE>   34
                   FIRST COMMUNITY CORPORATION AND SUBSIDIARY
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED



(1)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

         STOCK-BASED COMPENSATION
         In October, 1995, the Financial Accounting Standards Board issued SFAS
         No. 123, "Accounting for Stock-Based Compensation", which is effective
         for awards granted in fiscal years beginning after December 31, 1995.
         The standard defines a fair value-based method of measuring employee
         stock options or similar equity instruments. Under this method,
         compensation cost is measured at the option grant date based on the
         value of the award and is recognized over the service period, which is
         usually the vesting period. In lieu of recording the value of such
         options, the Company has elected to continue to measure compensation
         cost using APB Opinion 25 and to provide pro forma disclosures
         quantifying the difference between compensation cost included in
         reported net income and the related cost measured by such fair
         value-based method.

         PER SHARE AMOUNTS
         Earnings per share (EPS) is calculated in accordance with Statement of
         Financial Accounting Standards (SFAS) No. 128, issued in February,
         1997. The statement requires the dual presentation of basic and diluted
         EPS on the income statement. Basic EPS excludes dilution, and is
         computed by dividing income available to common stockholders by the
         weighted-average number of common shares outstanding for the period.
         Diluted EPS reflects the potential dilution that could occur if
         securities or contracts to issue common stock were exercised or
         converted into common stock that then shared in the earnings of the
         entity. All prior period EPS data has been restated to reflect
         implementation of this statement.

         TRANSFER AND SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENTS OF
         LIABILITIES
         Effective January 1, 1997, the Company adopted SFAS No. 125,
         "Accounting for Transfers and Servicing of Financial Assets and
         Extinguishments of Liabilities". The statement, which supersedes SFAS
         No. 122, provides accounting and reporting standards for transfers and
         servicing of financial assets and extinguishments of liabilities based
         on application of a financial-components approach that focuses on
         control. It distinguishes transfers of financial assets that are sales
         from transfers of assets that are secured borrowings. The adoption of
         SFAS No. 125 did not have a material effect on the Company's financial
         position or results of operations. SFAS No. 125 has been replaced by
         SFAS No. 140 bearing the same title, effective for transactions
         occurring after March 31, 2001.

         INCOME TAXES
         The Company files a consolidated tax return with its subsidiary. Income
         taxes are allocated to members of the consolidated group on a separate
         return basis. Income taxes have been provided using the liability
         method as prescribed by SFAS No. 109, "Accounting for Income Taxes".

         EMPLOYEE BENEFITS
         The Bank maintains a 401(k) profit-sharing plan which covers
         substantially all employees.

         COMPREHENSIVE INCOME
         On January 1, 1998, the Company adopted Statement of Financial
         Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income".
         SFAS No. 130 establishes standards for reporting comprehensive income.
         Comprehensive income includes net income and other comprehensive income
         which is defined as non-owner related transactions in equity.





<PAGE>   35
                   FIRST COMMUNITY CORPORATION AND SUBSIDIARY
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED



(1)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

         RECLASSIFICATIONS
         Certain amounts have been reclassified in the previous years' financial
         statements to conform with the current year's classifications.

         FAIR VALUE OF FINANCIAL INSTRUMENTS
         The following methods and assumptions were used to estimate the fair
         value of each class of financial instruments for which it is
         practicable to estimate that value. These fair values are provided for
         disclosure purposes only and do not impact carrying values of financial
         statement amounts.

         Short-Term Financial Instruments - The carrying amounts reported in the
         balance sheet for cash and due from banks, interest-bearing deposits,
         and federal funds sold approximate their fair values. The carrying
         amounts for short-term borrowings, which consist of federal funds
         purchased and securities sold under agreements to repurchase,
         short-term FHLB advances and notes payable approximate their fair
         values.

         Securities (including mortgage-backed securities) - Fair values for
         securities are based on quoted market prices, where available. If
         quoted market prices are not available, fair values are based on quoted
         market prices of comparable instruments.

         Loans Receivable - For variable-rate loans that reprice frequently and
         have no significant change in credit risk, fair values are based on
         carrying values. The fair values for other loans are estimated using
         discounted cash flow analyses, using interest rates currently offered
         for loans with similar terms to borrowers of similar credit quality.

         Deposit Liabilities - The fair values disclosed for demand deposits are
         equal to the amount payable on demand at the reporting date (i.e.,
         their carrying amounts). The carrying amounts for variable-rate,
         fixed-term money market accounts and certificates of deposits
         approximate their fair values at the reporting date. Fair values for
         fixed-rate certificates of deposit are estimated using a discounted
         cash flow calculation that applies interest rates currently offered on
         certificates to a schedule of aggregated expected monthly maturities on
         time deposits.

         FHLB Borrowings - The fair value of fixed rate long-term borrowings
         from the FHLB are estimated using a discounted cash flow calculation
         that applies interest rates currently available on similar borrowings.

         Accrued Interest - The carrying amounts of accrued interest approximate
         their fair values.

