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
          March 31, 2005                                          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 12b-2 of
                               the Exchange Act).

                                 Yes [ ] No [X]

                     The number of outstanding shares of the
                      issuer's $1.11 par value common stock
                        as of May 2, 2004 was 5,917,855.




<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>
                                                                                         March 31,         March 31,    December 31,
                                                                                           2005              2004           2004
                                                                                         Unaudited         Unaudited       Audited
                                                                                         ---------         ---------       -------
ASSETS
<S>                                                                                      <C>              <C>             <C>
CASH AND DUE FROM BANKS ..........................................................       $  10,775        $  12,774       $   8,630
INTEREST-BEARING DEPOSITS IN OTHER BANKS .........................................             783              320           1,028
FEDERAL FUNDS SOLD ...............................................................          16,244           14,315           2,631
                                                                                         ---------        ---------       ---------
     Total cash and cash equivalents .............................................          27,802           27,409          12,289
SECURITIES
     Available for sale ..........................................................          60,878           68,675          62,052
     Held for investment (market value of $7,531, $7,393 and $7,451) .............           7,579            7,180           7,386
     Other investments, at cost ..................................................           1,725            1,814           1,809
LOANS-less allowance for loan losses of $3,774, $3,464 and $3,691 ................         331,354          295,729         322,212
MORTGAGE LOANS HELD FOR SALE .....................................................               -            8,777               -
PREMISES AND EQUIPMENT, net of accumulated
     depreciation and amortization ...............................................          10,884           10,984          11,075
ACCRUED INTEREST RECEIVABLE ......................................................           1,798            1,616           1,830
CASH SURRENDER VALUE OF LIFE INSURANCE ...........................................           9,143            9,553           9,049
OTHER ASSETS .....................................................................           2,645            1,686           2,094
                                                                                         ---------        ---------       ---------
         TOTAL ASSETS ............................................................       $ 453,808        $ 433,423       $ 429,796
                                                                                         =========        =========       =========

LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
DEPOSITS
     Noninterest-bearing .........................................................       $  44,804        $  49,531       $  51,507
     Interest-bearing ............................................................         331,237          308,084         294,638
                                                                                         ---------        ---------       ---------
         Total deposits ..........................................................         376,041          357,615         346,145
SECURITIES SOLD UNDER REPURCHASE
     AGREEMENTS ..................................................................          31,600           31,701          33,953
FEDERAL FUNDS PURCHASED ..........................................................               -                -             572
NOTES PAYABLE TO FEDERAL HOME LOAN BANK ..........................................           5,000            5,000           8,500
ACCRUED INTEREST PAYABLE .........................................................           1,366            1,497           1,154
OTHER LIABILITIES ................................................................           1,099            1,046           1,232
                                                                                         ---------        ---------       ---------
         Total Liabilities .......................................................         415,106          396,859         391,556
                                                                                         ---------        ---------       ---------
SHAREHOLDERS' EQUITY
Common Stock - 15,000,000 shares authorized, $1.11
     Par value per share, 5,910,069 shares, 5,523,842 shares .....................           6,560            6,150           6,463
       and 5,822,608 shares outstanding, respectively ............................
Additional paid-in capital .......................................................          32,373           29,505          32,237
Retained Earnings ................................................................             616              727               -
Accumulated other comprehensive income ...........................................            (847)             182            (460)
                                                                                         ---------        ---------       ---------
         Total Shareholders' Equity ..............................................          38,702           36,564          38,240
                                                                                         ---------        ---------       ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY .......................................       $ 453,808        $ 433,423       $ 429,796
                                                                                         =========        =========       =========
</TABLE>


                                       1
<PAGE>


                 Peoples Bancorporation, Inc. and Subsidiaries
                        Consolidated Statements of Income
             (Dollars in thousands except per share and share data)

<TABLE>
<CAPTION>
                                                                                                               (Unaudited)
                                                                                                           Three Months Ended
                                                                                                                March 31,
                                                                                                                ---------
                                                                                                      2005                    2004
                                                                                                      ----                    ----
INTEREST INCOME
<S>                                                                                               <C>                     <C>
   Interest and fees on loans ......................................................              $    5,248              $    4,480
   Interest on securities
       Taxable .....................................................................                     446                     517
       Tax-exempt ..................................................................                      59                      52
   Interest on federal funds .......................................................                      54                      34
                                                                                                  ----------              ----------
Total interest income ..............................................................                   5,807                   5,083
                                                                                                  ----------              ----------

INTEREST EXPENSE
   Interest on deposits ............................................................                   1,603                   1,529
   Interest on federal funds purchased and securities
       sold under repurchase agreements ............................................                     146                      60
Interest on notes payable Federal Home Loan Bank ...................................                      96                      61
                                                                                                  ----------              ----------
Total interest expense .............................................................                   1,845                   1,650
                                                                                                  ----------              ----------
     Net interest income ...........................................................                   3,962                   3,433

