<PAGE>
                       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, 2001

                         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, 2001
were:

                                  $ 11,515,808

         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 December 31, 2001, is $22,922,516 for 1,478,872 shares, at an estimated
$15.50 per share.

         As of December 31, 2001, 1,917,167 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,
2002, are incorporated by reference into Part III of this annual report on Form
10-KSB.


<PAGE>


                             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>
<CAPTION>
<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, 2002.


<PAGE>


                        CAUTIONARY STATEMENT CONCERNING
                          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 state bank chartered under
the laws of Tennessee, which was organized in late 1992 shortly after the last
locally-owned bank headquartered at that time in Hawkins County was acquired by
a regional bank holding company. From the time of its opening in April, 1993
until December 31, 2001, the Bank has grown to total assets of more than
$136,000,000.

         The Bank's primary trade area is Hawkins County, Tennessee, which had
a population of 48,388 according to the most recent information available.

         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, with the exception of a $12 million certificate of
deposit from a local governmental entity.

         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,
the Bank pays a quarterly statutory assessment and is subject to the rules and
regulations of the FDIC.


<PAGE>


         At December 31, 2001, the Bank had three full-service offices in two
communities in Hawkins County (two in Rogersville and one in Church Hill). 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 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. A full service branch
was opened in February 2002 in a new Wal-Mart store in Rogersville.

         During 2000, First Community Bank (FCB) and a group of individuals
(organizers) from Greene County opened a full-service branch in Greeneville.
The organizers applied for a state bank charter and began operations as a
state-chartered bank in 2001. The organizers had an agreement with FCB to
purchase the assets and liabilities of FCB's branch when the new bank charter
was approved. The branch was sold during 2001, resulting in no gain or loss to
FCB.

         The Bank had approximately 50 full-time equivalent employees as of
December 31, 2001. The Company has no employees who are not also employed by
the Bank. Although the Bank has been in existence only eight years, the Bank
believes that it has been able to attract and retain a staff possessing 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, as well as companies that have expanded into the quasi-financial
market, and some of these competitors 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.

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 along with 100% of those 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.


<PAGE>


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
each month to the full Board of Directors on the 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

         The Company is not a party to any collective bargaining agreement and
believes that its employee relations generally are good. The Company offers
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.

         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, 2001, the Company's
subsidiary bank's risk-based Tier 1 Capital and risk-based Total Capital ratios
were 12.33% and 13.53%, respectively.


<PAGE>


         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 in an amount equal to or less than the total of its net
income for that year combined with retained net income of the preceding two (2)
years. Payment of dividends in excess of this amount requires prior approval by
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 2001, 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.

         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, 2001, the Bank was considered a "well
capitalized" institution under these definitions.


<PAGE>


         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 one or more unsafe or unsound practices. The
receipt of an unsatisfactory examination rating may provide a basis for finding
unsafe and unsound conditions or practices 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 replacement 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.

         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 than 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, 2001, 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


<PAGE>


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
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. De novo branching is
also permitted under conditions, whereby an out-of-state bank may acquire a
branch office located in Tennessee which has been in operation for at least 5
years, provided the laws of the home state of the out-of-state bank permit an
acquisition of a branch by a Tennessee bank under similar conditions.
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.

         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
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.


<PAGE>


         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.

         The activities permissible to bank holding companies and their
affiliates were substantially expanded by the Gramm-Leach-Bliley Act which the
President signed into law on November 12, 1999. Effective March 11, 2000, the
Gramm-Leach-Bliley Act removed Federal and state law barriers that prevented
banking organizations, such as the Registrant, from affiliating with insurance
organizations and securities firms. An eligible bank holding company may elect
to be treated as a financial holding company and, as such, it may engage in
financial activities (activities that are financial in nature, such as
insurance and securities underwriting and dealing activities) and activities
the Federal Reserve determines to be complementary to financial activities
which do not pose a substantial risk to the safety or soundness of depository
institutions or the financial system generally. To be eligible to elect the
status of a financial holding company, all of the depository institution
subsidiaries of the bank holding company must meet the requirements of their
regulators to be considered well managed and well capitalized and have a CRA
rating of at least "satisfactory." Bank holding companies that do not elect the
status of a financial holding company may continue to engage in and own
companies conducting nonbanking activities which had been approved by Federal
Reserve order or regulation prior to November 12, 1999.

         The Federal Reserve and Treasury Secretary will determine what
activities qualify as financial in nature. A financial holding company will not
be required to obtain prior Federal Reserve approval in order to engage in the
financial activities identified in the Act, other than in connection with an
acquisition of a thrift institution. However, a financial holding company will
not be able to commence, or acquire, any new financial activities if one of its
depository institution subsidiaries receives a less than satisfactory CRA
rating. In addition, if any of its depository institution subsidiaries ceases
being well capitalized or well managed, and compliance is not achieved within
180 days, a financial holding company may be forced, in effect, to cease
conducting business as a financial holding company by divesting either its
nonbanking financial activities or its banks.


<PAGE>


         Subject to certain exceptions, national banks will also be able to
engage in financial activities through separate subsidiaries. As a general
rule, financial subsidiaries of national banks will not be permitted to engage
as principal in underwriting insurance or issuing annuities, real estate
development or investment, merchant banking (for at least 5 years) or insurance
company portfolio activities in which financial holding companies may engage.
Insured state banks are permitted to control or hold an interest in a financial
subsidiary that engages in the same type of activities permissible for national
banks. Conducting financial activities through a bank subsidiary can impact
capital adequacy, and restrictions will apply to affiliate transactions between
the bank and its financial subsidiary.

         The banking, securities and insurance activities of financial
organizations will be functionally regulated by the banking regulators, the
Securities and Exchange Commission and state securities regulators and
organizations, and the state insurance regulators, respectively. Consistent
with this functional approach, and after eighteen months have elapsed after the
enactment of the Gramm-Leach-Bliley Act, banks will no longer be excluded from
the definition of a broker or a dealer under the Federal securities laws.
Limited exemptions will be retained for specific types of bank activities,
including an exemption to permit banks to continue to offer on-site third party
brokerage services under certain conditions. Banks advising registered
investment companies will be required to register as investment advisors, and
only collective investment funds (common trust funds) that are employed by
banks solely as an aid to the administration of trusts, estates, or other
fiduciary accounts will be able to avoid the registration requirements imposed
on investment companies.

         The Gramm-Leach-Bliley Act also includes consumer privacy protections
and CRA "sunshine" rules, "modernizes" various other banking-related statutes,
permits mutual bank holding companies, and requires a number of studies and
reports to Congress over the next five years.

         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 and May 2000.

         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 comprising 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.

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.


<PAGE>


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, 2001.


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 2001 and 2000:


<TABLE>
<CAPTION>
                              2001                                            High                 Low
                                                                              ----                 ---
<S>                                                                          <C>                  <C>
First quarter......................................................          $19.00               19.00
Second quarter.....................................................           17.00               17.00
Third quarter......................................................           17.00               16.00
Fourth quarter.....................................................           17.50               15.50

                             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
</TABLE>

         Prior to the end of the year, the most recent trade of the Company's
common stock known to the Company occurred on December 21, 2001 at a price of
$15.50 per share. 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, 2001, there were approximately 879 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 2001 and 2000, and $.26 per share in
1999.

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 the Company. The Company's business activity is currently limited
to holding the stock of the bank, which is a wholly-owned subsidiary of the
Company. 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, 2001, earning assets were $126 million, compared to
$114 million at December 31, 2000. This increase is due to a $9 million, or
8.9%, increase in loans.


<PAGE>


         Economic growth in the local market, as well as loan participations
with regional banks, has enabled the Bank to achieve continued loan growth.
Real estate lending increased $25 million (38%). Total loans for December 31,
2001 were 80.8% of total assets compared to 82.3% of assets for December 31,
2000.

FUNDING SOURCES. Management relies upon local area deposits as a stable source
of funding. The Bank had total deposits of $106 million as of December 31,
2001, compared to $95.7 million of December 31, 2000. Average 2001 deposits
increased 15.3%, or $13.6 million to $102.3 million from $88.7 million in 2000.
Certificates of deposit and interest-bearing demand accounts accounted for most
of the deposit growth in 2000, 1999 and 1998. Average 2001 certificates of
deposit increased 13.9%, or $7.3 million to $59.7 million from $52.4 million in
2000. Average certificate of deposit growth for 2000 was $4.9 million (10.4%).

