FIRST COMMUNITY CORP /SC/, 424B1, 1998-07-01

FIRST COMMUNITY CORP /SC/
424B1, 1998-07-01
NATIONAL COMMERCIAL BANKS

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<PAGE> 1
Filed Pursuant to Rule 424(b)(1)
Registration No. 333-53065

PROSPECTUS

450,000 SHARES

[LOGO]

FIRST COMMUNITY CORPORATION

COMMON STOCK

All of the 450,000 shares of Common Stock offered hereby are being sold
by First Community Corporation (the "Company"). Prior to the offering, there has
been only limited trading in the Common Stock and no established market for the
Common Stock has existed. See "Underwriting" for the factors considered in
determining the public offering price. The Common Stock will be quoted on the
OTC Bulletin Board under the trading symbol "FCCO."

SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK.

-----------------

THE SECURITIES OFFERED HEREBY ARE NOT SAVINGS OR DEPOSIT ACCOUNTS OR OTHER
OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND ARE NOT INSURED BY THE
SAVINGS ASSOCIATION INSURANCE FUND OR THE BANK INSURANCE FUND OF
THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

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Underwriting Proceeds to the
Price to Public Discount (1) (2) Company (3)
-----------------------------------------------------------------------------------------------------------------------

<S> <C> <C> <C>
Per Share....................................... $ 14.00 $ 0.828 $ 13.172
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Total (4)....................................... $6,300,000 $372,400 $5,927,600
=======================================================================================================================

</TABLE>

(1) The Company has agreed to indemnify the Underwriter against certain
civil liabilities, including liabilities under the Securities Act of
1933. See "Underwriting."

(2) The Underwriting Discount has been calculated on the basis of an
underwriting discount of 7% with respect to an aggregate of 380,000
shares of Common Stock to be sold by the Company to the public, and no
underwriting discount with respect to an aggregate of up to 70,000
shares of Common Stock sold in the offering to directors and executive
officers of the Company. The Underwriter will also be paid a financial
advisory fee of up to $30,000. See "Underwriting."

(3) Before deducting expenses of the offering payable by the Company
estimated to be approximately $180,000.
(4) The Company has granted the Underwriter an over-allotment option to
purchase up to 67,500 additional shares of Common Stock on the same
terms and conditions as set forth above. If all such shares are
purchased by the Underwriter, the total Price to Public will be
$7,245,000, the total Underwriting Discount will be $438,550, and the
total Proceeds to the Company will be $6,806,450. See "Underwriting."

-----------------

The shares of Common Stock are offered by the Underwriter subject to
prior sale, receipt and acceptance by the Underwriter, and to the Underwriter's
right to reject orders in whole or in part and to withdraw, cancel, or modify
the offer without notice. It is expected that certificates for the shares will
be available for delivery on or about July 6, 1998.

-----------------

EDGAR M. NORRIS & CO., INC.
June 29, 1998

<PAGE> 2

FIRST COMMUNITY CORPORATION

The Community Bank of the Midlands

(Map appears here, showing the state of South Carolina, with the four-county
Midlands Region highlighted in green, including Fairfield, Richland, Lexington,
and Newberry counties. The cities of Lexington, Irmo, and Forest Acres, South
Carolina, are indicated with green dots, and the city of Columbia, South
Carolina, is indicated with a black star.)

IN CONNECTION WITH THE OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON
STOCK AT LEVELS ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE OTC BULLETIN BOARD OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

<PAGE> 3

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and the Company's consolidated financial statements and notes
thereto appearing elsewhere in this Prospectus. Unless the context indicates
otherwise, the information in this Prospectus assumes no exercise of the
Underwriter's over-allotment option. Prospective investors should consider
carefully the information set forth under the heading "Risk Factors." This
Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual results may differ materially from the
results discussed in the forward-looking statements. Factors that might cause
such a difference include, but are not limited to, those discussed in "Risk
Factors."

THE COMPANY

First Community Corporation is a South Carolina bank holding company
formed in 1994 to serve as a holding company for First Community Bank, N.A. (the
"Bank"). The Bank opened as a national bank in August 1995 with offices located
in Lexington and Forest Acres, South Carolina, and the Company has grown from
approximately $19.4 million in total assets, $3.8 million in loans, $11.3
million in deposits, and $6.1 million in shareholders' equity at December 31,
1995 to approximately $58.3 million in total assets, $31.2 million in loans,
$46.7 million in deposits, and $6.2 million in shareholders' equity at March 31,
1998. The Company recorded its first quarterly profit in the fourth quarter of
1996 and has been profitable each subsequent quarter through the date of this
Prospectus.

The Company engages in a general commercial and retail community
banking business characterized by personalized service and local
decision-making, emphasizing the banking needs of small- to medium-sized
businesses, professional concerns, and individuals. The Company attributes its
success to date to the Company's location in growing market areas and its focus
on attracting customers in these areas who prefer to conduct business with a
locally owned and managed institution that demonstrates an active interest in
their business and personal financial affairs.

The Company's primary service area currently includes portions of
Lexington and Richland Counties, and the Company's goal is to be the leading
community bank in the Midlands area of South Carolina, which includes Lexington,
Richland, Newberry, and Fairfield Counties. According to the U.S. Census Bureau,
Lexington County is one of the fastest growing counties in South Carolina, with
a population of 191,900 in 1995, reflecting a 14.5% increase since 1990.
Lexington County also boasts one of the highest per capita incomes in South
Carolina, with a median household income in 1995 of $40,500, compared to $31,000
for South Carolina as a whole. Richland County had a population of 299,700 and a
median household income of $40,500 in 1995. The U.S. Department of Housing and
Urban Development projects a median household income in 1998 of $45,600 for the
Columbia, South Carolina, Metropolitan Statistical Area, which includes both
Richland County and Lexington County. This figure represents growth of 2.9% over
the median household income for 1997 and 27.6% over 1990.

Total employment in Lexington County grew by 5.9% between December 1996
and December 1997. During the same period, the unemployment rate in Lexington
County fell from 3.0% to 1.5%. Total employment in Richland County grew by 5.5%
between December 1996 and December 1997. During the same period, the
unemployment rate in Richland county fell from 3.7% to 1.9%. As of August 1997,
total non-agricultural employment in the Columbia Metropolitan Statistical Area
was 277,100. The principal components of the economy within the Company's market
areas are service industries, government, and wholesale and retail trade. The
largest employers, each of which employs in excess of 3,000 people in the
Midlands area, include the Fort Jackson Army Base, the University of South
Carolina, Policy Management Systems Corporation, Richland Memorial Hospital,
Blue Cross Blue Shield, SCANA Corporation, and Pepsi-Cola, Inc.

The Company intends to use the proceeds of this offering to support its
continued growth through its existing offices and by opening three additional
branches in the next 18 to 24 months in other fast growing areas in the
Midlands. Although the Company has not yet acquired any branch sites, it is
searching for sites in community and neighborhood settings in the Midlands area
similar to the areas in which the Company's two existing offices are located.
The Company has entered into a contract to purchase a branch site on Highway 60
in Irmo, South Carolina, which is in Lexington County. The Company has the right
to terminate this contract without penalty during a 75-day inspection period
ending August 11, 1998. In selecting further branch sites, the Company will
favor growth areas that have their own community identity, with characteristics
such as a strong school system, a progressive business climate, a local
newspaper, and a separate municipal

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<PAGE> 4

government. The Company believes that these types of sites will provide the
Company with the greatest opportunity for continued success.

The principal executive offices of both the Company and the Lexington
office of the Bank are located on Highway 378, also known as Sunset Boulevard,
in Lexington, South Carolina. The address of these offices is 5455 Sunset
Boulevard, Lexington, South Carolina 29072. The Company's Forest Acres office in
Richland County is located at 4404 Forest Drive, Columbia, South Carolina 29206
(at the corner of Forest Drive and Clemson Avenue in Forest Acres). The
Company's telephone number is (803) 951-2265.

THE OFFERING
<TABLE>
<CAPTION>

<S> <C>
Common Stock offered by the Company............................ 450,000 shares (1)

Common Stock outstanding prior to the offering................. 689,677 shares (2)

Common Stock to be outstanding after the offering.............. 1,139,677 shares (1)(2)

Use of proceeds................................................ The Company will use the net proceeds of
this offering to support the continued
growth and expansion of the Company,
including approximately $3.0 million for the
opening of up to three new branch offices,
and for other general corporate purposes.
See "Use of Proceeds."

OTC Bulletin Board symbol...................................... FCCO (3)

</TABLE>

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(1) Excludes up to 67,500 shares of Common Stock which may be sold by the
Company upon exercise of the over-allotment option granted to the
Underwriter. See "Underwriting."

(2) Excludes 84,000 shares of Common Stock issuable upon the exercise of
stock options outstanding as of the date of the Prospectus, all of
which are exercisable at $10.00 per share.

(3) The Underwriter has filed an application to have the Company's Common
Stock quoted on the OTC Bulletin Board under the symbol "FCCO."

RISK FACTORS

An investment in the securities offered hereby involves substantial
risks including, among others, the risks associated with the proposed expansion
of the Company, the lack of an established trading market for the Common Stock,
the credit risk associated with the Company's loan portfolio, and the adequacy
of the allowance for loan losses.

4
<PAGE> 5

SUMMARY CONSOLIDATED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

THREE MONTHS ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
-------------------------- ------------------------------------------
1998 1997 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net interest income ........................ $ 544 $ 374 $ 1,802 $ 1,024 $ 245
Provision for loan losses .................. 43 37 194 135 77
Noninterest income ......................... 83 46 262 126 20
Noninterest expense ........................ 468 367 1,619 1,297 746
Net income (loss) .......................... 116 16 251 (282) (558)
BALANCE SHEET DATA:
Total assets ............................... $ 58,328 $ 39,721 $ 51,012 $ 38,129 $ 19,380
Earning assets ............................. 53,473 35,284 45,127 33,481 17,157
Investment securities (1) .................. 15,384 12,355 13,507 11,813 9,019
Loans (2) .................................. 31,625 19,763 29,000 15,915 3,833
Allowance for loan losses .................. 421 231 380 201 77
Deposits ................................... 46,700 32,462 42,247 30,901 11,334
Shareholders' equity ....................... 6,236 5,755 6,115 5,782 6,136
SHARE DATA:
Basic net income (loss) per share (3) ...... $ 0.17 $ 0.02 $ 0.36 $ (0.41) $ (1.59)
Diluted net income (loss) per share (4) . 0.16 0.02 0.36 (0.41) (1.59)
Book value per share (period end) (5) ...... 9.04 8.36 8.87 8.40 8.92
Tangible book value per share (period ...... 9.02 8.33 8.85 8.37 8.88
end)(5)
Weighted average shares outstanding ......... 689,677 688,077 689,015 688,077 350,641
PERFORMANCE RATIOS:
Return on average assets ................... 0.87% 0.16% 0.56% (1.04)% (8.65)%
Return on average equity ................... 7.60% 1.10% 4.28% (4.82)% (17.02)%
Interest rate spread ....................... 3.63% 3.36% 3.55% 3.13% 1.72%
Net interest margin (6) .................... 4.45% 4.36% 4.44% 4.28% 4.43%
Efficiency (7) ............................. 74.59% 87.45% 78.44% 112.78% 281.51%
ASSET QUALITY RATIOS:
Allowance for loan losses to period end
loans(2) ................................. 1.33% 1.17% 1.31% 1.26% 2.01%
Net charge-offs to average loans ........... 0.01% 0.04% 0.06% 0.10% --
Nonperforming assets to period end loans
and foreclosed property (2)(8) ........... -- -- -- -- --
Nonperforming assets to period end total
assets(8) ................................ -- -- -- -- --
CAPITAL AND LIQUIDITY RATIOS: (9)
Average equity to average assets ........... 11.44% 14.92% 13.06% 21.65% 50.81%
Leverage ................................... 9.85% 12.85% 10.73% 14.79% 27.84%
Risk-based capital
Tier 1 ................................... 13.83% 19.91% 14.93% 23.41% 69.66%
Total .................................... 14.91% 20.83% 16.02% 24.35% 70.67%
Average loans to average deposits .......... 67.56% 55.99% 62.53% 53.76% 25.75%
</TABLE>

- -----------
(1) Securities held to maturity are stated at amortized cost, and
securities available for sale are stated at fair value.
(2) Loans are stated net of unearned income, before allowance for loan
losses.
(3) Basic net income (loss) per share is computed using the weighted
average number of shares of common stock outstanding for the period.
(4) Diluted net income (loss) per share is computed using the weighted
average number of outstanding shares of common stock and dilutive
common stock equivalents from stock options (using the treasury stock
method).
(5) Excludes the effect of any outstanding stock options.
(6) Net interest income divided by average earning assets.
(7) Noninterest expense divided by the sum of net interest income and
noninterest income, net of gains and losses on sales of assets.
(8) The Company did not have any nonperforming assets during the periods
indicated.
(9) Capital and liquidity ratios are for the Bank, not the Company.

5
<PAGE> 6

RISK FACTORS

An investment in the securities offered hereby involves certain risks.
In addition to the other information contained in the Prospectus, prospective
investors should consider the following factors in evaluating an investment in
the shares of Common Stock offered hereby. This Prospectus contains
"forward-looking statements" relating to, without limitation, future economic
performance, plans and objectives of management for future operations, and
projections of revenues and other financial items that are based on the beliefs
of the Company's management, as well as assumptions made by and information
currently available to the Company's management. The words "expect," "estimate,"
"anticipate," "believe," and similar expressions are intended to identify
forward-looking statements. The cautionary statements set forth in this "Risk
Factors" section and elsewhere in this Prospectus identify important factors
with respect to such forward-looking statements, including certain risks and
uncertainties, that could cause actual results to differ materially from those
in such forward-looking statements.

RISKS ASSOCIATED WITH OPENING NEW OFFICES. The proceeds of the offering
will be used to enhance the Company's capital position and to support its
proposed growth and expansion, including the establishment of up to three
additional branch offices over the next 18 to 24 months. Although the Company
has entered into a contract for the purchase of one branch site, the Company has
not yet acquired any sites for the additional branch offices, and there can be
no assurance that it will identify acceptable sites or be able to purchase the
sites on acceptable terms. There can also be no assurance that the Company will
actually experience any further asset growth or open any additional branch
offices, or that the Company will experience any favorable results if such
growth and branch expansion occurs. Because of the Company's short history and
the significance of this proposed growth and branch expansion, the Company's
historical results of operations are not necessarily indicative of the Company's
future operations. The likelihood of the continued success of the Company must
be considered in light of the problems, expenses, complications, and delays
frequently encountered in connection with the establishment of new branches and
the competitive environment in which the new branches will operate. There can be
no assurance that any of the new branches will ever operate profitably or that
the impact of their respective operations will not have a material adverse
impact on the results of operations and financial condition of the Company.

LACK OF ESTABLISHED TRADING MARKET AND POSSIBLE VOLATILITY OF STOCK
PRICE AND QUARTERLY EARNINGS. Prior to this offering, there has been no
established or other active or liquid market for the Common Stock. Although the
Company will be quoted on the OTC Bulletin Board, there can be no assurance
regarding the liquidity of any markets that may develop for the Common Stock,
the ability of holders of Common Stock to sell their securities, or the price at
which holders would be able to sell their securities. The public offering price
of the Common Stock offered hereby has been determined solely by negotiations
among the Company and Edgar M. Norris & Co., Inc. (the "Underwriter") and may
bear no relationship to the market price of the Common Stock after this
offering. See "Underwriting." The market price of the Common Stock could be
subject to significant fluctuations in response to variations in quarterly and
yearly operating results (which could be substantial in the near term as a
result of the expenses associated with the opening of the proposed additional
branches), general trends in the Company's industry, and other factors.
Furthermore, it is possible that in some future quarter the Company's operating
results will be below the expectations of public market analysts and investors.
In such an event, the price of the Common Stock would likely be materially
adversely affected. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations." In addition, the stock market in recent
years has experienced extreme price and volume fluctuations that have often been
unrelated or disproportionate to the operating performance of affected
companies. These broad fluctuations may adversely affect the market price of the
Common Stock. See "Market for Common Stock."

DEPENDENCE ON SENIOR MANAGEMENT. The Company's growth and development
to date have been largely the result of the contributions of certain of the
senior executive officers of the Company, including James C. Leventis, the
Company's Chairman, Michael C. Crapps, the Company's President and Chief
Executive Officer, David K. Proctor, the Company's Senior Vice President and
Senior Credit Officer, and Joseph G. Sawyer, the Company's Senior Vice President
and Chief Financial Officer. The loss of the services of one or more of these
individuals could have a material adverse effect on the Company's business and
development. No assurance can be given that replacements for any of these
officers could be employed if these officers' services were no longer available.
In addition, continued growth of the Company will require that the Company
attract and retain additional personnel with a variety of skills and experience.
Significant competition exists for such personnel with the skills and experience
needed successfully to manage the Company's business and operations. See
"Management."

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<PAGE> 7
COMPETITION. The Company encounters strong competition from other
financial institutions within its primary market area. In addition, established
financial institutions not already operating in the Company's primary market
area may, under South Carolina law, open branches in the area at future dates.
In the conduct of certain aspects of its banking business, the Company also
competes with savings institutions, credit unions, mortgage banking companies,
consumer finance companies, insurance companies, and other institutions, some of
which are not subject to the same degree of regulation and restriction imposed
upon the Company. Many of these competitors have substantially greater resources
and lending limits than the Company and offer certain services that the Company
does not currently provide. In addition, many of these competitors have numerous
branch offices located throughout their extended market areas which provide them
with a competitive advantage over the Company. Furthermore, as a consequence of
legislation enacted by the United States Congress, out-of-state banks are
allowed to commence operations and compete in the Company's primary market
areas. No assurance can be given that such competition will not have an adverse
impact on the financial condition and results of operations of the Company or
that the Company will ultimately be able to successfully compete with other
financial institutions in its market. See "Business -- Competition" and
"Supervision and Regulation."

CREDIT RISK; ADEQUACY OF ALLOWANCE FOR LOAN LOSSES. There are certain
risks inherent in making all loans, including risks with respect to the period
of time over which loans may be repaid, risks resulting from changes in economic
and industry conditions, risks inherent in dealing with individual borrowers,
and, in the case of a collateralized loan, risks resulting from uncertainties
about the future value of the collateral. The Company maintains an allowance for
loan losses based on, among other things, historical experience, an evaluation
of economic conditions, and regular reviews of delinquencies and loan portfolio
quality. Management's judgment about the adequacy of the allowance is based upon
a number of assumptions about future events which it believes to be reasonable
but which may not prove to be accurate. Thus, there can be no assurance that
charge-offs in future periods will not exceed the allowance for loan losses or
that additional increases in the allowance for loan losses will not be required.
Additions to the allowance for loan losses would result in a decrease of the
Company's net income and, possibly, its capital. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Provision and
Allowance for Loan Losses."

POTENTIAL IMPACT OF CHANGES IN INTEREST RATES. The Company's
profitability is dependent on the net interest income of the Bank, which is the
difference between the Bank's interest income on interest-earning assets and the
Bank's interest expense on interest-bearing liabilities. The Company, like most
financial institution holding companies, will continue to be affected by changes
in general interest rate levels and other economic factors beyond the Company's
control. As of March 31, 1998, the Company had a cumulative one-year negative
gap position of 15.92% of total interest-bearing assets. With a negative gap
position, the rates on the Company's interest-bearing liabilities will likely
adjust to changes in market interest rates at a faster rate than the yields on
the Company's interest-earning assets. Consequently, the Company's net interest
income could be adversely affected during periods of rapidly increasing interest
rates. Although the Company has structured its asset and liability management
strategies to mitigate the impact of changes in interest rates, there can be no
assurance that these strategies will be successful. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Net Interest
Income."

NO DIVIDENDS. The Company has never paid cash dividends on its Common
Stock and in the near-term intends to retain any future earnings to finance its
growth. As the Company's business operations are conducted almost exclusively
through the Bank, the Company's ability to pay dividends on the Common Stock is
directly dependent on the dividends paid by the Bank to the Company. The ability
of the Bank to pay dividends to the Company is subject to the Bank's
profitability and to government regulations that limit the aggregate amount of
cash dividends paid to shareholders based on then-current income levels. There
can be no assurance that the Bank's future earnings will support dividend
payments to the Company. Additionally, there is no restriction on the ability of
the Company to issue shares of stock with preferential dividend rights in the
future. See "Dividend Policy," "Supervision and Regulation -- Dividends," and
"Description of Securities -- Preferred Stock."

LOCAL ECONOMIC CONDITIONS. The Company's success is influenced by the
geographic markets served by the Company. Adverse changes in economic conditions
in these markets would likely impair the Company's ability to collect loans and
could otherwise have a negative effect on the financial condition of the
Company. See "Business -- Market Areas."

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<PAGE> 8

DILUTION. Purchasers of Common Stock in the offering will experience
immediate dilution in the net tangible book value per share of the Common Stock
from the public offering price. Moreover, in the near-term, the Company expects
that the expenses associated with the offering and the establishment of the
additional branch offices will result in dilution of the Company's return on
equity and earnings per share. See "Dilution" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

SHARES ELIGIBLE FOR FUTURE SALE. Future sales of substantial amounts of
Common Stock could adversely affect the market price of the Common Stock. Upon
consummation of the offering, the Company will have 1,139,677 shares of Common
Stock outstanding, and all of these shares (plus any shares issued upon the
exercise of the Underwriter's over-allotment option) will be freely tradeable
without restriction or registration under the Securities Act of 1933 (the
"Securities Act"), unless owned by an affiliate of the Company or subject to the
lock-up agreements described below. In addition, there are outstanding stock
options that the Company has granted to certain directors, officers, and
employees of the Company for the purchase of an aggregate of 84,000 shares of
Common Stock under the First Community Corporation 1996 Stock Option Plan (the
"1996 Stock Option Plan"), of which options for 47,200 shares are currently
exercisable. The Company's directors and executive officers have agreed with the
Underwriter not to sell any Common Stock, which includes 221,634 currently
outstanding shares and 44,000 shares issuable upon exercise of options, for 180
days from the date of this Prospectus without the Underwriter's prior written
consent. See "Description of Securities -- Shares Eligible for Future Sale" and
"Underwriting."

ISSUANCE OF ADDITIONAL STOCK. Pursuant to its Articles of
Incorporation, the Company has the authority to issue up to 8,860,323 additional
shares of Common Stock and has authorized 10,000,000 shares of Preferred Stock
which may be issued by the Board of Directors on such terms and with such
rights, preferences, and designations as the Board of Directors may determine
without any vote of the shareholders. Issuance of such Preferred Stock could
have the effect of delaying, deterring, or preventing a change in control of the
Company. Issuance of additional shares of Common Stock or Preferred Stock could
also result in the dilution of the voting power of the Common Stock purchased in
this offering. See "Description of Securities -- Common Stock," "-- Preferred
Stock," and "-- Certain Antitakeover Effects."

ANTITAKEOVER PROVISIONS; INSIDER CONTROL OF THE COMPANY. Certain
provisions of the Company's Articles of Incorporation could delay or frustrate
the removal of incumbent directors and could make a merger, tender offer, or
proxy contest involving the Company more difficult, even if such events could be
perceived as beneficial to the interests of the shareholders. These provisions
include staggered terms for the Board of Directors and requirements of
super-majority votes to approve certain business transactions. In addition,
certain provisions of state and federal law may also have the effect of
discouraging or prohibiting a future takeover attempt in which shareholders of
the Company might otherwise receive a substantial premium for their shares over
then-current market prices. To the extent that these provisions are effective in
discouraging or preventing takeover attempts, they may tend to reduce the market
price for the Common Stock offered hereby. Directors and executive officers of
the Company currently own in the aggregate approximately 32.1% of the
outstanding shares of Common Stock. Following completion of the offering,
directors and executive officers of the Company are expected to own in the
aggregate at least 19.4% of the outstanding shares of Common Stock (18.4% if the
Underwriter's over-allotment option is exercised in full). Because directors and
executive officers of the Company are entitled to purchase shares in the
offering, these percentages may actually be higher than 19.4% and 18.4%.
Therefore, to the extent they vote together, the directors and executive
officers of the Company will have the ability to exert significant influence
over the election of the Company's Board of Directors and other corporate
actions requiring shareholder approval. See "Principal Shareholders" and
"Description of Securities -- Certain Antitakeover Effects."