PROVISION FOR LOAN LOSSES ..........................................................                     173                     130
                                                                                                  ----------              ----------
Net interest income after provision for loan losses ................................                   3,789                   3,303

NON-INTEREST INCOME
   Service fees and other income ...................................................                     885                     738
   Gain on sale of mortgage loans held for sale ....................................                       -                     472
   Gain on sale of available for sale securities ...................................                       4                      93
                                                                                                  ----------              ----------
                                                                                                         889                   1,303
NON-INTEREST EXPENSES
   Salaries and benefits ...........................................................                   1,968                   2,155
   Occupancy .......................................................................                     173                     159
   Equipment .......................................................................                     367                     295
   Marketing and advertising .......................................................                      85                      79
   Communications ..................................................................                      57                      61
   Printing and supplies ...........................................................                      36                      43
   Bank paid loan costs ............................................................                      53                      61
   Director fees ...................................................................                      79                      72
   Other post employment benefits ..................................................                      29                     419
   Other operating expenses ........................................................                     486                     448
                                                                                                  ----------              ----------
             Total noninterest expenses ............................................                   3,333                   3,792
                                                                                                  ----------              ----------
   Income before income taxes ......................................................                   1,345                     814
PROVISION FOR INCOME TAXES .........................................................                     434                     273
                                                                                                  ----------              ----------

   Net income ......................................................................              $      911              $      541
                                                                                                  ==========              ==========

INCOME PER COMMON SHARE:
   BASIC ...........................................................................              $     0.15              $     0.09
                                                                                                  ==========              ==========
   DILUTED .........................................................................              $     0.15              $     0.09
                                                                                                  ==========              ==========

WEIGHTED AVERAGE COMMON SHARES:
   BASIC ...........................................................................               5,883,322               5,800,338
                                                                                                  ==========              ==========
   DILUTED .........................................................................               6,074,318               6,038,104
                                                                                                  ==========              ==========

DIVIDENDS PAID PER COMMON SHARE ....................................................              $     0.05              $     0.05
                                                                                                  ==========              ==========
</TABLE>


                                       2
<PAGE>

                 Peoples Bancorporation, Inc. and Subsidiaries
           Consolidated Statements of Changes in Shareholders' Equity
               for the three months ended March 31, 2004 and 2005

                    (Dollars in thousands except share data)


                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                                          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, 2003 ........................    5,523,842       $6,150     $29,505       $ 444       $  62          $36,161
Net income ........................................            -            -           -         541           -              541
Other comprehensive income, net of tax:
   Unrealized holding losses on
    securities available for sale,
    net of income taxes of $94 ....................            -            -           -           -         181              181
   Less reclassification
    adjustments for gains
    included in net income, net of
    income taxes of $32 ...........................            -            -           -           -         (61)             (61)
                                                                                                                           -------
Comprehensive income ..............................                                                                            661

Cash dividends ....................................            -            -           -        (258)          -             (258)
                                                       ---------       ------     -------       -----       -----          -------
Balance, March 31, 2004 ...........................    5,523,842       $6,150     $29,505       $ 727       $ 182          $36,564
                                                       =========       ======     =======       =====       =====          =======

Balance, December 31, 2004 ........................    5,822,608       $6,463     $32,237       $   -       $(460)         $38,240
Net income ........................................            -            -                      911          -              911
Other comprehensive income, net of tax:
   Unrealized holding losses on
    securities available for sale,
    net of income taxes of $204 ...................            -            -           -           -        (384)            (384)
   Less reclassification
    adjustments for gains
    included in net income, net of
    income taxes of $1 ............................            -            -           -           -          (3)              (3)
                                                                                                                           -------
Comprehensive income ..............................                                                                            524
Proceeds from stock options
     exercised ....................................       87,461           97         136           -           -              233
Cash dividends ....................................            -            -           -        (295)          -             (295)
                                                       ---------       ------     -------       -----       -----          -------
Balance, March 31, 2005 ...........................    5,910,069       $6,560     $32,373       $ 616       $(847)         $38,702
                                                       =========       ======     =======       =====       =====          =======
</TABLE>







                                       3
<PAGE>

                  Peoples Bancorporation, Inc. and Subsidiaries
                      Consolidated Statements of Cash Flows
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                                                                 (Unaudited)
                                                                                                              Three months Ended
                                                                                                                  March 31,
                                                                                                                  ---------
                                                                                                          2005               2004
                                                                                                          ----               ----
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                                                     <C>              <C>
   Net income ................................................................................          $    911         $    541
   Adjustments to reconcile net income to net cash provided
     by (used for) operating activities
   Loss on sale of premises and equipment ....................................................                 6                -
   Gain on sale of mortgage loans held for sale ..............................................                 -             (472)
   Gain on sale of securities available for sale .............................................                (4)             (93)
   Provision for loan losses .................................................................               173              130
   Depreciation and amortization .............................................................               329              247
   Amortization and accretion (net) of premiums and
     discounts on securities .................................................................                28               69
   Origination of mortgage loans held for sale ...............................................                 -          (43,368)
   Sale of mortgage loans held for sale ......................................................                 -           40,164
   Decrease in accrued interest receivable ...................................................                32              205
   Decrease (increase) in other assets .......................................................              (347)              69
   Increase (decrease) in accrued interest payable ...........................................               212             (107)
   Increase in other liabilities .............................................................              (133)            (226)
                                                                                                        --------         --------
     Net cash provided by (used for) operating activities ....................................             1,207           (2,841)
                                                                                                        --------         --------

