SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB
                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                 For the Quarterly Period Ended Commission file
                            March 31, 1998 000-20616

                          PEOPLES BANCORPORATION, INC.
          (Exact name of small business issuer as specified in charter)

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

               1800 East Main Street, Easley, South Carolina 29640
               (Address of principal executive offices) (Zip Code)

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

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

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

                             Yes ___X___ No _______

The number of outstanding shares of the issuer's $1.67 par value common stock as
of May 11, 1998 was 1,693,010.

                 Transitional Small Business Disclosure Format:

                             Yes _______ No ___X___


<PAGE>


                   PEOPLES BANCORPORATION, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>

                                                                                           March 31,                    December 31,
                                                                                   1998                 1997                1997
                                                                                   ----                 ----                ----
                                                                                           Unaudited                      Audited
ASSETS
<S>                                                                         <C>                  <C>                  <C>          
CASH AND DUE FROM BANKS .............................................       $   4,673,321        $   2,777,234        $   3,908,784
FEDERAL FUNDS SOLD ..................................................           4,840,000            2,930,000            4,570,000
SECURITIES
  Available for sale ................................................          24,937,591           18,384,174           20,320,579
  Held for investment (market value of $3,954,908
    $3,571,234 and $3,953,648) ......................................           3,849,663            3,571,299            3,852,356
LOANS - less allowance for loan losses of $1,003,382
    $801,039 and $987,138 ...........................................          75,829,897           69,183,452           75,861,965
PREMISES AND EQUIPMENT, net of accumulated
    depreciation and amortization ...................................           2,949,642            1,878,073            2,673,712
ACCRUED INTEREST RECEIVABLE .........................................             857,226              731,042              878,459
OTHER ASSETS ........................................................           1,600,314              712,030            1,350,449
                                                                            -------------        -------------        -------------

TOTAL ASSETS ........................................................       $ 119,537,654        $ 100,167,304        $ 113,416,304
                                                                            =============        =============        =============

LIABILITIES AND SHAREHOLDERS' EQUITY
DEPOSITS:
  Noninterest-bearing ...............................................       $  12,790,362        $   9,497,317        $  11,007,809
  Interest-bearing ..................................................          91,034,527           71,888,606           85,182,039
                                                                            -------------        -------------        -------------
     Total deposits .................................................         103,824,889           81,385,923           96,189,848
SECURITIES SOLD UNDER REPURCHASE
  AGREEMENTS ........................................................           2,731,399            4,159,555            4,433,554
NOTES PAYABLE TO FEDERAL HOME LOAN BANK .............................           2,000,000            5,020,405            2,030,612
ACCRUED INTEREST PAYABLE ............................................             979,271              781,036              860,877
OTHER LIABILITIES ...................................................             170,354              219,656              391,924
                                                                            -------------        -------------        -------------
     Total liabilities ..............................................         109,705,913           91,566,575          103,906,815
                                                                            -------------        -------------        -------------

SHAREHOLDERS' EQUITY
Common Stock-10,000,000 shares authorized, $1.67
  par value per share, 1,693,010 shares and .........................           1,687,250
  shares  outstanding  at March 31, 1998 and December 31,
  1997, respectively; 5,000,000 shares authorized, $3.33
  par value per share,  800,071 shares outstanding at
  March 31, 1997  ...................................................           2,827,327            2,664,237            2,817,708
Additional paid-in capital ..........................................           5,171,330            4,232,918            5,158,024
Retained earnings ...................................................           1,851,972            1,805,617            1,553,206
Unrealized loss on securities available for sale ....................             (18,888)            (102,043)             (19,449)
                                                                            -------------        -------------        -------------
     Total shareholders' equity .....................................           9,831,741            8,600,729            9,509,489
                                                                            -------------        -------------        -------------

TOTAL LIABILITIES & SHAREHOLDERS' EQUITY ............................       $ 119,537,654        $ 100,167,304        $ 113,416,304
                                                                            =============        =============        =============
</TABLE>



                                       1
<PAGE>

                   PEOPLES BANCORPORATION, INC. AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                                         Three Months Ended
                                                                                                               March 31,
                                                                                                   1998                     1997
                                                                                                   ----                     ----
INTEREST INCOME
<S>                                                                                            <C>                       <C>        
Interest and fees on loans ......................................................              $ 1,741,430               $ 1,606,831
Interest on securities
     Taxable ....................................................................                  304,377                   276,131
     Tax-exempt .................................................................                   60,907                    59,479
Interest on fed funds ...........................................................                   85,105                    51,893
                                                                                               -----------               -----------