GOVERNMENT REGULATION. The banking industry is heavily regulated. This
regulation is intended primarily for the protection of depositors of the Bank,
not shareholders, and could adversely affect the operations of the Bank, such as
its ability to make loans and attract deposits. In recent years, the United
States Congress has enacted three major pieces of banking legislation: The
Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA"),
the Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"),
and the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the
"Interstate Banking Act"). These three Acts have significantly changed the
commercial banking industry through, among other things, revising and limiting
the types and amounts of investment authority, significantly increasing minimum
regulatory capital requirements, broadening the scope and power of federal bank
and thrift regulators over financial institutions and affiliated persons in
order to protect the deposit insurance funds and depositors, and significantly
enhancing the ability of banks and bank holding companies to engage in
interstate bank acquisition and branching activities. Additional legislation
affecting financial institutions has been proposed and may be enacted, and
regulations now affecting the Company may be modified at any time. There can be
no assurance that any

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<PAGE> 9

such legislation or modifications would not adversely affect the business of the
Company. The Company is also affected by the Federal Reserve's monetary
policies, and there can be no assurance that actions by the Federal Reserve will
not have an adverse effect on the deposit levels, loan demand, or the business
and earnings of the Company. See "Supervision and Regulation."

YEAR 2000. Like many financial institutions, the Company relies upon
computers for the daily conduct of its business and for information systems
processing. There is concern among industry experts that on January 1, 2000
computers will be unable to "read" the new year, which may result in widespread
computer malfunctions. While the Company believes that it has available
resources and has adopted a plan to address Year 2000 compliance, it is largely
dependent on its outside core data processing provider and other third party
vendors. The Company has been informed by its core data processing provider that
the facilities at which the Company's data processing is currently handled are
not Year 2000 compliant, but that the Company's data processing will be
transitioned by October 31, 1998 to another facility of the processing provider
which is Year 2000 compliant. The Company anticipates that the cost to move its
data processing system will be incurred by its data processing provider and that
any additional costs incurred by the Company to upgrade ancillary systems will
not materially differ from normal costs incurred during prior years to upgrade
and maintain its computer systems. However, the Company has not completed an
evaluation of all its internal systems and software and the network connections
it maintains, and it may incur additional costs. There can be no assurances that
all hardware and software that the Company uses will be Year 2000 compliant, and
the Company cannot predict with any certainty the costs it will incur to respond
to any Year 2000 issues.

Further, the business of many of the Company's customers may be
negatively affected by the Year 2000 issue, and any financial difficulties
incurred by the Company's customers in solving Year 2000 issues could negatively
affect such customer's ability to repay any loans which the Company may have
extended. Therefore, even if the Company does not incur significant direct costs
in connection with responding to the Year 2000 issue, there can be no assurance
that the failure or delay of the Company's customers or other third parties in
addressing the Year 2000 issue or the costs involved in such process will not
have a material adverse effect on the Company's business, financial condition,
or results of operations. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Year 2000."

9
<PAGE> 10

USE OF PROCEEDS

The Company estimates that the net proceeds it will receive from the
sale of the Common Stock in this offering will be approximately $5.7 million
($6.6 million if the Underwriter's over-allotment option is exercised in full),
based upon an assumed public offering price of $14.00 per share and after
deducting the underwriting discount and expenses payable by the Company. The
Company intends to use approximately $3 million of the net proceeds to purchase
the properties and construct and outfit the three proposed branch facilities. On
May 28, 1998, the Company entered into a contract to purchase a branch site on
Highway 60 in Irmo, South Carolina for a total purchase price of $448,780. The
Company has the right to terminate this contract without penalty during a 75-day
inspection period ending August 11, 1998. At the end of the inspection period,
the Company must close on the property within an additional 75 days or forfeit
the $10,000 earnest money deposit, unless OCC approval for the branch is not
received. Because the Company has not yet acquired any of these branch sites or
entered into agreements for the construction of the branch facilities, it cannot
determine with certainty the cost to open each branch, and the actual cost could
be significantly higher than $3 million. The Company will use the remaining
proceeds to support initial loan growth at the three new branch offices, as well
as at the Company's two existing branch offices, and for other general corporate
purposes. The Company intends to invest any proceeds not immediately required
for the purposes described above in United States government securities,
short-term certificates of deposit, money market funds, as a deposit with the
Bank, or in other short-term interest-bearing investments.

MARKET FOR COMMON STOCK

The Common Stock will be quoted on the OTC Bulletin Board under the
trading symbol "FCCO." The Underwriter has also advised the Company that upon
completion of the offering it intends to act as a "market maker" in the Common
Stock. Making a market in securities involves maintaining bid and ask quotations
and being able, as principal, to effect transactions in reasonable quantities at
those quoted prices, subject to various securities laws and other regulatory
requirements. The development of a public trading market depends, however, on
the existence of willing buyers and sellers, the presence of which is not within
the control of the Company, the Underwriter or any market maker.

The Company presently intends to apply for listing on the Nasdaq
National Market, the Nasdaq SmallCap Market or the American Stock Exchange at
such time as the Company either meets the listing qualifications or obtains a
waiver of those requirements. The decisions whether and where to apply for
listing have not yet been made and remain in the discretion of the Company.
There is no assurance that the Company will apply for or be accepted for listing
within any particular period of time, if at all.

There is currently no established public trading market in the Common
Stock, and trading and quotations of the Common Stock have been limited and
sporadic. The Company is not aware of all prices at which the Common Stock has
been traded. Based on information available to the Company from a limited number
of sellers and purchasers of Common Stock, the Company believes transactions in
the Common Stock ranged from $10.00 to $11.00 during 1996, from $11.00 to $14.00
during 1997, and from $13.00 to $14.00 from January 1, 1998 through March 31,
1998. The Company issued 688,067 shares (99.8%) of its currently issued and
outstanding Common Stock in its initial public offering on June 30, 1995. The
price per share in the initial public offering was $10.00.

As of the date of this Prospectus, there were 689,677 shares of Common
Stock outstanding held by approximately 890 shareholders of record.

DIVIDEND POLICY

The Company has not declared or distributed any cash dividends to its
shareholders since its organization in 1994, and the Company does not anticipate
paying any cash dividends in the near future because it intends to retain its
earnings to provide funds to operate and expand the business of the Company. The
future dividend policy of the Company is subject to the discretion of the Board
of Directors and will depend upon a number of factors, including future
earnings, financial condition, cash requirements, and general business
conditions. The Company's ability to distribute cash dividends will depend
entirely upon the Bank's abilities to distribute dividends to the Company. As a
national bank, the Bank is subject to legal limitations on the amount of
dividends it is permitted to pay. For example, the Bank may only pay dividends
out of its net profits then on hand, after deducting expenses, including losses
and bad debts. See "Supervision and Regulation -- Dividends."

10
<PAGE> 11

DILUTION

At March 31, 1998, the Company had a net tangible book value of
approximately $6.2 million, or $9.02 per share. Net tangible book value per
share represents the amount of the Company's shareholders' equity, less
intangible assets, divided by the number of shares of Common Stock outstanding.
Dilution per share to new investors represents the difference between the amount
per share paid by purchasers of shares of Common Stock in this offering and the
pro forma net tangible book value per share of Common Stock immediately after
completion of the offering. After (i) giving effect to the sale by the Company
of 450,000 shares of Common Stock in this offering, (ii) deducting estimated
offering expenses, and (iii) giving effect to the application of the estimated
net proceeds as set forth under "Use of Proceeds," the pro forma net tangible
book value of the Company at March 31, 1998 would have been approximately $12.0
million, or $10.50 per share. This represents an immediate increase in net
tangible book value of $1.48 per share to existing shareholders and an immediate
dilution of $3.50 per share to new investors. The following table illustrates
this per share dilution:

<TABLE>
<S> <C> <C>
Public offering price per share................................... $ 14.00
Net tangible book value per share at March 31, 1998......... $ 9.02
Increase per share attributable to new investors............ 1.48
--------

Pro forma net tangible book value per share after the offering.... 10.50
-------

Dilution per share to new investors............................... 3.50
=======
</TABLE>

The following table sets forth on a pro forma basis, as of March 31,
1998, (a) the number of shares of Common Stock purchased from the Company prior
to the offering and the number of shares purchased in the offering, and (b) the
total consideration and average price per share paid to the Company with respect
to Common Stock held by the existing shareholders of the Company and to be paid
by new investors in the offering.

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
---------------- ------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------ ------- ------ ------- ---------
<S> <C> <C> <C> <C> <C>
Existing shareholders......... 689,677 60.5% $ 6,896,770 52.3% $10.00
New investors................. 450,000 39.5 6,300,000 47.7 14.00
--------- ----- ------------ -----
Total.................... 1,139,677 100.0% $ 13,196,770 100.0%
========= ===== ============ =====
</TABLE>

The foregoing tables assume no exercise of outstanding stock options.
As of the date of this Prospectus, there are outstanding options to purchase an
aggregate of 84,000 shares of Common Stock at an exercise price of $10.00 per
share. To the extent outstanding options are exercised, there will be further
dilution to new investors.

11
<PAGE> 12

CAPITALIZATION

The following table sets forth the consolidated capitalization of the
Company at March 31, 1998, and as adjusted to reflect the sale of 450,000 shares
of Common Stock in this offering and the application of the net proceeds
therefrom as set forth under "Use of Proceeds."

<TABLE>
<CAPTION>
MARCH 31, 1998
-------------------------------
ACTUAL AS ADJUSTED
----------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
SHAREHOLDERS' EQUITY:
Preferred stock, par value $1.00 per share, 10,000,000 shares
authorized, no shares issued or outstanding............................ -- --
Common stock, par value $1.00 per share; 10,000,000 shares
authorized, 689,677 shares issued and outstanding - actual;
1,139,677 shares issued and outstanding - as adjusted (1).............. $ 690 $ 1,140
Additional paid-in capital............................................... 6,155 11,453
Accumulated deficit...................................................... (616) (616)
Unrealized gain on securities available for sale......................... 7 7
------------ -------------
Total shareholders' equity................................................. $ 6,236 $ 11,984
============ =============
</TABLE>
- ------------

(1) Excludes 84,000 shares of Common Stock issuable upon exercise of stock
options outstanding as of March 31, 1998, at an exercise price of $10.00
per share.

12
<PAGE> 13
SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data for each of the
three years ended December 31, 1997, 1996, and 1995, and for the three months
ended March 31, 1998 and 1997 is derived from, and is qualified in its entirety
by, the detailed information and the consolidated financial statements,
including the accompanying notes, of the Company included elsewhere in this
Prospectus. The consolidated financial statements for the years ended December
31, 1995 through 1997 have been audited by Clifton D. Bodiford, C.P.A.
independent auditor. The selected consolidated financial data as of and for the
three months ended March 31, 1998 and 1997 has not been audited but, in the
opinion of management, contains all adjustments (consisting of only normal
recurring adjustments) necessary to present fairly the financial position and
results of operations of the Company as of such dates and for such periods in
accordance with generally accepted accounting principles.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
--------------------------- -----------------------------------------
1998 1997 1997 1996 1995
----------- ----------- ----------- ----------- --------
STATEMENT OF OPERATIONS DATA: (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<S> <C> <C> <C> <C> <C>
Interest income .............................. $ 982 $ 653 $ 3,194 $ 1,770 $ 343
Interest expense ............................. 438 279 1,392 746 98
----------- ----------- ----------- ----------- --------
Net interest income .......................... 544 374 1,802 1,024 245
Provision for loan losses .................... 43 37 194 135 77
----------- ----------- ----------- ----------- --------
Net interest income after
provision for loan losses .................. 501 337 1,608 889 168
Noninterest income ........................... 83 46 262 126 20
Noninterest expense .......................... 468 367 1,619 1,297 746
----------- ----------- ----------- ----------- --------
Net income (loss) ............................ $ 116 $ 16 $ 251 $ (282) $ (558)
=========== =========== =========== =========== ========
BALANCE SHEET DATA:
Total assets ................................. $ 58,328 $ 39,721 $ 51,012 $ 38,129 $ 19,380
Earning assets ............................... 53,473 35,284 45,127 33,481 17,157
Investment securities (1) .................... 15,384 12,355 13,507 11,813 9,019
Loans (2) .................................... 31,203 19,763 29,000 15,915 3,833
Allowance for loan losses .................... 421 231 380 201 77
Deposits ..................................... 46,700 32,462 42,247 30,901 11,334
Shareholders' equity ......................... 6,236 5,755 6,115 5,782 6,136

SHARE DATA:
Basic net income (loss) per
share (3) .................................. $ 0.17 $ 0.02 $ 0.36 $ (0.41) $ (1.59)
Diluted net income (loss) per
share (4) .................................. 0.16 0.02 0.36 (0.41) (1.59)
Book value per share (period
end) (5) ................................... 9.04 8.36 8.87 8.40 8.92
Tangible book value per share (period end) (5) 9.02 8.34 8.85 8.37 8.88
Weighted average shares
outstanding ................................ 689,677 688,077 689,015 688,077 350,641

PERFORMANCE RATIOS:
Return on average assets ..................... 0.87% 0.16% 0.56% (1.04)% (8.65)%
Return on average equity ..................... 7.60% 1.10% 4.28% (4.82)% (17.02)%
Interest rate spread ......................... 3.63% 3.36% 3.55% 3.13% 1.72%
Net interest margin (6) ...................... 4.45% 4.36% 4.44% 4.28% 4.43%
Efficiency (7) ............................... 74.59% 89.45% 78.44% 112.78% 281.51%

ASSET QUALITY RATIOS:
Allowance for loan losses to
period end loans (2) ....................... 1.33% 1.17% 1.31% 1.26% 2.01%
Net charge-offs to average loans ............. 0.01% 0.04% 0.06% 0.10% --
Nonperforming assets to period
end loans and foreclosed
property (2)(8) ............................ -- -- -- -- --
Nonperforming assets to period
end total assets (8) ....................... -- -- -- -- --

CAPITAL AND LIQUIDITY RATIOS (9):
Average equity to average assets ............. 11.44% 14.92% 13.06% 21.65% 50.81%
Leverage (4.00% required
minimum) ................................... 9.85% 12.85% 10.73% 14.79% 27.84%
Risk-based capital
Tier 1 ..................................... 13.83% 19.91% 14.93% 23.41% 69.66%
Total ...................................... 14.91% 20.83% 16.02% 24.35% 70.67%
Average loans to average
deposits ................................... 67.56% 55.99% 62.53% 53.76% 25.75%
</TABLE>

- ----------------
(1) Securities held to maturity are stated at amortized cost, and securities
for sale are stated at fair value.
(2) Loans are stated net of unearned income, before allowance for loan losses.
(3) Basic net income (loss) per share is computed using the weighted average
number of shares of common stock outstanding for the period.
(4) Diluted net income per share is computed using the weighted average number
of shares of common stock and dilutive common stock equivalents from stock
options (using treasury stock method).
(5) Excludes the effect of any outstanding stock options.
(6) Net interest income divided by average earning assets.
(7) Noninterest expense divided by the sum of net interest income and
noninterest income, net of gains and losses on sales of assets.
(8) The Company did not have any nonperforming assets during the periods
indicated.
(9) Capital and liquidity ratios are for the Bank, not the Company.

13
<PAGE> 14

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

First Community Corporation was incorporated on November 2, 1994 to
serve as a holding company for the Bank. The Bank, the Company's only
subsidiary, began operations on August 17, 1995 from its main office located in
Lexington, South Carolina. On September 14, 1995, the Company opened its second
office located in Forest Acres, South Carolina. The Company engages in a general
commercial and retail banking business characterized by personalized service and
local decision-making, emphasizing the banking needs of small- to medium- sized
businesses, professional concerns, and individuals.

The Company has grown from approximately $19.4 million in total assets,
$3.8 million in loans, $11.3 million in deposits, and $6.1 million in
shareholders' equity at December 31, 1995 to approximately $58.3 million in
total assets, $31.6 million in loans, $46.7 million in deposits, and $6.2
million in shareholders' equity at March 31, 1998. The Company enjoyed its first
quarterly profit in the fourth quarter of 1996 and has been profitable each
subsequent quarter through the date of this Prospectus. Comparisons of the
Company's results for all of the periods presented, particularly with respect to
the banking operations, should be made with an understanding of the Company's
short history. The following discussion should be read in conjunction with the
preceding "Selected Consolidated Financial Data" and the Company's Financial
Statements and the Notes thereto and the other financial data included elsewhere
in this Prospectus.

The following table demonstrates the Company's growth during the last
nine calendar quarters ended March 31, 1998.

SUMMARY QUARTERLY FINANCIAL DATA

<TABLE>
<CAPTION>
1998 1997 1996
--------- ------------------------------------------ --------------------------------------

FIRST FOURTH THIRD SECOND FIRST FOURTH THIRD SECOND FIRST
QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER
------- ------- ------- ------- ------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:

Net interest income.... $ 544 $ 538 $ 475 $ 415 $ 374 $ 342 $ 269 $ 228 $ 185
Provision for loan
losses................ 43 35 62 60 37 37 33 29 36
Noninterest income..... 83 78 67 71 46 45 36 26 19
Noninterest expense.... 468 446 409 397 367 347 318 316 316
Net income (loss)...... $ 116 $ 135 $ 71 $ 29 $ 16 $ 3 $ (46) $ (91) $ (148)
Basic net income
(loss) per share ..... $ 0.17 $ 0.20 $ 0.10 $ 0.04 $ 0.02 $ 0.01 $ (0.07) $ (0.13) $ (0.22)
Diluted net income
(loss) per share...... $ 0.16 $ 0.20 $ 0.10 $ 0.04 $ 0.02 $ 0.01 $ (0.07) $ (0.13) $ (0.22)

SELECTED AVERAGE BALANCES:
Total assets........... $54,252 $48,787 $47,674 $44,260 $38,768 $33,638 $28,643 $24,532 $21,173
Earning assets......... 49,616 44,446 43,178 39,937 34,801 29,777 25,422 21,740 18,793
Investment securities.. 14,633 13,602 13,405 12,491 13,454 11,377 11,114 10,419 10,514
Loans.................. 29,914 28,014 25,310 21,653 17,655 15,532 12,027 9,048 5,916
Deposits............... 44,281 40,471 40,009 36,168 31,536 26,322 21,485 17,486 13,848
</TABLE>

14
<PAGE> 15
RESULTS OF OPERATIONS

NET INCOME

The Company's net income for the three months ended March 31, 1998 was
$116,000, or $0.17 per share, as compared to $16,000, or $0.02 per share, for
the three months ended March 31, 1997. This improvement reflects the Company's
continued growth, as average earning assets increased to $49.6 million during
the first quarter of 1998 as compared to $34.8 million during the first quarter
of 1997. The increase in average earning assets resulted in an increase in net
interest income of $170,000, or 45.5%, in the first quarter of 1998 as compared
to the first quarter of 1997. In addition, noninterest income increased 80.4%,
to $83,000 in the first quarter of 1998 as compared to $46,000 in the first
quarter of 1997. This improvement included increased deposit account charges
resulting from the growth in deposits, as well as a $14,000 increase in
commissions earned on the sale of nondeposit investment products. The increases
in net interest income and noninterest income were partially offset by an
increase of $101,000 in noninterest expense in the first quarter of 1998 as
compared to the first quarter of 1997.

The Company's net income was $251,000, or $0.36 per share, for the year
ended December 31, 1997, as compared to a loss of $(282,000), or $(0.41) per
share, for the year ended December 31, 1996 and a loss of $(558,000), or $(1.59)
per share, for the year ended December 31, 1995. The 1995 loss of $(558,000)
includes approximately four months of operations and eight months of pre-opening
activities, as the Bank opened for business in August 1995. The return (or loss)
on average assets for 1997, 1996, and 1995 was 0.56%, (1.04)%, and (8.65)%,
respectively, and return (or loss) on average equity was 4.3%, (4.8)%, and
(17.0)%, respectively. The improvement in net income from 1996 to 1997 resulted
primarily from a $778,000 increase in net interest income, which is attributable
to the Company's substantial growth during these periods. Total assets at
December 31, 1997 were $51.0 million as compared to $38.1 million at December
31, 1996 and $19.4 million at December 31, 1995. Average earning assets
increased to $40.6 million during 1997 as compared to $24.0 million during 1996
and $5.5 million during 1995. Asset growth was principally attributable to a
net increase in loans of $13.1 million during 1997.

A $136,000 increase in noninterest income in 1997 as compared to 1996
also contributed to the improvement in net income. Increases in noninterest
income resulted from increased deposit and related account charges associated
with an increase in deposit balances of $11.3 million from year-end 1996 to
year-end 1997. The increases in net interest income and noninterest income were
partially offset by a $323,000 increase in noninterest expense. All categories
of noninterest expense increased with the exception of occupancy expense. The
increases in noninterest expenses primarily resulted from increases in staff
during this period of substantial growth, as well as higher marketing and
advertising expenses during the Bank's second full year of operations.

NET INTEREST INCOME

The largest component of net income for the Company is net interest
income, which is the difference between the income earned on assets and interest
paid on deposits and borrowings used to support such assets. Net interest income
is determined by the rates earned on the Company's interest-earning assets and
the rates paid on its interest-bearing liabilities, the relative amounts of
interest-earning assets and interest-bearing liabilities, and the degree of
mismatch and the maturity and repricing characteristics of its interest-earning
assets and interest-bearing liabilities.

Net interest income was $544,000 for the three months ended March 31,
1998 as compared to $374,000 for the three months ended March 31, 1997. This
45.5% increase reflected the substantial growth of the Company's loan portfolio
between these periods, which resulted in substantial improvements in the
Company's net interest spread and net interest margin. Net interest spread, the
difference between the yield on earning assets and the rate paid on
interest-bearing liabilities, was 3.63% for the three months ended March 31,
1998 as compared to 3.36% for the three months ended March 31, 1997. Net
interest margin (which is net interest income divided by average
interest-earning assets) increased to 4.45% for the three months ended March 31,
1998 as compared to 4.36% for the three months ended March 31, 1997. These
increases reflect the fact that loans comprised 60.3% of earning assets during
the first quarter of 1998 as compared to only 50.7% during the first quarter of
1997. Loans typically provide a higher yield than the other types of earning
assets and thus one of the Company's goals is to continue to grow the loan
portfolio as a percentage of total earning assets. The yield on average earning
assets increased from 7.61% for the first quarter of 1997 to 8.03% for the first
quarter of 1998. This increase in the yield on average earning assets was
partially offset by an increase in the rate paid on

15
<PAGE> 16

interest-bearing liabilities to 4.40% in first quarter of 1998 as compared to
4.25% in the first quarter of 1997. Management increased the rate paid on money
market accounts during the second quarter of 1997 as part of a marketing
campaign and has maintained higher rates on money market accounts since that
date to counter similar increases by other banks in the area.

Net interest income totaled $1.8 million in 1997, $1.0 million in 1996,
and $245,000 in 1995. Net interest spread was 3.55% in 1997 as compared to 3.13%
in 1996 and 1.72% in 1995. The Bank's net interest margin also increased to
4.44% in 1997 as compared to 4.28% in 1996. The net interest spread and net
interest margin increased from 1996 to 1997 primarily because the Bank allocated
a greater percentage of its earning assets to loans in 1997 than it did in 1996
(57.1% in 1997 compared to 44.5% in 1996, based on average balances for each
year) and the total amount of earning assets increased by $16.7 million between
the two periods. Similarly, the increase in net interest income to $1.0 million
in 1996 from $245,000 in 1995 was the result of increases in the level of
earning assets as well as an improvement in the net interest spread to 3.13% in
1996 from 1.72% in 1995. During 1995, the loan portfolio represented only 10.6%
of the average earning asset portfolio.

16
<PAGE> 17

Average Balances, Income and Expenses, and Rates. The following tables
provide, for the periods indicated, certain information related to the Company's
average balance sheet and its average yields on assets and average costs of
liabilities. Such yields are derived by dividing income or expense by the
average balance of the corresponding assets or liabilities. Average balances
have been derived from daily averages.

AVERAGE BALANCES, INCOME AND EXPENSES, AND RATES

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------------------------
1997 1996 1995
-------------------------- -------------------------- --------------------------
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE BALANCE EXPENSE RATE
------- ------- ---- ------- ------- ---- ------- ------- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Earning Assets
Loans (1) ................................. $23,192 $ 2,184 9.42% $10,648 $ 1,005 9.43% $ 584 $ 57 9.79%
Securities:
Taxable ................................. 13,239 782 5.91% 10,856 635 5.85% 2,357 136 5.79%
Federal funds sold and securities
purchased under agreement to
resell .................................. 4,193 228 5.43% 2,446 130 5.33% 1,082 63 5.81%

Short-term investments, pre-opening ....... -- -- -- -- -- -- 1,513 87 5.74%
------- ------- ------- ------- ------- -------
Total earning assets ...................... 40,624 3,194 7.86% 23,950 1,770 7.39% 5,536 343 6.20%
------- ------- -------

Cash and due from banks ................... 1,349 928 162
Premises and equipment .................... 2,873 2,020 732
Other assets .............................. 351 258 32
Allowance for loan losses ................. (284) (132) (10)
------- ------- -------
Total assets .............................. $44,913 $27,024 $ 6,452
======= ======= =======

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing Liabilities
Interest-bearing transaction accounts (1).. $ 4,393 $ 61 1.40% $ 2,411 $ 36 1.49% $ 236 $ 5 1.94%
Money market accounts (1).................. 4,740 213 4.50% 1,595 52 3.24% 284 10 3.60%
Savings deposits (1) ...................... 6,264 240 3.84% 3,707 148 4.01% 446 18 3.97%
Time deposits (1) ......................... 15,251 803 5.26% 8,646 459 5.31% 1,082 58 5.41%
Other short-term borrowings ............... 1,662 75 4.48% 1,167 51 4.32% 144 7 4.99%
------- ------- ------- ------- ------- -------
Total interest-bearing liabilities ........ 32,310 1,392 4.31% 17,526 746 4.26% 2,192 98 4.48%
------- ------- -------

Demand deposits (1) ....................... 6,440 3,449 220
Other liabilities ......................... 296 197 762
Shareholders' equity ...................... 5,867 5,852 3,278
------- ------- -------
Total liabilities and shareholders' equity. $44,913 $27,024 $ 6,452
======= ======= =======

Net interest spread ....................... 3.55% 3.13% 1.72%
Net interest income/margin ................ $ 1,802 4.44% $ 1,024 4.28% $ 245 4.43%
======= ======= =======
</TABLE>

- ---------------

(1) All loans and deposits were made to borrowers in the United States. The
Company had no nonaccrual loans during the periods presented.