CASH FLOWS FROM INVESTING ACTIVITIES
   Purchases of securities held for investment ...............................................              (614)          (1,556)
   Purchases of securities available for sale ................................................              (503)         (15,708)
   Sales (purchases) of other investments ....................................................                84             (139)
   Proceeds from principal pay downs on securities available for sale ........................               715            1,588
   Proceeds from the sale of securities available for sale ...................................               358            4,456
   Proceeds from the maturities and calls of securities available for sale ...................                 -           20,296
   Proceeds from the maturity of securities held for investment ..............................               410                -
   Investment in life insurance policies .....................................................               (94)          (7,224)
   Net increase in loans .....................................................................            (9,315)          (3,046)
   Proceeds from the sale of premises and equipment ..........................................                12                -
   Purchase of premises and equipment ........................................................              (156)            (999)
                                                                                                        --------         --------
     Net cash used in investing activities ...................................................            (9,103)          (2,332)
                                                                                                        --------         --------

CASH FLOWS FROM FINANCING ACTIVITIES
   Net increase in deposits ..................................................................            29,896            4,286
   Net increase (decrease) in securities sold under repurchase agreements ....................            (2,353)           7,311
   Net increase in federal funds purchased ...................................................              (572)               -
   Net decrease in advances from Federal Home Loan Bank ......................................            (3,500)               -
   Proceeds from the exercise of stock options ...............................................               233                -
   Cash dividend .............................................................................              (295)            (258)
                                                                                                        --------         --------
     Net cash provided by financing activities ...............................................            23,409           11,339
                                                                                                        --------         --------
     Net increase in cash and cash equivalents ...............................................            15,513            6,166
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR .................................................            12,289           21,243
                                                                                                        --------         --------
CASH AND CASH EQUIVALENTS, END OF PERIOD .....................................................          $ 27,802         $ 27,409
                                                                                                        ========         ========

CASH PAID FOR
     Interest ................................................................................          $  1,877         $  1,757
                                                                                                        ========         ========
     Income Taxes ............................................................................          $    677         $    462
                                                                                                        ========         ========
</TABLE>


                                       4
<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 2004 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 $0.05 per common share to
shareholders of record March 18, 2005, payable April 4, 2005.

     Statement of Financial  Account Standards  ("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 three  months  ended
March 31, 2005 and 2004 was 5,883,322 and 5,800,338,  respectively. The weighted
average  number of common shares  outstanding  for diluted net income per common
share was  6,074,318 and 6,038,104 for the three months ended March 31, 2005 and
2004.

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

                                                        Quarter ended March 31,
                                                        -----------------------
                                                             2005      2004
                                                             ----     ----
Net income, as reported ..............................      $ 911     $ 541
Deduct:  total stock-based employee compensation
  expense determined under fair value based method
  for all awards, Net of related tax effects .........        (24)      (27)
                                                            -----     -----
Pro forma net income .................................      $ 887     $ 514
                                                            =====     =====
Net income per common share
  Basic - as reported ................................      $0.15     $0.09
                                                            =====     =====
  Basic - pro forma ..................................      $0.15     $0.09
                                                            =====     =====
  Diluted - as reported ..............................      $0.15     $0.09
                                                            =====     =====
  Diluted - pro forma ................................      $0.15     $0.09
                                                            =====     =====

     Per share data in 2004 has been restated to reflect the 3-for-2 stock split
effected in October 2004 and the 5% stock dividend declared in December 2004.


                                       5
<PAGE>


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 a 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.

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
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;  adequacy  of the
allowance for loan losses; 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.




                                       6
<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 2004
Annual Report on Form 10-K of Peoples Bancorporation, Inc. Results of operations
for the three-month period ending March 31, 2005 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 2004
Annual Report on Form 10-K of Peoples Bancorporation, Inc.

         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 and such differences  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 2004 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.



                                       7
<PAGE>



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 seven  banking  offices  and one  retail  mortgage
origination office located in the Upstate Area of South Carolina.




                                       8
<PAGE>


                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

EARNINGS PERFORMANCE

Overview

     The  consolidated  Company's  net income for the first  quarter of 2005 was
$911,000  or $0.15 per diluted  share  compared to $541,000 or $0.09 per diluted
share for the first  quarter of 2004,  an increase  of 68.4%.  Return on average
equity for the three months ended March 31, 2005 was 9.43% compared to 5.97% for
the three months ended March 31,  2004.  Return on average  assets for the three
months  ended  March 31, 2005 was 0.83%  compared to 0.51% for the three  months
ended March 31,  2004.  The  increases  in the  Company's  net  income,  diluted
earnings per share,  return on average  equity,  and return on average assets in
the first quarter of 2005 are largely  attributable  to the negative impact of a
one-time expense in 2004 related to salary  continuation and death benefit plans
for executives.

