SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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

             For the Quarterly Period Ended          Commission file
                    March 31, 2008                     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, a non-accelerated filer, or a smaller reporting company.
 See definitions of "large accelerated filer," "accelerated filer" and "smaller
       reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

   Large accelerated filer [ ]                   Accelerated filer [ ]
   Non-accelerated filer [ ]                     Smaller reporting company [X]
  (Do not check if a smaller reporting company)

               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 May 7, 2008 was 7,059,166.






<PAGE>


PART I - FINANCIAL INFORMATION
Item 1. Financial Statements


         Peoples Bancorporation, Inc. and Subsidiaries
                  Consolidated Balance Sheets
         (Dollars in thousands except per share data)
<TABLE>
<CAPTION>
                                                                                             March 31,    March 31,     December 31,
                                                                                               2008         2007            2007
                                                                                             Unaudited    Unaudited        Audited
                                                                                             ---------    ---------        -------
ASSETS
<S>                                                                                         <C>            <C>            <C>
CASH AND DUE FROM BANKS ...............................................................     $  8,980       $ 10,603       $  8,618
INTEREST-BEARING DEPOSITS IN OTHER BANKS ..............................................          983            494            643
FEDERAL FUNDS SOLD ....................................................................        6,796          1,323          1,263
                                                                                            --------       --------       --------
     Total cash and cash equivalents ..................................................       16,759         12,420         10,524
SECURITIES
     Available for sale ...............................................................       80,807         77,195         84,796
     Held to maturity (market value of $12,878,
         $13,244 and $13,113) .........................................................       12,878         13,337         13,102
     Other investments, at cost .......................................................        4,877          2,562          4,795
LOANS-less allowance for loan losses
         of $3,665, $4,077 and $4,310 .................................................      419,826        361,771        414,688
PREMISES AND EQUIPMENT, net of accumulated
         depreciation and amortization ................................................       13,740         11,152         13,757
ACCRUED INTEREST RECEIVABLE ...........................................................        3,147          2,705          3,321
CASH SURRENDER VALUE OF LIFE INSURANCE ................................................       11,456         11,036         11,350
OTHER ASSETS ..........................................................................        1,928          1,653          2,110
                                                                                            --------       --------       --------
         TOTAL ASSETS .................................................................     $565,418       $493,831       $558,443
                                                                                            ========       ========       ========

LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
DEPOSITS
     Noninterest-bearing ..............................................................     $ 47,070       $ 54,666       $ 53,950
     Interest-bearing .................................................................      381,740        352,855        363,671
                                                                                            --------       --------       --------
         Total deposits ...............................................................      428,810        407,521        417,621
SECURITIES SOLD UNDER REPURCHASE AGREEMENTS ...........................................       18,840         20,942         19,824
FEDERAL FUNDS PURCHASED ...............................................................            -            460            429
NOTES PAYABLE TO FEDERAL HOME LOAN BANK ...............................................       63,000         14,000         65,100
ACCRUED INTEREST PAYABLE ..............................................................        3,668          3,079          4,465
OTHER LIABILITIES .....................................................................          488            556            763
                                                                                            --------       --------       --------
         Total Liabilities ............................................................      514,806        446,558        508,202
                                                                                            --------       --------       --------
SHAREHOLDERS' EQUITY
Common  stock - 15,000,000 shares authorized, $1.11 Par value per share,
     7,057,551 shares, 6,696,674 shares
     and 7,056,337 shares outstanding, respectively ...................................        7,834          7,433          7,833
Additional paid-in capital ............................................................       41,643         38,722         41,624
Retained earnings .....................................................................          132            970              -
Accumulated other comprehensive income ................................................        1,003            148            784
                                                                                            --------       --------       --------
         Total Shareholders' Equity ...................................................       50,612         47,273         50,241
                                                                                            --------       --------       --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ............................................     $565,418       $493,831       $558,443
                                                                                            ========       ========       ========
</TABLE>


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 data)

<TABLE>
<CAPTION>
                                                                                                              (Unaudited)
                                                                                                          Three Months Ended
                                                                                                               March 31,
                                                                                                               ---------
                                                                                                     2008                    2007
                                                                                                     ----                    ----
INTEREST INCOME
<S>                                                                                             <C>                      <C>
   Interest and fees on loans .....................................................             $     7,504              $     7,255
   Interest on securities
       Taxable ....................................................................                     792                      738
       Tax-exempt .................................................................                     370                      351
   Interest on federal funds ......................................................                      20                       39
                                                                                                -----------              -----------
Total interest income .............................................................                   8,686                    8,383
                                                                                                -----------              -----------
INTEREST EXPENSE
   Interest on deposits ...........................................................                   3,586                    3,207
   Interest on federal funds purchased and securities
       sold under repurchase agreements ...........................................                     107                       88
Interest on notes payable Federal Home Loan Bank ..................................                     672                      397
                                                                                                -----------              -----------
Total interest expense ............................................................                   4,365                    3,692
                                                                                                -----------              -----------
     Net interest income ..........................................................                   4,321                    4,691

PROVISION FOR LOAN LOSSES .........................................................                     235                      150
                                                                                                -----------              -----------
Net interest income after provision for loan losses ...............................                   4,086                    4,541
                                                                                                -----------              -----------
NON-INTEREST INCOME
   Service charges on deposit accounts ............................................                     460                      416
   Customer service fees ..........................................................                      48                       43
   Mortgage banking ...............................................................                     131                      124
   Brokerage services .............................................................                      60                       27
   Bank owned life insurance ......................................................                     124                      117
   Other noninterest income .......................................................                     145                      292
   Gain(loss) on sale of available for sale securities ............................                       2                        -
   Gain(loss) on sale of assets acquired in settlement of loans ...................                      (9)                       7
                                                                                                -----------              -----------
           Total non-interest income ..............................................                     961                    1,026
                                                                                                -----------              -----------
NON-INTEREST EXPENSES
   Salaries and benefits ..........................................................                   2,486                    2,283
   Occupancy and equipment ........................................................                     564                      524
   Marketing and advertising ......................................................                     137                      113
   Communications .................................................................                      71                       65
   Printing and supplies ..........................................................                      57                       45
   Bank paid loan costs ...........................................................                     135                       48
   ATM/Debit card expenses ........................................................                      81                       78
   Legal and professional fees ....................................................                      82                       78
   Director fees ..................................................................                     111                      114
   Regulatory assessments .........................................................                      84                       54
   Other post employment benefits .................................................                      87                       64
   Other operating expenses .......................................................                     362                      349
                                                                                                -----------              -----------
             Total non-interest expenses ..........................................                   4,257                    3,815
                                                                                                -----------              -----------
   Income before income taxes .....................................................                     790                    1,752
PROVISION FOR INCOME TAXES ........................................................                     177                      480
                                                                                                -----------              -----------
   Net income .....................................................................             $       613              $     1,272
                                                                                                ===========              ===========
INCOME PER COMMON SHARE*:
   BASIC ..........................................................................             $      0.08              $      0.18
                                                                                                ===========              ===========
   DILUTED ........................................................................             $      0.08              $      0.18
                                                                                                ===========              ===========
WEIGHTED AVERAGE COMMON SHARES*:
   BASIC ..........................................................................               7,409,579                7,030,102
                                                                                                ===========              ===========
   DILUTED ........................................................................               7,410,586                7,043,962
                                                                                                ===========              ===========
DIVIDENDS PAID PER COMMON SHARE ...................................................             $      0.05              $      0.05
                                                                                                ===========              ===========
</TABLE>

* 2007 amounts restated for 5% stock dividend declared in December, 2007.