17
<PAGE> 18

AVERAGE BALANCES, INCOME AND EXPENSES, AND RATES
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
---------------------------------------------------------------
1998 1997
----------------------------- -----------------------------
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE
------- ------- ---- ------- ------- ----
Dollars in thousands
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Earning Assets
Loans (1) .............................................. $29,914 $ 699 9.47% $17,655 $ 411 9.45%
Securities:
Taxable .............................................. 14,633 214 5.95% 13,454 194 5.84%
Federal funds sold and securities
purchased under agreement to resell .................. 5,069 69 5.53% 3,692 48 5.30%
------- ------- ------- -------
Total earning assets ................................... 49,616 982 8.03% 34,801 653 7.61%
------- -------

Cash and due from banks ................................ 1,660 1,250
Premises and equipment ................................. 2,973 2,620
Other assets ........................................... 396 309
Allowance for loan losses .............................. (393) (212)
------- -------
Total assets ........................................... $54,252 $38,768
======= =======

LIABILITIES
Interest-bearing liabilities
Interest-bearing transaction accounts (1)............... $ 4,822 $ 15 1.23% $ 3,259 $ 12 1.50%
Money market accounts (1)............................... 6,511 73 4.54% 2,602 25 3.95%
Savings deposits (1) ................................... 6,091 57 3.78% 6,256 60 3.86%
Time deposits (1) ...................................... 19,553 255 5.29% 13,320 170 5.17%
Other short-term borrowings ............................ 3,403 38 4.62% 1,200 12 4.22%
------- ------- ------- -------
Total interest-bearing liabilities ..................... 40,380 438 4.40% 26,637 279 4.25%
------- -------

Demand deposits (1) .................................... 7,304 6,099
Other liabilities ...................................... 364 246
Shareholders' equity ................................... 6,204 5,786
------- -------
Total liabilities and shareholders' equity ............. $54,252 $38,768
======= =======

Net interest spread .................................... 3.63% 3.36%
Net interest income/margin ............................. $ 544 4.45% $ 374 4.36%
======= =======
</TABLE>
(1) All loans and deposits were made to borrowers in the United States. The
Company had no nonaccrual loans during the periods presented.

18
<PAGE> 19

Analysis of Changes in Net Interest Income. The following table
presents the dollar amount of changes in interest income and interest expense
attributable to changes in volume and the amount attributable to changes in
rate. The combined effect in both volume and rate which cannot be separately
identified has been allocated proportionately to the change due to volume and
due to rate.

ANALYSIS OF CHANGES IN NET INTEREST INCOME

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
-------------------------- --------------------------------------------------------
1998 VERSUS 1997 1997 VERSUS 1996 1996 VERSUS 1995
INCREASE (DECREASE) DUE TO INCREASE (DECREASE) DUE TO INCREASE (DECREASE) DUE TO
-------------------------- -------------------------- --------------------------
NET NET NET
VOLUME RATE CHANGE VOLUME RATE CHANGE VOLUME RATE CHANGE
------ ---- ------ ------ ---- ------ ------ ---- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INTEREST INCOME ON EARNING ASSETS:
Loans ................................. $286 $ 1 $287 $1,181 $ (1) $1,180 $ 949 $ (2) $ 947
Securities ............................ 17 4 21 141 6 147 497 2 499
Federal funds sold and
securities purchased under
agreements to resell ................ 19 2 21 95 (2) 97 72 (4) 68

Other short-term investments .......... -- -- -- -- -- -- (87) -- (87)
---- ------ ------
Total interest income ............... 291 38 329 1,304 120 1,424 1,349 78 1,427
---- ------ ------

INTEREST EXPENSE ON INTEREST-BEARING
LIABILITIES:
Interest-bearing transaction accounts . 4 (1) 3 27 (2) 25 32 (1) 31
Money market accounts ................. 43 4 47 135 27 162 42 (1) 41
Savings deposits ...................... (1) (1) (2) 98 (6) 92 131 (1) 131
Time deposits ......................... 81 4 85 347 (4) 343 403 (1) 402
Other short-term borrowings ........... 25 1 26 22 2 24 44 (1) 43
---- ------ ------
Total interest expense .............. 149 10 159 637 9 646 652 (4) 648
---- ------ ------

Net interest income ..................... $142 $28 $170 $ 667 $111 $ 778 $ 697 $ 82 $ 779
==== ====== ======
</TABLE>

19
<PAGE> 20
Interest Rate Sensitivity. The Company monitors and manages the pricing
and maturity of its assets and liabilities in order to reduce the potential
adverse impact that changes in interest rates could have on its net interest
income. A monitoring technique employed by the Company is the measurement of the
Company's interest sensitivity "gap," which is the positive or negative dollar
difference between assets and liabilities that are subject to interest rate
repricing within a given period of time. The Company also performs
asset/liability modeling to assess the impact varying interest rates and balance
sheet mix assumptions will have on net interest income. Interest rate
sensitivity can be managed by repricing assets or liabilities, selling
securities available-for-sale, replacing an asset or liability at maturity, or
adjusting the interest rate during the life of an asset or liability. Managing
the amount of assets and liabilities repricing in the same time interval helps
to hedge the risk and minimize the impact on net interest income of rising or
falling interest rates. The Company evaluates interest sensitivity risk and then
formulates guidelines regarding asset generation and repricing, funding sources
and pricing, and off-balance sheet commitments in order to decrease interest
rate sensitivity risk.

The following table illustrates the Company's interest rate sensitivity and
cumulative gap position at December 31, 1997.

INTEREST RATE SENSITIVITY ANALYSIS
DECEMBER 31, 1997
--------------------------------------------------------------------------
WITHIN AFTER THREE AFTER SIX GREATER THAN
THREE THROUGH SIX THROUGH WITHIN ONE ONE YEAR OR
MONTHS MONTHS TWELVE MONTHS YEAR NONSENSITIVE TOTAL
----------- ----------- ------------- ---------- ------------ -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS REPRICING:
Earnings Assets
Loans ...................................... $ 13,056 $ 1,435 $ 1,210 $ 15,701 $ 13,299 $ 29,000
Securities ................................. 2,494 293 1,297 4,084 9,423 13,507
Funds sold and securities
purchased under agreement to resell ...... 2,620 -- -- 2,620 -- 2,620
-------- -------- -------- -------- -------- --------
Total earning assets ..................... 18,170 1,728 2,507 22,405 22,722 45,127
-------- -------- -------- -------- -------- --------
INTEREST-BEARING LIABILITIES REPRICING:
Interest-bearing liabilities
Interest-bearing deposits
NOW accounts (1) ........................... 758 758 1,516 3,032 3,031 6,063
Money market accounts ...................... 5,957 -- -- 5,957 -- 5,957
Savings deposits (1) ....................... 756 757 1,513 3,026 3,027 6,053
Time deposits .............................. 9,216 3,884 1,642 14,742 1,878 16,620
-------- -------- -------- -------- -------- --------
Total interest-bearing
deposits .............................. 16,687 5,399 4,671 26,757 7,936 34,693
Other short-term borrowings ................... 2,143 -- -- 2,143 -- 2,143
-------- -------- -------- -------- -------- --------
Total interest-bearing
liabilities ........................... 18,830 5,399 4,671 28,900 7,936 36,836
-------- -------- -------- -------- -------- --------

Interest-sensitivity gap per period ........... $ (660) $ (3,671) $ (2,164) $ (6,495) $ 14,786 $ 8,291
======== ======== ======== ======== ======== ========
Cumulative gap at December 31,
1997 ....................................... $ (660) $ (4,331) $ (6,495) $ (6,495) $ 8,291 $ 8,291
======== ======== ======== ======== ======== ========
Ratio of cumulative gap to total
earning assets at December 31,
1997 ....................................... (1.46)% (9.60)% (14.39)% (14.39)% 18.37%
</TABLE>
- --------------

(1) NOW and savings accounts are subject to immediate withdrawal and
repricing. These deposits do not tend to immediately react to changes
in interest rates and the Company believes these deposits are a stable
and predictable funding source. Therefore, these deposits are included
in the repricing period that management believes most closely matches
the periods in which they are likely to reprice rather than the period
in which the funds can be withdrawn contractually.

20
<PAGE> 21
The following table illustrates the Company's cumulative gap position
at March 31, 1998.

<TABLE>
<CAPTION>
INTEREST RATE SENSITIVITY ANALYSIS
MARCH 31, 1998

------------------------------------------------------------------------------------------
WITHIN AFTER THREE AFTER SIX GREATER THAN
THREE THROUGH SIX THROUGH WITHIN ONE ONE YEAR OR
MONTHS MONTHS TWELVE MONTHS YEAR NONSENSITIVE TOTAL
----------- --------------- --------------- ------------ --------------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Cumulative gap at March 31,
1998......................... $ (1,200) $(5,102) $(8,515) $(8,515) $ 9,759 $ 9,759
Ratio of cumulative gap to total ======== ======= ======= ======= ======= ========
earning assets at March 31,
1998......................... (2.24)% (9.54)% (15.92)% (15.92)% 18.25%
</TABLE>

The Company generally would benefit from increasing market rates of
interest when it has an asset-sensitive gap and generally from decreasing
market rates of interest when it is liability sensitive. The Company currently
is liability sensitive over the three month, six month, and one year time
frames. However, the Company's gap analysis is not a precise indicator of its
interest sensitivity position. The analysis presents only a static view of the
timing of maturities and repricing opportunities, without taking into
consideration that changes in interest rates do not affect all assets and
liabilities equally. For example, rates paid on a substantial portion of core
deposits may change contractually within a relatively short time frame, but
those rates are viewed by management as significantly less interest-sensitive
than market-based rates such as those paid on non-core deposits. Accordingly,
management believes a liability-sensitive position is not as indicative of the
Company's true interest sensitivity as it would be for an organization which
depends to a greater extent on purchased funds to support earning assets. Net
interest income is also affected by other significant factors, including
changes in the volume and mix of earning assets and interest-bearing
liabilities.

PROVISION AND ALLOWANCE FOR LOAN LOSSES

The Company has developed policies and procedures for evaluating the
overall quality of its credit portfolio and the timely identification of
potential problem loans. Management's judgment as to the adequacy of the
allowance is based upon a number of assumptions about future events which it
believes to be reasonable, but which may or may not be accurate. Thus, there
can be no assurance that charge-offs in future periods will not exceed the
allowance for loan losses or that additional increases in the loan loss
allowance will not be required.

Additions to the allowance for loan losses, which are expended as the
provision for loan losses on the Company's statement of operations, are made
periodically to maintain the allowance at an appropriate level based on
management's analysis of the potential risk in the loan portfolio. Currently,
the allowance for loan losses is evaluated on an overall portfolio basis.
Management intends to begin allocating the allowance to loan categories once
the loan portfolio becomes large and diversified enough to support such an
allocation system. The amount of the provision is a function of the level of
loans outstanding, the level of nonperforming loans, historical loan loss
experience, the amount of loan losses actually charged against the reserve
during a given period, and current and anticipated economic conditions.

At March 31, 1998, the allowance for loan losses amounted to $421,000,
or 1.33% of outstanding loans. The Company's provision for loan losses was
$43,000 for the three months ended March 31, 1998, as compared to $37,000 for
the three months ended March 31, 1997. At December 31, 1997, 1996, and 1995,
the allowance for loan losses amounted to $380,000, $201,000, and $77,000,
respectively. The allowance represented 1.31%, 1.26%, and 2.01% of outstanding
loans at December 31, 1997, 1996, and 1995, respectively. The Company's
provision for loan losses was $194,000, $135,000, and $77,000 for the years
ended December 31, 1997, 1996, and 1995, respectively. The provision was made
based on management's assessment of general loan loss risk and asset quality.

21
<PAGE> 22

The Company discontinues accrual of interest on loans when management
believes, after considering economic and business conditions and collection
efforts, that a borrower's financial condition is such that the collection of
interest is doubtful. Generally, the Company will place a delinquent loan in
nonaccrual status when the loan becomes 90 days or more past due. At the time a
loan is placed in nonaccrual status, all interest which has been accrued on the
loan but remains unpaid is reversed and deducted from earnings as a reduction
of reported interest income. No additional interest is accrued on the loan
balance until the collection of both principal and interest becomes reasonably
certain. The Company had no nonaccrual, restructured, or other nonperforming
loans at March 31, 1998 or at December 31, 1997, 1996, or 1995. At March 31,
1998, the Company had only one loan, in the principal amount of $2,000, that
was delinquent by more than 30 days, and no loans that were delinquent by more
than 60 days. At December 31, 1997, 1996, and 1995, the Company did not have
any loans that were delinquent by more than 30 days.

A potential problem loan is one in which management has serious doubts
about the borrower's future performance under the terms of the loan contract.
These loans are current as to principal and interest and, accordingly, they are
not included in nonperforming assets categories. The level of potential problem
loans is one factor used in the determination of the adequacy of the allowance
for loan losses. At March 31, 1998 and December 31, 1997, the Company had no
loans considered by management to be potential problem loans.

The following table sets forth an analysis of the Company's allowance
for loan losses for the periods indicated.

ALLOWANCE FOR LOAN LOSSES

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
----------------------- --------------------------------------
1998 1997 1997 1996 1995
---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS)

<S> <C> <C> <C> <C> <C>
Average loans outstanding.......................... $ 29,914 $ 17,655 $ 23,192 $ 10,648 $ 584
======== ======== ======== ======== ========
Loans outstanding at period end.................... $ 31,625 $ 19,763 $ 29,000 $ 15,915 $ 3,833
======== ======== ======== ======== ========
Total nonperforming loans.......................... -- -- -- -- --
======== ======== ======== ======== ========

Beginning balance of allowance..................... $ 380 $ 201 $ 201 $ 77 --
Loans charged-off:
Commercial, financial, and agricultural....... -- -- -- -- --
Real estate - construction.................... -- -- -- -- --
Real estate - mortgage........................ -- -- -- -- --
Consumer...................................... -- -- 4 1 --
Leases........................................ 2 7 14 10 --
-------- -------- -------- -------- --------
Total loans charged-off............................ 2 7 18 11 --
-------- -------- -------- -------- --------

Recoveries of previous charge-offs:
Commercial, financial, and agricultural....... -- -- -- -- --
Real estate - construction.................... -- -- -- -- --
Real estate - mortgage........................ -- -- -- -- --
Consumer...................................... -- -- -- -- --
Leases........................................ -- -- 3 -- --
-------- -------- -------- -------- --------
Total recoveries................................... 3 -- --
-------- -------- -------- -------- --------
Net loans charged-off.............................. 2 7 15 11 --
-------- -------- -------- -------- --------
Provision for loan losses.......................... 43 37 194 135 77
-------- -------- -------- -------- --------
Balance at period end.............................. $ 421 $ 231 $ 380 $ 201 $ 77
======== ======== ======== ======== ========

Net charge-offs to average loans................... 0.01% 0.04% 0.06% 0.10%
Allowance as percent of total loans................ 1.33% 1.17% 1.31% 1.26% 2.01%
Nonperforming loans as a percentage of total loans. -- -- -- -- --
Allowance as a percentage of nonperforming loans... -- -- -- -- --
</TABLE>

22
<PAGE> 23

NONINTEREST INCOME AND EXPENSE

Noninterest Income. The Company's primary source of noninterest income
is service charges on deposit accounts. In addition, the Company originates
mortgage loans, which are closed in the name of a third party, for which the
Company receives a fee. Other sources of noninterest income include bankcard
fees, commissions on check sales, safe deposit box rent, wire transfer, and
official check fees.

Total noninterest income increased by $37,000 during the first quarter
of 1998 as compared to the same period in 1997, reflecting increased activity
fees related to increases in deposit and loan balances. Deposit service charges
and fees from the sale of nondeposit products were the primary components of
total noninterest income in the first quarter of 1998. Deposit service charges
were $46,000 for the first quarter of 1998 as compared to $34,000 for the first
quarter of 1997. In addition, during the first quarter of 1998 the Company
employed a registered investment representative and began offering nondeposit
investment products such as mutual funds, annuities, stocks, and bonds. During
the first quarter of 1998 the Company generated $14,000 in fees from the sale
of these products, compared to no fees in the first quarter of 1997.

Noninterest income for the year ended December 31, 1997 was $262,000
as compared to $126,000 for 1996. This increase is primarily a result of the
substantial growth in deposit account balances and the related deposit account
fees. These fees amounted to $171,000 in 1997 as compared to $82,000 in 1996.
Mortgage loan origination fees amounted to $41,000 in 1997 as compared to
$25,000 in 1996, as the Company increased its emphasis on this source of
revenue in 1997 as compared to 1996. Noninterest income was only $20,000 in
1995, reflecting the fact that the Bank did not open until August 1995.

Noninterest Expense. Total noninterest expense increased by $101,000
during the first quarter of 1998 as compared to the same quarter of 1997 as a
result of the Company's continued growth. This increase includes a $47,000
increase in salary and benefits expense, as the Company employed an additional
three full time employees, a $19,000 increase in marketing expense, and a
$27,000 increase in other expenses. The increase in marketing expense is a
result of planned increases in advertising during 1998 over 1997. The increase
in other expenses reflects increases in supplies and correspondent bank charges
related to increased volumes of activity in the first quarter of 1998 as
compared to the first quarter of 1997.

Noninterest expense increased from $1.3 million for the year ended
December 31, 1996 to $1.6 million for the year ended December 31, 1997. The
Company experienced increases in most expense categories, which reflects the
growth of the Company during its first two full years of operations. The
largest increase was in salary and employee benefits, which increased by
$172,000 in 1997 as compared to 1996. This increase included normal merit
increases in salaries as well as the addition of two full time equivalent and
one part time equivalent employees in late 1996 and early 1997. Occupancy
expense decreased from $130,000 in 1996 as compared to $114,000 in 1997. This
decrease resulted from reduced costs related to the move to permanent
facilities of the Lexington office in August 1996 and the Forest Acres office
in June 1997. Prior to moving into permanent facilities, the cost of the
temporary facilities was being depreciated over a short time period and
resulted in higher depreciation expense during the comparable periods.
Equipment expense increased from $102,000 in 1996 as compared to $144,000 in
1997. This increase is primarily due to an increase in maintenance expense of
approximately $31,000 for computer hardware and software which occurred after
expiration of the warranty on this equipment. Marketing and public relations
expense increased from $36,000 in 1996 to $90,000 in 1997, primarily as a
result of planned increases in advertising during the Bank's second full year
of operations. Correspondent bank fees, postage, and other expenses increased
primarily as a result of the growth of the Company in 1997 as compared to 1996
and the resulting increased lending activities. In light of the intense
competition in the financial services market in recent years, management
emphasizes expense management and will continue to evaluate and monitor growth
in discretionary expense categories in an attempt to control future increases.

Noninterest expense increased to $1.3 million in 1996 as compared to
$746,000 in 1995. This increase is a result of the Bank being in operation for
only four months in 1995, as compared to a full year in 1996. Pre-opening
activities accounted for $251,000 of the noninterest expenses during 1995.
These pre-opening activities included the preparation and filing of
applications with various regulators and planning and organizing activities for
the opening of the Bank.

23
<PAGE> 24

The following table sets forth the primary components of noninterest
expense for the periods indicated:

NONINTEREST EXPENSE

<TABLE>
<CAPTION>
Three Months
Ended March 31, YEARS ENDED DECEMBER 31,
----------------------- ---------------------------------------
1998 1997 1997 1996 1995
------ ------ ------ ------ -----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Salaries and employee benefits...... $ 247 $ 200 $ 876 $ 704 $ 251
Occupancy........................... 28 29 114 130 58
Equipment........................... 40 32 144 102 30
Marketing and public relations...... 35 16 90 36 27
Data processing..................... 23 32 96 94 33
Supplies............................ 20 9 52 44 27
Telephone........................... 6 5 22 23 8
Correspondent services.............. 14 9 38 30 7
Insurance........................... 11 9 32 22 8
Professional fees................... 10 7 36 36 14
Postage............................. 6 2 22 13 2
Other............................... 28 17 97 63 30
Pre-opening expense................. -- -- -- -- 251
------ ------ ------ ------- -----
Total.......................... $ 468 $ 367 $1,619 $ 1,297 $ 746
====== ====== ====== ======= =====
</TABLE>

INCOME TAX EXPENSE

The Company had a cumulative net operating loss carryforward of
approximately $617,000 for the three months ended March 31, 1998 and of
$733,000, $984,000, and $700,000 for the years ended December 31, 1997, 1996,
and 1995, respectively. The Company's ability to realize a deferred tax benefit
as a result of net operating losses will depend upon whether the Company has
sufficient taxable income of an appropriate character in the carryforward
periods. The Company recognizes deferred tax assets for future deductible
amounts resulting from differences in the financial statement and tax bases of
assets and liabilities and operating loss carryforwards. The Company then
establishes a valuation allowance to reduce the deferred tax asset to the level
that it is "more likely than not" that the tax benefit will be realized. The
Company has fully offset the deferred tax assets resulting primarily from the
provision for loan losses, the deferred pre-opening costs, and the operating
loss carry forwards by a valuation allowance in the same amount.

ANALYSIS OF FINANCIAL CONDITION

EARNING ASSETS

Loans. Loans typically provide higher yields than the other types of
the Company's earning assets, and thus one of the Company's goals is for loans
to be the largest category of the Company's earning assets. At March 31, 1998,
loans accounted for 59.1% of earning assets, as compared to 64.3%, 47.5%, and
22.3% of earning assets at December 31, 1997, 1996, and 1995, respectively.
Management attempts to control and counterbalance the inherent credit and
liquidity risks associated with the higher loan yields without sacrificing
asset quality to achieve its asset mix goals. Total loans averaged $23.2
million during 1997, as compared to $10.6 million in 1996.

24
<PAGE> 25

The following table shows the composition of the Bank's loan portfolio
by category:

COMPOSITION OF LOAN PORTFOLIO

<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, -------------------------------------------------------------------
1998 1997 1996 1995
------------------ ------------------- -------------------- --------------------
PERCENT PERCENT PERCENT PERCENT
AMOUNT OF TOTAL AMOUNT OF TOTAL AMOUNT OF TOTAL AMOUNT OF TOTAL
------- -------- ------- -------- ------- -------- ------ --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial, financial
and agricultural.......... $ 7,954 25.15% $ 7,148 24.65% $ 2,837 17.83% $ 497 12.96%
Real estate:
Mortgage-
commercial............ 11,068 35.00% 10,454 36.05% 6,639 41.72% 1,580 41.22%
Mortgage-residential 5,000 15.81% 4,457 15.37% 2,602 16.35% 664 17.34%
Construction.............. 2,514 7.95% 2,006 6.92% 792 4.97% 35 0.91%
Consumer and other........... 5,089 16.09% 4,935 17.01% 3,045 19.13% 1,057 27.57%
------- ------ ------- ------ ------- ------ ------ ------
Total loans............. 31,625 100.00% 29,000 100.00% 15,915 100.00% 3,833 100.00%
====== ====== ====== ======
Allowance for loan
losses.................... (421) (380) (201) (77)
------- ------- ------- ------
Total net loans......... $31,204 $28,620 $15,714 $3,756
======= ======= ======= ======
</TABLE>

In the context of this discussion, a "real estate mortgage loan" is
defined as any loan, other than loans for construction purposes, secured by
real estate, regardless of the purpose of the loan. The Company follows the
common practice of financial institutions in the Company's market area of
obtaining a security interest in real estate whenever possible, in addition to
any other available collateral. This collateral is taken to reinforce the
likelihood of the ultimate repayment of the loan and tends to increase the
magnitude of the real estate loan portfolio component. Generally, the Company
limits its loan-to-value ratio to 80%. The Company's largest category of loans,
commercial mortgage loans, totaled $11.1 million and represented 35.0% of the
loan portfolio at March 31, 1998, compared to $10.5 million and 36.1% at
December 31, 1997 and $6.6 million and 41.7% at December 31, 1996. A
significant portion of these commercial mortgage loans are made to finance
owner-occupied real estate. Due to the short term the loan portfolio has
existed, the current portfolio may not be indicative of the ongoing portfolio
mix. Management attempts to maintain a conservative philosophy regarding its
underwriting guidelines and believes it will reduce the risk elements of its
loan portfolio through strategies that diversify the lending mix.

