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
               September 30, 2003                       000-20616

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

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

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

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


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

                             Yes [X]     No [ ]

         Indicate by check mark whether the registrant is an accelerated
             filer (as defined in Rule 12 b-2 of the Exchange Act).

                             Yes [ ]     No [X]

        The number of outstanding shares of the issuer's $1.67 par value
               common stock as of November 7, 2003 was 3,507,911.




<PAGE>



PART I - FINANCIAL INFORMATION
Item 1. Financial Statements


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

<TABLE>
<CAPTION>
                                                                                         September 30,   September 30,  December 31,
                                                                                             2003            2002           2002
                                                                                          Unaudited        Unaudited       Audited
                                                                                          ---------        ---------       -------
ASSETS
<S>                                                                                       <C>              <C>              <C>
CASH AND DUE FROM BANKS .........................................................         $ 13,445         $ 17,234         $  9,474
INTEREST-BEARING DEPOSITS IN OTHER BANKS ........................................            1,023               25               33
FEDERAL FUNDS SOLD ..............................................................           15,003           16,852            2,635
                                                                                          --------         --------         --------
     Total cash and cash equivalents ............................................           29,471           34,111           12,142
SECURITIES
     Available for sale .........................................................           79,462           76,948           80,163
     Held for investment (market value of $5,188, $3,534
         and $4,248) ............................................................            5,069            3,371            4,123
     Other investments, at cost .................................................            2,146            1,884            1,884
LOANS-less allowance for loan losses of $3,745,
         $2,804 and $2,850 ......................................................          279,844          234,537          247,637
MORTGAGE LOANS HELD FOR SALE ....................................................           13,417           32,913           55,026
PREMISES AND EQUIPMENT, net of accumulated
     depreciation and amortization ..............................................           10,111            9,498            9,539
ACCRUED INTEREST RECEIVABLE .....................................................            1,785            2,011            1,976
CASH SURRENDER VALUE OF LIFE INSURANCE ..........................................            2,279            1,385            2,202
OTHER ASSETS ....................................................................            2,103            1,390            1,430
                                                                                          --------         --------         --------
         TOTAL ASSETS ...........................................................         $425,687         $398,048         $416,122
                                                                                          ========         ========         ========

LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
DEPOSITS
     Noninterest-bearing ........................................................         $ 48,039         $ 45,531         $ 40,614
     Interest-bearing ...........................................................          308,325          285,500          287,560
                                                                                          --------         --------         --------
         Total deposits .........................................................          356,364          331,031          328,174
SECURITIES SOLD UNDER REPURCHASE
     AGREEMENTS .................................................................           24,903           23,225           35,331
FEDERAL FUNDS PURCHASED .........................................................                0            4,363                0
NOTES PAYABLE TO FEDERAL HOME LOAN BANK .........................................            5,000            5,000           17,000
ACCRUED INTEREST PAYABLE ........................................................            1,553            1,372            1,575
OTHER LIABILITIES ...............................................................            1,752            1,297            1,295
                                                                                          --------         --------         --------
         Total Liabilities ......................................................          389,572          366,288          383,375
                                                                                          --------         --------         --------
SHAREHOLDERS' EQUITY
Common Stock - 10,000,000 shares authorized, $1.67
     Par value per share, 3,507,911 shares, 3,341,370 shares
       and 3,507,911 shares outstanding, respectively ...........................            5,858            5,580            5,858
Additional paid-in capital ......................................................           25,758           22,855           25,758
Retained Earnings ...............................................................            4,483            2,630              446
Accumulated other comprehensive income ..........................................               16              695              685
                                                                                          --------         --------         --------
         Total Shareholders' Equity .............................................           36,115           31,760           32,747
                                                                                          --------         --------         --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ......................................         $425,687         $398,048         $416,122
                                                                                          ========         ========         ========
</TABLE>



                                       1
<PAGE>

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

<TABLE>
<CAPTION>
                                                                            Three Months Ended                 Nine Months Ended
                                                                               September 30,                     September 30,
                                                                           2003              2002            2003              2002
                                                                           ----              ----            ----              ----
INTEREST INCOME
<S>                                                                    <C>              <C>              <C>              <C>
   Interest and fees on loans ..................................       $    4,620       $    4,400       $   13,688       $   13,007
   Interest on securities
       Taxable .................................................              506              773            1,807            1,862
       Tax-exempt ..............................................               45               36              132              108
   Interest on federal funds ...................................               65              135              130              333
                                                                       ----------       ----------       ----------       ----------
Total interest income ..........................................            5,236            5,344           15,757           15,310
                                                                       ----------       ----------       ----------       ----------

INTEREST EXPENSE
   Interest on deposits ........................................            1,727            1,975            5,184            5,381
   Interest on federal funds purchased and securities
       sold under repurchase agreements ........................               83              112              323              356
    Interest on notes payable Federal Home Loan Bank ...........               62               62              216              195
                                                                       ----------       ----------       ----------       ----------
Total interest expense .........................................            1,872            2,149            5,723            5,932
                                                                       ----------       ----------       ----------       ----------

Net interest income ............................................            3,364            3,195           10,034            9,378

PROVISION FOR LOAN LOSSES ......................................              549              143            1,007              654
                                                                       ----------       ----------       ----------       ----------

Net interest income after provision for loan losses ............            2,815            3,052            9,027            8,724

