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, 2006                                  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 a large  accelerated  filer, an
accelerated  filer, or a  non-accelerated  filer. See definition of "accelerated
filer and large  accelerated  filer" in Rule 12b-2 of the Exchange  Act.  (Check
one):

  Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [X]

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).

                             Yes [ ]  No [X]

The number of outstanding shares of the issuer's $1.11 par value common stock as
of November 7, 2006 was 6,326,431.






<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,
                                                                                     2006               2005                2005
                                                                                     ----               ----                ----
                                                                                   Unaudited          Unaudited            Audited
ASSETS
<S>                                                                                 <C>                <C>                <C>
CASH AND DUE FROM BANKS ...................................................         $  10,180          $  15,811          $   9,311
INTEREST-BEARING DEPOSITS IN OTHER BANKS ..................................               412                891                900
FEDERAL FUNDS SOLD ........................................................             3,750              3,863                  -
                                                                                    ---------          ---------          ---------
     Total cash and cash equivalents ......................................            14,342             20,565             10,211
SECURITIES
     Available for sale ...................................................            95,092             65,253             65,009
     Held to maturity (market value
         of $13,397, $9,569 and $10,674) ..................................            13,523              9,611             10,855
     Other investments, at cost ...........................................             3,920              1,972              2,197
LOANS-less allowance for loan losses
     of $4,081, $3,979 and $3,854 .........................................           356,959            360,518            373,641
PREMISES AND EQUIPMENT, net of accumulated
     depreciation and amortization ........................................            11,043             10,757             10,635
ACCRUED INTEREST RECEIVABLE ...............................................             2,736              2,095              2,441
CASH SURRENDER VALUE OF LIFE INSURANCE ....................................             9,646              9,322              9,403
OTHER ASSETS ..............................................................             1,956              2,535              3,585
                                                                                    ---------          ---------          ---------
         TOTAL ASSETS .....................................................         $ 509,217          $ 482,628          $ 487,977
                                                                                    =========          =========          =========

LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
DEPOSITS
     Noninterest-bearing ..................................................         $  60,034          $  54,734          $  52,467
     Interest-bearing .....................................................           327,330            343,375            337,882
                                                                                    ---------          ---------          ---------
         Total deposits ...................................................           387,364            398,109            390,349
SECURITIES SOLD UNDER REPURCHASE
     AGREEMENTS ...........................................................            28,083             29,941             31,736
FEDERAL FUNDS PURCHASED ...................................................                 -                  -              4,039
NOTES PAYABLE TO FEDERAL HOME LOAN BANK ...................................            45,000             11,000             17,500
ACCRUED INTEREST PAYABLE ..................................................             2,743              1,926              2,281
OTHER LIABILITIES .........................................................             1,202              1,183                901
                                                                                    ---------          ---------          ---------
         Total Liabilities ................................................           464,392            442,159            446,806
                                                                                    ---------          ---------          ---------
SHAREHOLDERS' EQUITY *
Common Stock - 15,000,000 shares authorized, $1.11
     Par value per share, 6,618,325 shares, 6,553,070 shares
       and 6,557,624 shares outstanding, respectively .....................             7,347              7,274              7,279
Additional paid-in capital ................................................            34,688             31,775             34,337
Retained Earnings .........................................................             3,115              2,096                408
Accumulated other comprehensive income (loss) .............................              (325)              (676)              (853)
                                                                                    ---------          ---------          ---------
         Total Shareholders' Equity .......................................            44,825             40,469             41,171
                                                                                    ---------          ---------          ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ................................         $ 509,217          $ 482,628          $ 487,977
                                                                                    =========          =========          =========
</TABLE>

* Share and per share data for 2005 has been  restated  to reflect  the 5% stock
dividend  to be  issued  in  January  2007  and  2006  per  share  data has been
calculated assuming the effect of the 5% stock dividend as if it had occurred on
January 1, 2006.

See Notes to Unaudited  Consolidated  Financial Statements which are an integral
part of these statements.

                                       1
<PAGE>
                  Peoples Bancorporation, Inc. and Subsidiaries
                        Consolidated Statements of Income
             (Dollars in thousands except per share and share data)
                                    Unaudited

<TABLE>
<CAPTION>
                                                                                Three Months Ended            Nine Months Ended
                                                                                   September 30,               September 30,
                                                                                   -------------               -------------
                                                                                 2006        2005           2006            2005
                                                                                 ----        ----           ----            ----
INTEREST INCOME
<S>                                                                          <C>           <C>            <C>           <C>
    Interest and fees on loans ...........................................   $     7,283   $     6,244    $    21,441   $    17,279
    Interest on securities
      Taxable ............................................................           628           493          1,629         1,413
      Tax-exempt .........................................................           163            64            351           183
    Interest on federal funds ............................................           136            42            189           173
                                                                             -----------   -----------    -----------   -----------
Total interest income ....................................................         8,210         6,843         23,610        19,048
                                                                             -----------   -----------    -----------   -----------
INTEREST EXPENSE
    Interest on deposits .................................................         2,899         2,150          7,796         5,695
    Interest on federal funds purchased and securities
             sold under repurchase agreements ............................           199           168            580           470
    Interest on notes payable Federal Home Loan Bank .....................           171            75            669           239
                                                                             -----------   -----------    -----------   -----------
Total interest expense ...................................................         3,269         2,393          9,045         6,404
                                                                             -----------   -----------    -----------   -----------
Net interest income ......................................................         4,941         4,450         14,565        12,644
PROVISION FOR LOAN LOSSES ................................................           225           165            718           521
                                                                             -----------   -----------    -----------   -----------
Net interest income after provision for loan losses ......................         4,716         4,285         13,847        12,123
                                                                             -----------   -----------    -----------   -----------
NON-INTEREST INCOME
    Service charges on deposit accounts ..................................           433           519          1,388         1,499
    Customer service fees ................................................            35            39            131           132
    Mortgage banking .....................................................           124           146            327           367
    Brokerage services ...................................................            59            67            196           153
    Bank owned life insurance ............................................            93           104            286           314
    Gain on sale of available for sale securities ........................             -             -              -             7
    Gain (loss) on sale of assets acquired in settlement of loans ........            35           (67)           159           (64)
    Other noninterest income .............................................           116            91            369           270
                                                                             -----------   -----------    -----------   -----------
                                                                                     895           899          2,856         2,678
                                                                             -----------   -----------    -----------   -----------
NON-INTEREST EXPENSES
    Salaries and benefits ................................................         2,203         2,119          6,689         6,123
    Occupancy ............................................................           205           187            595           541
    Equipment ............................................................           335           327          1,032         1,013
    Marketing and advertising ............................................           103            91            319           297
    Communications .......................................................            60            53            181           164
    Printing and supplies ................................................            40            34            130           106
    Bank paid loan costs .................................................            44           119            181           228
    Director fees ........................................................            82            88            260           261
    ATM/Debit card expenses ..............................................            77            68            224           201
    Legal and professional fees ..........................................            88            99            442           263
    Other operating expenses .............................................           445           398          1,295         1,170
                                                                             -----------   -----------    -----------   -----------
              Total noninterest expenses .................................         3,682         3,583         11,348        10,367
                                                                             -----------   -----------    -----------   -----------
    Income before income taxes ...........................................         1,929         1,601          5,355         4,434
PROVISION FOR INCOME TAXES ...............................................           608           528          1,707         1,449
                                                                             -----------   -----------    -----------   -----------
    Net income ...........................................................   $     1,321   $     1,073    $     3,648   $     2,985
                                                                             ===========   ===========    ===========   ===========
INCOME PER COMMON SHARE *
    BASIC ................................................................   $      0.20   $      0.16    $      0.55   $      0.46
                                                                             ===========   ===========    ===========   ===========
    DILUTED ..............................................................   $      0.20   $      0.16    $      0.55   $      0.45
                                                                             ===========   ===========    ===========   ===========
WEIGHTED AVERAGE COMMON SHARES *
    BASIC ................................................................     6,610,239     6,552,533      6,588,025     6,525,632
                                                                             ===========   ===========    ===========   ===========
    DILUTED ..............................................................     6,690,844     6,676,554      6,672,305     6,667,889
                                                                             ===========   ===========    ===========   ===========
CASH DIVIDENDS PAID PER COMMON SHARE .....................................   $      0.05   $      0.05    $      0.15   $      0.15
                                                                             ===========   ===========    ===========   ===========
</TABLE>

* Share and per share data for 2005 has been  restated  to reflect  the 5% stock
dividend  to be  issued  in  January  2007  and  2006  per  share  data has been
calculated assuming the effect of the 5% stock dividend as if it had occurred on
January 1, 2006.