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 Three months ended March 31, 2007 and 2008
                             (Dollars in thousands)
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                                                         Accumulated
                                                                Common stock      Additional                 other        Total
                                                                ------------       paid-in     Retained  comprehensive shareholders'
                                                            Shares      Amount     capital     earnings      income     equity
                                                            ------      ------     -------     --------      ------     ------
<S>                                                       <C>         <C>         <C>         <C>          <C>         <C>
Balance, December 31, 2006 ............................   6,666,568   $   7,400   $  38,614   $      32    $      18   $  46,064
                                                                                                                       ---------
Net income ............................................           -           -                   1,272           -        1,272
Other comprehensive income, net of tax:
   Unrealized holding gains on
     securities available for sale,
     net of income taxes of $16 .......................           -           -           -           -          130         130
                                                                                                                       ---------
Comprehensive income ..................................                                                                    1,402
Cash dividends ........................................           -           -           -        (334)           -        (334)
Proceeds from stock options
     exercised ........................................      30,106          33          92           -            -         125
Stock-based compensation ..............................           -           -          16           -            -          16
                                                          ---------   ---------   ---------   ---------    ---------   ---------
Balance, March 31, 2007 ...............................   6,696,674   $   7,433   $  38,722   $     970    $     148   $  47,273
                                                          =========   =========   =========   =========    =========   =========


Balance, December 31, 2007 ............................   7,056,337   $   7,833   $  41,624  $        -    $     784   $  50,241
                                                                                                                       ---------
Net income ............................................           -           -                     613            -         613
Other comprehensive income, net of tax:
   Unrealized holding gains on
     securities available for sale,
     net of income taxes of $113 ......................           -           -           -           -          217         217
   Reclassification adjustment
     for gains included in net
     income, net of income
     taxes of $0 ......................................           -           -           -           -            2           2
                                                                                                                       ---------
Comprehensive income ..................................                                                                      832
Cash dividends ........................................           -           -           -        (353)           -        (353)
Proceeds from stock options
     exercised ........................................       1,214           1           5           -            -           6
Stock-based compensation ..............................           -           -          14           -            -          14
Cumulative effect of post
     retirement cost of life insurance ................           -           -           -        (128)           -        (128)
                                                          ---------   ---------   ---------   ---------    ---------   ---------
Balance, March 31, 2008 ...............................   7,057,551   $   7,834   $  41,643   $     132    $   1,003   $  50,612
                                                          =========   =========   =========   =========    =========   =========
</TABLE>


See Notes to Unaudited  Consolidated  Financial 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)
                                                                                                              Three months Ended
                                                                                                                  March 31,
                                                                                                                  ---------
                                                                                                          2008                 2007
                                                                                                          ----                 ----
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                                                    <C>                 <C>
   Net income ..............................................................................           $    613            $  1,272
   Adjustments to reconcile net income to net cash provided
     by operating activities:
   Gain on sale of premises and equipment ..................................................                  -                (169)
   Gain on sale of securities available for sale ...........................................                 (2)                  -
   (Gain) loss on sale of assets acquired in settlement of loans ...........................                  7                  (7)
   Provision for loan losses ...............................................................                235                 150
   Benefit from deferred income taxes ......................................................                  -                (198)
   Depreciation and amortization ...........................................................                275                 262
   Amortization and accretion (net) of premiums and
     discounts on securities ...............................................................                  3                  13
   Stock-based compensation ................................................................                 14                  16
   Postretirement cost of insurance for split-dollar life
       Insurance coverage ..................................................................               (128)                  -
   Decrease in accrued interest receivable .................................................                174                 338
   Increase in other assets ................................................................                 31                 258
   Increase (decrease) in accrued interest payable .........................................               (797)                153
   Decrease in other liabilities ...........................................................               (275)               (855)
                                                                                                       --------            --------
     Net cash provided by operating activities .............................................                150               1,233
                                                                                                       --------            --------

CASH FLOWS FROM INVESTING ACTIVITIES
   Purchases of securities held to maturity ................................................               (444)                  -
   Purchases of securities available for sale ..............................................               (513)                  -
   Sales (purchases) of other investments ..................................................                (82)              1,721
   Proceeds from principal pay-downs on securities available for sale ......................              2,141               1,692
   Proceeds from the maturities and calls of securities available for sale .................              2,250               3,000
   Proceeds from the sale of securities available for sale .................................                455                   -
   Proceeds from the maturity of securities held to maturity ...............................                655                 140
   Investment in bank owned life insurance .................................................               (106)               (102)
   Proceeds from the sale of other real estate owned .......................................                 31                  32
   Net increase in loans ...................................................................             (5,373)             (7,910)
   Proceeds from the sale of premises and equipment ........................................                  -                 498
   Purchase of premises and equipment ......................................................               (258)               (626)
                                                                                                       --------            --------
     Net cash used in investing activities .................................................             (1,244)             (1,555)
                                                                                                       --------            --------

CASH FLOWS FROM FINANCING ACTIVITIES
   Net increase in deposits ................................................................             11,189              22,476
   Net increase (decrease) in securities sold under repurchase agreements ..................               (984)              2,574
   Net increase (decrease) in federal funds purchased ......................................               (429)                460
   Net decrease in notes payable to Federal Home Loan Bank .................................             (2,100)            (36,000)
   Proceeds from the exercise of stock options .............................................                  6                 125
   Cash dividend ...........................................................................               (353)               (334)
                                                                                                       --------            --------
     Net cash provided by (used in) financing activities ...................................              7,329             (10,699)
                                                                                                       --------            --------
     Net increase (decrease) in cash and cash equivalents ..................................              6,235             (11,021)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD .............................................             10,524              23,441
                                                                                                       --------            --------
CASH AND CASH EQUIVALENTS, END OF PERIOD ...................................................           $ 16,759            $ 12,420
                                                                                                       ========            ========

CASH PAID FOR
     Interest ..............................................................................           $  3,539            $  3,539
                                                                                                       ========            ========
     Income Taxes ..........................................................................           $     27            $     27
                                                                                                       ========            ========
</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 2007 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 a cash  dividend of $0.05 per common share
to shareholders of record March 14, 2008, payable March 28, 2008.

EARNINGS PER SHARE

     Statement of Financial  Account  Standards  ("SFAS") No. 128,  Earnings per
Share requires that the Company  present basic and diluted net income per common
share.  The assumed  conversion of stock options creates the difference  between
basic and  diluted  net  income per share.  Income  per share is  calculated  by
dividing net income by the weighted average number of common shares  outstanding
for each  period  presented.  The  weighted  average  number  of  common  shares
outstanding  for basic net income per common  share for the three  months  ended
March 31, 2008 and 2007 was 7,409,579 and 7,030,102,  respectively. The weighted
average  number of common shares  outstanding  for diluted net income per common
share was  7,410,586 and 7,043,962 for the three months ended March 31, 2008 and
2007. Weighted average shares in 2007 have been restated to reflect the 5% stock
dividend declared in December, 2007.

