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                                  EXHIBIT 10.5

       Employment Agreement dated September 27, 2002 - Jeffrey A. Paolucci

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                                                                    EXHIBIT 10.5

                              EMPLOYMENT AGREEMENT

This Agreement is made this 15th day of September, 2002, by and between First
Reliance Bank (hereinafter referred to as "Employer" or "Company") and Jeffrey
A. Paolucci (hereinafter referred to as "Employee").

                               W I T N E S S E T H

     WHEREAS, the parties hereto desire to provide for the Employee's employment
by the Employer.

     NOW THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereto agree as follows:

1. Employment. The Employer agrees to employ the Employee and the Employee
agrees to enter into the employ of the Employer on the terms and conditions
hereinafter set forth.

2. Capacity and Duties. The Employee is being hired as a full-time employee of
the Employer primarily to perform those duties set forth in the job description
of Senior Vice President, Chief Financial Officer, Bank Executive, which is
incorporated herein as if fully set forth verbatim in this Agreement, and such
duties as assigned by the CEO. However, the Employer and Employee affirm that
the Employee's position and duties may change as dictated by the needs of the
Employer.

3. Term. The term of the Employee's employment hereunder shall be for a three
year period commencing on the date set forth above, unless such term is
terminated earlier by and/or modified pursuant to Paragraph 8 herein. Upon the
conclusion of the three-year period, the parties may, but are not required to,
extend the Agreement in writing.

4. Location. The Employee's central office shall be located at 2170 West
Palmetto Street, Florence, South Carolina 29501. However, the employee may be
required to perform tasks for the Employer at other physical locations as deemed
necessary by the Employer.

5. Compensation. For services rendered by the Employee under this Agreement
during the first year, the Employer shall pay the Employee $95,000 per year
(hereinafter referred to as "Base Salary"). The Employee shall additionally be
entitled to the following benefits:

          .    Moving expenses incurred in relocating once from Chapin, South
               Carolina to Florence, South Carolina up to $2,500.00 upon
               presentation of proper receipts.

          .    A signing bonus in the amount of $9,500.00.

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          .    Reimbursement for Employee's monthly dues at the Florence Country
               club.

          .    Benefits including health insurance, dental insurance, life
               insurance and disability insurance as set forth in the Plan
               documents outlining the Employee Benefit Plan.* . An annual bonus
               in an amount to be determined by the Employer.

*Any questions concerning coverage may be directed to the manger of human
resources.

6. Deductions. Employee agrees and acknowledges that the Base Salary provided
for herein is subject to withholding and other taxes.

7. Vacation and Sick Leave. After an initial 90 days of employment, the Employee
shall be entitled to three weeks of paid vacation for the first year. The
Employee shall be entitled to three weeks paid vacation in each year thereafter.
The Employee shall additionally be entitled paid holidays in accordance with the
Employer's Policies and Procedures as outlined in the Employers' Employee
Handbook. The Employee shall be entitled to sick days in accordance with the
Employer's Policies and Procedures as outlined in the Employer's handbook.

8. Termination. Notwithstanding Section 3 hereof, the term of the Employee's
employment hereunder shall terminate on the earlier of the termination date
provided for under Section 3 or under any of the paragraphs of this Section 8
hereof.

     (a)  Death. In the event of the Employee's death, the Employee's employment
          shall terminate automatically, effective as of the date of death, and
          the Employer shall pay to the Employee's estate the Base Salary which
          would otherwise be paid to the Employee pursuant to the salary
          provisions of this Agreement up to the end of the month in which his
          death occurs.

     (b)  Disability. If the Employee, due to physical or mental illness, shall
          be unable to perform substantially all of his duties for a continuous
          period of three (3) months, either the Employee or the Employer may by
          notice terminate the Employee's employment under this Agreement
          effective as of a date thirty (30) days after the date such notice is
          given.

