UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q
(Mark One)

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

         For the quarterly period ended March 31, 2010

         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES
-----    EXCHANGE ACT OF 1934
         For the transition period from     to
                                       ----     ----

                         COMMISSION FILE NUMBER 1-5735

                      PROVIDENT COMMUNITY BANCSHARES, INC.
                      ------------------------------------
     (Exact name of registrant as specified in its Charter)

          Delaware                                           57-1001177
          --------                                           ----------
(State or other Jurisdiction of                           (I.R.S. Employer
 Incorporation or Organization)                          Identification No.)

             2700 Celanese Road, Rock Hill, South Carolina   29732
             -----------------------------------------------------
                    (Address of Principal Executive Offices)

                                 (803)-325-9400
                                 --------------
              (Registrant's telephone number, including area code)

                                 Not Applicable
                                 --------------
     (Former name, former address and former fiscal year, if changed since last
                                     report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding  12  months  (or  for such shorter period that the registrant was
required  to  file  such  reports),  and  (2)  has  been  subject to such filing
requirements  for  the  past  90  days. Yes  X     No
                                             --      --

Indicate  by  check mark whether the registrant has submitted electronically and
posted  on  its corporate Web site, if any, every Interactive Data File required
to  be  submitted  and  posted  pursuant  to Rule 405 of Regulation S-T (Section
232.405  of  this  chapter)  during the preceding 12 months (or for such shorter
period  that  the  registrant  was  required  to  submit  and  post such files).
Yes [ ]  No [ ]

Indicate  by  check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.  See
the  definitions  of "large accelerated filer," "accelerated filer" and "smaller
reporting  company"  in  Rule  12b-2  of  the  Exchange  Act.  (Check  one):

Large accelerated filer [ ]  Accelerated filer [ ]

Non-accelerated filer [ ]    Smaller Reporting Company [X]

Indicate  by check mark whether the registrant is a shell company (as defined in
Rule  12b-2  of  the  Exchange  Act.) Yes          No  X
                                         ---          ---

The  Corporation  had  1,790,599 shares, $0.01 par value, of common stock issued
and  outstanding  as  of  May  10,  2010.

<PAGE>

             PROVIDENT COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES

                                     INDEX

Part  I.    Financial  Information                                         Page
            ----------------------                                         ----

            Item  1.  Financial  Statements  (unaudited)

            Consolidated  Balance  Sheets  as  of  March  31,  2010
            and  December  31,  2009                                          3

            Consolidated  Statements  of  Income  (Loss)  for  the  three
            months  ended  March  31,  2010  and  2009                        4

            Consolidated  Statements  of  Cash  Flows  for  the  three
            months  ended  March  31,  2010  and  2009                        5

            Consolidated  Statements  of  Shareholders'  Equity  and
            Comprehensive  Income  (Loss)  for  the  three  months
            ended  March  31,  2010  and  2009                                6

            Notes  to  Consolidated  Financial  Statements                 7-15

            Item  2.  Management's  Discussion  and  Analysis  of
            Financial  Condition  and Results of Operations               15-32

            Item  3.  Quantitative  and  Qualitative  Disclosures
            about  Market  Risk                                              32

            Item 4T.  Controls  and  Procedures                              32

Part  II.   Other  Information
            ------------------

            Item  1.   Legal  Proceedings                                    32

            Item  1A.  Risk  Factors                                         32

            Item  2.   Unregistered Sales of  Equity  Securities
                       and  Use  of  Proceeds                                33

            Item  3.   Defaults  Upon  Senior  Securities                    33

            Item  4.   Reserved                                              33

            Item  5.   Other  Information                                    33

            Item  6.   Exhibits                                              33

            Signatures                                                       34

<PAGE>

<TABLE>
<CAPTION>
<S>                                                                                                 <C>                <C>
Part 1. Financial Information
PROVIDENT COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 2010 and December 31, 2009

                                                                                                            March 31,   December 31,
ASSETS                                                                                                         2010         2009
                                                                                                           (Unaudited)   (Audited)
                                                                                                           ------------ ------------
                                                                                                            (DOLLARS IN THOUSANDS)
Cash and due from banks                                                                                   $      4,427        5,103
Interest earning balances with the Federal Reserve                                                               5,605        5,241
Federal funds sold                                                                                              20,344        5,287
                                                                                                           ------------ ------------
Cash and cash equivalents                                                                                       30,376       15,631
Investment and mortgage-backed securities
  Held to maturity (market value of $4,009,000 and $3,976,000 at March 31, 2010 and December 31, 2009)           3,934        3,934
  Available for sale                                                                                           127,143      147,816
                                                                                                           ------------ ------------
Total investment and mortgage-backed securities                                                                131,077      151,750

Loans, net of unearned fees                                                                                    243,354      255,999
   Allowance for loan losses (ALL)                                                                              (5,433)      (5,579)
                                                                                                           ------------ ------------
Loans, net of ALL                                                                                              237,921      250,420

Real estate acquired through foreclosure                                                                         6,441        5,917
Office properties and equipment, net                                                                             5,346        5,447
Federal Home Loan Bank stock, at cost                                                                            3,947        3,947
Federal Reserve Bank stock, at cost                                                                                832          832
Accrued interest receivable                                                                                      1,863        2,238
Cash surrender value of life insurance                                                                           9,430        9,332
Other assets                                                                                                    11,298       11,489
                                                                                                           ------------ ------------
TOTAL ASSETS                                                                                              $    438,531 $    457,003
                                                                                                           ============ ============

LIABILITIES

Demand and savings deposits                                                                               $    163,557 $    161,911
Time deposits                                                                                                  162,389      170,851
                                                                                                           ------------ ------------
  Total deposits                                                                                               325,946      332,762
                                                                                                           ------------ ------------
Advances from the Federal Home Loan Bank                                                                        59,500       64,500
Securities sold under agreements to repurchase                                                                  11,991       18,520
Floating rate junior subordinated deferrable interest debentures                                                12,372       12,372
Accrued interest payable                                                                                           539          581
Other liabilities                                                                                                2,323        2,147
                                                                                                           ------------ ------------
TOTAL LIABILITIES                                                                                              412,671      430,882
                                                                                                           ------------ ------------

Commitments and contingencies-Note 5

SHAREHOLDERS' EQUITY

Serial preferred stock - $0.01 par value
  authorized - 500, 000 shares
   issued and outstanding - 9,266                                                                                9,246        9,245
  at March 31, 2010 and December 31, 2009, respectively
Common stock - $0.01 par value,
  authorized - 5,000,000 shares,
   issued and outstanding - 1,790,599 shares at March 31, 2010                                                      20           20
   and 1,790,599 at December 31, 2009
Common stock warrants                                                                                               25           25
Additional paid-in capital                                                                                      12,919       12,919
Accumulated other comprehensive income (loss)                                                                   (1,135)        (972)
Retained earnings, substantially restricted                                                                     11,085       11,184
Treasury stock, at cost                                                                                         (6,300)      (6,300)
                                                                                                           ------------ ------------
TOTAL SHAREHOLDERS' EQUITY                                                                                      25,860       26,121
                                                                                                           ------------ ------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                                                $    438,531 $    457,003
                                                                                                           ============ ============

See notes to consolidated financial statements.
</TABLE>

                                       3
<PAGE>

<TABLE>
<CAPTION>
<S>                                                                             <C>                   <C>
PROVIDENT COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
Three Months Ended March 31, 2010 and 2009 (unaudited)

                                                                                               Three Months Ended
                                                                                         March 31,             March 31,
                                                                                           2010                  2009
                                                                                    -------------------   -------------------
                                                                                     (DOLLARS IN THOUSANDS EXCEPT PER SHARE)

Interest Income:
  Loans                                                                            $             3,120   $             3,596
  Deposits and federal funds sold                                                                    6                     8
  Interest and dividends on mortgage-backed securities                                             429                   895
  Interest and dividends on investment securities                                                  975                   639
                                                                                    -------------------   -------------------
Total interest income                                                                            4,530                 5,138
                                                                                    -------------------   -------------------

Interest Expense:
  Deposit accounts                                                                               1,547                 2,092
  Floating rate junior subordinated deferrable interest debentures                                 118                   151
  Advances from the FHLB and other borrowings                                                      744                   784
                                                                                    -------------------   -------------------
Total interest expense                                                                           2,409                 3,027
                                                                                    -------------------   -------------------

Net Interest Income                                                                              2,121                 2,111
  Provision for loan losses                                                                        896                 2,700
                                                                                    -------------------   -------------------
Net interest income (loss) after
   provision for loan losses                                                                     1,225                  (589)
                                                                                    -------------------   -------------------

Non-Interest Income:
  Fees for financial services                                                                      662                   673
  Other fees, net                                                                                   23                    22
  Other-than-temporary-impairment write-down on securities                                        (303)                 (309)
  Net gain on sale of investments                                                                  677                    95
                                                                                    -------------------   -------------------
Total non-interest income                                                                        1,059                   481
                                                                                    -------------------   -------------------

Non-Interest Expense:
  Compensation and employee benefits                                                             1,122                 1,192
  Occupancy and equipment                                                                          599                   611
  Deposit insurance premiums                                                                       144                    56
  Professional services                                                                            100                    93
  Advertising and public relations                                                                  13                    30
  Loan operations                                                                                   93                   110
  Intangible amortization                                                                           --                    95
  Items processing                                                                                  77                    89
  Telephone                                                                                         37                    52
  Other                                                                                            154                   188
                                                                                    -------------------   -------------------
Total non-interest expense                                                                       2,339                 2,516
                                                                                    -------------------   -------------------

Net loss before income taxes                                                                       (55)               (2,624)
Benefit for income taxes                                                                           (73)                 (929)
                                                                                    -------------------   -------------------
Net income (loss)                                                                  $                18                (1,695)
Accretion of preferred stock to redemption value and preferred dividends accrued                   119                    25
                                                                                    -------------------   -------------------
Net loss to common shareholders                                                                   (101)  $            (1,720)
                                                                                    ===================   ===================

Net loss per common share (basic)                                                  $             (0.06)  $             (0.96)
                                                                                    ===================   ===================

Net loss per common share (diluted)                                                $             (0.06)  $             (0.96)
                                                                                    ===================   ===================

Cash dividend per common share                                                     $                --   $              0.03
                                                                                    ===================   ===================

Weighted average number of common shares outstanding

Basic                                                                                        1,790,599             1,787,890

Diluted                                                                                      1,790,599             1,787,890

See notes to consolidated financial statements.
</TABLE>

                                       4
<PAGE>

<TABLE>
<CAPTION>
<S>                                                                                                 <C>              <C>
PROVIDENT COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 2010 and 2009 (unaudited)

                                                                                                             Three Months Ended
                                                                                                          March 31,      March 31,
                                                                                                             2010          2009
                                                                                                        -------------- -------------
                                                                                                               (IN THOUSANDS)

OPERATING ACTIVITIES:

Net income (loss)                                                                                       $          18       ($1,695)
Adjustments to reconcile net income (loss) to
  net cash provided (used) by operating activities:
  Provision for loan losses                                                                                       896         2,700
  Amortization of intangibles                                                                                      --            95
  Depreciation expense                                                                                            118           131
  Recognition of deferred income, net of costs                                                                    (65)         (108)
  Deferral of fee income, net of costs                                                                             56            73
  Other than temporary impairment charge on AFS securities                                                        303           309
  Gain on investment transactions                                                                                (677)          (95)
  Gain on sale of assets acquired from foreclosed loans                                                            --            (2)
  Changes in operating assets and liabilities:
   Decrease in accrued interest receivable                                                                        375           122
   Increase in cash surrender value of life insurance                                                             (98)         (100)
   Increase in other assets                                                                                      (333)       (1,647)
   Increase in other liabilities                                                                                  176            33
   Increase (decrease) in accrued interest payable                                                                (42)           44
                                                                                                        -------------- -------------

Net cash (used) provided by operating activities                                                                  727          (140)
                                                                                                        -------------- -------------

INVESTING ACTIVITIES:

Purchase of investment and mortgage-backed securities:
   Available for sale                                                                                         (40,598)      (54,278)
   Held to maturity                                                                                                --          (504)
Proceeds from sale of investment and mortgage-
    backed securities available for sale                                                                       26,495         5,123
Proceeds from maturity of investment and mortgage-
    backed securities:
   Available for sale                                                                                          27,848        18,251
   Held to maturity                                                                                                --            --
Principal repayments on mortgage-backed securities:
   Available for sale                                                                                           7,139         3,547
Net decrease (increase) in loans                                                                               11,582        (2,716)
Purchase of FHLB/FRB stock                                                                                         --           (52)
Proceeds from sales of foreclosed assets, net of costs and improvements                                            30            69
Purchase of office properties and equipment                                                                       (17)          (62)
                                                                                                        -------------- -------------

