SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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

                 For the Quarterly Period Ended Commission file
                             June 30, 2003 000-20616

                          PEOPLES BANCORPORATION, INC.
             (Exact name of registrant as specified in its charter)

            South Carolina                                57-09581843
   (State or other jurisdiction of                     (I.R.S. Employer
    incorporation or organization)                     Identification No.)

               1818 East Main Street, Easley, South Carolina 29640
               ---------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                  Registrant's telephone number: (864) 859-2265


                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 is an accelerated
             filer (as defined in Rule 12 b-2 of the Exchange Act).

                                 Yes [ ] No [X]

                       The number of outstanding shares of
                          the issuer's $1.67 par value
                        common stock as of August 6, 2003
                                 was 3,507,911.




<PAGE>



PART I - FINANCIAL INFORMATION
Item 1. Financial Statements


        Peoples Bancorporation, Inc. and Subsidiaries
                 Consolidated Balance Sheets
           (Dollars in thousands except share data)

<TABLE>
<CAPTION>
                                                                                          June 30,         June 30,     December 31,
                                                                                            2003             2002           2002
                                                                                         Unaudited        Unaudited        Audited
                                                                                         ---------        ---------        -------
ASSETS
<S>                                                                                       <C>              <C>              <C>
CASH AND DUE FROM BANKS .........................................................         $ 10,764         $ 13,882         $  9,474
INTEREST-BEARING DEPOSITS IN OTHER BANKS ........................................               17               19               33
FEDERAL FUNDS SOLD ..............................................................           19,108           38,454            2,635
                                                                                          --------         --------         --------
     Total cash and cash equivalents ............................................           29,889           52,355           12,142
SECURITIES
     Available for sale .........................................................           63,094           56,419           80,163
     Held for investment (market value of
         $5,089, $3,177 and $4,248) .............................................            4,845            3,059            4,123
       Other investments, at cost ...............................................            2,057            1,884            1,884
LOANS-less allowance for loan losses
     of $3,220, $2,785 and $2,850 ...............................................          275,961          225,228          247,637
MORTGAGE LOANS HELD FOR SALE ....................................................           40,337           13,100           55,026
PREMISES AND EQUIPMENT, net of accumulated
     depreciation and amortization ..............................................            9,802            8,816            9,539
ACCRUED INTEREST RECEIVABLE .....................................................            1,824            1,788            1,976
CASH SURRENDER VALUE OF LIFE INSURANCE ..........................................            2,253            1,368            2,202
OTHER ASSETS ....................................................................            1,738            1,713            1,430
                                                                                          --------         --------         --------
         TOTAL ASSETS ...........................................................         $431,800         $365,730         $416,122
                                                                                          ========         ========         ========

LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
DEPOSITS
     Noninterest-bearing ........................................................         $ 44,584         $ 39,341         $ 40,614
     Interest-bearing ...........................................................          314,410          265,381          287,560
                                                                                          --------         --------         --------
         Total deposits .........................................................          358,994          304,722          328,174
SECURITIES SOLD UNDER REPURCHASE
     AGREEMENTS .................................................................           29,233           22,776           35,331
NOTES PAYABLE TO FEDERAL HOME LOAN BANK .........................................            5,000            5,000           17,000
ACCRUED INTEREST PAYABLE ........................................................            1,557            1,191            1,575
OTHER LIABILITIES ...............................................................            1,485            1,320            1,295
                                                                                          --------         --------         --------
         Total Liabilities ......................................................          396,269          335,009          383,375
                                                                                          --------         --------         --------
SHAREHOLDERS' EQUITY
Common Stock - 10,000,000 shares authorized, $1.67
     Par value per share, 3,507,911 shares, 3,341,370 shares
       and 3,507,911 shares outstanding, respectively ...........................            5,858            5,580            5,858
Additional paid-in capital ......................................................           25,758           22,855           25,758
Retained Earnings ...............................................................            3,423            1,756              446
Accumulated other comprehensive income ..........................................              492              530              685
                                                                                          --------         --------         --------
         Total Shareholders' Equity .............................................           35,531           30,721           32,747
                                                                                          --------         --------         --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ......................................         $431,800         $365,730         $416,122
                                                                                          ========         ========         ========
</TABLE>


                                       2
<PAGE>


                 Peoples Bancorporation, Inc. and Subsidiaries
                        Consolidated Statements of Income

<TABLE>
<CAPTION>
                   (Dollars in thousands except share data)                   Three Months Ended                  Six Months Ended
                                   Unaudited                                       June 30,                         June 30,
                                                                           2003              2002             2003            2002
                                                                           ----              ----             ----            ----
INTEREST INCOME
<S>                                                                    <C>              <C>              <C>              <C>
   Interest and fees on loans ..................................       $    4,541       $    4,228       $    9,068       $    8,607
   Interest on securities
       Taxable .................................................              571              624            1,301            1,089
       Tax-exempt ..............................................               45               35               87               72
   Interest on federal funds ...................................               39              139               65              198
                                                                       ----------       ----------       ----------       ----------
Total interest income ..........................................            5,196            5,026           10,521            9,966
                                                                       ----------       ----------       ----------       ----------

INTEREST EXPENSE
   Interest on deposits ........................................            1,729            1,875            3,457            3,406
   Interest on federal funds purchased and securities
       sold under repurchase agreements ........................              107              120              240              244
    Interest on notes payable Federal Home Loan Bank ...........               79               62              154              133
                                                                       ----------       ----------       ----------       ----------
Total interest expense .........................................            1,915            2,057            3,851            3,783
                                                                       ----------       ----------       ----------       ----------

Net interest income ............................................            3,281            2,969            6,670            6,183

PROVISION FOR LOAN LOSSES ......................................              329              198              458              511
                                                                       ----------       ----------       ----------       ----------

Net interest income after provision for loan losses ............            2,952            2,771            6,212            5,672

NON-INTEREST INCOME
   Service fees and other income ...............................              665              627            1,287            1,150
   Mortgage banking ............................................            2,761              759            4,872            1,638
    Gain on sale of available for sale securities ..............                6                0                7                0
                                                                       ----------       ----------       ----------       ----------
                                                                            3,432            1,386            6,166            2,788
NON-INTEREST EXPENSES
   Salaries and benefits .......................................            2,092            1,517            4,145            3,001
   Occupancy ...................................................              149              122              298              245
   Equipment ...................................................              224              180              476              332
   Marketing and advertising ...................................              109              112              173              186
   Communications ..............................................               65               53              128              111
   Printing and supplies .......................................               66               52              131              105
   Bank paid loan costs ........................................              140              180              254              334
   Other operating expenses ....................................              685              474            1,319              884
                                                                       ----------       ----------       ----------       ----------
             Total noninterest expenses ........................            3,530            2,690            6,924            5,198
                                                                       ----------       ----------       ----------       ----------
   Income before income taxes ..................................            2,854            1,467            5,454            3,262

PROVISION FOR INCOME TAXES .....................................            1,043              526            1,986            1,171
                                                                       ----------       ----------       ----------       ----------

   Net income ..................................................       $    1,811       $      941       $    3,468       $    2,091
                                                                       ==========       ==========       ==========       ==========

INCOME PER COMMON SHARE:
   BASIC .......................................................       $     0.52       $     0.27       $     0.99       $     0.60
                                                                       ==========       ==========       ==========       ==========
   DILUTED .....................................................       $     0.50       $     0.26       $     0.95       $     0.58
                                                                       ==========       ==========       ==========       ==========

WEIGHTED AVERAGE COMMON SHARES:
   BASIC .......................................................        3,507,911        3,503,972        3,507,911        3,499,506
                                                                       ==========       ==========       ==========       ==========
   DILUTED .....................................................        3,638,263        3,618,165        3,634,852        3,605,769
                                                                       ==========       ==========       ==========       ==========