Interest Income, Interest Expense and Net Interest Income

     The largest  component  of the  Company's  income is 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  $529,000 or 15.4% to  $3,962,000  for the quarter  ended
March 31, 2005 compared to $3,433,000  for the quarter ended March 31, 2004. The
Company's  net  interest  margin was 3.90% for the quarter  ended March 31, 2005
compared to 3.45% for the quarter ended March 31, 2004.

     The  Company's  total  interest  income  for the first  quarter of 2005 was
$5,807,000  compared to $5,083,000 for the first quarter of 2004, an increase of
$724,000 or 14.2%.  Interest and fees on loans,  the largest  component of total
interest income,  increased  $768,000 in the first quarter of 2005 to $5,248,000
compared to $4,480,000 for the first quarter of 2004, an increase of 17.1%.  The
increase in interest and fees on loans for the three-month  period was primarily
due to higher  average  balances  in  outstanding  loans.  Interest  on  taxable
securities,  the second largest  component of total interest  income,  decreased
$71,000 in the first  quarter of 2005 to $446,000  compared to $517,000  for the
first quarter of 2004, a decrease of 13.7%.  The decrease in interest on taxable
securities  for the  three-month  period  was  primarily  due to  lower  average
balances in these types of earning assets.

      The  Company's  total  interest  expense for the first quarter of 2005 was
$1,845,000  compared to $1,650,000 for the first quarter of 2004, an increase of
$195,000 or 11.8%. Interest expense on deposits,  the largest component of total
interest  expense,  increased $74,000 in the first quarter of 2005 to $1,603,000
compared to $1,529,000  for the first quarter of 2004, an increase of 4.8%.  The
increase in interest expense on deposits for the three-month period ending March
31, 2005 compared to the same period in 2004 is largely  attributable  to higher


                                       9
<PAGE>

average  balances in these  accounts.  Interest on federal  funds  purchased and
securities sold under  repurchase  agreements,  the second largest  component of
total  interest  expense,  increased  $86,000 or 143.3% to $146,000 in the first
quarter of 2005 compared to $60,000 for the first quarter of 2004. This increase
is largely  attributable  to higher market  interest  rates  experienced  at the
Company's  bank  subsidiaries  as well  as  higher  average  balances  in  these
accounts.  Interest on notes  payable to the Federal  Home Loan Bank,  the third
largest  component  of total  interest  expense,  increased  $35,000 or 57.4% to
$96,000 for the three  months  ended March 31, 2005  compared to $61,000 for the
three  months  ended  March 31,  2004,  largely  attributable  to higher  market
interest rates and higher average balances in these accounts.

Provision for Loan Losses

     The provision for loan losses charged to operations during the three months
ended March 31, 2005 was  $173,000  compared  to $130,000  for the three  months
March 31, 2004,  an increase of $43,000 or 33.1%.  The changes in the  Company's
provision  for  loan  losses  for  the  first  quarter  of  2005  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 three months of
2005, The Peoples  National Bank made a provision of $75,000 compared to $50,000
for the same period in 2004. Bank of Anderson,  N.A. made a provision of $80,000
for the first  three  months of 2005  compared to $60,000 for the same period of
2004.  Seneca  National Bank made a provision of $18,000  during the first three
months of 2005 compared to $20,000 for the same period of 2004.

Non-interest Income

     Non-interest  income decreased  $414,000 or 31.8% to $889,000 for the first
quarter of 2005  compared to $1,303,000  for the first quarter of 2004.  Service
fees and other income, the largest component of non-interest  income,  increased
$147,000 or 19.9% to $885,000 for the first quarter of 2005 compared to $738,000
for the first quarter of 2004.  The increase in service fees and other income is
largely attributable to increased earnings on bank-owned life insurance policies
at each of the subsidiary banks from additional  policies purchased in the first
quarter of 2004, and increased income from customers' deposit accounts.

     Mortgage banking income increased from zero in the first quarter of 2004 to
$65,000 in the first quarter of 2005.  This is due to the fact that all mortgage
banking  income was formerly  reported as gains on mortgage  loans held for sale
because these pre-sold loans were closed and funded by The Peoples National Bank
prior to their actual  sale.  Gain on mortgage  loans held for sale,  the second
largest component of non-interest  income in 2004,  decreased 100% from $472,000
during  the first  quarter  of 2004 to zero  during  the first  quarter of 2005.
During 2004  management  made the  decision  to  completely  exit the  wholesale
mortgage  business  due to the  significant  decrease in demand for  residential
mortgage loans and refinancings.  At December 31, 2004 the Company no longer had
any mortgage loans held for sale.


                                       10
<PAGE>


     Gains of  $4,000  and  $93,000  were  realized  on the  sale of  securities
available  for sale  during  the three  months  ended  March 31,  2005 and 2004,
respectively.

