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, 2004                                            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 $1.67 par value common stock
                        as of May 4, 2004 was 3,682,754.




<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,
                                                                                              2004            2003          2003
                                                                                            Unaudited       Unaudited      Audited
                                                                                            ---------       ---------      -------
ASSETS
<S>                                                                                         <C>             <C>             <C>
CASH AND DUE FROM BANKS ............................................................        $ 12,774        $ 14,616        $  9,164
INTEREST-BEARING DEPOSITS IN OTHER BANKS ...........................................             320               8             214
FEDERAL FUNDS SOLD .................................................................          14,315           8,448          11,865
                                                                                            --------        --------        --------
     Total cash and cash equivalents ...............................................          27,409          23,072          21,243
SECURITIES
     Available for sale ............................................................          68,675          75,533          78,714
     Held for investment (market value of $7,393, $4,723 and $5,752) ...............           7,180           4,545           5,632
     Other investments, at cost ....................................................           1,814           2,079           2,147
LOANS-less allowance for loan losses of $3,464, $2,932 and $3,438 ..................         295,729         262,604         292,814
MORTGAGE LOANS HELD FOR SALE .......................................................           8,777          44,143           5,101
PREMISES AND EQUIPMENT, net of accumulated
     depreciation and amortization .................................................          10,984           9,534          10,231
ACCRUED INTEREST RECEIVABLE ........................................................           1,616           1,874           1,821
CASH SURRENDER VALUE OF LIFE INSURANCE .............................................           9,553           2,227           2,294
OTHER ASSETS .......................................................................           1,686           1,568           1,759
                                                                                            --------        --------        --------
         TOTAL ASSETS ..............................................................        $433,423        $427,179        $421,756
                                                                                            ========        ========        ========

LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
DEPOSITS
     Noninterest-bearing ...........................................................        $ 49,531        $ 65,041        $ 42,289
     Interest-bearing ..............................................................         308,084         287,026         311,040
                                                                                            --------        --------        --------
         Total deposits ............................................................         357,615         352,067         353,329
SECURITIES SOLD UNDER REPURCHASE
     AGREEMENTS ....................................................................          31,701          32,562          24,390
FEDERAL FUNDS PURCHASED ............................................................               -             400               -
NOTES PAYABLE TO FEDERAL HOME LOAN BANK ............................................           5,000           5,000           5,000
ACCRUED INTEREST PAYABLE ...........................................................           1,497           1,476           1,604
OTHER LIABILITIES ..................................................................           1,046           1,606           1,272
                                                                                            --------        --------        --------
         Total Liabilities .........................................................         396,859         393,111         385,595
                                                                                            --------        --------        --------
SHAREHOLDERS' EQUITY
Common Stock - 10,000,000 shares authorized, $1.67
     Par value per share, 3,682,754 shares, 3,507,911 shares
     and 3,682,754 shares outstanding, respectively ................................           6,150           5,858           6,150
Additional paid-in capital .........................................................          29,505          25,758          29,505
Retained Earnings ..................................................................             727           1,858             444
Accumulated other comprehensive income .............................................             182             594              62
                                                                                            --------        --------        --------
         Total Shareholders' Equity ................................................          36,564          34,068          36,161
                                                                                            --------        --------        --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY .........................................        $433,423        $427,179        $421,756
                                                                                            ========        ========        ========
</TABLE>


                                       1
<PAGE>


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

<TABLE>
<CAPTION>
                                                                                                              (Unaudited)
                                                                                                          Three Months Ended
                                                                                                               March 31,
                                                                                                     2004                    2003
                                                                                                     ----                    ----
INTEREST INCOME
<S>                                                                                               <C>                     <C>
   Interest and fees on loans ......................................................              $    4,480              $    4,527
   Interest on securities
       Taxable .....................................................................                     517                     730
       Tax-exempt ..................................................................                      52                      42
   Interest on federal funds .......................................................                      34                      26
                                                                                                  ----------              ----------
Total interest income ..............................................................                   5,083                   5,325
                                                                                                  ----------              ----------

INTEREST EXPENSE
   Interest on deposits ............................................................                   1,529                   1,728
   Interest on federal funds purchased and securities
       sold under repurchase agreements ............................................                      60                     133
Interest on notes payable Federal Home Loan Bank ...................................                      61                      75
                                                                                                  ----------              ----------
Total interest expense .............................................................                   1,650                   1,936
                                                                                                  ----------              ----------
     Net interest income ...........................................................                   3,433                   3,389

PROVISION FOR LOAN LOSSES ..........................................................                     130                     129
                                                                                                  ----------              ----------
Net interest income after provision for loan losses ................................                   3,303                   3,260