STOCK-BASED COMPENSATION

     The Company has four stock option plans, the "1993 Employee Incentive Stock
Option  Plan," the "1997  Non-Employee  Directors  Stock Option Plan," the "2004
Stock Option Plan" and the "2007 Non-Employee  Directors Stock Option Plan." The
"1993  Employee  Incentive  Stock Option Plan"  expired in 2003,  but options to
purchase 36,549 shares remain  outstanding and exercisable  under this plan. The
"1997 Non-Employee  Directors Stock Option Plan" expired in 2007, but options to
purchase 53,208 shares remain outstanding and exercisable 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 expire  not more than ten years from the date of grant.  Under
the "2007  Non-Employee  Directors  Stock Option Plan," upon  adjournment of the


                                       5
<PAGE>

Company's  annual meeting of shareholders  each year, each person who has served
as a  non-employee  director  of  the  Company  or  one  the  Banks  during  the
immediately  preceding year is granted  options to purchase 500 shares of common
stock up to a maximum  of 5,000 per  director  in the  aggregate  under both the
"2007  Non-Employee  Directors  Stock  Option  Plan" and the "1997  Non-Employee
Directors  Stock  Option  Plan." The  exercise  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 earliest of one
year after the director's death or permanent and total disability, 90 days after
the  director  ceases  to be a  director  for any  reason  other  than  death or
permanent  and total  disability  or ten years from the grant date. At March 31,
2008,  an aggregate of 390,150  shares were reserved for issuance on exercise of
options  under all four of these  plans.  During the first three months of 2008,
options to purchase 2,500 shares were granted with a weighted average fair value
of $8.07 per share.  The  following is a summary of the status of the  Company's
plans as of March 31, 2008 and changes  during the three  months ended March 31,
2008.

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

Outstanding, December 31, 2007 ...............    168,749              $10.29
Granted ......................................      2,500              $ 8.07
Exercised ....................................     (1,214)             $ 5.35
Forfeited ....................................     (3,625)             $ 9.61
                                                  -------
Outstanding, March 31, 2008 ..................    166,410              $10.31
                                                  =======

Options Exercisable, March 31, 2008 ..........    129,667
                                                  =======


 INCOME TAXES

         The provision  for income taxes  includes  deferred  taxes on temporary
differences  between the recognition of certain income and expense items for tax
and  financial  statement  purposes.  Income taxes are computed on the liability
method as described in SFAS No 109, Accounting for Income Taxes.

         As of January 1, 2007,  the  Company  adopted  the  provisions  of FASB
Interpretation  No.  48,  Accounting  for  Uncertainty  in  Income  Taxes  -  an
interpretation of FASB Statement No. 109 ("FIN 48"), which provides criteria for
the  recognition,  measurement,  presentation  and  disclosure  of uncertain tax
positions. The Company has analyzed the tax position expected to be taken in its
tax returns and concluded it has no liability related to uncertain tax positions
in accordance with FIN 48.



                                       6
<PAGE>

         The Company's  policy is to record  interest and  penalties  related to
income tax matters as income tax expense.  Accrued  interest and penalties  were
immaterial as of March 31, 2008.


POSTRETIRMENT SPLIT-DOLLAR LIFE INSURANCE

         In September  2006,  The FASB ratified the  consensuses  reached by the
FASB's  Emerging Task Force ("EITF")  relating to EITF 06-4,  Accounting for the
Deferred   Compensation  and  Postretirement   Benefit  Aspects  of  Endorsement
Sprit-Dollar Life Insurance Arrangements ("EITF 06-4"). The consensus stipulates
that an  agreement  by an employer to share a portion of the  proceeds of a life
insurance  policy  with  an  employee  during  the  postretirement  period  is a
postretirement  benefit arrangement  required to be accounted for under SFAS No.
106 or Accounting Opinion ("APB") No. 12, Omnibus Opinion - 1967." The consensus
concludes  that the purchase of a split-dollar  life  insurance  policy does not
constitute a settlement under SFAS No. 106 and,  therefore,  a liability for the
postretirement  obligation must be recognized  under SFAS No. 106 if the benefit
is offered under an arrangement  that  constitutes a plan or under APB No. 12 if
it is not part of a plan.  Issue  06-04  is  effective  for  annual  or  interim
reporting periods beginning after December 15, 2007.

            In March 2007,  the EITF reached a final  conclusion on Issue 06-10,
Accounting for Collateral Assignment  Split-Dollar Life Insurance  Arrangements.
The  consensus   concludes   that  a  liability   must  be  recognized  for  the
postretirement  obligation related to a collateral assignment  split-dollar life
insurance  arrangement in accordance  with SFAS No. 106 or APB No. 12. Any asset
should be  recognized  and  measured  based on the nature and  substance  of the
collateral  assignment  split-dollar life insurance  arrangement.  The effective
date of EITF 06-10 is for fiscal years beginning after December 15, 2007.

            The  adoption  of EITF 06-4 and 06-10 by the  Company  on January 1,
2008 resulted in a $128,000 decrease to the Company's retained earnings.


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.


                                       7
<PAGE>

Cautionary Notice with Respect to Forward Looking Statements

          This report contains  "forward-looking  statements" within the meaning
of the securities  laws. The Private  Securities  Litigation  Reform Act of 1995
provides a safe harbor for forward-looking  statements.  In order to comply with
the terms of the safe harbor,  the Company notes that a variety of factors could
cause the Company's actual results and experience to differ  materially from the
anticipated   results  or  other   expectations   expressed  in  the   Company's
forwarding-looking statements.

          All statements that are not historical facts are statements that could
be  "forward-looking   statements."  You  can  identify  these   forward-looking
statements  through the use of words such as "may," "will,"  "should,"  "could,"
"would," "expect,"  "anticipate,"  "assume," indicate,"  "contemplate,"  "seek,"
"plan,"  "predict,"  "target,"  "potential,"  "believe,"  "intend,"  "estimate,"
"project,  " "continue,"  or other  similar  words.  Forward-looking  statements
include,  but are not limited to,  statements  regarding  the  Company's  future
business  prospects,   revenues,  working  capital,  liquidity,  capital  needs,
interest costs, income, business operations and proposed services.

          These  forward-looking  statements are based on current  expectations,
estimates and projections about the banking industry,  management's beliefs, and
assumptions made by management.  Such information includes,  without limitation,
discussions  as to estimates,  expectations,  beliefs,  plans,  strategies,  and
objectives  concerning  future  financial  and  operating   performance.   These
statements  are not guarantees of future  performance  and are subject to risks,
uncertainties and assumptions that are difficult to predict.  Therefore,  actual
results  may  differ  materially  from those  expressed  or  forecasted  in such
forward-looking  statements.  The risks and uncertainties  include,  but are not
limited to:

     o    future economic and business conditions;
     o    lack of  sustained  growth in the  economies of the  Company's  market
          areas;
     o    government monetary and fiscal policies;
     o    the  effects of changes in interest  rates on the levels,  composition
          and costs of deposits, loan demand, and the values of loan collateral,
          securities, and interest sensitive assets and liabilities;
     o    the effects of  competition  from a wide  variety of local,  regional,
          national and other providers of financial,  investment,  and insurance
          services,  as well as  competitors  that offer  banking  products  and
          services by mail, telephone, computer and/or the Internet;
     o    credit risks;
     o    the  failure  of  assumptions  underlying  the  establishment  of  the
          allowance for loan losses and other estimates,  including the value of
          collateral securing loans;
     o    the risks of opening new offices,  including,  without limitation, the
          related  costs  and  time  of  building  customer   relationships  and
          integrating  operations as part of these  endeavors and the failure to
          achieve  expected  gains,  revenue growth and/or expense  savings from
          such endeavors;


                                       8
<PAGE>

     o    changes in laws and regulations, including tax, banking and securities
          laws and regulations;
     o    changes in accounting policies, rules and practices;
     o    changes in technology or products may be more difficult or costly,  or
          less effective, than anticipated;
     o    the  effects of war or other  conflicts,  acts of  terrorism  or other
          catastrophic  events that may affect general  economic  conditions and
          economic confidence; and
     o    other factors and  information  described in this report and in any of
          the  other  reports  that we file  with the  Securities  and  Exchange
          Commission under the Securities Exchange Act of 1934.