25
<PAGE> 26

The repayment of loans in the loan portfolio as they mature is a
source of liquidity for the Company. The following table sets forth the
Company's loans maturing within specified intervals at December 31, 1997.

LOAN MATURITY SCHEDULE AND SENSITIVITY TO CHANGES IN INTEREST RATES

<TABLE>
<CAPTION>
DECEMBER 31, 1997
------------------------------------------------------------
OVER ONE YEAR
ONE YEAR THROUGH OVER FIVE
OR LESS FIVE YEARS YEARS TOTAL
------- ---------- ----- ------
(DOLLARS IN THOUSANDS)

<S> <C> <C> <C> <C>
Commercial, financial and agricultural.... $2,077 $ 4,558 $ 513 $ 7,148
Real estate - construction................ 1,435 571 -- 2,006
All other loans........................... 3,525 12,488 3,833 19,846
------ ------- ------ -------
$7,037 $17,617 $4,346 $29,000
====== ======= ====== =======

Loans maturing after one year with:
Fixed interest rates..................................................................... $15,291
Floating interest rates.................................................................. 6,672
-------
$21,963
=======
</TABLE>

The information presented in the above table is based on the
contractual maturities of the individual loans, including loans which may be
subject to renewal at their contractual maturity. Renewal of such loans is
subject to review and credit approval, as well as modification of terms upon
their maturity.

Investment Securities. The investment securities portfolio is a
significant component of the Company's total earning assets. Total securities
averaged $13.2 million in 1997, as compared to $10.9 million in 1996. This
represents 32.6% and 45.3% of the average earning assets for the year ended
December 31, 1997 and 1996, respectively. At March 31, 1998, investment
securities represented 28.77% of earning assets. The Company attempts to
maintain a portfolio of high quality, highly liquid investments with returns
competitive with short term U.S. Treasury or agency obligations. This objective
is particularly important as the Company continues to emphasize increasing the
percentage of the loan portfolio to total earning assets. The Company primarily
invests in U.S. Treasury securities and securities of other U.S. Government
agencies with maturities up to five years.

The following table summarizes the carrying value of securities for
the dates indicated.

SECURITIES PORTFOLIO

<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, --------------------------------
1998 1997 1996 1995
--------- ---- ---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Available-for-sale
U.S. Treasury......................... $ 4,722 $ 5,804 $ 4,724 $2,655
U.S. government agencies.............. 7,611 5,650 4,338 3,984
Other................................. 153 153 151 180
------- ------- ------- ------
Total available for sale.............. 12,486 11,607 9,213 6,819
------- ------- ------- ------
Held-to-maturity
U.S. government agencies.............. 2,898 1,900 2,600 2,200
------- ------- ------- ------

Total..................................... $15,384 $13,507 $11,813 $9,019
======= ======= ======= ======
</TABLE>

26
<PAGE> 27

The following table shows, at carrying value, the scheduled maturities
and average yields of securities held at December 31, 1997.

INVESTMENT SECURITIES MATURITY DISTRIBUTION AND YIELDS (1)

<TABLE>
<CAPTION>
DECEMBER 31, 1997
-----------------------------------------------------------------------------------
AFTER ONE BUT WITHIN AFTER FIVE BUT
WITHIN ONE YEAR FIVE YEARS WITHIN TEN YEARS AFTER TEN YEARS
---------------- ----------------- ---------------- ---------------
AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD
------ ----- ------ ----- ------ ----- ------ -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Held-to-maturity:
U.S. government agencies.... $ 500 6.39% $1,400 6.03% -- -- -- --
------ ------
Available-for-sale:
U.S. Treasury.............. 3,085 5.45% 2,719 5.95% -- -- -- --
U.S. government agencies.... 500 5.98% 5,150 6.15% -- -- -- --
Other....................... -- -- -- -- -- -- $151 6.00%
------ ------ ------ ----

Total investment
securities
available-for-sale...... 3,585 5.52% 7,869 6.09% -- -- 151 6.00%
------ ------ ------ ----
Total investment
securities.............. $4,085 5.63% $9,269 6.08% -- -- $151 6.00%
====== ====== ====== ====
</TABLE>
- ----------------

(1) Yields on and maturities of investments with a call feature are shown as of
the contractual maturity date.

Short-Term Investments. Short-term investments, which consist of
federal funds sold and securities purchased under agreements to resell,
averaged $4.2 million in 1997 as compared to $2.4 million in 1996. At March 31,
1998 and December 31, 1997, short-term investments totaled $6.5 million and
$2.6 million, respectively. These funds are a primary source of the Company's
liquidity and are generally invested in an earning capacity on an overnight
basis.

DEPOSITS AND OTHER INTEREST-BEARING LIABILITIES

Average interest-bearing liabilities increased $14.8 million, or
84.4%, to $32.3 million in 1997, from $17.5 million in 1996, reflecting the
general growth of the Bank during its second full year of operations.

Deposits. Average interest-bearing deposits increased $14.3 million,
or 87.4%, to $30.7 million in 1997, from $16.4 million in 1996, and average
total deposits increased $17.3 million, or 87.2%, to $37.1 million in 1997 from
$19.8 million in 1996. At December 31, 1997, total deposits were $42.2 million,
compared to $30.9 million a year earlier, an increase of 36.7%.

27
<PAGE> 28

The following table sets forth the deposits of the Company by category
for the periods indicated.

<TABLE>
<CAPTION>
DEPOSITS
DECEMBER 31,
MARCH 31, ---------------------------------------------------------------
1998 1997 1996 1995
------------------ ------------------- ----------------- -------------------
PERCENT OF PERCENT OF PERCENT OF PERCENT OF
AMOUNT DEPOSITS AMOUNT DEPOSITS AMOUNT DEPOSITS AMOUNT DEPOSITS
------ ---------- -------- -------- ------ -------- ------ --------
(Dollars in thousands)

<S> <C> <C> <C> <C> <C> <C> <C> <C>
Demand deposit accounts..... $ 8,034 17.20% $ 7,554 17.88% $ 6,044 19.56% $ 1,255 11.06%
NOW accounts................ 5,150 11.03% 6,063 14.35% 3,989 12.91% 1,228 10.84%
Money market accounts....... 7,299 15.63% 5,957 14.10% 1,974 6.39% 1,549 13.67%
Savings accounts............ 6,482 13.88% 6,053 14.33% 7,154 23.15% 1,779 15.70%
Time deposits less than 11,046 23.65% 10,248 24.26% 6,732 21.78% 2,905 25.63%
$100,000 ...................

Time deposits of $100,000 or
over........................ 8,689 18.61% 6,372 15.08% 5,008 16.21% 2,618 23.10%
------- ------ ------- ------ ------- ------ ------- ------
Total deposits.......... $46,700 100.00% $42,247 100.00% $30,901 100.00% $11,334 100.00%
======= ====== ======= ====== ======= ====== ======= ======
</TABLE>

Core deposits, which exclude certificates of deposit of $100,000 or
more, provide a relatively stable funding source for the Company's loan
portfolio and other earning assets. The Company's core deposits were $38.0
million at March 31, 1998 and $35.9 million and $25.9 million at December 31,
1997 and 1996, respectively. Management anticipates that a stable base of
deposits will be the Company's primary source of funding to meet both its
short-term and long-term liquidity needs in the future.

The maturity distribution of the Company's certificates of deposit of
$100,000 or more at March 31, 1998 and December 31, 1997 is shown in the
following table. The Company did not have any other time deposits of $100,000
or more at either of these dates.

MATURITIES OF CERTIFICATES OF DEPOSIT
OF $100,000 OR MORE

<TABLE>
<CAPTION>
AFTER SIX
AFTER THREE THROUGH AFTER
WITHIN THREE THROUGH TWELVE TWELVE
MONTHS SIX MONTHS MONTHS MONTHS TOTAL
------ ---------- ------ ------ -----
(DOLLARS IN THOUSANDS)

<S> <C> <C> <C> <C> <C>
December 31, 1997........................ $4,220 $1,341 $ 107 $ 704 $6,372
March 31, 1998........................... $5,083 $1,626 $ 970 $1,010 $8,689
</TABLE>

Large certificate of deposit customers tend to be extremely sensitive
to interest rate levels, making these deposits less reliable sources of funding
for liquidity planning purposes than core deposits. Some financial institutions
fund their balance sheets in part through large certificates of deposit
obtained through brokers. These brokered deposits are generally expensive and
are unreliable as long-term funding sources. Accordingly, the Company has never
accepted brokered deposits.

Borrowed funds. Borrowed funds consist primarily of short-term
borrowings in the form of securities sold under agreements to repurchase. These
borrowings averaged $1.5 million and $1.1 million during 1997 and 1996,
respectively. The repurchase agreements are generally originated with customers
that have other relationships with the Company and tend to provide a stable and
predictable source of funding.

The Company has short term borrowings provided through a U.S. Treasury
demand note associated with a treasury tax and loan account. The average
balance of this note for 1997 and 1996 was $114,000 and $68,000, respectively.

28
<PAGE> 29
CAPITAL

Total shareholders' equity as of December 31, 1997 was $6.1 million, an
increase of $333,000 or approximately 5.8% compared with shareholders' equity of
$5.8 million as of December 31, 1996. This increase was attributable to net
income for the year ended December 31, 1997 of $251,000, a $66,000 increase in
the market value of investment securities available-for-sale, and $16,000 in net
proceeds from the issuance of Common Stock pursuant to the exercise of
outstanding stock options.

The Federal Reserve Board and bank regulatory agencies require bank
holding companies and financial institutions to maintain capital at adequate
levels based on a percentage of assets and off-balance sheet exposures, adjusted
for risk weights ranging from 0% to 100% (the Federal Reserve grants an
exemption from these requirements for bank holding companies with less than $150
million in consolidated assets, and therefore the Company's capital is currently
measured only at the Bank level). Under the risk-based standard, capital is
classified into two tiers. Tier 1 capital consists of common shareholders'
equity, excluding the unrealized gain (loss) on available-for-sale securities,
minus certain intangible assets. Tier 2 capital consists of the general reserve
for loan losses subject to certain limitations. An institution's qualifying
capital base for purposes of its risk-based capital ratio consists of the sum of
its Tier 1 and Tier 2 capital. The regulatory minimum requirements are 4% for
Tier 1 and 8% for total risk-based capital.

Bank holding companies and banks are also required to maintain capital
at a minimum level based on total assets, which is known as the leverage ratio.
The minimum requirement for the leverage ratio is 3%, but all but the highest
rated institutions are required to maintain ratios 100 to 200 basis points above
the minimum. The Company and the Bank exceeded their minimum regulatory capital
ratios as of December 31, 1997 and 1996, as reflected in the following table.
See also "Supervision and Regulation - Capital Regulations."

ANALYSIS OF CAPITAL

<TABLE>
<CAPTION>
REGULATORY MINIMUMS THE COMPANY THE BANK
-------------------------- ----------------------------------- ------------------------------
DECEMBER 31, DECEMBER 31,
CAPITAL ADEQUATELY WELL MARCH 31, --------------------- MARCH 31, ------------------
RATIOS CAPITALIZED CAPITALIZED 1998 1997 1996 1998 1997 1996
-------- ----------- ----------- -------- -------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Leverage........4.00% 5.00% 11.45% 12.50% 17.29% 9.85% 10.73% 14.79%
Risk-based
capital
Tier 1.....4.00% 6.00% 16.07% 17.41% 27.37% 13.83% 14.93% 23.41%
Total......8.00% 10.00% 17.16% 18.49% 28.31% 14.91% 16.02% 24.35%
</TABLE>

LIQUIDITY MANAGEMENT

Liquidity management involves monitoring the Company's sources and uses
of funds in order to meet its day-to-day cash flow requirements while maximizing
profits. Liquidity represents the ability of a company to convert assets into
cash or cash equivalents without significant loss and to raise additional funds
by increasing liabilities. Liquidity management is made more complicated because
different balance sheet components are subject to varying degrees of management
control. For example, the timing of maturities of the investment portfolio is
very predictable and subject to a high degree of control at the time investment
decisions are made. However, net deposit inflows and outflows are far less
predictable and are not subject to the same degree of control. Asset liquidity
is provided by cash and assets which are readily marketable, which can be
pledged, or which will mature in the near future. Liability liquidity is
provided by access to core funding sources, principally the ability to generate
customer deposits in the Company's market area. In addition, liability liquidity
is provided through the ability to borrow against approved lines of credit
(federal funds purchased) from correspondent banks and to borrow on a secured
basis through securities sold under agreements to repurchase.

The Company sold 688,077 shares during its initial public offering in
1995, with net proceeds after offering expenses of $6.8 million. Approximately
$6.0 million of the proceeds of the offering were used to capitalize the Bank.
The remaining offering proceeds were used to provide working capital for the
Company. With the successful completion

29
<PAGE> 30

of the initial public offering, the Company has maintained a high level of
liquidity that has been adequate to meet planned capital expenditures, as well
as providing the necessary cash requirements of the Company needed for
operations. The Company's funds sold position, which is typically its primary
source of liquidity, averaged $4.2 million during the year ended December 31,
1997 and totaled $2.6 million at December 31, 1997. The Company also maintains
federal funds purchased lines with several financial institutions, in the
aggregate amount of $2.5 million, although these were not utilized in 1997.

Management regularly reviews the liquidity position of the Company and
has implemented internal policies which establish guidelines for sources of
asset-based liquidity and limit the total amount of purchased funds used to
support the balance sheet and funding from non-core sources. The Company intends
to use the net proceeds of the offering to finance the formation and initial
growth of three new branches, as well as to support the continued growth of the
Company. See "Use of Proceeds." The Company anticipates that the net proceeds of
the offering, together with cash flows from operations, will be adequate for the
establishment of these branches and the Company's capital needs for the
foreseeable future. However, should the Company need additional capital to
support the branches or the Company's growth, the Company would likely obtain
loans from third parties.

ACCOUNTING MATTERS

In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standard ("SFAS") No. 130, "Reporting Comprehensive
Income." SFAS 130 established standards for reporting and display of
comprehensive income and its components (revenues, expenses, gains, and losses)
in a full set of general purpose financial statements. SFAS 130 requires that
all items that are required to be recognized under accounting standards as
components of comprehensive income be reported in a financial statement that is
displayed with the same prominence as other financial statements. SFAS 130
requires that companies (i) classify items of other comprehensive income by
their nature in a financial statement and (ii) display the accumulated balance
of other comprehensive income separately from retained earnings and additional
paid-in capital in the equity section of the statement of financial position at
the end of an accounting period. SFAS 130 is effective for fiscal years
beginning after December 31, 1997, and the Company began following the statement
in the first quarter of 1998. As required by the statement, reclassification of
earlier periods has been reflected in the financial statements included
elsewhere herein.

YEAR 2000

Like many financial institutions, the Company relies upon computers for
the daily conduct of its business and for information systems processing. There
is concern among industry experts that on January 1, 2000 computers will be
unable to "read" the new year, which may result in widespread computer
malfunctions. While the Company believes that it has available resources and has
adopted a plan to address Year 2000 compliance, it is largely dependent on its
outside core data processing provider and other third party vendors. The Company
has been informed by its core data processing provider that the facilities at
which the Company's data processing is currently handled are not Year 2000
compliant, but that the Company's data processing will be transitioned by
October 31, 1998 to another facility of the providing processor which is Year
2000 compliant. The Company is seeking assurances about the Year 2000 compliance
with respect to the other third party hardware and software systems it uses, and
the Company believes that its internal systems and software and the network
connections it maintains will be adequately programmed to address the Year 2000
issue.

The Company has established time lines for testing all ancillary
systems, such as telephone systems and security devices, by December 31, 1998.
At this time, the Company has identified less than $10,000 in additional costs
it must incur to make modifications to correct Year 2000 problems. The Company
anticipates that the cost to move its data processing system will be incurred by
its data processing provider and that any additional costs incurred by the
Company to upgrade ancillary systems will not materially differ from normal
costs incurred during prior years to upgrade and maintain systems. However, the
Company has not completed an evaluation of all its internal systems and software
and the network connections it maintains, and it may incur additional costs.
There can be no assurances that all hardware and software that the Company uses
will be Year 2000 compliant, and the Company cannot predict with any certainty
the costs it will incur to respond to any Year 2000 issues. Factors which may
affect the amount of these costs include the Company's inability to control
third party modification plans, the Company's ability to identify and correct
all relevant

30
<PAGE> 31
computer codes, the availability and cost of engaging personnel
trained in solving Year 2000 issues, and other similar uncertainties.

Further, the business of many of the Company's customers may be
negatively affected by the Year 2000 issue, and any financial difficulties
incurred by the Company's customers in solving Year 2000 issues could negatively
affect those customers' ability to repay any loans which the Company may have
extended. Therefore, even if the Company does not incur significant direct costs
in connection with responding to the Year 2000 issue, there can be no assurance
that the failure or delay of the Company's customers or other third parties in
addressing the Year 2000 issue or the costs involved in such process will not
have a material adverse effect on the Company's business, financial condition,
or results of operations.

IMPACT OF INFLATION

Unlike most industrial companies, the assets and liabilities of
financial institutions such as the Company are primarily monetary in nature.
Therefore, interest rates have a more significant effect on the Company's
performance than do the effects of changes in the general rate of inflation and
changes in prices. In addition, interest rates do not necessarily move in the
same direction or in the same magnitude as the prices of goods and services. As
discussed previously, management seeks to manage the relationships between
interest sensitive assets and liabilities in order to protect against wide
interest rate fluctuations, including those resulting from inflation.

31
<PAGE> 32

BUSINESS

OVERVIEW

The Company is a one-bank holding company headquartered in Lexington,
South Carolina which currently operates through offices in Lexington and Forest
Acres, South Carolina. The Company pursues a community banking business
characterized by personalized service and local decision-making, emphasizing the
banking needs of individuals and small-to medium-sized businesses. The Company
attributes its success to date to its location in growing market areas and its
focus on attracting customers in these areas who prefer to conduct business with
a locally owned and managed institution that demonstrates an active interest in
their business and personal financial affairs. The Company's goal is to be the
leading community bank in the Midlands area of South Carolina, which includes
Lexington, Richland, Newberry, and Fairfield Counties.

The Company's primary source of revenue is interest income and fees,
which its earns by lending and investing the funds which are held on deposit.
Because loans generally earn higher rates of interest than investments, the
Company seeks to employ as much of its deposit funds as possible in the form of
loans to individuals, businesses, and other organizations. To ensure sufficient
liquidity, the Company also maintains a portion of the Bank's deposits in cash,
government securities, deposits with other financial institutions, and overnight
loans of excess reserves (known as "federal funds sold") to correspondent banks.
The revenue which the Company earns (prior to deducting its overhead expenses)
is essentially a function of the amount of the Company's loans and deposits, as
well as the profit margin ("interest spread") and fee income which can be
generated on these amounts.

MARKETING FOCUS

The Company's primary service area currently includes portions of Lexington and
Richland Counties, and the Company intends to continue to focus primarily on the
faster growing areas in the Midlands. According to the U.S. Census Bureau,
Lexington County is one of the fastest growing counties in South Carolina, with
a population of 191,900 in 1995, reflecting a 14.5% increase since 1990.
Lexington County also boasts one of the highest per capita incomes in South
Carolina, with a median household income in 1995 of $40,500, compared to $31,000
for South Carolina as a whole. Richland County had a population of 299,700 in
1995, a 4.9% increase since 1990. Richland County also had a median household
income of $40,500 in 1995. The U.S. Department of Housing and Urban Development
projects a median household income in 1998 of $45,600 for the Columbia, South
Carolina, Metropolitan Statistical Area, which includes both Richland County and
Lexington County. This figure represents growth of 2.9% over the median
household income for 1997 and 27.6% over 1990.

Most of the banks in the Midlands are now local branches of large
regional banks. Although size gives the larger banks certain advantages in
competing for business from large corporations, including higher lending limits
and the ability to offer services in other areas of South Carolina and
elsewhere, the Company believes there remains a demand for community banks in
the Midlands that the Company can successfully fulfill. As a result, the Company
generally does not attempt to compete for the banking relationships of large
corporations, but concentrates its efforts on small- to medium-sized businesses
and on individuals. The Company strives to provide its customers with the
breadth of products comparable to a regional bank, while maintaining the quick
response and personal service of a locally headquartered bank. The Company's
advertising emphasizes the Company's local ownership, community bank nature, and
ability to provide more personalized service than its competition.

<PAGE> 33

OPERATING AND GROWTH STRATEGY

The Company's goal is to be the leading community bank in the Midlands.
It intends to achieve this goal by providing personalized service with a
community focus, hiring and retaining high caliber and motivated employees,
maintaining high asset quality, increasing asset size through internal growth
and branch expansion, and offering its customers a breadth of products
comparable to a regional bank. These goals are intended to build long-term
shareholder value.

- Personalized Service. The Company strives to provide high
service levels and maintain strong customer relationships. It
seeks customers who prefer to conduct business with a locally
owned and managed institution that demonstrates an active
interest in their business and personal financial affairs.

- Community Focus. The Company approaches banking with a
community focus. The Company has located its two existing
offices, and plans to locate its three proposed offices, in
community and neighborhood settings in the Midlands. The
Company favors growth areas that have their own community
identity, with characteristics such as a strong school system,
a progressive business climate, a local newspaper, and a
separate municipal government.

- Motivated Employees. The Company believes that the key to its
success lies with its employees, because it is through the
employees that the Company is able to provide Midlands banking
customers with the high level of service and attention that
they expect and deserve. To this end, the Company hires high
caliber banking professionals who are committed to providing a
superior level of banking service. By selecting only qualified
and committed employees, the Company believes it can provide
an unsurpassed level of customer service and satisfaction.
Each employee focuses on the individual needs of the Company's
customers and strives to deliver the specific products and
services that will best help these customers achieve their
financial goals.

- High Asset Quality. The Company places a great deal of
emphasis on maintaining high asset quality and believes that
the outstanding asset quality it has experienced to date is
principally due to the closeness of its lenders, senior
officers, and directors to their customers and their
significant knowledge of the communities in which they reside.
Since the Company's inception through December 31, 1997, the
Company has had an average net charge-off ratio of 0.06%. The
Company intends to continue to emphasize high asset quality.

- Internal Growth and Branch Expansion. The Company has grown
significantly since opening in 1995, and it intends to use the
proceeds of this offering to support its continued growth,
including through the opening of up to three additional branch
offices in the Midlands in the next 18 to 24 months. The
Company currently intends to grow through branch expansion,
rather than by opening additional banks, because the costs
associated with opening new branches are significantly lower
than the costs of opening new branches are significantly lower
than opening new banks. Following the offering, the Company
will continue to focus on acquiring market share, particularly
from large Southeastern regional bank holding companies, by
emphasizing its local management and decision-making and
personal services.

- Broad Range of Products and Services. The Company strives to
provide its customers with the breadth of products and
services comparable to a regional bank, while maintaining the
quick response and personal service of a locally owned and
managed bank. In addition to offering a full range of deposit
services and commercial and personal loans, the Company offers
products such as mortgage loan originations, accounts
receivable financing, small equipment leasing, and investment
products and brokerage services through a third party
arrangement.

BANKING SERVICES

The Company offers a full range of deposit services that are typically
available in most banks and savings and loan associations, including checking
accounts, NOW accounts, savings accounts, and other time deposits of various
types, ranging from daily money market accounts to longer-term certificates of
deposit. The transaction accounts and time certificates are tailored to the
Company's principal market area at rates competitive to those offered by other
banks in the area. In addition, the Company offers certain retirement account
services, such as Individual Retirement Accounts (IRAs). All deposit accounts
are insured by the Federal Deposit Insurance Corporation (the "FDIC") up to the

<PAGE> 34
maximum amount allowed by law. The Company solicits these accounts from
individuals, businesses, associations and organizations, and governmental
authorities.

The Company also offers a full range of commercial and personal loans.
Commercial loans include both secured and unsecured loans for working capital
(including inventory and receivables), business expansion (including acquisition
of real estate and improvements), and purchase of equipment and machinery.
Consumer loans include secured and unsecured loans for financing automobiles,
home improvements, education, and personal investments. The Company also makes
real estate construction and acquisition loans. The Company originates fixed and
variable rate mortgage loans in the name of a third party which are sold into
the secondary market. The Company's lending activities are subject to a variety
of lending limits imposed by federal law. While differing limits apply in
certain circumstances based on the type of loan or the nature of the borrower
(including the borrower's relationship to the Company), in general the Company
is subject to a loan-to-one-borrower limit of an amount equal to 15% of the
Bank's unimpaired capital and surplus, or 25% of the unimpaired capital and
surplus if the excess over 15% is approved by the Board of Directors of the
Company and is fully secured by readily marketable collateral. The Company may
not make any loans to any director, officer, employee, or 10% shareholder of the
Company unless the loan is approved by the Board of Directors of the Company and
is made on terms not more favorable to such person than would be available to a
person not affiliated with the Company.