DIVIDENDS PAID PER COMMON SHARE ................................       $     0.07       $     0.06       $     0.14       $     0.11
                                                                       ==========       ==========       ==========       ==========
</TABLE>



                                       3
<PAGE>


                 Peoples Bancorporation, Inc. and Subsidiaries
           Consolidated Statements of Changes in Shareholders' Equity
                for the six months ended June 30, 2002 and 2003

<TABLE>
<CAPTION>
                    (Dollars in thousands except share data)
                                  (Unaudited)
                                                                                                          Accumulated
                                                          Common stock           Additional                  other          Total
                                                          ------------             paid-in     Retained  comprehensive shareholders'
                                                        Shares         Amount      capital     earnings     income       equity
                                                        ------         ------      -------     --------     ------       ------
<S>                                                   <C>          <C>           <C>          <C>          <C>          <C>
Balance, December 31, 2001* ........................  3,328,609    $    5,559    $   22,786   $       32   $      174   $   28,551
Net Income .........................................                                               2,091                     2,091
Other comprehensive income, net of
tax:
   Unrealized holding gains on
   securities available for sale ...................                                                              356          356
                                                                                                                        ----------
Comprehensive income ...............................                                                                         2,447
Cash Dividends .....................................                                                (367)                     (367)
Proceeds from stock options ........................     12,761            21            69                                     90
                                                     ----------    ----------    ----------   ----------   ----------   ----------
Balance, June 30, 2002 .............................  3,341,370    $    5,580    $   22,855   $    1,756   $      530   $   30,721
                                                     ==========    ==========    ==========   ==========   ==========   ==========

Balance, December 31, 2002* ........................  3,507,911    $    5,858    $   25,758   $      446   $      685   $   32,747
Net Income .........................................                                               3,468                     3,468
Other comprehensive income, net of
tax:
   Unrealized holding losses on
   securities available for sale ...................                                                             (188)        (188)
   Less reclassification
   adjustments for gains
   included in net income ..........................                                                               (5)          (5)
                                                                                                                        ----------

Comprehensive income ...............................                                                                         3,275
Cash Dividends .....................................                                                (491)                     (491)
                                                     ----------    ----------    ----------   ----------   ----------   ----------
Balance, June 30, 2003 .............................  3,507,911    $    5,858    $   25,758   $    3,423   $      492   $   35,531
                                                     ==========    ==========    ==========   ==========   ==========   ==========
</TABLE>


* Share data has been restated to reflect 5% stock  dividends  issued in January
2002 and November 2002.





                                       4
<PAGE>


            Peoples Bancorporation, Inc. and Subsidiaries
                     Consolidated Statements of Cash Flows
                             (Dollars in thousands)
<TABLE>
<CAPTION>
                                                                                                                 (Unaudited)
                                                                                                              Six months Ended
                                                                                                                  June 30,
                                                                                                         2003                   2002
                                                                                                         ----                   ----
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                                                 <C>                   <C>
   Net Income ..........................................................................            $   3,468             $   2,091
   Adjustments to reconcile net income to net cash provided
     by (used in) operating activities
   (Gain) on sale of premises and equipment ............................................                   (7)                   (6)
   (Gain) on sale of securities available for sale .....................................                   (7)                    0
   Provision for loan losses ...........................................................                  458                   511
   Depreciation and amortization .......................................................                  405                   296
   Amortization and accretion (net) of premiums and
     discounts on securities ...........................................................                  188                    46
   Origination of mortgage loans held for sale .........................................             (274,717)             (159,071)
   Sale of mortgage loans held for sale ................................................              289,406               186,896
   (Increase) decrease in accrued interest receivable ..................................                  153                  (105)
   Increase in other assets ............................................................                 (361)                 (415)
   Decrease in accrued interest payable ................................................                  (18)                  (27)
   Increase in other liabilities .......................................................                  303                   362
                                                                                                    ---------             ---------
     Net cash provided by operating activities .........................................               19,271                30,578
                                                                                                    ---------             ---------

CASH FLOWS FROM INVESTING ACTIVITIES
   Purchases of securities held for investment .........................................                 (405)                    0
   Purchases of securities available for sale ..........................................              (45,471)              (33,611)
   Purchase of other investments .......................................................                 (195)                  (69)
   Proceeds from the maturity of securities held to maturity ...........................                  275                   575
   Proceeds from the maturity of securities available for sale .........................                3,200                     0
   Proceeds from the sale of securities available for sale .............................                5,999                     0
   Proceeds from the call of securities available for sale .............................               44,265                 5,400
   Proceeds from principal pay downs ...................................................                8,026                 2,400
   Net increase in loans ...............................................................              (28,782)              (14,980)
   Proceeds from the sale of premises and equipment ....................................                   44                     0
   Purchase of premises and equipment ..................................................                 (712)               (1,152)
                                                                                                    ---------             ---------
     Net cash used in investing activities .............................................              (13,756)              (41,437)
                                                                                                    ---------             ---------

CASH FLOWS FROM FINANCING ACTIVITIES
   Net increase in deposits ............................................................               30,821                67,920
   Net increase (decrease) in securities sold under repurchase
     agreements ........................................................................               (6,098)                2,130
   Net decrease in notes payable Federal Home Loan Bank ................................              (12,000)              (18,985)
    Proceeds from stock options exercised ..............................................                    0                    90
   Cash dividend .......................................................................                 (491)                 (367)
                                                                                                    ---------             ---------
     Net cash provided by financing activities .........................................               12,232                50,788
                                                                                                    ---------             ---------
     Net increase in cash and cash equivalents .........................................               17,747                39,929
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR ...........................................               12,142                12,426
                                                                                                    ---------             ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD ...............................................            $  29,889             $  52,355
                                                                                                    =========             =========

CASH PAID FOR
     Interest ..........................................................................            $   3,869             $   3,809
                                                                                                    =========             =========
     Income Taxes ......................................................................            $   1,778             $     776
                                                                                                    =========             =========
</TABLE>



                                       5
<PAGE>


                  PEOPLES BANCORPORATION, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      A summary of these  policies is included in the 2002 Annual Report on Form
10-K and incorporated herein by reference.

STATEMENT OF CASH FLOWS

      Cash  includes  currency  and coin,  cash items in process of  collection,
amounts due from banks and  federal  funds sold.  All have  maturities  of three
months or less.

COMMON STOCK

     The Board of Directors declared cash dividends of $0.07 per common share to
shareholders  of record March 21, 2003 and June 20, 2003,  payable April 4, 2003
and July 7, 2003.

     SFAS No. 128,  "Earnings per Share" requires that the Company present basic
and diluted net income per common share. The assumed conversion of stock options
creates the  difference  between basic and diluted net income per share.  Income
per share is calculated by dividing net income by the weighted average number of
common shares outstanding for each period presented. The weighted average number
of common shares  outstanding  for basic net income per common share for the six
months ended June 30, 2003 and 2002 was 3,507,911 and  3,499,506,  respectively.
The weighted average number of common shares  outstanding for diluted net income
per common share was  3,634,852  and 3,605,769 for the six months ended June 30,
2003 and 2002.

      The following table  illustrates the effect on net income and earnings per
share if the  Company  had  applied  the fair value  recognition  provisions  of
Financial  Accounting Standards Board ("FASB") Statement of Financial Accounting
Standards  ("SFAS")  No.  123,  Accounting  for  Stock-Based  Compensation,   to
stock-based employee compensation.

