SECURITIES AND EXCHANGE
                           COMMISSION WASHINGTON, D.C.

                                   FORM 10-QSB

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

                  For the Quarterly Period Ended March 31, 2006


                                       OR

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

               For the Transition Period from _________to_________

                               Commission File No.
                                    000-50466

                             DEKALB BANKSHARES, INC.
        (Exact name of small business issuer as specified in its charter)

                 South Carolina                          61-1444253
          (State or other jurisdiction                (I.R.S. Employer
       of incorporation or organization)            Identification No.)

                             631 West DeKalb Street
                          Camden, South Carolina 29020
                    (Address of principal executive offices)

                                 (803) 432-7575
                (Issuer's telephone number, including area code)
                ------------------------------------------------

Check  whether  the issuer  (1) has filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports)  and (2) has been subject to such filing  requirements  for the past 90
days.

                                 YES [X] NO [ ]

  Indicate by check mark whether the  registrant  is a shell company (as defined
in Rule 12b-2 of the Exchange Act)

                                 YES [ ] NO [X]


State the number of shares outstanding of each of the issuer's classes of common
stock as of the latest practicable date.

       610,139 shares of common stock, no par value, as of April 30, 2006


   Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]





<PAGE>


                             DEKALB BANKSHARES, INC.


<TABLE>
<CAPTION>
                                      INDEX


PART I - FINANCIAL INFORMATION                                                                                     Page No.
------------------------------

Item 1.  Financial Statements (Unaudited)

<S>                                                                                                                    <C>
         Condensed Consolidated Balance Sheets - March 31, 2006 and December 31, 2005.....................................3

         Condensed Consolidated Statements of Income - Three months ended March 31, 2006 and 2005.........................4

         Condensed Consolidated Statements of Shareholders' Equity and Comprehensive Income -
           Three months ended March 31, 2006 and 2005.....................................................................5

         Condensed Consolidated Statements of Cash Flows - Three months ended March 31, 2006 and 2005.....................6

Notes to Condensed Consolidated Financial Statements....................................................................7-9

Item 2.  Management's Discussion and Analysis or Plan of Operation.....................................................9-14

Item 3. Controls and Procedures..........................................................................................14

PART II - OTHER INFORMATION

Item 6.  Exhibits .......................................................................................................15
</TABLE>





<PAGE>


                             DEKALB BANKSHARES, INC.
                      Condensed Consolidated Balance Sheets

PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements

<TABLE>
<CAPTION>
                                                                                                March 31,               December 31,
                                                                                                  2006                     2005
                                                                                                  ----                     ----
                                                                                              (Unaudited)
Assets
   Cash and cash equivalents:
<S>                                                                                          <C>                       <C>
     Cash and due from banks ...................................................             $  1,431,652              $    589,136
     Federal funds sold ........................................................                1,239,000                 1,330,000
     Securities purchased under agreements to resell ...........................                  507,092                   501,576
     Other interest bearing deposits ...........................................                   67,117                    51,826
                                                                                             ------------              ------------
       Total cash and cash equivalents .........................................                3,244,861                 2,472,538
                                                                                             ------------              ------------
     Time deposits with other banks ............................................                                                  -
Investment securities:
   Securities available-for-sale ...............................................                9,930,161                11,031,973
   Nonmarketable equity securities .............................................                  462,694                   576,695
                                                                                             ------------              ------------
       Total investment securities .............................................               10,392,855                11,608,668
                                                                                             ------------              ------------
Loans held for sale ............................................................                  149,000                   626,223
Loans receivable ...............................................................               27,958,297                29,905,856
   Less allowance for loan losses ..............................................                 (317,500)                 (305,000)
                                                                                             ------------              ------------
       Loans, net ..............................................................               27,640,797                29,600,856
   Premises and equipment, net .................................................                1,318,608                 1,344,362
   Accrued interest receivable .................................................                  164,240                   194,422
   Other assets ................................................................                  453,261                   479,183
                                                                                             ------------              ------------
       Total assets ............................................................             $ 43,363,622              $ 46,326,252
                                                                                             ============              ============
Liabilities
   Deposits
     Noninterest-bearing transaction accounts ..................................             $  4,346,424              $  2,979,405
     Interest-bearing transaction accounts .....................................                4,929,507                 4,177,455
     Savings ...................................................................                2,949,492                 3,135,976
     Time deposits $100,000 and over ...........................................               13,743,971                14,249,513
     Other time deposits .......................................................                5,537,915                 5,758,276
                                                                                             ------------              ------------
       Total deposits ..........................................................               31,507,309                30,300,625
   Securities sold under agreements to repurchase ..............................                3,000,000                 3,000,000
   Advances from Federal Home Loan Bank ........................................                3,500,000                 7,600,000
   Accrued interest payable ....................................................                  112,678                   204,556
   Other liabilities ...........................................................                  103,908                    63,544
                                                                                             ------------              ------------
       Total liabilities .......................................................               38,223,895                41,168,725
                                                                                             ------------              ------------
Shareholders' equity
   Common stock, no par value; 20,000,000 shares
     authorized, 610,139 shares issued and outstanding .........................                5,877,597                 5,877,597
   Retained earnings (deficit) .................................................                 (546,127)                 (538,897)
   Accumulated other comprehensive income (loss) ...............................                 (191,743)                 (181,173)
                                                                                             ------------              ------------
       Total shareholders' equity ..............................................                5,139,727                 5,157,527
                                                                                             ------------              ------------
       Total liabilities and shareholders' equity ..............................             $ 43,363,622              $ 46,326,252
                                                                                             ============              ============
</TABLE>

                 See notes to consolidated financial statements.