Net cash (used) provided by investing activities                                                               32,479       (30,622)
                                                                                                        -------------- -------------

FINANCING ACTIVITIES:

Proceeds from the dividend reinvestment plan                                                                       --             8
Proceeds from issuance of preferred stock                                                                          --         9,241
Proceeds from issuance of warrants                                                                                 --            25
Dividends paid in cash                                                                                             --           (53)
Dividends paid on preferred stock                                                                                (116)           --
Decrease in other borrowings                                                                                  (11,529)           26
Increase (decrease) in deposit accounts                                                                        (6,816)       24,775
                                                                                                        -------------- -------------

Net cash (used) provided by financing activities                                                              (18,461)       34,022
                                                                                                        -------------- -------------

NET INCREASE IN CASH
   AND CASH EQUIVALENTS                                                                                        14,745         3,260

CASH AND CASH EQUIVALENTS
   AT BEGINNING OF PERIOD                                                                                      15,631        21,370
                                                                                                        -------------- -------------

CASH AND CASH EQUIVALENTS
   AT END OF PERIOD                                                                                     $      30,376  $     24,630
                                                                                                        ============== =============

SUPPLEMENTAL DISCLOSURES:

Cash paid for:
  Income taxes                                                                                          $          18  $        510
  Interest                                                                                                      2,451         2,983

Non-cash transactions:
  Loans foreclosed                                                                                      $         559  $        499
 Unrealized gain (loss) on securities available for sale, net of income tax                                      (395)          489
See notes to consolidated financial statements.
</TABLE>

                                       5
<PAGE>

<TABLE>
<CAPTION>
<S>                       <C>      <C>   <C>    <C>       <C>       <C>          <C>        <C>  <C>     <C>           <C>

-0-
*T
                                       PROVIDENT COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
                          CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME (LOSS)
                                       Three Months Ended March 31, 2010 and 2009 (unaudited)

                                                                                    Retained     Accumulated
                                                                       Additional   Earnings,       Other                  Total
                                Preferred         Common                Paid-in   Substantially Comprehensive Treasury Shareholders'
                                   Stock          Stock                                                         Stock
                               Shares Amount  Shares   Amount Warrants  Capital    Restricted   Income (loss) at Cost     Equity
                               ------ ------ --------- ------ -------- ---------- ------------- ------------- -------- -------------
                                                                    (Dollars in Thousands, Except Share Data)

BALANCE AT DECEMBER 31, 2008                 1,787,092 $   20          $   12,903 $     18,997       ($1,696) ($6,300) $     23,924

Net income (loss)                                                                       (1,695)                              (1,695)

  Other comprehensive loss, net
   of tax on
     unrealized holding losses
      on securities available
      for sale
     arising during period                                                                               489                    489
  Less reclassification
   adjustment for gains and
   other than                                                                                           (138)                  (138)
                                                                                                -------------          -------------
     temporary investment
      charge in net loss
  Comprehensive loss                                                                                                         (1,344)

Dividend reinvestment plan
 contributions                                   1,218                          8                                                 8

Issuance of preferred stock     9,266  9,240                                                                                  9,240

Issuance of common stock
 warrants                                                           25                                                           25

Accretion of Preferred Stock to
 redemption value                          1                                                (1)                                  --

Cash dividend ($.03 per share)                                                             (52)                                 (52)

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

BALANCE AT MARCH 31, 2009       9,266 $9,241 1,788,310 $   20 $     25 $   12,911 $     17,249       ($1,345) ($6,300) $     31,801
                               ======================= =============================================================================

BALANCE AT DECEMBER 31, 2009    9,266 $9,245 1,790,599 $   20 $     25 $   12,919 $     11,184         ($972) ($6,300) $     26,121

Net income (loss)                                                                           18                                   18

  Other comprehensive loss, net
   of tax on
     unrealized holding losses
      on securities available
      for sale
     arising during period                                                                              (395)                  (395)
  Less reclassification
   adjustment for gains and
   other than
     temporary investment
      charge in net income                                                                               232                    232
                                                                                               -------------          -------------

  Comprehensive loss                                                                                                           (145)

Accretion of Preferred Stock to
 redemption value                          1                                                (1)                                  --

Preferred stock dividend                                                                  (116)                                (116)
                               -----------------------------------------------------------------------------------------------------

BALANCE AT MARCH 31, 2010       9,266 $9,246 1,790,599 $   20 $     25 $   12,919 $     11,085       ($1,135) ($6,300) $     25,860
                               =====================================================================================================
</TABLE>

                                       6

<PAGE>

             PROVIDENT COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
                             NOTES TO CONSOLIDATED
                        FINANCIAL STATEMENTS (UNAUDITED)

1.     Presentation  of  Consolidated  Financial  Statements
       -----------------------------------------------------

The  accompanying  unaudited  consolidated  financial  statements  of  Provident
Community  Bancshares, Inc. (the "Corporation") were prepared in accordance with
instructions  for  Form  10-Q  and,  therefore,  do  not include all disclosures
necessary  for  a  complete  presentation  of  consolidated financial condition,
results  of  operations, and cash flows in conformity with accounting principles
generally  accepted  in  the  United States of America. However, all adjustments
which  are, in the opinion of management, necessary for the fair presentation of
the  interim  consolidated  financial  statements  have  been included. All such
adjustments  are of a normal and recurring nature. The results of operations for
the  three  months  ended  March  31, 2010 are not necessarily indicative of the
results  which  may  be  expected  for the entire calendar year or for any other
period.  Certain  amounts  in  the  prior  year's financial statements have been
reclassified  to conform to current year classifications. Subsequent events that
provide  additional  evidence  about  conditions that existed at the date of the
balance  sheet should be recognized at the balance sheet date. Subsequent events
that  provide  evidence about conditions that arose after the balance sheet date
but  before  financial statements are issued, or are available to be issued, are
not  required  to  be  recognized.

Recently  Issued  Accounting  Standards

The  following  is  a  summary  of  recent authoritative pronouncements that may
affect  accounting,  reporting,  and  disclosure of financial information by the
Corporation.

     In  January,  2010,  an  amendment  was  issued  to  clarify  the  scope of
subsidiaries  for  consolidation  purposes.  The  amendment  provides  that  the
decrease  in  ownership  guidance  should  apply to (1) a subsidiary or group of
assets  that  is  a  business  or nonprofit activity, (2) a subsidiary that is a
business  or nonprofit activity that is transferred to an equity method investee
or  joint  venture,  and (3) an exchange of a group of assets that constitutes a
business  or nonprofit activity for a noncontrolling interest in an entity.  The
guidance  does  not  apply to a decrease in ownership in transactions related to
sales  of in substance real estate or conveyances of oil and gas mineral rights.
The update is effective for the interim or annual reporting periods ending on or
after  December  15,  2009  and  had  no  impact  on the Corporation's financial
statements.

     In January 2010, fair value guidance was amended to require disclosures for
significant amounts transferred in and out of Levels 1 and 2 and the reasons for
such  transfers and to require that gross amounts of purchases, sales, issuances
and  settlements be provided in the Level 3 reconciliation.  The new disclosures
are  effective  for  the  Corporation  for  the  current  quarter  and have been
reflected  in  the  Fair  Value  footnote.

     Other accounting standards that have been issued or proposed by the FASB or
other standards-setting bodies are not expected to have a material impact on the
Corporation's  financial  position,  results  of  operations  or  cash  flows.

2. Income(Loss)Per Share
   ---------------------

Basic  income  (loss)  per common share amounts for the three months ended March
31,  2010  and 2009 were computed based on the weighted average number of common
shares  outstanding  during  the period. Diluted income (loss) per share adjusts
for  the  dilutive effect of outstanding common stock options during the periods
utilizing  the  treasury  stock  method.  There were no common stock equivalents
included  in  the  diluted  earnings  (loss) per share calculation for the three
months  ended  March  31,  2010 and 2009. Anti-dilutive common stock equivalents
that  were  excluded in the diluted earnings per share calculation for the three
months  ended  March  31,  2010  and  2009 were 90,863 and 94,113, respectively.

                                       7

<PAGE>

3.  Assets  Pledged
    ---------------

Approximately  $76,547,000  and $94,598,000 of debt securities at March 31, 2010
and  December  31, 2009, respectively, were pledged by Provident Community Bank,
N.A.  (the  "Bank")  as  collateral  to  secure  deposits  of the State of South
Carolina,  and Union, Laurens and York counties along with additional borrowings
and  repurchase agreements. The Bank pledges as collateral for Federal Home Loan
Bank  advances  commercial  and  residential  real estate mortgage loans under a
collateral agreement with the Federal Home Loan Bank whereby the Bank maintains,
free  of  other  encumbrances,  qualifying  mortgages  (as  defined) with unpaid
principal  balances  equal  to,  when  discounted at 75% of the unpaid principal
balances,  100% of total advances. As part of the total assets pledged, the Bank
will  also  pledge securities to cover additional advances from the Federal Home
Loan  Bank  that  exceed  the  qualifying  mortgages balance along with security
repurchase  lines  with  various  brokerage  houses.

4.  Fixed/Floating  Rate  Junior  Subordinated  Deferrable  Interest  Debentures
    ----------------------------------------------------------------------------

On July 18, 2006, Provident Community Bancshares Capital Trust I ("Capital Trust
I")  was formed. The Corporation is the owner of all of the common securities of
Capital Trust I. On July 21, 2006, Capital Trust I issued $4,000,000 in the form
of  fixed/floating  rate  capital  securities  through  a pooled trust preferred
securities  offering.  The  proceeds  from  this  issuance,  along  with  the
Corporation's  $124,000  capital  contribution  for  Capital  Trust  I's  common
securities,  were  used  to acquire $4,124,000 aggregate principal amount of the
Corporation's  floating  rate junior subordinated deferrable interest debentures
due  October  1,  2036,  which constitute the sole asset of Capital Trust I. The
interest  rate  on  the debentures and the capital securities is equal to 7.393%
for  the  first  five  years.  Thereafter,  the  interest  rate  is variable and
adjustable  quarterly  at  1.74%  over the three-month LIBOR. The debentures are
subject  to redemption at par at the option of the Corporation, subject to prior
regulatory  approval,  in  whole  or  in part on any interest payment date after
October  1, 2011. The debentures are also subject to redemption prior to October
1,  2011  at  up  to  103.7%  of  par  after  the  occurrence of certain events.

On  November  28,  2006,  Provident Community Bancshares Capital Trust ("Capital
Trust  II")  was  established. The Corporation is the owner of all of the common
securities  of  the  Trust. On December 15, 2006, the Trust issued $8,000,000 in
the  form  of  floating rate capital securities through a pooled trust preferred
securities  offering.  The  proceeds  of  Capital Trust II were utilized for the
redemption  of Union Financial Bancshares Statutory Trust issued on December 18,
2001.  The  proceeds  from  this issuance, along with the Corporation's $248,000
capital  contribution  for  the  Trust's common securities, were used to acquire
$8,247,000  aggregate principal amount of the Corporation's floating rate junior
subordinated  deferrable interest debentures due March 1, 2037, which constitute
the  sole asset of the Capital Trust II. The interest rate on the debentures and
the  capital  securities  is variable and adjustable quarterly at 1.74% over the
three-month LIBOR. The debentures are subject to redemption at par at the option
of the Corporation, subject to prior regulatory approval, in whole or in part on
any  interest  payment date after March 1, 2012. The debentures are also subject
to  redemption  prior  to March 1, 2012 at 103.5% of par after the occurrence of
certain  events.

                                       8

<PAGE>

A summary of the Subordinated Deferrable Interest Debentures issued and
outstanding follows:

<TABLE>
<CAPTION>
<S>                          <C>              <C>          <C>                  <C>             <C>                <C>
                                   Amount Outstanding at
                                         March 31,
                               ------------------------------                                                         Distribution
                                                                                    Prepayment                           Payment
            Name                     2010            2009            Rate          Option Date         Maturity         Frequency
-----------------------------   --------------  ------------- ------------------ ----------------  ----------------- ---------------

Provident Community                                                               October 1, 2011    October 1, 2036    Quarterly
 Bancshares Capital Trust I          4,000,000      4,000,000             7.39%
Provident Community                                                                 March 1, 2012      March 1, 2037    Quarterly
 Bancshares Capital Trust II         8,000,000      8,000,000             1.99%
            Total              $    12,000,000  $  12,000,000
                               ===============  =============
</TABLE>

5.  Contingencies  and  loan  commitments
    -------------------------------------

In  the  ordinary course of business, the Bank enters into financial instruments
with  off-balance-sheet risk to meet the financing needs of its customers. These
instruments expose the Bank to credit risk in excess of the amount recognized on
the  balance  sheet.