<TABLE>
<CAPTION>
                                                                            Three Months Ended               Six Months Ended
                                                                            ------------------               ----------------
                                                                                 June 30,                        June 30,
                                                                                 --------                        --------
                                                                        2003               2002             2003          2002
                                                                        ----               ----             ----          ----
<S>                                                                 <C>               <C>               <C>              <C>
Net income, as reported ......................................      $      1,811      $        941      $      3,468     $    2,091
Deduct:  total stock-based employee compensation
  expense determined under fair value based method
  for all awards, Net of related tax effects .................               (11)              (15)              (22)           (30)
                                                                    ------------      ------------      ------------      ---------
Pro forma net income .........................................      $      1,800      $        926      $      3,446     $     2061
                                                                    ============      ============      ============      =========
Net income per common share
  Basic - as reported ........................................      $       0.52      $       0.27      $       0.99      $    0.60
                                                                    ============      ============      ============      =========
  Basic - pro forma ..........................................      $       0.51      $       0.26      $       0.98      $    0.59
                                                                    ============      ============      ============      =========
  Diluted - as reported ......................................      $       0.50      $       0.26      $       0.95      $    0.58
                                                                    ============      ============      ============      =========
  Diluted - pro forma ........................................      $       0.49      $       0.26      $       0.95      $    0.57
                                                                    ============      ============      ============      =========
</TABLE>


                                       6
<PAGE>

      The Company  issued a  five-percent  common stock dividend in January 2002
and November  2002.  Per share data in 2002 has been  restated to reflect  these
transactions.


MANAGEMENT'S OPINION

     The accompanying unaudited financial statements of Peoples  Bancorporation,
Inc. have been  prepared in  accordance  with  accounting  principles  generally
accepted in the United States of America for interim  financial  information and
with the  instructions  to Form 10-Q  according to  guidelines  set forth by the
Securities  and  Exchange  Commission.  Accordingly,  they  do not  include  all
information and notes required by accounting  principles  generally  accepted in
the United States of America for complete financial statements.  However, in the
opinion  of  management,   all  adjustments   (consisting  of  normal  recurring
adjustments)  considered necessary for the fair presentation have been included.
The results of operations for any interim period are not necessarily  indicative
of the results to be expected for an entire year.




                                       7
<PAGE>


Item 2.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                     CONDITION AND RESULTS OF OPERATIONS

     The following  discussion and analysis  should be read in conjunction  with
the consolidated financial statements and related notes and with the statistical
information  and  financial  data  appearing  in this report as well as the 2002
Annual  Report  of  Peoples  Bancorporation,  Inc.  on  Form  10-K.  Results  of
operations for the  three-month  and six-month  periods ending June 30, 2003 are
not necessarily indicative of the results to be attained for any other period.

Critical Accounting Policies

         Peoples  Bancorporation,  Inc.  (the  "Company")  has  adopted  various
accounting  policies  that  govern  the  application  of  accounting  principles
generally  accepted in the United  States in the  preparation  of the  Company's
financial  statements.  The significant  accounting  policies of the Company are
described in Item 8, Note 1 to the Consolidated Financial Statements in the 2002
Annual Report of Peoples Bancorporation, Inc. on Form 10-K.

         Certain   accounting   policies  involve   significant   judgments  and
assumptions by management  that have a material  impact on the carrying value of
certain assets and liabilities; 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 that could have a material impact on the carrying
values of assets and liabilities and the results of operations of the Company.

         Of these  significant  accounting  policies,  the Company considers its
policies  regarding the allowance  for loan losses (the  "Allowance")  to be its
most  critical  accounting  policy due to the  significant  degree of management
judgment  involved in determining  the amount of the Allowance.  The Company has
developed  policies and  procedures for assessing the adequacy of the Allowance,
recognizing  that this process  requires a number of  assumptions  and estimates
with respect to its loan portfolio. The Company's assessments may be impacted in
future  periods by  changes in  economic  conditions,  the impact of  regulatory
examinations,  and the discovery of information with respect to borrowers, which
is not  known to  management  at the time of the  issuance  of the  consolidated
financial statements.  Refer to the discussion under Provision and Allowance for
Loan Losses, Loan Loss Experience section of the Company's 2002 Annual Report on
Form 10-K and the  Allowance  for Loan  Losses  and  Provision  for Loan  Losses
sections of this report on Form 10-Q for a detailed description of the Company's
estimation process and methodology related to the allowance for loan losses.

Forward-Looking Statements

         From time to time,  including in this  report,  the Company may publish
forward-looking  statements  relating to such matters as  anticipated  financial


                                       8
<PAGE>

performance,  business prospects,  technological developments,  new products and
similar   matters.   All   statements   that  are  not   historical   facts  are
"forward-looking  statements."  Words such as "estimate,"  "project,"  "intend,"
"expect,"  "believe,"  "anticipate,"  "plan," and similar  expressions  identify
forward-looking statements. The Private Securities Litigation Reform Act of 1995
provides a safe harbor for forward-looking  statements.  In order to comply with
terms of the safe  harbor,  the  Company  notes that a variety of factors  could
cause the Company's actual results and experience to differ  materially from the
anticipated   results  or  other   expectations   expressed  in  the   Company's
forward-looking  statements.  The risks and  uncertainties  that may  affect the
operations,  performances,  development  and results of the  Company's  business
include,  but are not limited to, the following:  risks from changes in economic
and industry  conditions;  changes in interest  rates;  risks inherent in making
loans including  repayment  risks and value of collateral;  dependence on senior
management;  and recently-enacted or proposed legislation.  Statements contained
in this report  regarding the demand for Peoples  Bancorporation's  products and
services,  changing economic conditions,  interest rates,  consumer spending and
numerous  other  factors may be  forward-looking  statements  and are subject to
uncertainties and risks.

Overview

       The  Company  is  a  bank  holding   company   with  three   wholly-owned
subsidiaries: The Peoples National Bank, Easley, South Carolina, a national bank
which commenced business  operations in August 1986; Bank of Anderson,  National
Association,  Anderson, South Carolina, a national bank which commenced business
operations in September 1998; and, Seneca National Bank, Seneca, South Carolina,
a national bank which commenced business  operations in February 1999 (sometimes
referred to herein as the "Banks").

     Currently,  the Company engages in no significant operations other than the
ownership  of its  three  subsidiaries  and the  support  thereof.  The  Company
conducts its business  from six banking  offices  located in the Upstate Area of
South Carolina.




                                       9
<PAGE>


                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

EARNINGS PERFORMANCE

Overview

     The Company's  consolidated  net income for the second  quarter of 2003 was
$1,811,000 or $0.50 per diluted share  compared to $941,000 or $0.26 per diluted
share for the second  quarter of 2002, an increase of 92.5%.  Net income for the
six  months  ended  June 30,  2003 was  $3,468,000  or $0.95 per  diluted  share
compared to  $2,091,000 or $0.58 per diluted share for the six months ended June
30, 2002, an increase of 65.9%.  Return on average equity for the six months and
three  months  ended June 30, 2003 was 20.82% and 21.18%  compared to 14.36% and
12.65% for the six  months  and three  months  ended  June 30,  2002.  Return on
average assets for the six months and three months ended June 30, 2003 was 1.65%
and 1.69%  compared to 1.27% and 1.08% for the six months and three months ended
June 30, 2002.  The increases in the Company's net income,  earnings per diluted
share,  return on  average  equity,  and  return on  average  assets in 2003 are
attributable  to increased  earnings at the  Company's  bank  subsidiaries.  The
Peoples  National Bank  recorded net earnings of  $2,633,000  for the six months
ended June 30, 2003  compared to net earnings of  $1,595,000  for the six months
ended June 30, 2002, an increase of 65.1%. Bank of Anderson,  N. A. recorded net
earnings of  $595,000  for the six months  ended June 30,  2003  compared to net
earnings  of $354,000  for the six months  ended June 30,  2002,  an increase of
68.1%. Seneca National Bank recorded net earnings of $256,000 for the six months
ended June 30,  2003  compared to net  earnings  of $149,000  for the six months
ended June 30, 2002, an increase of 71.8%. Key factors for the Company's results
of operations are discussed throughout the Management's  Discussion and Analysis
below.