See Notes to Unaudited  Consolidated  Financial Statements which are an integral
part of these statements.

                                       2
<PAGE>

                  Peoples Bancorporation, Inc. and Subsidiaries
           Consolidated Statements of Changes in Shareholders' Equity
              for the six months ended September 30, 2005 and 2006

                    (Dollars in thousands except share date)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                         Accumulated
                                                             Common stock           Additional               other        Total
                                                             ------------            paid-in   Retained  comprehensive shareholders'
                                                         Shares        Amount        capital   earnings   Income(loss)    equity
                                                         ------        ------        -------   --------   ------------    ------
<S>                                                    <C>          <C>           <C>          <C>          <C>          <C>
Balance, December 31, 2004* .......................    6,419,425    $    7,125    $   31,575   $        -   $     (460)  $   38,240
Net Income ........................................                                                 2,985                     2,985
Other comprehensive income, net of tax:
   Unrealized holding losses on
     securities available for sale,
     net of income taxes of $111 ..................                                                               (211)        (211)
   Less reclassification
     adjustments for gains
     included in net income, net of
     income taxes of $ 2 ..........................                                                                 (5)          (5)
                                                                                                                         ----------
Comprehensive income ..............................                                                                           2,769
Cash Dividends ....................................                                                  (889)                     (889)
Proceeds from stock options .......................      133,645           149           200                                    349
                                                       ---------    ----------    ----------   ----------   ----------   ----------
Balance, September 30, 2005* ......................    6,553,070    $    7,274    $   31,775   $    2,096   $     (676)  $   40,469
                                                       =========    ==========    ==========   ==========   ==========   ==========

Balance, December 31, 2005* .......................    6,557,624    $    7,279    $   34,337   $      408   $     (853)  $   41,171
Net Income ........................................                                                 3,648                     3,648
Other comprehensive income, net of tax:
   Unrealized holding gains on
     securities available for sale,
     net of income taxes of $273 ..................                                                               528           528
                                                                                                                         ----------
Comprehensive income ..............................                                                                           4,176
Cash Dividends ....................................                                                 (941)                      (941)
Proceeds from stock options .......................       60,701            68           289                                    357
Stock-based compensation ..........................                                       62                                     62
                                                       ---------    ----------    ----------   ----------   ----------   ----------
Balance, September 30, 2006* ......................    6,618,325    $    7,347    $   34,688   $    3,115   $     (325)  $   44,825
                                                       =========    ==========    ==========   ==========   ==========   ==========
</TABLE>


* Share and per share data for 2005 has been  restated  to reflect  the 5% stock
dividend  to be  issued  in  January  2007  and  2006  per  share  data has been
calculated assuming the effect of the 5% stock dividend as if it had occurred on
January 1, 2006.

See Notes to Unaudited Consolidated  Financials Statements which are an integral
part of these statements.



                                       3
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                                                 (Unaudited)
                                                                                                              Nine Months Ended
                                                                                                                September 30,
                                                                                                                -------------
                                                                                                           2006               2005
                                                                                                           ----               ----
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                                                     <C>                <C>
   Net income ................................................................................          $  3,648           $  2,985
   Adjustments to reconcile net income to net cash provided
     by operating activities:
   Loss (gain) on sale of premises and equipment .............................................                (3)                20
   Gain on sale of securities available for sale .............................................                 -                 (7)
   Gain on sale of assets acquired in settlement of loans ....................................              (159)               (64)
   Provision for loan losses .................................................................               718                521
   Depreciation and amortization .............................................................               819                843
   Amortization and accretion (net) of premiums and
     discounts on securities .................................................................               101                 95
   Stock-based compensation ..................................................................                62                  -
   Increase in accrued interest receivable ...................................................              (295)              (265)
   Increase in other assets ..................................................................              (300)              (208)
   Increase in accrued interest payable ......................................................               462                772
   Increase (decrease) in other liabilities ..................................................               301                (49)
                                                                                                        --------           --------
     Net cash provided by operating activities ...............................................             5,354              4,643
                                                                                                        --------           --------

CASH FLOWS FROM INVESTING ACTIVITIES
   Purchases of securities held to maturity ..................................................            (2,893)            (3,479)
   Purchases of securities available for sale ................................................           (60,201)            (6,493)
   Purchases of other investments ............................................................            (1,875)              (163)
   Proceeds from principal pay-downs on securities available for sale ........................             3,351              2,547
   Proceeds from the sale of securities available for sale ...................................               335                358
   Proceeds from the maturities and calls of securities available for sale ...................            27,350                  -
   Proceeds from the maturity of securities held to maturity .................................               160              1,218
   Investment in bank owned life insurance ...................................................              (243)              (273)
   Net (increase) decrease in loans ..........................................................            15,964            (39,244)
   Proceeds from the sale of  assets acquired in settlement of loans .........................             1,915                367
   Proceeds from the sale of premises and equipment ..........................................                30                 71
   Purchase of premises and equipment ........................................................            (1,355)              (616)
                                                                                                        --------           --------
     Net cash provided by (used in) investing activities .....................................           (17,462)           (45,707)
                                                                                                        --------           --------

CASH FLOWS FROM FINANCING ACTIVITIES
   Net increase (decrease) in deposits .......................................................            (2,985)            51,964
   Net decrease in securities sold under repurchase agreements ...............................            (3,653)            (4,012)
   Net decrease in federal funds purchased ...................................................            (4,039)              (572)
   Net decrease in notes payable to Federal Home Loan Bank ...................................            27,500              2,500
   Proceeds from the exercise of stock options ...............................................               357                349
   Cash dividend .............................................................................              (941)              (889)
                                                                                                        --------           --------
     Net cash provided (used in) by financing activities .....................................            16,239             49,340
                                                                                                        --------           --------
     Net increase in cash and cash equivalents ...............................................             4,131              8,276
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD ...............................................            10,211             12,289
                                                                                                        --------           --------
CASH AND CASH EQUIVALENTS, END OF PERIOD .....................................................          $ 14,342           $ 20,565
                                                                                                        ========           ========

CASH PAID FOR
     Interest ................................................................................          $  8,583           $  5,632
                                                                                                        ========           ========
     Income Taxes ............................................................................          $  1,553           $  1,660
                                                                                                        ========           ========

NON-CASH TRANSACTIONS
     Change in unrealized loss on available for sale securities ..............................          $    801           $   (322)
                                                                                                        ========           ========
     Loans transferred to other real estate ..................................................          $    160           $    606
                                                                                                        ========           ========
</TABLE>

         See Notes to Unaudited  Consolidated  Financial Statements which are an
integral part of these statements.


                                       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 2005 Annual Report on Form
10-K and incorporated herein by reference.

STATEMENT OF CASH FLOWS

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

COMMON STOCK

     The Board of Directors declared cash dividends of $0.05 per common share to
shareholders  of record March 17, 2006,  June 16, 2006,  and September 15, 2006,
payable March 31, 2006, June 30, 2006, and September 29, 2006, respectively.

     The Company  declared a five percent  common stock  dividend on October 19,
2006, payable January 5, 2007 to shareholders of record December 22, 2006. Share
and per share data for 2005 has been  restated to reflect this  transaction  and
2006 per share data has been calculated  assuming the effect of the five percent
stock dividend as if is had occurred on January 1, 2006.