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  is
represented  by  the  contractual 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. Total credit exposure at March 31, 2010
related  to  these  items  is  summarized  below:

<TABLE>
<CAPTION>
<S>                                                                      <C>
     Loan Commitments:                                                       Contract Amount
     -----------------                                                       ---------------

     Approved loan commitments                                            $             700,000
     Commitments to fund commercial and construction loans                              379,000
     Unused portions of loans and credit lines                                       32,650,000
                                                                          ---------------------
            Total loan commitments                                        $          33,729,000
                                                                          =====================
</TABLE>

Loan  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. Loan
commitments  generally  have fixed expiration dates or other termination clauses
and  may  require  payment  of  a  fee.  The  Bank  evaluates  each  customer's
creditworthiness on a case-by-case basis. The amount of collateral obtained upon
extension  of  credit  is based on management's credit evaluation of the counter
party.  Collateral  held  is  primarily  residential  and  commercial  property.
Commitments outstanding at March 31, 2010 consisted of fixed and adjustable rate
loans  at  rates  ranging  from  5.5%  to  7.5%.  Commitments to originate loans
generally  expire  within  30  to  60  days.

Commitments  to  fund  loans, including credit lines (principally variable rate,
consumer  lines  secured  by  real  estate  and  overdraft  protection)  totaled
approximately  $33,729,000  at  March  31, 2010. Of these lines, the outstanding
loan  balances  totaled  approximately  $54,718,000.

6.  Fair  Valueof  Financial  Instruments
    -------------------------------------

The  Corporation  utilizes  fair  value  measurements  to  record  fair  value
adjustments  to  certain  assets  and  liabilities  and  to determine fair value
disclosures.  Effective  January  1,  2008,  the  Corporation  adopted  FASB ASC
825-10-50  ("FASB Topic 820") Fair Value Measurements which provides a framework
for  measuring  and  disclosing  fair  value under generally accepted accounting
principles.  FASB  ASC  825-10-50  requires  disclosures about the fair value of
assets  and liabilities recognized in the balance sheet in periods subsequent to
initial recognition, whether the measurements are made on a recurring basis (for
example,  available-for-sale  investment  securities) or on a nonrecurring basis
(for  example,  impaired  loans).

                                            9
<PAGE>

Fair  Value  Hierarchy
----------------------

FASB  ASC  Topic  820  defines  fair  value  as the exchange price that would be
received  for  an  asset  or paid to transfer a liability (an exit price) in the
principal  or  most advantageous market for the asset or liability in an orderly
transaction  between market participants on the measurement date. FASB ASC Topic
820 also establishes a fair value hierarchy which requires an entity to maximize
the  use  of  observable inputs and minimize the use of unobservable inputs when
measuring  fair value. The standard describes three levels of inputs that may be
used  to  measure  fair  value:

Level 1        Valuation is based upon quoted prices in active markets for
               identical assets or liabilities.

Level 2        Valuation is based upon quoted prices for similar assets or
               liabilities; quoted prices in markets that are not active; or
               other inputs that are observable or can be corroborated by
               observable market data for substantially the full term of the
               assets or liabilities.

Level 3        Valuation is based upon quoted prices for similar assets or
               liabilities; quoted prices in markets that are not active; and
               model-based techniques whose value is determined using pricing
               models, discounted cash flow methodologies and similar
               techniques.

Following  is  a  description  of  valuation  methodologies  used for assets and
liabilities  recorded  at  fair  value.

Investment  Securities  Available-for-Sale
------------------------------------------

Available-for-sale  investment  securities  are  recorded  at  fair  value  on a
recurring  basis.  Fair  value  measurement  is  based  upon  quoted  prices, if
available.  If  quoted  prices are not available, fair values are measured using
independent pricing models or other model-based valuation techniques such as the
present  value  of future cash flows, adjusted for the security's credit rating,
prepayment  assumptions and other factors such as credit loss assumptions. Level
1  securities  include  those traded on an active exchange, such as the New York
Stock  Exchange  and  U.S.  Treasury  securities  that  are traded by dealers or
brokers  in  active  over-the-counter  markets.  Level  2  securities  include
mortgage-backed  securities  issued  by government sponsored entities, municipal
bonds  and  corporate  debt  securities.  Securities  classified  as Level 3 may
include  asset-backed  securities  in  less  liquid  markets.

Loans
-----

The  Corporation is predominantly an asset based lender with real estate serving
as  collateral  on  a  substantial  majority  of loans. The Corporation does not
record  loans  at fair value on a recurring basis. However, from time to time, a
loan  is  considered  impaired and the related impairment is charged against the
allowance or a specific allowance is established. Loans for which it is probable
that  payment  of interest and principal will not be made in accordance with the
contractual terms of the loan agreement are considered impaired. Loans which are
deemed  to be impaired are primarily valued at the fair values of the underlying
real  estate  collateral.  Such  fair  values  are obtained using collateral net
liquidation  value,  market  value  of  similar  debt,  enterprise  value,  and
discounted  cash  flows. Those impaired loans not requiring a specific allowance
represent loans for which the fair value of the expected repayment or collateral
meet  or exceed the recorded investment in such loans. The Corporation considers
all  non-accrual  loans  and  troubled  debt  restructurings  to  be  impaired.
Therefore,  at  March  31,  2010,  loans  classified  as  impaired totaled $26.1
million.  When the fair value of the collateral is based on an observable market
price or a current appraised value, the Corporation records the impaired loan as
nonrecurring  Level  2.  When  an appraised value is not available or management
determines  the  fair  value  of  the  collateral  is further impaired below the
appraised value and there is no observable market price, the Corporation records
the  impaired  loans  as  nonrecurring  Level  3.

                                       10

<PAGE>

Real  Estate Acquired Through  Foreclosure
------------------------------------------

Other  real estate owned ("OREO") is adjusted to fair value upon transfer of the
loans  to  OREO. Subsequently, OREO is carried at the lower of carrying value or
fair value. Fair value is based upon independent market prices, appraised values
of  the  collateral  or  management's estimation of the value of the collateral.
When  the fair value of the collateral is based on an observable market price or
a  current  appraised  value,  the  Corporation  records the foreclosed asset as
nonrecurring  Level  2.  When  an appraised value is not available or management
determines  the  fair  value  of  the  collateral  is further impaired below the
appraised value and there is no observable market price, the Corporation records
the  OREO  as  nonrecurring  Level  3.

Assets and Liabilities Recorded at Fair Value on a Recurring Basis
------------------------------------------------------------------

The  following tables present the balances of assets measured at fair value on a
recurring  basis by level within the hierarchy as of March 31, 2010 and December
31,  2009  (In  thousands).

<TABLE>
<CAPTION>
<S>                                             <C>                 <C>                   <C>                  <C>
                                                                       Quoted Prices in      Significant Other      Significant
                                                                      Active Markets for        Observable         Unobservable
                                                       March 31,       Identical Assets           Inputs              Inputs
                                                          2010             (Level 1)              (Level 2)           (Level 3)
                                                    ---------------- --------------------- ------------------- ---------------------
Investment securities:
U.S. Agency obligations                             $              3                     3
Government Sponsored Enterprises                              82,188                82,188
Municipal securities                                           5,299                                     5,299
Trust Preferred securities                                     5,423                                     2,536                 2,887
                                                    ----------------                       ------------------- ---------------------
         Total investment securities                          92,913                82,191               7,835                 2,887
                                                    ---------------- --------------------- ------------------- ---------------------
Mortgage-backed and related securities                        34,230                                    34,230
                                                    ----------------                       -------------------
         Total                                      $        127,143                82,191              42,065                 2,887
                                                    ================ ===================== =================== =====================

                                                                         Quoted Prices in    Significant Other       Significant
                                                                        Active Markets for       Observable         Unobservable
                                                        December 31,     Identical Assets          Inputs              Inputs
                                                            2009             (Level 1)            (Level 2)            (Level 3)
                                                     ------------------ ------------------ --------------------  -------------------
Investment securities:
U.S. Agency obligations                              $                4                  4
Government Sponsored Enterprises                                 78,471             78,471
Municipal securities                                              6,042                                   6,042
Trust Preferred securities                                        5,912                                   2,802                3,110
                                                     ------------------                    --------------------  -------------------
         Total investment securities                             90,429             78,475                8,844                3,110
                                                     ------------------ ------------------ --------------------  -------------------
Mortgage-backed and related securities                           57,387                                  57,387
                                                     ------------------                    --------------------
         Total                                       $          147,816             78,475               66,231                3,110
                                                     ================== ================== ====================  ===================
</TABLE>

                                       11

<PAGE>

The  following  is  a  reconciliation  of  the beginning and ending balances for
assets  measured  at  fair  value  on  a  recurring  basis  using  significant
unobservable  inputs  (Level  3)  for  the  period  ended  March  31,  2010.

<TABLE>
<CAPTION>
<S>                                                            <C>
                                                                 Fair Value Measurements Using Significant
                                                                       Unobservable Inputs (Level 3)
                                                                 -----------------------------------------
                                                                           Investment Securities
                                                                            Available-for-Sale
                                                                 -----------------------------------------
Beginning balance at December 31, 2009                           $                              3,110,000
Transfers into Level 3                                                                                 --
Gain/(Loss) for the year                                                                         (223,000)
Purchases, sales, issuances and settlements, net                                                       --
                                                                 -----------------------------------------
Ending balance at March 31, 2010                                 $                              2,887,000
                                                                 =========================================
</TABLE>

Assets  andLiabilitiesRecorded  atFairValue  on  aNonrecurringBasis
-------------------------------------------------------------------

The Corporation may be required, from time to time, to measure certain assets at
fair  value  on  a nonrecurring basis in accordance with U.S. generally accepted
accounting  principles.  These  include assets that are measured at the lower of
cost  or  market that were recognized at fair value below cost at the end of the
period  and  assumes  all  impaired  loans  have  specific reserves or have been
written  down  to  fair  value.

Assets  measured  at fair value on a nonrecurring basis at March 31, 2010 are as
follows:

<TABLE>
<CAPTION>
<S>                                                              <C>              <C>              <C>             <C>

                                                                         Total          (Level 1)        (Level 2)      (Level 3)
                                                                   ----------------- --------------- --------------- ---------------
Impaired loans                                                     $      21,875,000 $            -- $    21,875,000 $            --
Other real estate owned                                                    6,441,000              --       6,441,000              --
                                                                   -----------------                 ---------------
Total assets at fair value                                         $      28,316,000 $            -- $    28,316,000 $            --
                                                                   ================= =============== =============== ===============
</TABLE>

Assets  and  liabilities  measured  at  fair  value  on  a nonrecurring basis at
December  31,  2009  are  as  follows:

<TABLE>
<CAPTION>
<S>                                                      <C>                <C>              <C>              <C>
                                                                 Total           (Level 1)         (Level 2)          (Level 3)
                                                          ------------------- --------------- ----------------- --------------------
Impaired loans                                            $        20,869,000 $            -- $      20,869,000 $                 --
Other real estate owned                                             5,917,000              --         5,917,000                   --
                                                          -------------------                 -----------------
Total assets at fair value                                $        26,786,000 $            -- $      26,786,000 $                 --
                                                          =================== =============== ================= ====================
</TABLE>

The following methods and assumptions were used by the Corporation in estimating
fair  values  of  financial  instruments  as  disclosed  herein:

     Cash and cash equivalents - The carrying amounts of cash and due from banks
approximate  their  fair  value.

     Available  for  sale  and  held  to  maturity  securities - Fair values for
securities are based on quoted market prices.  The carrying values of restricted
equity  securities  approximate fair values. If quoted prices are not available,
fair  values  are measured using independent pricing models or other model-based
valuation  techniques  such  as the present value of future cash flows, adjusted
for  the security's credit rating, prepayment assumptions and other factors such
as  credit  loss  assumptions.

     Loans  -  The  Corporation is predominantly an asset based lender with real
estate serving as collateral on a substantial majority of loans. The Corporation
does  not record loans at fair value on a recurring basis. However, from time to
time,  a  loan  is  considered  impaired  and  the related impairment is charged
against the allowance or a specific allowance is established. Loans for which it
is  probable  that  payment  of  interest  and  principal  will  not  be made in
accordance  with  the  contractual  terms  of  the loan agreement are considered
impaired. Loans which are deemed to be impaired are primarily valued at the fair
values  of  the underlying real estate collateral. Such fair values are obtained
using collateral net liquidation value, market value of similar debt, enterprise
value,  and discounted cash flows. Those impaired loans not requiring a specific
allowance  represent loans for which the fair value of the expected repayment or
collateral meet or exceed the recorded investment in such loans. The Corporation
considers all non-accrual loans and troubled debt restructurings to be impaired.