NON-INTEREST INCOME
   Service fees and other income ...............................              628              627            1,915            1,777
   Mortgage banking ............................................            2,478              885            7,350            2,523
   Gain on sale of available for sale securities ...............                6                0               13                0
                                                                       ----------       ----------       ----------       ----------
                                                                            3,112            1,512            9,278            4,300
NON-INTEREST EXPENSES
   Salaries and benefits .......................................            2,347            1,721            6,492            4,722
   Occupancy ...................................................              156              154              454              399
   Equipment ...................................................              323              217              799              549
   Marketing and advertising ...................................               99               71              272              257
   Communications ..............................................               71               58              199              169
   Printing and supplies .......................................               75               81              206              186
   Bank paid loan costs ........................................              108              132              362              466
   Other operating expenses ....................................              694              449            2,013            1,333
                                                                       ----------       ----------       ----------       ----------
             Total noninterest expenses ........................            3,873            2,883           10,797            8,081
                                                                       ----------       ----------       ----------       ----------
   Income before income taxes ..................................            2,054            1,681            7,508            4,943

PROVISION FOR INCOME TAXES .....................................              749              607            2,735            1,778
                                                                       ----------       ----------       ----------       ----------

   Net income ..................................................       $    1,305       $    1,074       $    4,773       $    3,165
                                                                       ==========       ==========       ==========       ==========

INCOME PER COMMON SHARE:
   BASIC .......................................................       $     0.37       $     0.31       $     1.36       $     0.90
                                                                       ==========       ==========       ==========       ==========
   DILUTED .....................................................       $     0.36       $     0.30       $     1.31       $     0.88
                                                                       ==========       ==========       ==========       ==========

WEIGHTED AVERAGE COMMON SHARES:
   BASIC .......................................................        3,507,911        3,508,439        3,507,911        3,502,483
                                                                       ==========       ==========       ==========       ==========
   DILUTED .....................................................        3,646,696        3,572,893        3,638,925        3,591,550
                                                                       ==========       ==========       ==========       ==========

DIVIDENDS PAID PER COMMON SHARE ................................       $     0.07       $     0.06       $     0.21       $     0.17
                                                                       ==========       ==========       ==========       ==========
</TABLE>




                                       2
<PAGE>




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

                    (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, 2001* ........................  3,328,609    $    5,559    $   22,786   $       32   $      174    $   28,551
Net Income .........................................                                               3,165                      3,165
Other comprehensive income, net of tax:
   Unrealized holding gains on
   securities available for sale ...................                                                              521           521
                                                                                                                         ----------
Comprehensive income ...............................                                                                          3,686
Cash Dividends .....................................                                                (567)                      (567)
Proceeds from stock options ........................     12,761            21            69                                      90
                                                     ----------    ----------    ----------   ----------   ----------    ----------
Balance, September 30, 2002 ........................  3,341,370    $    5,580    $   22,855   $    2,630   $      695    $   31,760
                                                     ==========    ==========    ==========   ==========   ==========    ==========

Balance, December 31, 2002 .........................  3,507,911    $    5,858    $   25,758   $      446   $      685    $   32,747
Net Income .........................................                                               4,773                      4,773
Other comprehensive income, net of tax:
   Unrealized holding losses on
   securities available for sale ...................                                                             (661)         (661)
   Less reclassification
   adjustments for gains
   included in net income ..........................                                                               (8)           (8)
                                                                                                                         ----------
Comprehensive income ...............................                                                                          4,104
Cash Dividends .....................................                                                (736)                      (736)
                                                     ----------    ----------    ----------   ----------   ----------    ----------
Balance, September 30, 2003 ........................  3,507,911    $    5,858    $   25,758   $    4,483   $       16    $   36,115
                                                      =========    ==========    ==========   ==========   ==========    ==========

</TABLE>

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





                                       3
<PAGE>



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

                                                                                                                (Unaudited)
                                                                                                              Nine months Ended
                                                                                                                September 30,
                                                                                                        2003                  2002
                                                                                                        ----                  ----
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                                                 <C>                   <C>
   Net Income ..........................................................................            $   4,773             $   3,165
   Adjustments to reconcile net income to net cash provided
     by (used in) operating activities
   Gain on sale of premises and equipment ..............................................                   (6)                  (13)
   Gain on sale of securities available for sale .......................................                  (13)                    0
   Provision for loan losses ...........................................................                1,007                   654
   Depreciation and amortization .......................................................                  641                   356
   Amortization and accretion (net) of premiums and
     discounts on securities ...........................................................                  298                    82
   Origination of mortgage loans held for sale .........................................             (421,939)             (263,913)
   Sale of mortgage loans held for sale ................................................              463,548               271,925
   (Increase) decrease in accrued interest receivable ..................................                  192                  (328)
   Increase in other assets ............................................................                 (753)                 (147)
   Increase (decrease) in accrued interest payable .....................................                  (23)                  154
   Increase in other liabilities .......................................................                  733                   225
                                                                                                    ---------             ---------
     Net cash provided by operating activities .........................................               48,458                12,160
                                                                                                    ---------             ---------