EARNINGS PER SHARE

     Statement of Financial  Accounting Standards ("SFAS") No. 128, Earnings per
Share requires that the Company  present basic and diluted net income per common
share.  The assumed  conversion of stock options creates the difference  between
basic and  diluted  net  income per share.  Income  per share is  calculated  by
dividing net income by the weighted average number of common shares  outstanding
for each  period  presented.  The  weighted  average  number  of  common  shares
outstanding  for basic net  income per common  share for the nine  months  ended
September  30, 2006 and 2005 was  6,588,025  and  6,525,632,  respectively.  The
weighted average number of common shares  outstanding for diluted net income per
common share was 6,672,305 and 6,667,889 for the nine months ended September 30,
2006 and 2005. Weighted average shares in 2005 have been restated to reflect the
5% stock dividend to be issued in January 2007.

STOCK BASED COMPENSATION

     On  January  1,  2006,  the  Company  adopted  the fair  value  recognition
provisions  of  Financial  Accounting  Standards  Board  ("FASB")  Statement  of
Financial Accounting  Standards ("SFAS") No. 123(R),  Accounting for Stock-Based
Compensation,  to account for  compensation  costs under its stock option plans.
The Company  previously  utilized the  intrinsic  value method under  Accounting
Principles  Board Opinion No. 25,  Accounting  for Stock Issued to Employees (as


                                       5
<PAGE>

amended) ("APB 25").  Under the intrinsic value method  prescribed by APB 25, no
compensation  costs were  recognized for the Company's stock options because the
option exercise price in its plans equals the market price on the date of grant.
Prior to January 1, 2006,  the Company only  disclosed  the pro forma effects on
net income and earnings per share as if the fair value recognition provisions of
SFAS 123(R) had been utilized.

     In  adopting  SFAS No.  123(R),  the  Company  elected to use the  modified
prospective method to account for the transition from the intrinsic value method
to the fair value recognition  method.  Under the modified  prospective  method,
compensation cost is recognized from the adoption date forward for all new stock
options  granted and for any  outstanding  unvested  awards as if the fair value
method had been applied to those awards as of the date of grant.  The  following
table illustrates the effect on net income and earnings per share as if the fair
value based method had been applied to all  outstanding  and unvested  awards in
each period (in thousands, except per share amounts).

<TABLE>
<CAPTION>
                                                                               Three Months Ended            Nine Months Ended
                                                                                 September 30,                  September 30,
                                                                                 -------------                  -------------
                                                                             2006            2005            2006           2005
                                                                             ----            ----            ----           ----
<S>                                                                     <C>              <C>             <C>             <C>
Net income, as reported ............................................    $       1,321    $      1,073    $       3,648   $    2,985
Add: Stock-based employee compensation expense
       included  in  reported  net income net
       of related tax effects ......................................               16               -               41            -
Deduct: Total stock-based employee compensation
          expense determined under fair value based method
          for all awards, Net of related tax effects ...............              (16)            (40)             (41)         (98)
                                                                        -------------    ------------    -------------    ---------
Pro forma net income ...............................................    $       1,321    $      1,033    $       3,648   $    2,887
                                                                        =============    ============    =============    =========
Net income per common share
  Basic - as reported ..............................................    $        0.20    $       0.16    $        0.55    $    0.46
                                                                        =============    ============    =============    =========
  Basic - pro forma ................................................       $        -    $       0.16       $        -    $    0.44
                                                                        =============    ============    =============    =========
  Diluted - as reported ............................................    $        0.20    $       0.16    $        0.55    $    0.45
                                                                        =============    ============    =============    =========
  Diluted - pro forma ..............................................       $        -    $       0.15       $        -    $    0.43
                                                                        =============    ============    =============    =========
</TABLE>

Share and per share  data for 2005 has been  restated  to  reflect  the 5% stock
dividend  to be  issued  in  January  2007  and  2006  per  share  data has been
calculated assuming the effect of the 5% stock dividend as if it had occurred on
January 1, 2006.

         The Company has three stock option plans, the "1993 Employee  Incentive
Stock Option Plan," the "1997 Non-Employee Directors Stock Option Plan," and the
"2004 Stock Option Plan. The "1993 Employee Incentive Stock Option Plan" expired
in 2003,  but options to purchase  36,248 shares  remain  available for exercise
under this plan.  Under the "2004 Stock Option Plan," the Board of Directors may
grant options to officers and employees to purchase  common stock of the Company
at prices  not less than 100  percent of the fair value of the stock on the date
of grant.  The  outstanding  options become  exercisable  in various  increments
beginning  on the date of grant and  expiring  ten years from the date of grant.
Under  the  "1997  Non-Employee   Directors  Stock  Option  Plan,"  non-employee
directors  of the Company or one the Banks are granted  options to purchase  500
shares of common  stock for each year  served on the board to a maximum of 5,000
per  director.  The option  price shall not be less than 100 percent of the fair
value of the stock on the grant date. The outstanding options become exercisable
on the grant date and expire at the earlier of the end of the director's term or


                                       6
<PAGE>

ten years from the grant date.  At September  30, 2006,  an aggregate of 388,014
shares were  reserved for issuance on exercise of options under all these plans.
During the first nine  months of 2006,  options to purchase  17,850  shares were
granted with a weighted average fair value of $11.65 per share. The following is
a summary of the status of the  Company's  plans as of  September  30,  2006 and
changes during the nine months ended September 30, 2006.






                                                                      Weighted
                                                                       Average
                                                                      Exercise
                                                     Shares            Price
                                                     ------            -----

Outstanding, December 31, 2005 ....................  302,673          $ 7.52
Granted ...........................................   17,850          $11.65
Exercised .........................................  (65,023)         $ 5.33
Forfeited .........................................  (15,309)         $14.14
                                                     --------
Outstanding, September 30, 2006 ...................   240,191         $ 8.03
                                                     ========
Options Exercisable, September 30, 2006 ...........   221,512
                                                     ========


                                       7
<PAGE>


MANAGEMENT'S OPINION

     The accompanying  unaudited  consolidated  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.





                                       8
<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 2005
Annual  Report  of  Peoples  Bancorporation,  Inc.  on  Form  10-K.  Results  of
operations for the three-month  and nine-month  periods ended September 30, 2006
are not  necessarily  indicative  of the  results to be  attained  for any other
period.

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.

     The Company  undertakes  no  obligation  to  publicly  update or revise any
forward-looking  statements,  whether  as a result  of new  information,  future
events or otherwise.  In light of these risks,  uncertainties,  and assumptions,
the forward-looking events discussed in this report might not occur.


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 of America 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 2005  Annual
Report on Form 10-K of Peoples Bancorporation, Inc.

                                       9
<PAGE>

     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 2005 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.








                                       10
<PAGE>


Overview

       The Company is a financial  holding company with three  wholly-owned bank
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 loan-production  office
located in the Upstate Area of South Carolina.





                                       11
<PAGE>


                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

EARNINGS PERFORMANCE

Overview

     The  Company's  consolidated  net income for the third  quarter of 2006 was
$1,321,000  or $0.20 per  diluted  share  compared  to  $1,073,000  or $0.16 per
diluted  share for the third  quarter of 2005, an increase of $248,000 or 23.1%.
Net income for the nine months ended  September 30, 2006 was $3,648,000 or $0.55
per diluted share compared to $2,985,000 or $0.45 per diluted share for the nine
months ended  September  30, 2005,  an increase of $663,000 or 22.2%.  Return on
average equity for the nine months and three months ended September 30, 2006 was
11.18% and 11.73%  respectively,  compared to 9.98% and 10.42%  respectively for
the nine months and three months  ended  September  30, 2005.  Return on average
assets for the nine months and three months ended  September  30, 2006 was 1.00%
and 1.06%  respectively,  compared to 0.87% and 0.89%  respectively for the nine
months and three months ended September 30, 2005. The increases in the Company's
net income,  diluted earnings per share, return on average equity, and return on
average  assets in the first nine  months of 2006 are  largely  attributable  to
higher yields and average balances of earning assets.