          All  forward-looking  statements  are  expressly  qualified  in  their
entirety by this cautionary notice. The Company has no obligation,  and does not
undertake,  to update,  revise or correct any of the forward-looking  statements
after the date of this  report.  The Company  has  expressed  its  expectations,
beliefs and projections in good faith and believes they have a reasonable basis.
However,  there is no assurance that these expectations,  beliefs or projections
will result or be achieved or accomplished.


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  Note 1 to  the  Consolidated  Financial  Statements
included  in  Item  8--"Financial  Statements  and  Supplementary  Data"  of the
Company's 2007 Annual Report on Form 10-K.

         Certain   accounting   policies  involve   significant   judgments  and
assumptions by management  that have a material  impact on the carrying value of
certain assets and liabilities; management considers such accounting policies to
be  critical  accounting  policies.   The  judgments  and  assumptions  used  by
management  are based on  historical  experience  and other  factors,  which are
believed to be reasonable under the circumstances.  Because of the nature of the
judgments and assumptions  made by management,  actual results could differ from
these judgments and estimates and such differences  could have a material impact
on the carrying  values of assets and  liabilities and the results of operations
of the Company.

         Of these  significant  accounting  policies,  the Company considers its
policies  regarding the allowance  for loan losses (the  "Allowance")  to be its
most  critical  accounting  policy due to the  significant  degree of management
judgment  involved in determining  the amount of the Allowance.  The Company has
developed  policies and  procedures for assessing the adequacy of the Allowance,
recognizing  that this process  requires a number of  assumptions  and estimates
with respect to its loan portfolio. The Company's assessments may be impacted in
future  periods by  changes in  economic  conditions,  the impact of  regulatory
examinations,  and the discovery of information with respect to borrowers, which
is not  known to  management  at the time of the  issuance  of the  consolidated
financial statements. Refer to the discussion under the "Provision and Allowance
for  Loan  Losses,  Loan  Loss  Experience"  section  in Item  7--"Manangement's
Discussion and Analysis of Financial Condition and Results of Operations" of the
Company's   2007   Annual   Report   on  Form  10-K  and  the   "Balance   Sheet
Review--Allowance for Loan Losses" and "Earnings Performance--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.



                                       9
<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  Company's  2007 Annual Report on Form 10-K.  Results of operations  for the
three-month  period ended March 31, 2008 are not  necessarily  indicative of the
results to be attained for any other period.

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 nine  full-service  banking  offices  located in the
Upstate Area of South Carolina.


                                       10
<PAGE>

                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

EARNINGS PERFORMANCE

Overview

         The consolidated Company's net income for the first quarter of 2008 was
$613,000 or $0.08 per diluted share  compared to $1,272,000 or $0.18 per diluted
share for the first quarter of 2007, a decrease of $659,000 or 51.8%.  Return on
average  equity for the three months ended March 31, 2008 was 4.91%  compared to
11.02% for the three months ended March 31, 2007.  Return on average  assets for
the three months ended March 31, 2008 was 0.44%  compared to 1.04% for the three
months ended March 31, 2007.

Interest Income, Interest Expense and Net Interest Income

         The largest component of the Company's revenue 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  decreased  $370,000,  or 7.9%, to $4,321,000  for the quarter ended
March 31, 2008 compared to $4,691,000  for the quarter ended March 31, 2007. The
Company's  net  interest  margin was 3.32% for the quarter  ended March 31, 2008
compared to 4.14% for the  quarter  ended March 31,  2007.  The  decrease in the
Company's net interest  income and its net interest margin is due to compression
of the margin, resulting largely from a decrease in market interest rates, which
lowered  yields on interest  earning  assets more than funding costs of interest
bearing  liabilities,  coupled with an increase in the Company's  non-performing
assets.

         The Company's  total interest  income for the first quarter of 2008 was
$8,686,000  compared to $8,383,000 for the first quarter of 2007, an increase of
$303,000,  or 3.6%.  Interest and fees on loans, the largest  component of total
interest income,  increased  $249,000 in the first quarter of 2008 to $7,504,000
compared to $7,255,000  for the first quarter of 2007, an increase of 3.4%.  The
increase in  interest  and fees on loans for the  three-month  period was due to
higher  outstanding  loan balances,  but largely offset by lower market interest
rates.  Interest on taxable  securities,  the second largest  component of total
interest  income,  increased by $54,000 in the first quarter of 2008 to $792,000
compared to $738,000  for the first  quarter of 2007,  an increase of 7.3%.  The
increase in interest on taxable securities for the three-month period was due to
higher  interest  rates earned on these  securities,  partially  offset by lower
average balances.

         The Company's total interest  expense for the first quarter of 2008 was
$4,365,000  compared to $3,692,000 for the first quarter of 2007, an increase of
$673,000, or 18.2%. Interest expense on deposits, the largest component of total
interest  expense,  increased  by  $379,000  in the  first  quarter  of  2008 to
$3,586,000  compared to $3,207,000 for the first quarter of 2007, an increase of
11.8%. The increase in interest  expense on deposits for the three-month  period


                                       11
<PAGE>

ending  March  31,  2008  compared  to  the  same  period  in  2007  is  largely
attributable  to higher  average  balances.  Interest  on notes  payable  to the
Federal  Home Loan Bank of Atlanta  ("FHLB"),  the second  largest  component of
total interest  expense,  increased  $275,000 or 69.3% to $672,000 for the three
months  ended March 31, 2008  compared to $397,000  for the three  months  ended
March 31, 2007,  attributable  to higher average  balances.  Interest on federal
funds  purchased and  securities  sold under  repurchase  agreements,  the third
largest  component  of total  interest  expense,  increased  $19,000 or 21.6% to
$107,000 in the first  quarter of 2008 compared to $88,000 for the first quarter
of 2007, attributable to higher average balances in these accounts.

Provision for Loan Losses

         The  provision for loan losses  charged to operations  during the three
months  ended March 31,  2008 was  $235,000  compared to $150,000  for the three
months ended March 31, 2007, an increase of $85,000 or 56.7%. The changes in the
Company's  provision  for loan losses for the first quarter of 2008 are based on
management's evaluation of the Company's overall credit quality and its estimate
of loan losses  inherent in the loan  portfolio.  See  "BALANCE  SHEET  REVIEW -
Allowance for Loan Losses."

Non-interest Income

         Non-interest income decreased $65,000 or 6.3% to $961,000 for the first
quarter of 2008  compared to $1,026,000  for the first quarter of 2007.  Service
fees  on  deposit  accounts,  the  largest  component  of  non-interest  income,
increased $44,000 or 10.6% to $460,000 for the first quarter of 2008 compared to
$416,000 for the first quarter of 2007.

         Brokerage service income increased from $27,000 in the first quarter of
2007 to $60,000 in the first  quarter of 2008, an increase of $33,000 or 122.2%.
This increase was largely due to a temporary  disruption of service in the first
quarter of 2007 that resulted from a change in broker-dealer affiliation.

         Other  non-interest  income  decreased  $147,000 or 50.3% from $292,000
during the first quarter of 2007 to $145,000 for the first quarter of 2007. This
decrease is largely  attributable to a $169,000 gain on the sale of a portion of
a parcel of land that was realized during the first quarter of 2007.

         The Company  recorded a $2,000 gain on the sale of  available  for sale
securities  in the first  quarter of 2008.  There were no gains  realized on the
sale of securities available for sale during the first quarter of 2007.