Non-interest Expense

      Total  non-interest  expense decreased $459,000 or 12.1% to $3,333,000 for
the  first  quarter  of 2005 from  $3,792,000  for the  first  quarter  of 2004.
Salaries and benefits, the largest component of non-interest expense,  decreased
$187,000 or 8.7% to $1,968,000 for the first quarter of 2005 from $2,155,000 for
the first  quarter of 2004.  The  decrease in salaries and benefits is primarily
due to a reduction in commissions  paid and changes in personnel due to the exit
from wholesale mortgage loan originations, and partially offset by normal salary
increases and other changes in personnel  throughout the Company.  Occupancy and
furniture and equipment  expenses  increased $86,000 or 18.9% to $540,000 in the
first  quarter of 2005  compared to $454,000 in the first  quarter of 2004.  The
increase  is  primarily  attributable  to the  completion  of an  expansion  and
renovation to the main office of Bank of Anderson,  N.A. in the third quarter of
2004.

      Other post employment  benefits decreased $390,000 or 93.1% to $29,000 for
the first  quarter of 2005 from  $419,000  for the first  quarter of 2004.  This
decrease is  attributable  to a one-time,  non-recurring  charge incurred in the
first quarter of 2004 of $376,000 to increase the  liability for death  benefits
payable to the beneficiary of the Company's former  Chairman,  President and CEO
who died shortly after March 31, 2004.  This charge was required by SFAS No. 112
in accordance with generally accepted accounting principles.

      Miscellaneous  other  non-interest  expenses  increased $32,000 or 4.2% to
$796,000  for the first three  months of 2005 from  $764,000 for the first three
months of 2004.  This increase in  attributable  to normal  recurring  operating
expenses.
















                                       11
<PAGE>

BALANCE SHEET REVIEW

Loans

     Outstanding  loans (which excludes  mortgage loans held for sale) represent
the largest  component of earning assets at 79.4% of total earning assets. As of
March 31, 2005, the Company held total gross loans  outstanding of $335,128,000.
Gross  loans  increased  $9,225,000  or 2.8% from  $325,903,000  in total  gross
outstanding  loans at December 31, 2004 and increased  $35,935,000 or 12.0% from
$299,193,000  in total gross loans  outstanding  at March 31, 2004. The increase
resulted from new loans generated by the Company's  three banking  subsidiaries.
The following table summarizes outstanding loans by type:

<TABLE>
<CAPTION>
Loan Portfolio Composition                                                                      March 31,               December 31,
--------------------------                                                                      ---------               ------------
(Dollars in Thousands)                                                                  2005                2004             2004
                                                                                        ----                ----             ----
                                                                                              (Unaudited)                  (Audited)

<S>                                                                                   <C>                <C>                <C>
Commercial and Industrial - not secured by real estate ....................           $ 39,410           $ 41,146           $ 39,723
Commercial and Industrial - secured by real estate ........................            105,680             88,046             95,965
Residential real estate - mortgage ........................................            103,347             92,618            105,580
Residential real estate - construction ....................................             65,286             55,937             63,380
Consumer loans ............................................................             21,405             21,446             21,255
                                                                                      --------           --------           --------
     Gross Loans ..........................................................           $335,128           $299,193           $325,903
                                                                                      ========           ========           ========
</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 three months ended March 31, 2005 was 6.33%
compared to 5.90% for the three months ended March 31, 2004.  Between the end of
first  quarter  of 2004 and the end of the first  quarter of 2005,  the  Federal
Reserve  increased  the federal funds target rate seven times for a total of 175
basis  points.  A large portion of the Company's  adjustable  rate loans,  which
constitute 47.9% of the loan portfolio,  reprice almost immediately following an
interest rate change by the Federal Reserve.

      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  originators  who originate loans that are pre-sold at origination
to third parties.  The Company also formerly  purchased mortgage loans through a
wholesale  mortgage  loan  division of The  Peoples  National  Bank,  which were
pre-sold at origination  to third  parties.  These loans are classified as loans
held for sale for reporting purposes.  In the first quarter of 2004, the Company
originated $43,368,000 and sold $40,164,000 in mortgage loans held for sale. Due
to the fact that  management  made the decision to completely exit the wholesale
mortgage business by the end of 2004, there were no mortgage loans held for sale


                                       12
<PAGE>

at  March  31,  2005 or at  December  31,  2004,  a  decrease  of 100%  from the
$8,777,000 in mortgage loans held for sale at March 31, 2004.