NON-INTEREST INCOME
   Service fees and other income ...................................................                     738                     622
   Gain on sale of mortgage loans held for sale ....................................                     472                   2,111
    Gain on sale of available for sale securities ..................................                      93                       1
                                                                                                  ----------              ----------
                                                                                                       1,303                   2,734
NON-INTEREST EXPENSES
   Salaries and benefits ...........................................................                   2,155                   2,026
   Occupancy .......................................................................                     159                     149
   Equipment .......................................................................                     295                     252
    Marketing and advertising ......................................................                      79                      64
    Communications .................................................................                      61                      63
    Printing and supplies ..........................................................                      43                      65
    Bank paid loan costs ...........................................................                      61                     114
    Director fees ..................................................................                      72                      75
    Executive retirement benefit expense ...........................................                     419                      38
   Other operating expenses ........................................................                     448                     548
                                                                                                  ----------              ----------
             Total noninterest expenses ............................................                   3,792                   3,394
                                                                                                  ----------              ----------
   Income before income taxes ......................................................                     814                   2,600

PROVISION FOR INCOME TAXES .........................................................                     273                     943
                                                                                                  ----------              ----------

   Net income ......................................................................              $      541              $    1,657
                                                                                                  ==========              ==========

INCOME PER COMMON SHARE:
   BASIC ...........................................................................              $     0.15              $     0.45
                                                                                                  ==========              ==========
   DILUTED .........................................................................              $     0.14              $     0.43
                                                                                                  ==========              ==========

WEIGHTED AVERAGE COMMON SHARES:
   BASIC ...........................................................................               3,682,754               3,683,307
                                                                                                  ==========              ==========
   DILUTED .........................................................................               3,833,717               3,812,988
                                                                                                  ==========              ==========

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



                                       2
<PAGE>




                 Peoples Bancorporation, Inc. and Subsidiaries
           Consolidated Statements of Changes in Shareholders' Equity
               for the three months ended March 31, 2003 and 2004

                    (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, 2002 ........................    3,507,911    $   5,858    $  25,758    $     446     $     685     $  32,747
Net Income ........................................            -            -            -        1,657             -         1,657
Other comprehensive income, net of tax:
   Unrealized holding gains on
   securities available for sale ..................            -            -            -            -           (91)          (91)
                                                                                                                          ---------
Comprehensive income ..............................                                                                           1,566
Cash Dividends ....................................            -            -            -         (245)            -          (245)
                                                       ---------    ---------    ---------    ---------     ---------     ---------
Balance, March 31, 2003 ...........................    3,507,911    $   5,858    $  25,758    $   1,858     $     594     $  34,068
                                                       =========    =========    =========    =========     =========     =========

Balance, December 31, 2003 ........................    3,682,754    $   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
   Less reclassification
    adjustments for gains
    included in net income, net of
     income taxes of $32 ..........................            -            -            -            -           (61)          120
                                                                                                                          ---------
Comprehensive income ..............................                                                                             661
Cash Dividends ....................................            -            -            -         (258)            -          (258)
                                                       ---------    ---------    ---------    ---------     ---------     ---------
Balance, March 31, 2004 ...........................    3,682,754    $   6,150    $  29,505    $     727     $     182     $  36,564
                                                       =========    =========    =========    =========     =========     =========
</TABLE>








                                       3
<PAGE>



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

<TABLE>
<CAPTION>
                                                                                                                 (Unaudited)
                                                                                                              Three months Ended
                                                                                                                  March 31,
                                                                                                          2004                 2003
                                                                                                          ----                 ----
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                                                  <C>                  <C>
   Net Income ............................................................................           $     541            $   1,657
   Adjustments to reconcile net income to net cash provided
     by (used in) operating activities
   Gain on sale of premises and equipment ................................................                   -                  (13)
   Gain on sale of mortgage loans held for sale ..........................................                (472)              (2,111)
   Gain on sale of securities available for sale .........................................                 (93)                  (1)
   Provision for loan losses .............................................................                 130                  129
   Depreciation and amortization .........................................................                 247                  210
   Amortization and accretion (net) of premiums and
     discounts on securities .............................................................                  69                   78
    Origination of mortgage loans held for sale ..........................................             (43,368)            (117,650)
    Sale of mortgage loans held for sale .................................................              40,164              130,644
   Decrease in accrued interest receivable ...............................................                 205                  102
   Decrease (increase) in other assets ...................................................                  69                 (164)
   Decrease in accrued interest payable ..................................................                (107)                 (99)
   Increase (decrease)in other liabilities ...............................................                (226)                 373
                                                                                                     ---------            ---------
     Net cash provided by (used for) operating activities ................................              (2,841)              13,155
                                                                                                     ---------            ---------