                                       12

<PAGE>

     Cash  surrender  value  of  life  insurance  - The carrying amounts of cash
surrender  values  of  life  insurance  approximate  their  fair  value.

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

     Advances  from  the  FHLB  and  other  borrowings  - The fair values of the
Corporation's borrowings are estimated using discounted cash flow analysis based
on  the  Corporation's  current incremental borrowing rates for similar types of
borrowing  arrangements.

     Securities  sold  under  agreements  to repurchase - The fair values of the
Corporation's  repurchase  agreements  are  estimated using discounted cash flow
analysis  based  on  the  Corporation's  current incremental borrowing rates for
similar  types  of  borrowing  arrangements.

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

     Floating rate junior subordinated deferrable interest debentures - The fair
values  of  the  Corporation's  floating  rate  debentures  are  estimated using
discounted  cash  flow  analysis  based on the Corporation's current incremental
borrowing  rates  for  similar  types  of  borrowing  arrangements.

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

                                       13

<PAGE>

The  estimated  fair  values  of the Corporation's financial instruments were as
follows  at  March  31,  2010 (in  thousands):

<TABLE>
<CAPTION>
<S>                                                                             <C>                      <C>
                                                                                                    March 31, 2010
                                                                                  --------------------------------------------------
                                                                                          Carrying                   Fair
                                                                                           Amount                    Value
                                                                                  ------------------------ -------------------------
Financial assets
----------------
Cash and due from banks                                                           $                30,376  $                 30,376
Securities available for sale                                                                     127,143                   127,143
Securities held to maturity                                                                         3,934                     4,009
Federal Home Loan Bank stock, at cost                                                               3,947                     3,947
Federal Reserve Bank stock, at cost                                                                   832                       832
Loans, net                                                                                        237,921                   237,869
Accrued interest receivable                                                                         1,863                     1,863
Cash surrender value of life insurance                                                              9,430                     9,430

Financial liabilities
---------------------
Deposits                                                                          $               325,946  $                317,109
Advances from FHLB and other borrowings                                                            59,500                    62,145
Securities sold under agreement to repurchase                                                      11,991                    11,305
Floating rate junior subordinated deferrable interest debentures                                   12,372                    11,231
Accrued interest payable                                                                              539                       539

Off-balance-sheet assets (liabilities)
--------------------------------------
Commitments to extend credit                                                                     ($33,729)                      ($0)
</TABLE>

The  estimated  fair  values  of the Corporation's financial instruments were as
follows  at  December  31,  2009 (in  thousands):

<TABLE>
<CAPTION>
<S>                                                                             <C>                   <C>

                                                                                                  December 31, 2009
                                                                                 ---------------------------------------------------
                                                                                        Carrying                    Fair
                                                                                         Amount                     Value
                                                                                 ----------------------- ---------------------------
Financial assets
----------------
Cash and due from banks                                                          $               15,631  $                   15,631
Securities available for sale                                                                   147,816                     147,816
Securities held to maturity                                                                       3,934                       3,976
Federal Home Loan Bank stock, at cost                                                             3,947                       3,947
Federal Reserve Bank stock, at cost                                                                 832                         832
Loans, net                                                                                      250,420                     250,455
Accrued interest receivable                                                                       2,238                       2,238
Cash surrender value of life insurance                                                            9,332                       9,332

Financial liabilities
---------------------
Deposits                                                                         $              332,762  $                  323,113
Advances from FHLB and other borrowings                                                          64,500                      67,457
Securities sold under agreement to repurchase                                                    18,520                      18,544
Floating rate junior subordinated deferrable interest debentures                                 12,372                      10,758
Accrued interest payable                                                                            581                         581

Off-balance-sheet assets (liabilities)
--------------------------------------
Commitments to extend credit                                                                   ($40,131)                        ($0)
</TABLE>

7.  Preferred  Stock
    ----------------

On  March  13,  2009,  as part of the United States Department of the Treasury's
Capital  Purchase  Program,  the  Corporation  issued 9,266 shares of Fixed Rate
Cumulative  Perpetual  Preferred  Stock,  Series A, $1,000 per share liquidation
preference,  and a warrant to purchase up to 178,880 shares of the Corporation's
common  stock for a period of ten years at an exercise price of $7.77 per share,
in  exchange  for  $9,266,000  in  cash from the United States Department of the
Treasury.  The  proceeds,  net  of  issuance costs consisting primarily of legal
fees,  were  allocated between the preferred stock and the warrant on a pro rata
basis,  based  upon  the  estimated market values of the preferred stock and the
warrant.  As  a  result,  $25,000 of the proceeds were allocated to the warrant,
which  increased  additional  paid-in-capital  from  common  stock.  The  amount
allocated  to  the  warrant  is considered a discount on the preferred stock and
will be amortized using the level yield method over a five-year period through a
charge  to retained earnings.  Such amortization will not reduce net income, but
will  reduce  income  available  for  common  shares.

                                       14

<PAGE>

7.  Preferred  Stock
    ----------------

On  March  13,  2009,  as part of the United States Department of the Treasury's
Capital  Purchase  Program,  the  Corporation  issued 9,266 shares of Fixed Rate
Cumulative  Perpetual  Preferred  Stock,  Series A, $1,000 per share liquidation
preference,  and a warrant to purchase up to 178,880 shares of the Corporation's
common  stock for a period of ten years at an exercise price of $7.77 per share,
in  exchange  for  $9,266,000  in  cash from the United States Department of the
Treasury.  The  proceeds,  net  of  issuance costs consisting primarily of legal
fees,  were  allocated between the preferred stock and the warrant on a pro rata
basis,  based  upon  the  estimated market values of the preferred stock and the
warrant.  As  a  result,  $25,000 of the proceeds were allocated to the warrant,
which  increased  additional  paid-in-capital  from  common  stock.  The  amount
allocated  to  the  warrant  is considered a discount on the preferred stock and
will be amortized using the level yield method over a five-year period through a
charge  to retained earnings.  Such amortization will not reduce net income, but
will  reduce  income  available  for  common  shares.

The  preferred stock pays cumulative dividends of 5% per year for the first five
years  and  9%  per  year  thereafter.  The Corporation may redeem the preferred
stock  at  its  liquidation  preference plus accrued and unpaid dividends at any
time  with  the  prior  regulatory  approval.  The securities purchase agreement
between the Corporation and the United States Department of the Treasury limits,
for three years, the rate of dividend payments on the Corporation's common stock
to  the  amount  of its last quarterly cash dividend before participation in the
program  of  $0.03 per share unless an increase is approved by the Department of
the  Treasury,  limits  the Corporation's ability to repurchase its common stock
for  three  years and subjects the Corporation to certain executive compensation
limitations  included  in  the  Emergency Economic Stabilization Act of 2008, as
amended  by  the  American  Recovery  and  Reinvestment  Act  of  2009.

7.  Subsequent  Events
    ------------------

Subsequent  events are events or transactions that occur after the balance sheet
date  but  before  financial statements are issued. Recognized subsequent events
are  events  or  transactions  that provide additional evidence about conditions
that  existed at the date of the balance sheet, including the estimates inherent
in  the  process  of  preparing  financial statements. Non-recognized subsequent
events  are  events that provide evidence about conditions that did not exist at
the date of the balance sheet but arose after that date. Management has reviewed
events  occurring  through  the date the financial statements were issued and no
subsequent  events  have  occurred  requiring  accrual  or  disclosure.

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

Critical  Accounting  Policies
------------------------------

The  Corporation  has  adopted  various  accounting  policies  which  govern the
application  of accounting principles generally accepted in the United States of
America  in  the  preparation  of  financial  statements.

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

The  Corporation believes the allowance for loan losses is a critical accounting
policy that requires significant judgments and estimates used in the preparation
of  consolidated  financial  statements.  Management  reviews  the  level of the
allowance on a monthly basis and establishes the provision for loan losses based
on  the  composition  and size of the loan portfolio, overall portfolio quality,
delinquency  and  charge-off  levels,  a  review of specific problem loans, loss
experience, economic conditions, and other factors related to the collectibility
of  the loan portfolio. A portion of the allowance is established by segregating
the  loans  by  residential  mortgage,  commercial  and  consumer  and assigning
allocation  percentages  based  on  historical  loss  experience and delinquency
trends.  The applied allocation percentages are reevaluated at least annually to
ensure  their  relevance  in  the  current  economic  environment.  Accordingly,
increases  in  the  size  of  the  loan  portfolio and the increased emphasis on
commercial  real  estate  and  commercial  business  loans, which carry a higher
degree  of  risk of default and, thus, a higher allocation percentage, increases
the  allowance. Additionally, a portion of the allowance is established based on
the  level  of  classified  assets.

                                       15

<PAGE>

Although the Corporation believes that it uses the best information available to
establish  the  allowance for loan losses, future additions to the allowance may
be  necessary  based  on estimates that are susceptible to change as a result of
changes  in  economic  conditions and other factors.  In addition, the Office of
the Comptroller of the Currency, as an integral part of its examination process,
will  periodically  review  the  Corporation's  allowance for loan losses.  Such
agency  may  require  the  Corporation to recognize adjustments to the allowance
based  on  its  judgments  about  information available to it at the time of its
examination.

Forward  Looking  Statements
----------------------------

Management's  discussion  and  analysis  of  financial  condition and results of
operations  and  other  portions  of  this  Form  10-Q  may  contain  certain
"forward-looking  statements"  concerning  the  future  operations,  plans  or
strategies of the Corporation and the Bank. These forward-looking statements are
generally  identified  by  the  use  of the words "believe," "expect," "intend,"
"anticipate,"  "estimate," "project," or similar expressions. Management intends
to  take  advantage  of  the  safe  harbor  provisions of the Private Securities
Litigation  Reform  Act  of 1995 and is including this statement for the express
purpose  of availing the Corporation of the protections of such safe harbor with
respect to all forward-looking statements contained in this report. Management's
ability  to  predict  results  or  the  effect  of future plans or strategies is
inherently uncertain. Factors which could effect actual results include interest
rate  trends,  the  general economic climate in the Corporation's and the Bank's
market  area  and the country as a whole, the ability of the Corporation and the
Bank  to  control  costs  and expenses, competitive products and pricing and the
demand for such products, loan delinquency rates, the quality and composition of
the  loan  and  investment  portfolios,  changes  in  accounting  principles and
guidelines  and  changes  in  federal  and  state  laws  and  regulations.  The
Corporation  provides greater detail regarding some of these factors in its Form
10-K for the year ended December 31, 2009, including in the Risk Factors section
of that report, and in its other SEC reports. These factors should be considered
in  evaluating  the forward-looking statements, and undue reliance should not be
placed  on  such  statements.

Except  as  required  by  applicable law or regulation, the Corporation does not
undertake,  and  specifically  disclaims any obligation, to release publicly the
result  of  any  revisions that may be made to any forward looking statements to
reflect events or circumstances after the date of these statements or to reflect
the  occurrence  of  anticipated  or  unanticipated  events.

Financial  Condition
--------------------

Assets
------

Total  assets  of  the  Corporation  decreased $18.5 million, or 4.0%, to $438.5
million  at  March 31, 2010 from $457.0 million at December 31, 2009. Investment
securities  at  March  31,  2010  decreased  13.6% to $131.1 million from $151.8
million  at  December 31, 2009. Fed funds sold at March 31, 2010 increased $15.1
million  to  $20.3 million from $5.3 million at December 31, 2009 as a result of
sales  and  maturities  of  securities.  Net  loans decreased $12.5 million from
December 31, 2009 to March 31, 2010, due primarily to a significant reduction in
loan  demand  as  a  result  of  economic  conditions currently present in South
Carolina.

                                       16

<PAGE>

Investment  and  Mortgage-backed  Securities
--------------------------------------------

Included  in  our  investment securities are 7 pooled trust preferred securities
with  an  amortized  cost  of  $4.3 million and a fair value of $2.9 million. An
other  than  temporary  investment  charge  of  $303,000  was  recorded  for the
three-month  period  ended  March  31,  2010  related  to  these trust preferred
securities  as  a  result  of  projected  shortfalls  of  interest and principal
payments  in  the  cash  flow  analysis  of  the  securities.