CASH FLOWS FROM INVESTING ACTIVITIES
   Purchases of securities held for investment .........................................                 (635)                    0
   Purchases of securities available for sale ..........................................              (73,629)              (73,632)
   Purchase of other investments .......................................................                 (195)                  (69)
   Proceeds from the maturity of securities held to maturity ...........................                  275                 1,250
   Proceeds from the maturity of securities available for sale .........................                3,700                     0
   Proceeds from the sale of securities available for sale .............................                6,999                 5,750
   Proceeds from the call of securities available for sale .............................               48,515                16,650
   Proceeds from principal pay downs ...................................................               13,241                 4,049
   Net increase in loans ...............................................................              (33,214)              (24,289)
   Proceeds from the sale of premises and equipment ....................................                   44                     0
   Purchase of premises and equipment ..................................................               (1,257)               (1,893)
                                                                                                    ---------             ---------
     Net cash used in investing activities .............................................              (36,156)              (72,184)
                                                                                                    ---------             ---------

CASH FLOWS FROM FINANCING ACTIVITIES
   Net increase in deposits ............................................................               28,191                94,229
   Net increase (decrease) in securities sold under repurchase
     agreements ........................................................................              (10,428)                2,579
   Net increase in federal funds purchased .............................................                    0                 4,363
   Net decrease in advances from Federal Home Loan Bank ................................              (12,000)              (18,985)
   Proceeds from stock options exercised ...............................................                    0                    90
   Cash dividend .......................................................................                 (736)                 (567)
                                                                                                    ---------             ---------
     Net cash provided by financing activities .........................................                5,027                81,709
                                                                                                    ---------             ---------
     Net increase in cash and cash equivalents .........................................               17,329                21,685
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR ...........................................               12,142                12,426
                                                                                                    ---------             ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD ...............................................            $  29,471             $  34,111
                                                                                                    =========             =========

CASH PAID FOR
     Interest ..........................................................................            $   5,745             $   5,778
                                                                                                    =========             =========
     Income Taxes ......................................................................            $   2,617             $   1,597
                                                                                                    =========             =========
</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 2002 Annual Report on Form
10-K and incorporated herein by reference.

STATEMENT OF CASH FLOWS

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

COMMON STOCK

     The Board of Directors declared cash dividends of $0.07 per common share to
shareholders  of record March 21, 2003,  June 20, 2003 and  September  19, 2003,
payable April 4, 2003, July 7, 2003 and October 3, 2003.

     SFAS No. 128,  "Earnings per Share" requires that the Company present basic
and diluted net income per common share. The assumed conversion of stock options
creates the  difference  between basic and diluted net income per share.  Income
per share is calculated by dividing net income by the weighted average number of
common shares outstanding for each period presented. The weighted average number
of common shares  outstanding for basic net income per common share for the nine
months  ended   September  30,  2003  and  2002  was  3,507,911  and  3,502,483,
respectively.  The weighted  average  number of common  shares  outstanding  for
diluted net income per common share was  3,638,925  and  3,591,550  for the nine
months ended September 30, 2003 and 2002.

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

<TABLE>
<CAPTION>
                                                                             Three Months Ended              Nine Months Ended
                                                                               September 30,                   September 30,
                                                                          2003             2002             2003           2002
                                                                          ----             ----             ----           ----

<S>                                                                    <C>              <C>              <C>              <C>
Net income, as reported ........................................       $    1,305       $    1,074       $    4,733       $   3,165
Deduct:  total stock-based employee compensation
  expense determined under fair value based method
  for all awards, Net of related tax effects ...................              (17)             (15)             (39)            (45)
                                                                       ----------       ----------       ----------       ---------
Pro forma net income ...........................................       $    1,288       $    1,059       $    4,694       $   3,120
                                                                       ==========       ==========       ==========       =========
Net income per common share
  Basic - as reported ..........................................       $     0.37       $     0.31       $     1.36       $    0.90
                                                                       ==========       ==========       ==========       =========
  Basic - pro forma ............................................       $     0.37       $     0.30       $     1.34       $    0.89
                                                                       ==========       ==========       ==========       =========
  Diluted - as reported ........................................       $     0.36       $     0.30       $     1.31       $    0.88
                                                                       ==========       ==========       ==========       =========
  Diluted - pro forma ..........................................       $     0.35       $     0.30       $     1.30       $    0.87
                                                                       ==========       ==========       ==========       =========
</TABLE>


                                       5
<PAGE>

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


MANAGEMENT'S OPINION

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




                                       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 2002
Annual  Report  of  Peoples  Bancorporation,  Inc.  on  Form  10-K.  Results  of
operations for the three-month and nine-month  periods ending September 30, 2003
are not  necessarily  indicative  of the  results to be  attained  for any other
period.

Critical Accounting Policies

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

         Certain   accounting   policies  involve   significant   judgments  and
assumptions by management  that have a material  impact on the carrying value of
certain assets and liabilities; management considers such accounting policies to
be  critical  accounting  policies.   The  judgments  and  assumptions  used  by
management  are based on  historical  experience  and other  factors,  which are
believed to be reasonable under the circumstances.  Because of the nature of the
judgments and assumptions  made by management,  actual results could differ from
these judgments and estimates 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 2002 Annual Report on
Form 10-K and the  Allowance  for Loan  Losses  and  Provision  for Loan  Losses
sections of this report on Form 10-Q for a detailed description of the Company's
estimation process and methodology related to the allowance for loan losses.