      The Company's  commercial lending activity is directed principally towards
businesses  whose demand for funds falls within each Bank's legal lending limits
and which are potential  deposit  customers of the Banks. This category of loans
includes loans made to individuals, partnerships, and corporate borrowers, 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 an 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
March 31,  2005  approximately  $12,265,000  or 5.2% 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 March 31, 2005 was  $3,774,000 or 1.13% of
loans  outstanding  (which  excludes  mortgage  loans held for sale) compared to
$3,691,000 or 1.13% of loans outstanding at December 31, 2004, and to $3,464,000
or 1.16% of loans  outstanding  at March 31, 2004. 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 March 31,  2005 the  Company  had  $2,004,000  in  non-accruing  loans,
$504,000 in restructured loans, $181,000 in loans more than ninety days past due
and still accruing  interest,  and  $1,104,000 in Other Real Estate Owned.  This
compares to $670,000 in  non-accruing  loans,  $512,000 in  restructured  loans,
$838,000  in loans more than ninety  days past due on which  interest  was still
being accrued,  and $756,000 in other real estate owned at December 31, 2004. At
March 31, 2004 the Company had $677,000 in  non-accruing  loans, no restructured
loans,  $1,000 in loans  more  than  ninety  days  past due and  still  accruing
interest, and $728,000 in Other Real Estate Owned. Non-performing loans at March
31, 2005  consisted  of  $1,899,000  in mortgage  loans and $105,000 in consumer
loans.  Non-performing  assets as a  percentage  of loans and other real  estate


                                       13
<PAGE>

owned were 1.13%,  0.69%,  and 0.46% at March 31,  2005,  December  31, 2004 and
March 31, 2004, respectively.

      Net charge-offs  during the three months ended March 31, 2005 were $90,000
compared to net  charge-offs  of $104,000  for the three  months ended March 31,
2004 and net  charge-offs  of $336,000 for the year ended December 31, 2004. The
allowance  for loan losses as a  percentage  of  non-performing  loans was 140%,
245%,  and 511% as of March 31, 2005,  December  31,  2004,  and March 31, 2004,
respectively.

     The Company  accounts for impaired loans in accordance  with the provisions
of SFAS No. 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 each of March 31, 2005, December 31, 2004, and
March 31, 2004, the Company had no impaired loans.

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 March 31, 2005 securities totaled $70,182,000, which represents 16.6%
of  total  earning  assets.   Securities   decreased  $1,065,000  or  1.5%  from
$71,247,000  invested as of December 31, 2004, and decreased  $7,487,000 or 9.6%
from  $77,669,000  invested  as of March  31,  2004.  The size of the  Company's
investment  portfolio is managed and  fluctuates  from time to time based on the
amount of  public  deposits  held,  loan  demand,  liquidity  needs,  investment
strategy, and other pertinent factors.

     At March 31, 2005 the Company's total  investments  classified as available
for sale had an amortized cost of $62,161,000  and a market value of $60,878,000
for an unrealized  loss of  $1,283,000.  This  compares to an amortized  cost of
$62,749,000 and a market value of $62,052,000 for an unrealized loss of $697,000
on the  Company's  investments  classified as available for sale at December 31,
2004. At March 31, 2004 the Company's total investments  classified as available
for sale had an amortized cost of $70,213,000  and a market value of $70,489,000
for an unrealized  gain of $276,000.  The change from an  unrealized  gain to an
unrealized  loss is the result of the  continued  decline in the market value of
the Company's  investments  classified  as available  for sale.  This decline in
market  value is largely  due to an increase in market  interest  rates  between
March 31, 2004 and March 31, 2005.


                                       14
<PAGE>

Cash Surrender Value of Life Insurance

     The Company's  cash  surrender  value of life  insurance was  $9,143,000 at
March 31,  2005,  an  increase  of $94,000 or 1.0% from the  $9,049,000  held at
December 31, 2004 and a decrease of $410,000 or 4.3% from the $9,553,000 held at
March 31, 2004.  The decrease  since March 31, 2004 is due to the  conversion of
certain life insurance  policies into cash subsequent to the death of an officer
of the Company.

Cash and Cash Equivalents

     The Company's cash and cash equivalents  increased $15,513,000 or 126.2% to
$27,802,000  at March  31,  2005  from  $12,289,000  at  December  31,  2004 and
increased  $393,000 or 1.4% from  $27,409,000 at March 31, 2004. The substantial
swings in the level of cash and cash  equivalents are due to fluctuations in the
Banks' need for immediate liquidity.

Deposits

     The  Banks'  primary  source of funds for  loans and  investments  is their
deposits.  Total deposits grew  $29,896,000 or 8.6% to $376,041,000 at March 31,
2005  from  $346,145,000  at  December  31,  2004 and  $18,426,000  or 5.2% from
$357,615,000 at March 31, 2004.  Competition  for deposit  accounts is primarily
based on the interest rates paid, location convenience and services offered.

     During the three  months ended March 31,  2005,  interest-bearing  deposits
averaged $358,187,000 compared to $309,017,000 for the same period of 2004. From
time to time the Banks  solicit  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.  On March 31, 2005 there were no  outstanding
certificates  garnered  through the  Internet,  and  brokered  deposits  totaled
$7,290,000.  On December  31, 2004 and March 31, 2004 there were no  outstanding
certificates garnered through the Internet, and no brokered deposits.