Interest Income, Interest Expense and Net Interest Income

     The largest  component  of the  Company's  income is interest  income.  Net
interest income,  which is the difference  between the interest earned on assets
and the interest paid for the  liabilities  used to fund those assets,  measures
the gross  profit  from  lending  and  investing  activities  and is the primary
contributor to the Company's earnings.  Net interest income before provision for
loan losses  increased  $491,000  or 11.0% to  $4,941,000  in the quarter  ended
September 30, 2006  compared to  $4,450,000  in the quarter ended  September 30,
2005.  For the nine months ended  September 30, 2006 net interest  income before
provision for loan losses increased  $1,921,000 or 15.2% to $14,565,000 compared
to $12,644,000  for the nine months ended  September 30, 2005. The Company's net
interest  margin for the three months and nine months ending  September 30, 2006
was 4.25% and 4.25%  respectively,  compared to 4.00% and 3.95% respectively for
the three months and nine months ended September 30, 2005.

     The  Company's  total  interest  income  for the third  quarter of 2006 was
$8,210,000  compared to $6,843,000 for the third quarter of 2005, an increase of
$1,367,000 or 20.0%.  Total interest  income for the nine months ended September
30, 2006 was  $23,610,000  compared  to  $19,048,000  for the nine months  ended
September 30, 2005,  an increase of  $4,562,000  or 24.0%.  Interest and fees on
loans, the largest component of total interest income,  increased  $1,039,000 in
the third  quarter of 2006 to $7,283,000  compared to  $6,244,000  for the third
quarter of 2005,  an increase  of 16.6%.  Interest  and fees on loans  increased
$4,162,000 for the nine months ended September 30, 2006 to $21,441,000  compared
to  $17,279,000  for the nine months ended  September  30, 2005,  an increase of
24.1%.  The  increases in total  interest  income and interest and fees on loans
were  primarily  due to higher  interest  rates and fees  charged.  Interest  on


                                       12
<PAGE>

taxable  securities,  the second  largest  component  of total  interest  income
increased $135,000 in the third quarter of 2006 to $628,000 compared to $493,000
for the third  quarter  of 2005,  an  increase  of 27.4%.  Interest  on  taxable
securities  increased  $216,000 for the nine months ended  September 30, 2006 to
$1,629,000  compared to $1,413,000 for the nine months ended September 30, 2005,
an increase of 15.3%.  The increases in interest on taxable  securities were due
to higher interest rates and higher average balances.

     The  Company's  total  interest  expense for the third  quarter of 2006 was
$3,269,000  compared to $2,393,000 for the third quarter of 2005, an increase of
$876,000 or 36.6%.  Total interest  expense for the nine months ended  September
30,  2006 was  $9,045,000  compared  to  $6,404,000  for the nine  months  ended
September  30, 2005, an increase of  $2,641,000  or 41.2%.  Interest  expense on
deposits, the largest component of total interest expense, increased $749,000 in
the third  quarter of 2006 to $2,899,000  compared to  $2,150,000  for the third
quarter of 2005, an increase of 34.8%.  Interest  expense on deposits  increased
$2,101,000 for the nine months ended  September 30, 2006 to $7,796,000  compared
to  $5,695,000  for the nine months ended  September  30,  2005,  an increase of
36.9%. The increase in interest  expense on deposits is largely  attributable to
higher interest rates paid on these accounts, as well as higher average balances
during the first nine  months of 2006 when  compared to the same period of 2005.
Interest  on federal  funds  purchased  and  securities  sold  under  repurchase
agreements,  the second largest component of total interest  expense,  increased
$31,000 or 18.5% to $199,000 in the third  quarter of 2006  compared to $168,000
for the  third  quarter  of  2005.  Interest  on  federal  funds  purchased  and
securities  sold under  repurchase  agreements  increased  $110,000  or 23.4% to
$580,000  in the first nine months of 2006  compared  to $470,000  for the first
nine months of 2005.  This  increase is largely  attributable  to higher  market
interest rates experienced at the Company's bank  subsidiaries  during the first
nine months of 2006 when compared to the same period of 2005.  Interest on notes
payable to the Federal Home Loan Bank ("FHLB"),  the third largest  component of
total  interest  expense,  increased  $96,000 or 128.0% to $171,000 in the third
quarter of 2006 compared to $75,000 for the third  quarter of 2005.  Interest on
notes  payable to the  Federal  Home Loan Bank  increased  $430,000 or 179.9% to
$669,000  in the first nine months of 2006  compared  to $239,000  for the first
nine months of 2005.  The  increase  is largely  attributable  to higher  market
interest  rates and higher average  balances in these accounts  during the first
nine months of 2006 when compared to the same period of 2005.

Provision for Loan Losses

     The provision for loan losses charged to operations during the three months
ended September 30, 2006 was $225,000 compared to $165,000, for the three months
ended  September  30, 2005,  an increase of $60,000 or 36.4%.  The provision for
loan losses  charged to  operations  during the nine months ended  September 30,
2006 increased $197,000 or 37.8% to $718,000,  compared to $521,000 for the nine
months ended September 30, 2005. The changes in the Company's provision for loan
losses  for the  third  quarter  and  first  nine  months  of 2006 are  based on
management's evaluation of the Company's overall credit quality and its estimate


                                       13
<PAGE>

of loan losses  inherent in the loan  portfolio.  See  "BALANCE  SHEET  REVIEW -
Allowance for Loan Losses" for further discussion.

Non-interest Income

     Non-interest  income  decreased  $4,000 or 0.4% to  $895,000  for the third
quarter of 2006 compared to $899,000 for the third quarter of 2005. Non-interest
income  increased  $178,000 or 6.6% to  $2,856,000  for the first nine months of
2006 compared to $2,678,000 for the same period of 2005. Service fees on deposit
accounts,  the largest  component of non-interest  income,  decreased $86,000 or
16.6% to $433,000  for the third  quarter of 2006  compared to $519,000  for the
third quarter of 2005.  Service fees on deposit accounts  decreased  $111,000 or
7.4% to $1,388,000  for the first nine months of 2006 compared to $1,499,000 for
the first  nine  months of 2005.  These  decreases  in  service  fee  income are
primarily the result of a lower number of overdraft items at the banks.

     Mortgage banking income decreased  $22,000 or 15.1% in the third quarter of
2006 to  $124,000  compared  to  $146,000  in the  third  quarter  of 2005,  and
decreased $40,000 or 10.9% in the first nine months of 2006 to $327,000 compared
to  $367,000 in the first nine  months of 2005.  These  changes in the levels of
mortgage banking income are largely due to the substantial  swings in the demand
for residential mortgage loan origination that occur from time to time.

     There were no gains  realized on the sale of available for sale  securities
during the third  quarter  and first nine  months of 2006,  compared to no gains
during  the third  quarter of 2005 and gains of $7,000  realized  on the sale of
available for sale securities during the first nine months of 2005.

Non-interest Expense

     Total non-interest  expense increased $99,000 or 2.8% to $3,682,000 for the
third  quarter of 2006 from  $3,583,000  for the third  quarter  of 2005.  Total
non-interest  expense  increased  $981,000 or 9.5% to $11,348,000  for the first
nine months of 2006 from  $10,367,000 for the same period of 2005.  Salaries and
benefits,  the largest component of non-interest  expense,  increased $84,000 or
4.0%, to $2,203,000 for the third quarter of 2006 from  $2,119,000 for the third
quarter of 2005. Salaries and benefits increased $566,000 or 9.2%, to $6,689,000
for the first nine months of 2006 from  $6,123,000  for the first nine months of
2005.  The  increases in salaries and benefits are primarily due to the addition
of certain key personnel,  signing bonuses,  normal salary increases,  and other
changes in personnel throughout the Company.