Total interest income ...........................................................                2,191,819                 1,994,334
                                                                                               -----------               -----------

INTEREST EXPENSE
Interest on deposits ............................................................                1,017,382                   786,873
Interest on federal funds purchased and securities
     sold under repurchase agreements ...........................................                   36,650                    40,741
Interest on notes payable Federal Home Loan Bank ................................                   28,530                    78,945
                                                                                               -----------               -----------

Total interest expense ..........................................................                1,082,562                   906,559
                                                                                               -----------               -----------

Net interest income .............................................................                1,109,257                 1,087,775

PROVISION FOR LOAN LOSSES .......................................................                   (2,500)                   46,740
                                                                                               -----------               -----------

Net interest income after provision for loan losses .............................                1,111,757                 1,041,035
                                                                                               -----------               -----------

NON-INTEREST INCOME
Service fees and other income ...................................................                  317,673                   193,175
                                                                                               -----------               -----------

NON-INTEREST EXPENSE
Salaries and benefits ...........................................................                  500,083                   415,815
Occupancy .......................................................................                   56,974                    41,302
Equipment .......................................................................                   66,698                    64,553
Other operating expenses ........................................................                  272,162                   194,501
                                                                                               -----------               -----------
                                                                                                   895,917                   716,171

Income before income taxes ......................................................                  533,513                   518,039

PROVISION FOR INCOME TAXES ......................................................                  176,060                   170,950
                                                                                               -----------               -----------

Net income ......................................................................              $   357,453               $   347,089
                                                                                               ===========               ===========

BASIC NET INCOME PER COMMON SHARE ...............................................              $      0.21               $      0.22
                                                                                               ===========               ===========
DILUTED NET INCOME PER COMMON SHARE .............................................              $      0.20               $      0.21
                                                                                               ===========               ===========

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
     BASIC ......................................................................                1,693,010                 1,600,142
     DILUTED ....................................................................                1,822,400                 1,688,030
                                                                                               ===========               ===========

DIVIDENDS PAID PER COMMON SHARE .................................................              $     0.035               $      0.03
                                                                                               ===========               ===========
</TABLE>

                                       2
<PAGE>



                   PEOPLES BANCORPORATION, INC. AND SUBSIDIARY
                 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                                           Three Months Ended
                                                                                                                March 31,
                                                                                                    1998                     1997
                                                                                                    ----                     ----

<S>                                                                                              <C>                      <C>      
Net income ......................................................................                $ 357,453                $ 347,089
Other comprehensive income, net of tax:
  Unrealized income (loss) on securities:
     Unrealized income (loss) arising during period .............................                      561                  (76,779)
                                                                                                 ---------                ---------
Other comprehensive income ......................................................                      561                  (76,779)
                                                                                                 ---------                ---------
Comprehensive income ............................................................                $ 358,014                $ 270,310
                                                                                                 =========                =========
</TABLE>



                                       3
<PAGE>



                   PEOPLES BANCORPORATION, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOW
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                                         Three Months Ended
                                                                                                              March 31,
                                                                                                     1998                   1997
                                                                                                     ----                   ----
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                                           <C>                      <C>         
Net Income .......................................................................            $    357,453             $    347,089
Adjustments to reconcile net cash provided
by operating activities
Provision for loan losses ........................................................                  (2,500)                  46,740
Depreciation .....................................................................                  49,804                   13,477
Net amortization and (accretion) of premiums and
  discounts on securities ........................................................                  14,833                   13,924
(Increase) decrease in accrued interest receivable ...............................                  21,233                   (2,110)
Increase in other assets .........................................................                (265,678)                (393,453)
Increase in accrued interest payable .............................................                 118,395                  105,440
Increase (decrease) in other liabilities .........................................                (203,100)                 389,568
                                                                                              ------------             ------------
     Net cash provided by operating activities ...................................                  90,440                  520,675
                                                                                              ------------             ------------