                                       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 third  quarter of 2003 was
$1,305,000  or $0.36 per  diluted  share  compared  to  $1,074,000  or $0.30 per
diluted share for the second  quarter of 2002, an increase of 21.5%.  Net income
for the nine months ended September 30, 2003 was $4,773,000 or $1.31 per diluted
share  compared to  $3,165,000  or $0.88 per  diluted  share for the nine months
ended September 30, 2002, an increase of 50.8%. Return on average equity for the
nine  months and three  months  ended  September  30, 2003 was 20.38% and 14.59%
compared  to 14.20%  and  14.02%  for the nine  months  and three  months  ended
September  30,  2002.  Return on average  assets  for the nine  months and three
months ended  September 30, 2003 was 1.64% and 1.20% compared to 1.21% and 1.12%
for the nine months and three months ended  September 30, 2002. The increases in
the Company's net income,  earnings per fully diluted  share,  return on average
equity,  and  return on average  assets in 2003 are  attributable  to  increased
earnings at the Company's bank subsidiaries.  The Peoples National Bank recorded
net earnings of $3,640,000 for the nine months ended September 30, 2003 compared
to net earnings of $2,386,000  for the nine months ended  September 30, 2002, an
increase of 52.6%. Bank of Anderson, N. A. recorded net earnings of $838,000 for
the nine months ended  September  30, 2003  compared to net earnings of $578,000
for the nine months  ended  September  30,  2002,  an increase of 45.0%.  Seneca
National  Bank  recorded  net  earnings  of $326,000  for the nine months  ended
September  30,  2003  compared to net  earnings of $229,000  for the nine months
ended September 30, 2002, an increase of 42.4%.

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  $169,000  or 5.3% to  $3,364,000  for the quarter  ended
September 30, 2003 compared to  $3,195,000  for the quarter ended  September 30,
2002.  For the nine months ended  September 30, 2003 net interest  income before
provision for loan losses increased $656,000 or 7.0% to $10,034,000  compared to
$9,378,000  for the nine months ended  September 30, 2002.  The increases in the
net  interest  income  resulted  primarily  from an increase in the  balances of
interest earning assets,  as well as a decrease in interest  expense  associated
with interest  bearing  liabilities.  The Company's net interest  margin for the
nine  months and three  months  ended  September  30,  2003 was 3.33% and 3.26%,
respectively, compared to 3.84% and 3.57%, respectively, for the nine months and
three months ended September 30, 2002.

     The  Company's  total  interest  income  for the third  quarter of 2003 was
$5,236,000  compared to $5,344,000  for the third quarter of 2002, a decrease of


                                       9
<PAGE>

$108,000 or 2.0%.  Total interest income for the nine months ended September 30,
2003 was $15,757,000 compared to $15,310,000 for the nine months ended September
30,  2002,  an increase of $447,000  or 2.9%.  Interest  and fees on loans,  the
largest  component of total  interest  income,  increased  $220,000 in the third
quarter of 2003 to $4,620,000  compared to  $4,400,000  for the third quarter of
2002, an increase of 5.0%. Interest and fees on loans increased $681,000 for the
nine months ended September 30, 2003 to $13,688,000  compared to $13,007,000 for
the nine months ended  September 30, 2002, an increase of 5.2%.  The increase in
interest and fees on loans,  as well as the increase in total  interest  income,
resulted  primarily from the higher  average  balances in these types of earning
assets,  and was partially  offset by the lower market  interest rates that were
experienced at the Company's bank  subsidiaries  during the first nine months of
2003 compared to the first nine months of 2002.  Interest on taxable securities,
the second largest component of total interest income, decreased $267,000 in the
third quarter of 2003 to $506,000  compared to $773,000 for the third quarter of
2002, a decrease of 34.5%.  Interest on taxable securities decreased $55,000 for
the nine months ended  September 30, 2003 to  $1,807,000  compared to $1,862,000
for the nine months ended  September 30, 2002, a decrease of 3.0%.  The decrease
in interest on taxable securities for the three-month and mine-month periods was
primarily due to 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 third  quarter of 2003 was
$1,872,000  compared to $2,149,000  for the third quarter of 2002, a decrease of
$277,000 or 12.9%.  Total interest  expense for the nine months ended  September
30,  2003 was  $5,723,000  compared  to  $5,932,000  for the nine  months  ended
September  30,  2002,  a  decrease  of  $209,000  or 3.5%.  Interest  expense on
deposits, the largest component of total interest expense, decreased $248,000 in
the third  quarter of 2003 to $1,727,000  compared to  $1,975,000  for the third
quarter of 2002,  a decrease of 12.6%.  Interest  expense on deposits  decreased
$197,000 for the nine months ended September 30, 2003 to $5,184,000  compared to
$5,381,000  for the nine months  ended  September  30, 2002, a decrease of 3.7%.
Interest  on federal  funds  purchased  and  securities  sold  under  repurchase
agreements,  the second largest component of total interest  expense,  decreased
$29,000 or 25.9% to $83,000 in the third  quarter of 2003  compared  to $112,000
for the  third  quarter  of  2002.  Interest  on  federal  funds  purchased  and
securities  sold  under  repurchase  agreements  decreased  $33,000  or  9.3% to
$323,000 for the nine months ended  September  30, 2003 compared to $356,000 for
the same  period  in 2002.  The  decrease  in  interest  expense  among  each of
deposits,   federal  funds  purchased,  and  securities  sold  under  repurchase
agreements for the three-month and nine-month  periods ending September 30, 2003
compared to the same  periods in 2002 is largely  attributable  to lower  market
interest rates  experienced at the Company's bank subsidiaries and was partially
offset by the higher average balances in some of the accounts