                                       3
<PAGE>

                             DEKALB BANKSHARES, INC.

                   Condensed Consolidated Statements of Income
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                                                     For the three months ended
                                                                                                              March 31,
                                                                                                              ---------
                                                                                                    2006                     2005
                                                                                                    ----                     ----
Interest income
<S>                                                                                               <C>                      <C>
   Loans, including fees ..........................................................               $ 521,313                $ 445,944
   Investment securities, taxable .................................................                 108,047                   92,077
   FHLB interest and dividends ....................................................                   6,430                    4,065
   Federal funds sold .............................................................                  15,383                   11,122
   Securities purchased under agreements to resell ................................                   5,517                        -
   Time deposits with other banks .................................................                       -                    1,627
                                                                                                  ---------                ---------
       Total ......................................................................                 656,690                  554,835
                                                                                                  ---------                ---------
Interest expense
   Time deposits $100,000 and over ................................................                 141,541                   76,181
   Other deposits .................................................................                  66,384                   49,532
   Other interest expense .........................................................                  90,887                   65,085
                                                                                                  ---------                ---------
       Total ......................................................................                 298,812                  190,798
                                                                                                  ---------                ---------
Net interest income ...............................................................                 357,878                  364,037
Provision for loan losses .........................................................                  12,500                   22,500
                                                                                                  ---------                ---------
Net interest income after provision for loan losses ...............................                 345,378                  341,537
                                                                                                  ---------                ---------
Other operating income
   Service charges on deposit accounts ............................................                  33,242                   31,105
   Gain (loss) on sale of investments .............................................                 (13,750)                       -
   Residential mortgage origination fees ..........................................                  34,133                   56,159
   Other service charges, commissions and fees ....................................                  46,277                   10,696
                                                                                                  ---------                ---------
       Total ......................................................................                  99,902                   97,960
                                                                                                  ---------                ---------
Other operating expenses
   Salaries and employee benefits .................................................                 207,691                  215,658
   Occupancy expense ..............................................................                  22,347                   21,233
   Furniture and equipment expense ................................................                  10,195                   12,429
   Other operating expenses .......................................................                 216,001                  150,606
                                                                                                  ---------                ---------
       Total ......................................................................                 456,234                  399,926
                                                                                                  ---------                ---------
Income before income taxes ........................................................                 (10,954)                  39,571
Income tax expense ................................................................                  (3,724)                  14,902
                                                                                                  ---------                ---------
Net income ........................................................................               $  (7,230)               $  24,669
                                                                                                  =========                =========
Earnings per share
Basic earnings per share ..........................................................               $    (.01)               $     .04
</TABLE>

                 See notes to consolidated financial statements.




                                       4
<PAGE>

                             DEKALB BANKSHARES, INC.

          Condensed Consolidated Statement of Shareholders' Equity and
     Comprehensive Income For the three months ended March 31, 2006 and 2005
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                                                      Accumulated
                                                        Common Stock                 Retained             Other
                                                        ------------                 Earnings         Comprehensive
                                                  Shares            Amount           (Deficit)            Income            Total
                                                  ------            ------           ---------            ------            -----
Balance,
<S>                                              <C>            <C>                <C>                <C>               <C>
  December 31, 2004 ..................           610,139        $ 5,877,597        $  (644,608)       $   (40,594)      $ 5,192,395

Net income ...........................                                                  24,669                               24,669
  for the period

Other
  comprehensive
  income (loss),
  net of tax of $41,472 ..............                                                                    (70,615)          (70,615)
                                                                                                                        -----------

Comprehensive
  income (loss) ......................                                                                                      (45,946)
                                                 -------        -----------        -----------        -----------       -----------

Balance,
  March 31, 2005 .....................           610,139          5,877,597           (619,939)          (111,209)        5,146,449

Balance,
  December 31, 2005 ..................           610,139          5,877,597           (538,897)          (181,173)        5,157,527

Net income ...........................                                                  (7,230)                              (7,230)
  for the period

Other
  comprehensive
  income (loss),
  net of tax of $6,207 ...............                                                                   (10,570)           (10,570)
                                                                                                                        -----------

Comprehensive
  income (loss) ......................                                                                                      (17,800)
                                                 -------        -----------        -----------        -----------       -----------

Balance,
  March 31, 2006 .....................           610,139        $ 5,877,597        $  (546,127)       $  (191,743)      $ 5,139,727
                                                 =======        ===========        ===========        ===========       ===========
</TABLE>

                 See notes to consolidated financial statements.