         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, FHLB advances and other borrowings amounted to $15.9 million, $16.7
million and $13.4 million for the years ended December 31, 2001, 2000, and
1999, respectively. Due to the highly competitive local market for deposits,
management anticipates the continued use of alternative funding sources to
partially fund loans growth.

         Effective December 18, 2001, the Company, through a placement agent,
sold to institutional investors $4,000,000 in trust preferred securities. The
interest rate, which varies quarterly with LIBOR, was 5.60% at December 31,
2001. The proceeds of the issue were used to reduce existing notes payable,
purchase and retire Company stock and contribute capital to the subsidiary
Bank.

         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, 2001 were .28% ($318,000) of total loans and foreclosed and
repossessed assets, up from $96,000 at December 31, 2000.

         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. These loans totaled $232,000 or .23% of total loans at December 31,
2001, as compared to $164,000 or .16% of total loans at December 31, 2000.

         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 1.13% of outstanding loans at December 31,
2001, compared to 1.01% at December 31, 2000.

         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 6.73% of total
assets at December 31, 2001, and $9.2 million or 7.45% of total assets at
December 31, 2000. At December 31, 2001, $2.3 million of the trust preferred
securities qualify as Tier I capital for regulatory purposes. This brings the
Tier I ratio of the Company to 8.38% at December 31, 2001.

         During 2001 and 2000, the Company purchased and retired common stock
totaling $808,000 and $1.1 million, respectively. The Company entered into an
agreement in 2000 with the former President of the Company to purchase 137,604
shares of common stock at $17.50 per share over three years. The first two
purchases of $803,000 each are reflected in the 2000 and 2001 financial
statements with the final one-third to be purchased in 2002.

         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 $16,500 at December 31, 2001 compared to an increase of
$17,000 as of December 31, 2000.


<PAGE>


         The Bank's earnings performance over the past two years allowed the
board of directors to declare a dividend of $.28 per share in 2001 and 2000 and
$.26 per share in 1999. Additionally, the board of directors develops and
reviews the capital goals of the Company 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
13 to the consolidated financial statements. The Bank's capital ratios exceed
regulatory minimums and compare favorably to industry averages.

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 residential mortgage, commercial real estate
and agricultural real estate loan financing in the Bank's loan portfolio. The
Bank's current borrowing capacity is approximately $13.6 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, 2001 the ratio of rate-sensitive assets to
rate-sensitive liabilities maturing or repricing within one year or less is
(4.3%), a negative one-year gap position. In a period of generally falling
interest rates, this gap position will normally result in an increase in net
interest income. Whereas, in a period of generally rising interest rates, this
gap position will normally result in a decrease in net interest income.


<PAGE>


INTEREST RATE GAP ANALYSIS


<TABLE>
<CAPTION>
                                                                 REPRICEABLE OR MATURITY WITHIN
                                      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                  $ 3,713        $     --         $  3,713         $    --        $     --         $  3,713
Investment securities                    --             151              151           7,649           2,718           10,518
Loans                                31,385          21,013           52,398          51,466           6,405          110,269
                                    -------        --------         --------         -------        --------         --------
Total interest-earning assets       $35,098        $ 21,164         $ 56,262         $59,115        $  9,123         $124,500

LIABILITIES
Interest-bearing deposits           $26,481        $ 31,639         $ 58,120         $35,456        $     --         $ 93,576
Other term borrowings                 3,518              --            3,518              --          12,000           15,518
                                    -------        --------         --------         -------        --------         --------

Total interest-bearing
liabilities                         $29,999        $ 31,639         $ 61,638         $35,456        $ 12,000         $109,094
                                    -------        --------         --------         -------        --------         --------

Assets (liability) GAP              $ 5,099        $(10,475)        $ (5,376)        $23,659        $ (2,877)        $ 15,406
Cumulative asset
   (liability)GAP                   $ 5,099        $ (5,376)        $ (5,376)        $18,283        $ 15,406         $ 15,406
                                    =======        ========         ========         =======        ========         ========
Cumulative as a percentage
   of interest-earning assets          4.10%          (4.32)%          (4.32)%         14.69%          12.37%           12.37%
                                    =======        ========         ========         =======        ========         ========
</TABLE>

         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, 2001, 2000 AND 1999. The
Company recorded net income in 2001 of $1,343,000, an increase of 13% over 2000
net income of $1,189,000. Net income for the year ended December 31, 2000
("2000"), increased 1% from $1,179,000 at December 31, 1999 ("1999"). Net
income increased during 2001 and 2000 because of a higher volume of average
earning assets and a decrease in the average cost of funds from 4.69% in 2000
to 4.02% in 2001.

         Return on average shareholders' equity for the years ended December
31, 2001, 2000, and 1999 was 13.9%, 11.4%, and 13.0%, respectively. Return on
average assets for the years ended December 31, 2001, 2000, and 1999 was 1.04%,
1.01%, and 1.11%, 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 $710,000 (14.5%) in 2001 and $120,000
(2.5%) in 2000. The increase was attributable to the increase in average
earning assets of $12.0 million (10.5%) in 2001 and $10 million (10.4%) in
2000. The net interest yield, which is net interest income expressed as a
percentage of average earning assets, increased from 4.62% in 2000 to 4.74% in
2001 and decreased from 4.98% in 1999 to 4.62% in 2000.


<PAGE>


         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 $648,000, $207,000,
and $256,000 in 2001, 2000 and 1999, respectively. Net chargeoffs to average
loans outstanding was .31% (326,000), .13% (133,000), and .24% (187,000) for
2001, 2000 and 1999, respectively. The allowance for loan losses was 1.1%,
1.0%, and 1.0% of outstanding portfolio loans at December 31, 2001, 2000 and
1999, respectively.

         NON-INTEREST INCOME. Non-interest income increased less than 1.0% in
2001 and increased 10.6% in 2000. As a percentage of average assets,
non-interest income was .88%, .97%, and .98% for 2001, 2000 and 1999,
respectively. Included in other income in 2000 is a gain of $75,000 on the sale
of land adjoining the Church Hill office. Service charges on deposit accounts
increased slightly in 2001 and 2000. 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 by $27,000
(.6%) in 2001 and by $280,000 (7.6%) in 2000, respectively. The ratio of
non-interest expense as a percentage of average assets was 3.1%, 3.4%, and 3.5%
for 2001, 2000 and 1999, respectively. Salaries and employee benefits, which
comprise almost 50% of total noninterest expense, increased less than 1.0% in
2001 and 3.0% in 2000. The ratio of personnel expense has decreased slightly as
a percentage of average total assets and was 1.49% in 2001, 1.65% in 2000 and
1.78% in 1999. 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 (included in other
operating expense).

         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 36.4% in 2001, 36.2% in 2000 and 36.8% in
1999. See Note 8 to the consolidated financial statements for additional
details of the Company's income tax provision.


<PAGE>


                   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, 2001            DECEMBER 31, 2000        2001/2000 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)                           $102,876   9.31%     9,579    95,502   9.63%    9,201      710    (332)    378
                                                --------   ----    -------   -------   ----    ------   ------    ----    ----
Investment securities (4)                          9,875   5.93%       586     9,379   6.03%      566       30     (10)     20
                                                --------   ----    -------   -------   ----    ------   ------    ----    ----
Federal funds sold and other                       6,397   3.56%       228     1,732   5.89%      102      275    (149)    126
                                                --------   ----    -------   -------   ----    ------   ------    ----    ----
               Total earning assets, net
                 of allowance for loan losses    119,148   8.72%    10,393   106,613   9.26%    9,869    1,015    (491)    524
                                                           ====    =======             ====    ======   ======    ====    ====
Cash and due from banks                            3,543                       3,509
Other assets                                       6,731                       7,107
                                                --------                     -------
               Total assets                     $129,422                     117,229
                                                ========                     =======
Deposits:
      NOW and money market investments          $ 20,662   2.87%       594    16,360   3.64%      595      156    (157)     (1)
      Savings                                     10,040   2.60%       261     8,825   2.97%      262       36     (37)     (1)
      Time deposits $100,000 and over             23,834   4.90%     1,167    14,403   6.07%      874      572    (279)    293
      Other time deposits                         35,841   5.22%     1,872    38,080   5.68%    2,164     (127)   (165)   (292)
                                                --------   ----    -------   -------   ----    ------   ------    ----    ----
               Total interest-bearing
                   deposits                       90,377   4.31%     3,894    77,668   5.01%    3,895      637    (638)     (1)
Non interest-bearing demand deposits              11,941     --         --    11,054     --        --       --      --      --
                                                --------   ----    -------   -------   ----    ------   ------    ----    ----
               Total deposits                    102,318   3.81%     3,894    88,722   4.39%    3,895      597    (638)     (1)
Other borrowings                                  15,939   5.37%       856    16,739   6.27%    1,050      (50)   (144)   (194)
                                                --------   ----    -------   -------   ----    ------   ------    ----    ----
               Total deposits and borrowed
                   funds                         118,257   4.02%     4,750   105,461   4.69%    4,945      547    (782)   (195)
                                                           ----    -------             ----    ------   ------    ----    ----
Other liabilities                                  1,527                       1,351
Shareholders' equity                               9,638                      10,417
                                                --------                     -------
               Total liabilities and
                 shareholders' equity           $129,422                     117,229
                                                ========                     =======
Net interest income                                                $ 5,643                     $4,924      468     291     719
                                                                   =======                     ======   ======    ====    ====
Net yield on earning assets                                4.74%                       4.62%
                                                           ====                        ====
</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 $509,000 in 2001 and
         $424,000 in 2000.