Non-interest Expense

         Total non-interest expense increased $442,000,  or 11.6%, to $4,257,000
for the first  quarter of 2008 from  $3,815,000  for the first  quarter of 2007.
Salaries and benefits, the largest component of non-interest expense,  increased
$203,000,  or 8.9%, to $2,486,000 for the first quarter of 2008 from  $2,283,000
for the first  quarter  of 2007.  This  increase  is largely  due to  additional



                                       12
<PAGE>

staffing for the two new  full-service  banking offices of The Peoples  National
Bank that  opened  in the  fourth  quarter  of 2007,  as well as  normal  salary
increases.

         Occupancy and furniture and equipment expenses  increased  $40,000,  or
7.6%, to $564,000 in the first quarter of 2008 compared to $524,000 in the first
quarter of 2007.  Again,  the  increase is largely due to the opening of two new
full-service  banking  facilities  in the fourth  quarter of 2007 by The Peoples
National Bank.

         Marketing  and  advertising  expense  increased  $24,000  or 21.2% from
$113,000 in the first quarter of 2007 to $137,000 during the same period in 2008
primarily  due to  advertising  for the two new branch  offices  of The  Peoples
National Bank and a new checking account product.

         Bank paid loan costs  increased  $87,000 or 181.3% to  $135,000  in the
first quarter of 2008 compared to $48,000 in the first quarter 2007.  $62,000 of
this  increase  is  attributable  to the  write-down  of an  asset  acquired  in
settlement of a loan to its current market value.

         Regulatory  assessments increased $30,000 or 55.6% from $54,000 for the
first  quarter of 2007 to  $84,000  for the first  quarter  of 2008.  Regulatory
assessments  include  fees paid to the  Federal  Deposit  Insurance  Corporation
("FDIC")  and the  Office of the  Comptroller  of the  Currency  ("OCC")  by the
Company's  three Banks.  The FDIC  changed its  assessment  calculation  process
effective January 1, 2007. Eligible insured depository institutions were granted
a one-time  assessment  credit.  Of the Company's three Banks,  only The Peoples
National Bank was granted a one-time  credit of  approximately  $112,000.  As of
March 31, 2008, this credit has been exhausted.

         All other operating expenses were $851,000 in the first quarter of 2008
compared to $793,000  for the first  quarter of 2007,  an increase of $58,000 or
7.3%.

Income Taxes

         The provision for income taxes decreased  $303,000 or 63.1% to $177,000
for the first  quarter of 2008  compared  to $480,000  for the first  quarter of
2007.  The decrease in the  provision  for income taxes is  attributable  to the
decrease in net  pre-tax  income and the  increase  in the amount of  tax-exempt
income. The provision for income taxes is an estimate,  and management considers
several factors in making this estimate including current pre-tax income levels,
the amount of tax-exempt  income,  and a comparison of prior period estimates to
income taxes ultimately determined.



                                       13
<PAGE>

BALANCE SHEET REVIEW

Loans

         Outstanding  loans represent the largest component of earning assets at
79.9% of total  earning  assets.  As of March 31,  2008,  the Company held total
gross loans outstanding of $423,491,000 an increase of $4,493,000, or 1.1%, from
$418,998,000  in total  gross  loans  outstanding  at  December  31, 2007 and an
increase  of  $57,643,000,  or 15.8%,  from  $365,848,000  in total  gross loans
outstanding  at  March  31,  2007.  The  significant   loan  growth  during  the
twelve-month  and  three-month  period is the result of increased loan demand at
the Company's three bank subsidiaries.

<TABLE>
<CAPTION>
Loan Portfolio Composition                                                                     March 31,             December 31,
                                                                                               ---------             ------------
(Dollars in Thousands)                                                                  2008             2007             2007
                                                                                        ----             ----             ----
                                                                                              (Unaudited)              (Audited)
<S>                                                                                   <C>                <C>            <C>
Commercial and Industrial - not secured by real estate ....................           $ 47,118           $ 44,766       $ 47,885
Commercial and Industrial - secured by real estate ........................            108,621             94,503        107,531
Residential real estate - mortgage ........................................            112,842             98,524        108,161
Residential real estate - construction ....................................            136,179            114,082        138,926
Consumer loans ............................................................             18,731             13,973         16,495
                                                                                      --------           --------       --------
     Gross Loans ..........................................................           $423,491           $365,848       $418,998
                                                                                      ========           ========       ========
</TABLE>

         The  interest  rates  charged  on loans  vary with the  degree of risk,
maturity,  and amount of the loan.  Competitive  pressures,  money market rates,
availability of funds, and government  regulation also influence interest rates.
The average  yield on the  Company's  loans for the three months ended March 31,
2007 was 7.13%  compared to 8.05% for the three months ended March 31, 2007. The
Federal  Reserve  decreased  the federal  funds  target rate by 100 basis points
during the fourth  quarter of 2007 and another 200 basis points during the first
quarter of 2008. A large portion of the Company's  adjustable-rate  loans, which
constitute approximately 45.9% of the loan portfolio, reprice almost immediately
following an interest-rate change by the Federal Reserve.

         The  Company's  loan  portfolio  consists  principally  of  residential
mortgage loans, commercial loans, and consumer loans. Substantially all of these
loans are to borrowers  located in South  Carolina and are  concentrated  in the
Company's market areas.

         The Company's  real estate loans are primarily  construction  loans and
other loans secured by real estate,  both  commercial and  residential,  located
within  the  Company's  trade  areas.  The  Company  does  not  actively  pursue
long-term,  fixed-rate  mortgage  loans  for  retention  in its loan  portfolio.
However,  the Banks do employ mortgage loan originators who originate such loans
that are pre-sold at origination to third parties.

         The  Company's  commercial  lending  activity is  directed  principally
towards businesses whose demand for funds falls within each Bank's legal lending
limits and which are potential  deposit customers of the Banks. This category of
loans includes loans made to individuals, partnerships, and corporate borrowers,
which are obtained for a variety of business  purposes.  Particular  emphasis is
placed on loans to small- and medium-sized businesses.  The Company's commercial
loans are spread  throughout a variety of industries,  with no industry or group



                                       14
<PAGE>

of related  industries  accounting  for a significant  portion of the commercial
loan  portfolio.  Commercial  loans are made on either a secured or an unsecured
basis.   When  taken,   security  usually  consists  of  liens  on  inventories,
receivables,  equipment,  furniture and fixtures. Unsecured commercial loans are
generally  short-term with emphasis on repayment strengths and low debt-to-worth
ratios. At March 31, 2008,  approximately  $10,580,000,  or 22.5%, 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 March 31, 2008 was  $3,665,000,  or
0.87%  of  loans  outstanding,   compared  to  $4,310,000,  or  1.03%  of  loans
outstanding,  at  December  31,  2007,  and to  $4,077,000,  or  1.11%  of loans
outstanding,  at March 31,  2007.  The  allowance  for loan losses is based upon
management's continuing evaluation of the collectibility of past-due loans based
on the  historical  loan  loss  experience  of  the  Company,  current  economic
conditions affecting the ability of all borrowers to repay, the volume of loans,
the quality of collateral  securing  non-performing and problem loans, and other
factors deserving recognition.