     (c)  Change in Control. In the event that a merger, consolidation,
          exchange, acquisition, any change in control as defined by the Banking
          Control Act, or change in beneficial ownership as evidenced by an
          individual or entity holding 50% or more of the combined voting power,
          occurs within three years from the effective date of the Agreement and
          the Employee's employment with the Employer has not been terminated
          pursuant to Paragraphs 8(a)(b)(d)or (e):

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               (i) the Agreement shall be renewed by the Employer's successor
               for an additional three year period effective on the date of the
               change in control, subject to the terms and provisions set forth
               herein effective, or

               (ii) the Employer may terminate the Employee, effective on the
               date of the change in control, and pay the Employee his most
               recent Base Salary along with the Benefits and Bonus to which the
               Employee would otherwise be entitled for a three year period
               beginning on the date of the change in control.

     (d)  By The Employer For Cause. The Employee's employment may be terminated
          effective immediately by the Employer for "cause" by notice of
          termination to the Employee. "Cause" for such termination shall
          include, but not be limited to, the following:

          i)   Commission by the Employee of any fraud, misappropriation,
               embezzlement or other dishonest act that may reasonably be
               expected to have injurious effect on the Employer;

          ii)  The failure and/or refusal of the Employee to perform any duties
               reasonably required of him, which is intended to injure and/or
               injures the reputation, business or business relationships of the
               Employer after written notification by the Employer of such
               failure or refusal and the failure of the Employee within thirty
               (30) business days of such notification to correct such failure
               or refusal (other than failure by reason of incapacity due to
               physical or mental illness);

          iii) Conviction of a crime involving dishonest or fraudulent conduct;
               or

          iv)  Willful breach by the Employee of any of the covenants contained
               in this Agreement.

     (e)  By the Employee or the Employer. During the term of this Agreement,
          either the Employee or the Employer may terminate the Agreement, for
          any or no reason, upon two weeks written notice to the other party.
          Employee shall be paid his Base Salary during the designated notice
          period, whether or not the Employer requires the Employee to work
          during the entire period and without regard to which party terminated
          the Agreement. Both the Employee and Employer agree that payment of
          this salary shall constitute an

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          agreed-upon termination and severance payment and that, based on the
          nature of Employee's duties, the notice period is reasonable and will
          provide for a proper and orderly transition of Employee's management
          responsibilities.

     (f)  Compensation Upon Termination. Except as provided in paragraphs 8(a)
          and 8(c) hereof, all compensation shall cease immediately on
          termination of the Employee's employment hereunder.

     (g)  Reimbursement Upon Termination. Both the Employee and Employer agree
          that if the employment relationship is terminated pursuant to
          paragraphs 8(a)(b) or (d) prior to the conclusion of the three year
          term set forth in paragraph 3, the Employee shall be required to
          reimburse the Employer for the signing bonus set forth in paragraph 5
          as follows:

               (i)  if the employment relationship is terminated by either party
                    within the first year, the Employee shall be required to
                    reimburse the Employer in the amount of $6,333.33.

               (ii) if the employment relationship is terminated by either party
                    during the second year, the Employee shall be required to
                    reimburse the Employer in the amount of $3,166.66.

               (iii) if the employment relationship is terminated between the
                    second and third years, the Employee will be required to
                    reimburse the Employer for a pro-rata share of the remaining
                    $3,166.66.

9. Assignment. This Agreement is personal and shall in no way be subject to
assignment by the Employee. It shall be binding upon and shall inure to the
benefit of the Employer and its successors and assigns, and its economic rights
and benefits shall inure to the benefit of the Employee or his heirs or duly
constituted legal representatives subject to Paragraph 17.

10. Solicitations/Non-raid. Employee agrees for a period of one (1) year after
the termination or cessation of employment for any reason, he shall not directly
or indirectly as an individual proprietor, partner, stockholder, officer,
employee, director, joint venturer, consultant, lender, or in any other capacity
whatsoever engage in the following activity or activities:

     (a)  Solicit Employees. The Employee shall not recruit, solicit or induce,
          or attempt to induce, any employee or employees of the Company to
          terminate their employment with, or otherwise cease their relationship
          with, the Company. The restrictions set forth in this section shall
          apply to any geographic area, market, or territory

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          covered by the Employee where the Company is actively conducting
          business or attempting to conduct business by engaging in activities
          such as contacting, serving, soliciting, selling, or marketing to
          customers, suppliers, or creditors.