         Off-Balance Sheet Instruments - Fair values for off-balance sheet
         lending commitments are based on fees currently charged to enter into
         similar agreements, taking into account the remaining terms of the
         agreements and the counterparties' credit standings.

         RECENT ACCOUNTING PRONOUNCEMENTS
         SFAS No. 133, "Accounting for Derivative Instruments and Hedging
         Activities" establishes accounting and reporting standards for
         derivative instruments and hedging activities. It requires that an
         entity recognize all derivatives as either assets or liabilities in the
         balance sheets and measure those instruments at fair value. This
         statement is effective for all fiscal quarters of fiscal years
         beginning after June 15, 1999. The adoption of the provisions of this
         statement did not have a material impact on the Company's financial
         statements.


<PAGE>   36

                   FIRST COMMUNITY CORPORATION AND SUBSIDIARY
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(2)      SECURITIES

         The following table reflects the amortized cost and fair values of
         securities available for sale held at December 31, 2000 and 1999.

<TABLE>
<CAPTION>
                                                                GROSS            GROSS
                                                              AMORTIZED       UNREALIZED     UNREALIZED         FAIR
                                                                 COST            GAINS         LOSSES          VALUE
                                                             ---------------------------------------------------------
         <S>                                                 <C>              <C>            <C>             <C>
                  2000

         U.S. GOVERNMENT AGENCY
           SECURITIES                                        $  7,051,205       48,339        (10,756)       7,088,788
         MORTGAGE-BACKED
           SECURITIES                                             172,053          375             --          172,428
         TAX EXEMPT SECURITIES                                    981,909        3,623        (14,466)         971,066
         EQUITY SECURITIES                                         77,815           --             --           77,815
                                                             ---------------------------------------------------------

             TOTAL AVAILABLE FOR SALE                        $  8,282,982       52,337        (25,222)       8,310,097
                                                             =========================================================
                  1999

         U.S. Government Agency
           securities                                        $  6,437,430       16,650       (687,000)       6,385,300
         Mortgage-backed
           securities                                             252,209           --         (4,518)         247,691
         Tax exempt securities                                    983,970        3,646        (50,096)         937,520
         Equity securities                                         77,815           --             --           77,815
                                                             ---------------------------------------------------------
             Total available for sale                        $  7,751,424       20,296       (123,394)       7,648,326
                                                             =========================================================
</TABLE>

         The amortized cost and fair value of securities at December 31, 2000 by
         contractual maturity are shown below. Expected maturities will differ
         from contractual maturities because borrowers may have the right to
         call or prepay obligations.

<TABLE>
<CAPTION>
                                                                              AMORTIZED             FAIR
                                                                                 COST               VALUE
                                                                            -------------------------------
         <S>                                                                <C>                   <C>
         Due after 1 through 5 years                                        $  4,563,136          4,573,040
         Due after 5 through 10 years                                          2,951,282          2,982,584
         Due after 10 years                                                      518,696            504,230
         Mortgage-backed                                                         172,053            172,428
         Equity securities                                                        77,815             77,815
                                                                            -------------------------------
                                                                            $  8,282,982          8,310,097
                                                                            ===============================
</TABLE>

         The Company had gross realized gains from the sale of securities of
         $47,250 and gross realized losses of $5,553 in 1998 (none in 2000 or
         1999).


<PAGE>   37

                   FIRST COMMUNITY CORPORATION AND SUBSIDIARY
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(2)      SECURITIES, CONTINUED

         Securities carried at $8,232,000 at December 31, 2000, were pledged to
         secure public deposits and for other purposes as required or permitted
         by law. Included in that amount is $3,408,000 of securities pledged to
         holders of securities sold under agreement to repurchase (see note 9).

(3)      LOANS

         A summary of loans outstanding by category at December 31, 2000 and
         1999 follows:

<TABLE>
<CAPTION>
                                                                                  2000                 1999
                                                                            ----------------------------------
         <S>                                                                <C>                     <C>
         Commercial, financial and agricultural                             $   20,245,000          19,902,000
         Real estate - construction                                              3,413,000           5,070,000
         Real estate - 1 to 4 family residential properties                     36,990,000          34,564,000
         Real estate - other                                                    25,674,000          18,979,000
         Consumer                                                               14,935,131          14,795,868
                                                                            ----------------------------------
                  Total loans                                               $  101,257,131          93,310,868
                                                                            ==================================
</TABLE>

         At December 31, 2000 and 1999, the Bank had loans amounting to $96,000
         and $77,000, respectively that were specifically classified as
         impaired. The allowance for loan losses related to impaired loans
         amounted to approximately $15,000 and $12,000 at December 31, 2000 and
         1999, respectively. The average balance of these loans amounted to
         approximately $50,000, $95,000 and $30,000 for the years ended December
         31, 2000, 1999 and 1998, respectively. The impact on net interest
         income of these loans was not material to the Bank's results of
         operations.