                                       5
<PAGE>

                             DEKALB BANKSHARES, INC.

                 Condensed Consolidated Statements of Cash Flows
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                         For the three months ended
                                                                                                                 March 31,
                                                                                                                 ---------
                                                                                                         2006                2005
                                                                                                         ----                ----
Cash flows from operating activities
<S>                                                                                                 <C>                 <C>
   Net income ..............................................................................        $    (7,230)        $    24,669
   Adjustments to reconcile net income to net cash
     provided (used) by operating activities
       Provision for loan losses ...........................................................             12,500              22,500
       Depreciation and amortization expense ...............................................             27,390              29,414
       (Gain) Loss on sale of securities ...................................................             13,750                   -
       Accretion and premium amortization ..................................................              2,708               4,781
       Deferred income tax provision (benefit) .............................................             61,762              13,487
       (Increase) decrease in interest receivable ..........................................             30,182               1,125
       Increase (decrease) in interest payable .............................................            (91,878)            (56,542)
       Increase in other assets ............................................................             39,217             (88,292)
       Increase (decrease) in other liabilities ............................................            (34,692)             30,895
                                                                                                    -----------         -----------
         Net cash provided (used) by operating activities ..................................             53,709             (17,963)
                                                                                                    -----------         -----------
Cash flows from investing activities
   Net (increase) decrease in loans made to customers ......................................          2,424,782          (2,787,346)
   Purchases of securities available-for-sale ..............................................           (249,174)           (745,298)
   Sales/calls or maturities of securities available-for-sale ..............................            986,250                   -
   Payments received on mortgage backed securities .........................................            337,707             550,537
   Redemption (purchase) of non-marketable equity securities ...............................            114,001             (52,381)
   Purchases of premises and equipment .....................................................             (1,636)            (15,553)
                                                                                                    -----------         -----------
         Net cash (used) provided by investing activities ..................................          3,611,930          (3,050,041)
                                                                                                    -----------         -----------
Cash flows from financing activities
   Net increase (decrease) in demand deposits, interest-bearing transaction
     accounts and savings accounts .........................................................          1,932,587           1,414,199
   Net increase (decrease) in certificates of deposit and other time deposits ..............           (725,903)           (585,461)
   Increase (decrease) in advances from the Federal Home Loan Bank .........................         (4,100,000)            600,000
                                                                                                    -----------         -----------

         Net cash (used) provided by financing activities ..................................         (2,893,316)          1,428,738
                                                                                                    -----------         -----------
Net increase (decrease) in cash and cash equivalents .......................................            772,323          (1,639,266)
Cash and cash equivalents, beginning .......................................................          2,472,538           3,804,566
                                                                                                    -----------         -----------
Cash and cash equivalents, end .............................................................        $ 3,244,861         $ 2,165,300
                                                                                                    ===========         ===========
Cash paid during the period for:
   Interest ................................................................................        $   129,832         $   247,340
   Income taxes ............................................................................                  -               2,509
</TABLE>

                 See notes to consolidated financial statements.




                                       6
<PAGE>

                             DEKALB BANKSHARES, INC.

              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

Note 1 - Pending merger with First Community Corporation

On  January  19,  2006,  Dekalb  Bankshares,  Inc.  ("DeKalb")  entered  into an
agreement  and  plan  of  merger  with  First  Community   Corporation   ("First
Community"),  the parent holding  company for First Community Bank in Lexington,
South Carolina.  Pursuant to the agreement,  DeKalb will be merged with and into
First  Community  and The Bank of  Camden  will be  merged  with and into  First
Community  Bank.  Each share of DeKalb  common stock will be converted  into the
right to receive  $3.875 in cash and 0.60705  shares of First  Community  common
stock.  The boards of  directors  of both  companies  have  approved  the merger
agreement.  The agreement is subject to the approval of  shareholders  of DeKalb
and  regulatory  authorities.  The  transaction  is expected to close during the
second quarter of 2006.

Note 2 - Basis of Presentation

The accompanying  financial statements have been prepared in accordance with the
requirements  for  interim  financial  statements  and,  accordingly,  they  are
consolidated and omit  disclosures,  which would  substantially  duplicate those
contained in our 2005 Annual Report on Form 10-KSB. The financial  statements as
of March 31, 2006 are  unaudited  and, in our opinion,  include all  adjustments
(consisting of normal  recurring  adjustments)  considered  necessary for a fair
presentation. The financial information as of December 31, 2005 has been derived
from the audited financial  statements as of that date. For further information,
refer  to the  financial  statements  and  the  notes  included  in  the  DeKalb
Bankshares,  Inc.  Annual Report on Form 10-KSB for the year ended  December 31,
2005 filed with the Securities and Exchange Commission.

Note 3 - Recent Accounting Pronouncements

The  following is a summary of recent  authoritative  pronouncements  that could
impact the accounting,  reporting,  and / or disclosure of financial information
by the Company.