     Interest on notes payable to the Federal Home Loan Bank,  the third largest
component of total interest expense,  remained unchanged at $62,000 in the third
quarter of 2003 compared to the third quarter of 2002. Interest on notes payable
to the Federal  Home Loan Bank  increased  $21,000 or 10.8% to $216,000  for the


                                       10
<PAGE>

nine months ended  September  30, 2003  compared to $195,000 for the nine months
ended  September 30, 2002. The increase in interest  expense on notes payable to
the Federal Home Loan Bank for the nine-month  period ending  September 30, 2003
compared  to the same  period  in 2002 is  largely  attributable  to the  higher
average  balances in those notes payable,  and was partially offset by the lower
market interest rates experienced at the Company's subsidiary banks.

Provision for Loan Losses

     The provision for loan losses charged to operations during the three months
and  nine  months  ended   September  30,  2003  was  $549,000  and  $1,007,000,
respectively,  compared to $143,000 and  $654,000,  respectively,  for the three
months and nine months ended  September  30, 2002.  The changes in the Company's
provision  for loan  losses for the third  quarter and first nine months of 2003
are based on management's evaluation of the Company's overall credit quality and
its estimate of loan losses inherent in the loan  portfolio.  The increases were
caused  primarily by the growth of the loan  portfolio,  a $395,000  increase in
non-accruing  loans  and loans 90 days  past due and  still  accruing  interest,
coupled with a specific  allocation for a certain loan in the approximate amount
of $300,000  identified by management  that although  current and still accruing
interest, the ultimate collectibility of outstanding principal is not considered
probable.  During the first nine months of 2003, The Peoples  National Bank made
provision of $775,000  compared to $475,000 for the same period on 2002. Bank of
Anderson,  N.A.  made  provision  of $140,000 for the first nine months of 2003,
compared to  $100,000  for the same period of 2002.  Seneca  National  Bank made
provision  of $92,000  during the first nine months of 2003  compared to $79,000
for the same period of 2002.

Non-interest Income

     Non-interest  income  increased  $1,600,000 or 105.8% to $3,112,000 for the
third  quarter of 2003  compared to  $1,512,000  for the third  quarter of 2002.
Non-interest  income  increased  $4,978,000 or 115.8% to $9,278,000 for the nine
months ended September 30, 2003 compared to $4,300,000 for the nine months ended
September  30,  2002.  Mortgage  banking fee income,  the largest  component  of
non-interest  income,  increased  $1,593,000 or 180% to $2,478,000 for the third
quarter of 2003  compared to $885,000  for the third  quarter of 2002.  Mortgage
banking fee income  increased  $4,827,000 or 191.3% to $7,350,000  for the first
nine months of 2003  compared to  $2,523,000  for the first nine months of 2002.
The increase in mortgage banking fee income is largely attributable to increased
customer  refinancing  activity due to market  interest  rates that have been at
historical lows. The Company does not expect to be able to sustain this level of
mortgage  banking fee income  indefinitely.  Service fees and other income,  the
second largest  component of non-interest  income,  increased  $1,000 or 0.2% to
$628,000  for the third  quarter  of 2003  compared  to  $627,000  for the third
quarter of 2002.  Service  fees and other income  increased  $138,000 or 7.8% to
$1,915,000  for the first nine  months of 2003  compared to  $1,777,000  for the
first nine months of 2002. Gains of $6,000 and $13,000 were realized on the sale
of  available-for-sale  securities during the three months and nine months ended
September  30, 2003,  respectively.  No gain or loss was realized on the sale of
securities during the three months and nine months ended September 30, 2002.


                                       11
<PAGE>

Non-interest Expense

     Total  non-interest  expense increased  $990,000 or 34.3% to $3,873,000 for
the third quarter of 2003 from  $2,883,000 for the third quarter of 2002.  Total
non-interest  expense increased  $2,716,000 or 33.6% to $10,797,000 for the nine
months ended  September 30, 2003 from $8,081,000 for nine months ended September
30, 2002. Salaries and benefits,  the largest component of non-interest expense,
increased  $626,000 or 36.4% to  $2,347,000  for the third  quarter of 2003 from
$1,721,000  for the third  quarter  of 2002.  Salaries  and  benefits  increased
$1,770,000 or 37.5% to $6,492,000  for the nine months ended  September 30, 2003
from  $4,722,000  for the nine months ended  September 30, 2002. The increase in
salaries and benefits is primarily attributable to increases in commissions paid
due to elevated levels of mortgage loan activity, as well as additional staffing
associated  with the  Company's  continued  growth and normal  salary  increases
throughout the Company.