         Certain parties (principally directors and officers of the Bank,
         including their affiliates, families, and companies in which they hold
         ten percent or more ownership) were customers of, and had loans and
         other transactions with the Bank in the ordinary course of business.
         The outstanding balances of such loans totaled $2,388,000 and
         $3,014,000 as of December 31, 2000 and 1999, respectively. During 2000,
         $425,000 of new loans were made and repayments amounted to $1,051,000.
         These loan transactions were made on substantially the same terms as
         those prevailing at the time for comparable loans to other persons.
         They did not involve more than the normal risk of collectibility or
         present other unfavorable features.

(4)      COMMITMENTS AND CONTINGENCIES

         The Bank is a party to financial instruments with off-balance sheet
         risk in the normal course of business to meet the financing needs of
         its customers. These financial instruments include commitments to
         extend credit and standby letters of credit. Those instruments involve,
         to varying degrees, elements of credit risk in excess of the amount
         recognized in the balance sheet. The contract or notional amounts of
         those instruments reflect the extent of involvement the Bank has in
         those particular financial instruments.

         The Bank's exposure to credit loss in the event of nonperformance by
         the other party to the financial instrument for commitments to extend
         credit and standby letters of credit is represented by the contractual
         notional amount of those instruments. The Bank uses the same credit
         policies in making commitments and conditional obligations as it does
         for on-balance sheet instruments.


<PAGE>   38

                   FIRST COMMUNITY CORPORATION AND SUBSIDIARY
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(4)      COMMITMENTS AND CONTINGENCIES, CONTINUED

<TABLE>
<CAPTION>
                                                                                                        CONTRACT OR
                                                                                                          NOTIONAL
                                                                                                           AMOUNT
                                                                                                        ------------
         <S>                                                                                            <C>
         Financial instruments whose contract amounts represent credit risk:
                   Commitment to extend credit                                                          $  6,264,000
                   Standby letters of credit                                                                 102,000
</TABLE>

         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. Since many of the
         commitments are expected to expire without being drawn upon, the total
         commitment amounts do not necessarily represent future cash
         requirements. The Bank evaluates each customer's creditworthiness on a
         case-by-case basis. The amount of collateral obtained if deemed
         necessary by the Bank upon extension of credit is based on management's
         credit evaluation. Collateral held varies but may include accounts
         receivable, inventory, property, plant and equipment, and
         income-producing commercial properties.

         Standby letters of credit are conditional commitments issued by the
         Bank to guarantee the performance of a customer to a third party. Those
         guarantees are primarily issued to support public and private borrowing
         arrangements, including commercial paper, bond financing, and similar
         transactions. All letters of credit are due within one year or less of
         the original commitment date. The credit risk involved in issuing
         letters of credit is essentially the same as that involved in extending
         loan facilities to customers.

         The Bank primarily serves customers located in upper East Tennessee. As
         such, the Bank's loans, commitments, and standby letters of credit have
         been granted to customers in that area. Concentration of credit by type
         of loan is presented in Note 3.

         In the normal course of business, the Bank is involved in various legal
         proceedings. Management has concluded, based upon advice of counsel,
         that the result of these proceedings will not have a material effect on
         the Bank's financial condition or results of operations.

(5)      ALLOWANCE FOR LOAN LOSSES

         Changes in the allowance for loan losses are as follows:

<TABLE>
<CAPTION>
                                                                                 2000                 1999               1998
                                                                            --------------------------------------------------
         <S>                                                                <C>                    <C>                <C>
         Balance at beginning of period                                     $    938,486            869,013            750,828
             Provision charged to operating expenses                             206,861            256,141            212,500
             Loans charged off                                                  (136,554)          (194,256)          (100,503)
             Recoveries on loans previously charged off                            3,610              7,588              6,188
                                                                            --------------------------------------------------
         Balance at end of period                                           $  1,012,403            938,486            869,013
                                                                            ==================================================
</TABLE>


<PAGE>   39

                   FIRST COMMUNITY CORPORATION AND SUBSIDIARY
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(6)      PREMISES AND EQUIPMENT

         The provision for depreciation totaled $ 387,743, $332,718 and $276,852
         for 2000, 1999 and 1998, respectively. Following is a summary of
         premises and equipment at December 31:

<TABLE>
<CAPTION>
                                                                                           2000               1999
                                                                                      -------------------------------
         <S>                                                                          <C>                   <C>
         Land                                                                         $    692,667            707,667
         Building                                                                        3,146,842          3,115,564
         Furniture and equipment                                                         1,592,788          1,509,623
                                                                                      -------------------------------
                                                                                         5,432,297          5,332,854
         Less allowance for depreciation and amortization                                1,478,511          1,120,746
                                                                                      -------------------------------
                                                                                      $  3,953,786          4,212,108
                                                                                      ===============================
</TABLE>

(7)      DEPOSITS

         A summary of deposits at December 31 follows:

<TABLE>
<CAPTION>
                                                                                           2000                1999
                                                                                      --------------------------------
         <S>                                                                          <C>                   <C>
         Non-interest-bearing demand                                                  $ 12,029,129          10,665,984
         Interest-bearing demand                                                        19,948,996          14,134,522
         Savings                                                                         8,623,587           8,782,530
         Certificates of deposit of $100,000 or more                                    18,227,138          16,892,907
         Other time                                                                     36,825,561          36,202,585
                                                                                      --------------------------------
                                                                                      $ 95,654,411          86,678,528
                                                                                      ================================
</TABLE>

         Interest expense on deposits of $100,000 or more amounted to $874,250
         in 2000, $637,046 in 1999 and $555,835 in 1998.