     The  average  interest  rate paid on  interest-bearing  deposits  was 1.79%
during the three  months  ended  March 31,  2005  compared to 1.99% for the same
period of 2004. In pricing deposits,  the Company considers its liquidity needs,
the  direction and levels of interest  rates,  and local market  conditions.  At
March 31,  2005  interest-bearing  deposits  comprised  88.1% of total  deposits
compared to 86.1% at March 31, 2004.

     The Company's core deposit base consists largely of consumer time deposits,
savings accounts,  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  77.0% and
76.7% for the three  months  ended March 31, 2005 and 2004,  respectively.  Time


                                       15
<PAGE>

deposits of $100,000 or more  represented  23.0% of total  deposits at March 31,
2005 and  23.3% at March  31,  2004.  The  Company's  larger  denomination  time
deposits are generally  garnered from customers within the local market areas of
its  banks,  and  therefore  may have a  greater  degree  of  stability  than is
typically associated with this source of funds at other financial institutions.

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 March 31, 2005 and March
31,  2004   short-term   borrowings   totaled   $31,600,000   and   $31,701,000,
respectively,  and were comprised  entirely of securities sold under  repurchase
agreements.  At December 31, 2004 short-term  borrowings totaled $38,025,000 and
were comprised of $572,000 in federal funds purchased,  $3,500,000 in short-term
advances  from  the  Federal  Home  Loan  Bank of  Atlanta  and  $33,953,000  in
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 March 31, 2005, December 31, 2004, and March 31, 2004.

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 March 31, 2005, The Peoples  National
Bank had total  borrowing  capacity  from the Federal  Home Loan Bank of Atlanta
equal  to  $40,312,000,  and the  unused  portion  of this  line of  credit  was
$35,312,000.  The Company's  other two bank  subsidiaries,  Bank of Anderson and
Seneca  National  Bank,  each had  established  secured lines of credit with the
Federal  Home  Loan  Bank at  March  31,  2005 of  $17,381,000  and  $7,188,000,
respectively,  all of which were unused. At March 31, 2005, the Banks had unused
federal  funds  lines  of  credit  with  various  correspondent  banks  totaling
$30,750,000.

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

     During  the latter  part of 2004 and the first  three  months of 2005,  the
Company made capital expenditures of approximately  $140,000 associated with the
renovation of portions of the  corporate  headquarters  building in Easley,  SC.
Additional expenditures in the amount of approximately $150,000 are expected for
the completion of this project.  The Company may additionally  make other lesser
capital expenditures through the normal course of business.

                                       16
<PAGE>

     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
March 31, 2005,  the Banks had issued  commitments  to extend credit  (excluding
commitments for residential  mortgage loans designated for sale) of $104,421,000
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 it will not suffer
a loss if the Bank's  customer fails to meet its  contractual  obligation to the
third party.  Standby  letters of credit  totaled  $5,996,000 at March 31, 2005.
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 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.  In 2004 the  Company  engaged  in the
origination and sale of residential  mortgage loans and entered 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 March 31,  2004 the  Company had  commitments  outstanding  to
originate  residential mortgage loans under rate lock commitments from borrowers
totaling $27,109,000.  Simultaneously, the Company had commitments to sell these
loans to third parties under rate lock commitments.  The Company did 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 March 31, 2004 for the
Company was immaterial.

                                       17
<PAGE>

     Neither  the  Company  nor  the  subsidiaries  are  involved  in any  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 March 31, 2005.


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 March 31, 2005:


                                 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 .................................       $43,323    12.26%       $35,337    10.00%       $28,269     8.00%
Tier 1 Risk-based Capital ................................        39,549    11.20         21,187     6.00         14,125     4.00
Leverage Ratio ...........................................        39,549     8.91         22,194     5.00         17,755     4.00

Peoples National Bank:
Total Risk-based Capital .................................       $24,884    12.58%       $19,781    10.00%       $15,824     8.00%
Tier 1 Risk-based Capital ................................        22,857    11.55         11,874     6.00          7,916     4.00
Leverage Ratio ...........................................        22,857     9.24         12,369     5.00          9,895     4.00

Bank of Anderson, N. A.:
Total Risk-based Capital .................................       $11,627    10.19%       $11,410    10.00%       $ 9,128     8.00%
Tier 1 Risk-based Capital ................................        10,383     9.10          6,846     6.00          4,564     4.00
Leverage Ratio ...........................................        10,383     7.13          7,281     5.00          5,825     4.00

Seneca National Bank:
Total Risk-based Capital .................................       $ 4,893    11.88%       $ 4,119    10.00%       $ 3,295     8.00%
Tier 1 Risk-based Capital ................................         4,390    10.66          2,471     6.00          1,647     4.00
Leverage Ratio ...........................................         4,390     8.14          2,697     5.00          2,157     4.00
</TABLE>




                                       18
<PAGE>


RECENTLY ISSUED ACCOUNTING STANDARDS

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

         In  December  2004,  the FASB  issued  SFAS  No.  123  (revised  2004),
"Share-Based Payment" ("SFAS No. 123(R)"). SFAS No.123(R) covers a wide range of
share-based compensation arrangements including share options,  restricted share
plans,  performance-based  awards, share appreciation rights, and employee share
purchase plans.  SFAS No. 123(R) will require  companies to measure all employee
stock-based  compensation  awards  using a fair value  method  and  record  such
expense in its  financial  statements.  In  addition,  the  adoption of SFAS No.
123(R) requires  additional  accounting and disclosure related to the income tax
and cash flow effects resulting from share-based payment arrangements.  SFAS No.
123 (R) is effective beginning with the first interim or annual reporting period
of a company's first fiscal year beginning on or after June 15, 2005.