Interest Income, Interest Expense and Net Interest Income

     The largest  component of the Company's income is net interest income.  Net
interest income,  which is the difference  between the interest earned on assets
and the interest paid for the  liabilities  used to fund those assets,  measures
the gross  profit  from  lending  and  investing  activities  and is the primary
contributor to the Company's earnings.  Net interest income before provision for
loan losses increased  $312,000 or 10.5% to $3,281,000 in the quarter ended June
30, 2003 compared to $2,969,000 in the quarter ended June 30, 2002.  For the six
months ended June 30, 2003 net interest income before  provision for loan losses
increased  $487,000 or 7.9% to  $6,670,000  compared to  $6,183,000  for the six
months ended June 30, 2002.  The  increase in the net interest  income  resulted
primarily from larger  average  balances in earning assets at the Company's bank
subsidiaries,  and was  partially  offset by a decrease in the yields on earning
assets.  The Company's  net interest  margin for the six months and three months
ended June 30,  2003 was 3.36% and 3.25%,  respectively,  compared  to 3.99% and
3.65%,  respectively,  for the six months and three  months ended June 30, 2002.
The decrease in net interest margin resulted  primarily from the decrease in the
yields on earning assets, which resulted from falling market interest rates.


                                       10
<PAGE>

     The  Company's  total  interest  income for the second  quarter of 2003 was
$5,196,000 compared to $5,026,000 for the second quarter of 2002, an increase of
$170,000 or 3.4%.  Total interest  income for the six months ended June 30, 2003
was  $10,521,000  compared to $9,966,000 for the six months ended June 30, 2002,
an  increase  of  $555,000  or 5.6%.  Interest  and fees on loans,  the  largest
component of total interest income,  increased $313,000 in the second quarter of
2003 to  $4,541,000  compared to $4,228,000  for the second  quarter of 2002, an
increase of 7.4%.  Interest  and fees on loans  increased  $461,000  for the six
months  ended June 30, 2003 to  $9,068,000  compared to  $8,607,000  for the six
months  ended June 30, 2002,  an increase of 5.4%.  The increase in interest and
fees on  loans,  as well as the  increase  in total  interest  income,  resulted
primarily  from the higher  average  balances  in the  various  types of earning
assets,  and was partially  offset by the lower market  interest rates that were
experienced  at the Company's  bank  subsidiaries  during the first half of 2003
when compared to the first half of 2002.

     The Company's  total  interest  expense for the second  quarter of 2003 was
$1,915,000  compared to $2,057,000 for the second quarter of 2002, a decrease of
$142,000 or 6.9%.  Total interest expense for the six months ended June 30, 2003
was $3,851,000 compared to $3,783,000 for the six months ended June 30, 2002, an
increase of $68,000 or 1.8%. Interest expense on deposits, the largest component
of total interest expense,  decreased  $146,000 in the second quarter of 2003 to
$1,729,000  compared to $1,875,000 for the second quarter of 2002, a decrease of
7.8%.  Interest expense on deposits  increased  $51,000 for the six months ended
June 30, 2003 to $3,457,000 compared to $3,406,000 for the six months ended June
30,  2002,  an  increase  of 1.5%.  Interest  on  federal  funds  purchased  and
securities sold under  repurchase  agreements,  the second largest  component of
total  interest  expense,  decreased  $13,000 or 10.8% to $107,000 in the second
quarter of 2003 compared to $120,000 for the second quarter of 2002. Interest on
federal  funds  purchased  and  securities  sold  under  repurchase   agreements
decreased  $4,000 or 1.6% to  $240,000  in the first  half of 2003  compared  to
$244,000  for the first half of 2002.  Interest on notes  payable to the Federal
Home Loan Bank, the third largest component of total interest expense, increased
$17,000 or 27.4% to $79,000 in the second  quarter of 2003  compared  to $62,000
for the second  quarter of 2002.  Interest on notes  payable to the Federal Home
Loan Bank  increased  $21,000  or 15.8% to  $154,000  in the first  half of 2003
compared  to  $133,000  for the first half of 2002.  The  decrease  in  interest
expense  among the  various  types of  interest-bearing  liabilities  is largely
attributable  to lower market  interest rates  experienced at the Company's bank
subsidiaries  during the first half of 2003 when  compared  to the first half of
2002,  and was partially  offset by the higher  average  balances in some of the
accounts.  For certain other types of interest-bearing  liabilities,  the higher
average  balances in the  accounts  had a greater  impact than the lower  market
interest rates,  to which the increase in interest  expense in these accounts is
largely attributable.




                                       11
<PAGE>

Provision for Loan Losses

     The provision for loan losses charged to operations during the three months
and six months  ended June 30, 2003 was  $329,000  and  $458,000,  respectively,
compared to $198,000 and  $511,000,  respectively,  for the three months and six
months  ended June 30, 2002.  The changes in the  Company's  provision  for loan
losses for the second  quarter and first half of 2003 are based on  management's
evaluation  of the  Company's  overall  credit  quality and its estimate of loan
losses  inherent  in the loan  portfolio.  During  the first  half of 2003,  The
Peoples  National Bank made  provision of $325,000  compared to $400,000 for the
first half of 2002.  Bank of Anderson,  N.A.  made  provision of $80,000 for the
first six  months of 2003,  compared  to  $70,000  for the same  period of 2002.
Seneca  National  Bank made  provision of $53,000  during the first half of 2003
compared to $41,000 for the first half of 2002.

Non-interest Income

     Non-interest  income  increased  $2,046,000 or 147.6% to $3,432,000 for the
second  quarter of 2003 compared to $1,386,000  for the second  quarter of 2002.
Non-interest  income increased  $3,378,000 or 121.2% to $6,166,000 for the first
half of 2003 compared to $2,788,000 for the first half of 2002. Mortgage banking
fee income, the largest component of non-interest  income,  increased $2,002,000
or 263.8% to $2,761,000  for the second quarter of 2003 compared to $759,000 for
the second quarter of 2002. Mortgage banking fee income increased  $3,234,000 or
197.4% to $4,872,000  for the first half of 2003 compared to $1,638,000  for the
first half of 2002.  The  increase  in  mortgage  banking  fee income is largely
attributable  to  increased  activity in customer  refinancing  activity  due to
market interest rates that have been at historical lows.  Service fees and other
income, the second largest component of non-interest  income,  increased $38,000
or 6.1% to $665,000 for the second  quarter of 2003 compared to $627,000 for the
second  quarter of 2002.  Service  fees and other income  increased  $137,000 or
11.9% to $1,287,000  for the first half of 2003  compared to $1,150,000  for the
first half of 2002. Gains of $6,000 and $7,000,  respectively,  were realized on
the sale of  available-for-sale  securities  during the second quarter and first
half of 2003. No gain or loss was realized on the sale of securities  during the
second quarter or first half of 2002.

Non-interest Expense

     Total  non-interest  expense increased  $840,000 or 31.2% to $3,530,000 for
the second quarter of 2003 from $2,690,000 for the second quarter of 2002. Total
non-interest  expense increased  $1,726,000 or 33.2% to $6,924,000 for the first
half of 2003 from $5,198,000 for the first half of 2002.  Salaries and benefits,
the largest component of non-interest  expense,  increased $575,000 or 37.9%, to
$2,092,000 for the second quarter of 2003 from $1,517,000 for the second quarter
of 2002. Salaries and benefits increased  $1,144,000 or 38.1%, to $4,145,000 for
the first half of 2003 from  $3,001,000 for the first half of 2002. The increase
in salaries and benefits is primarily  attributable  to increases in commissions


                                       12
<PAGE>

paid due to elevated  levels of mortgage  loan  activity,  as well as additional
staffing  associated  with the  Company's  continued  growth and  normal  salary
increases throughout the Company.