In February 2006, the FASB issued SFAS No. 155,  "Accounting  for Certain Hybrid
Financial  Instruments--an  amendment of FASB  Statements No. 133 and 140." This
Statement  amends SFAS No.  133,  "Accounting  for  Derivative  Instruments  and
Hedging  Activities," and SFAS No. 140,  "Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities." This Statement resolves
issues addressed in SFAS No. 133  Implementation  Issue No. D1,  "Application of
Statement 133 to Beneficial Interests in Securitized Financial Assets." SFAS No.
155 is  effective  for all  financial  instruments  acquired or issued after the
beginning of an entity's first fiscal year that begins after September 15, 2006.
The  Company  does not  believe  that the  adoption  of SFAS No. 155 will have a
material impact on its financial position, results of operations and cash flows.

In March  2006,  the FASB  issued SFAS No. 156,  "Accounting  for  Servicing  of
Financial Assets--an amendment of FASB Statement No. 140." This Statement amends
FASB No. 140,  "Accounting  for Transfers and Servicing of Financial  Assets and
Extinguishments  of Liabilities,"  with respect to the accounting for separately
recognized servicing assets and servicing liabilities.  SFAS No. 156 requires an
entity to  recognize  a  servicing  asset or  servicing  liability  each time it
undertakes  an  obligation  to  service a  financial  asset by  entering  into a
servicing  contract;  requires all separately  recognized  servicing  assets and
servicing  liabilities to be initially  measured at fair value,  if practicable;
permits an entity to choose its subsequent measurement methods for each class of
separately recognized servicing assets and servicing liabilities; at its initial
adoption,  permits a one-time reclassification of available-for-sale  securities
to trading  securities by entities with  recognized  servicing  rights,  without
calling into question the treatment of other available-for-sale securities under
Statement 115, provided that the available-for-sale securities are identified in
some  manner as  offsetting  the  entity's  exposure to changes in fair value of
servicing assets or servicing liabilities that a servicer elects to subsequently
measure at fair value;  and requires  separate  presentation of servicing assets
and servicing  liabilities  subsequently measured at fair value in the statement
of financial position and additional  disclosures for all separately  recognized
servicing assets and servicing liabilities.  An entity should adopt SFAS No. 156
as of the  beginning of its first fiscal year that begins  after  September  15,
2006.  The Company  does not  believe  the  adoption of SFAS No. 156 will have a
material impact on its financial position, results of operations and cash flows.

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
Company's financial position, results of operations and cash flows.


                                       7
<PAGE>

                             DEKALB BANKSHARES, INC.

              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

Note 4 - Stock-Based Compensation

On January 1, 2006, the Company adopted the fair value recognition provisions of
Financial  Accounting Standards Board ("FASB") Statement of Financial Accounting
Standards  ("SFAS") No. 123(R),  Accounting  for  Stock-Based  Compensation,  to
account  for  compensation  costs  under its stock  option  plans.  The  Company
previously utilized the intrinsic value method under Accounting Principles Board
Opinion No. 25,  Accounting  for Stock  Issued to Employees  (as amended)  ("APB
25").  Under the intrinsic  value method  prescribed by APB 25, no  compensation
costs  were  recognized  for the  Company's  stock  options  because  the option
exercise price in its plans equals the market price on the date of grant.  Prior
to January 1, 2006,  the Company  only  disclosed  the pro forma  effects on net
income and earnings  per share as if the fair value  recognition  provisions  of
SFAS 123(R) had been utilized.

In adopting  SFAS No. 123, the Company  elected to use the modified  prospective
method to account for the transition from the intrinsic value method to the fair
value recognition method.  Under the modified  prospective method,  compensation
cost is  recognized  from the adoption  date  forward for all new stock  options
granted and for any outstanding  unvested awards as if the fair value method had
been  applied to those awards as of the date of grant.  The Company  allows 100%
vesting rights for stock options within 6 months of issuance. As of December 31,
2005, there were no unvested options and there were no options issued during the
first three months of 2006.

Note 5 - Earnings Per Share

There were no dilutive  common share  equivalents  outstanding  during the first
three months of 2006 due to the net loss; therefore, basic and dilutive loss per
share were the same. A reconciliation of the numerators and denominators used to
calculate basic and diluted  earnings per share for the three months ended March
31, 2006 and 2005 are as follows:

<TABLE>
<CAPTION>
                                                                                       Three Months Ended March 31, 2006
                                                                                       ---------------------------------
                                                                                Income                 Shares              Per Share
                                                                              (Numerator)           (Denominator)           Amount
                                                                              -----------           -------------           ------
Basic earnings per share
<S>                                                                             <C>                     <C>                 <C>
  Loss to common shareholders ..................................                $(7,230)                610,139             $  (.01)
                                                                                                                            =======
Effect of dilutive securities
  Stock options ................................................                      -                       -
                                                                                -------                 -------
Diluted earnings per share
  Loss to common shareholders
    plus assumed conversions ...................................                $(7,230)                610,139             $  (.01)
                                                                                =======                 =======             =======
</TABLE>

<TABLE>
<CAPTION>
                                                                                       Three Months Ended March 31, 2005
                                                                                       ---------------------------------
                                                                                Income                 Shares              Per Share
                                                                              (Numerator)           (Denominator)           Amount
                                                                              -----------           -------------           ------
Basic earnings per share
<S>                                                                              <C>                   <C>                 <C>
  Income available to common shareholders ...........................            $24,669               610,139             $   .04
                                                                                                                           =======
Effect of dilutive securities
  Stock options .....................................................                                    4,000
                                                                                 -------               -------
Diluted earnings per share
  Income available to common shareholders
    plus assumed conversions ........................................            $24,669               614,139             $   .04
                                                                                 =======               =======             =======
</TABLE>


                                       8
<PAGE>

                             DEKALB BANKSHARES, INC.