         At December 31, 2000, maturities of time deposits were as follows:

<TABLE>
         <S>                                                                                    <C>
         One year or less                                                                       $  51,450,000
         Over one year through three years                                                          3,594,699
         Over three years                                                                               8,000
                                                                                                -------------
                                                                                                $  55,052,699
                                                                                                =============
</TABLE>


<PAGE>   40

                   FIRST COMMUNITY CORPORATION AND SUBSIDIARY
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(8)      INCOME TAXES

         The components of income tax expense for the years ended December 31
         were as follows:

<TABLE>
<CAPTION>
                                                                                2000                 1999               1998
                                                                            --------------------------------------------------
         <S>                                                                <C>                     <C>                <C>
         Current tax provision
                  Federal                                                   $  533,090              533,655            556,082
                  State                                                        100,893              103,271            108,800
                                                                            --------------------------------------------------
                                                                               633,983              636,926            664,882
                                                                            --------------------------------------------------
         Deferred
                  Federal                                                       34,000               41,000             14,000
                  State                                                          6,000                8,000              2,000
                                                                            --------------------------------------------------
                                                                                40,000               49,000             16,000
                                                                            --------------------------------------------------
                                                                            $  673,983              685,926            680,882
                                                                            ==================================================
</TABLE>

         The reasons for the differences between the statutory federal income
         tax rate and the effective tax rate for the years ended December 31 are
         summarized as follows:

<TABLE>
<CAPTION>
                                                                                 2000                1999               1998
                                                                            --------------------------------------------------
         <S>                                                                <C>                    <C>                <C>
         Tax at statutory rate                                              $   633,396            633,972            625,018
         Increase (decrease) resulting from:
              State income tax, net of federal effect                            73,000             73,000             73,000
              Tax exempt interest                                               (24,000)           (16,000)           (25,600)
              Other, net                                                         (8,413)             5,044              8,464
                                                                            -------------------------------------------------
                                                                            $   673,983            685,926            680,882
                                                                            =================================================
</TABLE>

         The tax effect of each type of temporary difference that gives rise to
         deferred tax assets and liabilities is as follows:

<TABLE>
<CAPTION>
                                                                                             2000                 1999
                                                                                         -------------------------------
         <S>                                                                             <C>                     <C>
         Deferred tax asset:
              Provision for loan losses                                                  $   336,000             300,000
              Deferred compensation                                                           16,000               7,000
              Unrealized losses on securities                                                     --              38,000
                                                                                         -------------------------------
                                                                                         $   352,000             345,000
                                                                                         -------------------------------
         Deferred tax liability:
              Unrealized gains on securities                                                 (10,000)                 --
              Stock dividends                                                               (110,000)            (75,000)
              Depreciation                                                                  (200,000)           (150,000)
                                                                                         -------------------------------
                                                                                            (320,000)           (225,000)
                                                                                         -------------------------------
         Net deferred tax asset                                                          $    32,000             120,000
                                                                                         ===============================
</TABLE>


<PAGE>   41

                   FIRST COMMUNITY CORPORATION AND SUBSIDIARY
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(9)      OTHER BORROWED FUNDS

         The carrying value of securities underlying securities sold under
         agreements to repurchase was $3,408,000 at December 31, 2000 and
         $2,743,000 at December 31, 1999. The securities are held in safekeeping
         by another financial institution and are pledged to the holders of the
         agreements.

         The Company has in effect a line of credit with a financial institution
         of $4,500,000 which is secured by all the shares of the subsidiary
         bank. The interest rate floats with the 30-day LIBOR rate and was
         8.4875% at December 31, 2000. The line matures in 2001. The balance
         outstanding on the line at December 31, 2000 was $1,823,305.

         The Bank obtains various short-term and long-term advances from the
         Federal Home Loan Bank of Cincinnati (FHLB) under Blanket Agreements
         for Advances and Security Agreements (Agreements). The Agreements
         entitle the Bank to borrow funds from the FHLB to fund mortgage loan
         programs and satisfy other funding needs. Fixed and variable rate
         advances at December 31, 2000 totaled $12.5 million with $10.5 million
         maturing in 2001, and $2 million maturing in 2010. Interest rates on
         the advances range from 6.26% to 7.07%. The FHLB advances and the
         letters of credit are collateralized by the Bank's FHLB stock with a
         carrying value of $1,288,900 and certain single-family mortgage loans
         totaling $19 million.