BALANCE SHEET REVIEW

Loans

     Outstanding  loans (which excludes  mortgage loans held for sale) represent
the largest  component of earning assets at 68.3% of total earning assets. As of
June 30, 2003, the Company held total gross loans  outstanding of  $279,181,000.
Gross loans  increased  $28,694,000  or 11.5% from  $250,487,000  in total gross
outstanding  loans at December 31, 2002 and increased  $51,168,000 or 22.4% from
$228,013,000  in total gross loans  outstanding  at June 30, 2002.  The increase
resulted from new loans generated by the Company's  three banking  subsidiaries.
The following table summarizes outstanding loans by collateral type:

<TABLE>
<CAPTION>
                                                                                               June 30,               December 31,
                                                                                               --------               ------------
Loan Portfolio Composition                                                             2003              2002             2002
(Dollars in Thousands)                                                                 ----              ----             ----
<S>                                                                                 <C>               <C>               <C>
Commercial and Industrial - not secured by real estate .................            $ 37,866          $ 30,150          $ 35,548
Commercial and Industrial - secured by real estate .....................              82,457            61,429            72,600
Residential real estate - mortgage .....................................              81,409            67,558            69,579
Residential real estate - construction .................................              55,785            43,227            48,452
Consumer loans .........................................................              21,664            25,649            24,308
                                                                                    --------          --------          --------
     Gross Loans .......................................................            $279,181          $228,013          $250,487
                                                                                    ========          ========          ========
</TABLE>

     The interest rates charged on loans vary with the degree of risk,  maturity
and amount of the loan. Competitive pressures,  money market rates, availability
of funds, and government  regulation also influence  interest rates. The average
yield on the Company's  loans for the six months and three months ended June 30,
2003  was  5.87%  and  5.74%,   respectively,   compared  to  7.20%  and  7.07%,
respectively,  for  the six  months  and  three  months  ended  June  30,  2002.
Approximately 49.8% of the Company's loans are tied to the prime interest rate.

     The Company's loan portfolio consists  principally of residential  mortgage
loans,  commercial  loans, and consumer loans.  Substantially all of these loans
are to borrowers located in South Carolina and are concentrated in the Company's
market areas.

     The Company's real estate loans are primarily  construction loans and other
loans secured by real estate,  both commercial and  residential,  located within
the  Company's  trade areas.  The Company does not  actively  pursue  long-term,
fixed-rate mortgage loans for retention in its loan portfolio.

     The Banks employ  mortgage  loan  personnel who originate and package loans
that are pre-sold at origination to third parties and are classified as mortgage
loans held for sale for  reporting  purposes.  At June 30, 2003 the Company held
$40,337,000  of mortgage loans held for sale compared to $55,026,000 at December
31, 2002 and $13,100,000 at June 30, 2002. The  substantial  swings in the level


                                       13
<PAGE>

of mortgage loans held for sale are due to wide  fluctuations  in the demand for
residential  mortgages from time to time. During the three months ended June 30,
2003, the Company  originated  $157,067,000 and sold $160,873,000 in residential
mortgages.  During the six months  ended June 30, 2003,  the Company  originated
$274,717,000 and sold $289,406,000 in residential mortgages.

     The Company's  commercial lending activity is directed  principally towards
businesses  whose demands for funds fall within each Banks' legal lending limits
and which are potential  deposit  customers of the Banks. This category of loans
includes loans made to individuals,  partnerships,  and corporations,  which are
obtained for a variety of business  purposes.  Particular  emphasis is placed on
loans to small and medium-sized  businesses.  The Company's commercial loans are
spread throughout a variety of industries,  with no industry or group of related
industries   accounting  for  a  significant  portion  of  the  commercial  loan
portfolio.  Commercial  loans are made on either a secured or  unsecured  basis.
When taken,  security  usually  consists of liens on  inventories,  receivables,
equipment,  furniture and  fixtures.  Unsecured  commercial  loans are generally
short-term with emphasis on repayment strengths and low debt-to-worth ratios. At
June  30,  2003  approximately  $11,733,000  or 9.8% of  commercial  loans  were
unsecured.

     The  Company's   direct   consumer  loans  consist   primarily  of  secured
installment  loans to individuals for personal,  family and household  purposes,
including automobile loans to individuals and pre-approved lines of credit.

     Management believes that the loan portfolio is adequately diversified.  The
Company has no foreign  loans or loans for highly  leveraged  transactions.  The
Company has few agricultural loans.

Allowance for Loan Losses

     The allowance  for loan losses at June 30, 2003 was  $3,220,000 or 1.15% of
loans  outstanding  (which  excludes  mortgage  loans held for sale) compared to
$2,850,000  or 1.14% of loans  outstanding  at December 31, 2002 and compared to
$2,785,000  or 1.22% of loans  outstanding  at June 30, 2002.  The allowance for
loan  losses  is  based  upon   management's   continuing   evaluation   of  the
collectibility of past due loans based on the historical loan loss experience of
the Company,  current economic conditions  affecting the ability of borrowers to
repay,  the volume of loans, the quality of collateral  securing  non-performing
and problem loans, and other factors deserving recognition.

     At June 30,  2003 the  Company  had  $914,000  in  non-accruing  loans,  no
restructured  loans,  no loans more than ninety days past due and still accruing
interest,  and $393,000 in Other Real Estate Owned. This compares to $926,000 in
non-accruing loans, no restructured loans, $5,000 in loans more than ninety days
past due on which interest was still being  accrued,  and $193,000 in other real
estate owned at December 31, 2002. At June 30, 2002, the Company had $691,000 in


                                       14
<PAGE>

non-accruing  loans,  no restructured  loans,  $20,000 in loans more than ninety
days past due and still  accruing  interest,  and  $723,000 in Other Real Estate
Owned.  Non-performing loans at June 30, 2003 consisted of $61,000 in commercial
loans, $819,000 in mortgage loans, and $34,000 in consumer loans. Non-performing
assets as a percentage  of loans and other real estate  owned was 0.41%,  0.37%,
and 0.59% at June 30, 2003, December 31, 2002, and June 30, 2002, respectively.

     Net charge-offs  during the first six months of 2003 were $88,000  compared
to net  charge-offs  of  $14,000  for the  first  six  months  of  2002  and net
charge-offs  of $382,000 for the year ended December 31, 2002. The allowance for
loan losses as a percentage of non-performing  loans was 352%, 306%, and 392% as
of June 30, 2003, December 31, 2002, and June 30, 2002, respectively.

         The  Company  accounts  for  impaired  loans  in  accordance  with  the
provisions  of  Statement  of  Financial   Accounting  Standards  ("SFAS")  114,
Accounting  by Creditors for  Impairment of a Loan.  SFAS No. 114, as amended by
SFAS No. 118,  requires  that  impaired  loans be measured  based on the present
value of  expected  future  cash flows or the  underlying  collateral  values as
defined in the  pronouncement.  When the ultimate  collectibility of an impaired
loan's  principal is in doubt,  wholly or partially,  all cash receipts are then
applied to  principal.  At June 30, 2003 the  Company  had  $367,000 in impaired
loans and no impaired loans at December 31, 2002 and June 30, 2002.