CASH FLOWS FROM INVESTING ACTIVITIES
   Purchases of securities held for investment ...........................................              (1,556)                   -
   Purchases of securities available for sale ............................................             (15,708)             (21,896)
   Purchase of other investments .........................................................                (139)                (195)
   Proceeds from principal pay downs on securities available for sale ....................               1,588                3,463
   Proceeds from the sale of securities available for sale ...............................               4,456                1,000
   Proceeds from the maturities and calls of securities available for sale ...............              20,296               21,425
   Purchase of cash surrender value of life insurance ....................................              (7,224)                   -
   Net increase in loans .................................................................              (3,046)             (15,096)
   Proceeds from the sale of premises and equipment ......................................                   -                   39
   Purchase of premises and equipment ....................................................                (999)                (244)
                                                                                                     ---------            ---------
     Net cash used in investing activities ...............................................              (2,332)             (11,504)
                                                                                                     ---------            ---------

CASH FLOWS FROM FINANCING ACTIVITIES
   Net increase in deposits ..............................................................               4,286               23,893
   Net increase (decrease) in securities sold under repurchase
     agreements ..........................................................................               7,311               (2,769)
   Net increase in federal funds purchased ...............................................                   -                  400
   Net decrease in advances from Federal Home Loan Bank ..................................                   -              (12,000)
   Cash dividend .........................................................................                (258)                (245)
                                                                                                     ---------            ---------
     Net cash provided by financing activities ...........................................              11,339                9,279
                                                                                                     ---------            ---------
     Net increase in cash and cash equivalents ...........................................               6,166               10,930
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR .............................................              21,243               12,142
                                                                                                     ---------            ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD .................................................           $  27,409            $  23,072
                                                                                                     =========            =========

CASH PAID FOR
     Interest ............................................................................           $   1,757            $   2,035
                                                                                                     =========            =========
     Income Taxes ........................................................................           $     462            $     492
                                                                                                     =========            =========
</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 2003 Annual Report on Form
10-K and incorporated herein by reference.

STATEMENT OF CASH FLOWS

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

COMMON STOCK

     The Board of Directors declared cash dividends of $0.07 per common share to
shareholders of record March 19, 2004, payable April 2, 2004.

     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, 2004 and 2003 was 3,682,754 and 3,683,307,  respectively.
The weighted average number of common shares  outstanding for diluted net income
per common share was  3,833,717  and  3,812,988 for the three months ended March
31, 2004 and 2003.

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

                                                         Quarter ended March 31,
                                                         -----------------------
                                                           2004          2003
                                                           ----          ----

Net income, as reported .............................   $     541     $   1,657
Deduct:  total stock-based employee compensation
  expense determined under fair value based method
  for all awards, Net of related tax effects ........          27           (11)
                                                        ---------      ---------
Pro forma net income ................................   $     568     $   1,646
                                                        =========      =========
Net income per common share
  Basic - as reported ...............................   $    0.15      $    0.45
                                                        =========      =========
  Basic - pro forma .................................   $    0.15      $    0.45
                                                        =========      =========
  Diluted - as reported .............................   $    0.14      $    0.43
                                                        =========      =========
  Diluted - pro forma ...............................   $    0.15      $    0.43
                                                        =========      =========

     The Company issued a  five-percent  common stock dividend in November 2003.
Per share data in 2003 has been restated to reflect these transactions.



                                       5
<PAGE>

NOTES TO FINANCIALS

Subsequent Event

     The Company  recorded a one-time,  non-recurring  charge of $376,000 in the
first quarter of 2004 to increase the liability  for death  benefits  payable to
the  beneficiary of the Company's  former  Chairman,  President and CEO who died
shortly after the end of the period.


MANAGEMENT'S OPINION

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




                                       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 2003
Annual Report on Form 10-K of Peoples Bancorporation, Inc. Results of operations
for the three-month period ending March 31, 2004 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 2003
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 2003 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>



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.