     Occupancy and furniture and equipment  expense increased $26,000 or 5.1% to
$540,000 in the third  quarter of 2006 compared to $514,000 in the third quarter
of 2005.  Occupancy and furniture and equipment  expenses  increased  $73,000 or
4.7% to  $1,627,000  for the first nine months of 2006 from  $1,554,000  for the
first nine months of 2005. The increase is primarily  attributable to the normal
expansion of the Company.

                                       14
<PAGE>

     Legal and  professional  fees decreased  $11,000 or 11.1% to $88,000 in the
third quarter of 2006  compared to $99,000 in the third  quarter of 2005.  Legal
and professional fees increased $179,000 or 68.1% to $442,000 for the first nine
months of 2006  compared  to  $263,000  in the first same  period of 2005.  This
increase includes legal fees associated with the termination of the President of
Bank of Anderson, N. A., which occurred in January 2006.

     Marketing and advertising expense increased $12,000 or 13.2% to $103,000 in
the third  quarter of 2006 from  $91,000  for the third  quarter  of 2005.  This
increase is  attributable  to the timing of marketing  and  advertising  of bank
products and services.  Marketing and advertising  expense  increased $22,000 or
7.4% to $319,000  for the first nine months of 2006 from  $297,000 for the first
nine months of 2005. This increase for the nine-month  period is attributable to
the promotion of certain bank products and advertising  associated with the 20th
anniversary of The Peoples  National Bank.  Directors' fees decreased  $6,000 or
6.8% to $82,000 in the third  quarter of 2006 from $88,000 for the third quarter
of 2005 as a result of a decrease  in the  number of  directors.  Director  fees
decreased  $1,000 or 0.4% to  $260,000  for the first  nine  months of 2006 from
$261,000  for the first nine  months of 2005 due to a decrease  in the number of
directors,  partially  offset by an increase in the amount of  compensation  per
director.

     All other  operating  expenses  were  $666,000 in the third quarter of 2006
compared to  $672,000  for the second  quarter of 2005,  a decrease of $6,000 or
0.9%. All other operating expense  increased  $142,000 or 7.6% to $2,011,000 for
the first nine months of 2006 from $1,869,000 for the first nine months of 2005.
This increase is due to normal growth in miscellaneous operating expenses.



                                       15
<PAGE>

BALANCE SHEET REVIEW

Loans

     Outstanding  loans  represent  the largest  component of earning  assets at
75.6% of total earning assets.  As of September 30, 2006, the Company held total
gross loans  outstanding of $361,040,000.  Gross loans decreased  $16,455,000 or
4.4% from $377,495,000 in total gross outstanding loans at December 31, 2005 and
decreased  $3,457,000 or 0.9% from $364,497,000 in total gross loans outstanding
at September 30, 2005. This decrease in 2006 resulted from softening loan demand
at the Company's  banks.  The following table  summarizes  outstanding  loans by
collateral type:

<TABLE>
<CAPTION>
Loan Portfolio Composition                                                                     September 30,           December 31,
                                                                                               -------------           ------------
(Dollars in Thousands)                                                                   2006             2005             2005
                                                                                         ----             ----             ----
                                                                                              (Unaudited)                (Audited)
<S>                                                                                   <C>               <C>                <C>
Commercial and Industrial - not secured by real estate ....................           $ 39,186          $ 40,549           $ 39,669
Commercial and Industrial - secured by real estate ........................             89,659            92,584             90,186
Residential real estate - mortgage ........................................            102,479           107,456            107,398
Residential real estate - construction ....................................            115,210           104,890            121,048
Consumer loans ............................................................             14,506            19,018             19,194
                                                                                      --------          --------           --------
     Gross Loans ..........................................................           $361,040          $364,497           $377,495
                                                                                      ========          ========           ========
</TABLE>

     The interest rates charged on loans vary with the degree of risk,  maturity
and amount of the loan.  Competitive  pressures,  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, 2006 was 7.67% and 7.90% respectively, compared to 6.66% and 6.90%
respectively  for the nine months and three  months  ended  September  30, 2005.
Between the end of the third quarter of 2005 and the end of the third quarter of
2006, the Federal Reserve  increased the federal funds target rate six times for
a total of 150 basis points.  A large  portion of the Company's  adjustable-rate
loans,  which constitutes 51% 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 do
employ  mortgage  loan  originators  who  originate  loans that are  pre-sold at
origination to third parties.

     The Company's  commercial lending activity is directed  principally towards
businesses  whose  demands for funds fall within each Bank's legal lending limit
and which are potential  deposit  customers of the Banks. This category of loans


                                       16
<PAGE>

includes loans made to individuals,  partnerships,  and corporations,  which are
obtained for a variety of business  purposes.  Particular  emphasis is placed on
loans to small and medium-sized  businesses.  The Company's commercial loans are
spread throughout a variety of industries,  with no industry or group of related
industries   accounting  for  a  significant  portion  of  the  commercial  loan
portfolio.  Commercial loans are made on either a secured or 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
September 30, 2006  approximately  $10,162,000 or 7.9% 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, if any, agricultural loans.

Allowance for Loan Losses

     The allowance for loan losses at September 30, 2006 was $4,081,000 or 1.13%
of loans  outstanding  compared to $3,854,000 or 1.02% of loans  outstanding  at
December 31, 2005 and compared to  $3,979,000 or 1.09% of loans  outstanding  at
September 30, 2005.  The  allowance  for loan losses is based upon  management's
continuing  evaluation of the  collectibility  of 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 the
collateral  securing   non-performing  and  problem  loans,  and  other  factors
deserving recognition.

     At September  30, 2006 the Company had  $1,638,000 in  non-accruing  loans,
$423,000 in restructured loans, $110,000 in loans more than ninety days past due
and still  accruing  interest,  and  $418,000 in other real estate  owned.  This
compares to $1,206,000 in non-accruing  loans,  $922,000 in restructured  loans,
$10,000  in loans more than  ninety  days past due on which  interest  was still
being  accrued,  and $2,007,000 in other real estate owned at December 31, 2005.
At  September  30,  2005,  the Company had  $2,394,000  in  non-accruing  loans,
$1,414,000 in  restructured  loans,  no loans more than ninety days past due and
still accruing interest, and $920,000 in other real estate owned. Non-performing
loans at September 30, 2006 consisted of $1,423,000 in mortgage loans,  $199,000
in commercial  loans and $16,000 in consumer loans.  Non-performing  assets as a
percentage of loans and other real estate owned was 0.72%,  1.09%,  and 1.29% at
September 30, 2006, December 31, 2005, and September 30, 2005, respectively.

     Net charge-offs during the first nine months of 2006 were $492,000 compared
to net  charge-offs  of  $233,000  for the  first  nine  months  of 2005 and net


                                       17
<PAGE>

charge-offs  of $685,000 for the year ended December 31, 2005. The allowance for
loan losses as a percentage of non-performing  loans was 188%, 180%, and 104% as
of September 30, 2006, December 31, 2005, and September 30, 2005, respectively.

     The Company  accounts for impaired loans in accordance  with the provisions
of SFAS No. 114, Accounting by Creditors for Impairment of a Loan. SFAS No. 114,
as amended by SFAS No. 118,  requires that impaired  loans be measured  based on
the present  value of expected  future cash flows or the  underlying  collateral
values as defined in the pronouncement.  When the ultimate  collectibility of an
impaired loan's  principal is in doubt,  wholly or partially,  all cash receipts
are then applied to  principal.  The Company had no impaired  loans at September
30, 2006 and December 31, 2005,  and $253,000 in impaired loans at September 30,
2005.

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 September 30, 2006 securities totaled $112,535,000,  which represents
23.6% of total earning  assets.  Securities held at September 30, 2006 increased
$34,474,000  or 44.2% from  $78,061,000  invested  as of  December  31, 2005 and
increased  $35,699,000  or 46.5% from  $76,836,000  invested as of September 30,
2005.  The  increase  is  due  to  a  strategy  that  is  designed  to  purchase
replacements  for a number of  securities  that are due to mature  over the next
year,  increase the Company's overall  investment in earning assets,  and change
the interest-rate risk profile in response to economic data.