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of securities held for investments .....................................                       0                 (261,214)
Purchases of securities available for sale .......................................              (8,267,090)              (5,744,175)
Proceeds from the maturity of securities available for sale ......................                 938,769                2,700,000
Proceeds from the call of securities available for sale ..........................               2,700,000                        0
Net (increase) decrease in loans .................................................                  32,068               (3,779,507)
Proceeds from the sale of property ...............................................                       0                   39,000
Purchase of premises and equipment ...............................................                (325,734)                 (83,150)
                                                                                              ------------             ------------
     Net cash used by investing activities .......................................              (4,921,987)              (7,129,046)
                                                                                              ------------             ------------

CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits .........................................................               7,635,041                1,181,540
Net increase (decrease) in securities sold under
  repurchase agreements ..........................................................              (1,702,155)                 232,664
Net decrease in notes payable to Federal home Loan Bank ..........................                 (30,612)              (1,377,551)
Proceeds from stock options exercised ............................................                  22,925                        0
Cash dividend ....................................................................                 (59,115)                 (48,004)
                                                                                              ------------             ------------
     Net cash (used) provided by financing activities ............................               5,866,084                  (11,351)
                                                                                              ------------             ------------

     Net decrease in cash and cash equivalents ...................................               1,034,537               (6,619,722)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD ...................................               8,478,784               12,326,956
                                                                                              ------------             ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD .........................................            $  9,513,321             $  5,707,234
                                                                                              ============             ============

CASH PAID FOR
Interest .........................................................................            $    890,327             $    726,416
                                                                                              ============             ============
Income taxes .....................................................................            $     19,003             $     19,650
                                                                                              ============             ============
</TABLE>



                                       4
<PAGE>




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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     A summary  of these  policies  is  included  in the 1997  Annual  Report to
shareholders.

STATEMENT OF CASH FLOWS

    Cash  includes  currency  and coin,  cash items in  process  of  collection,
amounts due from banks and federal funds sold.

COMMON STOCK

    The board of Directors  declared a cash  dividend of $0.035 per common share
to shareholders of record March 19, 1998, payable March 31, 1998.

    The Company adopted SFAS No. 128,  Earnings per Share, on December 31, 1997.
This  statement  requires that the Company  present basic and diluted net income
per 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 was 1,693,010 at March
31, 1998 and 1,600,142 at March 31, 1997. The weighted  average number of common
shares  outstanding  for diluted net income per common  share was  1,822,400  at
March 31, 1998 and 1,688,030 at March 31, 1997.

     The Company issued a  five-percent  common stock dividend and a two-for-one
stock split in 1997.  Net income per common  share in 1997 has been  restated to
reflect these transactions.

NONPERFORMING LOANS

    As of March 31, 1998, there were fifteen  nonaccrual loans totaling $805,376
and one  loan 90 days  past due or more as to  principal  or  interest  payments
totaling $39,680.

MANAGEMENT'S OPINION

    In  the  opinion  of  management,   the  accompanying   unaudited  financial
statements of Peoples Bancorporation,  Inc. contain all adjustments necessary to
fairly  present the  financial  results of the interim  periods  presented.  The
results of operations for any interim period are not  necessarily  indicative of
the results to be expected for an entire year.



                                       5
<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 1997
Annual  Report of Peoples  Bancorporation,  Inc.  on Form  10-KSB/A.  Results of
operations for the three-month  period ending March 31, 1998 are not necessarily
indicative of the results to be attained for any other period.

Forward Looking Statements

     From time to time,  the  Company  may  publish  forward-looking  statements
relating  to  such  matters  as  anticipated  financial  performance,   business
prospects,  technological  developments,  new products and similar matters.  The
Private  Securities  Litigation  Reform Act of 1995  provides a safe  harbor for
forward-looking  statements.  In order  to  comply  with  the  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' rates 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 filing
regarding the demand for Peoples National Bank'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

    Peoples Bancorporation, Inc. (the "Company"), headquartered in Easley, South
Carolina, was incorporated on March 6, 1992 for the primary purpose of effecting
the reorganization of The Peoples National Bank (the "Bank") into a bank holding
company structure which reorganization  resulted in the ownership by the Company
of 100% of the issued and outstanding shares of common stock of the bank.

    The Bank, a  nationally  chartered  financial  institution,  operates  three
offices, in Easley, Pickens and Powdersville, South Carolina.

    The Bank  received  regulatory  approval in September  1997 to open a branch
office in Seneca, South Carolina.  Construction has begun on this office and the
loan purchase,  building  construction and equipment  purchases are estimated to
cost $965,000.  The new branch is anticipated to open in the latter part of 1998
upon completion of the construction.