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 2004 was
$541,000 or $0.14 per diluted share  compared to $1,657,000 or $0.43 per diluted
share for the first  quarter  of 2003,  a decrease  of 67.4%.  Return on average
equity for the three  months  ended March 31, 2004 was 5.97%  compared to 20.46%
for the three  months  ended March 31,  2003.  Return on average  assets for the
three  months  ended  March 31,  2004 was 0.51%  compared to 1.60% for the three
months ended March 31, 2003. The decreases in the Company's net income,  diluted
earnings per share,  return on average  equity,  and return on average assets in
the first quarter of 2004 are largely  attributable to a substantial decrease in
non-interest income derived from the gain on sale of residential  mortgage loans
at the Company's bank  subsidiaries,  coupled with a one-time expense related to
salary  continuation  and death  benefit  plans for an  executive at The Peoples
National Bank.  The Peoples  National Bank recorded net earnings of $234,000 for
the three months ended March 31, 2004 compared to net earnings of $1,243,000 for
the three months ended March 31, 2003, a decrease of 81.2%. Bank of Anderson, N.
A.  recorded  net earnings of $242,000 for the three months ended March 31, 2004
compared to net  earnings of $300,000 for the three months ended March 31, 2004,
a decrease of 19.3%.  Seneca  National Bank recorded net earnings of $76,000 for
the three months  ended March 31, 2004  compared to net earnings of $123,000 for
the three months ended March 31, 2003, a decrease of 38.2%.

Interest Income, Interest Expense and Net Interest Income

     The largest  component of the Company's net 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  $44,000 or 1.3% to $3,433,000 for the quarter ended March
31,  2004  compared to  $3,389,000  for the quarter  ended March 31,  2003.  The
Company's  net  interest  margin was 3.45% for the quarter  ended March 31, 2004
compared to 3.47% for the quarter ended March 31, 2003.

     The  Company's  total  interest  income  for the first  quarter of 2004 was
$5,083,000  compared to $5,325,000  for the first quarter of 2003, a decrease of
$242,000 or 4.5%.  Interest  and fees on loans,  the largest  component of total
interest  income,  decreased  $47,000 in the first quarter of 2004 to $4,480,000
compared  to  $4,527,000  for the first  quarter of 2003,  a  decrease  of 1.0%.
Interest on taxable  securities,  the second largest component of total interest
income,  decreased $213,000 in the first quarter of 2004 to $517,000 compared to
$730,000  for the first  quarter of 2003,  a decrease of 29.2%.  The decrease in
interest on taxable  securities for the three-month  period was primarily due to


                                       9
<PAGE>

lower average  balances in these types of earning assets,  and also due to lower
market interest rates experienced by the Company's bank subsidiaries.

     The  Company's  total  interest  expense for the first  quarter of 2004 was
$1,650,000  compared to $1,936,000  for the first quarter of 2003, a decrease of
$286,000 or 14.8%. Interest expense on deposits,  the largest component of total
interest expense,  decreased $199,000 in the first quarter of 2004 to $1,529,000
compared to $1,728,000  for the first quarter of 2003, a decrease of 11.5%.  The
decrease in interest expense on deposits for the three-month period ending March
31, 2004  compared to the same period in 2003 is largely  attributable  to lower
market interest rates  experienced at the Company's bank  subsidiaries,  and was
partially offset by higher average balances in these accounts. Interest on notes
payable to the Federal  Home Loan Bank,  the second  largest  component of total
interest  expense,  decreased  $14,000 or 18.7% to $61,000 for the three  months
ended March 31, 2004  compared to $75,000 for the three  months  ended March 31,
2003, largely  attributable to lower market interest rates.  Interest on federal
funds  purchased and  securities  sold under  repurchase  agreements,  the third
largest  component  of total  interest  expense  decreased  $73,000  or 54.9% to
$60,000 in the first  quarter of 2004 compared to $133,000 for the first quarter
of 2003.  This decrease is largely  attributable  to lower market interest rates
experienced at the Company's bank subsidiaries as well as lower average balances
in these accounts.

Provision for Loan Losses

     The provision for loan losses charged to operations during the three months
ended March 31, 2004 was  $130,000  compared  to $129,000  for the three  months
March 31,  2003,  an  increase of $1,000 or 0.8%.  The changes in the  Company's
provision  for  loan  losses  for  the  first  quarter  of  2004  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
2004, The Peoples  National Bank made a provision of $50,000 compared to $75,000
for the same period on 2003. Bank of Anderson,  N.A. made a provision of $60,000
for the first three  months of 2004,  compared to $30,000 for the same period of
2003.  Seneca  National Bank made a provision of $20,000  during the first three
months of 2004 compared to $24,000 for the same period of 2003.