     At  September  30,  2006 the  Company's  total  investments  classified  as
available for sale had an amortized  cost of  $99,038,000  and a market value of
$98,546,000  for an unrealized  loss of $492,000.  This compares to an amortized
cost of $66,277,000  and a market value of $65,253,000 for an unrealized loss of
$1,024,000  on the  Company's  investments  classified  as available for sale at
September  30,  2005.  At December  31,  2005 the  Company's  total  investments
classified  as available  for sale had an amortized  cost of  $66,303,000  and a
market value of $65,009,000 for an unrealized loss of $1,294,000. The changes in
the market valuation of the investment  portfolio were related to the changes in
market  interest  rates and not the credit  quality of the issuer and therefore,
these losses are not considered  other-than-temporary.  Management believes that
maintaining  most of its securities in the available for sale category  provides
greater flexibility in the management of the overall investment  portfolio.  The
Company  has the  ability  and intent to hold these  securities  until the value
recovers or the securities mature.

Cash Surrender Value of Life Insurance

     The Company's cash  surrender  value of life insurance on key employees was
$9,646,000  at  September  30,  2006,  an  increase of $243,000 or 2.6% from the


                                       18
<PAGE>

$9,403,000  held at  December  31, 2005 and an increase of $324,000 or 3.5% from
the $9,322,000 held at September 30, 2005.

Cash and Cash Equivalents

     The Company's cash and cash  equivalents  increased  $4,131,000 or 40.5% to
$14,342,000  at  September  30, 2006 from  $10,211,000  at December 31, 2005 and
decreased  $6,223,000  or 30.3% from  $20,565,000  at September  30,  2005.  The
substantial  swings  in the  level  of  cash  and  cash  equivalents  are due to
fluctuations in the Banks' needs for immediate liquidity.

Deposits

     The  Banks'  primary  source of funds for loans and  investments  are their
deposits.  Total  deposits  decreased  $2,985,000  or  0.8% to  $387,364,000  at
September  30,  2006  from  $390,349,000  at  December  31,  2005 and  decreased
$10,745,000 or 2.7% from  $398,109,000  at September 30, 2005.  Competition  for
deposit  accounts  is  primarily  based on the  interest  rates  paid,  location
convenience and services offered.

     During the first nine months of 2006,  interest-bearing  deposits  averaged
$338,240,000  compared to  $328,022,000  for the first nine months of 2005. From
time to time the Banks  solicit  certificates  of deposit from  various  sources
through  brokers.  This is done to  reduce  the  need  for  funding  from  other
short-term  sources such as federal funds  purchased and  short-term  borrowings
from the  Federal  Home Loan Bank of Atlanta.  On  September  30, 2006  brokered
deposits totaled $15,199,000.  On December 31, 2005 and September 30, 2005 there
were $2,295,000 and $2,386,000 in brokered deposits, respectively.

     The average interest rate paid on  interest-bearing  deposits was 3.08% for
the first nine  months of 2006  compared  to 2.31% for the first nine  months of
2005.  In pricing  deposits,  the Company  considers its  liquidity  needs,  the
direction  and  levels of  interest  rates,  and  local  market  conditions.  At
September 30, 2006  interest-bearing  deposits comprised 84.5% of total deposits
compared to 86.3% at September 30, 2005.

     The Company's core deposit base consists largely of consumer time deposits,
savings,  NOW accounts,  money market accounts and checking  accounts.  Although
such core  deposits are becoming  increasingly  interest-sensitive  for both the
Company and the industry as a whole, these core deposits continue to provide the
Company with a large  source of  relatively  stable  funds.  Core  deposits as a
percentage of total deposits averaged approximately 77.0% and 77.2% for the nine
months ended  September  30, 2006 and  September  30, 2005,  respectively.  Time
deposits of $100,000 or more  represented  22.8% of total  deposits at September
30, 2006 and 22.8% at September  30, 2005.  Except for  brokered  deposits,  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.



                                       19
<PAGE>



Borrowings

     The  Company's   borrowings  are  comprised  of  federal  funds  purchased,
securities sold under repurchase  agreements,  and both short-term and long-term
advances  from the Federal  Home Loan Bank.  At  September  30, 2006  short-term
borrowings  totaled  $68,083,000 and were comprised of $28,083,000 in securities
sold under repurchase agreements and $40,000,000 in short-term advances from the
Federal  Home Loan Bank.  At December  31, 2005  short-term  borrowings  totaled
$48,275,000   and  were  comprised  of  $31,736,000  in  securities  sold  under
repurchase agreements, $4,039,000 in federal funds purchased, and $12,500,000 in
short-term  advances  from the Federal  Home Loan Bank.  At  September  30, 2005
short-term  borrowings totaled  $35,941,000 and were comprised of $29,941,000 in
securities  sold  under  repurchase  agreements  and  $6,000,000  in  short-term
advances  from the  Federal  Home  Loan  Bank.  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, 2006, December 31, 2005, and September 30, 2005.


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 September  30, 2006,  The Peoples
National Bank had total borrowing capacity from the Federal Home Loan Bank equal
to $56,840,000,  and the unused portion of this line of credit was  $25,840,000.
Bank of Anderson,  N.A. had total borrowing  capacity from the Federal Home Loan
Bank equal to  $15,490,000,  and the  unused  portion of this line of credit was
$4,490,000 at September 30, 2006.  Seneca National Bank had established  secured
lines of  credit  with the  Federal  Home  Loan Bank at  September  30,  2006 of
$5,390,000  and the unused  portion of this line of credit  was  $2,390,000.  At
September 30, 2006, the Banks also had unused federal funds lines of credit with
various correspondent banks totaling $42,000,000.

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

     During  the  latter  part of 2005 and the first  nine  months of 2006,  the
Company  made  capital  expenditures  of  approximately  $812,000  to purchase a


                                       20
<PAGE>

2.4-acre  tract in  Greenville,  SC,  including  preliminary  design  costs  and
demolition  of an existing  structure,  in  preparation  for  construction  of a
full-service  retail banking  office.  Additional  expenditures in the amount of
approximately  $1.5 million are expected for the  construction of this facility,
which should occur later in 2006 and 2007. During that same period,  the Company
also made capital  expenditures of approximately  $115,000 for the renovation of
an office building in Easley,  SC, $76,000 for the renovation of Seneca National
Bank, and $115,000 for enhancements to its operating  systems.  During the first
nine months of 2006, the Company also made capital expenditures of approximately
$22,000 for general  building  needs and $45,000  for  furniture  and  equipment
purchases.  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.



                                       21
<PAGE>


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,  2006,  the  Banks had  issued  commitments  to extend  credit of
$110,788,000  through various types of arrangements.  The commitments  generally
expire in one year. Past experience  indicates that many of these commitments to
extend credit will expire not fully used. As described  under  "Liquidity,"  the
Company  believes that it has adequate  sources of liquidity to fund commitments
that are drawn upon by the borrowers.

     In addition to commitments  to extend credit,  the Banks also issue standby
letters of credit, which are assurances to a third party that it will not suffer
a loss if the Bank's  customer fails to meet its  contractual  obligation to the
third party. Standby letters of credit totaled $6,493,000 at September 30, 2006.
Past  experience  indicates  that many of these  standby  letters of credit will
expire unused.  However,  through its various sources of liquidity,  the Company
believes  that it will have the  necessary  resources to meet these  obligations
should the need arise.  Various types of  collateral  secure most of the standby
letters of credit.  The Company  believes that the risk of loss  associated with
standby  letters of credit is comparable to the risk of loss associated with its
loan portfolio.  Moreover, the fair value associated with any standby letters of
credit issued by the Company is immaterial to the Company.