(10)     OTHER NONINTEREST EXPENSES

         A summary of other operating expenses included in noninterest expenses
         is as follows:

<TABLE>
<CAPTION>
                                                                                 2000                 1999               1998
                                                                            --------------------------------------------------
         <S>                                                                <C>                     <C>                <C>
         Communications                                                     $    144,943            146,354            124,711
         Legal and professional                                                  110,135            122,890            116,619
         Board and committee fees                                                 52,625             59,350             57,150
         Software amortization                                                   115,531             46,435             41,402
         Other operating                                                         624,272            485,402            419,057
                                                                            --------------------------------------------------
                                                                            $  1,047,506            860,431            758,939
                                                                            ==================================================
</TABLE>

(11)     SHAREHOLDERS' EQUITY

         The Company's charter authorizes 1,000,000 shares of preferred stock,
         no par value. Shares of the preferred stock may be issued from time to
         time in one or more series, each such series to be so designated as to
         distinguish the shares thereof from the shares of all other series and
         classes. The board of directors has the authority to divide any or all
         classes of preferred stock and to fix and determine the relative rights
         and preferences of the shares of any series so established. The board
         currently has no intent to issue such preferred stock.

         In November, 1998, the Company's board of directors declared a
         three-for-one split of the Company's common stock, effected by a
         distribution of two shares for each share held of record at the close
         of business on November 10, 1998. All references in the consolidated
         financial statements to shares and related prices, average number of
         shares, per share amounts and stock plan data have been adjusted to
         reflect the split.


<PAGE>   42

                   FIRST COMMUNITY CORPORATION AND SUBSIDIARY
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(11)     SHAREHOLDERS' EQUITY, CONTINUED

         During 2000, the Company entered into an agreement with the former
         President of the Company to purchase 137,604 shares of Company stock
         owned by the former President for $17.50 per share. One-third (45,868)
         of the shares were purchased in 2000 with one-third to be purchased in
         2001 and the remaining one-third to be purchased in 2002.

(12)     REGULATORY MATTERS

         The Company's subsidiary bank is required to maintain reserves, in the
         form of cash and due from banks against its deposit liabilities. The
         requirement was satisfied by teller and vault cash at December 31,
         2000.

         Funds for cash distributions to shareholders and normal operating
         expenses of the Company are derived primarily from dividends from the
         subsidiary bank. The subsidiary is subject to federal and state
         statutes and regulations that impose restrictions on the amount of
         dividends that can be declared without prior regulatory approval. At
         December 31, 2000, approximately $1,800,000 of retained earnings was
         available for dividend declaration by the subsidiary without prior
         regulatory approval.

         Under capital adequacy guidelines and the regulatory framework for
         prompt corrective action, the Company's subsidiary bank is required to
         meet specific capital adequacy guidelines that involve quantitative
         measures of a bank's assets, liabilities, and certain off-balance sheet
         items as calculated under regulatory accounting practices. Failure to
         meet minimum capital requirements can initiate certain mandatory and
         possible additional discretionary actions by regulators that, if
         undertaken, could have a material effect on the Company's financial
         condition. The bank's capital amounts and classifications are also
         subject to qualitative judgments by the regulators about components,
         risk weightings, and other factors. The risk-based guidelines are based
         on the assignment of risk weights to assets and off-balance sheet items
         depending on the level of credit risk associated with them. In addition
         to minimum capital requirements, under the regulatory framework for
         prompt corrective action, regulatory agencies have specified certain
         ratios an institution must maintain to be considered
         "undercapitalized", "adequately capitalized", and "well capitalized".
         As of December 31, 2000, the most recent notification from the bank's
         regulatory authority categorized the bank as "well capitalized". There
         are no conditions or events since that notification that management
         believes have changed the bank's category.


<PAGE>   43

                   FIRST COMMUNITY CORPORATION AND SUBSIDIARY
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(12)     REGULATORY MATTERS, CONTINUED

         The bank's capital amounts and ratios at December 31, 2000 and 1999
         were as follows:

<TABLE>
<CAPTION>
                                                                                                     2000
                                                                            -----------------------------------------------------
                                                                               REQUIRED
                                                                                TO BE              REQUIRED
                                                                              ADEQUATELY          TO BE WELL             BANK'S
                                                                             CAPITALIZED         CAPITALIZED             ACTUAL
                                                                            -----------------------------------------------------
         <S>                                                                <C>                    <C>                 <C>
         Amount:
              Tier I leverage                                               $  4,798,000           5,998,000           10,774,000
              Tier I risk-based                                                3,703,000           5,555,000           10,774,000
              Total risk-based                                                 7,407,000           9,259,000           11,786,000

         Ratio:
              Tier I leverage                                                       4.00%               5.00%                8.98%
              Tier I risk-based                                                     4.00%               6.00%               11.64%
              Total risk-based                                                      8.00%              10.00%               12.73%

                                                                                                     1999
                                                                            -----------------------------------------------------
         Amount:
              Tier I leverage                                               $  4,527,000           5,659,000           10,056,000
              Tier I risk-based                                                3,450,000           5,178,000           10,056,000
              Total risk-based                                                 6,900,000           8,629,000           10,994,000
         Ratio:
              Tier I leverage                                                       4.00%               5.00%                8.88%
              Tier I risk-based                                                     4.00%               6.00%               11.65%
              Total risk-based                                                      8.00%              10.00%               12.74%
</TABLE>

(13)     STOCK COMPENSATION PLANS

         The Company has two stock option plans, the 1994 Stock Option Plan (the
         employee plan), and the Outside Directors' Stock Option Plan (the
         directors' plan), which are described below. All options expire within
         ten years from the date of grant.