Securities

         The Company  invests  primarily in  obligations of the United States or
obligations  guaranteed as to principal and interest by the United States, other
taxable securities, and in certain obligations of states and municipalities. The
Company  does not  invest  in  corporate  bonds  nor  does it hold  any  trading
securities.  The Company uses its investment  portfolio to provide liquidity for
unexpected  deposit  liquidation  or  loan  generation,  to meet  the  Company's
interest rate  sensitivity  goals,  to secure public  deposits,  and to generate
income. At June 30, 2003 securities totaled $69,996,000,  which represents 17.1%
of  total  earning  assets.  Securities  decreased  $16,174,000  or  18.8%  from
$86,170,000  invested as of December 31, 2002 and increased  $8,634,000 or 14.1%
from $61,362,000 invested as of June 30, 2002. The increase in securities,  when
comparing  June 30,  2003 to June 30,  2002,  is  primarily  the  result  of the
investment  of excess  liquidity  from an increase in deposits at the  Company's
bank  subsidiaries.  The decrease when  comparing  June 30, 2003 to December 31,
2002 resulted from the funding of the Company's  mortgage lending activities and
core loan growth.

         At  June  30,  2003  the  Company's  total  investments  classified  as
available for sale had an amortized  cost of  $62,348,000  and a market value of
$63,094,000  for an unrealized  gain of $746,000.  This compares to an amortized
cost of $55,615,000  and a market value of $56,419,000 for an unrealized gain of
$804,000 on the Company's  investments  classified as available for sale at June
30, 2002. At December 31, 2002 the  Company's  total  investments  classified as
available for sale had an amortized  cost of  $79,125,000  and a market value of
$80,163,000 for an unrealized gain of $1,038,000.



                                       15
<PAGE>



Cash and Cash Equivalents

         The Company's cash and cash equivalents increased $17,747,000 or 146.2%
to  $29,889,000  at June 30,  2003 from  $12,142,000  at  December  31, 2002 and
decreased  $22,466,000 or 43.0% from $52,355,000 at June 30, 2002. The swings in
the level of cash and cash  equivalents  are due to  fluctuations  in the Banks'
need for immediate liquidity.

Deposits

         The Bank's  primary  source of funds for loans and  investments  is its
deposits.  Total deposits grew  $30,820,000 or 9.4% to  $358,994,000 at June 30,
2003 from  $328,174,000 at December 31, 2002 and increased  $54,272,000 or 17.8%
from  $304,722,000  at June  30,  2002.  The  increase  resulted  from  deposits
generated  by all of the Banks.  Competition  for deposit  accounts is primarily
based on the interest rates paid, location convenience and services offered.

         During the first six months of 2003, interest-bearing deposits averaged
$293,717,000  compared to  $233,008,000  for the first six months of 2002.  From
time to time Peoples National Bank solicits certificates of deposit from various
sources  through  brokers and through a program  designed to gather deposits via
the Internet.  This is done to reduce the need for funding from other short-term
sources such as federal  funds  purchased  and  short-term  borrowings  from the
Federal Home Loan Bank of Atlanta. These non-traditional  deposits are primarily
being  used  to  fund  Peoples  National  Bank's  short-term   mortgage  lending
activities.  On June 30, 2003 there were no  outstanding  certificates  garnered
through the Internet, and brokered deposits totaled $15,594,000. At December 31,
2002  Internet  certificates  of  deposit  totaled  $990,000,  and there were no
brokered  deposits.  On June 30,  2002  the  outstanding  certificates  garnered
through  the  Internet  totaled   $4,450,000,   and  brokered  deposits  totaled
$1,900,000.   These  deposits  are  an  attractive  alternative  funding  source
available to use while continuing  efforts to maintain and grow the banks' local
deposit base.

         The average interest rate paid on  interest-bearing  deposits was 2.35%
for the first six months of 2003  compared  to 2.90% for the first six months of
2002.  In pricing  deposits,  the Company  considers its  liquidity  needs,  the
direction and levels of interest rates, and local market conditions. At June 30,
2003  interest-bearing  deposits  comprised 87.6% of total deposits  compared to
87.1% at June 30, 2002.

         The  Company's  core deposit  base  consists  largely of consumer  time
deposits,  savings,  NOW accounts,  money market accounts and checking accounts.
Although such core  deposits are becoming  increasingly  interest-sensitive  for
both the Company and the industry as a whole,  these core  deposits  continue to
provide  the  Company  with a large  source of  relatively  stable  funds.  Core
deposits as a percentage  of total  deposits  averaged  approximately  74.1% and
76.8% for the six months  ended June 30, 2003 and June 30,  2002,  respectively.
The Company closely monitors its reliance on certificates greater than $100,000,
which are generally considered less stable and less reliable than core deposits.



                                       16
<PAGE>


Borrowings

         The Company's  borrowings  are  comprised of federal  funds  purchased,
securities sold under repurchase  agreements,  and both short-term and long-term
advances from the Federal Home Loan Bank of Atlanta. At June 30, 2003 short-term
borrowings  totaled  $29,233,000 and were comprised  entirely of securities sold
under repurchase agreements.  At December 31, 2002 short-term borrowings totaled
$47,331,000   and  were  comprised  of  $35,331,000  in  securities  sold  under
repurchase  agreements and  $12,000,000 in short-term  advances from the Federal
Home  Loan Bank of  Atlanta.  At June 30,  2002  short-term  borrowings  totaled
$22,776,000  and were  comprised  entirely of securities  sold under  repurchase
agreements.  Short-term  borrowings  are used  primarily for the immediate  cash
needs of the Company. The Company also had $5,000,000 of long-term advances from
the Federal  Home Loan Bank of Atlanta at each of June 30,  2003,  December  31,
2002, and June 30, 2002.

LIQUIDITY

         Liquidity management involves meeting the cash flow requirements of the
Company.  The Company's  liquidity position is primarily dependent upon its need
to respond to  short-term  demand for funds caused by increased  loan demand and
withdrawals  from deposit  accounts.  The Company's  primary  liquidity  sources
include cash and due from banks,  federal funds sold, and  securities  available
for sale. In addition, the Company (through the Banks) has the ability to borrow
funds on a  short-term  basis from the  Federal  Reserve  System and to purchase
federal funds from other financial  institutions.  The Banks are also members of
the Federal Home Loan Bank System and have the ability to borrow both short-term
and long-term  funds on a secured basis.  At June 30, 2003 The Peoples  National
Bank had total  borrowing  capacity  from the Federal  Home Loan Bank of Atlanta
equal  to  $35,405,560,  and the  unused  portion  of this  line of  credit  was
$30,405,560.  The Company's  other two bank  subsidiaries,  Bank of Anderson and
Seneca  National  Bank,  each had secured  lines of credit with the Federal Home
Loan  Bank  of  Atlanta  at  June  30,  2003  of   $12,208,000   and  $4,378,000
respectively,  all of which was  unused.  At June 30,  2003 the Banks had unused
federal funds lines of credit totaling $32,450,000.

         Peoples  Bancorporation,  Inc., the parent holding company, has limited
liquidity needs, and requires  liquidity to pay limited  operating  expenses and
dividends only.

         During  the  first  six  months  of  2003,   the  Company  had  capital
expenditures of  approximately  $404,000  associated with the  construction of a
branch  banking  facility  for Bank of Anderson.  The Company will  additionally
spend  approximately  $400,000 in order to  complete  the  construction  of this
branch  banking  facility  during the second  half of 2003.  The Company is also
considering  other capital  expenditures  that may be made, in whole or in part,
during the remainder of 2003, including the renovation and expansion of the main
office of Bank of Anderson for approximately  $800,000,  as well as the possible
purchase of a tract of land at an undetermined  price for a branch office of The


                                       17
<PAGE>

Peoples  National Bank in Greenville.  The Company may  additionally  make other
lesser capital expenditures through the normal course of business.

         Company management  believes its liquidity sources are adequate to meet
its  operating  needs  and does not know of any  trends  that may  result in the
Company's liquidity materially increasing or decreasing.