              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

Note 6 - Comprehensive Income

Comprehensive  income includes net income and other comprehensive  income, which
is defined as nonowner related  transactions in equity. The following table sets
forth the amounts of other  comprehensive  income  included in equity along with
the  related  tax effect for the three  month  periods  ended March 31, 2006 and
2005:

<TABLE>
<CAPTION>
                                                                                  Pre-tax            (Expense)            Net-of-tax
                                                                                   Amount             Benefit               Amount
                                                                                   ------             -------               ------
For the Three Months Ended March 31, 2006
<S>                                                                              <C>                  <C>                  <C>
  Unrealized gains (losses) on securities
    available-for-sale ..............................................            $(30,527)            $ 11,296             $(19,231)
  Plus - reclassification adjustment for gains
    (losses) realized in net income .................................              13,750               (5,089)               8,661
                                                                                 --------             --------             --------
  Net unrealized gains (losses) on securities .......................             (16,777)               6,207              (10,570)
                                                                                 --------             --------             --------
  Other comprehensive income ........................................            $(16,777)            $  6,207             $(10,570)
                                                                                 ========             ========             ========

<CAPTION>

                                                                                  Pre-tax            (Expense)            Net-of-tax
                                                                                   Amount             Benefit               Amount
                                                                                   ------             -------               ------
For the Three Months Ended March 31, 2005
<S>                                                                              <C>                 <C>                  <C>
  Unrealized gains (losses) on securities
    available-for-sale ..............................................            $(112,087)          $  41,472            $ (70,615)
  Plus - reclassification adjustment for gains
    (losses) realized in net income .................................                    -                   -                    -
                                                                                 ---------           ---------            ---------
  Net unrealized gains (losses) on securities .......................             (112,087)             41,472              (70,615)
                                                                                 ---------           ---------            ---------
  Other comprehensive income ........................................            $(112,087)          $  41,472            $ (70,615)
                                                                                 =========           =========            =========
</TABLE>




                                       9
<PAGE>

                             DEKALB BANKSHARES, INC.

Item 2 - Management's Discussion and Analysis or Plan of Operation

The following is a discussion  of our  financial  condition as of March 31, 2006
compared to December  31,  2005,  and the  results of  operations  for the three
months  ended  March  31,  2006 and  2005.  This  discussion  should  be read in
conjunction with our consolidated  financial  statements and accompanying  notes
appearing in this report and in  conjunction  with the financial  statements and
related  notes and  disclosures  in our 2005 Annual  Report on Form 10-KSB filed
with  the   Securities   and   Exchange   Commission.   This   report   contains
"forward-looking  statements"  relating to, without limitation,  future economic
performance,  plans and  objectives of  management  for future  operations,  and
projections of revenues and other financial items that are based on our beliefs,
as well as assumptions  made by and information  currently  available to us. The
words  "expect,"  "estimate,"  "anticipate,"  "plan," and  "believe," as well as
similar expressions,  are intended to identify forward-looking  statements.  Our
actual  results  may  differ  materially  from  the  results  discussed  in  the
forward-looking  statements,  and our  operating  performance  each  quarter  is
subject to various risks and  uncertainties  that are discussed in detail in our
filings with the Securities and Exchange Commission.

Results of Operations

Net Interest Income

For the three  months  ended March 31,  2006,  net  interest  income,  the major
component of our net income, was $357,878,  as compared to $364,037 for the same
period in 2005, a decrease of $6,159.  The  decrease in net interest  income was
the result of a 1.04% increase in the cost of interest-bearing  liabilities with
only a 0.64%  increase in the rate  realized  on  interest-bearing  assets.  The
average rate paid on interest-bearing  liabilities  increased from 2.22% for the
three  months ended March 31, 2005 to 3.26% for the three months ended March 31,
2006, while the average rate realized on interest-earning  assets increased from
5.49% to 6.13%, for the same periods.

The  net  interest  spread  and  net  interest  margin  were  2.87%  and  3.34%,
respectively, for the three month period ended March 31, 2006, compared to 3.27%
and 3.60% for the three month period ended March 31, 2005.