                                       6
<PAGE>

    In October  1997,  the Company  announced  it would be forming a new bank in
Anderson,  South Carolina.  The  announcement of Regions  Financial  Corporation
purchasing  First  United  Bancorporation,  based in  Anderson,  South  Carolina
created an opportunity for the Company. Anderson, whose $960 million in deposits
represents  a market  three  times as large as  Easley,  is better  suited for a
full-fledged locally owned community bank. Consequently, Bank of Anderson, N. A.
is currently  in the  application  process  through  regulatory  channels and is
expected  to open  in the  latter  part  of  1998.  The  size of the new  market
potential will necessitate a stock offering to capitalize the Anderson bank.

    The Bank intends to enter into a construction contract in the second quarter
of 1998 for the  construction of a building in Anderson South Carolina.  The new
building will house the operations of the new bank ("Bank of Anderson, N. A." in
organization)  which will be a wholly owned subsidiary of the Company.  The land
purchase,  building  construction and equipment  purchases are estimated to cost
$1,125,000.  The new bank is  expected  to open in the latter  part of 1998 upon
receipt of all regulatory approvals.

    The  Company  and the Bank  presently  employ  56  full-time  and  part-time
persons. With the addition of the Seneca branch and the new bank in Anderson, we
expect to employ additional 20 persons.

                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

EARNINGS REVIEW

    The  Company's  net income for the first  quarter of 1998 was  $357,453,  or
$0.20 per fully diluted  share.  For the first  quarter of 1997,  net income was
$347,089,  or $0.21 per fully  diluted  share.  Net  interest  income  increased
approximately  $21,482  for the  first  quarter  of 1998,  compared  to the year
earlier  period.  Return on average  equity for the three months ended March 31,
1998 was  14.67%  compared  to 16.09%  for the same  period  in 1997.  Return on
average  assets for the three months ended March 31, 1998 was 1.22%  compared to
1.38% for the same period in 1997.

    The largest  component of the Company's  net 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 the
provision  for loan losses for the first  quarter of 1998  increased  $21,482 or
1.97% over the first quarter of 1997.  Net interest  income after  provision for
loan losses for the three months ended March 31, 1998 increased $70,722 or 6.79%
over the same period in 1997.  This  represents a 4.09% net interest margin (net
interest  income divided by average earning assets) on average earning assets of
$108,544,700. For this same period in 1997, the net interest margin was 4.58% on
average earning assets of $80,248,000. This decrease in interest margin resulted
primarily from higher funding costs and lower yields on earning assets.

                                       7
<PAGE>

Noninterest Income

     Noninterest income, excluding securities  transactions,  increased $124,498
or 64.45% for the first  quarter of 1998 as compared to the same period of 1997.
A $46,254  increase in origination  fees on mortgage loans;  increased  earnings
from the Bank's  business  manager  product of $20,601;  and earnings of $17,837
from the Bank's  specialized  investment  program were the main  contributors to
increased  noninterest  income.  No gain or loss  was  realized  on the  sale of
available  for sale  securities  during the first three months of either 1998 or
1997.

Noninterest Expense

    Noninterest  expense  increased  $179,746 or 25.10% for the first quarter of
1998 over the first  quarter of 1997.  First  quarter  salary and benefit  costs
increased  $84,268 or 20.27% due to normal salary  increases and the addition of
several  key  employees  during  the last six  months  of  1997.  Occupancy  and
equipment expenses were up $17,817 or 16.83% primarily due to an increase in the
purchase and  maintenance  of  equipment.  Other  operating  expenses  increased
$77,661 or 39.93%  primarily  attributable  to a $12,250  increase in  marketing
expenses due to the  advertising  commitment  made by the Bank's  management,  a
$4,185 additional expense on the Business Manager (account  receivable) product,
a $4,800 increase in board fees paid to the Company and Bank board members,  and
$13,480 in expenses associated with the Salary Continuation Plan.

Provision for Loan Losses

    The amount  charged to the provision for loan losses by the Company is based
on  management's  judgment as to the amount  required  to maintain an  allowance
adequate to provide for potential losses in the Company's loan portfolio.