OFF-BALANCE SHEET RISK and DERIVATIVE FINANCIAL INSTRUMENTS

         The Company,  through the  operations of the Banks,  makes  contractual
commitments to extend credit in the ordinary course of its business  activities.
These  commitments are legally binding  agreements to lend money to customers of
the Banks at  predetermined  interest  rates for a specified  period of time. At
June 30, 2003,  the Banks had issued  commitments  to extend  credit  (excluding
commitments for residential  mortgage loans  designated for sale) of $69,345,000
through various types of arrangements.  The commitments  generally expire in one
year. Past experience  indicates that many of these commitments to extend credit
will expire not fully used. As described under  Liquidity,  the Company believes
that it has adequate  sources of liquidity  to fund  commitments  that are drawn
upon by the borrowers.

         In  addition  to  commitments  to extend  credit,  the Banks also issue
standby letters of credit,  which are assurances to a third party that they will
not  suffer  a loss  if the  Banks'  customer  fails  to  meet  its  contractual
obligation to the third party.  Standby letters of credit totaled  $4,243,000 at
June 30, 2003. Past  experience  indicates that many of these standby letters of
credit will expire unused.  However,  through its various  sources of liquidity,
the Company  believes  that it will have the  necessary  resources to meet these
obligations  should the need arise.  Various types of collateral  secure most of
the  standby  letters  of credit.  The  Company  believes  that the risk of loss
associated  with  standby  letters of credit is  comparable  to the risk of loss
associated with its loan portfolio. Moreover, the fair value associated with any
standby letters of credit issued by the Company is immaterial to the Company.

         According to Statement of Financial  Accounting  Standards ("SFAS") No.
133,  Accounting  for  Derivative  Instruments  and  Hedging  Activities,   loan
commitments  that relate to the  origination  or purchase of mortgage loans that
will  be  held  for  sale  must  be  accounted  for as  derivative  instruments.
Therefore,  such commitments are recorded at fair value in derivative  assets or
liabilities, with changes in fair value recorded in the net gain or loss on sale
of  mortgage  loans.  The  Company  engages  in  the  origination  and  sale  of
residential  mortgage loans and enters into  commitments  on an individual  loan
basis to both originate and sell residential mortgage loans whereby the interest
rate  on the  loan  to the  borrower  and to the end  purchaser  of the  loan is
determined  prior to  funding  (rate  lock  commitments).  At June 30,  2003 the
Company had  commitments  outstanding  to originate  residential  mortgage loans
under   rate   locks   commitments   from   borrowers   totaling    $20,859,000.
Simultaneously, the Company had commitments to sell these


                                       18
<PAGE>

loans to third parties under rate lock commitments. The Company does not collect
any upfront fees when issuing a mortgage loan commitment to a potential borrower
and  mortgages  are sold to third parties at par value.  The  cumulative  effect
under SFAS No. 133 for rate lock commitments as of June 30, 2003 for the Company
was immaterial.

         Neither  the  Company  nor  the  subsidiaries  are  involved  in  other
off-balance sheet contractual relationships or transactions that could result in
liquidity  needs or other  commitments or  significantly  impact  earnings.  The
Company  did not have  any  obligations  under  non-cancelable  operating  lease
agreements at June 30, 2003.





                                       19
<PAGE>



CAPITAL ADEQUACY and RESOURCES

         The capital needs of the Company have been met through the retention of
earnings and from the proceeds of prior public stock offerings.

         The Company and the Banks are  required  to  maintain  certain  capital
ratios by federal banking regulators. The following table sets forth the capital
ratios for the Company and the Banks as of June 30, 2003:


                                 CAPITAL RATIOS
                             (Amounts in Thousands)
<TABLE>
<CAPTION>

                                                                                        Well                       Adequately
                                                                                    Capitalized                    Capitalized
                                                           Actual                   Requirement                    Requirement
                                                           ------                   -----------                    -----------
                                                  Amount           Ratio       Amount            Ratio       Amount           Ratio
                                                  ------           -----       ------            -----       ------           -----
Company:
<S>                                              <C>               <C>         <C>               <C>         <C>               <C>
Total Risk-based Capital ...............         $38,259           12.17%      $31,437           10.00%      $25,150           8.00%
Tier 1 Risk-based Capital ..............          35,039           11.15        18,855            6.00        12,570           4.00
Leverage Ratio .........................          35,039            8.26        21,210            5.00        16,968           4.00

Peoples National Bank:
Total Risk-based Capital ...............         $22,950           11.70%      $19,615           10.00%      $15,692           8.00%
Tier 1 Risk-based Capital ..............          20,931           10.67        11,770            6.00         7,847           4.00
Leverage Ratio .........................          20,931            8.20        12,763            5.00        10,210           4.00

Bank of Anderson, N. A:
Total Risk-based Capital ...............         $ 9,433           11.70%      $ 8,062           10.00%      $ 6,450           8.00%
Tier 1 Risk-based Capital ..............           8,610           10.68         4,837            6.00         3,225           4.00
Leverage Ratio .........................           8,610            6.77         6,359            5.00         5,087           4.00

Seneca National Bank:
Total Risk-based Capital ...............         $ 4,247           11.56%      $ 3,674           10.00%      $ 2,939           8.00%
Tier 1 Risk-based Capital ..............           3,869           10.53         2,205            6.00         1,470           4.00
Leverage Ratio .........................           3,869            8.22         2,353            5.00         1,883           4.00
</TABLE>





                                       20
<PAGE>


RECENTLY ISSUED ACCOUNTING STANDARDS

         In  December  2002,  the FASB  issued  SFAS No.  148,  "Accounting  for
Stock-based  Compensation--Transition  and  Disclosure",  an  amendment  of FASB
Statement  No.  123,  "Accounting  for  Stock-Based  Compensation",  to  provide
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based  employee  compensation.  SFAS No. 148 also
amends the disclosure  provisions of SFAS No. 123 and  Accounting  Pronouncement
Board  ("APB")  Opinion  No.  28,  "Interim  Financial  Reporting",  to  require
disclosure in the summary of significant  accounting  policies of the effects of
an entity's accounting policy with respect to stock-based employee  compensation
on reported net income and  earnings  per share in annual and interim  financial
statements.  While SFAS No. 148 does not amend SFAS No. 123 to require companies
to  account  for  employee  stock  options  using  the fair  value  method,  the
disclosure  provisions  of SFAS No. 148 are  applicable  to all  companies  with
stock-based employee  compensation,  regardless of whether they account for that
compensation  using the fair value method of SFAS No. 123 or the intrinsic value
method of APB Opinion No. 25. The  provisions  of SFAS No. 148 are effective for
annual financial statements for fiscal years ending after December 15, 2002, and
for financial  reports  containing  condensed  financial  statements for interim
periods  beginning  after  December  15,  2002.  The  Company  has  adopted  the
disclosure  provisions  of SFAS No.  148 which  had no  impact on the  financial
condition or operating results of the Company.

         In April 2003,  the FASB issued SFAS No. 149,  "Amendment  of Statement
133 on Derivative  Instruments and Hedging  Activities." SFAS No. 149 amends and
clarifies  accounting for derivative  instruments,  including certain derivative
instruments  embedded in other contracts and loan commitments that relate to the
origination of mortgage loans held for sale,  and for hedging  activities  under
SFAS No. 133. SFAS No. 149 is generally  effective for contracts entered into or
modified  after  June 30,  2003.  The  adoption  of SFAS No. 149 will not have a
material impact on the financial condition or operating results of the Company.

         In May 2003,  the FASB  issued SFAS No.  150,  "Accounting  for Certain
Financial Instruments with Characteristics of both Liabilities and Equity." SFAS
No. 150 establishes  standards for how an issuer classifies and measures certain
financial  instruments with  characteristics  of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability (or an asset in some  circumstances.)  Many of those  instruments
were previously  classified as equity.  SFAS No. 150 is generally  effective for
financial instruments entered into or modified after May 31, 2003, and otherwise
is effective at the beginning of the first interim period  beginning  after June
15,  2003.  The  adoption of SFAS No. 150 did not have a material  impact on the
financial condition or operating results of the Company.