Other bank services include cash management services, safe deposit
boxes, travelers checks, direct deposit of payroll and social security checks,
and automatic drafts for various accounts. The Company offers other investment
products and investment brokerage services through a registered representative
with an affiliation through AAG Securities, Inc. The Company is associated with
HONOR(R) and PLUS(R) networks of automated teller machines and Mastermoney debit
cards that may be used by the Company's customers throughout South Carolina and
other regions. The Company also offers VISA(R) and MASTERCARD(R) credit card
services through a correspondent bank as an agent for the Company.

LOCATION AND SERVICE AREA

The Company serves the Midlands area of South Carolina, which includes
Lexington, Richland, Newberry, and Fairfield Counties. The Company's primary
service area currently includes portions of Lexington and Richland Counties. The
Company's main office is located in an 8,500 square foot facility at 5455 Sunset
Boulevard, in the city of Lexington, South Carolina, which is west of Columbia
in Lexington County. The Company's second office is located in a 4,000 square
foot facility at 4404 Forest Drive, in the city of Forest Acres, South Carolina,
which is east of Columbia in Richland County.

Lexington County and Richland County are located in the geographic
center of the state of South Carolina. Columbia, the capital of South Carolina,
is located within and divided between these two counties. The area has
experienced steady growth over the past ten years and the Company expects the
Midlands area, as well as the service industries needed to support it, to
continue to grow. The Company intends to focus primarily on the faster growing
areas in the Midlands. According to the U.S. Census Bureau, Lexington County is
one of the fastest growing counties in South Carolina, with a population of
191,900 in 1995, reflecting a 14.5% increase since 1990. Lexington County also
boasts one of the highest per capita incomes in South Carolina, with a median
household income in 1995 of $40,500, compared to $31,000 for South Carolina as a
whole. Richland County had a population of 299,700 in 1995, a 4.9% increase
since 1990. Richland County also had a median household income of $40,500 in
1995.

As of December 1997, unemployment was 1.5% in Lexington County and 1.9%
in Richland County, according to the South Carolina Employment Security
Commission Labor Market Information Division. The principal components of the
economy within the Company's market areas are service industries, government,
and wholesale and retail trade. The largest employers, each of which employs in
excess of 3,000 people in the Midlands area, include the Fort Jackson Army Base,
the University of South Carolina, Policy Management Systems Corporation,
Richland Memorial Hospital, Blue Cross Blue Shield, SCANA Corporation, and
Pepsi-Cola, Inc.

<PAGE> 35
COMPETITION

Banks generally compete with other financial institutions through the
selection of banking products and services offered, the pricing of services, the
level of service provided, the convenience and availability of services, and the
degree of expertise and the personal manner in which services are offered. South
Carolina law permits statewide branching by banks and savings institutions, and
many financial institutions in the state have branch networks. Consequently,
commercial banking in South Carolina is highly competitive. Many large banking
organizations currently operate in the Company's market area, several of which
are controlled by out-of-state ownership. In addition, competition between
commercial banks and thrift institutions (savings institutions and credit
unions) has been intensified significantly by the elimination of many previous
distinctions between the various types of financial institutions and the
expanded powers and increased activity of thrift institutions in areas of
banking which previously had been the sole domain of commercial banks. Recent
legislation, together with other regulatory changes by the primary regulators of
the various financial institutions, has resulted in the almost total elimination
of practical distinctions between a commercial bank and a thrift institution.
Consequently, competition among financial institutions of all types is largely
unlimited with respect to legal ability and authority to provide most financial
services.

The Company faces increased competition from both federally-chartered
and state-chartered financial and thrift institutions, as well as credit unions,
consumer finance companies, insurance companies and other institutions in the
Company's market area. Some of these competitors are not subject to the same
degree of regulation and restriction imposed upon the Company. Many of these
competitors also have broader geographic markets and substantially greater
resources and lending limits than the Company and offer certain services such as
trust banking that the Company does not currently provide. In addition, many of
these competitors have numerous branch offices located throughout the extended
market areas of the Company that may provide these competitors with an advantage
in geographic convenience that the Company does not have at present.

35
<PAGE> 36

The following tables reflect the Bank's market share of deposits as of
June 30, 1997 and 1996 in the service area for each of its existing offices
(based on figures reported by the financial institutions to the FDIC, with the
numbers in parentheses representing the number of branches, if more than one, of
each financial institution in the relevant market).

LEXINGTON MARKET

JUNE 30,
1997 VERSUS 1996
JUNE 30, 1997 JUNE 30, 1996 INCREASE (DECREASE)
-------------------------- ------------------------- ------------------------
PERCENT OF PERCENT
DEPOSITS MARKET DEPOSITS OF MARKET AMOUNT PERCENT
------------ ----------- --------- ---------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
First Community $ 25,706 7.6% $ 13,411 4.5% $ 12,295 91.7%

BB&T 186,849(3) 55.0% 178,898(3) 59.5% 7,951 4.4%
Wachovia 41,565 12.2% 37,774 12.5% 3,791 10.0%
Carolina First 29,189 8.6% 19,864 6.6% 9,325 46.9%
NationsBank 26,841(2) 7.9% 28,394(2) 9.4% (1,553) (5.5)%
First Union 10,251 3.0% 10,980 3.7% (729) (6.6)%
First Citizens 8,595 2.5% 7,151 2.4% 1,444 20.2%
First Palmetto FSB 4,678 1.4% 4,172 1.4% 506 12.1%
Palmetto Federal 3,617 1.0% -- -- 3,617 --
SouthTrust 2,725 0.8% -- -- 2,725 --
----------- ---------- --------- -------- ---------
$340,016 100.0% $ 300,644 100.0% $ 39,372
=========== ========== ========= ======== =========
</TABLE>

FOREST ACRES MARKET

JUNE 30,
1997 VERSUS 1996
JUNE 30, 1997 JUNE 30, 1996 INCREASE (DECREASE)
--------------------------- -------------------------- -----------------------
PERCENT OF PERCENT OF
DEPOSITS MARKET DEPOSITS OF MARKET AMOUNT PERCENT
-------- --------- -------- --------- ------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
First Community $ 14,866 3.5% $ 8,688 2.3% $ 6,178 71.1%

Wachovia 81,882(2) 19.4% 78,030(2) 20.4% 3,852 4.9%
NationsBank 69,507(2) 16.5% 70,278(2) 18.4% (771) (1.1)%
Carolina First 67,728 16.1% 60,162 15.8% 7,566 12.6%
NBSC 57,083 13.5% 51,131 13.4% 5,952 11.6%
First Citizens 48,176(3) 11.4% 38,631(2) 10.1% 9,545 24.7%
First Union 46,556 11.1% 46,126 12.0% 430 0.9%
First Palmetto FSB 21,585 5.1% 20,468 5.3% 1,117 5.5%
SouthTrust 7,129 1.7% 1,537 0.4% 5,592 363.8%
BB&T 6,994 1.7% 7,157 1.9% (163) (2.3)%
-------- ------- -------- ------ -------
$421,506 100.0% $382,208 100.0% $39,298
======== ======= ======== ====== =======
</TABLE>

LEGAL PROCEEDINGS

In the ordinary course of operations, the Company is a party to various
legal proceedings. Management does not believe that there is any pending or
threatened proceeding against the Company which, if determined adversely, would
have a material effect on the business, results of operations, or financial
position of the Company.

36
<PAGE> 37

SUPERVISION AND REGULATION

The Company and the Bank are subject to state and federal banking laws
and regulations which impose specific requirements or restrictions on and
provide for general regulatory oversight with respect to virtually all aspects
of operations. These laws and regulations are generally intended to protect
depositors, not shareholders. To the extent that the following summary describes
statutory or regulatory provisions, it is qualified in its entirety by reference
to the particular statutory and regulatory provisions. Any change in applicable
laws or regulations may have a material effect on the business and prospects of
the Company. Beginning with the enactment of FIRREA in 1989 and following with
FDICIA in 1991, numerous additional regulatory requirements have been placed on
the banking industry in the past several years, and additional changes have been
proposed. The operations of the Company may be affected by legislative changes
and the policies of various regulatory authorities. The Company is unable to
predict the nature or the extent of the effect on its business and earnings that
fiscal or monetary policies, economic control, or new federal or state
legislation may have in the future.

The Company. Because it owns the outstanding capital stock of the Bank,
the Company is a bank holding company within the meaning of the federal Bank
Holding Company Act of 1956 (the "BHCA") and The South Carolina Bank Holding
Company Act (the "South Carolina Act"). The activities of the Company are also
governed by the Glass-Steagall Act of 1933 (the "Glass-Steagall Act").

The BHCA. Under the BHCA, the Company is subject to periodic
examination by the Federal Reserve and is required to file periodic reports of
its operations and such additional information as the Federal Reserve may
require. The Company's and the Bank's activities are limited to banking,
managing, or controlling banks; furnishing services to or performing services
for its subsidiaries; and engaging in other activities that the Federal Reserve
determines to be so closely related to banking, managing, or controlling banks
as to be a proper incident thereto.

Investments, Control, and Activities. With certain limited exceptions,
the BHCA requires every bank holding company to obtain the prior approval of the
Federal Reserve before (i) acquiring substantially all the assets of any bank,
(ii) acquiring direct or indirect ownership or control of any voting shares of
any bank if after such acquisition it would own or control more than 5% of the
voting shares of such bank (unless it already owns or controls the majority of
such shares), or (iii) merging or consolidating with another bank holding
company.

In addition, and subject to certain exceptions, the BHCA and the Change
in Bank Control Act, together with regulations thereunder, require Federal
Reserve approval (or, depending on the circumstances, no notice of disapproval)
prior to any person or company acquiring "control" of a bank holding company,
such as the Company. Control is conclusively presumed to exist if an individual
or company acquires 25% or more of any class of voting securities of the bank
holding company. Control is rebuttably presumed to exist if a person acquires
10% or more but less than 25% of any class of voting securities and either the
Company has registered securities under Section 12 of the Securities Exchange
Act of 1934 (the "Exchange Act") (which the Company has done) or no other person
owns a greater percentage of that class of voting securities immediately after
the transaction. The regulations provide a procedure for challenge of the
rebuttable control presumption.

Under the BHCA, a bank holding company is generally prohibited from
engaging in, or acquiring direct or indirect control of more than 5% of the
voting shares of any company engaged in nonbanking activities unless the
Federal Reserve Board, by order or regulation, has found those activities to be
so closely related to banking or managing or controlling banks as to be a proper
incident thereto. Some of the activities that the Federal Reserve Board has
determined by regulation to be proper incidents to the business of a bank
holding company include making or servicing loans and certain types of leases,
engaging in certain insurance and discount brokerage activities, performing
certain data processing services, acting in certain circumstances as a fiduciary
or investment or financial adviser, owning savings associations, and making
investments in certain corporations or projects designed primarily to promote
community welfare.

The Federal Reserve Board imposes certain capital requirements on the
Company under the BHCA, including a minimum leverage ratio and a minimum ratio
of "qualifying" capital to risk-weighted assets. These requirements are
described below under "-- Capital Regulations." Subject to its capital
requirements and certain other restrictions, the

37
<PAGE> 38

Company is able to borrow money to make a capital contribution to the Bank, and
such loans may be repaid from dividends paid from the Bank to the Company
(although the ability of the Bank to pay dividends is subject to regulatory
restrictions as described below in "The Bank--Dividends"). The Company is also
able to raise capital for contribution to the Bank by issuing securities without
having to receive regulatory approval, subject to compliance with federal and
state securities laws.

Source of Strength; Cross-Guarantee. In accordance with Federal Reserve
Board policy, the Company is expected to act as a source of financial strength
to the Bank and to commit resources to support the Bank in circumstances in
which the Company might not otherwise do so. Under the BHCA, the Federal Reserve
Board may require a bank holding company to terminate any activity or relinquish
control of a nonbank subsidiary (other than a nonbank subsidiary of a bank) upon
the Federal Reserve Board's determination that such activity or control
constitutes a serious risk to the financial soundness or stability of any
subsidiary depository institution of the bank holding company. Further, federal
bank regulatory authorities have additional discretion to require a bank holding
company to divest itself of any bank or nonbank subsidiary if the agency
determines that divestiture may aid the depository institution's financial
condition.

Glass-Steagall Act. The Company is also restricted in its activities by
the provisions of the Glass-Steagall Act, which prohibits the Company from
owning subsidiaries that are engaged principally in the issue, flotation,
underwriting, public sale, or distribution of securities. The interpretation,
scope, and application of the provisions of the Glass-Steagall Act currently are
being considered and reviewed by regulators and legislators, and the
interpretation and application of those provisions have been challenged in the
federal courts.

South Carolina Act. As a bank holding company registered under the
South Carolina Act, the Company is subject to regulation by the South Carolina
State Board of Financial Institutions (the "South Carolina Board").
Consequently, the Company must receive the approval of the South Carolina Board
prior to engaging in the acquisition of banking or nonbanking institutions or
assets. The Company must also file with the South Carolina Board periodic
reports with respect to its financial condition and operations, management, and
intercompany relationships between the Company and its subsidiaries.

The Bank. The Bank operates as a national banking association
incorporated under the laws of the United States and subject to examination by
the OCC. Deposits in the Bank are insured by the FDIC up to a maximum amount
(generally $100,000 per depositor, subject to aggregation rules). The OCC and
the FDIC regulate or monitor virtually all areas of the Bank's operations,
including security devices and procedures, adequacy of capitalization and loss
reserves, loans, investments, borrowings, deposits, mergers, issuances of
securities, payment of dividends, interest rates payable on deposits, interest
rates or fees chargeable on loans, establishment of branches, corporate
reorganizations, maintenance of books and records, and adequacy of staff
training to carry on safe lending and deposit gathering practices. The OCC
requires the Bank to maintain certain capital ratios and imposes limitations on
the Bank's aggregate investment in real estate, bank premises, and furniture and
fixtures. The Bank is required by the OCC to prepare quarterly reports on the
Bank's financial condition and to conduct an annual audit of its financial
affairs in compliance with minimum standards and procedures prescribed by the
OCC.

Under FDICIA, all insured institutions must undergo regular on site
examinations by their appropriate banking agency. The cost of examinations of
insured depository institutions and any affiliates may be assessed by the
appropriate agency against each institution or affiliate as it deems necessary
or appropriate. Insured institutions are required to submit annual reports to
the FDIC and the appropriate agency (and state supervisor when applicable).
FDICIA also directs the FDIC to develop with other appropriate agencies a method
for insured depository institutions to provide supplemental disclosure of the
estimated fair market value of assets and liabilities, to the extent feasible
and practicable, in any balance sheet, financial statement, report of condition
or any other report of any insured depository institution. FDICIA also requires
the federal banking regulatory agencies to prescribe, by regulation, standards
for all insured depository institutions and depository institution holding
companies relating, among other things, to: (i) internal controls, information
systems, and audit systems; (ii) loan documentation; (iii) credit underwriting;
(iv) interest rate risk exposure; and (v) asset quality.

National banks and their holding companies which have been chartered or
registered or have undergone a change in control within the past two years or
which have been deemed by the OCC or the Federal Reserve Board, respectively, to
be troubled institutions must give the OCC or the Federal Reserve Board,

38
<PAGE> 39
respectively, thirty days prior notice of the appointment of any senior
executive officer or director. Within the thirty day period, the OCC or the
Federal Reserve Board, as the case may be, may approve or disapprove any such
appointment.

Deposit Insurance. The FDIC establishes rates for the payment of
premiums by federally insured banks and thrifts for deposit insurance. A
separate Bank Insurance Fund ("BIF") and Savings Association Insurance Fund
("SAIF") are maintained for commercial banks and thrifts, respectively, with
insurance premiums from the industry used to offset losses from insurance
payouts when banks and thrifts fail. In 1993, the FDIC adopted a rule which
establishes a risk-based deposit insurance premium system for all insured
depository institutions. Under this system, until mid-1995 depositor
institutions paid to BIF or SAIF from $0.23 to $0.31 per $100 of insured
deposits depending on its capital levels and risk profile, as determined by its
primary federal regulator on a semi-annual basis. Once the BIF reached its
legally mandated reserve ratio in mid-1995, the FDIC lowered premiums for
well-capitalized banks, eventually to $.00 per $100, with a minimum semiannual
assessment of $1,000. However, in 1996 Congress enacted the Deposit Insurance
Funds Act of 1996, which eliminated this minimum assessment. It also separated
the Financial Corporation (FICO) assessment to service the interest on its bond
obligations. The amount assessed on individual institutions, including the Bank,
by FICO is in addition to the amount paid for deposit insurance according to the
risk-related assessment rate schedule. Increases in deposit insurance premiums
or changes in risk classification will increase the Bank's cost of funds, and
there can be no assurance that such cost can be passed on to the Bank's
customers.

Transactions With Affiliates and Insiders. The Bank is subject to the
provisions of Section 23A of the Federal Reserve Act, which place limits on the
amount of loans or extensions of credit to, or investments in, or certain other
transactions with, affiliates and on the amount of advances to third parties
collateralized by the securities or obligations of affiliates. The aggregate of
all covered transactions is limited in amount, as to any one affiliate, to 10%
of the bank's capital and surplus and, as to all affiliates combined, to 20% of
the bank's capital and surplus. Furthermore, within the foregoing limitations as
to amount, each covered transaction must meet specified collateral requirements.
Compliance is also required with certain provisions designed to avoid the taking
of low quality assets.

The Bank is also subject to the provisions of Section 23B of the
Federal Reserve Act which, among other things, prohibit an institution from
engaging in certain transactions with certain affiliates unless the transactions
are on terms substantially the same, or at least as favorable to such
institution or its subsidiaries, as those prevailing at the time for comparable
transactions with nonaffiliated companies. The Bank is subject to certain
restrictions on extensions of credit to executive officers, directors, certain
principal shareholders, and their related interests. Such extensions of credit
(i) must be made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
third parties and (ii) must not involve more than the normal risk of repayment
or present other unfavorable features.

Dividends. A national bank may not pay dividends from its capital. All
dividends must be paid out of undivided profits then on hand, after deducting
expenses, including reserves for losses and bad debts. In addition, a national
bank is prohibited from declaring a dividend on its shares of common stock until
its surplus equals its stated capital, unless there has been transferred to
surplus no less than one-tenth of the bank's net profits of the preceding two
consecutive half-year periods (in the case of an annual dividend). The approval
of the OCC is required if the total of all dividends declared by a national bank
in any calendar year exceeds the total of its net profits for that year combined
with its retained net profits for the preceding two years, less any required
transfers to surplus.

Branching. National banks are required by the National Bank Act to
adhere to branch office banking laws applicable to state banks in the states in
which they are located. Under current South Carolina law, the Bank may open
branch offices throughout South Carolina with the prior approval of the OCC. In
addition, with prior regulatory approval, the Bank is able to acquire existing
banking operations in South Carolina. Furthermore, federal legislation has
recently been passed which permits interstate branching. The new law permits
out-of-state acquisitions by bank holding companies (subject to veto by new
state law), interstate branching by banks if allowed by state law, interstate
merging by banks, and de novo branching by national banks if allowed by state
law. See "Recent Legislative Developments."

Community Reinvestment Act. The Community Reinvestment Act requires
that, in connection with examinations of financial institutions within their
respective jurisdictions, the Federal Reserve, the FDIC, the OCC, or the Office
of Thrift Supervision shall evaluate the record of the financial institutions in
meeting the credit needs of their local

39
<PAGE> 40
communities, including low and moderate income neighborhoods, consistent with
the safe and sound operation of those institutions. These factors are also
considered in evaluating mergers, acquisitions, and applications to open a
branch or facility.

Other Regulations. Interest and certain other charges collected or
contracted for by the Bank are subject to state usury laws and certain federal
laws concerning interest rates. The Bank's loan operations are also subject to
certain federal laws applicable to credit transactions, such as the federal
Truth-In-Lending Act, governing disclosures of credit terms to consumer
borrowers; the Home Mortgage Disclosure Act of 1975, requiring financial
institutions to provide information to enable the public and public officials to
determine whether a financial institution is fulfilling its obligation to help
meet the housing needs of the community it serves; the Equal Credit Opportunity
Act, prohibiting discrimination on the basis of race, creed or other prohibited
factors in extending credit; the Fair Credit Reporting Act of 1978, governing
the use and provision of information to credit reporting agencies; the Fair Debt
Collection Act, governing the manner in which consumer debts may be collected by
collection agencies; and the rules and regulations of the various federal
agencies charged with the responsibility of implementing such federal laws. The
deposit operations of the Bank also are subject to the Right to Financial
Privacy Act, which imposes a duty to maintain confidentiality of consumer
financial records and prescribes procedures for complying with administrative
subpoenas of financial records, and the Electronic Funds Transfer Act and
Regulation E issued by the Federal Reserve Board to implement that act, which
governs automatic deposits to and withdrawals from deposit accounts and
customers' rights and liabilities arising from the use of automated teller
machines and other electronic banking services.

Capital Regulations. The federal bank regulatory authorities have
adopted risk-based capital guidelines for banks and bank holding companies that
are designed to make regulatory capital requirements more sensitive to
differences in risk profiles among banks and bank holding companies and account
for off-balance sheet items. The guidelines are minimums, and the federal
regulators have noted that banks and bank holding companies contemplating
significant expansion programs should not allow expansion to diminish their
capital ratios and should maintain ratios in excess of the minimums. Neither the
Company nor the Bank has received any notice indicating that either entity is
subject to higher capital requirements. The current guidelines require all bank
holding companies and federally-regulated banks to maintain a minimum risk-based
total capital ratio equal to 8%, of which at least 4% must be Tier 1 capital.
Tier 1 capital includes common shareholders' equity, qualifying perpetual
preferred stock, and minority interests in equity accounts of consolidated
subsidiaries, but excludes goodwill and most other intangibles and excludes the
allowance for loan and lease losses. Tier 2 capital includes the excess of any
preferred stock not included in Tier 1 capital, mandatory convertible
securities, hybrid capital instruments, subordinated debt and intermediate
term-preferred stock, and general reserves for loan and lease losses up to 1.25%
of risk-weighted assets.

Under these guidelines, banks' and bank holding companies' assets are
given risk-weights of 0%, 20%, 50%, or 100%. In addition, certain off-balance
sheet items are given credit conversion factors to convert them to asset
equivalent amounts to which an appropriate risk-weight applies. These
computations result in the total risk-weighted assets. Most loans are assigned
to the 100% risk category, except for first mortgage loans fully secured by
residential property and, under certain circumstances, residential construction
loans, both of which carry a 50% rating. Most investment securities are assigned
to the 20% category, except for municipal or state revenue bonds, which have a
50% rating, and direct obligations of or obligations guaranteed by the United
States Treasury or United States Government agencies, which have a 0% rating.

The federal bank regulatory authorities have also implemented a
leverage ratio, which is equal to Tier 1 capital as a percentage of average
total assets less intangibles, to be used as a supplement to the risk-based
guidelines. The principal objective of the leverage ratio is to place a
constraint on the maximum degree to which a bank holding company may leverage
its equity capital base. The minimum required leverage ratio for top-rated
institutions is 3%, but most institutions are required to maintain an additional
cushion of at least 100 to 200 basis points.

FDICIA established a new capital-based regulatory scheme designed to
promote early intervention for troubled banks which requires the FDIC to choose
the least expensive resolution of bank failures. The new capital-based
regulatory framework contains five categories of compliance with regulatory
capital requirements, including "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized," and "critically
undercapitalized." To qualify as a "well capitalized" institution, a bank must
have a leverage ratio of no less than 5%, a Tier 1 risk-based ratio of no less
than 6%, and a total risk-based capital ratio of no less than 10%, and the bank
must not
40
<PAGE> 41
be under any order or directive from the appropriate regulatory agency to meet
and maintain a specific capital level. As of December 31, 1997, the Company and
the Bank were qualified as "well capitalized." See "Management's Discussion and
Analysis or Plan of Operation -- Capital."

Under the FDICIA regulations, the applicable agency can treat an
institution as if it were in the next lower category if the agency determines
(after notice and an opportunity for hearing) that the institution is in an
unsafe or unsound condition or is engaging in an unsafe or unsound practice. The
degree of regulatory scrutiny of a financial institution increases, and the
permissible activities of the institution decreases, as it moves downward
through the capital categories. Institutions that fall into one of the three
undercapitalized categories may be required to (i) submit a capital restoration
plan; (ii) raise additional capital; (iii) restrict their growth, deposit
interest rates, and other activities; (iv) improve their management; (v)
eliminate management fees; or (vi) divest themselves of all or a part of their
operations. Bank holding companies controlling financial institutions can be
called upon to boost the institutions' capital and to partially guarantee the
institutions' performance under their capital restoration plans.