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>


                   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   6.03%      566     5,300   5.42%      287      221      58      279
                                                --------   ----    ------   -------   ----    ------     ----    ----   ------
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   9.26%    9,868    96,552   8.95%    8,637      868     363    1,231
                                                           ====    =======            ====    ======     ====    ====   ======
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                                                $4,923                     $4,813      416    (249)     110
                                                                   ======                     ======     ====    ====   ======
Net yield on earning assets                                4.62%                      4.98%
                                                           ====                       ====
</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 $424,000 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>


II.      INVESTMENT PORTFOLIO

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


<TABLE>
<CAPTION>
                                                               DECEMBER 31
                                                        ------------------------
                                                         2001              2000
                                                        -------            -----
                                                            ($ in thousands)
<S>                                                     <C>                <C>
CATEGORY
Available for sale:
U.S. Agency securities                                  $ 7,328            7,089
Mortgage-backed                                           1,996              172
Tax exempt                                                1,194              971
                                                        -------            -----
Total                                                   $10,518            8,232
                                                        =======            =====
</TABLE>

         The following table presents the carrying value by maturity
         distribution of debt securities along with weighted average yields
         thereon as of December 31, 2001:


<TABLE>
<CAPTION>
                                                 Within            1-5            Beyond
($ in thousands)                                 1 Year           Years           5 Years         Total
                                                 ------          -------          -------         ------
<S>                                              <C>             <C>              <C>             <C>
U.S. Agency securities                           $   --          $ 3,743          $3,584          $7,328
Tax exempt securities                               151              318             725           1,194
                                                 ------          -------          ------          ------
                                                 $  151          $ 4,061          $4,309          $8,522
                                                 ======          =======          ======          ======
Weighted average yield (tax equivalent)            6.84%            5.02%           6.15%           5.42%
                                                 ======          =======          ======          ======
Mortgage-backed securities                                                                        $1,996
                                                                                                  ======
Weighted average yield                                                                              5.42%
                                                                                                  ======
</TABLE>

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:


<TABLE>
<CAPTION>
                                                              AS OF DECEMBER 31,
                                                         ----------------------------
TYPE OF LOAN                                               2001                2000
                                                         ---------           --------
                                                                ($ in thousands)
<S>                                                      <C>                 <C>
Domestic:
         Commercial, financial and agricultural          $  16,833             20,245
         Real estate-construction                            9,172              3,413
         Real estate-1 to 4 family residential              36,965             36,990
         Real estate-other                                  36,598             25,674
         Consumer loans                                     10,700             14,935
                                                         ---------           --------
                  Total loans                              110,269            101,257
         Allowance for possible loan losses                 (1,244)            (1,012)
                                                         ---------           --------
Total (net of allowance)                                 $ 109,025            100,245
                                                         =========           ========
</TABLE>


<PAGE>


         The following is a presentation of an analysis of maturities of loans
         as of December 31, 2001:


<TABLE>
<CAPTION>
                                                 DUE IN 1        DUE IN       DUE AFTER
TYPE OF LOAN                                   YEAR OR LESS   1 TO 5 YEARS     5 YEARS          TOTAL
                                               ------------   ------------    ---------        ------
                                                                    (IN THOUSANDS)
<S>                                            <C>            <C>             <C>              <C>
Commercial, financial, and agricultural           4,256          6,330          6,247          16,833
Real estate-construction                          9,172             --             --           9,172
                                                  -----          -----          -----          ------
Total                                            13,428          6,330          6,247          26,005
                                                 ======          =====          =====          ======
</TABLE>

         The following is a presentation of an analysis of sensitivities of
         loans to changes in interest rates as of December 31, 2001 (in
         thousands):


<TABLE>
                  <S>                                                                   <C>
                  Loans due after 1 year with predetermined interest rates              $35,536
                  Loans due after 1 year with variable interest rates                   $53,841
</TABLE>


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


<TABLE>
<CAPTION>
                                                   DECEMBER 31, 2001    DECEMBER 31, 2000
                                                   -----------------    -----------------
<S>                                                <C>                  <C>
Loans accounted for on a non-accrual basis:
         Number                                              11                 4
         Amount                                        $318,000            96,000
Accruing loans (including consumer loans) which are contractually past due 90
  days or more as to principal and interest payments:
         Number                                              10                24
         Amount                                        $232,000           164,000

Loans defined as "troubled debt
  restructurings"
         Number                                               0                 0
         Amount                                        $      0                 0
</TABLE>

         As of December 31, 2001, 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>


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,
                                                                       ----------------------------
                                                                        2001                 2000
                                                                       -------              -------
<S>                                                                    <C>                      <C>
Balance at beginning of period                                         $ 1,012                  938
Charge-offs: Real estate                                                  (177)                  20
             Consumer                                                     (157)                (116)
                                                                       -------              -------
                                                                          (334)                (136)
                                                                       -------              -------
Recoveries                                                                   8                    3
Net Charge-offs                                                           (326)                (133)
                                                                       -------              -------
Additions charged to operations                                            558                  207
                                                                       -------              -------
Balance at end of period                                               $ 1,244              $ 1,012
                                                                       =======              =======
Ratio of net charge-offs during the period to average loans
outstanding during the period                                              .31%                 .13%
                                                                       =======              =======
</TABLE>

         At December 31, 2001 the allowance was allocated as follows:


<TABLE>
<CAPTION>
                                                       ($ in thousands)
                                                           PERCENT OF LOANS IN EACH
                                                  AMOUNT   CATEGORY TO TOTAL LOANS
                                                  ------   ------------------------
<S>                                               <C>      <C>
Commercial, financial and agricultural            $  187             15
Real estate-construction                             100              8
Real estate-mortgage                                 422             34
Real estate-other                                    411             33
Consumer loans                                       124             10
                                                  ------            ---
         Total                                    $1,244            100
                                                  ======            ===
</TABLE>


<PAGE>


         At December 31, 2000 the allowance was allocated as follows:


<TABLE>
<CAPTION>
                                                        ($ in thousands)
                                                           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>


         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,
         2001, 15% 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, 2001 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:


<TABLE>
<CAPTION>
                                                    YEAR ENDED DECEMBER 31, 2001
                                                         ($ in thousands)
DEPOSIT CATEGORY                             AVERAGE AMOUNT            AVERAGE RATE PAID
                                             --------------            -----------------
<S>                                          <C>                       <C>
Non interest-bearing demand deposits            $11,914                 Not applicable
NOW deposits                                     20,663                      2.72
Savings deposits                                 10,049                      2.71
Time deposits                                    59,658                      5.13
</TABLE>


<PAGE>


<TABLE>
<CAPTION>
                                                     YEAR ENDED DECEMBER 31, 2000
                                                           ($ in thousands)
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>

         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, 2001 (in thousands):


<TABLE>
<CAPTION>
                         TIME CERTIFICATES OF DEPOSIT
                         ----------------------------
<S>                      <C>
3 months or less                   $13,706
3-12 months                          9,449
over 12 months                       1,886
                                   -------
Total                              $26,041
                                   =======
</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,
                                                     ---------------------------------------
                                                     2001             2000             1999
                                                     ----             ----             ----