Non-interest Income

     Non-interest  income  decreased  $1,431,000 or 52.3% to $1,303,000  for the
first  quarter of 2004  compared to  $2,734,000  for the first  quarter of 2003.
Service fees and other income,  the largest  component of  non-interest  income,
increased  $116,000 or 18.7% to $738,000 for the first  quarter of 2004 compared
to $622,000 for the first quarter of 2003. Gain on mortgage loans held for sale,
the second largest  component of non-interest  income,  decreased  $1,639,000 or
77.6% to $472,000 for the first quarter of 2004  compared to $2,111,000  for the
first quarter of 2003.  The decrease in gain on mortgage  loans held for sale is
primarily the result of a significant  decrease in the volume of the residential
mortgage  department,  which  resulted  from a marked  decrease  in  demand  for
residential  mortgage loans and  refinancings.  Gains of $93,000 and $1,000 were


                                       10
<PAGE>

realized on the sale of  available-for-sale  securities  during the three months
ended March 31, 2004 and 2003, respectively.

Non-interest Expense

     Total  non-interest  expense increased  $398,000 or 11.7% to $3,792,000 for
the  first  quarter  of 2004 from  $3,394,000  for the  first  quarter  of 2003.
Salaries and benefits, the largest component of non-interest expense,  increased
$129,000 or 6.4% to $2,155,000 for the first quarter of 2004 from $2,026,000 for
the first  quarter of 2003.  The  increase in salaries and benefits is primarily
attributable  to additional  staffing  associated  with the Company's  continued
growth and  normal  salary  increases  throughout  the  Company.  Occupancy  and
furniture and equipment  expenses  increased $53,000 or 13.2% to $454,000 in the
first  quarter of 2004  compared to $401,000 in the first  quarter of 2003.  The
increase is primarily attributable to the opening of a new branch office of Bank
of Anderson, N. A. in August 2003 and the purchase of additional office space by
The Peoples  National Bank in Easley,  South Carolina in January 2004 to be used
for residential mortgage operations.

     Executive Retirement Benefit Expense increased $381,000 to $419,000 for the
first quarter of 2004 from $38,000 for the first quarter of 2003.  This increase
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 the end of the  period.  This  charge is  required by FASB 112 in
accordance with generally accepted accounting principles.

     Other non-interest expenses decreased $165,000 or 17.8% to $764,000 for the
first three months of 2004 from $929,000 for the first three months of 2003. The
decrease  in  other  non-interest  expenses  was  principally   attributable  to
decreases in expenses  associated  with a significant  decrease in the volume of
mortgage loans processed in the first quarter of 2004 when compared to the frist
quarter of 2003.

BALANCE SHEET REVIEW

Loans

     Outstanding  loans (which excludes  mortgage loans held for sale) represent
the largest  component of earning assets at 74.7% of total earning assets. As of
March 31, 2004, the Company held total gross loans  outstanding of $299,193,000.
Gross  loans  increased  $2,941,000  or 1.0% from  $296,252,000  in total  gross
outstanding  loans at December 31, 2003 and increased  $33,657,000 or 12.7% from
$265,536,000  in total gross loans  outstanding  at March 31, 2003. The increase
resulted from new loans generated by the Company's  three banking  subsidiaries.
The following table summarizes outstanding loans by type:



                                       11
<PAGE>


<TABLE>
<CAPTION>
Loan Portfolio Composition                                                                   March 31,                 December 31,
(Dollars in Thousands)                                                                       ---------                 ------------
                                                                                       2004               2003             2003
                                                                                       ----               ----             ----

<S>                                                                                 <C>                <C>               <C>
Commercial and Industrial - not secured by real estate .................            $ 41,146           $ 36,071          $ 44,306
Commercial and Industrial - secured by real estate .....................              88,046             77,331            84,805
Residential real estate - mortgage .....................................              92,618             76,208            90,299
Residential real estate - construction .................................              55,937             54,521            55,139
Consumer loans .........................................................              21,446             21,405            21,703
                                                                                    --------           --------          --------
     Gross Loans .......................................................            $299,193           $265,536          $296,252
                                                                                    ========           ========          ========
</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, 2004 was 5.90%
compared to 6.00% for the three months ended March 31, 2003.  Interest rates are
presently at historically  low levels.  During 2003, the Federal Reserve lowered
the  federal  funds  target  rate one time in June by 25 basis  points.  A large
portion of the Company's  adjustable rate loans,  which  constitute 53.6% 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 and package loans that are pre-sold at
origination to third parties.  The Company also purchases mortgage loans through
a  wholesale  mortgage  loan  division  of The  Peoples  National  Bank that are
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

     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,  2004  approximately  $21,548,000  or 52.4% of  commercial  loans were
unsecured.