         At March 31, 2008 the Company had  $5,309,000  in  non-accruing  loans,
$411,000  in  restructured  loans,  no loans more than  ninety days past due and
still accruing interest,  and $930,000 in Other Real Estate Owned. This compares
to $7,505,000 in non-accruing  loans,  $412,000 in restructured  loans, no loans
more than ninety days past due and still  accruing  interest,  and $1,023,000 in
other real estate owned at December 31, 2007.  At March 31, 2007 the Company had
$914,000 in non-accruing  loans,  $421,000 in restructured  loans, no loans more
than ninety days past due and still  accruing  interest,  and  $239,000 in Other
Real Estate Owned. The substantial increase in non-accruing loans from March 31,
2007 to March 31, 2008 is largely the result of a single borrowing  relationship
that accounts for $4,130,000 of the total increase.  The credit  relationship is
secured by real estate  consisting  largely of completed  houses and residential
subdivision  lots,  all of  which  are in the  Company's  primary  market  area.
Management  has charged off  $752,000  associated  with this credit and believes
that any future  write-downs  associated  with this credit will be minimal.  The
balance of the  Company's  non-performing  loans at March 31, 2008  consisted of
$1,142,000  in  mortgage  loans,  $27,000  in  commercial  loans and  $10,000 in
consumer  loans.  Non-performing  assets as a percentage of loans and other real
estate owned were 1.57%,  2.13%, and 0.43% at March 31, 2008,  December 31, 2007
and March 31, 2007, respectively.

         Net  charge-offs  during the three  months  ended  March 31,  2008 were
$880,000 compared to net charge-offs of $660,000 for the year ended December 31,
2007 and net  charge-offs of $143,000 for the three months ended March 31, 2007.
The allowance for loan losses as a percentage of  non-performing  loans was 64%,
54%,  and 305% as of March 31,  2008,  December  31,  2007,  and March 31, 2007,
respectively.


                                       15
<PAGE>

         Management  continues to closely  monitor the levels of  non-performing
and  potential  problem  loans and will work to address the  weaknesses in these
credits to enhance  the  amount of  ultimate  collection  or  recovery  of these
assets.  With  increases in the overall  level of  non-performing  and potential
problem loans, management increases the provision and allowance for loan losses,
which in turn decreases net income.

         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 impaired loans
of  approximately  $6,976,000  at March 31, 2008 and  $2,024,000 at December 31,
2007. There were no impaired loans at March 31, 2007.

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 hold any trading  securities.  The Company uses its  investment
portfolio  to provide  liquidity  for  unexpected  deposit  liquidation  or loan
generation,  to meet the Company's  interest-rate  sensitivity  goals, to secure
public deposits,  and to generate income.  At March 31, 2008 securities  totaled
$98,562,000,   which  represents  18.6%  of  total  earning  assets.  Securities
decreased  $4,131,000,  or 4.0%, from  $102,693,000  invested as of December 31,
2007, and increased  $5,468,000,  or 5.9%, from $93,094,000 invested as of March
31,  2007.  The  size of the  Company's  investment  portfolio  is  managed  and
fluctuates  from time to time based on the amount of public  deposits held, loan
demand, liquidity needs, investment strategy, and other pertinent factors.

         At March  31,  2008  the  Company's  total  investments  classified  as
available for sale had an amortized  cost of  $79,287,000  and a market value of
$80,807,000 for an unrealized gain of $1,520,000.  This compares to an amortized
cost of $83,608,000  and a market value of $84,796,000 for an unrealized gain of
$1,188,000  on the  Company's  investments  classified  as available for sale at
December 31, 2007. At March 31, 2007 the Company's total investments  classified
as available for sale had an amortized cost of $76,970,000 and a market value of
$77,195,000  for an  unrealized  gain  of  $225,000.  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.  In
cases  where the  market  value is less than book  value,  the  Company  has the
ability and intent to hold  securities  that are in an unrealized loss positions


                                       16
<PAGE>

until a market price recovery or maturity,  and therefore  these  securities are
not considered impaired on an other-than-temporary basis.

Cash Surrender Value of Life Insurance

         The Company's cash surrender value of life insurance was $11,456,000 at
March 31, 2008, an increase of $106,000,  or 0.9%, from the $11,350,000  held at
December 31, 2007 and an increase of  $420,000,  or 3.8%,  from the  $11,036,000
held at March 31, 2007. The increase in cash  surrender  value life insurance is
due to normal  appreciation  in the cash  surrender  value  associated  with the
ownership of these assets.  Earnings  from the  ownership of these  policies are
informally  used  to  partially  offset  the  cost of  certain  employee-related
benefits.

Cash and Cash Equivalents

         The Company's cash and cash equivalents increased $6,235,000, or 59.2%,
to  $16,759,000  at March 31, 2008 from  $10,524,000  at December 31, 2007,  and
increased  $4,339,000,  or  34.9%,  from  $12,420,000  at March  31,  2007.  The
substantial  swings  in the  level  of  cash  and  cash  equivalents  are due to
fluctuations  in the Banks'  needs and  sources  for  immediate  and  short-term
liquidity.

Deposits

         The Banks' primary  source of funds for loans and  investments is their
deposits. Total deposits grew $11,189,000, or 2.7%, to $428,810,000 at March 31,
2008 from  $417,621,000  at December  31, 2007 and  $21,289,000,  or 5.2%,  from
$407,521,000 at March 31, 2007.  Competition  for deposit  accounts is primarily
based on the interest rates paid, location convenience and services offered.

         During the three months ended March 31, 2008, interest-bearing deposits
averaged $370,671,000 compared to $338,503,000 for the same period of 2007. 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. At March 31, 2008, brokered deposits
totaled  $38,338,000,  compared  to  $28,087,000  and  $31,294,000  in  brokered
deposits at  December  31, 2007 and March 31,  2007,  respectively.  The Company
considers these funds to be an attractive  alternative  funding source available
to use while continuing its efforts to maintain and grow its local deposit base.

         The average interest rate paid on  interest-bearing  deposits was 3.43%
during the three  months  ended  March 31,  2008  compared to 3.79% for the same
period of 2007 and 4.02% for the twelve  months  ended  December  31,  2007.  In
pricing  deposits,  the Company considers its liquidity needs, the direction and
levels of  interest  rates,  and local  market  conditions.  At March 31,  2008,
interest-bearing deposits comprised 89.0% of total deposits compared to 87.1% at
December 31, 2007 and 86.7% at March 31, 2007.




                                       17
<PAGE>

         The  Company's  core deposit  base  consists  largely of consumer  time
deposits  less than  $100,000,  savings  accounts,  NOW  accounts,  money market
accounts,  and  checking  accounts.  Although  such core  deposits  are becoming
increasingly  interest-sensitive  for both the  Company  and the  industry  as a
whole,  these core deposits  still  continue to provide the Company with a large
source of  relatively  stable  funds.  Core  deposits as a  percentage  of total
deposits averaged  approximately 69% at March 31, 2008, 77% at December 31, 2007
and 79% at March 31, 2007. Time deposits of $100,000 or more  represented  23.3%
of total  deposits at March 31,  2008,  23.7% at December  31, 2007 and 21.8% at
March 31, 2007. The Company's  larger  denomination  time deposits are generally
garnered  from  customers  within  the  local  market  areas of its  banks,  and
therefore may have a greater  degree of stability  than is typically  associated
with this source of funds at other financial institutions.

Borrowings

         The Company's  borrowings  are  comprised of federal  funds  purchased,
securities sold under repurchase  agreements,  and both short-term and long-term
advances from the Federal Home Loan Bank ("FHLB").  At March 31, 2008 short-term
borrowings  totaled  $81,840,000 and were comprised of $63,000,000 in short-term
advances  from the FHLB and  $18,840,000  in  securities  sold under  repurchase
agreements.  At December 31, 2007 short-term  borrowings totaled $85,353,000 and
were comprised of $429,000 in federal funds purchased, $65,100,000 in short-term
advances  from the FHLB and  $19,824,000  in  securities  sold under  repurchase
agreements.  March 31, 2007 short-term  borrowings totaled  $30,402,000 and were
comprised  of $460,000 in federal  funds  purchased,  $9,000,000  in  short-term
advances  from the FHLB and  $20,942,000  in  securities  sold under  repurchase
agreements.  Short-term  borrowings  are used  primarily for the immediate  cash
needs of the Company. The Company also had $5,000,000 of long-term advances from
the Federal Home Loan Bank of Atlanta on March 31, 2007.