Held  to  Maturity-Securities  classified  as  held to maturity consisted of the
following  (in  thousands):

<TABLE>
<CAPTION>
<S>                                   <C>               <C>                 <C>                <C>
                                                    March 31, 2010                      December 31, 2009
                                          ----------------------------------- --------------------------------------
                                              Amortize            Fair             Amortized              Fair
                                                Cost             Value                Cost               Value
                                          ---------------- ------------------ --------------------  ----------------

Municipal Securities                       $         3,934 $            4,009 $              3,934  $          3,976
                                          ================ ================== ====================  ================
</TABLE>

Available  for Sale-Securities classified as available for sale consisted of the
following  (in  thousands):

<TABLE>
<CAPTION>
<S>                                                                 <C>            <C>              <C>              <C>
                                                                              March 31, 2010                December 31, 2009
                                                                     -------------------------------- ------------------------------
                                                                        Amortized          Fair          Amortized         Fair
                                                                           Cost            Value           Cost           Value
                                                                     ---------------- --------------- --------------- --------------
Investment Securities:
U.S. Agency Obligations                                              $              3 $             3 $             4 $            4
  Government Sponsored Enterprises                                             82,477          82,188          79,162         78,471
  Municipal Securities                                                          5,054           5,299           5,781          6,042
  Trust Preferred Securities                                                    8,285           5,423           8,570          5,912
                                                                     ---------------- --------------- --------------- --------------
Total Investment Securities                                                    95,819          92,913          93,517         90,429
                                                                     ---------------- --------------- --------------- --------------
Mortgage-backed Securities:
  Fannie Mae                                                                   18,367          19,052          35,561         36,723
  Ginnie Mae                                                                   13,674          14,201          16,569         17,030
  Freddie Mac                                                                     456             468           3,068          3,154
  Collateralized Mortgage Obligations                                             572             509             597            480
                                                                     ---------------- --------------- --------------- --------------
Total Mortgage-backed Securities                                               33,069          34,230          55,795         57,387
                                                                     ---------------- --------------- --------------- --------------
Total Available for Sale                                             $        128,888 $       127,143 $       149,312 $      147,816
                                                                     ================ =============== =============== ==============
</TABLE>

The  Corporation  uses the investment securities portfolio for several purposes.
It  serves as a vehicle to manage interest rate and prepayment risk, to generate
interest  and  dividend income from investment of funds, to provide liquidity to
meet funding requirements, and to provide collateral for pledges on public funds
and  FHLB  borrowings.  The  average  yield on investments at March 31, 2010 was
3.39%  compared  to  4.04%  at  December  31,  2009.  The carrying values of the
investment  securities at March 31, 2010 and December 31, 2009 and percentage of
each  category  to  total  investments  are  as  follows:

<TABLE>
<CAPTION>
<S>                                                       <C>                <C>          <C>             <C>
                                                                      March 31, 2010               December 31, 2009
                                                             -------------------------------- ----------------------------
Available for sale:                                               Fair          Percent of       Fair        Percent of
                                                                  Value          Portfolio       Value        Portfolio
                                                             ---------------  --------------- ------------  --------------

Investment securities:
      U.S. Agency obligations                                $             3            0.01% $      40.00%          0.01%
      Government Sponsored Enterprises                                82,188           64.64        78,471          53.08
      Municipal securities                                             5,299            4.17         6,042           4.09
      Trust Preferred securities                                       5,423            4.26         5,912           4.00
                                                             ---------------  --------------- ------------  --------------
         Total investment securities                                  92,913           73.08        90,429          61.18
                                                             ---------------  --------------- ------------  --------------
Mortgage-backed and related securities                                34,230           26.92        57,387          38.82
                                                             ---------------  --------------- ------------  --------------
         Total                                               $       127,143          100.00% $    147,816         100.00%
                                                             ===============  =============== ============  ==============

                                                                     March 31, 2010               December 31, 2009
                                                             -------------------------------- ----------------------------
Held to maturity:                                               Carrying        Percent of      Carrying      Percent of
                                                                  Value          Portfolio       Value        Portfolio
                                                             ---------------  --------------- ------------  --------------

      Municipal securities                                   $         3,934          100.00% $      3,934         100.00%
                                                             ===============  =============== ============  ==============
</TABLE>

                                       17

<PAGE>

Investment  securities  at March 31, 2010 decreased 13.6% to $131.1 million from
$151.8 million at December 31, 2009. Fed funds sold at March 31, 2010, increased
$15.1  million  to  $20.3  million  from  $5.3 million at December 31, 2009 as a
result  of  sales  and  maturities  of  securities. The Corporation continues to
reposition  the investment portfolio for the potential of rising interest rates.
The  Corporation  accounts for investment securities in accordance with FASB ASC
Topic  320:  Investments  in Debt and Equity Securities. In accordance with FASB
ASC  Topic 320, debt securities that the Corporation has the positive intent and
ability  to hold to maturity are classified as "held to maturity" securities and
reported  at amortized cost. Debt and equity securities that are bought and held
principally  for  the  purpose  of  selling  in  the near term are classified as
"trading"  securities  and  reported  at  fair  value, with unrealized gains and
losses included in earnings. Debt and equity securities not classified as either
held  to  maturity  or trading securities are classified as "available for sale"
securities  and reported at fair value with unrealized gains and losses excluded
from  earnings  and reported as a separate component of shareholders' equity. No
securities  have  been  classified  as  trading  securities.

Purchases  and  sales  of  securities  are  accounted for on a trade date basis.
Premiums  and  discounts  on  debt  securities  are  amortized  or  accreted  as
adjustments  to  income  over  the estimated life of the security using a method
approximating  the level yield method. Gains or losses on the sale of securities
are based on the specific identification method. The fair value of securities is
based  on quoted market prices or dealer quotes. If a quoted market price is not
available,  fair  value  is  estimated  using  quoted  market prices for similar
securities.

The  amortized  cost  and  fair value of investment securities are summarized as
follows:

Held  to  Maturity  - Securities classified as held to maturity consisted of the
following  (in  thousands):

<TABLE>
<CAPTION>
<S>                              <C>         <C>            <C>        <C>
                                                  As of March 31, 2010
                                  -----------------------------------------------------
                                   Amortized      Gross Unrealized
                                     Cost        Gains        Losses       Fair Value
                                  -----------  ----------  ------------  --------------

Municipal Securities              $     3,934  $       81          ($6)  $        4,009
                                  ===========  ==========  ============  ==============
</TABLE>

Available  for  Sale  - Securities classified as available for sale consisted of
the  following  (in  thousands):

<TABLE>
<CAPTION>
<S>                                <C>          <C>          <C>             <C>
                                                     As of March 31, 2010
                                     -----------------------------------------------------
                                      Amortized        Gross Unrealized
                                        Cost        Gains         Losses       Fair Value
                                     -----------  ----------  --------------  ------------
Investment Securities:
  U.S. Agency Obligations            $         3  $        -  $          --   $          3
   Government Sponsored Enterprises       82,477         166           (455)        82,188
  Municipal Securities                     5,054         245              -          5,299
  Trust Preferred Securities               8,285           -         (2,862)         5,423
                                     -----------  ----------  --------------  ------------
Total Investment Securities               95,819         411         (3,317)        92,913
                                     -----------  ----------  --------------  ------------
Mortgage-backed Securities:
  Fannie Mae                              18,367         685              -         19,052
  Ginnie Mae                              13,674         527              -         14,201
  Freddie Mac                                456          12              -            468
  Collateralized Mortgage
   Obligations                               572           -            (63)           509
                                     -----------  ----------  --------------  ------------
Total Mortgage-backed Securities          33,069       1,224            (63)        34,230
                                     -----------  ----------  --------------  ------------
Total available for sale             $   128,888  $    1,635        ($3,380)  $    127,143
                                     ===========  ==========  ==============  ============
</TABLE>

                                       18

<PAGE>

Held  to  Maturity  - Securities classified as held to maturity consisted of the
following  (in  thousands):

<TABLE>
<CAPTION>
<S>                              <C>        <C>            <C>          <C>
                                                As of December 31, 2009
                                  ----------------------------------------------------

                                   Amortized        Gross Unrealized
                                     Cost        Gains        Losses      Fair Value
                                  -----------  ----------  ------------  -------------

Municipal Securities              $     3,934  $       52         ($10)  $       3,976
                                  ===========  ==========  ============  =============
</TABLE>

Available  for  Sale  - Securities classified as available for sale consisted of
the  following  (in  thousands):

<TABLE>
<CAPTION>
<S>                              <C>         <C>          <C>          <C>
                                                As of December 31, 2009
                                  ----------------------------------------------------
                                   Amortized       Gross Unrealized
                                     Cost        Gains        Losses       Fair Value
                                  -----------  ----------  -------------  ------------
Investment Securities:
  U.S. Agency Obligations         $         4  $       --  $         --   $          4
   Government Sponsored
    Enterprises                        79,162         217          (908)        78,471
  Municipal Securities                  5,781         261            --          6,042
  Trust Preferred Securities            8,570          --        (2,658)         5,912
                                  -----------  ----------  -------------  ------------
Total Investment Securities            93,517         478        (3,566)        90,429
                                  -----------  ----------  -------------  ------------
Mortgage-backed Securities:
  Fannie Mae                           35,561       1,162            --         36,723
  Ginnie Mae                           16,569         461            --         17,030
  Freddie Mac                           3,068          86            --          3,154
  Collateralized Mortgage
   Obligations                            597          --          (117)           480
                                  -----------  ----------  -------------  ------------
Total Mortgage-backed Securities       55,795       1,709          (117)        57,387
                                  -----------  ----------  -------------  ------------
Total available for sale          $   149,312  $    2,187  $     (3,683)  $    147,816
                                  ===========  ==========  =============  ============
</TABLE>

                                       19


<PAGE>

The  maturities  of  securities  at  March 31, 2010 are as follows
(in thousands):

                                          Held to Maturity   Available for Sale
                                          -----------------  -------------------
                                          Amortized  Fair    Amortized   Fair
                                            Cost     Value     Cost      Value
                                          ---------  ------  ---------  --------
Due in one year or less                      $   --  $   --  $      11  $     11
Due after one year through five years            --      --        416       423
Due after five years through ten years           --      --     37,606    37,637
Due after ten years                           3,934   4,009     90,855    89,072
                                          ---------  ------  ---------  --------
Total investment and mortgage-backed
  securities                                 $3,934  $4,009   $128,888  $127,143
                                          =========  ======  =========  ========


     The  following  table  shows  gross  unrealized  losses  and  fair  value,
aggregated by investment category, and length of time that individual securities
have  been  in  a  continuous  unrealized  loss  position  at March 31, 2010 (in
thousands).


<TABLE> <CAPTION>
                           Less than 12 Months       12 Months or More              Total
                          -----------------------  -----------------------  -----------------------
                            Fair      Unrealized    Fair      Unrealized      Fair     Unrealized
                            Value       Losses      Value       Losses       Value       Losses
                          ---------  ------------  --------  -------------  ---------  ------------
<S>                       <C>        <C>           <C>       <C>            <C>        <C>
Held to Maturity
----------------
Municipal Securities        $ --         $ --        $497         $6          $497          $6
                          =========  ============  ========  =============  =========  ============
</TABLE>


<TABLE> <CAPTION>
                           Less than 12 Months     12 Months or More                Total
                          ---------------------  ----------------------  ---------------------------
                           Fair    Unrealized     Fair     Unrealized        Fair        Unrealized
                           Value      Losses      Value      Losses          Value         Losses
                          -------  ------------  --------  ------------  -------------  ------------
Securities Available for
 Sale
------------------------
<S>                       <C>      <C>           <C>       <C>            <C>            <C>
U.S. Agency Obligations      $ --         $  --     $ --          $ --           $ --          $ --

Government Sponsored
 Enterprises               47,481           455       --            --         47,481           455

Municipal Securities           --            --       --            --             --            --

Trust Preferred
 Securities                    --            --    5,423         2,862          5,423         2,862

Mortgage-backed
 Securities                    --            --      554            63            554            63
                          -------  ------------  --------  ------------  -------------  ------------
  Total                   $47,481          $455   $5,977        $2,925        $53,458        $3,380
                          =======  ============  ========  ============  =============  ============

</TABLE>

The  following table shows gross unrealized losses and fair value, aggregated by
investment  category, and length of time that individual securities have been in
a  continuous  unrealized  loss  position  at  December 31, 2009 (in thousands).