    The provision  for loan losses to  operations  during the three months ended
March 31,  1998 was a benefit of $2,500  compared to a charge of $46,740 for the
same period in 1997.  The benefit is due  primarily  to the $18,744 net recovery
and the small $15,824 decrease in outstanding  loans since December 31, 1997. At
1.31% of total  outstanding  loans,  management  considers  this  reserve  to be
adequate  based upon  evaluations of specific loans and weighing of various loan
categories as suggested by the Bank's internal loan rating system.

BALANCE SHEET REVIEW

Loans

    Outstanding  loans  represent  the largest  component  of earning  assets at
69.56% to total  earning  assets.  As of March 31,  1998,  the Company had total
loans  outstanding  of  $76,833,279.  Loans  increased  $6,848,788 or 9.79% from


                                       8
<PAGE>

$69,984,491 at March 31, 1997, and decreased  $15,824 or 0.02% from  $76,849,103
at December 31, 1997. For the first  three-months  of 1998, the Company's  loans
averaged  $76,935,029  compared to $68,366,006  for the same period of 1997. The
increase resulted primarily from internal growth.

    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 as of March 31, 1998 was 9.18% compared to 9.27% at
March 31, 1997 and 9.21% at December 31, 1997.  Approximately  42% of the Bank's
loans are tied to prime,  including the Bank's  equity line loan product,  which
has increased $2,122,477 or 29.95% since March 31, 1997

    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 has no foreign  loans or loans for highly  leveraged
transactions.

Allowance for Loan Losses

    The allowance  for loan losses at March 31, 1998 was  $1,003,382 or 1.31% of
loans  outstanding  compared to $801,039 or 1.14% of loans  outstanding at March
31, 1997 and  $987,138 or 1.30% at December  31, 1997.  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  experienced  by the Bank,
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 March 31,  1998,  the Company had  $805,376 in  non-accruing  loans,  one
restructured  loan in the  amount of $9,476 and one loan more than  ninety  days
past due in the amount of $39,680 on which  interest  was still  being  accrued.
This compares to $247,657 in non-accruing  loans,  no restructured  loans and no
loans more than ninety days past due on which  interest was still being  accrued
at March 31, 1997.  At December 31, 1997,  there were  $757,206 in  non-accruing
loans,  one $9,898  restructured  loan and a $142,317 loan more than ninety days
past due on which  interest was still being accrued.  Nonperforming  assets as a
percentage  of loans and other real  estate  owned were 1.26% and 0.35% at March
31, 1998 and 1997, respectively.

    Net recoveries during the first three months of 1998 were $18,744,  compared
to net  charge-offs  of  $6,380  for the  first  three  months  of 1997  and net
charge-offs  of $98,016 for the year ended  December 31, 1997. The allowance for
loan losses as a percentage of nonperforming loans was 119% and 323% as of March
31, 1998 and 1997, respectively.

     The Company  accounts for impaired loans in accordance  with the provisions
of Statement of Financial  Accounting  Standards  ("SFAS")  114,  Accounting  by


                                       9
<PAGE>

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.  The Company  includes the provisions of SFAS NO. 114, if any, in
the allowance for loan losses.  When the ultimate  collectibility of an impaired
loan's principal is in doubt, wholly or partially, all cash receipts are applied
to  principal.  When this doubt does not exist,  cash receipts are applied under
the contractual  terms of the loan agreement first to principal then to interest
income.  Once the recorded  principal  balance has been reduced to zero,  future
cash  receipts are applied to interest  income,  to the extent that any interest
has been  foregone.  Further cash  receipts are  recorded as  recoveries  on any
amounts previously charged off. On each of March 31, 1998 and March 31, 1997 the
Company had no impaired loans.

Securities

     Investment securities constituted 26.06% and 23.14% of earning assets as of
March 31, 1998 and 1997,  respectively.  At March 31, 1998,  securities  totaled
$28,787,254, up $6,831,781 from $21,955,473 invested as of March 31, 1997 and up
$4,614,319 from December 31, 1997's balance of $24,172,935.  The increase is due
to increased  deposits  coupled with lower loan demand.  The yield on investment
securities  decreased  from 6.03% at March 31, 1997 and decreased  from 5.94% at
December 31, 1997 to 5.85% at March 31, 1998. The portfolio  yield decreased due
to maturities of higher yielding government securities, which were reinvested at
lower  rates.  The  investment  portfolio  has a weighted  average  maturity  of
approximately 1.33 years.