LIQUIDITY

         Liquidity management involves meeting the cash flow requirements of the
Company.  The Company's  liquidity position is primarily dependent upon its need
to respond to  short-term  demand for funds caused by increased  loan demand and
withdrawals  from deposit  accounts.  The Company's  primary  liquidity  sources
include cash and due from banks,  federal funds sold, and  securities  available
for sale. In addition, the Company (through the Banks) has the ability to borrow
funds on a  short-term  basis from the  Federal  Reserve  System and to purchase
federal funds from other financial  institutions.  The Banks are also members of
the Federal Home Loan Bank System and have the ability to borrow both short-term
and long-term funds on a secured basis. At March 31, 2008, The Peoples  National
Bank had total borrowing  capacity from the FHLB equal to  $69,300,000,  and the
unused portion of this line of credit was  $27,300,000.  Bank of Anderson,  N.A.
had total borrowing capacity from the FHLB equal to $30,850,000,  and the unused
portion  of this line of  credit  was  $13,850,000  at March  31,  2008.  Seneca
National Bank had established secured lines of credit with the FHLB at March 31,
2007  of  $6,980,000,  and  the  unused  portion  of this  line  of  credit  was



                                       18
<PAGE>

$2,960,000.  At March 31, 2008, 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 outside of those of its subsidiaries,  and requires funds to pay
limited operating expenses and dividends.  The parent company's  liquidity needs
are fulfilled  through  management  fees assessed each  subsidiary bank and from
dividends passed up to the parent company from The Peoples National Bank.

         During the first quarter of 2008, the Company made capital expenditures
of  approximately  $200,000  related to the  construction  and  furnishing  of a
full-service  retail banking office in Greenville,  SC for The Peoples  National
Bank,  which was opened during the fourth  quarter of 2007. The Company may make
other lesser capital expenditures in 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.




                                       19
<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
March  31,  2008,  the  Banks  had  issued   commitments  to  extend  credit  of
$106,911,000  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  $3,256,000 at
March 31, 2008. 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.

         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.




                                       20
<PAGE>


CAPITAL ADEQUACY AND RESOURCES

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

         The Company and the Banks are  required  to  maintain  certain  capital
ratios by federal banking regulators. The following table sets forth the capital
ratios for the Company and the Banks as of March 31, 2008:


                                 CAPITAL RATIOS
                             (Dollars 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 .........   $    53,274    11.86%           N/A      N/A     $   35,935     8.00%
Tier 1 Risk-based Capital ........        49,609    11.05            N/A      N/A         17,958     4.00
Leverage Ratio ...................        49,609     8.74            N/A      N/A         22,704     4.00

The Peoples National Bank:
Total Risk-based Capital .........   $    30,780    10.40%    $   29,596    10.00%    $   23,677     8.00%
Tier 1 Risk-based Capital ........        28,355     9.58         17,759     6.00         11,839     4.00
Leverage Ratio ...................        28,355     8.09         17,525     5.00         14,020     4.00

Bank of Anderson, N. A.:
Total Risk-based Capital .........   $    13,837    13.44%    $   10,295    10.00%    $    8,236     8.00%
Tier 1 Risk-based Capital ........        12,929    12.56          6,176     6.00          4,118     4.00
Leverage Ratio ...................        12,929     8.64          7,482     5.00          5,986     4.00

Seneca National Bank:
Total Risk-based Capital .........   $     5,907    11.34%    $    5,209    10.00%    $    4,167     8.00%
Tier 1 Risk-based Capital ........         5,440    10.45          3,123     6.00          2,082     4.00
Leverage Ratio ...................         5,440     7.73          3,519     5.00          2,815     4.00
</TABLE>




                                       21
<PAGE>


RECENTLY ISSUED ACCOUNTING STANDARDS

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

         In  December  2007,   the  FASB  issued  SFAS  No.   141(R),   Business
Combinations,  ("SFAS 141(R)") which replaces SFAS 141. SFAS 141(R)  establishes
principles  and  requirements  for how an  acquirer  in a  business  combination
recognizes  and measures in its financial  statements  the  identifiable  assets
acquired, the liabilities assumed, and any controlling interest;  recognizes and
measures goodwill acquired in the business  combination or a gain from a bargain
purchase;  and  determines  what  information to disclose to enable users of the
financial  statements  to  evaluate  the  nature  and  financial  effects of the
business  combination.  SFAS 141(R) is effective for acquisitions by the Company
taking  place on or  after  January  1,  2009.  Early  adoption  is  prohibited.
Accordingly,  a calendar  year-end  company is required  to record and  disclose
business  combinations  following existing  accounting guidance until January 1,
2009.  The  Company  will  assess the impact of SFAS 141(R) if and when a future
acquisition occurs.

         In  December  2007,  the  FASB  issued  SFAS  No.  160,  Noncontrolling
Interests  in  Consolidated  Financial  Statements  - an amendment of ARB No. 51
("SFAS 160").  SFAS 160 establishes  new accounting and reporting  standards for
the  noncontrolling  interest in a subsidiary and for the  deconsolidation  of a
subsidiary.  Before this  statement,  limited  guidance  existed  for  reporting
noncontrolling interests (minority interest). As a result, diversity in practice
exists. In some cases minority interest is reported as a liability and in others
it is  reported  in  the  mezzanine  section  between  liabilities  and  equity.
Specifically,  SFAS 160 requires the  recognition of a  noncontrolling  interest
(minority  interest)  as equity in the  consolidated  financial  statements  and
separate from the parent's equity. The amount of net income  attributable to the
noncontrolling  interest will be included in consolidated net income on the face
of the income statement. SFAS 160 clarifies that changes in a parent's ownership
interest  in a  subsidiary  that do not  result in  deconsolidation  are  equity
transactions  if the parent  retains  its  controlling  financial  interest.  In
addition,  this statement  requires that a parent  recognize gain or loss in net
income when a subsidiary is  deconsolidated.  Such gain or loss will be measured
using  the  fair  value  of  the   noncontrolling   equity   investment  on  the
deconsolidation  date. SFAS 160 also includes expanded  disclosure  requirements
regarding the interests of the parent and its noncontrolling interests. SFAS 160
is effective for the Company on January 1, 2009. Earlier adoption is prohibited.
The Company is currently evaluating the impact, if any, the adoption of SFAS 160
will have on its financial position, results of operations and cash flows.

         In  March  2008,  the  FASB  issued  SFAS No.  161,  Disclosures  about
Derivative  Instruments and Hedging  Activities  ("SFAS 161"). SFAS 161 requires
enhanced  disclosures  about an  entity's  derivative  and  hedging  activities,
thereby  improving the  transparency of financial  reporting.  It is intended to
enhance  the  current  disclosure  framework  in  SFAS  133  by  requiring  that
objectives for using derivative  instruments be disclosed in terms of underlying
risk and accounting  designation.  This disclosure better conveys the purpose of


                                       22
<PAGE>

derivative  use in terms of the risks  that the entity is  intending  to manage.
SFAS 161 is  effective  for the Company on January 1, 2009.  This  pronouncement
does  not  impact   accounting   measurements  but  will  result  in  additional
disclosures  if the  Company is  involved  in  material  derivative  and hedging
activities at that time.