<TABLE> <CAPTION>
                          Less than 12 Months      12 Months or More             Total
                         ----------------------  ----------------------  ----------------------
                          Fair     Unrealized     Fair      Unrealized     Fair     Unrealized
                          Value      Losses       Value       Losses       Value      Losses
                         --------  ------------  --------  ------------  --------  ------------
Held to Maturity
----------------
<S>                      <C>       <C>           <C>       <C>           <C>       <C>
Municipal Securities       $494         $9         $833         $1        $1,326       $10
  Total                    $494         $9         $833         $1        $1,326       $10
                         ========  ============  ========  ============  ========  ============
</TABLE>


                                       20
<PAGE>

<TABLE> <CAPTION>
                         Less than 12 Months       12 Months or More            Total
                        ----------------------   ---------------------  -----------------------
                         Fair     Unrealized      Fair    Unrealized      Fair     Unrealized
                         Value      Losses        Value      Losses       Value      Losses
                        --------  ------------   -------  ------------  --------  -------------
Securities Available
for Sale
----------------------
<S>                      <C>       <C>           <C>       <C>           <C>       <C>
U.S. Agency
 Obligations               $ -       $  -          $  -      $  -         $  -         $  -

Government Sponsored
 Enterprises              41,040       908            -         -         41,040            908

Municipal Securities        -           -             -         -            -            -

Trust Preferred             -           -          5,912         2,658     5,912          2,658
 Securities

Mortgage-backed
 Securities                --          --            532           117       532            117
                        --------  ------------   -------  ------------  --------  -------------
  Total                  $41,040          $908    $6,444        $2,775   $47,484         $3,683
                        ========  ============   =======  ============  ========  =============
</TABLE>


Loans
-----

Net  loans  decreased  to  $237.9  million  at March 31, 2010 compared to $250.4
million at December 31, 2009. The decrease was due to a significant reduction in
loan  demand  as  a  result  of  economic  conditions currently present in South
Carolina  and more conservative underwriting standards. Consumer loans decreased
$2.4  million,  or  4.5%,  commercial loans decreased $8.6 million, or 4.7%, and
residential mortgage loans decreased $1.7 million, or 8.6%, for the period ended
March  31,  2010.


                                       21
<PAGE>

Loans receivable consisted of the following (in thousands):

<TABLE> <CAPTION>
                                                    March 31,                December 31,
                                                -----------------         ------------------
                                                      2010                       2009
                                                -----------------         ------------------
Mortgage loans:
<S>                                             <C>                       <C>
  Fixed-rate residential                                  $10,399                    $10,675
  Adjustable-rate residential                               5,952                      6,202
  Commercial real estate                                  109,673                    110,901
  Construction                                              1,811                      2,923
                                                -----------------         ------------------
Total mortgage loans                                      127,835                    130,701
                                                -----------------         ------------------
Commercial loans:
  Commercial non-real estate                               28,831                     34,429
  Commercial lines of credit                               37,301                     39,096
                                                -----------------         ------------------
Total commercial loans                                     66,132                     73,525
                                                -----------------         ------------------
Consumer loans:
  Home equity                                              17,117                     17,395
  Consumer and installment                                 32,517                     34,578
  Consumer lines of credit                                    301                        314
                                                -----------------         ------------------
Total consumer loans                                       49,935                     52,287
                                                -----------------         ------------------
Total loans                                               243,902                    256,513
                                                -----------------         ------------------
Less:
  Undisbursed portion of interim
   construction loans                                       (379)                      (320)
   Unamortized loan discount                                (296)                      (309)
  Allowance for loan losses                               (5,433)                    (5,579)
  Net deferred loan origination costs                         127                        115
                                                -----------------         ------------------
Total, net                                               $237,921                   $250,420
                                                =================         ==================

Weighted-average interest rate of loans                     5.14%                      4.87%
</TABLE>


                                       22
<PAGE>

The  following  table  sets  forth  information  with  respect  to  the  Bank's
non-performing  assets  at  the  dates  indicated  (dollars  in  thousands):


<TABLE> <CAPTION>
                                                March 31, 2010         December 31, 2009
                                              -----------------        ------------------

        Non-accruing loans which are
         contractually past due 90 days
         or more:
<S>                                           <C>                      <C>
        Residential real estate               $             662        $             649
        Commercial                                       19,919                   19,045
        Consumer                                          1,294                    1,175
                                              ------------------       ------------------
        Total nonperforming loans                        21,875                   20,869

        Real estate acquired through
         foreclosure and repossessed assets               6,441                    5,917
                                              ------------------       ------------------
        Total nonperforming assets            $          28,316        $          26,786
                                              ==================       ==================

        Nonperforming loans to total loans                 8.96%                    8.13%
                                              ==================       ==================
        Nonperforming assets to total assets               6.45%                    5.86%
                                              ==================       ==================
        Allowance for loan losses to total
        loans outstanding                                  2.23%                    2.18%
                                              ==================       ==================
        Allowance for loan losses to
        Nonperforming loans                               24.84%                   26.73%
                                              ==================       ==================
        Allowance for loan losses             $           5,433        $           5,579
                                              ==================       ==================

</TABLE>

Loans  which  management identifies as impaired generally will be non-performing
loans.  Non-performing  assets  increased $1.5 million to $28.3 million at March
31,  2010,  or  6.45%  of total assets, as compared to $26.8 million or 5.86% of
total  assets, at December 31, 2009. Slow housing conditions have affected these
borrowers'  ability  to  sell  the  completed projects in a timely manner. These
loans  are  currently  being  carried  at  management's  best  estimate  of  net
realizable value, although no assurance can be given that no further losses will
be incurred on these loans until the collateral has been acquired and liquidated
or other arrangements can be made. Interest income that would have been recorded
for  the  period  ended  March  31,  2010 had non-accruing loans been current in
accordance  with  their original terms amounted to approximately $325,000. There
was  no  interest included in interest income on such loans for the period ended
March  31,  2010.  Management has allocated specific reserves to these and other
non-performing  assets that it believes will offset losses, if any, arising from
less  than  full  recovery of the loans from the supporting collateral. Specific
reserves  for non-performing loans are charged to the loan as a write-down after
completion  of the impairment analysis for all collateral dependent loans. These
additional reserves are based on management's evaluation of a number of factors,
including  the estimated value of the collateral supporting each of these loans.
Management  believes that the combination of additional reserves and established
impairment  of  these  loans  will  be  adequate to account for the current risk
associated  with  these  loans  as  of  March  31, 2010. Management continues to
evaluate  and  assess all nonperforming assets on a regular basis as part of its
well-established  loan  monitoring  and  review  process.

At  March  31,  2010,  criticized  and  classified  loans totaled $45.6 million,
compared  to  $51.4  million at December 31, 2009 and $27.0 million at March 31,
2009.  The  reduction  of  $4.0 million for criticized and classified loans from
December 31, 2009 to March 31, 2010 was due to the payout of two commercial real
estate  loans.  Our non-performing loans totaled $21.9 million at March 31, 2010
compared  to  $20.9  million  at  December 31, 2009. Non-performing and impaired
loans,  net  of  specific  reserves, totaled $11.8 million at March 31, 2009 and
$12.5  million  at December 31, 2008. While management uses the best information
available  to establish the allowance for loan losses, future adjustments to the
allowance  may be necessary if economic conditions differ substantially from the
assumptions used in making the valuations. Such adjustments would be made in the
relevant  period  and  may  be  material  to  the  financial  statements.


                                       23
<PAGE>

Real  estate  acquired through foreclosure increased $524,000 to $6.4 million at
March  31,  2010  from  $5.9  million  at  December  31,  2009,  as  a result of
foreclosure  on  one  commercial  real  estate property. Other real estate owned
("OREO")  is  adjusted  to  fair  value  upon  transfer  of  the  loans to OREO.
Subsequently, OREO is carried at the lower of carrying value or fair value. Fair
value  is  based  upon  independent  market  prices,  appraised  values  of  the
collateral  or  management's  estimation  of  the  value  of the collateral. The
properties are being actively marketed and maintained with the primary objective
of liquidating the collateral at a level which most accurately approximates fair
market  value  and  allows recovery of as much of the unpaid balance as possible
upon  the  sale  of  the properties in a reasonable period of time. The carrying
value  of  these  assets  are believed to be representative of their fair market
value,  although  there  can be no assurance that the ultimate proceeds from the
sale  of these  assets  will  be  equal  to or greater than the carrying values.

Real estate acquired in settlement of loans through foreclosure is summarized as
follows:

                                             March 31,       December 31,
                                               2010              2009
                                            -----------      ------------

Balance at beginning of period              $   5,917        $     667
Foreclosures added during the period              524            5,890
Provision charged as a write-down                  (0)            (640)
                                            -----------      ------------
Balance at the end of period                $   6,441        $   5,917
                                            ===========      ============

Other  Assets
-------------

Cash  surrender  value  of  life  insurance  increased $98,000, or 1.1%, to $9.4
million at March 31, 2010 from $9.3 million at December 31, 2009, due to accrued
life  insurance  benefits.

Other  assets  decreased  $191,000,  or 1.7%, to $11.3 million at March 31, 2010
from  $11.5  million  at December 31, 2009, due primarily to the amortization of
prepaid  FDIC  premiums  for  the  period.

Liabilities
-----------

Total  liabilities  decreased  $18.2 million to $412.7 million at March 31, 2010
from  $430.9  million  at December 31, 2009. Deposits decreased $6.8 million, or
2.1%,  to  $325.9  million at March 31, 2010 from $332.8 million at December 31,
2009.  The  decrease  was  due  to  an  $8.5 million decrease in certificates of
deposit,  offset  by a $1.6 million increase in transaction accounts as a result
of  a  special product promotion. The Corporation continues to target lower-cost
demand   deposit   accounts  through   media  advertising  and  special  product
promotions.  FHLB  advances decreased $5.0 million to $59.5 million at March 31,
2010  from $64.5 million at December 31, 2009 due to the maturity of advances as
additional  advances  were  not  needed  due to the decrease in assets. Security
agreements  to  repurchase  decreased $6.5 million to $11.9 million at March 31,
2010  from $18.5 million at December 31, 2009 due to the maturity of borrowings.


                                       24
<PAGE>

<TABLE><CAPTION>
                                              March 31, 2010                December 31, 2009
                                       ----------------------------  ---------------------------------
                                        Rate   Balance       %         Rate      Balance        %
                                       ------- --------  ----------  ---------  ---------  -----------
Account Type
------------
NOW accounts:
<S>                                      <C>   <C>       <C>         <C>        <C>        <C>
 Commercial non-interest-bearing          --   $ 18,965       5.82%       --    $  18,015        5.42%
 Non-commercial                          2.16%   95,209      29.19%      2.30%     98,274       29.53%
Money market checking accounts           1.31%   27,091       8.31%      1.57%     32,239        9.69%
Regular savings                          0.58%   22,292       6.84%      0.51%     13,383        4.02%
                                                -------  ----------  ---------    -------  -----------
Total demand and savings deposits        1.60%  163,557      50.16%      1.74%    161,911       48.66%
                                                -------  ----------               -------  -----------
Time deposits:
 Up to 3.00%                                    145,225      44.55%               135,064       40.59%
 3.01%- 4.00%                                     3,851       1.18%                20,885        6.27%
 4.01%- 5.00%                                    12,380       3.80%                13,744        4.13%
 5.01%- 6.00%                                       933       0.31%                 1,130        0.34%
 6.01%- 7.00%                                        --       0.00%                    28        0.01%
                                                -------  ----------               -------  -----------
Total time deposits                      2.02%  162,389      49.84%      2.27%    170,851       51.34%
                                                -------  ----------               -------  -----------
Total deposit accounts                   1.81% $325,946     100.00%      2.02%  $ 332,762      100.00%
                                               ========  ==========             =========  ===========
</TABLE>

FHLB  advances  decreased  $5.0  million to $59.5 million at March 31, 2010 from
$64.5 million at December 31, 2009.The maturity of the advances from the FHLB is
as  follows  (in  thousands):

<TABLE> <CAPTION>
                                                  March 31, 2010          December 31, 2009
                                                  --------------          -----------------
                                               Balance  Wtd Avg Rate    Balance    Wtd Avg Rate
                                               -------- -------------  --------- ----------------

Contractual Maturity:
<S>                                            <C>       <C>           <C>        <C>
Within one year - fixed rate                   $     --       --%      $   5,000        4.93%
After one but within three years - fixed rate        --       --%             --          --%
After one but within three years - adjustable
 rate                                            22,000     4.58%         22,000        4.58%
Greater than five years - adjustable rate        37,500     3.89%         37,500        3.89%
                                                 ------                   ------
Total advances                                 $ 59,500     4.14%      $  64,500        4.20%
                                               ========                =========
</TABLE>

The  Bank  pledges  as collateral for the advances its investment securities and
has  entered  into a blanket collateral agreement with the FHLB whereby the Bank
maintains,  free  of  other encumbrances, qualifying loans with unpaid principal
balances  equal  to,  when  discounted  at  50%  to  75% of the unpaid principal
balances,  100%  of  total  advances.