Provision and Allowance for Loan Losses

The  provision  for loan  losses is the  charge to  operating  earnings  that in
management's  judgment is necessary to maintain the allowance for loan losses at
an adequate level. For the three months ended March 31, 2006 and the same period
in 2005,  the  provision  was $12,500 and $22,500,  respectively.  There were no
nonperforming  loans at March 31, 2006 or 2005. No loans have been criticized or
classified  as of March  31,  2006.  Based on  present  information,  management
believes  the  allowance  for loan  losses is adequate at March 31, 2006 to meet
presently  known and inherent  losses in the loan  portfolio.  The allowance for
loan losses was 1.14% of total loans at March 31, 2006. There are risks 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.  The Company  maintains  an allowance  for loan
losses  based  on,  among  other  things,   historical   experience,   including
management's  experience  at  other  institutions,  an  evaluation  of  economic
conditions,  and regular reviews of  delinquencies  and loan portfolio  quality.
Management's 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,  there is a risk that charge-offs in future
periods  could  exceed  the  allowance  for  loan  losses  or  that  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.

Noninterest Income

Total  noninterest  income for the quarter ended March 31, 2006 was $99,902,  an
increase of $1,942, compared to $97,960 for the same period in 2005. In March of
2006, two low-yielding securities,  totaling $750,000, held in the available for
sale  category,  were sold for a total  loss of  $13,750.  At the same  time,  a
$1,000,000  convertible  advance  from the Federal Home Loan Bank of Atlanta was
repaid  prior to maturity  resulting  in a gain of $34,871.  This  non-recurring
activity was partially  offset by a decrease of $22,026 in residential  mortgage
origination fees during the quarter ended March 31, 2006 compared to the quarter
ended March 31, 2005.



                                       10
<PAGE>

                             DEKALB BANKSHARES, INC.


Item 2 - Management's Discussion And Analysis or Plan of Operation - continued

Noninterest Expense

Total  noninterest  expense  for the  three  months  ended  March  31,  2006 was
$456,234,  an increase of $56,308, when compared to the same period in 2005. The
primary  component of noninterest  expense is salaries and benefits,  which were
$207,691  and  $215,658  for the three  months  ended  March 31,  2006 and 2005,
respectively.  Other  operating  expenses  increased from $150,606 for the three
months  ended March 31, 2005 to $216,001  for the three  months  ended March 31,
2006. This increase is the result of $75,012 in merger related costs incurred in
preparation for the pending merger with First Community Corporation.

Net Income

The  Company's  net loss for the three  months  ended  March 31, 2006 was $7,230
after the recognition of an income tax benefit of $3,724 for the period. The net
income  for the same  period in 2005 was  $24,669  after the  recognition  of an
income tax expense of $14,902. As mentioned above, the net loss is the result of
$75,012 in merger  related costs  incurred  during the  quarter-ended  March 31,
2006.


Assets and Liabilities

During the first three months of 2006,  total  assets  decreased  $2,962,630  or
6.40%, when compared to December 31, 2005. The primary reduction in assets was a
decrease  in loans  receivable  of  $1,947,559,  or  6.51%,  and a  decrease  in
investment  securities  of  $1,215,813.  The decrease in loans  receivable  were
primarily due to scheduled maturities of several large residential  construction
loans.  Deposits  increased  $1,206,684  and advances from the Federal Home Loan
Bank of Atlanta decreased $4,100,000 during the first three months of 2006.

Investment Securities

Investment  securities  totaled  $10,392,855  at March  31,  2006,  compared  to
$11,608,668  at  December  31,  2005.  All  investments  in the  portfolio  were
designated as  available-for-sale  except for nonmarketable  equity  securities,
consisting  of stock in the  Federal  Home Loan Bank of Atlanta,  which  totaled
$313,200 as of March 31, 2006, and stock in Community Financial  Services,  Inc.
which totaled $149,494 as of March 31, 2006.

Loans

Gross loans decreased  $1,947,559  during the three months ended March 31, 2006.
The largest  decrease in loans was in residential  1-4 family loans secured by a
real estate  mortgage,  which  decreased  $700,214 to $8,960,804 as of March 31,
2006. Balances within the major loans receivable categories as of March 31, 2006
and December 31, 2005 were as follows:

                                                    March 31,       December 31,
                                                      2006             2005
                                                      ----             ----
Mortgage loans on real estate:
  Residential 1-4 family ...................       $ 8,960,804       $ 9,661,018
  Commercial ...............................         8,805,636         9,320,210
  Construction .............................         4,672,532         5,197,612
  Second mortgages .........................           306,909           307,322
  Equity lines of credit ...................         2,480,027         2,292,288
                                                   -----------       -----------
    Total mortgage loans ...................        25,225,908        26,778,450
Commercial and industrial ..................         1,771,190         2,090,227
Consumer and other .........................           961,199         1,037,179
                                                   -----------       -----------
    Total gross loans ......................       $27,958,297       $29,905,856
                                                   ===========       ===========


                                       11
<PAGE>

                             DEKALB BANKSHARES, INC.