                                       12
<PAGE>

     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, 2004 was  $3,464,000 or 1.16% of
loans  outstanding  (which  excludes  mortgage  loans held for sale) compared to
$3,438,000 or 1.16% of loans outstanding at December 31, 2003, and to $2,932,000
or 1.10% of loans  outstanding  at March 31, 2003. 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, 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.  This compares to
$829,000 in non-accruing  loans, no restructured  loans,  $122,000 in loans more
than  ninety  days past due on which  interest  was  still  being  accrued,  and
$517,000 in other real estate owned at December 31, 2003.  At March 31, 2003 the
Company had $662,000 in non-accruing loans, no restructured  loans,  $303,000 in
loans more than ninety days past due and still accruing  interest,  and $229,000
in Other Real Estate Owned.  Non-performing loans at March 31, 2004 consisted of
$23,000 in commercial loans, $620,000 in mortgage loans, and $34,000 in consumer
loans.  Non-performing  assets as a  percentage  of loans and other real  estate
owned was 0.46%, 0.49%, and 0.39% at March 31, 2004, December 31, 2003 and March
31, 2003, respectively.

     Net charge-offs  during the three months ended March 31, 2004 were $104,000
compared to net charge-offs of $48,000 for the three months ended March 31, 2003
and net  charge-offs  of $518,000  for the year ended  December  31,  2003.  The
allowance  for loan losses as a  percentage  of  non-performing  loans was 511%,
362%,  and 307% as of March 31, 2004,  December  31,  2003,  and March 31, 2003,
respectively.

     The Company  accounts for impaired loans in accordance  with the provisions
of Statement of Financial  Accounting  Standards  ("SFAS")  114,  Accounting  by
Creditors for  Impairment  of a Loan.  SFAS No. 114, as amended by SFAS No. 118,
requires that impaired  loans be measured based on the present value of expected
future  cash  flows  or the  underlying  collateral  values  as  defined  in the
pronouncement.  When the ultimate collectibility of an impaired loan's principal
is in  doubt,  wholly  or  partially,  all cash  receipts  are then  applied  to
principal. At each of March 31, 2004, December 31, 2003, and March 31, 2003, the
Company had no impaired loans.



                                       13
<PAGE>

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, 2004 securities totaled $77,669,000, which represents 19.4%
of  total  earning  assets.   Securities  decreased  $8,824,000  or  10.2%  from
$86,493,000  invested as of December 31, 2003, and decreased  $4,488,000 or 5.5%
from  $82,157,000  invested as of March 31,  2003.  The majority of the decrease
since December 31, 2003 was  attributable to the increased calls of U. S. agency
securities  in the  amount  of  $19,825,000  and the sale of  available-for-sale
mortgage  backed  securities in the amount of  $4,456,000 at the Company's  bank
subsidiaries.

     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.  This  compares to an  amortized  cost of
$78,620,000  and a market value of $78,714,000 for an unrealized gain of $94,000
on the  Company's  investments  classified as available for sale at December 31,
2003. At March 31, 2003 the Company's total investments  classified as available
for sale had an amortized cost of $74,633,000  and a market value of $75,533,000
for an unrealized gain of $900,000.

Cash Surrender Value of Life Insurance

     The Company's  cash  surrender  value of life  insurance was  $9,553,000 at
March 31, 2004, an increase of $7,259,000 or 316.4% from the $2,294,000  held at
December 31, 2003 and an increase of  $7,326,000  or 329.0% from the  $2,227,000
held at March 31, 2003.  The  increase is due to the purchase of  single-premium
life insurance  policies during the first quarter of 2004 on certain officers of
the Company and its bank  subsidiaries.  Earnings  from the  ownership  of these
policies  are used to  partially  offset  the cost of  certain  employee-related
benefits.

Cash and Cash Equivalents

     The Company's cash and cash  equivalents  increased  $6,166,000 or 29.0% to
$27,409,000  at March  31,  2004  from  $21,243,000  at  December  31,  2003 and
increased   $4,337,000  or  18.8%  from  $23,072,000  at  March  31,  2003.  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  are their
deposits.  Total deposits grew  $4,286,000 or 1.2% to  $357,615,000 at March 31,


                                       14
<PAGE>

2004  from  $353,329,000  at  December  31,  2003 and  $5,548,000  or 1.6%  from
$352,067,000 at March 31, 2003.  Competition  for deposit  accounts is primarily
based on the interest rates paid, location convenience and services offered.