The Corporation had $11.9 million and $18.5 million borrowed under agreements to
repurchase  at  March  31,  2010  and  December  31,  2009,  respectively.

Shareholders'  Equity
---------------------

Shareholders'  equity decreased $261,000, or 1.0%, to $25.9 million at March 31,
2010  from  $26.1  million  at  December  31,  2009  due primarily to a $163,000
increase  in  unrealized  losses on securities available for sale and  preferred
stock  dividend payments of $116,000, offset by  net income of $18,000. At March
31,  2010,  all  of  the  Bank's  capital  ratios  continued to be sufficient to
classify  it  as  a  well-capitalized  institution  by  regulatory  measures.

Liquidity
---------

Liquidity  is  the  ability  to  meet  demand  for  loan  disbursements, deposit
withdrawals,  repayment  of  debt,  payment  of  interest  on deposits and other
operating  expenses.  The  primary  sources  of  liquidity  are  deposits,  loan
repayments,  borrowings,  maturity and sale of securities and interest payments.


                                       25
<PAGE>

While  maturities  and  scheduled  amortization  of  loans  and  securities  are
predictable  sources  of  funds,  deposit  outflows and mortgage prepayments are
greatly  influenced  by   general  interest   rates,   economic  conditions  and
competition.  The  primary  investing  activities  of  the  Corporation  are the
origination of commercial and consumer loans, and the purchase of investment and
mortgage-backed  securities.  These activities are funded primarily by principal
and  interest  payments  on  loans  and  investment  securities, deposit growth,
securities  sold  under  agreements  to  repurchase  and  FHLB  advances.

At March 31, 2010, the Corporation's investment in marketable securities totaled
$131.1  million,  nearly  all  of which was available for sale. In addition, the
Corporation  had  $20.3  million in fed funds sold at March 31, 2010 compared to
$5.3 million at December 31, 2009. Approximately $76.5 million and $94.6 million
of  debt  securities at March 31, 2010 and December 31, 2009, respectively, were
pledged  by  the  Bank  as  collateral  to secure deposits of the State of South
Carolina,  and Union, Laurens and York counties along with additional borrowings
and  repurchase  agreements.

Outstanding  loan  commitments  (including  commitments  to  fund  credit lines)
totaled  $33.7  million  at  March  31,  2010.  Management  of  the  Corporation
anticipates  that  it  will  have sufficient funds available to meet its current
loan  commitments.

The  Corporation  closely monitors its liquidity position on a daily basis. Time
deposits  that  are scheduled to mature in one year or less from March 31, 2010,
totaled  $105.6  million. The Corporation relies primarily on competitive rates,
customer  service,  and  long-standing  relationships  with  customers to retain
deposits. From time to time, the Corporation will also offer special products to
its  customers to increase retention and to attract new deposits. Based upon the
Corporation's   experience   with   deposit   retention  and  current  retention
strategies,  management  believes  that,  although it is not possible to predict
future terms and conditions upon renewal, a significant portion of such deposits
will  remain  with the Corporation. If the Corporation requires funds beyond its
ability  to  generate them internally, additional sources of funds are available
through  FHLB advances, securities sold under agreements to repurchase and lines
of  credit. At March 31, 2010, the Corporation had outstanding $59.5 million  of
FHLB  borrowings  and  $11.9  million  of  securities  sold  under agreements to
repurchase.  At  March  31, 2010, the Corporation had unused short-term lines of
credit  to purchase federal funds from unrelated banks totaling $4.0 million and
the  ability to borrow an additional $70.0 million from secured borrowing lines.
Lines  of credit are available on a one-to-ten day basis for general purposes of
the  Corporation.  All  of the lenders have reserved the right to withdraw these
lines  at  their  option.

Provident  Community  Bancshares,  Inc. is a separate legal entity from the Bank
and  must  provide for its own liquidity. In addition to its operating expenses,
Provident  Community Bancshares is responsible for paying any dividends declared
to its shareholders and paying the obligations on its outstanding debentures and
preferred  stock.  Provident Community Bancshares' primary sources of income are
proceeds  that  it  retained  from its offering of preferred stock and dividends
received  from  the  Bank. The amount of dividends that the Bank may declare and
pay  to Provident Community Bancshares in any calendar year, without the receipt
of  prior  approval  from  the  Office of the Comptroller of the Currency cannot
exceed  retained  net income for that year combined with retained net income for
the  prior two years less any transfers to surplus and capital distributions. At
March  31,  2010, Provident Community Bancshares, Inc. had liquid assets of $1.6
million.


                                       26
<PAGE>

Capital  Management
-------------------

The  Bank  and  the  Corporation  are  subject  to  various  regulatory  capital
requirements administered by banking regulators. Failure to meet minimum capital
requirements   can  initiate  certain   mandatory   -  and  possibly  additional
discretionary  -  actions by regulators that, if undertaken, could have a direct
material  effect  on  the Corporation's consolidated financial statements. Under
capital  adequacy  guidelines and the regulatory framework for prompt corrective
action, the Bank must meet specific capital guidelines that involve quantitative
measures  of the Bank's assets, liabilities, and certain off-balance-sheet items
as  calculated under regulatory accounting practices. The Bank's capital amounts
and  classifications are also subject to qualitative judgments by the regulators
about  components,  risk  weights  and  other  factors.

Quantitative  measures  established  by  regulations  to ensure capital adequacy
require  the  Bank and the Corporation to maintain minimum amounts and ratios of
total  and  Tier  1  capital  to risk-weighted assets, and of Tier 1 capital  to
average assets (as defined in the regulations). Management believes, as of March
31,  2010,  that  the  Bank   and  the  Corporation  met  the  capital  adequacy
requirements  to  which  they  are  subject.

As  of  March  31,  2010,  the  Bank was "well capitalized" under the regulatory
framework  for prompt corrective action based on its capital ratio calculations.
In  order  to  be  "well  capitalized",  the  Bank  must  maintain minimum total
risk-based,  Tier  1  risk-based, and Tier 1 leverage ratios as set forth in the
following  table.

Under  present regulations of the Office of the Comptroller of the Currency, the
Bank  must  have core capital (leverage requirement) equal to 4.0% of assets, of
which  1.5% must be tangible capital, excluding intangible assets. The Bank must
also maintain risk-based regulatory capital as a percent of risk weighted assets
at least equal to 8.0%.  In measuring compliance with capital standards, certain
adjustments  must  be  made  to  capital  and  total  assets.

The  following tables present the total risk-based, Tier 1 risk-based and Tier 1
leverage  requirements  for the Corporation and the Bank (dollars in thousands).


<TABLE> <CAPTION>
                                        March 31, 2010
                                        --------------

                                  Actual          Regulatory Minimum      Well Capitalized
                                  ------          ------------------      ----------------

                             Amount     Ratio     Amount      Ratio      Amount       Ratio
                               $          %          $          %           $           %
Leverage ratio
<S>                          <C>        <C>       <C>         <C>        <C>         <C>
Corporation                  31,890     7.07%     18,043      4.00%        n/a         n/a
Bank                         33,537     7.44%     18,035      4.00%      22,543       5.00%

Tier 1 capital ratio
Corporation                  31,890     10.99%    11,610      4.00%        n/a         n/a
Bank                         33,537     11.56%    11,602      4.00%      17,403       6.00%

Total risk-based capital
ratio
Corporation                  38,540     13.28%    23,219      8.00%        n/a         n/a
Bank                         37,185     12.82%    23,203      8.00%      29,004      10.00%
</TABLE>


                                       27
<PAGE>

Off-Balance Sheet Risk
----------------------

In  the  normal  course  of  operations, the Corporation engages in a variety of
financial  transactions  that,  in accordance with generally accepted accounting
principles  are  not  recorded  in  its financial statements. These transactions
involve,  to  varying  degrees,  elements of credit, interest rate and liquidity
risk.  Such  transactions  are  used primarily to manage customers' requests for
funding  and  take  the  form  of  legally  binding  agreements to lend money to
customers  at  predetermined  interest  rates  for  a  specified period of time.
Outstanding  loan  commitments  (including  commitments  to  fund  credit lines)
totaled  $33.7  million  at March 31, 2010. Each customer's credit worthiness is
evaluated  on a case-by-case basis. The amount of collateral obtained, if deemed
necessary  by  the  Corporation upon extension of credit, is based on the credit
evaluation  of  the  borrower.  Collateral  varies  but  may  include  accounts
receivable, inventory, property, plant and equipment, commercial and residential
real  estate. The credit risk on these commitments is managed by subjecting each
customer  to  normal  underwriting and risk management processes. For the period
ended  March  31,  2010, the Corporation did not engage in any off-balance sheet
transactions  reasonably  likely  to  have  a  material  effect on its financial
condition,  results  of  operation  or  cash  flows.

Results of operations for the three months endedMarch31, 2010 and 2009
----------------------------------------------------------------------

General
-------

The  Corporation  recorded  a net loss to common shareholders of $99,000 for the
three  months ended March 31, 2010 as compared to a net loss of $1.7 million for
the same period in 2009. A decrease in the provision for loan losses to $896,000
for  the three months ended March 31, 2010 compared to $2.7 million for the same
period in 2009, an increase in non-interest income to $1.1 million for the three
months ended March 31, 2010 compared to $481,000 for the same period in 2009 and
a  decrease  in  non-interest  expense  all had a positive impact on earnings in
2010.


                                       28
<PAGE>


<TABLE> <CAPTION>
                                          Average                  Average          Average                   Average
                                          Balance    Interest    Yield/Cost(2)      Balance    Interest     Yield/Cost(2)
                                        ----------- ----------  ----------------  -----------  ---------   ---------------
Interest-earning assets:
<S>                                     <C>         <C>         <C>               <C>          <C>         <C>
Loans (1)                               $   247,998 $    3,120       5.03%        $   283,804  $   3,596      5.07%
Mortgage-backed securities                   43,735        429       3.92%             65,311        895      5.48%
Investment securities                        97,181        962       3.96%             47,581        624      5.24%
Other interest-earning assets                25,306         19       0.31%             21,160         23      0.43%
                                        ----------- ----------                    -----------  ---------
Total interest-earning assets               414,220      4,530       4.37%            417,856      5,138      4.92%
                                                    ----------                                 ---------
Non-interest-earning assets                  40,716                                    30,491
                                        -----------                               -----------
Total assets                            $   454,936                               $   448,347
                                        ===========                               ===========
Interest-bearing liabilities:
Deposits                                    312,594      1,547       1.98%            302,668      2,092      2.77%
Floating rate junior subordinated
 deferrable interest debentures              12,372        118       3.82%             12,372        151      4.87%
FHLB advances and other borrowings           81,532        744       3.65%             88,131        784      3.77%
                                        ----------- ----------                    -----------  ---------
Total interest-bearing liabilities          406,498      2,409       2.37%            403,171      3,027      3.00%
                                                    ----------                                 ---------
Non-interest-bearing sources:
Non-interest-bearing deposits                18,733                                    19,069
Non-interest-bearing liabilities              3,228                                     3,138
                                        -----------                               -----------
Total liabilities                           428,459                                   425,378
Shareholders equity                          26,477                                    22,969
                                        -----------                               -----------
Total liabilities and shareholders
 equity                                 $   454,936                                $  448,347
                                        ===========                                ==========
Net interest income                                 $    2,121                                 $   2,111
                                                    ==========                                 =========
Interest rate spread                                                 2.00%                                   1.92%
Impact of non-interest-bearing deposits                              0.05                                    0.10
                                                                     ----                                    ----
Net interest margin                                                  2.05%                                   2.02%
                                                                                                             -----
</TABLE>

(1)  Average  balances  of  loans  include  non-accrual  loans.
(2)  Annualized

Interest Income
---------------

Interest  income  decreased  $608,000,  or  11.8%, to $4.5 million for the three
months  ended  March  31,  2010 as compared to the same period in 2009. Interest
income  on  loans decreased by 13.2%, or $476,000, to $3.1 million for the three
months  ended  March 31, 2010 from $3.6 million for the three months ended March
31,  2009,  due  primarily  to  lower average balances. Interest on deposits and
federal  funds  sold,  combined  with  interest  and dividends on investment and
mortgage-backed  securities  decreased  $132,000,  or 8.6%, for the three months
ended March 31, 2010 to $1.4 million from $1.5 million during the same period in
2009  due  to lower yields due to declining market interest rates and a decrease
in  the  average balance of mortgage-backed securities, offset by higher average
balances  of  investment  securities.