     (b)  Solicit Customers. The Employee shall not solicit, divert or take
          away, or attempt to divert or to take away, the business or patronage
          of any of the Company's clients, customers or accounts which the
          Company conducted business with and the Employee personally dealt with
          during his employment with the Company. The restrictions set forth in
          this section shall apply to any geographic area, market, or territory
          covered by the Employee where the Company is actively conducting
          business or attempting to conduct business by engaging in activities
          such as contacting, serving, soliciting, selling, or marketing to
          customers, suppliers, or creditors.

     (c)  Solicit Potential Customers. The Employee shall not solicit, divert or
          take away, or attempt to divert or to take away, the business or
          patronage of any of the Company's prospective clients, customers or
          accounts, which the Employee personally had dealt with, contacted,
          solicited, or served, for the purpose of obtaining business for the
          Company, while he was employed with the Company. The restrictions set
          forth in this section shall apply to any geographic area, market, or
          territory covered by the Employee where the Company is actively
          conducting business or attempting to conduct business by engaging in
          activities such as contacting, serving, soliciting, selling, or
          marketing to customers, suppliers, or creditors.

11. Disclosure of Financial Information. Employer recognizes Employee's need for
access to financial data and other related financial information. Employer will
provide any necessary financial, statistical, or other related information to
the Employee within a reasonable period of time. Employee will treat financial
and other information related to Employer as confidential.

12. Severability. The parties agree that the Company can choose to enforce the
foregoing provisions (just as with all the provisions, sections, paragraphs, and
sentences of this Agreement) while enforcing or not enforcing any other
provision, section, paragraph, or sentence of this Agreement. Similarly, a court
can interpret or reform the foregoing provision (just as with all the
provisions, sections, paragraphs, and sentences of the Agreement) to make it
legally enforceable. Alternatively, a court can enforce or refuse to enforce the
foregoing provision (just as with all the provisions, sections, paragraphs, and
sentences of this Agreement) without affecting the legality or validity of the
remainder of the Agreement.

13. Enforceability. If any portion or provision of this Agreement shall to any
extent be declared illegal or unenforceable by a duly authorized court of
competent

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jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.

14. Notices. All notices and communications required or permitted to be given
hereunder shall be given by delivering the same in hand or by mailing the same
by certified or registered mail, return receipt requested, postage prepaid.
Notice shall be sent to the Employee at an address which is to be provided by
him to the Director of Human Resources, and which initially shall be:

          Jeffrey A. Paolucci
          612 Harborview Point
          Chapin, South Carolina 29036

          If to the Employer:

          F.R (Rick) Saunders, Jr.
          First Reliance Bank
          2710 West Palmetto Street
          Florence, South Carolina 29501

or such other address as either party shall have furnished to the other by like
notice. Notices shall be effective as of the date of such delivery or mailing.

15. Entire Agreement. This Agreement constitutes the entire Agreement and
understanding between the parties in relation to the subject matter hereof.
There are no promises, representations, conditions, provisions, or terms related
thereto other than those set forth herein. This Agreement supersedes all
previous understandings, agreements, and representations between the Employer
and the Employee regarding the Employee's employment by the Employer, written or
oral. The Employer and the Employee further agree that any modification to the
Agreement must be in writing and signed by the Employer.

16. Governing Law. This contract shall be construed under and be governed in all
respects by the laws of the State of South Carolina.

17. Enforcement. In the event that a dispute arises between the Employer and the
Employee, the parties agree that each party shall be responsible for any
attorney's fees incurred in enforcing this Agreement. In the event there is a
change in control pursuant to paragraph 8(c), and a dispute arises between the
Employee and the Employer's successor, the losing party shall be responsible for
any attorney's fees incurred in enforcing the Agreement.

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18. Drafting. Employer and Employee affirm that this Agreement is a result of
negotiations between the Employer and the Employee and neither party shall be
construed as the drafter.

19. Waiver; Amendment. No waiver in any instance by any party of any provision
of this Agreement shall be deemed a waiver by such party of such provision in
any other instance or a waiver of any other provision hereunder in any instance.
This Agreement cannot be modified except in writing signed by the party to be
charged.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date forth above written.

                                              FIRST RELIANCE BANK


                                          By: /s/ F. R. Saunders, Jr.
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                                          Title: President and CEO


                                              JEFFREY A. PAOLUCCI, EMPLOYEE


                                              /s/ Jeffrey A. Paolucci
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                                              Social Security Number:
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