These capital guidelines can affect the Company in several ways. If the
Company continues to grow at a rapid pace, a premature "squeeze" on capital
could occur making a capital infusion necessary. The requirements could impact
the Company's ability to pay dividends. The Company's present capital levels are
more than adequate; however, rapid growth, poor loan portfolio performance or
poor earnings performance or a combination of these factors could change the
Company's capital position in a relatively short period of time.

FDICIA requires the federal banking regulators to revise the risk-based
capital standards to provide for explicit consideration of interest-rate risk,
concentration of credit risk, and the risks of untraditional activities. It is
uncertain what effect these regulations, when implemented, would have on the
Company.

Failure to meet these capital requirements would mean that a bank would
be required to develop and file a plan with its primary federal banking
regulator describing the means and a schedule for achieving the minimum capital
requirements. In addition, such a bank would generally not receive regulatory
approval of any application that requires the consideration of capital adequacy,
such as a branch or merger application, unless the bank could demonstrate a
reasonable plan to meet the capital requirement within a reasonable period of
time.

Enforcement Powers. FIRREA expanded and increased civil and criminal
penalties available for use by the federal regulatory agencies against
depository institutions and certain "institution-affiliated parties" (primarily
including management, employees, and agents of a financial institution, and
independent contractors such as attorneys and accountants and others who
participate in the conduct of the financial institution's affairs). These
practices can include the failure of an institution to timely file required
reports or the filing of false or misleading information or the submission of
inaccurate reports. Civil penalties may be as high as $1,000,000 a day for such
violations. Criminal penalties for some financial institution crimes have been
increased to twenty years. In addition, regulators are provided with greater
flexibility to commence enforcement actions against institutions and
institution-affiliated parties. Possible enforcement actions include the
termination of deposit insurance. Furthermore, FIRREA expanded the appropriate
banking agencies' power to issue cease-and-desist orders that may, among other
things, require affirmative action to correct any harm resulting from a
violation or practice, including restitution, reimbursement, indemnifications or
guarantees against loss. A financial institution may also be ordered to restrict
its growth, dispose of certain assets, rescind agreements or contracts, or take
other actions as determined by the ordering agency to be appropriate.

Recent Legislative Developments. In the 1994 legislative session, South
Carolina amended its bank holding act to allow nationwide interstate banking
beginning in 1996. The Interstate Banking Act, passed by Congress in 1994,
allows unrestricted interstate bank mergers, unrestricted interstate acquisition
of banks by bank holding companies, and interstate de novo branching by banks if
allowed by state law. From time to time, various bills are introduced in the
United States Congress with respect to the regulation of financial institutions.
Certain of these proposals, if adopted, could significantly change the
regulation of banks and the financial services industry. For example, the House
of Representatives recently passed the Financial Services Competition Act of
1997, which, if it becomes law, would make substantial changes to the
regulation of banks and other companies within the U.S. financial services
industry. The Company cannot predict whether any of these proposals will be
adopted or, if adopted, how these proposals would affect the Company.

41
<PAGE> 42
Effect of Governmental Monetary Policies. The earnings of the Company
are affected by domestic economic conditions and the monetary and fiscal
policies of the United States government and its agencies. The Federal Reserve
Board's monetary policies have had, and are likely to continue to have, an
important impact on the operating results of commercial banks through its power
to implement national monetary policy in order, among other things, to curb
inflation or combat a recession. The monetary policies of the Federal Reserve
Board have major effects upon the levels of bank loans, investments and deposits
through its open market operations in United States government securities and
through its regulation of the discount rate on borrowings of member banks and
the reserve requirements against member bank deposits. It is not possible to
predict the nature or impact of future changes in monetary and fiscal policies.

42
<PAGE> 43

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS OF THE COMPANY

The following sets forth certain information regarding the Company's
executive officers and directors as of the date of this Prospectus. The
Company's Articles of Incorporation provide for a classified Board of Directors,
so that, as nearly as possible, one-third of the directors are elected each year
to serve three-year terms. The terms of office of the classes of directors
expire as follows: Class I at the 2001 annual meeting of shareholders, Class II
at the 1999 annual meeting of shareholders, and Class III at the 2000 annual
meeting of shareholders. Executive officers of the Company serve at the
discretion of the Company's Board of Directors.

NAME AGE POSITION WITH THE COMPANY
- ---- --- -------------------------

<S> <C> <C>
Richard K. Bogan, M.D. 52 Director
William L. Boyd, III 73 Director
Thomas C. Brown 40 Director
Chimin J. Chao 42 Director
Robert G. Clawson 82 Director
Michael C. Crapps 40 Director, President and Chief Executive Officer
Hinton G. Davis 60 Director
Anita B. Easter 53 Director
O.A. Ethridge, D.M.D. 55 Director
George H. Fann, Jr., D.M.D. 53 Director
William A. Jordan 42 Director
W. James Kitchens, Jr. 36 Director
James C. Leventis 60 Director, Chairman of the Board
Broadus Thompson 64 Director
Angelo L. Tsiantis 68 Director
Loretta R. Whitehead 55 Director
Mitchell M. Willoughby 50 Director
David K. Proctor 42 Senior Vice President/Senior Credit Officer
Joseph G. Sawyer 47 Senior Vice President/Chief Financial Officer
</TABLE>

Richard K. Bogan, Class I Director, has served as a director of the
Company since its formation in 1994. Dr. Bogan has practiced medicine in
Columbia, South Carolina since he started Pulmonary Associates of Carolina in
1978. He graduated with a B.S. degree from Wofford College in Spartanburg in
1966 and earned an M.D. degree from the Medical College of South Carolina in
Charleston in 1970. Dr. Bogan has been president of Bogan Consulting, Inc., a
medical consulting company, since December 1992 and holds memberships in
numerous medical organizations. He has served as medical director of Palmetto
Physician Partners and president of SCDA, a management company of sleep clinics
throughout the Southeast.

William L. Boyd, III, Class III Director, has served as a director of
the Company since its formation in 1994. Mr. Boyd has lived in Columbia, South
Carolina since 1926. He served as manager of Standard Parts Company, a division
of Genuine Parts Company, from 1948 to 1975 and bought the Columbia, Camden, and
Lexington branches of the business in 1975, operating it for a period of time
under the name of NAPA Auto Parts. He sold the business back to Genuine Parts in
1985 and resumed his job as manager until his retirement in 1987. Mr. Boyd is a
private investor and a co-owner of Rainbow Plantation, L.C. He attended the
University of Virginia and the University of South Carolina.

Thomas C. Brown, Class II Director, has served as a director of the
Company since its formation in 1994. Since 1989, Mr. Brown has been the
president and owner of T.C.B. Enterprises of South Carolina, Inc., a restaurant
business based in Myrtle Beach. An Elder of First Presbyterian Church in Myrtle
Beach, Mr. Brown is also a member of the Chicora Rotary Club of Myrtle Beach,
the Myrtle Beach Area Hospitality Association, and the Myrtle Beach Chamber of
Commerce. Mr. Brown graduated from Clemson University in 1981 with a B.S. degree
in Civil Engineering.

43
<PAGE> 44
Chimin J. Chao, Class III Director, has served as a director of the
Company since its formation in 1994. Mr. Chao lives in Lexington, South Carolina
and since 1987 has been president of the engineering firm Chao and Associates,
Inc. in West Columbia, South Carolina. Mr. Chao is a member of the American
Society of Engineers and the National Society of Professional Engineers. He
received a M.S. degree in Structural Engineering at the University of South
Carolina and holds a Professional Engineer License in South Carolina.

Robert G. Clawson, Class II Director, has served as a director of the
Company since its formation in 1994. Mr. Clawson began his banking career in
1939 as a bookkeeper/teller at The Bank of Yancyville, Yancyville, North
Carolina. He joined The Bank of Hartsville in 1947, serving as president and
chief executive officer from 1961 until his retirement in 1981. He continued to
serve as a director until 1987 when the bank was merged into NCNB, now
NationsBank. He continued as an advisory director until 1989, completing fifty
years of banking in South Carolina, for which Mr. Clawson was awarded the South
Carolina Bankers Association Fifty Year Cup. Mr. Clawson also served on the
board of directors of Republic National Bank from 1989 until the bank was sold
in 1994.

Michael C. Crapps, Class I Director, has served as the President and
Chief Executive Officer and as a director of the Company since its formation in
1994. Mr. Crapps, a life-long resident of Lexington, South Carolina, was
selected as the 1997 Young Banker of the Year by the South Carolina Bankers
Association. From 1985 to 1993, he worked for Republic National Bank in
Columbia, becoming president, chief executive officer, and a director of that
bank in 1993. During his career, Mr. Crapps has been responsible for virtually
all aspects of banking, including branches, commercial banking, operations,
credit administration, accounting, human resources, and compliance. He began his
banking career with South Carolina National Bank in 1980, and by the time he
changed jobs in 1985 he was a vice president and senior commercial lender in a
regional office of that bank. He also serves the banking industry through his
participation on the board of directors of the Independent Banks of South
Carolina and on the State Legislative Committee of the South Carolina Bankers
Association. He received a B.S. degree in Economics in 1980 from Clemson
University and an M.B.A. degree from the University of South Carolina in 1984.
Mr. Crapps is also a graduate of the LSU Banking School of the South. Mr. Crapps
is presently on the boards of directors of the American Cancer Society, the
Greater Columbia Community Relations Council, and the Saluda Shoals Park
Foundation.

Hinton G. Davis, Class I Director, has served as a director of the
Company since its formation in 1994. Mr. Davis is the founder and chief
executive officer of Capital City Insurance Company, Inc. and Davis Garvin
Agency, Inc., an insurance company and insurance agency, respectively. Since
founding these companies in 1981, Mr. Davis has worked as chief executive
officer and primary owner of three related insurance businesses: Southeastern
Claims Services, Inc., Capital E & S Brokers, and Charter Premium Audits. Mr.
Davis has resided in Columbia for over 20 years and holds a B.B.A. degree in
Insurance from the University of Georgia.

Anita B. Easter, Class I Director, has served as a director of the
Company since its formation in 1994. Ms. Easter, who has been a resident of the
Columbia area for over 20 years, is self-employed, working for Greenleaf
Enterprises, a company involved with investing, property management, auto
restoration, vintage auto racing, antiques, and collectibles. Ms. Easter is a
1965 graduate of North Carolina Baptist Hospital School of Nursing. She received
a B.S. degree in Nursing from the University of South Carolina in 1978. She
currently is chairperson for U.S.C.'s College of Nursing Capital Campaign
Executive Committee, and serves on the board of directors of the United Way and
the Greater Columbia Chamber of Commerce.

O.A. Ethridge, D.M.D., Class II Director, has served as a director of
the Company since its formation in 1994. Dr. Ethridge currently resides in
Lexington, South Carolina and has practiced children's dentistry in West
Columbia, South Carolina for more than 20 years. After graduating with a B.A.
degree in Science from Erskine College in Due West, South Carolina in 1965, Dr.
Ethridge received a D.M.D. in 1971 from the University of Louisville School of
Dentistry in Louisville, Kentucky. He became a pedodontist in 1974 after
receiving a pedodontist specialty from Children's Medical Center in Dayton,
Ohio.

George H. Fann, Jr., D.M.D., Class I Director, has served as a director
of the Company since its formation in 1994. Dr. Fann has practiced dentistry in
West Columbia, South Carolina for over 25 years. He earned a B.S. degree from
Clemson University in 1966 and a D.M.D. from the University of Louisville School
of Dentistry in 1969. Dr. Fann is vice president of the South Carolina Academy
of General Dentistry and a member of the board of directors of

44
<PAGE> 45

Lexington Medical Center in West Columbia, South Carolina. Dr. Fann was recently
awarded the Order of the Palmetto by Governor Beasley.

William A. Jordan, Class III Director, has served as a director of the
Company since its formation in 1994. Mr. Jordan has practiced law since 1983 and
is president and co-founder of William A. Jordan, L.L.C. in Greenville. Mr.
Jordan graduated from Clemson University in 1977 with an R.P.A. degree in
Resource Management and received a J.D. degree from the University of South
Carolina in 1983.

W. James Kitchens, Jr., Class II Director, has served as a director of
the Company since its formation in 1994. Mr. Kitchens has lived in and been in
the practice of public accounting in Columbia, South Carolina since 1990 and is
currently owner of The Kitchens Firm, P.A., a certified public accounting firm
in Columbia. Mr. Kitchens earned a B.S. degree in Mathematics from the
University of the South and an M.B.A. degree at Duke University.

James C. Leventis, Class III Director, Chairman of the Board, has
served as Chairman of the Board of Directors of the Company since its formation
in 1994. Mr. Leventis has practiced law for the past five years, currently as a
shareholder of the firm Rogers, Townsend & Thomas. Mr. Leventis received a J.D.
degree and a B.S. degree in Business Administration from the University of South
Carolina. Mr. Leventis has extensive experience in the banking industry. From
1964 to 1968, Mr. Leventis was a commercial lending officer with First National
City Bank of New York; from 1968 to 1974, he served as vice president and
general manager of Genway Corp., a nationwide leasing system of General Motors
dealers; and from 1985 to 1988, he served as president and chairman of Republic
National Bank in Columbia. Mr. Leventis is also past vice chairman of the School
Board of Richland District I, a past member and former chairman of the Richland
County Council and Central Midlands Regional Planning Council, and past
president of the Alumni Association of the University of South Carolina.

Broadus Thompson, Class II Director, has served as a director of the
Company since its formation in 1994. Since 1962, Mr. Thompson has served as
president of Carolina Investment and Development Company and its predecessor
company (a real estate development company). He is also an officer and director
of GTS Associates (a real estate management company) and managing partner or
officer in various real estate syndications and corporations. Mr. Thompson
graduated from the University of North Carolina with a B.A. degree in English in
1957.

Angelo L. Tsiantis, Class I Director, has served as a director of the
Company since its formation in 1994. Mr. Tsiantis has been self-employed in the
restaurant business for over 40 years and is the president and owner of Triangle
City Zesto, Inc. and Angelo's Zesto. He served in the U.S. Army for two years
and attended the University of South Carolina.

Loretta R. Whitehead, Class III Director, has served as a director of
the Company since its formation in 1994. Ms. Whitehead has been a real estate
agent since 1981 and currently is with RE/MAX Real Estate Services in Columbia,
South Carolina. She taught full-time from 1964 through 1968 after receiving a
B.A. degree in English and Elementary Education from Columbia College in 1963.

Mitchell M. Willoughby, Class II Director, has served as a director of
the Company since its formation in 1994. Mr. Willoughby has lived in Columbia,
South Carolina since 1970 and practiced law since 1975. He is currently founding
member of the law firm Willoughby & Hoefer, P.A. He received a B.S. degree in
1969 from Clemson University and a J.D. degree from the University of South
Carolina in 1975.

David K. Proctor has been the Senior Vice President/Senior Credit
Officer of the Company since the Bank opened for business in 1995. From May 1994
to June 1995, he was the vice president of credit and operations for Republic
Leasing Company. From 1987 to 1994, he held various positions with Republic
National Bank in Columbia and most recently was executive vice president and
senior credit officer. He is a 1979 graduate of Clemson University with a B.S.
in Business Administration.

Joseph G. Sawyer has been Senior Vice President/Chief Financial Officer
of the Company since the Bank opened for business in 1995. Prior to joining the
Company, he was senior vice president and general auditor for the National Bank
of South Carolina. He is a certified public accountant and a 1973 graduate of
The Citadel with a B.A. in Political Science.

<PAGE> 46

EMPLOYMENT AGREEMENTS

The Company has entered into employment agreements with Michael C.
Crapps, as the President and Chief Executive Officer of the Company, and James
C. Leventis, as the Chairman of the Board of the Company. Both employment
agreements provide for an initial term of three years, to be extended
automatically each day for an additional day so that the remaining term of the
agreement will continue to be three years. The term may be fixed at three years
without additional extension by notice of either party to the other. The
agreement with Mr. Crapps provides for a starting annual salary of $90,000, and
the agreement with Mr. Leventis provides for an annual salary of $25,000 per
year (initially $18,000 per year until the opening of the Bank), in each case to
be reviewed by the Board of Directors at least annually and increased at its
discretion. Both Mr. Crapps and Mr. Leventis are also eligible to receive annual
payments based upon achievement criteria established by the Board of Directors.

Both agreements provide that if the Company terminates the executive's
employment without cause or if the executive's employment is terminated due to a
sale, merger, or dissolution of the Company or the Bank, the Company will be
obligated to continue his salary and bonus for the first twelve months
thereafter plus one-half of his salary and bonus for the second twelve months
thereafter. Furthermore, the Company must remove any restrictions on outstanding
incentive awards so that all such awards vest immediately and the Company must
continue to provide his life insurance and medical benefits until he reaches the
age of 65.

In addition, both employment agreements provide that following
termination of the executive's employment with the Company and for a period of
twelve months thereafter, the executive may not (i) be employed in the banking
business as a director, officer at the vice president level or higher, or
organizer or promoter of, or provide executive management services to, any
financial institution within Richland or Lexington counties, (ii) solicit major
customers of the Company for the purpose of providing financial services, or
(iii) solicit employees of the Company for employment.

The Company has also granted Mr. Crapps an option to purchase 15,000
shares of Common Stock and Mr. Leventis an option to purchase 5,000 shares of
Common Stock. Both options are exercisable at $10.00 per share, have a term of
ten years, and vest over five years, subject to continued employment with the
Company. Both options also provide for accelerated vesting in the event of a
change in control of the Company.

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION

The following table sets forth for the fiscal year ended December 31,
1997 the cash compensation paid or accrued by the Company, as well as certain
other compensation paid or accrued for those years, for services in all
capacities to the chief executive officer of the Company. No other executive
officer of the Company earned total compensation, including salary and bonus,
for the fiscal year ended December 31, 1997 in excess of $100,000.

SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>

LONG TERM
COMPENSATION
AWARDS
----------
NAME AND ANNUAL COMPENSATION SECURITIES ALL OTHER
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) UNDERLYING OPTIONS (#) COMPENSATION (1)
------------------- ---- ---------- --------- ---------------------- ----------------

<S> <C> <C> <C> <C> <C>
Michael C. Crapps - 1997 $95,120 $8,886 -- $10,260
Director, President, 1996 90,000 3,263 15,000 10,260
and Chief Executive 1995 91,353 -- -- --
Officer
</TABLE>

- ----------

(1) Includes $1,260 club dues and an automobile allowance of $9,000.

46
<PAGE> 47

STOCK OPTION EXERCISES AND GRANTS

The following table provides certain information regarding the number
and value of unexercised options at December 31, 1997. The Company did not grant
any stock options to Mr. Crapps in 1997.

AGGREGATED OPTION/SAR EXERCISES IN
LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-
UNDERLYING UNEXERCISED THE-MONEY OPTIONS/SARS
SHARES VALUE OPTIONS/SARS AT FY-END (#) AT FY-END ($)(1)
ACQUIRED ON REALIZED -------------------------- ------------------
NAME EXERCISE (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------ ----- ------------------------- -------------------------

<S> <C> <C> <C> <C>
Michael C. Crapps 0 0 9,000/6,000 $36,000/$24,000
</TABLE>

- ---------------

(1) The market for the Company's Common Stock has been limited and sporadic. The
value of unexercised options as of December 31, 1997 is based on $14 per share
for the Common Stock, which management has determined was the fair market value
based on the price paid for purchases known to management closest to December
31, 1997.

In addition to the stock options described elsewhere in this
Prospectus, the Company intends to adopt a stock option plan for employees,
officers, and directors in late 1998 or early 1999. This plan would be subject
to shareholder approval at the 1999 annual meeting of shareholders and would
provide that no options may be granted at less than 85% of fair market value on
the date of grant. The Company has not determined how many shares would be
reserved for grants under this plan, nor has the Company considered how many
options, if any, would be granted to any individual.

COMPENSATION OF DIRECTORS

During the year ended December 31, 1997, outside directors received
fees of $50 for attendance at each committee meeting and $75 for attendance at
each Board meeting (these amounts will be $50 and $100, respectively, in 1998).
Salaried officers do not receive these fees.

INTERESTS OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS

The law firm Rogers, Townsend and Thomas, P.C. acts as counsel for the
Bank and the Company and is paid for legal services rendered to the Bank and the
Company in that capacity. James C. Leventis, Chairman of the Board of the
Company, is a shareholder of this firm.

The Company has banking and other transactions in the ordinary course
of business with directors and officers of the Company and their affiliates,
including members of their families or corporations, partnerships, or other
organizations in which such officers or directors have a controlling interest,
on substantially the same terms (including price, or interest rates and
collateral) as those prevailing at the time for comparable transactions with
unrelated parties. The Company believes that such transactions do not involve
more than the normal risk of collectibility nor present other unfavorable
features to the Company. The Bank is subject to a limit on the aggregate amount
it could lend to its and the Company's directors and officers as a group equal
to its unimpaired capital and surplus (or, under a regulatory exemption
available to banks with less than $100 million in deposits, twice that amount),
loans to individual directors and officers must also comply with the Bank's
lending policies and statutory lending limits, and directors with a personal
interest in any loan application will be excluded from the consideration of such
loan application.

<PAGE> 48
EXCULPATION AND INDEMNIFICATION

The Articles of Incorporation of the Company contain a provision which,
subject to certain exceptions described below, eliminates the liability of a
director or officer to the Company or its shareholders for monetary damages for
any breach of duty as a director or officer. This provision does not eliminate
such liability to the extent the director or officer engaged in willful
misconduct or a knowing violation of criminal law or of any federal or state
securities law, including, without limitation, laws proscribing insider trading
or manipulation of the market for any security.

Under its Bylaws, the Company must indemnify any person who becomes
subject to a lawsuit or proceeding by reason of service as a director of the
Company or the Bank or any other corporation which the person served as a
director at the request of the Company. Except as noted in the next paragraph,
directors are entitled to be indemnified against judgments, penalties, fines,
settlements, and reasonable expenses actually incurred by the director in
connection with the proceeding. Directors are also entitled to have the Company
advance any such expenses prior to final disposition of the proceeding, upon
delivery of a written affirmation by the director of his good faith belief that
the standard of conduct necessary for indemnification has been met and a written
undertaking to repay the amounts advanced if it is ultimately determined that
the standard of conduct has not been met.

Under the Bylaws, indemnification will be disallowed if it is
established that the director engaged in willful misconduct or a knowing
violation of the criminal law. In addition to the Bylaws of the Company, Section
33-8-520 of the South Carolina Business Corporation Act of 1988 (the
"Corporation Act") requires that "a corporation indemnify a director who was
wholly successful, on the merits or otherwise, in the defense of any proceeding
to which he was a party because he is or was a director of the corporation
against reasonable expenses incurred by him in connection with the proceeding."
The Corporation Act also provides that upon application of a director a court
may order indemnification if it determines that the director is entitled to such
indemnification under the applicable standard of the Corporation Act.

The Board of Directors of the Company also has the authority to extend
to officers, employees, and agents the same indemnification rights held by
directors, subject to all of the accompanying conditions and obligations. The
Board of Directors has extended or intends to extend indemnification rights to
all of its executive officers.

<PAGE> 49

PRINCIPAL SHAREHOLDERS

The following table sets forth the number and percentage of outstanding
shares of Common Stock beneficially owned at May 31, 1998, by (a) each named
executive officer of the Company, (b) each director of the Company, and (c) all
executive officers and directors of the Company as a group. The Company is not
aware of any person or entity which owns more than 5% of the outstanding Common
Stock.

AMOUNT AND NATURE PERCENT OF
NAME OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP COMMON STOCK(6)
- ------------------------ ----------------------- ---------------
<S> <C> <C>
Directors and Executive Officers:
Richard K. Bogan (1) 11,800 1.71%
William L. Boyd, III (1) 12,800 1.85%
Thomas C. Brown (1) 11,800 1.71%
Chimin J. Chao (1) 14,268 2.06%
Robert G. Clawson (1) 11,800 1.71%
Michael C. Crapps (2) 19,100 2.73%
Hinton G. Davis (1), (3) 30,300 4.38%
Anita B. Easter (1) 11,800 1.71%
O.A. Ethridge (1) 11,800 1.71%
George H. Fann, Jr. (1) 28,800 4.17%
William A. Jordan (1) 12,236 1.77%
W. James Kitchens, Jr. (1) 16,800 2.43%
James C. Leventis (4) 14,100 2.04%
Broadus Thompson (1) 10,680 1.54%
Angelo L. Tsiantis (1) 14,300 2.07%
Loretta R. Whitehead (1) 7,800 1.13%
Mitchell M. Willoughby (1) 12,800 1.85%
All executive officers and directors 265,434 36.18%
as a group (19 persons) (5)
</TABLE>

- ----------

(1) Includes 1,800 shares that the director has the right to acquire directly
within 60 days pursuant to the exercise of stock options under the 1996
Stock Option Plan.
(2) Includes 9,000 shares that Mr. Crapps has the right to acquire directly
within 60 days pursuant to the exercise of stock options under the 1996
Stock Option Plan.
(3) Includes 10,000 shares held by an investment company affiliate of Mr. Davis.
(4) Includes 3,000 shares that Mr. Leventis has the right to acquire directly
within 60 days pursuant to the exercise of stock options under the 1996
Stock Option Plan. Includes 11,000 shares held by an investment partnership
affiliate of Mr. Leventis.
(5) Includes 44,000 shares that the officers and directors have the right to
acquire directly or indirectly within 60 days pursuant to the exercise of
stock options under the 1996 Stock Option Plan.
(6) Percentage is determined on the basis of 733,677 shares of common stock,
those issued and outstanding plus shares subject to options held by the
named individual for whom the percentage is calculated which are
exercisable within the next sixty days as if outstanding, but treating
shares subject to options held by others as not outstanding.