     During the three  months ended March 31,  2004,  interest-bearing  deposits
averaged $309,017,000 compared to $289,092,000 for the same period of 2003. From
time to time Peoples National Bank solicits certificates of deposit from various
sources  through  brokers and through a program  designed to gather deposits via
the Internet.  This is done to reduce the need for funding from other short-term
sources such as federal  funds  purchased  and  short-term  borrowings  from the
Federal  Home Loan Bank of Atlanta.  These  non-traditional  deposits  have been
primarily used to fund The Peoples National Bank's  short-term  mortgage lending
activities.  On each of March 31,  2004,  December  31,  2003 and March 31, 2003
there were no outstanding  certificates  garnered  through the Internet,  and no
brokered deposits.

     The  average  interest  rate paid on  interest-bearing  deposits  was 1.99%
during the three  months  ended  March 31,  2004  compared to 2.42% for the same
period of 2003. In pricing deposits,  the Company considers its liquidity needs,
the  direction and levels of interest  rates,  and local market  conditions.  At
March 31,  2004  interest-bearing  deposits  comprised  86.1% of total  deposits
compared to 81.5% at March 31, 2003.

     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  76.7% and
80.3% for the three  months  ended March 31, 2004 and 2003,  respectively.  Time
deposits of $100,000 or more  represented  23.3% of total  deposits at March 31,
2004 and  19.7% at March  31,  2003.  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,  2004 and
December 31, 2003 short-term  borrowings  totaled  $31,701,000 and  $24,390,000,
respectively,  and were comprised  entirely of securities sold under  repurchase
agreements. At March 31, 2003 short-term borrowings totaled $32,962,000 and were
comprised of $400,000 in Federal Funds  Purchased and  $32,562,000 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, 2004, December 31, 2003, and March 31, 2003.



                                       15
<PAGE>

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, 2004, The Peoples  National
Bank had total  borrowing  capacity  from the Federal  Home Loan Bank of Atlanta
equal  to  $41,038,000,  and the  unused  portion  of this  line of  credit  was
$36,038,000.  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,  2004 of  $17,764,000  and  $3,945,000,
respectively,  all of which were unused. At March 31, 2004, the Banks had unused
federal  funds  lines  of  credit  with  various  correspondent  banks  totaling
$23,750,000.

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

     During the first three months of 2004, the Company had capital expenditures
of  approximately  $630,000  associated  with the purchase of additional  office
space for the mortgage  department of The Peoples  National Bank. The Company is
also expecting  capital  expenditures  that will be made during the remainder of
2004.  This  includes the expansion of the main office of Bank of Anderson for a
total cost of up to $800,000.  This  expansion was begun in the third quarter of
2003,  with  approximately  $360,000  being spent  through  March 31, 2004.  The
Company may  additionally  make other lesser  capital  expenditures  through the
normal course of business.

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

OFF-BALANCE SHEET RISK AND DERIVATIVE FINANCIAL INSTRUMENTS

     The  Company,  through  the  operations  of the  Banks,  makes  contractual
commitments to extend credit in the ordinary course of its business  activities.
These  commitments are legally binding  agreements to lend money to customers of
the Banks at  predetermined  interest  rates for a specified  period of time. At
March 31, 2004,  the Banks had issued  commitments  to extend credit  (excluding
commitments for residential  mortgage loans  designated for sale) of $93,179,000
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


                                       16
<PAGE>

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  $5,114,000 at March 31, 2004.
Past  experience  indicates  that many of these  standby  letters of credit will
expire unused.  However,  through its various sources of liquidity,  the Company
believes  that it will have the  necessary  resources to meet these  obligations
should the need arise.  Various types of  collateral  secure most of the standby
letters of credit.  The Company  believes that the risk of loss  associated with
standby  letters of credit is comparable to the risk of loss associated with its
loan portfolio.  Moreover, the fair value associated with any standby letters of
credit issued by the Company is immaterial to the Company.

     According to Statement of Financial  Accounting Standards ("SFAS") No. 133,
Accounting for Derivative  Instruments and Hedging Activities,  loan commitments
that relate to the  origination  or purchase of mortgage loans that will be held
for sale  must be  accounted  for as  derivative  instruments.  Therefore,  such
commitments are recorded at fair value in derivative assets or liabilities, with
changes  in fair  value  recorded  in the net  gain or loss on sale of  mortgage
loans.  The Company engages in the origination and sale of residential  mortgage
loans and enters into  commitments on an individual loan basis to both originate
and sell residential mortgage loans whereby the interest rate on the loan to the
borrower and to the  end-purchaser  of the loan is  determined  prior to funding
(rate  lock  commitments).  At  March  31,  2004  the  Company  had  commitments
outstanding to originate residential mortgage loans under rate locks 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
does not collect any upfront fees when issuing a mortgage  loan  commitment to a
potential  borrower,  and mortgages are sold to third parties at par value.  The
cumulative  effect under SFAS No. 133 for rate lock  commitments as of March 31,
2004 for the Company was immaterial.