BALANCE SHEET REVIEW

Loans

     Outstanding  loans (which excludes  mortgage loans held for sale) represent
the largest  component of earning assets at 70.9% of total earning assets. As of
September  30,  2003,  the  Company  held  total  gross  loans   outstanding  of
$283,589,000.  Gross loans increased  $33,102,000 or 13.2% from  $250,487,000 in
total gross outstanding loans at December 31, 2002 and increased  $46,248,000 or
19.4% from  $237,341,000 in total gross loans outstanding at September 30, 2002.
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                                                                September 30,            December 31,
                                                                                          -------------            ------------
(Dollars in Thousands)                                                              2003                2002           2002
                                                                                    ----                ----           ----
<S>                                                                               <C>                <C>             <C>
Commercial and Industrial - not secured by real estate ....................       $ 38,886           $ 31,958        $ 35,548
Commercial and Industrial - secured by real estate ........................         84,232             68,745          72,600
Residential real estate - mortgage ........................................         84,518             67,731          69,579
Residential real estate - construction ....................................         52,833             43,077          48,452
Consumer loans ............................................................         23,120             25,830          24,308
                                                                                  --------           --------        --------
     Gross Loans ..........................................................       $283,589           $237,341        $250,487
                                                                                  ========           ========        ========
</TABLE>

     The interest rates charged on loans vary with the degree of risk,  maturity
and amount of the loan. Competitive pressures,  money market rates, availability
of funds, and government  regulation also influence  interest rates. The average
yield on the  Company's  loans  for the  nine  months  and  three  months  ended
September  30,  2003 was 5.81% and 5.80%,  respectively,  compared  to 7.03% and
6.86%,  respectively,  for the nine months and three months ended  September 30,
2002. From January 2001 through  September 2003, the Federal Reserve has lowered
the federal funds target rate thirteen times for a total of 550 basis points, so


                                       12
<PAGE>

that interest rates are now at historically  low levels.  A large portion of the
Banks' adjustable rate loans, which constitute  approximately  51.7% of the loan
portfolio, reprice almost immediately following each 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  personnel who originate and package loans
that are pre-sold at origination to third parties and are classified as mortgage
loans held for sale for  reporting  purposes.  At September 30, 2003 the Company
held  $13,417,000  of mortgage  loans held for sale compared to  $55,026,000  at
December 31, 2002 and $32,913,000 at September 30, 2002. The substantial  swings
in the level of mortgage loans held for sale are due to wide fluctuations in the
demand for  residential  mortgages  from time to time.  During the three  months
ended  September  30,  2003  the  Company   originated   $147,222,000  and  sold
$174,142,000  in  residential  mortgage  loans.  During  the nine  months  ended
September 30, 2003, the Company originated $421,939,000 and sold $463,548,000 in
residential mortgage loans.

     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  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
September 30, 2003  approximately  $9,649,000  or 7.8% of commercial  loans were
unsecured.

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

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


                                       13
<PAGE>


Allowance for Loan Losses

     The allowance for loan losses at September 30, 2003 was $3,745,000 or 1.32%
of loans  outstanding  (which excludes mortgage loans held for sale) compared to
$2,850,000 or 1.14% of loans  outstanding at December 31, 2002 and to $2,804,000
or 1.18% of loans  outstanding  at September  30, 2002.  The  allowance for loan
losses is based upon management's continuing evaluation of the collectibility of
past due loans based on the  historical  loan loss  experience  of the  Company,
current  economic  conditions  affecting the ability of borrowers to repay,  the
volume of loans, the quality of collateral  securing  non-performing and problem
loans, and other factors deserving recognition.

     At September 30, 2003 the Company had $1,008,000 in non-accruing  loans, no
restructured  loans,  $318,000 in loans more than ninety days past due and still
accruing  interest,  and $193,000 in Other Real Estate  Owned.  This compares to
$926,000 in non-accruing  loans, no restructured  loans,  $5,000 loans more than
ninety days past due on which interest was still being accrued,  and $193,000 in
other real estate owned at December 31, 2002.  At September 30, 2002 the Company
had $691,000 in non-accruing  loans, no  restructured  loans,  $190,000 in loans
more than  ninety days past due and still  accruing  interest,  and  $193,000 in
Other Real Estate Owned. Non-performing loans at September 30, 2003 consisted of
$153,000 in commercial loans, $846,000 in mortgage loans, and $9,000 in consumer
loans.  Non-performing  assets as a  percentage  of loans and other real  estate
owned was 0.51%,  0.37%, and 0.40% at September 30, 2003, December 31, 2002, and
September 30, 2002, respectively.

     Net  charge-offs  during the nine  months  ended  September  30,  2003 were
$112,000  compared  to net  charge-offs  of $138,000  for the nine months  ended
September 30, 2002 and net  charge-offs  of $382,000 for the year ended December
31, 2002. The allowance for loan losses as a percentage of non-performing  loans
was 282%,  306%,  and 318% as of  September  30, 2003,  December  31, 2002,  and
September 30, 2002, respectively.

     The Company  accounts for impaired loans in accordance  with the provisions
of Statement of Financial  Accounting  Standards  ("SFAS")  114,  Accounting  by
Creditors for  Impairment  of a Loan.  SFAS No. 114, as amended by SFAS No. 118,
requires that impaired  loans be measured based on the present value of expected
future  cash  flows  or the  underlying  collateral  values  as  defined  in the
pronouncement.  When the ultimate collectibility of an impaired loan's principal
is in  doubt,  wholly  or  partially,  all cash  receipts  are then  applied  to
principal.  At September 30, 2003 the Company had $362,000 in impaired  loans as
compared to no impaired loans at December 31, 2002 and September 30, 2002.