                                       29
<PAGE>

Interest Expense
----------------

Interest  expense  decreased  $618,000,  or 20.4%, to $2.4 million for the three
months  ended  March  31,  2010 as compared to $3.0 million for the three months
ended  March  31, 2009. Interest expense on deposit accounts decreased $545,000,
or  26.1%,  to  $1.5 million for the three months ended March 31, 2010 from $2.1
million  during  the  same period in 2009 due primarily to lower market interest
rates  and a shift in the composition of the deposit portfolio from certificates
of  deposits  to  transaction  accounts,  offset by higher average balances. The
Corporation continues to target lower cost demand deposit accounts versus higher
cost certificates of deposits in order to reduce overall funding costs. Interest
expense  on  FHLB  advances and other borrowings decreased $40,000, or 5.1%, for
the  three  months  ended  March  31, 2010 as compared to the same period in the
previous  year  due  primarily  to  lower average balances and lower rates paid.
Interest  expense  on  floating  rate  junior  subordinated  deferrable interest
debentures  decreased  $33,000, or 21.8%, to $118,000 for the three months ended
March  31, 2010 from $151,000 during the same period in 2009 due to lower market
rates.

Provision for Loan Losses
-------------------------

We  have developed policies and procedures for evaluating the overall quality of
our credit portfolio and the timely identification of potential problem credits.
The  Board  of  Directors   reviews  and  approves  the  appropriate  level  for
Provident  Community  Bancshares  allowance for loan losses quarterly based upon
our  recommendations,  the  results  of  the  internal  monitoring and reporting
system, quarterly external independent loan reviews and the analysis of economic
conditions  in  our  local  markets. Additions to the allowance for loan losses,
which are expensed as the provision for loan losses on our income statement, are
periodically made to maintain the allowance at an appropriate level based on our
analysis of the potential risk in the loan portfolio. Loan losses, which include
write  downs  and  charge-offs  are  charged  directly  to  the  allowance while
recoveries  are credited against the allowance. The amount of the provision is a
function  of  the  level  and  composition  of  loans  outstanding, the level of
classified and non-performing loans, historical loan loss experience, the amount
of loan losses actually charged against the reserve during the given period, and
current  and  anticipated  economic  conditions.

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

Our  judgment  about  the  adequacy  of  the allowance is based upon a number of
assumptions  about  future  events, which we believe to be reasonable, but which
may  not  prove to be accurate. Thus, charge-offs in future periods could exceed
the  allowance  for  loan  losses,  or  substantial  additional increases in the
allowance for loan losses could be required. Additions to the allowance for loan
losses  would result in a decrease of our net income and, possibly, our capital.
Based  on  present  information  we  believe  the  allowance  for loan losses is
adequate  at  March  31,  2010 to meet presently known and inherent risks in the
loan  portfolio.


                                       30
<PAGE>

During  the three months ended March 31, 2010, the provision for loan losses was
$896,000  as  compared to $2.7 million for the same period in the previous year.
The  previous  year  provision  was  higher  than the current year due to higher
specific  reserves  required  on  nonperforming  loans along with a reduction in
classified  loans  for  the  current period. Non-performing loans increased $5.3
million from $16.6 million at March 31, 2009 to $21.9 million at March 31, 2010.
The increase in non-performing loans over the previous year related primarily to
commercial  real estate relationships that have been affected by the downturn in
the  residential  housing  market.  Slow  housing conditions have affected these
borrowers'  ability  to sell the completed projects in a timely manner. Specific
reserves  for  non-performing  loans at March 31, 2010 were $720,000 compared to
$4.8  million  for  nonperforming loans at March 31, 2009. All specific reserves
for  commercial  real  estate  loans  that were deemed collateral dependent were
charged  off  against the loans as of December 31, 2009. Management believes the
specific  reserves  allocated  to  these and other non accrual loans will offset
losses,  if  any,  arising  from  less  than full recovery of the loans from the
supporting  collateral. Management has sought to provide the amount estimated to
be  necessary to maintain an allowance for loan losses that is adequate to cover
the  level of loss that management believed to be inherent in the portfolio as a
whole, taking into account the Corporation's experience, economic conditions and
information  about  borrowers  available  at  the time of the analysis. However,
management  expects   further  deterioration  of   economic  conditions  in  the
Corporation's  market areas is likely in the short-term, especially with respect
to  real  estate  related  activities  and  real  property values. Consequently,
management expects that further additions in provisions for loan losses could be
needed  in  the  future.

The changes in the allowance for loan losses consisted of the following for the
three months ended March 31, 2010 and 2009 (in thousands):

                                             March 31,            March 31,
                                               2010                 2009
                                           -------------        -------------
     Balance at beginning of period            $5,579               $6,778

     Provision for loan losses                    896                2,700

     Charge-offs, net                         (1,042)              (1,339)
                                           -------------        -------------

     Balance at end of period                  $5,433               $8,139
                                           =============        =============

Non-Interest Income
-------------------

Total non-interest income increased $578,000, or 120.2%, to $1.1 million for the
three  months  ended  March  31,  2010  from $481,000 for the same period in the
previous  year.  The  increase  was due primarily to higher gains on the sale of
investments.  Gain  on  sale  of  investments were $677,000 for the three months
ended  March  31,  2010  compared to $95,000 for the same period in the previous
year.  The  Corporation  sold  approximately  $26  million of primarily mortgage
backed  securities to better position the investment portfolio for the potential
of  rising interest rates. An other-than-temporary impairment charge of $303,000
from  write-downs  on  trust  preferred  securities  as  a  result  of projected
shortfalls  of  interest and principal payments in the cash flow analysis of the
securities  was  recorded  for the three months ended March 31, 2010 compared to
$309,000  for  the  same  period in 2009. Fees from financial services decreased
$11,000,  or  1.6%,  to  $662,000 for the three months ended March 31, 2010 from
$673,000 for the same period in the previous year. The decrease was due to lower
service  charges  on  checking  accounts.

Non-Interest Expense
--------------------

For  the three months ended March 31, 2010, total non-interest expense decreased
$177,000,  or  7.0%,  to  $2.3  million from $2.5 million for the same period in
2009.  Compensation  and  employee  benefits decreased $70,000, or 5.9%, to $1.1
million for the three months ended March 31, 2010 from $1.2 million for the same
period  in  2009 due primarily to reductions in mortgage commission compensation
expense  due to lower loan volumes and reductions in employee compensation costs
due  to  prior  year  staffing  reductions.  Deposit  insurance premiums expense
increased  $88,000,  to  $144,000 for the three months ended March 31, 2010 from
$56,000  for  the  same period in 2009, due to higher industry-wide FDIC premium
assessments.  Advertising  and  public  relations  expense decreased $17,000, or
56.7%, to $13,000 for the three months ended March 31, 2010 from $30,000 for the
same  period  in  2009  due  primarily  to  lower  deposit product and promotion
expenses.  Loan  operations  expense decreased $17,000, or 15.5%, to $93,000 for
the  three months ended March 31, 2010 from $110,000 for the same period in 2009
due  primarily  to  lower foreclosure expenses. All goodwill and related deposit
premium  intangibles  were  charged off in 2009 thereby eliminating amortization
expenses.  Items  processing expense decreased $12,000, or 13.5%, to $77,000 for
the  three months ended March 31, 2010 from $89,000 for the same period in 2009,
due  primarily  to  expense  savings  from the prior year installation of branch
capture units in banking centers. Telephone expense decreased $15,000, or 28.9%,
to  $37,000  for the three months ended March 31, 2010 from $52,000 for the same
period  in  2009  due  primarily  to  improvements  in data line services. Other
expense  decreased  $34,000,  or  18.1%,  to $154,000 for the three months ended
March  31,  2010  from  $188,000  for  the same period in 2009, due primarily to
reductions  in  courier  expense  as  a result of the prior year installation of
branch  capture  and  lower  loan  expense  due  to  reduced  loan  volumes.

                                       31
<PAGE>

Income taxes
------------

Our  benefit  for  income taxes was $73,000 for the three months ended March 31,
2010  as  compared  to  a  benefit  of  $929,000  for  the  same period in 2009.

Item 3.    Quantitative and Qualitative Disclosures about Market Risk
           ----------------------------------------------------------

Not  applicable  as  the  registrant  is  a  smaller  reporting  company.

Item  4T.  Controls  and  Procedures
           -------------------------

The  Corporation's  management,  including the Corporation's principal executive
officer and principal financial officer, have evaluated the effectiveness of the
Corporation's  "disclosure  controls and procedures," as such term is defined in
Rule  13a-15(e)  promulgated  under  the  Securities  Exchange  Act  of 1934, as
amended,  (the  "Exchange  Act").  Based  upon  their  evaluation, the principal
executive  officer and principal financial officer concluded that, as of the end
of  the period covered by this report, the Corporation's disclosure controls and
procedures  were  effective  for  the  purpose  of ensuring that the information
required  to  be  disclosed in the reports that the Corporation files or submits
under  the  Exchange Act with the Securities and Exchange Commission (the "SEC")
(1)  is  recorded,  processed,  summarized  and reported within the time periods
specified  in the SEC's rules and forms, and (2) is accumulated and communicated
to the Corporation's management, including its principal executive and principal
financial  officers, as appropriate to allow timely decisions regarding required
disclosure.

There  has  been  no change in the Corporation's internal control over financial
reporting  identified  in  connection  with  the  evaluation  required  by  Rule
13(a)-15(e)  that occurred during the quarter that has materially affected or is
reasonably  likely to materially affect, the Corporation's internal control over
financial  reporting.

PART II - OTHER INFORMATION

Item  1.    Legal Proceedings
            -----------------

The  Corporation  is  not  involved  in  any  legal proceedings. The Bank is not
involved  in  any pending legal proceedings other than routine legal proceedings
occurring  in  the  normal  course  of  business. Management believes that these
proceedings  are immaterial to the Corporation's financial condition and results
of  operations.

Item  1A.   Risk Factors
            ------------

In  addition  to  the  other  information  set  forth in this report, you should
carefully  consider  the factors discussed in Part I, "Item 1A. Risk Factors" in
our Annual Report on Form 10-K for the year ended December 31, 2009, which could
materially affect our business, financial condition or future results. The risks
described in our Annual Report on Form 10-K are not the only risks that we face.
Additional  risks  and  uncertainties  not  currently  known  to  us  or that we
currently  deem  to  be  immaterial  also  may  materially  adversely affect our
business,  financial  condition  and/or  operating  results.


                                       32
<PAGE>

Item  2.   Unregistered Sales of Equity Securities and Use of Proceeds
           -----------------------------------------------------------

In  May 2005, the Corporation implemented a share repurchase program under which
the  Board of Directors of the Corporation authorized the repurchase of up to 5%
of  the  outstanding  shares  or  98,000  shares. The program was expanded by an
additional  5%,  or  92,000  shares,  in  August  2006.  The Corporation did not
repurchase  any  shares  during the three months ended March 31, 2010 and 36,034
shares  remain   under   the   previously  authorized  plans.  As  part  of  the
Corporation's  participation  in  the  Troubled  Asset  Relief  Capital Purchase
Program,  prior  to  the  earlier  of  March  6,  2012  or the date on which the
preferred  stock  issued to the Treasury Department has been redeemed in full or
transferred  to  non-affiliates, the Corporation cannot repurchase any shares of
its  common  stock  without  the  prior  approval  of  the  Treasury Department.

Item  3.   Defaults upon Senior Securities
           -------------------------------

           Not applicable.

Item  4.   Reserved

           None

Item 5.    Other Information
           -----------------

           None

Item  6.   Exhibits
           --------

           31(a)     Rule 13a-14(a)/15d-14(a) Certification of Chief Executive
                     Officer

           31(b)     Rule 13a-14(a)/15d-14(a) Certification of Chief Financial
                     Officer

           32(a)     Chief Executive Officer Certification Pursuant to Section
                     906 of the Sarbanes-Oxley Act of 2002

           32(b)     Chief Financial Officer Certification Pursuant to Section
                     906 of the Sarbanes-Oxley Act of 2002


                                       33
<PAGE>


                                   SIGNATURES
                                   ----------

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


                      PROVIDENT COMMUNITY BANCSHARES, INC.
                      ------------------------------------
                                  (Registrant)



Date: May 12, 2010          By: /s/ Dwight V. Neese
                                --------------------------
                                Dwight V. Neese, President and
                                Chief Executive Officer


Date: May 12, 2010          By: /s/ Richard H. Flake
                                --------------------------
                                Richard H. Flake, Executive Vice President
                                and Chief Financial Officer


                                       34