     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, 2004.





                                       17
<PAGE>



CAPITAL ADEQUACY AND RESOURCES

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

     The Company and the Banks are required to maintain  certain  capital ratios
by federal banking regulators. The following table sets forth the capital ratios
for the Company and the Banks as of March 31, 2004:


                                 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 ..................................         $ 39,846    12.75%    $ 32,082    10.00%    $ 25,666     8.00%
Tier 1 Risk-based Capital .................................           36,382    11.34       19,250     6.00       12,833     4.00
Leverage Ratio ............................................           36,382     8.55       21,276     5.00       17,021     4.00

Peoples National Bank:
Total Risk-based Capital ..................................         $ 23,485    12.62%    $ 18,609    10.00%    $ 14,887     8.00%
Tier 1 Risk-based Capital .................................           21,459    11.53       11,167     6.00        7,445     4.00
Leverage Ratio ............................................           21,459     8.89       12,069     5.00        9,655     4.00

Bank of Anderson, N. A:
Total Risk-based Capital ..................................         $ 10,275    10.59%    $  9,703    10.00%    $  7,762     8.00%
Tier 1 Risk-based Capital .................................            9,287     9.57        5,823     6.00        3,882     4.00
Leverage Ratio ............................................            9,287     7.00        6,634     5.00        5,307     4.00

Seneca National Bank:
Total Risk-based Capital ..................................         $  4,507    12.21%    $  3,691    10.00%    $  2,953     8.00%
Tier 1 Risk-based Capital .................................            4,057    10.99        2,215     6.00        1,477     4.00
Leverage Ratio ............................................            4,057     8.03        2,526     5.00        2,021     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 March  2004,  the FASB  issued an  exposure  draft on  "Share-Based
Payment".  The proposed  Statement  addresses the accounting for transactions in
which an  enterprise  receives  employee  services  in  exchange  for a)  equity
instruments of the enterprise or b) liabilities that are based on the fair value
of the enterprise's equity instruments or that may be settled by the issuance of
such equity instruments.  This proposed Statement would eliminate the ability to
account  for  share-based  compensation  transactions  using APB Opinion No. 25,
"Accounting for Stock Issued to Employees",  and generally would require instead
that such transactions be accounted for using a  fair-value-based  method.  This
Statement, if approved, will be effective for awards that are granted, modified,
or settled in fiscal  years  beginning  after a)  December  15,  2004 for public
entities  and  nonpublic  entities  that  used the  fair-value-based  method  of
accounting under the original provisions of Statement 123 for recognition or pro
forma  disclosure  purposes  and b) December  15,  2005 for all other  nonpublic
entities.  Earlier application is encouraged provided that financial  statements
for those earlier years have not yet been issued.  Retrospective  application of
this Statement is not permitted.  The adoption of this  Statement,  if approved,
will 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


                                       19
<PAGE>

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, 2004,  on a cumulative  basis
through 12 months,  rate-sensitive liabilities exceeded rate-sensitive assets by
$50,271,000.  This  liability-sensitive  position is largely attributable to the
Company's  short-term  Certificates  of Deposit,  Money Market  accounts and NOW
accounts, which totaled $134,236,000, $54,921,000 and $41,650,000, respectively,
at March 31, 2004.






                                       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 the  effectiveness  of such controls and procedures,  as of the end of
     the period covered by this quarterly report, was adequate.

     No disclosure is required under 17 C.F.R. Section 229.308(c).









                                       21
<PAGE>



PART II.  OTHER INFORMATION


Item 6.  Exhibits and Reports on Form 8-K

(a)      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

(b)      Reports on Form 8-K.

          -    Current  Report on Form 8-K dated  February 13, 2004  pursuant to
               Items 7 and 12 of that form, containing Summary Income Statements
               for the twelve  months and three months ended  December 31, 2003,
               and Summary Balance Sheet at December 31, 2003.

          -    Current  Report on Form 8-K dated March 3, 2004 pursuant to Items
               7 and  12 of  that  form,  correcting  information  contained  in
               Current  Report on Form 8-K dated  February 13, 2004,  containing
               Summary Income  Statements for the twelve months and three months
               ended  December 31, 2003,  and Summary  Balance Sheet at December
               31, 2003.





                                       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 7, 2004                      By:    /s/ R. Riggie Ridgeway
                                                ------------------------
                                                  R. Riggie Ridgeway
                                                  President and CEO


Dated:  May  7, 2004                     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






                                       24