         In April 2005, the Securities and Exchange  Commission's  Office of the
Chief  Accountant  and  its  Division  of  Corporation  Finance  released  Staff
Accounting Bulletin ("SAB") No. 107. SAB No. 107 provides  interpretive guidance
related to the  interaction  between  SFAS No.  123(R) and certain SEC rules and
regulations, as well as the staff's views regarding the valuation of share-based
payment  arrangements  for public  companies.  SAB No. 107 also  reminds  public
companies of the  importance of including  disclosures  within filings made with
the  SEC  relating  to the  accounting  for  share-based  payment  transactions,
particularly  during the transition to SFAS No.123(R).  The Company is currently
evaluating  the impact  that the  adoption  of SFAS No.  123(R) will have on its
financial position,  results of operations and cash flows. The cumulative effect
of adoption,  if any, will be measured and recognized in the statement of income
on the date of adoption.

         In November  2003, the Emerging  Issues Task Force  ("EITF")  reached a
consensus  that  certain  quantitative  and  qualitative  disclosures  should be
required for debt and marketable equity  securities  classified as available for
sale or held to maturity  under SFAS No. 115 and SFAS No. 124 that are  impaired
at the balance sheet date but for which other-than-temporary  impairment has not
been  recognized.  Accordingly  the EITF issued EITF No.  03-1,  "The Meaning of
Other-Than-Temporary  Impairment and Its  Application  to Certain  Investments."
This issue  addresses  the meaning of  other-than-temporary  impairment  and its
application  to investments  classified as either  available for sale or held to
maturity  under  SFAS  No.  115  and  provides   guidance  on  quantitative  and
qualitative  disclosures.  The  disclosure  requirements  of EITF  No.  03-1 are
effective for annual financial statements for fiscal years ending after June 15,
2004. The effective date for the measurement  and  recognition  guidance of EITF
No. 03-1 has been delayed.  The FASB staff has issued a proposed  Board-directed
FASB Staff Position ("FSP"), FSP EITF 03-1-a,  "Implementation  Guidance for the
Application  of Paragraph 16 of Issue No.  03-1." The proposed FSP would provide
implementation guidance with respect to debt securities that are impaired solely
due   to   interest    rates   and/or   sector    spreads   and   analyzed   for
other-than-temporary   impairment   under  the   measurement   and   recognition
requirements  of  EITF  No.  03-1.  The  delay  of the  effective  date  for the
measurement  and  recognition  requirements  of EITF No. 03-1 will be superseded


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<PAGE>

concurrent  with the final issuance of FSP EITF 03-1-a.  Adopting the disclosure
provisions of EITF No. 03-1 did not have any impact on the  Company's  financial
position or results of operations.

     Other accounting standards that have been issued or proposed by the FASB or
other standards-setting  bodies that do not require adoption until a future date
are not  expected  to  have a  material  impact  on the  consolidated  financial
statements upon adoption.


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 March 31, 2005,  on a cumulative  basis
through 12 months,  rate-sensitive liabilities exceeded rate-sensitive assets by
$36,983,000.  This  liability-sensitive  position is largely attributable to the
Company's  short-term  Certificates  of Deposit,  Money Market  accounts and NOW
accounts, which totaled $121,151,000, $46,588,000 and $50,039,000, respectively,
at March 31, 2005.




                                       20
<PAGE>


Item 4. CONTROLS AND PROCEDURES

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

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








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<PAGE>



PART II.  OTHER INFORMATION


Item 6.       Exhibits

               Exhibits.

31.1     Rule 13a-14(a)/15d-14(a) Certifications
31.2     Rule 13a-14(a)/15d-14(a) Certifications
32       Section 1350 Certifications




                                       22
<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:  May 11, 2005                    By:    /s/ R. Riggie Ridgeway
                                               ------------------------
                                                 R. Riggie Ridgeway
                                                 President and CEO


Dated:  May 11, 2005                    By:   /s/ Robert E. Dye, Jr.
                                              ------------------------
                                                 Robert E. Dye, Jr.
                                                 Senior Vice President and CFO
                                                 (principal financial officer)





                                       23
<PAGE>




                                                   Exhibit Index

Exhibit No.      Description of Exhibit

31.1             Rule 13a-14(a)/15d-14(a) Certifications
31.2             Rule 13a-14(a)/15d-14(a) Certifications
32               Section 1350 Certifications






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