<S>                                                  <C>              <C>              <C>
Return on average assets                             1.04%            1.01%            1.11%
Return on average equity                             13.9%            11.4%            13.0%
Average equity to average assets ratio                7.4%             8.9%             8.6%
Dividend payout ratio                                40.7%            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, 2001 and 2000:


<TABLE>
<CAPTION>
                                                               (IN THOUSANDS)
                                                          ------------------------
                                                           2001               2000
                                                          ------             -----
<S>                                                       <C>                <C>
Amount outstanding at December 31                         $3,518             2,257
Weighted average interest rate at year end                  1.46%             5.47%
Maximum month-end balance during the year                  3,518             2,596
Average amount outstanding during the year                 2,180             1,931
Weighted average interest rate during the year              3.52%             5.48%
</TABLE>

ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


<PAGE>


                          FIRST COMMUNITY CORPORATION
                                AND SUBSIDIARIES

                       CONSOLIDATED FINANCIAL STATEMENTS

                               DECEMBER 31, 2001


<PAGE>


                          INDEPENDENT AUDITORS' REPORT


The Board of Directors
First Community Corporation and Subsidiaries

We have audited the consolidated balance sheets of First Community Corporation
and Subsidiaries as of December 31, 2001 and 2000, and the related consolidated
statements of operations, changes in shareholders' equity, and cash flows for
each of the three years in the period ended December 31, 2001. 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 auditing standards generally
accepted in the United States of America. 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 Subsidiaries as of December 31, 2001 and 2000, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 2001, in conformity with
accounting principles generally accepted in the United States of America.



Heathcott & Mullaly, P.C.
Brentwood, Tennessee
February 8, 2002


<PAGE>

                  FIRST COMMUNITY CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2001 AND 2000


<TABLE>
<CAPTION>
                                                                            2001                     2000
                                                                        -------------             ------------
<S>                                                                     <C>                       <C>
                            ASSETS
Cash and due from banks                                                 $   4,865,846                3,424,530
Federal funds sold                                                          3,713,232                2,460,000
Securities, available for sale                                             10,518,402                8,232,282
Loans                                                                     110,269,083              101,257,131
Allowance for loan losses                                                  (1,243,496)              (1,012,403)
                                                                        -------------             ------------
         NET LOANS                                                        109,025,587              100,244,728
                                                                        -------------             ------------
Premises and equipment                                                      3,744,278                3,953,786
Accrued interest receivable                                                 1,362,478                1,605,669
Federal Home Loan Bank and Bankers Bank stock                               1,455,715                1,366,715
Cash surrender value of life insurance                                        643,569                  603,328
Computer software, net of amortization                                        499,687                  585,498
Other assets                                                                  625,892                  499,084
                                                                        -------------             ------------
         TOTAL ASSETS                                                   $ 136,454,686              122,975,620
                                                                        =============             ============

               LIABILITIES AND SHAREHOLDERS' EQUITY
DEPOSITS:
Noninterest-bearing                                                     $  12,521,610               12,029,129
Interest-bearing                                                           93,576,407               83,625,282
                                                                        -------------             ------------
         TOTAL DEPOSITS                                                   106,098,017               95,654,411
                                                                        -------------             ------------
Federal funds purchased and securities sold
  under agreement to repurchase                                             3,517,958                2,256,613
Borrowings from Federal Home Loan Bank                                     12,000,000               12,500,000
Note payable                                                                  124,000                1,823,305
Accrued interest payable                                                      641,917                1,018,916
Dividends payable                                                             134,202                  137,320
Other liabilities                                                             759,734                  420,536
                                                                        -------------             ------------
         TOTAL LIABILITIES                                                123,275,828              113,811,101
                                                                        -------------             ------------
TRUST PREFERRED SECURITIES                                                  4,000,000                       --

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 1,917,167 shares in 2001 and 1,961,706 shares in 2000              7,089,275                7,386,357
Retained earnings                                                           2,056,244                1,761,341
Accumulated other comprehensive income, net                                    33,339                   16,821
                                                                        -------------             ------------
         TOTAL SHAREHOLDERS' EQUITY                                         9,178,858                9,164,519
                                                                        -------------             ------------
         TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                     $ 136,454,686              122,975,620
                                                                        =============             ============
</TABLE>


See accompanying notes to consolidated financial statements.


<PAGE>


                  FIRST COMMUNITY CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                      THREE YEARS ENDED DECEMBER 31, 2001


<TABLE>
<CAPTION>
                                                  2001                   2000                 1999
                                               -----------            ---------            ---------
<S>                                            <C>                    <C>                  <C>
INTEREST INCOME:
   Loans, including fees                       $ 9,578,837            9,201,183            8,170,398
   Securities:
      Taxable                                      507,237              498,507              224,783
      Non-taxable                                   49,293               45,409               39,289
   Federal funds sold and other                    228,208              102,652              173,075
                                               -----------            ---------            ---------

         TOTAL INTEREST INCOME                  10,363,575            9,847,751            8,607,545
                                               -----------            ---------            ---------

INTEREST EXPENSE:
   Deposits                                      3,894,740            3,894,506            3,130,098
   Other                                           855,756            1,050,314              694,481
                                               -----------            ---------            ---------

         TOTAL INTEREST EXPENSE                  4,750,496            4,944,820            3,824,579
                                               -----------            ---------            ---------

         NET INTEREST INCOME                     5,613,079            4,902,931            4,782,966

PROVISION FOR LOAN LOSSES                          647,500              206,861              256,141
                                               -----------            ---------            ---------

         NET INTEREST INCOME AFTER
         PROVISION FOR LOAN LOSSES               4,965,579            4,696,070            4,526,825
                                               -----------            ---------            ---------

NONINTEREST INCOME:
    Service charges on deposit accounts            640,709              636,048              623,760
    Credit life insurance commissions               47,758               58,431               64,328
    Dividends on FHLB stock                         89,000               90,300               69,924
    Mortgage banking activities                    162,855               82,926              120,996
    Gain on sale of land                                --               74,675                   --
    Other                                          211,911              202,925              156,755
                                               -----------            ---------            ---------

TOTAL NONINTEREST INCOME                         1,152,233            1,145,305            1,035,763
                                               -----------            ---------            ---------

NONINTEREST EXPENSES:
   Salaries and employee benefits                1,936,718            1,932,736            1,876,741
   Occupancy                                       333,824              332,442              312,480
   Furniture and equipment                         314,980              347,908              271,409
   Advertising and public relations                 73,680               81,271               84,622
   Operating supplies                              166,703              209,559              126,050
   Other operating                               1,179,468            1,074,529            1,026,665
                                               -----------            ---------            ---------

         TOTAL NONINTEREST EXPENSES              4,005,373            3,978,445            3,697,967
                                               -----------            ---------            ---------

         INCOME BEFORE INCOME TAXES              2,112,439            1,862,930            1,864,621

INCOME TAXES                                       769,677              673,983              685,926
                                               -----------            ---------            ---------

NET INCOME                                     $ 1,342,762            1,188,947            1,178,695
                                               ===========            =========            =========

EARNINGS PER COMMON SHARE:
   BASIC                                              0.69                 0.59                 0.58
   DILUTED                                     $      0.68                 0.58                 0.57
                                               ===========            =========            =========

AVERAGE COMMON SHARES OUTSTANDING:
   BASIC                                         1,953,270            2,015,665            2,041,981
   DILUTED                                       1,981,369            2,048,268            2,076,669
                                               ===========            =========            =========
</TABLE>


See accompanying notes to consolidated financial statements.