     At March 31, 1998,  the  Company's  total  investment  portfolio had a book
value of  $28,815,872  and a market value of  $28,892,499  for an unrealized net
loss of $28,618.  Securities averaged  $25,406,719 for the first three months of
1998, 11.94% above the first three months of 1997 average of $22,696,500.

     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 and to generate income.  The Company  emphasizes
safety in its selection of investment  securities.  Accordingly,  the investment
portfolio  is  limited to  securities  of the United  States  government  or its
agencies,  mortgage backed  securities and investment  grade state and municipal
securities.  The Company does not invest in corporate bonds nor does it hold any
trading securities.

Deposits

        The  Bank's  primary  source of funds for loans and  investments  is its
deposits.   Deposits  grew  27.57%  to  $103,824,889  at  March  31,  1998  from
$81,385,923  at  March  31,  1997.  At  December  31,  1997,   deposits  totaled
$96,189,848.   The  increase  resulted   principally  from  account  promotions.
Competition for deposit  accounts is primarily based on the interest rates paid,
location, convenience and services offered.



                                       10
<PAGE>

        During  the  first  three  months  of  1998,  interest-bearing  deposits
averaged  $88,381,144  compared to $80,373,955  for the same period in 1997, and
$76,516,106 for the twelve months ended December 31, 1997. The average  interest
rates were 4.67% and 4.54% at March 31, 1998 and 1997  respectively.  In pricing
deposits, the Company considers its liquidity needs, the direction and levels of
interest   rates  and  local   market   conditions.   As  of  March  31,   1998,
interest-bearing deposits comprised 87.68% of total deposits.

        The  Company's  core deposit base  consists 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,  such core deposits continue to provide the
Company with a large and stable  source of funds.  Core deposits as a percentage
of total deposits averaged approximately 80.79% for the three months ended March
31, 1998. The Company closely monitors its reliance on certificates greater than
$100,000, which are generally considered less stable and less reliable than core
deposits.

Liquidity and Capital Resources

        Liquidity  management  entails meeting the cash flow requirements of the
Company.  The primary cash flow  requirements  include  withdrawals of deposits,
extensions of credit,  payment of operating  expenses and repayment of purchased
funds.  The  Company's  principal  sources of funds for  liquidity  purposes are
customer deposits, principal and interest payments on loans, maturities and sale
of debt securities, temporary investments and earnings.

     The Company  monitors and controls the mix and maturities of its assets and
liabilities  through  asset/liability  management.  The  essential  purposes  of
asset/liability  management are (i) to ensure adequate liquidity to fund demands
from  depositors  and  borrowers  and (ii) to  maintain an  appropriate  balance
between interest sensitive assets and liabilities. Interest sensitive assets and
liabilities are those that are subject to repricing in the near term,  including
both  floating  rate  instruments  and those with  approaching  maturities.  The
objective of interest  sensitivity  management is to maintain  reasonably stable
growth in net  interest  income  despite  changes  in market  interest  rates by
maintaining the proper mix of interest  sensitive assets and  liabilities.  Over
the past  several  years,  volatile  interest  rates  and  greater  reliance  on
market-sensitive deposits,  increasing both the importance and the difficulty of
interest  sensitivity  management  have  characterized  the environment in which
financial institutions operate. Throughout this period, management has sought to
maintain a general equilibrium between interest sensitive assets and liabilities
in order to insulate net interest  income from  significant  adverse  changes in
market rates.

     The  Company  routinely  reviews  its  interest   sensitivity  gap  or  the
difference  between total interest sensitive assets and liabilities for a static
time   period.   While   the   static   gap  is  a  widely   used   measure   of
interest-sensitivity,  it is not, in management's  opinion,  a true indicator of


                                       11
<PAGE>

the Company's interest rate sensitive position.  Consequently,  the Company also
uses an  asset/liability  simulation model,  which quantifies  balance sheet and
earnings  variations under different interest rate environments,  to measure and
manage interest rate risk.