         In June 2003, the American  Institute of Certified  Public  Accountants
(AICPA)  issued an exposure  draft of a proposed  Statement  of Position  (SOP),
Allowance for Credit  Losses.  The proposed SOP addresses  the  recognition  and
measurement  by  creditors of the  allowance  for credit  losses  related to all
loans,  as that term is defined in SFAS No. 114,  Accounting  by  Creditors  for


                                       21
<PAGE>

Impairment  of a Loan.  The proposed SOP provides  that the allowance for credit
losses  reported on a  creditor's  balance  sheet  should  consist only of (1) a
component for individual  loan  impairment  recognized and measured  pursuant to
FASB  Statement  No.  114  and (2) one or more  components  of  collective  loan
impairment   recognized  pursuant  to  FASB  Statement  No.  5,  Accounting  for
Contingencies, and measured in accordance with the guidance in the proposed SOP.
The  provisions of the proposed SOP would be effective for financial  statements
for fiscal years  beginning  after December 15, 2003,  with earlier  application
permitted.  The effect of initially  applying the provisions of the proposed SOP
would be reported as a change in accounting  estimate.  Comments on the exposure
draft are due by September 19, 2003.  The effect on the  financial  condition or
operating  results of the Company  related to the adoption of this  proposed SOP
have not been determined, but would most likely be material.


Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Market risk is the risk of loss from adverse  changes in market  prices
and interest rates. The Company's  market risk arises  principally from interest
rate risk inherent in its lending, deposit, and borrowing activities. Management
actively  monitors and manages its  interest  rate risk  exposure.  Although the
Company manages certain other risks,  such as credit quality and liquidity risk,
in the normal course of business,  management considers interest rate risk to be
its most  significant  market risk and the risk that could  potentially have the
largest  material  effect on the  Company's  financial  condition and results of
operations.  Other  types of market  risks,  such as foreign  currency  risk and
commodity price risk do not arise in the normal course of the Company's business
activities, although they may affect a few of the Company's customers

         The primary objective of Asset and Liability  Management at the Company
is to manage interest rate risk and achieve reasonable stability in net interest
income  throughout  interest rate cycles.  This is achieved by  maintaining  the
proper   balance   of   rate-sensitive   earning   assets   and   rate-sensitive
interest-bearing  liabilities. The relationship of rate-sensitive earning assets
to  rate-sensitive  interest-bearing  liabilities  is the  principal  factor  in
projecting  the effect that  fluctuating  interest rates will have on future net
interest  income.  Rate-sensitive  assets and  liabilities are those that can be
repriced  to  current  market  rates  within a  relatively  short  time  period.
Management monitors the rate sensitivity of earning assets and  interest-bearing
liabilities  over the entire life of these  instruments,  but places  particular
emphasis on the next twelve  months.  At June 30, 2003,  on a  cumulative  basis
through 12 months,  rate-sensitive liabilities exceeded rate-sensitive assets by
$120,196,000.  This liability-sensitive  position is largely attributable to the
Company's  short-term  Certificates  of Deposit,  Money Market  accounts and NOW
accounts, which totaled $141,666,000, $59,409,000 and $38,304,000, respectively,
at June 30, 2003.



                                       22
<PAGE>



Item 4.           CONTROLS AND PROCEDURES

     (a)  Based on their  evaluation  of the  issuer's  disclosure  controls and
          procedures  (as  defined  in  17  C.F.R  Sections   240.13a-14(c)  and
          240.15d-14(c)) as of a date within 90 days prior to the filing of this
          quarterly  report,  the  issuer's  chief  executive  officer and chief
          financial  officer  concluded that the  effectiveness of such controls
          and procedures was adequate.

     (b)  There were no significant changes in the issuer's internal controls or
          in other  factors  that  could  significantly  affect  these  controls
          subsequent to the date of their  evaluation,  including any corrective
          actions  with  regard  to   significant   deficiencies   and  material
          weaknesses.







                                       23
<PAGE>



PART II.  OTHER INFORMATION

Item 4. Submission to a Vote of Security Holders

On May 20, 2003, The Company held its Annual Meeting of Shareholders. The result
of the 2003 Annual Meeting of Shareholders is as follows:

The  following  persons  were elected as Directors to serve for a term set forth
below  with  2,294,504  shares  voted,  representing  65.4% of the total  voting
shares:

                                     For            Withheld      Term (years)
                                     ---            --------      ------------
     William A. Carr               2,270,362         24,142            3
     Robert E. Dye, Jr.            2,279,867         14,637            3
     W. Rutledge Galloway          2,269,024         25,480            3
     E. Smyth McKissick, III       2,263,666         30,838            3
     James A. Black, Jr.           2,288,761          5,743            3
     William B. West               2,285,631          8,873            3


Item 6.   Exhibits and Reports on Form 8-K

     (a)  Exhibits.

          None

     (b)  Reports on Form 8-K.

          Peoples Bancorporation,  Inc. filed a Current Report on Form 8-K dated
          April  17,  2003  pursuant  to Item 9 of that  Form  with  respect  to
          information provided pursuant to Item 12 of that Form.



                                       24
<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.


                          PEOPLES BANCORPORATION, INC.


Dated:  August 7, 2003                By:    /s/ Robert E. Dye, Sr.
                                           ------------------------
                                             Robert E. Dye, Sr.
                                             President and Chairman of the Board


Dated:  August 7, 2003                By:   /s/ William B. West
                                          ---------------------
                                             William B. West
                                             Sr. Vice President & CFO
                                             (principal financial officer)




                                       25
<PAGE>

                                 CERTIFICATIONS

     I, Robert E Dye, Sr., certify that:

     1.   I have  reviewed  this  quarterly  report  on  Form  10-Q  of  Peoples
          Bancorporation, Inc.;

     2.   Based on my  knowledge,  this  quarterly  report  does not contain any
          untrue  statement of a material  fact or omit to state a material fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this quarterly report;

     3.   Based on my knowledge,  the financial statements,  and other financial
          information  included in this quarterly report,  fairly present in all
          material respects the financial  condition,  results of operations and
          cash flows of the registrant as of, and for, the periods  presented in
          this quarterly report;

     4.   The registrant's  other certifying  officers and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in Exchange  Act Rules  13a-14 and 15d-14) for the  registrant
          and we have:

          a)   designed such  disclosure  controls and procedures to ensure that
               material  information  relating to the registrant,  including its
               consolidated  subsidiaries,  is made know to us by others  within
               those  entities,  particularly  during  the  period in which this
               quarterly report is being prepared;

          b)   evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and  procedures as of a date within 90 days prior to the
               filing date of this quarterly report (the "Evaluation Date"); and

          c)   presented  in this  quarterly  report our  conclusions  about the
               effectiveness of the disclosure  controls and procedures based on
               our evaluation as of the Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent functions):

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officers and I have indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


Dated:  August 7, 2003              By:    /s/ Robert E. Dye, Sr.
                                         ------------------------
                                           Robert E. Dye, Sr.
                                           President and Chairman of the Board

                                       26
<PAGE>

                                 CERTIFICATIONS

     I, William B. West, certify that:

1.   I  have   reviewed   this   quarterly   report  on  Form  10-Q  of  Peoples
     Bancorporation, Inc.;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a.   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated  subsidiaries,  is made know to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

     b.   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     c.   presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent functions):

     a.   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b.   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officers and I have indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Dated:  August 7, 2003                      By:   /s/ William B. West
                                                ---------------------
                                                   William B. West
                                                   Sr. Vice President & CFO
                                                   (principal financial officer)

                                       27