         1994 Stock Option Plan - This plan provides for the granting of options
         to purchase up to 225,000 shares by officers and key employees of the
         Company. The options become exercisable over 1 to 5 years. The
         per-share exercise price of the options may not be less than the fair
         value of a share of common stock on the date the option is granted.

         Outside Directors' Stock Option Plan - Adopted in 1994, this plan
         provides for the granting of options to purchase up to 150,000 shares
         by non-employee directors of the Company. In addition to the initial
         grant of 7,500 per director, each director is granted 1,500 shares
         annually at the fair value of the stock on the date of grant. These
         options become exercisable over 5 years.


<PAGE>   44

                   FIRST COMMUNITY CORPORATION AND SUBSIDIARY
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(13)     STOCK COMPENSATION PLANS, CONTINUED

         As discussed in Note 1, the Company will continue to apply APB Opinion
         25 and related interpretations in accounting for its plans.
         Accordingly, no compensation cost has been recognized for either plan.
         Had compensation cost for the plans been determined based on the fair
         value at the grant date for awards under those plans consistent with
         the method of FASB Statement No. 123, the Company's net income would
         not have been materially affected in 2000, 1999 or 1998.

         The fair value of the options granted is estimated as of the date
         granted using the Black-Scholes option pricing model with the following
         weighted-average assumptions used for grants: dividend yield of 2.0
         percent, risk-free interest rate of 6.0 percent, expected lives of four
         years, and expected volatility of 29 percent in 1999 and 18 percent in
         1998.

         The weighted-average fair value of options, calculated using the
         Black-Scholes option pricing model, granted during 1999 and 1998 is
         $5.23 and $2.40 per share, respectively.

         A summary of the status of the Company's stock option plans for the
         three years ended December 31, 2000 and the changes during those years
         is presented below:

<TABLE>
<CAPTION>
                                                                             TOTAL OPTION        EXERCISABLE           AVERAGE
                                                                                 SHARES            OPTIONS            EXERCISE
                                                                              OUTSTANDING        OUTSTANDING            PRICE
                                                                              ------------------------------------------------
         <S>                                                                  <C>                <C>                  <C>
         Options outstanding at
             December 31, 1997                                                   220,956            170,556           $   4.52

         Options granted                                                          10,500                 --              12.67
         Options which became exercisable                                             --             29,400               5.15
         Options exercised                                                      (157,581)          (157,581)              4.53
                                                                              ------------------------------------------------
         Options outstanding at
             December 31, 1998                                                    73,875             42,375               5.30

         Options granted                                                          21,000                 --              17.38
         Options which became exercisable                                             --             10,500               8.00
         Options exercised                                                       (15,075)           (15,075)              5.44
                                                                              ------------------------------------------------
         Options outstanding at
             December 31, 1999                                                    79,800             37,800               9.98

         Options which became exercisable                                             --             28,200              15.19
         Options exercised                                                          (975)              (975)              6.20
         Options expired                                                          (3,000)                --                 --
                                                                              ------------------------------------------------
         OPTIONS OUTSTANDING AT
             DECEMBER 31, 2000                                                    75,825             65,025           $  11.00
                                                                              ================================================
</TABLE>

         The effect of these options on earnings per common share was to
         increase average shares outstanding by 32,603 in 2000, 34,688 in 1999
         and 104,171 in 1998.


<PAGE>   45

                   FIRST COMMUNITY CORPORATION AND SUBSIDIARY
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(13)     STOCK COMPENSATION PLANS, CONTINUED

         The following table summarizes information about the stock options
         outstanding under the Company's plans at December 31, 2000:

<TABLE>
<CAPTION>
         EXERCISE            NUMBER                AVERAGE               NUMBER
           PRICE           OUTSTANDING         REMAINING LIFE         EXERCISABLE
         ------------------------------------------------------------------------
         <S>               <C>                 <C>                    <C>
            4.50              21,600              3 years               21,600
            6.00               7,500              5 years                7,500
            7.33               8,100              6 years                6,300
            9.33               8,625              7 years                5,025
           12.67               9,000              8 years                3,600
           13.33               6,000              9 years                6,000
           19.00              15,000              9 years               15,000
</TABLE>

(14)     EMPLOYEE BENEFITS

         The subsidiary bank's contribution to the 401K plan amounted to $21,451
         in 2000, $19,064 in 1999 and $8,637 in 1998.

         The Company has a non-qualified deferred compensation arrangement with
         an employee under which future defined benefits are funded principally
         by a single-premium life insurance policy. An actuarially determined
         charge, which is included in non-interest expense, is made each year
         based on the future benefits to be paid to the employee (or
         beneficiary) under the plan. Total amounts paid or accrued under such
         arrangements, which are not deductible by the Corporation for tax
         purposes until distributions are made to participants, amounted to
         $19,000 in 2000, $17,000 in 1999 and $17,000 in 1998.