         In  February  2008,  the FASB  issued FASB Staff  Position  No.  140-3,
Accounting  for  Transfers  of  Financial   Assets  and   Repurchase   Financing
Transactions  ("FSP  140-3").  This FSP provides  guidance on  accounting  for a
transfer of a financial asset and the transferor's  repurchase  financing of the
asset.  This FSP presumes  that an initial  transfer of a financial  asset and a
repurchase  financing  are  considered  part  of the  same  arrangement  (linked
transaction)  under SFAS 140. However,  if certain criteria are met, the initial
transfer and repurchase  financing are not evaluated as a linked transaction and
are  evaluated  separately  under  SFAS 140.  FSP 140-3  will be  effective  for
financial  statements issued for fiscal years beginning after November 15, 2008,
and interim  periods  within those fiscal years and earlier  application  is not
permitted.  Accordingly,  this FSP is  effective  for the  Company on January 1,
2009. The Company is currently  evaluating  the impact,  if any, the adoption of
FSP 140-3 will have on its financial  position,  results of operations  and cash
flows.

         In  April  2008,  the  FASB  issued  FASB  Staff  Position  No.  142-3,
Determination  of the Useful Life of Intangible  Assets ("FSP 142-3").  This FSP
amends the factors that should be considered in developing  renewal or extension
assumptions  used to determine the useful life of a recognized  intangible asset
under SFAS 142, Goodwill and Other Intangible  Assets. The intent of this FSP is
to improve the  consistency  between the useful life of a recognized  intangible
asset under SFAS 142 and the period of  expected  cash flows used to measure the
fair value of the asset under SFAS 141(R), Business Combinations, and other U.S.
generally accepted  accounting  principles.  This FSP is effective for financial
statements  issued for fiscal years  beginning  after  December  15,  2008,  and
interim  periods  within those fiscal  years and early  adoption is  prohibited.
Accordingly,  this FSP is  effective  for the  Company on  January 1, 2009.  The
Company does not believe the  adoption of FSP 142-3 will have a material  impact
on its financial position, results of operations or cash flows.

         Effective January 1, 2008, the Company adopted SFAS No. 157, Fair Value
Measurements   ("SFAS  157")  which  provides  a  framework  for  measuring  and
disclosing fair value under generally accepted accounting  principles.  SFAS 157
requires  disclosures about the fair value of assets and liabilities  recognized
in the balance sheet in periods subsequent to initial  recognition,  whether the
measurements  are made on a  recurring  basis (for  example,  available-for-sale
investment securities) or on a nonrecurring basis (for example, impaired loans).

         SFAS  157  defines  fair  value as the  exchange  price  that  would be
received  for an asset or paid to  transfer a  liability  (an exit price) in the
principal or most  advantageous  market for the asset or liability in an orderly
transaction  between market  participants on the measurement date. SFAS 157 also
establishes a fair value  hierarchy which requires an entity to maximize the use
of observable inputs and minimize the use of unobservable  inputs when measuring


                                       23
<PAGE>

fair value.  The standard  describes  three levels of inputs that may be used to
measure fair value:

Level 1        Quoted  prices  in  active   markets  for  identical   assets  or
               liabilities.  Level 1 assets  and  liabilities  include  debt and
               equity securities and derivative  contracts that are traded in an
               active  exchange  market,  as well as U.S.  Treasury,  other U.S.
               Government and agency  mortgage-backed  debt  securities that are
               highly  liquid  and  are  actively  traded  in   over-the-counter
               markets.

Level 2        Observable inputs other than Level 1 prices such as quoted prices
               for similar assets or liabilities;  quoted prices in markets that
               are not active;  or other  inputs that are  observable  or can be
               corroborated by observable market data for substantially the full
               term of the assets or liabilities. Level 2 assets and liabilities
               include debt  securities  with quoted prices that are traded less
               frequently  than   exchange-traded   instruments  and  derivative
               contracts  whose value is  determined  using a pricing model with
               inputs  that  are  observable  in the  market  or can be  derived
               principally from or corroborated by observable  market data. This
               category  generally  includes  certain  derivative  contracts and
               impaired loans.

Level 3        Unobservable  inputs  that are  supported  by little or no market
               activity and that are significant to the fair value of the assets
               or liabilities.  Level 3 assets and liabilities include financial
               instruments  whose  value is  determined  using  pricing  models,
               discounted cash flow  methodologies,  or similar  techniques,  as
               well as  instruments  for which the  determination  of fair value
               requires  significant  management  judgment  or  estimation.  For
               example,  this category generally includes certain private equity
               investments,  retained  residual  interests  in  securitizations,
               residential  mortgage servicing rights, and  highly-structured or
               long-term derivative contracts.


         Assets and Liabilities  measured at fair value on a recurring basis are
as follows as of March 31, 2008:

<TABLE>
<CAPTION>
                                            Quoted market price       Significant other       Significant unobservable
                                              in active markets       observable Inputs                 inputs
                                                  (Level 1)                (Level 2)                   (Level 3)
                                                  ---------                ---------                   ---------

<S>                                          <C>                        <C>                            <C>
Available for sale
  investment securities ................     $   80,289,000             $    518,000                   $        -

Impaired loans .........................                  -                6,976,000                            -

                                             --------------             ------------                    --------
Total ..................................     $   80,289,000             $  7,494,000                    $       -
                                             ==============             ============                    ========
</TABLE>



                                       24
<PAGE>

         The  Company  has no  liabilities  carried at fair value or measured at
fair value on a nonrecurring basis.

         The Company is  predominantly  an asset  based  lender with real estate
serving as collateral on a substantial majority of loans. Loans which are deemed
to be impaired are primarily  valued on a nonrecurring  basis at the fair values
of the underlying  real estate  collateral.  Such fair values are obtained using
independent  appraisals,  which the Company considers to be level 2 inputs.  The
aggregate carrying amount of impaired loans at March 31, 2008 was $6,976,000.

         FASB Staff Position No. FAS 157-2 delays the implementation of SFAS 157
until the first  quarter of 2009 with  respect  to  goodwill,  other  intangible
assets,  real estate and other assets  acquired  through  foreclosure  and other
non-financial assets measured at fair value on a nonrecurring basis.

         The Company has no assets or liabilities whose fair values are measured
using level 3 inputs.

         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 or cash flows.















                                       25
<PAGE>


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 March 31, 2008 the
Company was positioned so that net interest income would increase  $664,000 over
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
$710,000 over the next twelve months if interest rates were to gradually decline
by 100 basis points over the same period.  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  theoretical  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.


                                       26
<PAGE>



Item 4T.          CONTROLS AND PROCEDURES

Disclosure 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.

Changes in Internal Control over Financial Reporting

         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.


                                       27
<PAGE>



PART II.  OTHER INFORMATION


Item 6.       Exhibits

              Exhibits.

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





                                       28
<PAGE>



SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                          PEOPLES BANCORPORATION, INC.


Dated:  May 13, 2008                      By:    /s/ R. Riggie Ridgeway
                                               ------------------------
                                                 R. Riggie Ridgeway
                                                 President and CEO


Dated:  May 13, 2008                      By:   /s/ Robert E. Dye, Jr.
                                              ------------------------
                                                 Robert E. Dye, Jr.
                                                 Senior Vice President and CFO
                                                 (principal financial officer)





                                       29
<PAGE>





                                  Exhibit Index

Exhibit No.                    Description of Exhibit

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






                                       30