<PAGE>


                  FIRST COMMUNITY CORPORATION AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                      THREE YEARS ENDED DECEMBER 31, 2001


<TABLE>
<CAPTION>
                                                                                                ACCUMULATED
                                                                                                   OTHER          TOTAL
                                                                 COMMON           RETAINED     COMPREHENSIVE   SHAREHOLDERS'
                                                                  STOCK           EARNINGS     INCOME (LOSS)      EQUITY
                                                               -----------       ----------    -------------   -------------
<S>                                                            <C>               <C>           <C>             <C>
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 (loss):
  Net income                                                            --        1,178,695            --        1,178,695
  Other comprehensive income, net of income taxes:
    Change in unrealized gains (losses) on securities
      available for sale,  net of tax benefits of
      $47,700                                                           --               --       (78,196)         (78,196)
                                                               -----------       ----------       -------       ----------
      Total comprehensive income (loss)                                 --        1,178,695       (78,196)       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
  Other comprehensive income, net of income taxes:
    Change in unrealized gains (losses) on securities
      available for sale,  net of tax of $50,000                        --               --        80,784           80,784
                                                               -----------       ----------       -------       ----------
      Total comprehensive income                                        --        1,188,947        80,784        1,269,731
                                                               -----------       ----------       -------       ----------
BALANCE, DECEMBER 31, 2000                                       7,386,357        1,761,341        16,821        9,164,519
Purchase and retirement of common stock                           (306,406)        (501,534)           --         (807,940)
Issuance of 1,629 common shares in connection with stock
  option plans                                                       9,324               --            --            9,324
Dividends - $.28 per share                                              --         (546,325)           --         (546,325)
Comprehensive income:
  Net income                                                            --        1,342,762            --        1,342,762
  Other comprehensive income, net of income taxes:
    Change in unrealized gains (losses) on securities
      available for sale,  net of tax of $10,000                        --               --        16,518           16,518
                                                               -----------       ----------       -------       ----------
      Total comprehensive income                                        --        1,342,762        16,518        1,359,280
                                                               -----------       ----------       -------       ----------
BALANCE, DECEMBER 31, 2001                                     $ 7,089,275        2,056,244        33,339        9,178,858
                                                               ===========       ==========       =======       ==========
</TABLE>


See accompanying notes to consolidated financial statements.


<PAGE>


                  FIRST COMMUNITY CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                      THREE YEARS ENDED DECEMBER 31, 2001


<TABLE>
<CAPTION>
INCREASE (DECREASE) IN CASH                                     2001               2000                1999
                                                            ------------         ----------         -----------
<S>                                                         <C>                  <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  NET INCOME                                                $  1,342,762          1,188,947           1,178,695
  Adjustments to reconcile net income to
    net cash provided by operating activities:
      Depreciation and amortization                              474,546            503,274             381,739
      Provision for loan losses                                  647,500            206,861             256,141
      FHLB stock dividends                                       (89,000)           (90,300)            (69,800)
      Gain on sale of land                                            --            (74,675)                 --
      Deferred income taxes (benefits)                            (2,000)            40,000              49,000
      Decrease (increase) in accrued interest receivable         243,191           (313,788)           (253,048)
      Increase (decrease) in accrued interest payable           (376,999)           273,983              (4,323)
      Increase (decrease) in other liabilities                   336,080             74,771            (115,417)
      Other, net                                                (171,945)          (133,731)            (75,630)
                                                            ------------         ----------         -----------

NET CASH PROVIDED BY OPERATING ACTIVITIES                      2,404,135          1,675,342           1,347,357
                                                            ------------         ----------         -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Decrease (increase) in interest bearing deposits                    --          1,000,000            (962,206)
  Decrease (increase) in federal funds sold                   (1,253,232)        (1,360,000)         10,023,000
  Purchases of securities available for sale                 (11,014,480)          (830,491)         (6,961,000)
  Proceeds from maturities and redemptions of
     securities available for sale                             8,754,982             78,420           1,435,224
  Net increase in  loans                                      (9,428,359)        (8,079,207)        (12,599,267)
  Proceeds from sale of land                                          --             90,000                  --
  Purchases of fixed assets and computer software               (179,227)          (545,647)           (637,251)
                                                            ------------         ----------         -----------

  NET CASH USED BY INVESTING ACTIVITIES                      (13,120,316)        (9,646,925)         (9,701,500)
                                                            ------------         ----------         -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Cash dividends                                                (549,443)          (565,925)           (898,511)
  Proceeds from (repayments of) note payable                  (1,699,305)         1,230,000             593,305
  Proceeds from (repayments of) FHLB advances                   (500,000)        (2,600,000)          7,100,000
  Proceeds from trust preferred securities                     4,000,000                 --                  --
  Increase in deposits                                        10,443,606          8,975,883           3,217,078
  Increase (decrease) in federal funds purchased and
    securities sold under agreement to repurchase              1,261,345         (1,115,669)          1,844,218
  Purchase and retirement of common stock                       (807,940)        (1,051,245)           (598,905)
  Proceeds from issuance of common stock                           9,234              6,050              82,038
                                                            ------------         ----------         -----------

  NET CASH PROVIDED BY FINANCING ACTIVITIES                   12,157,497          4,879,094          11,339,223
                                                            ------------         ----------         -----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS           1,441,316         (3,092,489)          2,985,080

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD               3,424,530          6,517,019           3,531,939
                                                            ------------         ----------         -----------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                  $  4,865,846          3,424,530           6,517,019
                                                            ============         ==========         ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Cash paid during period for:
    Interest                                                $  5,127,495          4,670,837           3,828,902
    Income taxes                                                 564,000            671,565             732,375
                                                            ============         ==========         ===========
</TABLE>


See accompanying notes to consolidated financial statements.


<PAGE>


                  FIRST COMMUNITY CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 2001


(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,
         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. During
         2000, the Bank opened a branch in Greeneville, Tennessee. That branch
         was sold in 2001 (see note 17). The accounting principles followed and
         the methods of applying those principles conform with accounting
         principles generally accepted in the United States of America 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 subsidiaries First Community Bank
         of East Tennessee (the Bank) and Rogersville Statutory Trust I. All
         material intercompany balances and transactions have been eliminated
         in consolidation.

         USE OF ESTIMATES

         The preparation of financial statements in accordance with accounting
         principles generally accepted in the United States of America 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.
<PAGE>
                  FIRST COMMUNITY CORPORATION AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
                                DECEMBER 31, 2001

(1)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

         SECURITIES, CONTINUED

         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.

         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.

         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 is 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 that 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.



<PAGE>

(1)      SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

         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.

         STOCK-BASED COMPENSATION

         SFAS No. 123, "Accounting for Stock-Based Compensation", 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.

         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.



<PAGE>

(1)      SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

         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
         that is defined as non-owner related transactions in equity.

         RECLASSIFICATIONS

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

         FAIR VALUE OF FINANCIAL INSTRUMENTS

         Fair values of financial instruments are estimated using relevant
         market information and other assumptions, as more fully disclosed in a
         separate note. Fair value estimates involve uncertainties and matters
         of significant judgment regarding interest rates, credit risk,
         prepayments, and other factors, especially in the absence of broad
         markets for particular items. Changes in assumptions or in market
         conditions could significantly affect the estimates.

         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>

(1)      SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

         RECENT ACCOUNTING PRONOUNCEMENTS, CONTINUED

         A new accounting standard requires all business combinations to be
         recorded using the purchase method of accounting for any transaction
         initiated after June 30, 2001. Under the purchase method, all
         identifiable tangible and intangible assets and liabilities of the
         acquired company must be recorded at fair value at date of acquisition,
         and the excess of cost over fair value of net assets acquired is
         recorded as goodwill. Identifiable intangible assets must be separated
         from goodwill. Identifiable intangible assets with finite useful lives
         will be amortized under the new standard, whereas goodwill, both
         amounts previously recorded and future amounts purchased, will cease
         being amortized starting in 2002. Annual impairment testing will be
         required for goodwill with impairment being recorded if the carrying
         amount of goodwill exceeds its implied fair value. Adoption of this
         standard on January 1, 2002 will not have a material effect on the
         Company's financial statements.

(2)      SECURITIES

         The following table reflects the amortized cost and fair values of
         securities available for sale held at December 31, 2001 and 2000.