<PAGE> 50

DESCRIPTION OF SECURITIES

GENERAL

The authorized capital stock of the Company consists of 10,000,000
shares of Common Stock, par value $1.00 per share, and 10,000,000 shares of
preferred stock, par value $1.00 per share (the "Preferred Stock"), the rights
and preferences of which may be designated as the Board of Directors may
determine. As of the date of this Prospectus, 689,677 shares of Common Stock
were outstanding and were held of record by approximately 890 shareholders.
After the completion of this offering, there will be 1,139,677 shares of Common
Stock outstanding. No shares of Preferred Stock are currently outstanding.

COMMON STOCK

Holders of Common Stock are entitled to receive such dividends as may
from time to time be declared by the Board of Directors of the Company out of
funds legally available therefor. Holders of Common Stock are entitled to one
vote per share and do not have any cumulative voting rights. Holders of Common
Stock have no preemptive, conversion, redemption, or sinking fund rights. In the
event of a liquidation, dissolution, or winding-up of the Company, holders of
Common Stock are entitled to share equally and ratably in the assets of the
Company, if any, remaining after the payment of all debts and liabilities of the
Company and the liquidation preference of any outstanding Preferred Stock. The
outstanding shares of Common Stock are, and the shares of Common Stock offered
by the Company hereby when issued will be, fully paid and nonassessable. The
rights, preferences, and privileges of holders of Common Stock are subject to
any classes or series of Preferred Stock that the Company may issue in the
future.

PREFERRED STOCK

The Articles provide that the Board of Directors is authorized, without
further action by the holders of the Common Stock, to provide for the issuance
of shares of the Preferred Stock in one or more classes or series and to fix the
designations, preferences, and other rights and restrictions thereof, including
the dividend rate, conversion rights, voting rights, redemption price, and
liquidation preference, and to fix the number of shares to be included in any
such classes or series. Any Preferred Stock so issued may rank senior to the
Common Stock with respect to the payment of dividends and amounts upon
liquidation, dissolution, or winding-up. In addition, any such shares of
Preferred Stock may have class or series voting rights. Upon completion of this
offering, the Company will not have any shares of Preferred Stock outstanding.
Issuances of Preferred Stock, while providing the Company with flexibility in
connection with general corporate purposes, may, among other things, have an
adverse effect on the rights of holders of Common Stock, and in certain
circumstances such issuances could have the effect of decreasing the market
price of the Common Stock. The Company has no present plans to issue any
Preferred Stock.

CERTAIN ANTITAKEOVER EFFECTS

The provisions of the Articles, the Bylaws, and the South Carolina
corporation law summarized in the following paragraphs may be deemed to have
antitakeover effects and may delay, defer, or prevent a tender offer or takeover
attempt that a shareholder might consider to be in such shareholder's best
interest, including those attempts that might result in a premium over the
market price for the shares held by shareholders, and may make removal of
management more difficult.

Authorized but Unissued Stock. The authorized but unissued shares of
Common Stock and Preferred Stock will be available for future issuance without
shareholder approval. These additional shares may be used for a variety of
corporate purposes, including future public offerings to raise additional
capital, corporate acquisitions, and employee benefit plans. The existence of
authorized but unissued and unreserved shares of Common Stock and Preferred
Stock may enable the Board of Directors to issue shares to persons friendly to
current management, which could render more difficult or discourage any attempt
to obtain control of the Company by means such as a proxy contest, tender offer,
or merger, and thereby protect the continuity of the Company's management.

Supermajority Shareholder Vote Required for Merger. The Articles
require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of Common Stock entitled to vote to approve any merger,
consolidation, or sale of the Company or any substantial part of the Company's
assets.

50
<PAGE> 51

Number and Qualifications of Directors. The Articles and Bylaws provide
that the number of directors shall be fixed from time to time by resolution
adopted by a majority of the directors then in office, but may not consist of
fewer than nine nor more than 25 members. The Bylaws also provide that no
individual who is or becomes a Business Competitor (as defined below) or who is
or becomes affiliated with, employed by, or a representative of any individual,
corporation, or other entity which the Board of Directors, after having such
matter formally brought to its attention, determines to be in competition with
the Company or any of its subsidiaries (any such individual, corporation, or
other entity being a "Business Competitor") shall be eligible to serve as a
director if the Board of Directors determines that it would not be in the
Company's best interests for such individual to serve as a director of the
Company. Any financial institution having branches or affiliates within Richland
or Lexington Counties, South Carolina shall be presumed to be a Business
Competitor unless the Board of Directors determines otherwise.

Classified Board of Directors. The Articles and Bylaws divide the Board
of Directors into three classes of directors serving staggered three-year terms.
As a result, approximately one-third of the Board of Directors will be elected
at each annual meeting of shareholders. The classification of directors,
together with the provisions in the Articles and Bylaws described below that
limit the ability of shareholders to remove directors and that permit the
remaining directors to fill any vacancies on the Board of Directors, have the
effect of making it more difficult for shareholders to change the composition of
the Board of Directors. As a result, at least two annual meetings of
shareholders may be required for the shareholders to change a majority of the
directors.

Removal of Directors and Filling Vacancies. Under the Bylaws, removal
of directors without cause requires the approval of the holders of two-thirds of
the shares entitled to vote at an election of directors, and all vacancies on
the Board of Directors, including those resulting from an increase in the number
of directors, may be filled by a majority of the remaining directors, even if
they do not constitute a quorum. When a director resigns effective at a future
date, a majority of directors then in office, including the director who is to
resign, may vote on filling the vacancy.

Advance Notice Requirements for Shareholder Proposals and Director
Nominations. The Bylaws establish advance notice procedures with regard to
shareholder proposals and the nomination, other than by or at the direction of
the Board of Directors or a committee of the Board, of candidates for election
as directors. These procedures provide that the notice of shareholder proposals
and shareholder nominations for the election of directors at any meeting of
shareholders must be in writing and be received by the Secretary of the Company
not later than 90 days prior to the meeting. The Company may reject a
shareholder proposal or nomination that is not made in accordance with such
procedures.

Limitations on Shareholders' Action by Written Consent. The Corporation
Act permits shareholder action by written consent in lieu of a meeting only if
such consent is unanimous.

Certain Nomination Requirements. Pursuant to the Bylaws, the Company
has established certain nomination requirements for an individual to be elected
as a director of the Company at any annual or special meeting of the
shareholders, including that the nominating party provide the Company within a
specified time prior to the meeting (i) notice that such party intends to
nominate the proposed director; (ii) the name and certain biographical
information on the nominee; and (iii) a statement that the nominee has consented
to the nomination. The chairman of any shareholders meeting may, for good cause
shown, waive the operation of these provisions. These provisions could reduce
the likelihood that a third party would nominate and elect individuals to serve
on the Company's Board of Directors.

Business Combinations with Interested Shareholders. The Company is
subject to the South Carolina business combination statute, which restricts
mergers and other similar business combinations between public companies
headquartered in South Carolina and any 10% shareholder of the company. The
statute prohibits such a business combination for two years following the date
the person acquires shares to become a 10% shareholder unless the business
combination or such purchase of shares is approved by a majority of the
company's outside directors. The statute also prohibits such a business
combination with a 10% shareholder at any time unless the transaction complies
with the company's articles of incorporation and either (i) the business
combination or the shareholder's purchase of shares is approved by a majority of
the company's outside directors, (ii) the business combination is approved by a
majority of the shares held by the company's other shareholders at a meeting
called no earlier than two years after the shareholder acquired the shares to
become a 10% shareholder; or (iii) the business combination meets specified fair
price and form of consideration requirements.

51
<PAGE> 52
Consideration of Other Constituencies in Mergers. The Articles grant
the Board of Directors the discretion, when considering whether a proposed
merger or similar transaction is in the best interests of the Company and its
shareholders, to take into account the effect of the transaction on the
employees, customers, and suppliers of the Company and upon the communities in
which the offices of the Company are located.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, the Company will have 1,139,677
shares of Common Stock outstanding. The shares sold in this offering will be
freely tradable, without restriction or registration under the Securities Act,
except for shares purchased by "affiliates" of the Company, which will be
subject to resale restrictions under the Securities Act. An affiliate of the
issuer is defined in Rule 144 under the Securities Act as a person that directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with the issuer. Rule 405 under the Securities Act
defines the term "control" to mean possession of the power to direct the
management and policies of the person. Affiliates of a company generally include
its directors, executive officers, and principal shareholders. Securities held
by affiliates may be sold without registration in accordance with the provisions
of Rule 144 or another exemption from registration.

In general, under Rule 144 an affiliate of the Company or a person
holding restricted shares may sell, within any three-month period, a number of
shares no greater than 1% of the then outstanding shares of the Company's Common
Stock or the average weekly trading volume of the Common Stock during the four
calendar weeks preceding the sale, whichever is greater. Rule 144 also requires
that the securities must be sold in "brokers' transactions," as defined in the
Securities Act, and the person selling the securities may not solicit orders or
make any payment in connection with the offer or sale of securities to any
person other than the broker who executes the order to sell the securities. Rule
144 also requires persons holding restricted securities to hold the shares for
at least one year prior to sale.

52
<PAGE> 53
UNDERWRITING

Pursuant to the Underwriting Agreement and subject to the terms and
conditions thereof, the Underwriter named below has agreed to purchase from the
Company the shares of Common Stock set forth below.

<TABLE>

Name of Underwriter Number of Shares
- ------------------- ----------------
<S> <C>
Edgar M. Norris & Co., Inc.............................................. 450,000
</TABLE>

Pursuant to the Underwriting Agreement, the Company has the right to
direct the Underwriter, subject to the Underwriter's receipt of approval from
the National Association of Securities Dealers, Inc. (the "NASD"), to offer and
sell up to 70,000 of the Shares (the "Directed Shares") to the directors and
executive officers of the Company and the Bank identified by the Company (the
"Named Directors and Officers"). The underwriting discount has been calculated
on the basis of a commission rate of 7.0%, provided that there will be no
underwriting discount in connection with the sale of Directed Shares actually
purchased by the Named Directors and Officers. The 7.0% underwriting discount
will apply with respect to any Directed Shares that are not purchased by a Named
Director or Executive Officer. The Company will pay to the Underwriter a
financial advisory fee of $30,000; provided, however, that if the number of
Directed Shares purchased by the Named Directors and Officers is less than
70,000 shares, the financial advisory fee will be equal to an amount determined
by multiplying $30,000 by a fraction the numerator of which is the total number
of Directed Shares purchased by Named Directors and Officers and the denominator
of which is 70,000.

Pursuant to the Underwriting Agreement, the Company has agreed to
reimburse the Underwriter for certain expenses, including (i) the fees and
expenses incident to securing the required review by the NASD of the terms of
the sale of Shares in the offering, (ii) the fees and expenses of counsel for
the Underwriter in connection with such review, (iii) the other fees and
expenses of counsel to the Underwriter up to an amount of $20,000, and (iv) all
miscellaneous and travel fees and expenses of the Underwriter and all expenses
of any informational meetings associated with the sale of the Shares.

The Underwriting Agreement provides that the obligations of the
Underwriter thereunder are subject to the approval of certain legal matters by
counsel and to various other conditions customary in a firm commitment
underwritten public offering, including the absence of any material change in
the Company's business and the receipt of certain certificates, opinions, and
letters from the Company and its counsel and independent public accountant. The
nature of the Underwriter's obligation is such that it is committed to purchase
and pay for all shares of Common Stock offered hereby if any are purchased.

The Underwriter proposes to offer the shares of Common Stock being
purchased by it directly to the public at the public offering price set forth on
the cover page of this Prospectus and to certain securities dealers at such
price less a concession not in excess of $0.55 per share of Common Stock. The
Underwriter may allow, and such selected dealers may reallow, a concession not
in excess of $0.10 per share to certain other brokers and dealers. After the
initial offering to the public, the offering price and other selling terms may
be changed by the Underwriter.

The Company has granted an option, for a period of 30 days from the
date of this Prospectus, to the Underwriter to purchase up to a maximum of
67,500 additional shares of Common Stock to cover over-allotments, if any, at
the offering price to the public set forth on the cover page of this Prospectus.
The Underwriter may purchase such shares only to cover over-allotments made in
connection with this offering.

The Underwriter does not intend to sell shares of Common Stock to any
account over which it exercises discretionary authority.

The Company has agreed to indemnify the Underwriter against, and to
contribute to certain losses arising out of, certain liabilities, including
liabilities under the Securities Act of 1933.

To date, trading and quotations of the Common Stock have been limited
and sporadic. The public offering has been determined by negotiation among
the Company and the Underwriter. In determining such price, consideration was
given to, among other things, the financial and operating history and trends
of the Company, the experience of its management, the position of the Company in
its industry, the Company's prospects, and the Company's financial results.

53
<PAGE> 54
In addition, consideration was given to the status of the securities markets,
market conditions for new offerings of securities, and the prices of similar
securities of comparable companies.

The Company and each of the Company's and the Bank's directors,
executive officers, and organizers have agreed with the Underwriter that they
will not, for a period of 180 days from the date of this Prospectus, without the
prior written consent of the Underwriter, offer, pledge, sell, contract to sell,
grant any option for the sale of, or otherwise dispose of, directly or
indirectly, any shares of Common Stock or any security or other instrument which
by its terms is convertible into, exercisable for, or exchangeable for shares of
such Common Stock, other than through bona fide gifts to persons who agree in
writing to be bound by this agreement if such writing is delivered to the
Underwriter within five days after such gift or pledge, and, in the case of the
Company, Common Stock issued pursuant to the exercise of outstanding options.

The Company has agreed in the Underwriting Agreement that in the
event the Company or the shareholders of the Company engage in a transaction
prior to the consummation of the sale of the Shares in the offering and for a
period ending March 26, 1999, in connection with which more than 25.0%,
directly or indirectly, of the Company's outstanding capital stock, or assets
representing 25.0% or more of the value of the Company's total assets are sold
or agreed to be sold, the Company will engage the Underwriter to serve as a
financial advisor in connection with such transaction and pay a financial
advisory fee in the amount of 2.0% of the total consideration in connection
with the transaction (including payments made to shareholders of the Company,
the face amount of any debt assumed and the current value of any employment or
noncompetition agreements involved in the transaction). The financial advisory
fee would be payable upon the consummation of the transaction.

LEGAL MATTERS

Certain legal matters in connection with the Common Stock offered
hereby are being passed upon for the Company by Nelson Mullins Riley &
Scarborough, L.L.P., Atlanta, Georgia. Certain legal matters in connection with
the offering are being passed upon for the Underwriter by Long Aldridge & Norman
LLP, Atlanta, Georgia.

EXPERTS

The consolidated balance sheets of the Company as of December 31, 1996
and 1997 and the consolidated statements of operations, comprehensive income,
shareholders' equity, and cash flows of the Company for each of the three years
in the period ended December 31, 1997 have been included in this Prospectus in
reliance on the report of independent auditor Clifton D. Bodiford, C.P.A., given
on the authority of that firm as an expert in accounting and auditing.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the
Exchange Act, and in accordance therewith files reports, proxy statements, and
other information with the Securities and Exchange Commission. Such reports,
proxy statements, and other information can be inspected and copied at
prescribed rates at the public reference facilities maintained by the Securities
and Exchange Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549 and at the Securities and Exchange Commission's regional offices at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and at 7 World Trade Center, New York, New York 10048. Copies of
such material can be obtained by mail from the Public Reference Section of the
Securities and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Securities and Exchange Commission maintains a
web site that contains reports, proxy and information statements, and other
information regarding registrants that file electronically with the Securities
and Exchange Commission. The address of this site is http://www.sec.gov.

The Company has filed with the Securities and Exchange Commission a
Registration Statement on Form S-2 under the Securities Act with respect to the
shares of Common Stock offered hereby. This Prospectus, which is a part of the
Registration Statement, does not contain all of the information set forth in the
Registration Statement and the exhibits thereto. Statements contained herein
regarding the provisions of documents filed as exhibits to the Registration
Statement are not necessarily complete, and each such statement is qualified in
its entirety by reference to the copy of the applicable document filed with the
Securities and Exchange Commission. Any interested party may inspect the
Registration Statement without charge at the public reference facilities of the
Commission described above and may obtain copies of all or any part of it from
the Commission upon payment of the fees prescribed.

54
<PAGE> 55
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

The following documents which have been filed by the Company
(Commission File No. 33-86258) with the Commission are incorporated herein by
reference as if fully set forth herein:

(i) The Company's Annual Report on Form 10-KSB for the year ended
December 31, 1997; and

(ii) The Company's Quarterly Report on Form 10-QSB for the quarter
ended March 31, 1998.

All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act subsequent to the date
of this Prospectus and prior to the termination of the offering of the shares of
Common Stock offered hereby shall likewise be incorporated herein by reference
and shall become a part hereof from and after the time such documents are filed.
Any statement contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which is incorporated by reference herein modifies
or supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.

The Company will provide without charge to each person to whom
a copy of this Prospectus is delivered, upon the written or oral request of any
such person, a copy of any or all of the documents referred to above which have
been incorporated into this Prospectus by reference (other than exhibits to such
documents). Requests for such copies should be directed to First Community Bank,
Attention: Joseph Sawyer, at 5455 Sunset Boulevard, Lexington, South Carolina
29072.

55
<PAGE> 56

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

FIRST COMMUNITY CORPORATION

<TABLE>
<S> <C>
Report of Independent Auditor............................................................F-2

Consolidated Balance Sheets at December 31, 1997 and 1996, and at March 31, 1998.........F-3

Consolidated Statements of Operations for the Years Ended December 31, 1997, 1996 and
1995, and for the Three Months Ended March 31, 1998 and 1997.......................F-4

Consolidated Statements of Comprehensive Income for the Years Ended December 31, 1997,
1996, and 1995, and for the Three Months Ended March 31, 1998 and 1997.............F-5

Consolidated Statements of Shareholders' Equity for the Years Ended December 31, 1997,
1996 and 1995, and for the Three Months Ended March 31, 1998.......................F-6

Consolidated Statements of Cash Flows for the Years Ended December 31, 1997, 1996 and
1995, and for the Three Months Ended March 31, 1998 and 1997.......................F-7

Notes to Consolidated Financial Statements...............................................F-8
</TABLE>

F-1
<PAGE> 57

REPORT OF INDEPENDENT AUDITOR

The Board of Directors
First Community Corporation
Lexington, South Carolina

I have audited the accompanying consolidated balance sheets of First
Community Corporation as of December 31, 1997 and 1996, and the related
consolidated statements of operations, comprehensive income, changes in
shareholders' equity, and cash flows for the three years ended December 31,
1997. The financial statements are the responsibility of management. My
responsibility is to express an opinion on these financial statements based on
my audits.

I conducted the audits in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audits provide a reasonable basis for my opinion.

In my opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of First
Community Corporation at December 31, 1997 and 1996 and the results of its
operations and its cash flows for the three years ended December 31, 1997, in
conformity with generally accepted accounting principles.

Clifton D. Bodiford
Certified Public Accountant
Columbia, South Carolina
January 8, 1998, except for Note 17
as to which the date is May 4, 1998.

F-2
<PAGE> 58
FIRST COMMUNITY CORPORATION
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
------------ -------------------------------
1998 1997 1996
------------ ------------ ------------
ASSETS (UNAUDITED)
<S> <C> <C> <C>
Cash and due from banks .............................. $ 1,939,287 $ 2,869,066 $ 1,975,527
Federal funds sold and securities purchased
under agreements to resell ...................... 6,464,779 2,620,000 5,752,272
Investment securities - available-for-sale ........... 12,485,831 11,606,899 9,213,248
Investment securities - held-to-maturity (market
value of $1,894,940 and $2,562,844 at
December 31, 1997 and 1996 and $2,891,186
at March 31, 1998) .............................. 2,898,129 1,900,000 2,600,076
Loans ................................................ 31,624,759 28,999,906 15,915,004
Less, allowance for loan losses ...................... 421,408 380,120 200,860
------------ ------------ ------------
Net loans ............................................ 31,203,351 28,619,786 15,714,144
Property, furniture and equipment - net .............. 2,954,365 2,983,224 2,544,140
Other assets ......................................... 381,904 413,456 329,834
------------ ------------ ------------
Total assets .................................... $ 58,327,646 $ 51,012,431 $ 38,129,241
============ ============ ============

LIABILITIES

Deposits:
Non-interest bearing demand ..................... $ 8,033,556 $ 7,553,754 $ 6,043,599
NOW and money market accounts ................... 12,448,861 12,020,414 5,963,086
Savings ......................................... 6,481,700 6,052,584 7,154,307
Time deposits less than $100,000 ................ 11,046,296 10,247,650 6,731,697
Time deposits $100,000 and over ................. 8,689,205 6,372,330 5,008,135
------------ ------------ ------------
Total deposits ....................................... 46,699,618 42,246,732 30,900,824
Securities sold under agreements to repurchase ....... 4,973,500 2,143,400 923,400
Other borrowed money - demand note to U.S.
Treasury .......................................... 75,210 111,383 299,559
Other liabilities .................................... 343,233 396,063 223,352
------------ ------------ ------------
Total liabilities ............................... 52,091,561 44,897,578 32,347,135
------------ ------------ ------------

SHAREHOLDERS' EQUITY

Preferred stock, par value $1.00 per share;
10,000,000 shares authorized; none
issued and outstanding ........................... -- -- --
Common stock, par value $1.00 per share;
10,000,000 shares authorized; issued and
outstanding 689,677, 689,677 and 688,077 at
March 31, 1998, December 31, 1997 and 1996,
respectively ..................................... 689,677 689,677 688,077
Additional paid in capital ........................... 6,155,237 6,155,237 6,140,837
Accumulated deficit .................................. (616,585) (732,904) (984,080)
Unrealized gain (loss) on securities
available-for-sale .............................. 7,756 2,843 (62,728)
------------ ------------ ------------
Total shareholders' equity ...................... 6,236,085 6,114,853 5,782,106
------------ ------------ ------------
Total liabilities and shareholders' equity ...... $ 58,327,646 $ 51,012,431 $ 38,129,241
============ ============ ============
</TABLE>

The accompanying notes are an integral part of the
consolidated financial statements.

F-3
<PAGE> 59

FIRST COMMUNITY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
--------------------------- --------------------------------------------
1998 1997 1997 1996 1995
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Interest income:
Loans, including fees ......................... $ 698,834 $ 411,224 $ 2,184,512 $ 1,004,243 $ 57,223
Investment securities - available-for-sale .... 188,796 154,342 624,377 479,822 114,551
Investment securities - held-to maturity ...... 25,732 39,452 157,403 155,504 21,885
Federal funds sold and securities
purchased under agreements to resell .......... 69,111 48,239 227,747 130,463 62,894
Other, pre-opening ............................ -- -- -- -- 86,754
----------- ----------- ----------- ----------- -----------
Total interest income ............................ 982,473 653,257 3,194,039 1,770,032 343,307
----------- ----------- ----------- ----------- -----------

Interest expense:
Deposits ...................................... 399,513 266,873 1,317,360 695,626 91,096
Federal funds sold and securities
sold under agreements to repurchase ........... 37,731 11,407 70,007 48,095 7,174
Other ......................................... 1,064 1,090 4,490 2,328 --
----------- ----------- ----------- ----------- -----------
Total interest expense ........................... 438,308 279,370 1,391,857 746,049 98,270
----------- ----------- ----------- ----------- -----------

Net interest income .............................. 544,165 373,887 1,802,182 1,023,983 245,037
Provision for loan losses ........................ 43,000 37,000 193,860 135,000 76,750
----------- ----------- ----------- ----------- -----------
Net interest income after provision for
loan losses ................................. 501,165 336,887 1,608,322 888,983 168,287
----------- ----------- ----------- ----------- -----------
Noninterest income:
Deposit service charges ....................... 45,871 33,923 170,863 82,192 7,434
Mortgage origination fees ..................... 7,280 2,696 41,428 24,930 9,553
Other ......................................... 29,723 9,153 49,779 18,803 2,582
----------- ----------- ----------- ----------- -----------
Total non-interest income ..................... 82,874 45,772 262,070 125,925 19,569
----------- ----------- ----------- ----------- -----------
Noninterest expense:
Salaries and employee benefits ................ 247,311 199,851 876,091 704,416 250,902
Occupancy ..................................... 27,587 28,889 114,008 129,978 58,218
Equipment ..................................... 40,445 31,957 143,661 102,456 29,768
Marketing and public relations ................ 35,311 16,470 90,197 35,596 27,317
Other ......................................... 117,066 89,833 395,259 324,093 128,659
Pre-opening expense ........................... -- -- -- -- 250,826
----------- ----------- ----------- ----------- -----------
Total non-interest expense .................... 467,720 367,000 1,619,216 1,296,539 745,690
----------- ----------- ----------- ----------- -----------
Net income/(loss) ................................ $ 116,319 $ 15,659 $ 251,176 $ (281,631) $ (557,834)
=========== =========== =========== =========== ===========
Basic earnings/(loss) per common share ........... $ 0.17 $ 0.02 $ 0.36 $ (0.41) $ (1.59)
=========== =========== =========== =========== ===========
Diluted earnings/(loss) per common share ......... $ 0.16 $ 0.02 $ 0.36 $ (0.41) $ (1.59)
=========== =========== =========== =========== ===========
</TABLE>

The accompanying notes are an integral part of the
consolidated financial statements.