Securities

     The  Company  invests  primarily  in  obligations  of the United  States or
obligations  guaranteed as to principal and interest by the United States, other


                                       14
<PAGE>

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 September 30, 2003 securities totaled  $86,677,000,  which represents
21.7% of total  earning  assets.  Securities  increased  $507,000  or 0.6%  from
$86,170,000  invested  as of  December  31,  2002 and  $4,474,000  or 5.4%  from
$82,203,000  invested as of September  30, 2002.  The increase in  securities is
primarily the result of the  investment of excess  liquidity  resulting  from an
increase in deposits at the Company's bank subsidiaries.

     At  September  30,  2003 the  Company's  total  investments  classified  as
available for sale had an amortized  cost of  $81,583,000  and a market value of
$81,608,000  for an  unrealized  gain of $25,000.  This compares to an amortized
cost of $79,125,000  and a market value of $80,163,000 for an unrealized gain of
$1,038,000  on the  Company's  investments  classified  as available for sale at
December  31,  2002.  At  September  30, 2002 the  Company's  total  investments
classified  as available  for sale had an amortized  cost of  $75,895,000  and a
market value of $76,948,000 for an unrealized gain of $1,053,000.

Cash and Cash Equivalents


     The Company's cash and cash equivalents  increased $17,329,000 or 142.7% to
$29,471,000  at  September  30, 2003 from  $12,142,000  at December 31, 2002 and
decreased  $4,640,000  or 13.6% from  $34,111,000  at September  30,  2002.  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  $28,190,000 or 8.6% to $356,364,000 at September
30, 2003 from  $328,174,000  at December 31, 2002 and  $25,333,000  or 7.7% from
$331,031,000  at  September  30,  2002.  The  increase  resulted  from  deposits
generated by each of the Banks.  Competition  for deposit  accounts is primarily
based on the interest rates paid, location convenience and services offered.

     During the nine months ended September 30, 2003,  interest-bearing deposits
averaged $299,907,000 compared to $247,208,000 for the same period of 2002. From
time to time Peoples National Bank solicits certificates of deposit from various
sources  through  brokers and through a program  designed to gather deposits via
the Internet.  This is done to reduce the need for funding from other short-term
sources such as federal  funds  purchased  and  short-term  borrowings  from the
Federal Home Loan Bank of Atlanta. These non-traditional  deposits are primarily
being  used  to  fund  Peoples  National  Bank's  short-term   mortgage  lending
activities.  On  September  30,  2003  there  were no  outstanding  certificates
garnered  through the  Internet,  and brokered  deposits  totaled  $688,000.  At
December 31, 2002 the Internet  certificates  of deposit totaled  $990,000,  and
there were no brokered deposits. At September 30, 2002 Peoples National Bank had


                                       15
<PAGE>

$1,486,000 in Internet  certificates  of deposit and brokered  deposits  totaled
$100,000.  These deposits are an attractive alternative funding source available
to use while  continuing  efforts to maintain and grow the bank's local  deposit
base.

     The  average  interest  rate paid on  interest-bearing  deposits  was 2.31%
during the nine months ended  September  30, 2003 compared to 2.86% for the same
period of 2002. In pricing deposits,  the Company considers its liquidity needs,
the  direction and levels of interest  rates,  and local market  conditions.  At
September 30, 2003  interest-bearing  deposits comprised 86.5% of total deposits
compared to 86.3% at September 30, 2002.

     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  76.9% and
77.8% for the nine months ended  September 30, 2003 and 2002  respectively.  The
Company  closely  monitors its reliance on  certificates  greater than $100,000,
which are  generally  considered  to be less stable and less  reliable than core
deposits.

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  September  30, 2003
short-term  borrowings  totaled  $24,903,000  and  were  comprised  entirely  of
securities  sold under  repurchase  agreements.  At December 31, 2002 short-term
borrowings  totaled  $47,331,000 and were comprised of $35,331,000 in securities
sold under repurchase agreements and $12,000,000 in short-term advances from the
Federal Home Loan Bank of Atlanta.  At September 30, 2002 short-term  borrowings
totaled  $27,588,000 and were comprised of $4,363,000 in Federal Funds Purchased
and  $23,225,000  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 September 30, 2003,  December 31, 2002, and September
30, 2002.

LIQUIDITY

     Liquidity  management  involves  meeting the cash flow  requirements of the
Company.  The Company's  liquidity position is primarily dependent upon its need
to respond to  short-term  demand for funds caused by increased  loan demand and
withdrawals  from deposit  accounts.  The Company's  primary  liquidity  sources
include cash and due from banks,  federal funds sold, and  securities  available
for sale. In addition, the Company (through the Banks) has the ability to borrow
funds on a  short-term  basis from the  Federal  Reserve  System and to purchase
federal funds from other financial  institutions.  The Banks are also members of


                                       16
<PAGE>

the Federal Home Loan Bank System and have the ability to borrow both short-term
and  long-term  funds on a secured  basis.  At September  30, 2003,  The Peoples
National  Bank had total  borrowing  capacity from the Federal Home Loan Bank of
Atlanta equal to $38,026,000,  and the unused portion of this line of credit was
$33,026,000.  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 September  30, 2003 of  $13,497,000  and  $3,529,000,
respectively,  all of which were unused.  At September  30, 2003,  the Banks had
unused federal funds lines of credit with various  correspondent  banks totaling
$22,450,000.