<TABLE>
<CAPTION>
                                                                GROSS         GROSS
                                              AMORTIZED       UNREALIZED    UNREALIZED           FAIR
                                                COST             GAINS        LOSSES             VALUE
                                             -----------------------------------------------------------
         <S>                                 <C>              <C>           <C>               <C>
                   2001
         U.S. GOVERNMENT AGENCY
           SECURITIES                        $ 7,269,242        84,535        (26,250)         7,327,527
         MORTGAGE-BACKED
           SECURITIES                          1,988,952         7,625             --          1,996,577
         TAX EXEMPT SECURITIES                 1,206,470         5,425        (17,597)         1,194,298
                                             -----------------------------------------------------------
         TOTAL AVAILABLE FOR SALE            $10,464,664        97,585        (43,847)        10,518,402
                                             ===========================================================

                   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
                                             -----------------------------------------------------------
         Total available for sale            $ 8,205,167        52,337        (25,222)         8,232,282
                                             ===========================================================
</TABLE>



<PAGE>

(2)      SECURITIES, CONTINUED

         The amortized cost and fair value of securities at December 31, 2001,
         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 in 1 year or less                   $   149,924           151,385
         Due after 1 through 5 years               6,583,352         6,617,472
         Due after 5 through 10 years              1,125,000         1,148,620
         Due after 10 years                          617,436           604,348
         Mortgage-backed                           1,988,952         1,996,577
                                                 -----------------------------
                                                 $10,464,664        10,518,402
                                                 =============================
</TABLE>

         Securities carried at $8,512,000 at December 31, 2001, were pledged to
         secure public deposits and for other purposes as required or permitted
         by law. Included in that amount is $5,708,000 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, 2001 and
         2000 follows:

<TABLE>
<CAPTION>
                                                                           2001                2000
                                                                       --------------------------------
         <S>                                                           <C>                  <C>
         Commercial, financial and agricultural                        $ 16,833,000          20,245,000
         Real estate - construction                                       9,172,000           3,413,000
         Real estate - 1 to 4 family residential properties              36,965,000          36,990,000
         Real estate - other                                             36,598,000          25,674,000
         Consumer                                                        10,701,083          14,935,131
                                                                       --------------------------------
                  Total loans                                          $110,269,083         101,257,131
                                                                       ================================
</TABLE>

         At December 31, 2001 and 2000, the Bank had loans amounting to $318,000
         and $96,000, respectively that were specifically classified as
         impaired. The allowance for loan losses related to impaired loans
         amounted to approximately $48,000 and $15,000 at December 31, 2001 and
         2000, respectively. The average balance of these loans amounted to
         approximately $285,500, $50,000 and $95,000 for the years ended
         December 31, 2001, 2000 and 1999, respectively. The impact on net
         interest income of these loans was not material to the Bank's results
         of operations.



<PAGE>

(3)      LOANS, CONTINUED

         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 $2,422,000 and
         $2,388,000 as of December 31, 2001 and 2000, respectively. During 2001,
         $990,000 of new loans were made and repayments amounted to $956,000.
         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.

         Deposit balances of executive officers, directors, principal
         shareholders and their related interests at December 31, 2001, amounted
         to $903,000.

(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.

<TABLE>
<CAPTION>
                                                                                  Contract or
                                                                                Notional Amount
                                                                                ---------------
         <S>                                                                    <C>
         Financial instruments whose contract amounts represent credit risk:
         Commitment to extend credit                                               $7,539,000
         Standby letters of credit                                                    328,548
</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.



<PAGE>

(4)      COMMITMENTS AND CONTINGENCIES, CONTINUED

         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>
                                                                       2001                2000             1999
                                                                    ----------------------------------------------
         <S>                                                        <C>                  <C>               <C>
         Balance at beginning of period                             $ 1,012,403            938,486         869,013
             Provision charged to operating expenses                    647,500            206,861         256,141
             Bank of Greeneville allowance in settlement                (90,020)                --              --
             Loans charged off                                         (333,690)          (136,554)       (194,256)
             Recoveries on loans previously charged off                   7,303              3,610           7,588
                                                                    ----------------------------------------------
         Balance at end of period                                   $ 1,243,496          1,012,403         938,486
                                                                    ==============================================
</TABLE>

(6)      PREMISES AND EQUIPMENT

         The provision for depreciation totaled $367,212, $387,743 and 332,718
         for 2001, 2000 and 1999, respectively. Following is a summary of
         premises and equipment at December 31:

<TABLE>
<CAPTION>
                                                                                      2001                2000
                                                                                   ------------------------------
         <S>                                                                       <C>                  <C>
         Land                                                                       $  692,667            692,667
         Building                                                                    3,176,791          3,146,842
         Furniture and equipment                                                     1,682,065          1,592,788
                                                                                   ------------------------------
                                                                                     5,551,523          5,432,297
         Less allowance for depreciation and amortization                            1,807,245          1,478,511
                                                                                   ------------------------------
                                                                                   $ 3,744,278          3,953,786
                                                                                   ==============================
</TABLE>



<PAGE>

(7)      DEPOSITS

         A summary of deposits at December 31 follows:

<TABLE>
<CAPTION>
                                                                    2001               2000
                                                                ------------------------------
         <S>                                                    <C>                 <C>
         Non-interest-bearing demand                            $ 12,521,610        12,029,129
         Interest-bearing demand                                  20,543,149        19,948,996
         Savings                                                  12,488,505         8,623,587
         Certificates of deposit of $100,000 or more              26,041,195        18,227,138
         Other time                                               34,503,558        36,825,561
                                                                ------------------------------
                                                                $106,098,017        95,654,411
                                                                ==============================
</TABLE>

         Interest expense on deposits of $100,000 or more amounted to $1,166,793
         in 2001, $874,250 in 2000 and $637,046 in 1999.

         At December 31, 2001, maturities of time deposits were as follows:

<TABLE>

         <S>                                          <C>
         One year or less                             $51,693,753
         Over one year through three years              8,496,000
         Over three years                                 355,000
                                                      -----------
                                                      $60,544,753
                                                      ===========
</TABLE>

(8)      INCOME TAXES

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

<TABLE>
<CAPTION>
                                                                     2001                2000              1999
                                                                   ----------------------------------------------
            <S>                                                    <C>                  <C>               <C>
            Current tax provision
            Federal                                                $ 645,677            533,090           533,655
            State                                                    126,000            100,893           103,271
                                                                   ----------------------------------------------
                                                                     771,677            633,983           636,926
                                                                   ----------------------------------------------
            Deferred (benefit)
            Federal                                                   (1,500)            34,000            41,000
            State                                                       (500)             6,000             8,000
                                                                   ----------------------------------------------
                                                                      (2,000)            40,000            49,000
                                                                   ----------------------------------------------
                                                                   $ 769,677            673,983           685,926
                                                                   ==============================================
</TABLE>



<PAGE>

(8)      INCOME TAXES, CONTINUED

         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>
                                                                     2001                2000               1999
                                                                   ----------------------------------------------
         <S>                                                       <C>                  <C>               <C>
         Tax at statutory rate                                     $ 718,230            633,396           633,972
         Increase (decrease) resulting from:
              State income tax, net of federal effect                 75,200             73,000            73,000
              Tax exempt interest                                    (22,000)           (24,000)          (16,000)
              Other, net                                              (1,753)            (8,413)           (5,046)
                                                                   ----------------------------------------------
                                                                   $ 769,677            673,983           685,926
                                                                   ==============================================
</TABLE>

         The tax effect of each type of temporary difference that results in
         deferred tax assets and liabilities is as follows:

<TABLE>
<CAPTION>
                                                                                        2001               2000
                                                                                      ---------------------------
         <S>                                                                          <C>                 <C>
         Deferred tax asset:
              Provision for loan losses                                               $ 396,000           336,000
              Deferred compensation                                                      23,000            16,000
                                                                                      ---------------------------
                                                                                        419,000           352,000
                                                                                      ---------------------------
         Deferred tax liability:
              Unrealized gains on securities                                            (20,000)          (10,000)
              Stock dividends                                                          (144,000)         (110,000)
              Depreciation                                                             (231,000)         (200,000)
                                                                                      ---------------------------
                                                                                       (395,000)         (320,000)
                                                                                      ---------------------------
         Net deferred tax asset                                                       $  24,000            32,000
                                                                                      ===========================
</TABLE>

(9)      OTHER BORROWED FUNDS

         The carrying value of securities underlying securities sold under
         agreements to repurchase was $5,708,668 at December 31, 2001 and
         $3,408,000 at December 31, 2000. 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
         3.775% at December 31, 2001. The line matures in 2002. The balance
         outstanding on the line at December 31, 2001 was $124,000.

         The Bank also has available federal funds lines (or the equivalent
         thereof) with correspondent banks totaling $13,500,000.



<PAGE>

(9)      OTHER BORROWED FUNDS, CONTINUED

         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, 2001 totaled $12 million with $2 million
         maturing in 2010, and $10 million maturing in 2011. Interest rates on
         the advances range from 4.28% to 6.26%. The FHLB advances and the
         letters of credit are collateralized by the Bank's FHLB stock with a
         carrying value of $1,377,900 and certain single-family mortgage,
         commercial real estate, and agricultural real estate loans totaling $18
         million.