Item 2 - Management's Discussion And Analysis or Plan of Operation - continued

Risk Elements in the Loan Portfolio

Transactions  in the allowance for loan losses for the quarters  ended March 31,
2006 and 2005 are summarized below:

                                                       March 31,      March 31,
                                                         2006           2005
                                                         ----           ----
Balance, January 1 ...............................   $   305,000    $   266,478
Provision for loan losses for the period .........        12,500         22,500
Net loans (charged-off) recovered for the period .             -          1,019
                                                     -----------    -----------
Balance, end of period ...........................   $   317,500    $   289,997
                                                     ===========    ===========
Gross loans outstanding, end of period ...........   $27,958,297    $29,431,402
                                                     ===========    ===========
Allowance for loan losses to loans outstanding ...          1.14%          0.99%

There were no loans in nonaccrual status at March 31, 2006 and at March 31,2005.
There were no loans past due ninety days or more and still accruing interest and
no restructured loans at March 31, 2006 and March 31,2005.

Deposits

Total  deposits  increased  $1,206,684  or  3.98%  from  December  31,  2005  to
$31,507,309 at March 31, 2006. The largest increase was in non  interest-bearing
deposit accounts, which increased $1,367,019,  or 45.88%, to $4,346,424 at March
31, 2006. Expressed in percentages,  time deposits over $100,000 decreased 3.55%
and all other interest-bearing deposits decreased 3.83%.

Balances  within the major deposit  categories as of March 31, 2006 and December
31, 2005 are as follows:
                                                       March 31,    December 31,
                                                         2006           2005
                                                         ----           ----
Noninterest-bearing transaction accounts .......     $ 4,346,424     $ 2,979,405
Interest-bearing transaction accounts ..........       4,929,507       4,177,455
Savings ........................................       2,949,492       3,135,976
Time deposits $100,000 and over ................      13,743,971      14,249,513
Other time deposits ............................       5,537,915       5,758,276
                                                     -----------     -----------
    Total deposits .............................     $31,507,309     $30,300,625
                                                     ===========     ===========

Advances from the Federal Home Loan Bank

Advances  from the Federal  Home Loan Bank  totaled  $3,500,000  as of March 31,
2006,  compared to  $7,600,000  as of December  31,  2005.  One of the  advances
totaling  $500,000 is an  adjustable  rate advance with a current  fixed rate of
4.84% and that matures on September 6, 2011. Another advance totaling $2,000,000
has an  adjustable  interest  rate of 3.79%  and  matures  July 22,  2015 but is
callable  by the  Federal  Home Loan Bank of Atlanta on July 22,  2008.  We also
borrowed  $1,000,000 under the daily rate credit program with a rate of 5.09% as
of March 31, 2006 that is subject to change daily.

Securities Sold Under Agreements to Repurchase

We sold securities under an agreement to repurchase  during the first quarter of
2004  totaling  $3,000,000.  The  agreement  has an  interest  rate of 2.95% and
matures January 20, 2007.



                                       12
<PAGE>

                             DEKALB BANKSHARES, INC.

Item 2 - Management's Discussion And Analysis or Plan of Operation - continued

Liquidity

The Company meets its liquidity  needs through cash and short-term  investments,
and scheduled maturities of loans on the asset side and through pricing policies
on the liability side for  interest-bearing  deposit  accounts.  As of March 31,
2006, the Company's  primary  sources of liquidity  included  federal funds sold
totaling $1,239,000 and securities  available-for-sale  totaling $9,930,161. The
Company also had lines of credit available with correspondent  banks to purchase
federal funds  totaling  $2,200,000 at March 31, 2006. In addition,  The Company
also has borrowing  capacity  available  through the Federal Home Loan Bank. The
Company's  availability  to borrow funds from the Federal Home Loan Bank totaled
$8,672,157 of which the Company had borrowed $3,500,000 at March 31, 2006.

Critical Accounting Policies

We have adopted  various  accounting  policies  which govern the  application of
accounting principles generally accepted in the United States in the preparation
of our financial statements.  Our significant  accounting policies are described
in the notes to the  consolidated  financial  statements at December 31, 2005 as
filed in our 2005 Annual  Report on Form  10-KSB.  Certain  accounting  policies
involve significant judgments and assumptions by us which have a material impact
on the  carrying  value of certain  assets and  liabilities.  We consider  these
accounting  policies to be  critical  accounting  policies.  The  judgments  and
assumptions we use are based on the  historical  experience of our management in
the banking industry and other factors,  which we believe to be reasonable under
the  circumstances.  Because of the nature of the judgments and  assumptions  we
make, actual results could differ from these judgments and estimates which could
have a material  impact on our carrying values of assets and liabilities and our
results of operations.

We believe the  allowance for loan losses is a critical  accounting  policy that
requires the most significant judgments and estimates used in preparation of our
consolidated  financial  statements.  Refer to the portions of the discussion in
this  report on Form  10-QSB and in our 2005  Annual  Report on Form 10-KSB that
address our  allowance  for loan losses for a  description  of our processes and
methodology for determining our allowance for loan losses.

Capital Resources

Total  shareholders'  equity decreased  $17,800 to $5,139,727 at March 31, 2006.
This is the  result  of a net loss  for the  period  of  $7,230  and a  negative
adjustment of $10,570 for the unrealized loss on securities available for sale.