(15)     FAIR VALUE OF FINANCIAL INSTRUMENTS

         The estimated fair values of the Company's financial instruments as of
         December 31 follows:

<TABLE>
<CAPTION>
                                                                               2000                               1999
                                                                   CARRYING             FAIR           CARRYING           FAIR
                                                                    AMOUNT             VALUE            AMOUNT           VALUE
                                                               -----------------------------------------------------------------
         <S>                                                   <C>                   <C>             <C>              <C>
         FINANCIAL ASSETS:
             CASH AND DUE FROM BANKS                           $    3,424,530        3,424,530        6,517,019        6,517,019
             INTEREST-BEARING DEPOSITS                                     --               --        1,000,000        1,000,000
             FEDERAL FUNDS SOLD                                     2,460,000        2,460,000        1,100,000        1,100,000
             SECURITIES                                             9,598,997        9,598,997        8,846,926        8,846,926
             LOANS RECEIVABLE, NET                                100,244,728       99,800,000       93,310,868       92,900,000
             ACCRUED INTEREST RECEIVABLE                            1,605,669        1,605,669        1,291,881        1,291,881
             CSV OF LIFE INSURANCE                                    603,328          603,328          543,491          543,491
         FINANCIAL LIABILITIES:
             DEPOSITS                                              95,654,411       95,992,000       86,678,528       86,600,000
             FEDERAL FUNDS SOLD AND
               SECURITIES SOLD UNDER
               REPURCHASE AGREEMENTS                                2,256,613        2,256,613        3,372,282        3,372,300
             BORROWINGS FROM FHLB                                  12,500,000       12,490,000       15,100,000       14,811,400
             NOTE PAYABLE                                           1,823,305        1,823,305          593,305          593,305
             ACCRUED INTEREST PAYABLE                               1,018,916        1,018,916          744,933          744,933
</TABLE>


<PAGE>   46

                   FIRST COMMUNITY CORPORATION AND SUBSIDIARY
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(15)     FAIR VALUE OF FINANCIAL INSTRUMENTS, CONTINUED

<TABLE>
<CAPTION>
         Off-balance sheet instruments:                                        2000                              1999
                                                                   NOTIONAL                FAIR        NOTIONAL            FAIR
                                                                    AMOUNT                VALUE         AMOUNT             VALUE
                                                                 ---------------------------------------------------------------
         <S>                                                     <C>                      <C>         <C>                  <C>
         Loan commitments                                        $  6,264,000               --        5,170,000              --
         Letters of credit                                            102,000               --           83,435              --
</TABLE>

(16)     GREENEVILLE, TENNESSEE BRANCH

         During 2000, First Community Bank (FCB) and a group of individuals
         (organizers) from Greene County opened a full-service branch in
         Greeneville. The organizers have applied for a state bank charter and,
         upon receiving approvals from regulatory authorities, plan to begin
         operations as a state-chartered bank in 2001.

         The organizers have an agreement with FCB to purchase the assets and
         liabilities of FCB's branch when the new bank charter is approved. The
         purchase price will be based on FCB's book value causing FCB to incur
         no gain or loss on the sale of the branch. Currently FCB is receiving a
         management fee from the organizers in an amount which offsets any loss
         from branch operations. The management fee received by FCB in 2000
         amounted to approximately $33,000. Total loans of the branch amounted
         to approximately $3,500,000 at December 31, 2000 and total deposits
         were approximately $4,000,000.

(17)     QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

         Selected quarterly results of operations for the four quarters ended
         December 31 are as follows:

<TABLE>
<CAPTION>
                                                                                       Three Months Ended
                                                                         -----------------------------------------------
                                                                         Mar. 31       June 30      Sept. 30      Dec.31
                                                                         --------      -------      --------      ------

         2000:                                                               (in thousands, except per share amounts)

         <S>                                                             <C>            <C>          <C>          <C>
         Interest income                                                 $  2,382        2,416        2,446        2,695
         Interest expense                                                   1,179        1,185        1,194        1,387
                                                                         --------       ------       ------       ------
         Net interest income                                                1,203        1,232        1,251        1,308
         Provision for loan losses                                             26           46           55           80
         Other income                                                         237          317          295          205
         Other expense                                                        985        1,074          968          951
                                                                         --------       ------       ------       ------
         Income (loss) before income tax                                      429          429          522          482
         Income taxes (benefits)                                              157          155          188          174
                                                                         --------       ------       ------       ------
         Net income (loss)                                               $    272          274          334          309
         Earnings (loss) per common share                                     .13          .14          .17          .16
         Diluted earnings (loss) per common
            share                                                             .13          .14          .17          .16
         Cash dividends declared per common
            share                                                             .07          .07          .07          .07
</TABLE>


<PAGE>   47

                   FIRST COMMUNITY CORPORATION AND SUBSIDIARY
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

(17)     QUARTERLY RESULTS OF OPERATIONS (UNAUDITED), CONTINUED

<TABLE>
<CAPTION>
                                                                                       Three Months Ended
                                                                         -----------------------------------------------
                                                                         Mar. 31       June 30      Sept. 30      Dec.31
                                                                         --------      -------      --------      ------