(10)     TRUST PREFERRED SECURITIES

         On December 18, 2001, First Community Corporation, through Rogersville
         Statutory Trust I and with the assistance of its Placement Agent, sold
         to institutional investors $4,000,000 of Capital Securities.
         Rogersville Statutory Trust I, a Connecticut business trust wholly
         owned by First Community Corporation, issued $4,000,000 of Floating
         Rate Capital Securities. Holders of the Capital Securities are entitled
         to receive preferential cumulative cash distributions from the Trust,
         at a rate per annum reset quarterly equal to the sum of three month
         LIBOR plus 360 basis points applied to the liquidation amount of $1,000
         per Capital Security, accruing from the date of original issuance and
         payable quarterly in arrears on March 18, June 18, September 18 and
         December 18 each year commencing March 18, 2002. The rate was 5.60% at
         December 31, 2001. The Company can defer payment of interest on the
         subordinated debt securities at any time or from time to time for a
         period not to exceed twenty consecutive quarters.

         The proceeds were upstreamed to First Community Corporation as junior
         subordinated debt under the same terms and conditions. First Community
         Corporation has, through various contractual arrangements, fully and
         unconditionally guaranteed all of Rogersville Statutory Trust I's
         obligations with respect to the Capital Securities. These Capital
         Securities qualify as a Tier I Capital and are presented in the
         Consolidated Balance Sheets as Trust Preferred Securities. The sole
         asset of Rogersville Statutory Trust I is $4,000,000 of junior
         subordinated debentures issued by First Community Corporation. These
         junior subordinated debentures also carry the same floating rate and
         both mature on December 18, 2031; however, the maturity of both may be
         shortened to a date not earlier than December 18, 2006.



<PAGE>

(11)     OTHER NONINTEREST EXPENSES

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

<TABLE>
<CAPTION>
                                                2001             2000             1999
                                             --------------------------------------------
         <S>                                 <C>               <C>              <C>
         Communications                      $  137,947          144,943          146,354
         Legal and professional                 142,604          110,135          122,890
         Board and committee fees               106,025           52,625           59,350
         Software amortization                  106,335          115,531           46,435
         Other operating                        686,557          651,295          651,636
                                             --------------------------------------------
                                             $1,179,468        1,074,529        1,026,665
                                             ============================================
</TABLE>

(12)     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 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.

         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 and 2001, with the remaining
         one-third to be purchased in 2002.

(13)     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,
         2001.

         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, 2001, approximately $2,000,000 of retained earnings was
         available for dividend declaration by the subsidiary without prior
         regulatory approval.



<PAGE>

(13)     REGULATORY MATTERS, CONTINUED

         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, 2001, 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.

         The bank's capital amounts and ratios at December 31, 2001 and 2000
         were as follows:

<TABLE>
<CAPTION>
                                                                 2001
                                         --------------------------------------------------
                                          REQUIRED TO          REQUIRED
                                         BE ADEQUATELY        TO BE WELL           BANK'S
                                          CAPITALIZED         CAPITALIZED          ACTUAL
                                         --------------------------------------------------
         <S>                             <C>                  <C>                <C>
         Amount:
              Tier I leverage              $5,346,280          6,682,850         12,758,000
              Tier I risk-based             4,138,560          6,207,840         12,758,000
              Total risk-based              8,227,120         10,346,400         14,001,000
         Ratio:
              Tier I leverage                    4.00%              5.00%              9.55%
              Tier I risk-based                  4.00%              6.00%             12.33%
              Total risk-based                   8.00%             10.00%             13.53%

                                                                 2000
                                         --------------------------------------------------
         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%
</TABLE>



<PAGE>

(14)     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.

         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 2001, 2000 or 1999.

         The fair value of the options granted in 1999 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.

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

         The Company's common stock is not traded on an exchange nor is there a
         known active trading market. The market value of the stock used in
         these calculations is based solely on information made available to the
         Company from a limited number of buyers and sellers.



<PAGE>

(14)     STOCK COMPENSATION PLANS, CONTINUED

         A summary of the status of the Company's stock option plans for the
         three years ended December 31, 2001 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, 1998                        58,875          27,375         $ 6.65

         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                        64,800          22,800          12.29

         Options which became exercisable                 --          13,200          13.45
         Options exercised                              (975)           (975)          6.20
         Options expired and rescinded               (18,000)             --             --
                                                   ----------------------------------------

         Options outstanding at
             December 31, 2000                        45,825          35,025           8.61

         Options which became exercisable                 --           5,400           9.77
         Options exercised                            (1,629)         (1,629)          5.72
                                                   ----------------------------------------

         OPTIONS OUTSTANDING AT
             DECEMBER 31, 2001                        44,196          38,796         $ 8.72
                                                   ========================================
</TABLE>

         The effect of these options on earnings per common share was to
         increase average shares outstanding by 28,099 in 2001, 32,603 in 2000
         and 34,688 in 1999.

         The following table summarizes information about the stock options
         outstanding under the Company's plans at December 31, 2001:

<TABLE>
<CAPTION>
                                                     AVERAGE
              EXERCISE           NUMBER             REMAINING             NUMBER
                PRICE         OUTSTANDING             LIFE              EXERCISABLE
              ---------------------------------------------------------------------
              <S>             <C>                   <C>                 <C>
               $ 4.50            10,800              2 years              10,800
                 6.00             4,371              4 years               4,371
                 7.33             6,600              5 years               6,600
                 9.33             7,725              6 years               5,925
                12.67             8,700              7 years               5,100
                13.33             6,000              8 years               6,000
</TABLE>



<PAGE>

(15)     EMPLOYEE BENEFITS

         The subsidiary bank's contribution to the 401K plan amounted to $25,072
         in 2001, $21,451 in 2000 and $19,064 in 1999.

         The Company has a non-qualified deferred compensation arrangement with
         a former 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
         $20,000 in 2001, $19,000 in 2000 and $17,000 in 1999.

(16)     FAIR VALUE OF FINANCIAL INSTRUMENTS

         The methods and assumptions used to estimate fair value are described
         as follows:

         Carrying amount is the estimated fair value for cash and cash
         equivalents, short-term borrowings, Federal Home Loan Bank stock,
         accrued interest receivable and payable, demand deposits, short-term
         debt, and variable rate loans or deposits that reprice frequently and
         fully. Security fair values are based on market prices or dealer
         quotes, and if no such information is available, on the rate and term
         of the security and information about the issued. For fixed rate loans
         or deposits and for variable rate loans or deposits with infrequent
         repricing or repricing limits, fair value is based on discounted cash
         flows using current market rates applied to the estimated life and
         credit risk. Fair values for impaired loans are estimated using
         discounted cash flow analysis or underlying collateral values. Fair
         value of loans held for sale is based on market quotes. Fair value of
         debt is based on current rates for similar financing. The fair value of
         off-balance-sheet loan commitments is considered nominal.

         The estimated fair values of the Company's financial instruments as of
         December 31, 2001 and 2000 are as follows:

<TABLE>
<CAPTION>
                                                                 2001                                  2000
                                                     CARRYING             FAIR             CARRYING             FAIR
                                                      AMOUNT              VALUE             AMOUNT              VALUE
                                                   --------------------------------------------------------------------
         <S>                                       <C>                 <C>                <C>                <C>
         FINANCIAL ASSETS:
            CASH AND DUE FROM BANKS                $  4,865,846          4,865,846          3,424,530         3,424,530
            FEDERAL FUNDS SOLD                        3,713,232          3,713,232          2,460,000         2,460,000
            SECURITIES                               10,596,217         10,596,217          8,310,097         8,310,097
            LOANS RECEIVABLE, NET                   109,025,587        111,055,000        100,244,728        99,800,000
            ACCRUED INTEREST RECEIVABLE               1,362,478          1,362,478          1,605,669         1,605,669
            CSV OF LIFE INSURANCE                       643,569            643,569            603,328           603,328
            FHLB STOCK                                1,377,900          1,377,900          1,288,900         1,288,900
</TABLE>



<PAGE>

(16)     FAIR VALUE OF FINANCIAL INSTRUMENTS, CONTINUED

<TABLE>
<CAPTION>
                                                               2001                                  2000
                                                 --------------------------------------------------------------------
                                                     CARRYING              FAIR             CARRYING           FAIR
                                                      AMOUNT              VALUE              AMOUNT           VALUE
                                                 --------------------------------------------------------------------
         <S>                                     <C>                 <C>                 <C>               <C>
         FINANCIAL LIABILITIES:
             DEPOSITS                            $106,098,017        106,645,000         95,654,411        95,992,000
             FEDERAL FUNDS SOLD AND
               SECURITIES SOLD UNDER
               REPURCHASE AGREEMENTS                3,517,958          3,517,958          2,256,613         2,256,613
             BORROWINGS FROM FHLB                  12,000,000         12,516,000         12,500,000        12,490,000
             NOTE PAYABLE                             124,000            124,000          1,823,305         1,823,305
             ACCRUED INTEREST PAYABLE                 641,917            641,917          1,018,916         1,018,916
</TABLE>

(17)     SALE OF BRANCH

         On July 6, 2001, First Community Bank sold its Greeneville branch to
         Bank of Greeneville, a de novo bank. The sale price was based on the
         net book value of assets purchased and liabilities assumed by Bank of
         Greeneville. Total assets of the branch at July 6, 2001 were $9,880,756
         and total liabilities were $8,669,096. First Community Bank did not
         incur a gain or loss on the sale of the branch.