     The Company plans to meet its future cash needs through the  liquidation of
temporary  investments,  maturities  of loans  and  investment  securities,  and
generation of deposits.  By increasing  the rates paid on deposits,  the Company
would  expect to be able to raise  deposits  as needed.  In  addition,  the Bank
maintains  lines of credit from unrelated  banks in the amount of $2,500,000 and
is able to borrow from the Federal Home Loan Bank  ("FHLB").  At March 31, 1998,
unused borrowing capacity from the FHLB totaled $14 million. While FHLB advances
remain a source  of  funding,  the Bank has  increased  its  emphasis  on retail
banking and raised deposits through market promotions and sales efforts, thereby
decreasing FHLB advances.  The Company  believes that the potential  benefits of
cross-selling  these  customers  other  products and  services  would offset any
increase  in the cost of  funds.  At  March  31,  1998,  FHLB  advances  totaled
$2,000,000,  compared to $5,020,408 at March 31, 1997 and $2,030,612 at December
31, 1997.

Capital Adequacy

        Federal banking  regulations have  established  certain capital adequacy
standards  required to be  maintained  by banks and bank holding  companies.  At
March 31, 1998,  the Company and Peoples  National Bank were in compliance  with
each of the applicable capital  requirements and exceeded the "well capitalized"
regulatory guidelines. The following table sets forth the capital ratios for the
Company and Peoples National Bank as of March 31, 1998:

                                 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 ...............         $10,927         13.64%      $ 8,008         10.00%      $ 6,407         8.00%
Tier 1 Risk-based Capital ..............           9,926         12.39%        4,805          6.00%        3,203         4.00%
Leverage Ratio .........................           9,926          8.46%        5,866          5.00%        4,693         4.00%

Peoples National Bank:
Total Risk-based Capital ...............         $ 9,982         12.55%      $ 7,954         10.00%      $ 6,383         8.00%
Tier 1 Risk-based Capital ..............           8,979         11.30%        4,772          6.00%        3,181         4.00%
Leverage Ratio .........................           8,979          7.65%        5,868          5.00%        4,695         4.00%
</TABLE>



                                       12
<PAGE>

EFFECTS OF REGULATORY ACTION

    The  management  of the  Company  and the Bank are not aware of any  current
recommendations by regulatory authorities, which if they were to be implemented,
would have a material effect on liquidity, capital resources, or operations.

YEAR 2000

        The Company  acknowledges  that there is a business risk in computerized
systems as the new century approaches.  Many computer-based  information systems
in use today  exclude  the century as part of the date  definition,  which could
cause  inaccurate  interest  calculations  on loans  and  deposits.  A number of
computer  systems  used by the  Company  in its  day-to-day  operations  will be
affected by the "Year 2000  Problem."  Management  has  established  a Year 2000
Project Team (the "Y2K Team") which has identified  all affected  systems and is
currently working to ensure that this event will not disrupt operations. The Y2K
Team reports regularly to the Company's Board of Directors.  The Company is also
working  closely with all outside  computer  vendors to ensure that all software
corrections  and warranty  commitments  are  obtained and to implement  internal
"mock"  testing.  Testing  of all  systems  has begun and will be  completed  by
December 1998. The estimated cost to the Company for these corrective actions is
$100,000,  which is included in the Company's 1998 and 1999 budgets.  Incomplete
or untimely  compliance,  however,  could have a material  adverse effect on the
company, the dollar amount of which cannot be accurately quantified at this time
because of the inherent variables and uncertainties involved.







                                       13
<PAGE>




                  PART II.  OTHER INFORMATION

Item 1.     Legal Proceedings

               The  Company is  involved  in  various  claims and legal  actions
                arising in the normal  course of business.  Management  believes
                that these proceedings will not result in a material loss to the
                Company.

Item 6.     Exhibits and Reports on Form 8-K

             (a) Exhibits. No exhibits are required be filed with this report.

        (b)  Reports  on Form 8-K.  No report on Form 8-K was filed  during  the
             quarter ended March 31, 1998





                                       14
<PAGE>


SIGNATURES

    Pursuant to the requirements of the Securities and 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:  May 11, 1998                By:    /s/ Robert E. Dye
                                         -------------------
                                           Robert E. Dye
                                           President and Chairman of the Board
                              
                              
Dated:  May 11, 1998                By:   /s/ R. Riggie Ridgeway
                                        ------------------------
                                           R. Riggie Ridgeway
                                           Secretary and Treasurer
                                           (principal financial officer)
                              
                              
                          



                                       15
<PAGE>


                                          EXHIBIT INDEX


       Exhibit No. from
          Item 601 of
        Regulation S-B                       Description

              27                             Financial Data Schedule


                                       16