1999:                                                                           (in thousands, except per share amounts)

         <S>                                                             <C>            <C>          <C>          <C>
         Interest income                                                 $  2,008        2,161        2,190        2,318
         Interest expense                                                     907          861          954        1,103
                                                                         --------       ------       ------       ------
         Net interest income                                                1,101        1,299        1,237        1,216
         Provision for loan losses                                             40           86           71           59
         Other income                                                         212          259          241          254
         Other expense                                                        879          905          970          944
                                                                         --------       ------       ------       ------
         Income (loss) before income tax                                      394          568          436          467
         Income taxes                                                         146          213          161          166
                                                                         --------       ------       ------       ------
         Net income (loss)                                               $    248          355          275          301
         Earnings (loss) per common share                                     .12          .17          .14          .14
         Diluted earnings (loss) per common
            share                                                             .12          .17          .14          .14
         Cash dividends declared per common
            share                                                             .06          .06          .07          .07
</TABLE>


<PAGE>   48

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

         There have been no disagreements with the Company's independent
auditors on any matters of accounting principles or practices or financial
statement disclosure.

PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

         Information with respect to the directors and executive officers is
incorporated herein by reference to the Proxy Statement relating to the Annual
Meeting of Shareholders to be held April 25, 2001.

ITEM 10. EXECUTIVE COMPENSATION

         Information with respect to executive compensation is incorporated
herein by reference to the Proxy Statement relating to the Annual Meeting of
Shareholders to be held April 25, 2001.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         Information with respect to the security ownership of certain
beneficial owners and management is incorporated herein by reference to the
Proxy Statement relating to the Annual Meeting of Shareholders to be held April
25, 2001.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Information with respect to certain relationships and related
transactions is incorporated herein by reference to the Proxy Statement relating
to the Annual Meeting of Shareholders to be held April 25, 2001.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

         (a)      List of Exhibits Filed

<TABLE>
<CAPTION>
         Exhibit
         Number                                               Description
         -------                                              -----------
         <S>               <C>
         3.1               Charter of Registrant (previously filed as Exhibit 3(a) as part of the Registration Statement
                           on Form S-4 No. 33-75848, filed March 1, 1994, which exhibit is incorporated herein by
                           reference).

         3.2               Bylaws of Registrant (previously filed as Exhibit 3(b) as part of the Registration Statement
                           No. 33-75848, which exhibit is incorporated herein by reference).

         10.1              First Community Corporation 1994 Stock Option Plan (previously filed as Appendix C to
                           Registration Statement No. 33-75848, which appendix is incorporated herein by reference).

         10.2              First Community Corporation Outside Directors' Stock Option Plan (previously filed as
                           Appendix D to Registration Statement No. 33-75848, which appendix is incorporated herein
                           by reference).

         11                Statement Regarding Computation of Earnings Per Share (included in Item 7-Financial
                           Statements).

         21                Subsidiaries of the Registrant - The Registrant's sole subsidiary is "First Community Bank of East
                           Tennessee", a Tennessee state chartered banking institution.
</TABLE>

         (b)      Reports on Form 8-K. No reports on Form 8-K filed during the
                  fourth quarter of the Registrant's last fiscal year.


<PAGE>   49

                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                       FIRST COMMUNITY CORPORATION
                                       (Registrant)



                                       By: /s/ Mark Gamble
                                          --------------------------------------
                                          Mark Gamble, President and
                                          Chief Executive Officer

                                       Date: March 14, 2001
                                            ------------------------------------

         In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the Registrant and in the capacities and
on the dates indicated.



                                       By: /s/ Mark Gamble
                                          --------------------------------------
                                          Mark Gamble, Director, President and
                                          Chief Executive Officer

                                       Date: March 14, 2001
                                            ------------------------------------



                                       By: /s/ William J. Krickbaum
                                          --------------------------------------
                                          William J. Krickbaum
                                          Director, Chairman of the Board

                                       Date: March 14, 2001
                                            ------------------------------------



                                       By: /s/ Leland A. Davis
                                          --------------------------------------
                                          Leland A. Davis
                                          Director

                                       Date: March 14, 2001
                                            ------------------------------------



                                       By: /s/ Dr. David R. Johnson
                                          --------------------------------------
                                          Dr. David R. Johnson
                                          Director

                                       Date: March 14, 2001
                                            ------------------------------------


<PAGE>   50



                                       By: /s/ Sidney K. Lawson
                                          --------------------------------------
                                          Sidney K. Lawson
                                          Director

                                       Date: March 14, 2001
                                            ------------------------------------



                                       By: /s/ Kenneth E. Jenkins
                                          --------------------------------------
                                          Kenneth E. Jenkins
                                          Director

                                       Date: March 14, 2001
                                            ------------------------------------



                                       By: /s/ Tommy W. Young
                                          --------------------------------------
                                          Tommy W. Young
                                          Director

                                       Date: March 14, 2001
                                            ------------------------------------