The Company and the Bank are subject to various regulatory capital  requirements
administered  by  the  Federal   Reserve  and  the  federal  banking   agencies.
Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require  us to  maintain  minimum  ratios  of  Tier  1 and  total  capital  as a
percentage of assets and off-balance-sheet exposures,  adjusted for risk weights
ranging from 0% to 100%. For the Company and the Bank,  Tier 1 capital  consists
of  common  stockholders'  equity,  excluding  the  unrealized  gain  or loss on
securities available-for-sale,  minus certain intangible assets. For the Company
and the Bank,  Tier 2 capital  consists of the allowance for loan losses subject
to certain  limitations.  Total  capital for purposes of  computing  the capital
ratios consists of the sum of Tier 1 and Tier 2 capital.  The regulatory minimum
requirements are 4% for Tier 1 and 8% for total risk-based capital.

We are also  required to maintain  capital at a minimum  level based on adjusted
quarterly  average  assets,  which  is  known as the  leverage  ratio.  Only the
strongest  banks are allowed to maintain  capital at the minimum  requirement of
3%. All others are subject to maintaining ratios 1% to 2% above the minimum.


                                       13
<PAGE>

                             DEKALB BANKSHARES, INC.


Item 2 - Management's Discussion And Analysis or Plan of Operation - continued

Capital Resources - continued

The following table summarizes the Bank's risk-based capital at March 31, 2006:

Shareholders' equity ..........................................     $ 5,220,189
Plus - unrealized losses on available-for-sale securities .....         191,743
                                                                    -----------
Tier 1 capital ................................................       5,411,932
Plus - allowance for loan losses(1) ...........................         317,500
                                                                    -----------
Total capital .................................................     $ 5,729,432
                                                                    ===========
Risk-weighted assets ..........................................     $28,847,000
                                                                    ===========
Risk-based capital ratios
  Tier 1 capital (to risk-weighted assets) ....................           18.76%
  Total capital (to risk-weighted assets) .....................           19.86%
  Tier 1 capital (to total average assets) ....................           11.96%

     (1)  Limited to 1.25% of risk-weighted assets

Off-Balance Sheet Risk

Through its operations,  the Company has made contractual  commitments to extend
credit in the ordinary course of its business activities.  These commitments are
legally  binding  agreements  to  lend  money  to  the  Company's  customers  at
predetermined  interest rates for a specified period of time. At March 31, 2006,
the Company had issued  commitments  to extend credit of $6,240,370  and standby
letters  of  credit of  $65,657  through  various  types of  commercial  lending
arrangements. Approximately $4,492,722 of these commitments to extend credit had
variable rates.

The  following  table sets forth the  length of time until  maturity  for unused
commitments to extend credit and standby letters of credit at March 31, 2006.

<TABLE>
<CAPTION>
                                                                  After One    After Three
                                                        Within      Through       Through       Within      Greater
                                                          One        Three        Twelve         One          Than
(Dollars in thousands)                                   Month       Months        Months        Year        One Year        Total
                                                         -----       ------        ------        ----        --------        -----
<S>                                                 <C>           <C>           <C>           <C>           <C>           <C>
Unused commitments to extend credit ............    $   13,898    $  886,583    $2,413,426    $3,313,907    $2,926,463    $6,240,370
Standby letters of credit ......................        15,000             -             -        15,000        50,657        65,657
                                                    ----------    ----------    ----------    ----------    ----------    ----------
    Totals .....................................    $   28,898    $  886,583    $2,413,426    $3,328,907    $2,977,120    $6,306,027
                                                    ==========    ==========    ==========    ==========    ==========    ==========
</TABLE>

Based on historical  experience,  many of the  commitments and letters of credit
will expire unfunded.  Accordingly,  the amounts shown in the table above do not
necessarily reflect the Company's need for funds in the periods shown.

The Company evaluates each customer's credit worthiness on a case-by-case basis.
The amount of  collateral  obtained,  if deemed  necessary  by the Company  upon
extension  of  credit,  is  based  on its  credit  evaluation  of the  borrower.
Collateral  varies but may include  accounts  receivable,  inventory,  property,
plant and equipment, commercial and residential real estate.

Item 3.  Controls and Procedures

Based  on  the  evaluation  required  by  17  C.F.R.  Section  240.13a-15(b)  or
240.15d-15(b) of the Company's disclosure controls and procedures (as defined in
17  C.F.R.  Sections  240.13a-15(e)  and  240.15d-15(e)),  the  Company's  chief
executive  officer and chief financial  officer concluded that such controls and
procedures,  as of the end of the period covered by this quarterly report,  were
effective.

There  has been no change  in the  Company's  internal  control  over  financial
reporting during the most recent fiscal quarter that has materially affected, or
is reasonably likely to materially  affect,  the Company's internal control over
financial reporting.


                                       14
<PAGE>

                             DEKALB BANKSHARES, INC.


Part II - Other Information

Item 6. Exhibits

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

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




                                       15
<PAGE>

                             DEKALB BANKSHARES, INC.

                                    SIGNATURE

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




                                     By:s/William C. Bochette, III
                                        ----------------------------------------
                                        William C. Bochette, III
                                        Chief Executive Officer, President, and
                                        Chief Financial Officer
Date: May 15, 2006





                                       16
<PAGE>



Exhibit Index

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

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



                                       17