     According  to SFAS No.  133,  Accounting  for  Derivative  Instruments  and
Hedging Activities,  loan commitments that relate to the origination or purchase
of mortgage loans that will be held for sale must be accounted for as derivative
instruments.   Therefore,  such  commitments  are  recorded  at  fair  value  in
derivative assets or liabilities, with changes in fair value recorded in the net
gain or loss on sale of mortgage loans. The Company had no derivative  assets or
liabilities  at each of September 30, 2006,  December 31, 2005 and September 30,
2005.

     Neither  the Company  nor the Banks 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  Peoples
National Bank has an operating lease agreement for its loan-processing office in
Greenville,  South Carolina for which,  remaining obligations under the terms of
the lease total approximately  $21,000 at September 30, 2006. This obligation is
payable in installments over the next twelve months.





                                       22
<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, 2006:


                                 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 ..........  $    49,231    12.89%    $   38,193    10.00%    $   30,555     8.00%
Tier 1 Risk-based Capital .........       45,150    11.82         22,919     6.00         15,279     4.00
Leverage Ratio ....................       45,150     8.79         25,683     5.00         20,546     4.00

Peoples National Bank:
Total Risk-based Capital ..........  $    28,338    11.91%    $   23,793    10.00%    $   19,035     8.00%
Tier 1 Risk-based Capital .........       25,918    10.90         14,267     6.00          9,511     4.00
Leverage Ratio ....................       25,918     9.07         14,288     5.00         11,430     4.00

Bank of Anderson, N. A:
Total Risk-based Capital ..........  $    13,230    12.68%    $   10,434    10.00%    $    8,347     8.00%
Tier 1 Risk-based Capital .........       11,985    11.49          6,258     6.00          4,172     4.00
Leverage Ratio ....................       11,985     7.87          7,614     5.00          6,091     4.00

Seneca National Bank:
Total Risk-based Capital ..........  $     5,475    13.53%    $    4,047    10.00%    $    3,237     8.00%
Tier 1 Risk-based Capital .........        4,969    12.28          2,428     6.00          1,619     4.00
Leverage Ratio ....................        4,969     9.11          2,727     5.00          2,182     4.00
</TABLE>





                                       23
<PAGE>


RECENTLY ISSUED ACCOUNTING STANDARDS

     The  following  is a summary of recent  authoritative  pronouncements  that
could  impact  the  accounting,  reporting,  and / or  disclosure  of  financial
information by the Company.

     In February 2006, the Financial  Accounting Standards Board ("FASB") issued
SFAS No. 155, Accounting for Certain Hybrid Financial  Instruments--an amendment
of FASB  Statements  No.  133 and 140.  This  Statement  amends  SFAS  No.  133,
Accounting for Derivative Instruments and Hedging Activities,  and SFAS No. 140,
Accounting for Transfers and Servicing of Financial  Assets and  Extinguishments
of  Liabilities.  This  Statement  resolves  issues  addressed  in SFAS No.  133
Implementation  Issue  No.  D1,  Application  of  Statement  133  to  Beneficial
Interests in  Securitized  Financial  Assets.  SFAS No. 155 is effective for all
financial  instruments  acquired or issued  after the  beginning  of an entity's
first fiscal year that begins  after  September  15, 2006.  The Company does not
believe  that the  adoption  of SFAS No. 155 will have a material  impact on its
financial position, results of operations and cash flows.

     In March 2006, the FASB issued SFAS No. 156,  "Accounting  for Servicing of
Financial  Assets--an amendment of FASB Statement No. 140. This Statement amends
FASB No. 140,  Accounting  for Transfers  and Servicing of Financial  Assets and
Extinguishments  of  Liabilities,  with respect to the accounting for separately
recognized servicing assets and servicing liabilities.  SFAS No. 156 requires an
entity to  recognize  a  servicing  asset or  servicing  liability  each time it
undertakes  an  obligation  to  service a  financial  asset by  entering  into a
servicing  contract;  requires all separately  recognized  servicing  assets and
servicing  liabilities to be initially  measured at fair value,  if practicable;
permits an entity to choose its subsequent measurement methods for each class of
separately recognized servicing assets and servicing liabilities; at its initial
adoption,  permits a one-time reclassification of available-for-sale  securities
to trading  securities by entities with  recognized  servicing  rights,  without
calling into question the treatment of other available-for-sale securities under
Statement 115, provided that the available-for-sale securities are identified in
some  manner as  offsetting  the  entity's  exposure to changes in fair value of
servicing assets or servicing liabilities that a servicer elects to subsequently
measure at fair value;  and requires  separate  presentation of servicing assets
and servicing  liabilities  subsequently measured at fair value in the statement
of financial position and additional  disclosures for all separately  recognized
servicing assets and servicing liabilities.  An entity should adopt SFAS No. 156
as of the  beginning of its first fiscal year that begins  after  September  15,
2006.  The Company  does not  believe  the  adoption of SFAS No. 156 will have a
material impact on its financial position, results of operations and cash flows.

     In July  2006,  the FASB  issued  FASB  Interpretation  No. 48 ("FIN  48"),
Accounting for Uncertainty in Income Taxes.  FIN 48 clarifies the accounting for
uncertainty in income taxes recognized in an enterprises'  financial  statements
in accordance with FASB Statement No. 109,  Accounting for Income Taxes.  FIN 48
prescribes  a  recognition  threshold  and  measurement   attributable  for  the
financial  statement  recognition  and  measurement  of a tax position  taken or
expected  to be  taken  in a tax  return.  FIN  48  also  provides  guidance  on
derecognition,  classification,  interest and  penalties,  accounting in interim
periods,  disclosures  and  transitions.  FIN 48 is  effective  for fiscal years


                                       24
<PAGE>

beginning  after  December 15,  2006.  The Company is  currently  analyzing  the
effects of FIN 48.

     In September  2006, the FASB issued SFAS No. 157, Fair Value  Measurements.
SFAS 157 defines fair value, establishes a framework for measuring fair value in
generally accepted  accounting  principles,  and expands  disclosures about fair
value measurements. SFAS 157 is effective for the Company on January 1, 2008 and
is not  expected  to  have a  significant  impact  on  the  Company's  financial
statements.

     In September 2006, the FASB issued SFAS No. 158, Employers'  Accounting for
Defined  Benefit  Pension and Other  Postretirement  Plans ("SFAS  158"),  which
amends  SFAS  87 and  SFAS  106 to  require  recognition  of the  overfunded  or
underfunded  status of pension  and other  postretirement  benefit  plans on the
balance  sheet.  Under  SFAS 158,  gains and  losses,  prior  service  costs and
credits,  and any remaining  transition  amounts under SFAS 87 and SFAS 106 that
have  not  yet  been  recognized  through  net  periodic  benefit  cost  will be
recognized in accumulated other comprehensive income, net of tax effects,  until
they are amortized as a component of net periodic cost. The measurement  date --
the date at which the  benefit  obligation  and plan  assets are  measured -- is
required to be the company's fiscal year end. SFAS 158 is effective for publicly
held companies for fiscal years ending after  December 15, 2006,  except for the
measurement date  provisions,  which are effective for fiscal years ending after
December 15, 2008.  The Company is currently  analyzing  the effects of SFAS 158
but does not expect its  implementation  will have a  significant  impact on the
Company's financial conditions or results of operations.

     In September 2006, The FASB ratified the consensuses  reached by the FASB's
Emerging  Issues  Task Force  (EITF)  relating to EITF 06-4  Accounting  for the
Deferred   Compensation  and  Postretirement   Benefit  Aspects  of  Endorsement
Split-Dollar  Life  Insurance   Arrangements.   EITF  06-4  addresses   employer
accounting for endorsement split-dollar life insurance arrangements that provide
a benefit to an employee that extends to postretirement periods should recognize
a liability for future  benefits in accordance  with FASB Statement of Financial
Accounting  Standards (SFAS) No. 106,  Employers'  Accounting for Postretirement
Benefits Other Than Pensions,  or Accounting  Principles Board (APB) Opinion No.
12,  Omnibus  Opinion--1967.  EITF 06-4 is effective for fiscal years  beginning
after December 15, 2006.  Entities should recognize the effects of applying this
Issue  through   either  (a)  a  change  in  accounting   principle   through  a
cumulative-effect  adjustment  to retained  earnings or to other  components  of
equity or net assets in the statement of financial  position as of the beginning
of the  year  of  adoption  or (b) a  change  in  accounting  principle  through
retrospective application to all prior periods. The Company does not believe the
adoption  of EITF 06-4 will have a material  impact on its  financial  position,
results of operations and cash flows.