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

     During the first nine months of 2003, the Company had capital  expenditures
of approximately  $809,000 associated with the construction of a branch facility
for Bank of Anderson,  which opened in August 2003. The Company is also planning
capital  expenditures  that may be made in whole or part during the remainder of
2003.  This  includes the expansion of the main office of Bank of Anderson for a
total cost of  approximately  $800,000.  This  expansion  was begun in the third
quarter of 2003, with approximately  $25,000 being spent during the quarter. The
Company may also purchase additional office space for the mortgage department of
The Peoples  National Bank in Easley for  approximately  $630,000,  as well as a
tract of land at an  undetermined  price  for a  branch  office  of The  Peoples
National  Bank in  Greenville.  The Company may  additionally  make other lesser
capital expenditures through the normal course of business.

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

          OFF-BALANCE SHEET RISK and DERIVATIVE FINANCIAL INSTRUMENTS

     The  Company,  through  the  operations  of the  Banks,  makes  contractual
commitments to extend credit in the ordinary course of its business  activities.
These  commitments are legally binding  agreements to lend money to customers of
the Banks at  predetermined  interest  rates for a specified  period of time. At
September 30, 2003, the Banks had issued commitments to extend credit (excluding
commitments for residential  mortgage loans  designated for sale) of $72,662,000
through various types of arrangements.  The commitments  generally expire in one
year. Past experience  indicates that many of these commitments to extend credit
will expire not fully used. As described under  Liquidity,  the Company believes
that it has adequate  sources of liquidity  to fund  commitments  that are drawn
upon by the borrowers.

     In addition to commitments  to extend credit,  the Banks also issue standby
letters  of credit,  which are  assurances  to a third  party that they will not
suffer a loss if the Bank's customer fails to meet its contractual obligation to
the third party.  Standby letters of credit totaled  $4,273,000 at September 30,
2003.  Past  experience  indicates that many of these standby  letters of credit
will expire  unused.  However,  through its various  sources of  liquidity,  the
Company  believes  that it will  have  the  necessary  resources  to meet  these


                                       17
<PAGE>

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  September  30, 2003 the  Company had  commitments
outstanding to originate residential mortgage loans under rate locks commitments
from borrowers totaling $20,711,000. 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 June 30,
2003 for the Company was immaterial.

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





                                       18
<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 September 30, 2003:


                                 CAPITAL RATIOS
                             (Amounts in Thousands)

<TABLE>
<CAPTION>
                                                                                         Well                        Adequately
                                                                                      Capitalized                    Capitalized
                                                          Actual                      Requirement                    Requirement
                                                  Amount         Ratio           Amount         Ratio           Amount         Ratio
                                                  ------         -----           ------         -----           ------         -----
Company:
<S>                                              <C>             <C>            <C>             <C>             <C>            <C>
Total Risk-based Capital ...............         $39,767         12.75%         $31,190         10.00%          $24,952        8.00%
Tier 1 Risk-based Capital ..............          36,099         11.57           18,720          6.00            12,480        4.00
Leverage Ratio .........................          36,099          8.31           21,720          5.00            17,376        4.00

Peoples National Bank:
Total Risk-based Capital ...............         $24,059         12.71%         $18,929         10.00%          $15,143        8.00%
Tier 1 Risk-based Capital ..............          21,692         11.46           11,357          6.00             7,571        4.00
Leverage Ratio .........................          21,692          8.50           12,760          5.00            10,208        4.00

Bank of Anderson, N. A:
Total Risk-based Capital ...............         $ 9,736         11.45%         $ 8,503         10.00%          $ 6,802        8.00%
Tier 1 Risk-based Capital ..............           8,853         10.41            5,103          6.00             3,402        4.00
Leverage Ratio .........................           8,853          7.08            6,252          5.00             5,002        4.00

Seneca National Bank:
Total Risk-based Capital ...............         $ 4,357         11.72%         $ 3,718         10.00%          $ 2,974        8.00%
Tier 1 Risk-based Capital ..............           3,939         10.60            2,230          6.00             1,486        4.00
Leverage Ratio .........................           3,939          8.23            2,393          5.00             1,914        4.00

</TABLE>




                                       19
<PAGE>


RECENTLY ISSUED ACCOUNTING STANDARDS

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

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

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

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


                                       20
<PAGE>

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

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 September 30, 2003, on a cumulative basis
through 12 months,  rate-sensitive liabilities exceeded rate-sensitive assets by
$141,412,000.  This liability-sensitive  position is largely attributable to the
Company's  short-term  Certificates  of Deposit,  Money Market  accounts and NOW
accounts, which totaled $134,262,000, $57,478,000 and $39,386,000, respectively,
at September 30, 2003.






                                       21
<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 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).









                                       22
<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.

         Peoples  Bancorporation,  Inc. filed a Current Report on Form 8-K
         dated July 15, 2003 pursuant to Item 9 of that Form with respect
         to information provided pursuant to Item 12 of that Form.



                                       23
<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:  November 7, 2003                By:    /s/ Robert E. Dye, Sr.
                                             ------------------------
                                             Robert E. Dye, Sr.
                                             President and Chairman of the Board


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





                                       24
<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






                                       25