(18)     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
                                                       -------      -------      --------      ------
         2001:                                            (in thousands, except per share amounts)
         <S>                                           <C>          <C>          <C>           <C>
         Interest income                               $2,563        2,778        2,618        2,404
         Interest expense                               1,302        1,291        1,188          970
                                                       ------        -----        -----        -----
         Net interest income                            1,261        1,487        1,430        1,434
         Provision for loan losses                        158          166           90          234
         Other income                                     266          190          226          347
         Other expense                                  1,032        1,006        1,002          840
                                                       ------        -----        -----        -----
         Income before income tax                         337          505          564          707
         Income taxes                                     120          183          206          261
                                                       ------        -----        -----        -----
         Net income                                    $  217          322          358          446
         Earnings per common share                       0.11         0.16         0.18         0.23
         Diluted earnings per common share               0.11         0.16         0.18         0.23
         Cash dividends declared per common
           share                                         0.07         0.07         0.07         0.07
</TABLE>



<PAGE>

(18)     QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

<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        1,252        1,308
         Provision for loan losses                         26           46           55           80
         Other income                                     237          317          295          205
         Other expense                                    985        1,074          968          951
                                                       ------        -----        -----        -----
         Income before income tax                         429          428          524          482
         Income taxes                                     157          155          188          174
                                                       ------        -----        -----        -----
         Net income                                    $  272          273          336          308
         Earnings per common share                        .13          .14          .17          .16
         Diluted earnings per common share                .13          .14          .17          .16
         Cash dividends declared per common
            share                                         .07          .07          .07          .07
</TABLE>

(19)     PARENT COMPANY FINANCIAL INFORMATION

         Following are condensed balance sheets of First Community Corporation
         (parent company only) as of December 31, 2001 and 2000 and the related
         condensed statements of operations and cash flows for the three years
         then ended.

<TABLE>
<CAPTION>
         CONDENSED BALANCE SHEETS                                                December 31,
                                                                           2001               2000
                                                                        -----------        ----------
         <S>                                                            <C>                <C>
         ASSETS:
         Cash                                                           $   196,533            71,661
         Investment in subsidiaries at equity                            12,915,098        10,791,285
         Dividend receivable from subsidiary                                134,202           137,320
         Other assets                                                       315,227           124,878
                                                                        -----------        ----------
              TOTAL ASSETS                                              $13,561,060        11,125,144
                                                                        ===========        ==========

         LIABILITIES AND SHAREHOLDERS' EQUITY:
         Dividends payable                                                  134,202           137,320
         Note payable                                                       124,000         1,823,305
                                                                        -----------        ----------
              TOTAL LIABILITIES                                             258,202         1,960,625
                                                                        -----------        ----------

         SUBORDINATED DEBENTURES                                          4,124,000                --

              SHAREHOLDERS' EQUITY                                        9,178,858         9,164,519
                                                                        -----------        ----------
                  TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY            $13,561,060        11,125,144
                                                                        ===========        ==========
</TABLE>



<PAGE>

(19)     PARENT COMPANY FINANCIAL INFORMATION, CONTINUED

<TABLE>
<CAPTION>
         CONDENSED STATEMENTS OF OPERATIONS                                      Years Ended December 31,
                                                                        2001               2000             1999
                                                                     -----------        ----------        ---------
         <S>                                                         <C>                <C>               <C>
         INCOME:
            Dividends from subsidiary                                $   746,325           561,791          335,112
                                                                     -----------         ---------        ---------

         EXPENSES:
            Amortization of organization costs
            Interest                                                      97,652            68,953               --
            Other                                                         81,153            77,599           72,601
                                                                     -----------         ---------        ---------
                                                                         178,805           146,552           72,601
                                                                     -----------         ---------        ---------

         NET INCOME BEFORE INCOME TAXES AND EQUITY IN
              UNDISTRIBUTED INCOME OF SUBSIDIARY                         567,520           415,239          262,511

         INCOME TAX BENEFITS                                              67,946            55,690           27,588
                                                                     -----------         ---------        ---------

         NET INCOME BEFORE EQUITY IN UNDISTRIBUTED INCOME
              OF SUBSIDIARY                                              635,466           470,929          290,099

         UNDISTRIBUTED INCOME OF SUBSIDIARY                              707,296           718,018          888,596
                                                                     -----------         ---------        ---------

         NET INCOME                                                  $ 1,342,762         1,188,947        1,178,695
                                                                     ===========         =========        =========
</TABLE>

<TABLE>
<CAPTION>
         CONDENSED STATEMENTS OF CASH FLOWS                                         Years Ended December 31,
                                                                          2001                2000                1999
                                                                       -----------         ----------          ---------
         <S>                                                           <C>                 <C>                 <C>
         CASH FLOWS FROM OPERATING ACTIVITIES:
            Net income                                                 $ 1,342,762          1,188,947          1,178,695
            Adjustments to reconcile net income to net cash
              provided by operating activities:
            Effect of subsidiary operations                               (707,296)          (718,018)          (888,596)
            Other, net                                                    (187,140)           (50,153)          (166,455)
                                                                       -----------         ----------          ---------
            NET CASH PROVIDED BY OPERATING ACTIVITIES                      448,326            420,776            123,644
                                                                       -----------          ---------          ---------

         CASH FLOWS FROM FINANCING ACTIVITIES:
            Purchase and retirement of common stock                       (807,940)        (1,051,245)          (598,905)
            Proceeds from (repayments of) note payable                  (1,699,305)         1,230,000            593,305
            Proceeds from trust preferred securities                     4,000,000                 --                 --
            Dividends paid                                                (549,443)          (565,925)          (898,511)
            Issuance of common stock                                         9,234              6,050             82,038
            Capital contribution to subsidiary bank                     (1,276,000)                --                 --
                                                                       -----------          ---------          ---------
            NET CASH USED BY FINANCING ACTIVITIES                         (323,454)          (381,120)          (822,073)
                                                                       -----------          ---------          ---------

         NET INCREASE (DECREASE) IN CASH                                   124,872             39,656           (698,429)

         CASH AT BEGINNING OF YEAR                                          71,661             32,005            730,434
                                                                       -----------          ---------          ---------

         CASH AT END OF YEAR                                           $   196,533             71,661             32,005
                                                                       ===========          =========          =========
</TABLE>



<PAGE>

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 24, 2002.

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 24, 2002.

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
24, 2002.

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 24, 2002.

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 subsidiaries are "First Community Bank of East
                           Tennessee", a Tennessee state chartered banking institution and "Rogersville Statutory Trust I", a
                           Connecticut statutory trust.
</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>

                                   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

                                        Date: March 27, 2002
                                             -----------------------------------

         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

                                        Date: March 27, 2002
                                             -----------------------------------



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

                                        Date: March 27, 2002
                                             -----------------------------------



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

                                        Date: March 27, 2002
                                             -----------------------------------



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

                                        Date: March 27, 2002
                                             -----------------------------------



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

                                        Date: March 27, 2002
                                             -----------------------------------


<PAGE>



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

                                        Date: March 27, 2002
                                             -----------------------------------



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

                                        Date: March 27, 2002
                                             -----------------------------------



                                        By:/s/ A. Max Richardson
                                           -------------------------------------
                                            A. Max Richardson
                                            Director

                                        Date: March 27, 2002
                                             -----------------------------------