     On September 13, 2006,  the SEC issued Staff  Accounting  Bulleting No. 108
("SAB 108").  SAB 108 provides  interpretive  guidance on how the effects of the
carryover  or  reversal  of prior year  misstatements  should be  considered  in
quantifying a potential current year  misstatement.  Prior to SAB 108, Companies
might evaluate the materiality of financial statement misstatements using either
the  income  statement  or balance  sheet  approach,  with the income  statement
approach  focusing  on new  misstatements  added in the  current  year,  and the


                                       25
<PAGE>

balance sheet approach focusing on the cumulative amount of misstatement present
in a company's  balance  sheet.  Misstatements  that would be material under one
approach  could be viewed  as  immaterial  under  another  approach,  and not be
corrected.  SAB  108  now  requires  that  companies  view  financial  statement
misstatements  as material if they are  material  according to either the income
statement  or balance  sheet  approach.  The  Company has  analyzed  SAB 108 and
determined that upon adoption it will have no impact on the reported  results of
operations or financial conditions.

     Other accounting standards that have been issued or proposed by the FASB or
other standards-setting bodies are not expected to have a material impact on the
Company's financial position, results of operations and cash flows.


Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Market risk is the risk of loss arising  from  adverse  changes in the fair
value of financial instruments due to a change in interest rates, exchange rates
and equity prices.  The Company's  primary type of market risk is  interest-rate
risk.

     The primary  objective of  Asset/Liability  Management at the Company is to
manage  interest-rate  risk and achieve  reasonable  stability  in net  interest
income throughout  interest-rate cycles in order to maintain adequate liquidity.
The Company seeks to achieve this objective by maintaining the proper balance of
rate-sensitive earning assets and rate-sensitive  liabilities.  The relationship
of rate-sensitive earning assets to rate-sensitive  liabilities is the principal
factor in projecting  the effect that  fluctuating  interest  rates will have on
future net interest income. Rate-sensitive assets and rate-sensitive 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 first year.

     Each  of  the   Company's   banking   subsidiaries   has   established   an
Asset/Liability Management Committee. These committees use a variety of tools to
analyze  interest-rate  sensitivity,  including a static gap  presentation and a
simulation  model. A static gap  presentation  reflects the  difference  between
total  interest-sensitive  assets and  liabilities  within certain time periods.
While the static gap is a widely used measure of interest rate  sensitivity,  it
is not,  in  management's  opinion,  the  best  indicator  of a  company's  true
sensitivity position.  Accordingly,  the Company's banking subsidiaries also use
an earnings  simulation  model that estimates the variations in interest  income
under  different  interest-rate  environments  to measure  and manage the bank's
short-term  interest-rate risk. According to the model, as of September 30, 2006
the Company was positioned so that net interest  income would increase  $630,000
in the next twelve months if market interest rates were to gradually rise by 100
basis points over the same period. Conversely, net interest income would decline
$404,000 in the next twelve months if interest  rates were to gradually  decline


                                       26
<PAGE>

by  100  basis  points.  Computation  of  prospective  effects  of  hypothetical
interest-rate  changes are based on  numerous  assumptions,  including  relative
levels of market  interest rates and loan  prepayment,  and should not be relied
upon  as  indicative  of  actual  results.  Further,  the  computations  do  not
contemplate  all actions that the Company and its customers  could  undertake in
response to changes in interest rates.

     Additionally,   each  of  the  Company's  banking   subsidiaries   measures
anticipated  changes in its economic  value of equity in order to ascertain  its
long-term interest rate risk. This is done by calculating the difference between
the theoretical market value of the bank's assets and liabilities and subjecting
the balance sheet to different interest-rate  environments to measure and manage
long-term interest rate risk.

     It is the  responsibility  of the  Asset/Liability  Committees to establish
parameters  for various  interest risk  measures,  to set  strategies to control
interest rate risk within those parameters,  to maintain adequate and stable net
interest  income,  and to direct the  implementation  of  tactics to  facilitate
achieving their objectives.

     Management  is not aware of any  known  events  or  uncertainties  that are
expected  to have or are  reasonably  likely  to have a  material  effect on the
Company's liquidity,  capital resources or results of operations.  Management is
not aware of any current recommendations by the regulatory authorities, which if
they were to be  implemented,  would  have a  material  effect on the  Company's
liquidity, capital resources or results of operations.







                                       27
<PAGE>



Item 4.  CONTROLS AND PROCEDURES

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

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






                                       28
<PAGE>



PART II.  OTHER INFORMATION


Item 6.  Exhibits

                                 Exhibits.

10.1     Salary  Continuation  Agreement  between the Company and Robert E. Dye,
         Jr.,  dated  October 24, 2006  (incorporated  by  reference to Form 8-K
         filed October 30, 2006)

10.2     Salary Continuation Agreement between the Company and Daniel B. Minnis,
         dated  October 24, 2006  (incorporated  by  reference to Form 8-K filed
         October 30, 2006)

10.3     Salary  Continuation  Agreement between the Company and C. Kyle Thomas,
         dated  October 24, 2006  (incorporated  by  reference to Form 8-K filed
         October 30, 2006)

10.4     Salary Continuation  Agreement between the Company and William B. West,
         dated  October 24, 2006  (incorporated  by  reference to Form 8-K filed
         October 30, 2006)

10.5     Salary  Continuation  Agreement  between  the  Company  and  L.  Andrew
         Westbrook,  III, dated October 24, 2006  (incorporated  by reference to
         Form 8-K filed October 30, 2006)

10.6     Description  of increase in Chairman of the Board's fees  (incorporated
         by reference to Form 8-K filed August 17, 2006.

31.1     Rule 13a-14(a) / 15d-14(a) Certifications

31.2     Rule 13a-14(a) / 15d-14(a) Certifications

32       Section 1350 Certifications





                                       29
<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 10, 2006                     By: /s/ R. Riggie Ridgeway
                                                 -----------------------
                                                  R. Riggie Ridgeway
                                                  President and CEO


Dated:  November 10, 2006                     By:/s/ Robert E. Dye, Jr.
                                                 ----------------------
                                                  Robert E. Dye, Jr.
                                                  Sr. Vice President & CFO
                                                  (principal financial officer)



                                       30
<PAGE>



                                  Exhibit Index

Exhibit No.           Description of Exhibit


10.1     Salary  Continuation  Agreement  between the Company and Robert E. Dye,
         Jr.,  dated  October 24, 2006  (incorporated  by  reference to Form 8-K
         filed October 30, 2006)

10.2     Salary Continuation Agreement between the Company and Daniel B. Minnis,
         dated  October 24, 2006  (incorporated  by  reference to Form 8-K filed
         October 30, 2006)

10.3     Salary  Continuation  Agreement between the Company and C. Kyle Thomas,
         dated  October 24, 2006  (incorporated  by  reference to Form 8-K filed
         October 30, 2006)

10.4     Salary Continuation  Agreement between the Company and William B. West,
         dated  October 24, 2006  (incorporated  by  reference to Form 8-K filed
         October 30, 2006)

10.5     Salary  Continuation  Agreement  between  the  Company  and  L.  Andrew
         Westbrook,  III, dated October 24, 2006  (incorporated  by reference to
         Form 8-K filed October 30, 2006)

10.6     Description  of increase in Chairman of the Board's fees  (incorporated
         by reference to Form 8-K filed August 17, 2006.

31.1     Rule 13a-14(a) / 15d-14(a) Certifications

31.2     Rule 13a-14(a) / 15d-14(a) Certifications

32       Section 1350 Certifications






                                       31