F-4
<PAGE> 60

FIRST COMMUNITY CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
------------------------- ---------------------------------------------
1998 1997 1997 1996 1995
------------ ------------ ---------------------------------------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net income (loss)......................... $ 116,319 $ 15,659 $ 251,176 $ (281,631) $ (557,834)

Other comprehensive income, net of tax:
Unrealized gains (losses) arising
during the period, net of tax effect
of $2,645, $0, $1,598, $0, and $0 for
the three months ended March 31, 1998
and 1997 and the years ended December
31, 1997, 1996 and 1995, respectively.. 4,913 (43,214) 65,571 (71,768) 9,040
---------- --------- --------- ---------- ----------

Comprehensive income (loss)............... $ 121,232 $ (27,555) $ 316,747 $ (353,399) $ (548,794)
========== ========= ========= ========== ==========
</TABLE>

The accompanying notes are an integral part of the
consolidated financial statements.

F-5
<PAGE> 61

FIRST COMMUNITY CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
ACCUMULATED
ADDITIONAL OTHER
SHARES COMMON PAID-IN ACCUMULATED COMPREHENSIVE
ISSUED STOCK CAPITAL DEFICIT INCOME TOTAL
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance December 31, 1994...... 10 $ 10 $ 90 $ (144,615) $ -- $ (144,515)

Issuance of common stock....... 688,067 688,067 6,140,747 6,828,814
Net loss....................... (557,834) (557,834)
Other comprehensive income,
net of tax - unrealized
gain on available-for-sale
securities.................. -- -- -- -- 9,040 9,040
--------- --------- --------- ------------ ------------ ------------
Balance December 31, 1995...... 688,077 6,140,837 (702,449) 9,040 6,135,505

Net loss....................... -- -- -- (281,631) -- (281,631)
Other comprehensive income,
net of tax - unrealized
loss on available-for-sale
securities.................. -- -- -- -- (71,768) (71,768)
--------- --------- --------- ------------ ------------ ------------
Balance December 31, 1996...... 688,077 688,077 6,140,837 (984,080) (62,728) 5,782,106

Issuance of common stock....... 1,600 1,600 14,400 16,000
Net Income..................... 251,176 251,176
Other comprehensive income,
net of tax - unrealized
gain on available-for-sale
securities.................. -- -- -- -- 65,571 65,571
--------- --------- --------- ------------ ------------ ------------
Balance December 31, 1997...... 689,677 689,677 6,155,237 (732,904) 2,843 6,114,853

Net Income (unaudited) 116,319 116,319
Other comprehensive income,
net of tax - unrealized gain
on available-for-sale securities
(unaudited)................. -- -- -- -- 4,913 4,913
--------- --------- --------- ------------ ------------ ------------
Balance, March 31, 1998
(unaudited)................ 689,677 $ 689,677 $6,155,237 $ (616,585) $ 7,756 $ 6,236,085
========= ========= ========== ============ ============ ============
</TABLE>

The accompanying notes are an integral part of the
consolidated financial statements.

F-6
<PAGE> 62

FIRST COMMUNITY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
-------------------------- ---------------------------------------------
1998 1997 1997 1996 1995
----------- ----------- ------------ ------------ -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net Income (loss) .................................... $ 116,319 $ 15,659 $ 251,176 $ (281,631) $ (557,834)
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation ...................................... 32,630 35,314 135,703 169,129 65,254
Amortization (accretion) of premium/discount ...... (26,087) (2,365) (57,987) (4,070) 105
Provision for loan losses ......................... 43,000 37,000 193,860 135,000 76,750
Increase in other assets .......................... 31,552 15,536 (83,623) (142,965) (145,438)
Increase (decrease) in accounts payable ........... (55,408) (14,952) 171,112 114,060 (113,131)
----------- ----------- ------------ ------------ ------------
Net cash provided (used) in operating activities .. 142,006 86,192 610,241 (10,477) (674,294)
----------- ----------- ------------ ------------ ------------

Cash flows from investing activities:
Purchase of investment securities
available-for-sale ................................. (4,682,794) (3,080,302) (7,680,975) (8,208,751) (15,403,531)
Maturity/call of investment securities
available-for-sale ................................. 3,837,436 2,497,801 5,125,910 5,747,327 8,593,201
Sale of investment securities
available-for sale ................................. -- -- 286,647 -- --
Purchase of investment securities
held-to-maturity.................................... (1,498,125) -- -- (1,400,333) (2,600,000)
Maturity/call of investment securities
held-to-maturity.................................... 500,000 -- 700,000 1,000,000 400,000
Increase in loans .................................... (2,626,565) (3,854,584) (13,099,502) (12,092,752) (3,833,142)
Purchase of property and equipment ................... (3,771) (181,885) (624,787) (1,191,345) (1,592,736)
Proceeds from sale of equipment ...................... -- -- 50,000 41,935 --
----------- ----------- ------------ ------------ ------------
Net cash used in investing activities ............. (4,473,819) (4,618,970) (15,242,707) (16,103,919) (14,436,208)
----------- ----------- ------------ ------------ ------------

Cash flows from financing activities:
Increase in deposit accounts ......................... 4,452,886 1,560,692 11,345,908 19,566,884 11,333,940
Increase (decrease) in securities sold
under agreements to repurchase ..................... (36,173) (176,508) 1,220,000 (708,100) 1,631,500
Increase (decrease) in other borrowings .............. 2,830,100 250,300 (188,176) 130,198 169,361
Proceeds from sale of common stock ................... -- -- 16,000 -- 6,828,814
----------- ----------- ------------ ------------ ------------
Net cash provided from financing activities ....... 7,246,813 1,634,484 12,393,732 18,988,982 19,963,615
----------- ----------- ------------ ------------ ------------

Net increase (decrease) in cash and cash equivalents.... 2,915,000 (2,898,294) (2,238,734) 2,874,586 4,853,113

Cash and cash equivalents at beginning of period ....... 5,489,065 7,727,799 7,727,799 4,853,213 100
----------- ----------- ------------ ------------ ------------

Cash and cash equivalents at end of period.............. $ 8,404,065 $ 4,829,505 $ 5,489,065 $ 7,727,799 $ 4,853,213
=========== =========== ============ ============ ============

Supplemental disclosure:
Cash paid during the period for:
Interest ........................................... $ 460,406 $ 278,017 $ 1,280,508 $ 650,670 $ 59,834

Non-cash investing and financing activities:
Unrealized gain (loss) on securities
available-for-sale ................................. $ 7,492 $ (43,214) $ 65,571 $ (71,768) $ 9,040
</TABLE>

The accompanying notes are an integral part of the
consolidated financial statements.

F-7
<PAGE> 63

FIRST COMMUNITY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - ORGANIZATION AND BASIS OF PRESENTATION

The consolidated financial statements include the accounts of First
Community Corporation and its wholly owned subsidiary First Community
Bank, N.A. (the Bank). All material intercompany transactions are
eliminated in consolidation. The Company was organized on November 2,
1994 (the "Inception Date"). From the Inception Date through August
16, 1995, the Company was a development stage company. The activities
during this period included conducting the initial public offering,
the pursuit of approvals from various agencies to charter its bank
subsidiary, establishing systems, and hiring and training personnel
to open the Bank. Organizational costs in the amount of $28,300 have
been capitalized and are being amortized over a period of five years.

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates
The financial statements are prepared in accordance with generally
accepted accounting principles which require management to make
estimates and assumptions that effect the amounts reported in the
financial statements and accompanying notes. Actual results could
differ from those estimates.

Material estimates that are particularly susceptible to significant
change relate to the determination of the reserve for loan losses.
The estimation process includes management's judgment as to future
losses on existing loans based on an internal review of the loan
portfolio, including an analysis of the borrowers current financial
position, the consideration of current and anticipated economic
conditions and the effect on specific borrowers. In determining the
collectibility of loans management also considers the fair value of
underlying collateral. Various regulatory agencies, as an integral
part of their examination process, review the Company's allowance for
loan losses. Such agencies may require the Company to recognize
additions to the allowance based on their judgments about information
available to them at the time of their examination. Because of these
factors it is possible that the allowance for loan losses could
change materially.

Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand, due from banks,
federal funds sold and securities purchased under agreements to
resell. Generally federal funds are sold for a one-day period and
securities purchased under agreements to resell mature in less than
90 days.

Investment Securities
Investment securities are classified as either held-to-maturity or
available-for-sale. In determining such classification, securities
that the Company has the positive intent and ability to hold to
maturity are classified as held-to-maturity and are carried at
amortized cost. All other securities are classified as
available-for-sale and carried at estimated fair values with
unrealized gains and losses included in shareholders' equity on an
after tax basis.

Gains and losses on the sale of available-for-sale securities are
determined using the specific identification method. Declines in the
fair value of individual held-to-maturity and available-for-sale
securities below their cost that are other than temporary result in
write-downs of the individual securities to their fair value.

Premiums and discounts are recognized in interest income using the
interest method over the period to maturity.

Loans and Allowance for Loan Losses
Loans receivable that management has the intent and ability to hold
for the foreseeable future or until maturity or pay-off are reported
at their outstanding principal balance adjusted for any charge-offs,
the allowance for loan losses, and any deferred fees or costs on
originated loans. Interest is recognized over the term of the loan
based on the loan balance outstanding. Fees charged for originating
loans, if any, are deferred and offset by the deferral of certain
direct expenses associated with loans originated. The net deferred
fees are recognized as yield adjustments by applying the interest
method.

F-8
<PAGE> 64

The allowance for loan losses is maintained at a level believed to be
adequate by management to absorb potential losses in the loan
portfolio. Management's determination of the adequacy of the
allowance is based on an evaluation of the portfolio, economic
conditions and volume, growth and composition of the portfolio.

The accrual of interest on impaired loans is discontinued when, in
management's opinion, the borrower may be unable to meet payments as
they become due. When interest accrual is discontinued, all unpaid
accrued interest is reversed. Interest income is subsequently
recognized only to the extent cash payments are received.

Property and Equipment
Property and equipment are stated at cost less accumulated
depreciation. Depreciation is computed using the straight-line method
over the asset's estimated useful life.

Income Taxes
A deferred income tax liability or asset is recognized for the
estimated future effects attributable to differences in the tax bases
of assets or liabilities and their reported amounts in the financial
statements as well as operating loss and tax credit carryforwards.
The deferred tax asset or liability is measured using the enacted tax
rate expected to apply to taxable income in the period in which the
deferred tax asset or liability is expected to be realized.

Stock Based Compensation Cost
The Company applies Accounting Principles Board Opinion No. 25, "
Accounting for Stock Issued to Employees". Accordingly, compensation
cost for stock options is measured as the excess, if any, of the
market price of the Company's stock at the date of the grant over the
amount an employee must pay to acquire the stock. Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (SFAS 123) was issued in October 1995, and encourages
but does not require, adoption of a fair value method of accounting
for employee stock based compensation plans. See Note 12.

Earnings/Loss Per Share
During February 1997, Statement of Financial Accounting Standards No.
128, "Earnings Per Share" (SFAS 128) was issued and specifies the
computation, presentation and disclosure requirements for earnings
per share for entities with publicly held common stock or potential
common stock. SFAS 128 requires entities with other than simple
capital structures to present basic and diluted per share amounts for
income from continuing operations and net income. Basic earnings per
share is calculated by the Company by dividing net income by the
weighted average number of shares outstanding during the period.
Diluted earnings per share is calculated by dividing net income by
the weighted average number of shares outstanding plus the weighted
average number of additional common shares that would have been
outstanding if the dilutive potential common shares had been issued.
Diluted earnings per share include the effects of outstanding stock
options issued by the Company. See Note 14.

Note 3 - INVESTMENT SECURITIES

The amortized cost and estimated fair values of investment securities
are summarized below:

HELD-TO-MATURITY:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized
Cost Gain Loss Fair Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
December 31, 1997:
U.S. Government agency securities.......... $1,900,000 -- $ 5,060 $1,894,940
========== ========= ======== ==========

December 31, 1996:
U.S. Government agency securities.......... $2,600,076 -- $ 37,232 $2,562,844
========== ========= ======== ==========
</TABLE>

F-9
<PAGE> 65

AVAILABLE-FOR-SALE:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized
Cost Gain Loss Fair Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
December 31, 1997:
U.S. Treasury securities................. $ 5,792,837 $ 14,514 $ 3,162 $ 5,804,189
U.S. Government agency securities........ 5,656,591 8,068 14,979 5,649,680
Other.................................... 153,030 -- -- 153,030
------------ ---------- ---------- -------------
$ 11,602,458 $ 22,582 $ 18,141 $ 11,606,899
============ ========== ========== =============

December 31, 1996:
U.S. Treasury securities................. $ 4,738,586 $ 6,426 $ 20,803 $ 4,724,209
U.S. Government agency securities........ 4,386,660 4,737 53,088 4,338,309
Other.................................... 150,730 -- -- 150,730
------------ ---------- ---------- -------------
$ 9,275,976 $ 11,163 $ 73,891 $ 9,213,248
============ ========== ========== =============
</TABLE>

The amortized cost and fair value of investment securities at December
31, 1997, by contractual maturity, follow. Expected maturities differ
from contractual maturities because borrowers may have the right to
call or prepay the obligations with or without pre-payment penalties.

<TABLE>
<CAPTION>
Held-to-maturity Available-for-sale
----------------------------- ------------------------------
Amortized Amortized
Cost Fair Value Cost Fair Value
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Due in one year or less.................. $ 500,000 $ 500,000 $ 3,585,345 $ 3,584,504
Due after one year through five years.... 1,400,000 1,394,940 7,864,083 7,869,365
Due after ten years...................... -- -- 153,030 153,030
---------- ---------- ----------- -----------
$1,900,000 $1,894,940 $11,602,458 $11,606,899
========== ========== =========== ===========
</TABLE>

Securities with an amortized cost of $3,090,468 and fair value of
$3,089,235 at December 31, 1997, were pledged to secure public
deposits, demand notes due the U.S. Treasury and securities sold
under agreements to repurchase. During the year ended December 31,
1997, there were proceeds from the sale and call of securities from
the available-for-sale portfolio of $586,647. Gross gains amounted to
$2,345 and gross losses amounted to $2,304. There were no sales of
securities during the years ended December 31, 1996 and 1995.

Note 4 - LOANS

Loans summarized by category are as follows:

<TABLE>
<CAPTION>
December 31,
---------------------------------
1997 1996
--------------- ---------------
<S> <C> <C>
Commercial, financial and agricultural........ $ 7,148,239 $ 2,837,396
Real estate - construction.................... 2,005,911 791,758
Real estate - mortgage
Commercial................................ 10,453,666 6,639,358
Residential............................... 4,456,963 2,602,274
Consumer...................................... 4,880,202 2,761,621
Leases........................................ 54,925 282,597
--------------- ---------------
$ 28,999,906 $ 15,915,004
=============== ===============
</TABLE>

F-10
<PAGE> 66

Activity in the allowance for loan losses was as follows:

<TABLE>
<CAPTION>
December 31,
-------------------------------------------
1997 1996 1995
----------- ----------- ----------
<S> <C> <C> <C>
Balance at the beginning of year............. $ 200,860 $ 76,750 $ --
Provision for loan losses..................... 193,860 135,000 76,750
Charged off loans............................. (17,357) (11,205) --
Recoveries ................................... 2,757 315 --
--------- ---------- ---------
Balance at end of year....................... $ 380,120 $ 200,860 $ 76,750
========= ========== =========
</TABLE>

Loans outstanding to Bank directors, executive officers and their
related business interests amounted to $2,101,797 and $1,754,550 at
December 31, 1997 and 1996, respectively. Total loans made during the
year ended December 31, 1997 totaled $1,026,548 and repayments
totaled $679,301. Related party loans are made on substantially the
same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with unrelated
persons and generally do not involve more than the normal risk of
collectibility.

Note 5 - PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

<TABLE>
<CAPTION>
December 31,
-----------------------------
1997 1996
---------- ------------
<S> <C> <C>
Land.......................... $ 952,774 $ 952,774
Premises ................... 1,742,438 1,207,204
Equipment ................... 491,102 435,859
Construction in process....... -- 83,694
---------- ------------
3,186,314 2,679,531
Accumulated depreciation...... 203,090 135,391
---------- ------------
$2,983,224 $ 2,544,140
========== ============
</TABLE>

Provision for depreciation included in operating expenses for the
years ended December 31, 1997, 1996, and 1995 amounted to $135,703,
$169,129 and $65,254, respectively. Construction period interest
capitalized during the years ended December 31, 1997 and 1996
amounted to $8,500 and $12,104, respectively.

Note 6 - DEPOSITS

At December 31, 1997, the scheduled maturities of Certificates of
Deposits are as follows:

Note 7 - SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

Securities sold under agreements to repurchase generally mature
within one to four days from the transaction date. The weighted
average interest rate at December 31, 1997 and 1996, was 5.49% and
4.96%, respectively. The maximum month-end balance during 1997 and
1996 was $2,492,800 and $1,198,800, respectively.

F-11
<PAGE> 67

Note 8 - INCOME TAXES

The Company's accounting and reporting for the effect of income
taxes is in accordance with Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" (SFAS 109). The
realization of a deferred tax benefit by the Company depends upon
having sufficient taxable income of an appropriate character in the
carryforward periods. Under SFAS 109 deferred tax assets are
recognized for future deductible amounts resulting from differences
in the financial statement and tax bases of assets and liabilities
and operating loss carryforwards. A valuation allowance is then
established to reduce that deferred tax asset to the level that it
is "more likely than not that the tax benefit will be realized. At
December 31, 1997 and 1996 net deferred tax assets existed of
approximately $259,199 and $352,129, respectively. The deferred tax
assets have been offset by a valuation allowance.

Income tax expense for the years ended December 31, 1997, 1996 and
1995 consists of the following:

<TABLE>
<CAPTION>
Year ended December 31,
------------------------------------------
1997 1996 1995
---------- ---------- -----------
<S> <C> <C> <C>
Current
Federal............................ $ -- $ -- $ --
State.............................. -- -- --
----------- ----------- -----------

Deferred
Federal............................ 85,141 (94,276) (183,961)
State.............................. 7,789 (8,551) (16,475)
----------- ----------- -----------
92,930 (102,827) (200,436)
----------- ----------- -----------
Change in valuation allowance.......... (92,930) 102,827 200,436
----------- ----------- -----------
Income tax expense..................... $ -- $ -- $ --
=========== =========== ===========
</TABLE>

A reconciliation from expected federal tax expense (benefit) to
effective income tax expense for the periods indicated are as
follows:

<TABLE>
<CAPTION>
Year ended December 31
---------------------------------------
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Expected federal income tax expense (benefit) .... $ 85,399 $ (95,755) $(189,664)

State income tax net of federal benefit .......... 7,459 (8,365) (16,568)
Change in beginning of year valuation
allowance .................................... (92,930) 102,827 200,436
Other ............................................ 72 1,293 5,796
--------- --------- ---------
$ -- $ -- $ --
========= ========= =========
</TABLE>

F-12
<PAGE> 68

The following is a summary of the tax effects of temporary differences
that give rise to significant portions of the deferred tax assets and
deferred tax liabilities at December 31, 1997 and 1996.

<TABLE>
<CAPTION>
December 31,
---------------------------------
1997 1996
------------- --------------
<S> <C> <C>
Assets:
Provision for bad debts................................. $ 136,808 $ 72,291
Deferred pre-opening cost............................... 73,532 101,997
Net operating loss...................................... 52,911 208,285
Book depreciation in excess of tax depreciation......... -- 12,235
Other................................................... 5,418 1,309
------------- -------------
Total deferred tax assets........................... 268,669 396,117
Valuation reserve................................... (259,199) (352,129)
------------- -------------
Net deferred tax asset.............................. 9,470 43,988
------------- -------------
Liabilities:
Cash basis accounting for tax purposes.................... 5,975 43,988
Tax depreciation in excess of book depreciation........... 1,897 --
Unrealized gain on securities available for sale.......... 1,598 --
------------- -------------
Total deferred tax liabilities...................... 9,470 43,988
------------- -------------
Net deferred tax asset recognized................... $ -- $ --
============= =============
</TABLE>

The Company has a net operating loss carryforward for income tax
purposes at December 31, 1997, of approximately $147,000. Net
operating losses will expire in the year 2011, if not previously
utilized.

Note 9 - FAIR VALUE OF FINANCIAL INSTRUMENTS

Statement of Financial Accounting Standards No. 107, "Disclosure
about Fair Value of Financial Instruments" (SFAS 107), requires the
Company to disclose estimated fair values for its financial
instruments. Fair value estimates, methods, and assumptions are set
forth below.

Cash and short term investments - The carrying amount of these
financial instruments (cash and due from banks, federal funds sold
and securities purchased under agreements to resell) approximate fair
value. All mature within 90 days and do not present unanticipated
credit concerns.

Investment Securities - Fair values are based on quoted market
prices, where available. If quoted market prices are not available,
fair values are based on quoted market prices of comparable
instruments.

Loans - For certain categories of loans, such as variable rate loans
and other lines of credit, the carrying amount, adjusted for credit
risk, is a reasonable estimate of fair value as the Company has the
ability to reprice the loan as interest rate changes occur. The fair
value of other loans is estimated by discounting the future cash
flows using the current rates at which similar loans would be made to
borrowers with similar credit ratings and for the same remaining
maturities. As discount rates are based on current loan rates as well
as management estimates, the fair values presented may not be
indicative of the value negotiated in an actual sale.

Accrued Interest Receivable - The fair value approximates the
carrying value.

Deposits - The fair value of demand deposits, savings accounts, and
money market accounts is the amount payable on demand at the
reporting date. The fair value of fixed-maturity certificates of
deposits is estimated by discounting the future cash flows using
rates currently offered for deposits of similar remaining maturities.

Short Term Borrowings - the carrying value of short term borrowings
(securities sold under agreements to repurchase and demand notes to
the U.S. Treasury) approximate fair value.

F-13
<PAGE> 69
Accrued Interest Payable - The fair value approximates the carrying
value.

Commitments to Extend Credit - The fair value of these commitments
are immaterial because their underlying interest rates approximate
market.

The carrying amount and estimated fair value of the Company's
financial instruments are as follows:

<TABLE>
<CAPTION>
December 31, 1997 December 31, 1996
----------------------------- -------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
------ ----- ------ -----
<S> <C> <C> <C> <C>
Financial Assets:
Cash and short term investments........ $ 5,489,066 $ 5,489,066 $ 7,727,799 $ 7,727,799
============== ============== ============== ==============

Investment securities:
Held-to-maturity..................... $ 1,900,000 $ 1,894,940 $ 2,600,076 $ 2,562,844
Available-for-sale................... 11,606,899 11,606,899 9,213,248 9,213,248
-------------- -------------- -------------- --------------
Total investment securities........ $ 13,506,899 $ 13,501,839 $ 11,813,324 $ 11,776,092
============== ============== ============== ==============

Loans
Adjustable rate...................... $ 11,465,832 $ 11,465,832 $ 6,508,335 $ 6,508,335
Fixed rate........................... 17,534,074 17,573,708 9,406,669 9,399,644
-------------- -------------- -------------- --------------
Total loans........................ 28,999,906 29,039,540 15,915,004 15,907,979
Allowance for loan losses............ 380,120 -- 200,860 --
-------------- -------------- -------------- --------------
Net loans.......................... $ 28,619,786 $ 29,039,540 $ 15,714,144 $ 15,907,979
============== ============== ============== ==============
Accrued interest receivable............ $ 339,455 $ 339,455 $ 274,315 $ 274,315
============== ============== ============== ==============

Financial liabilities:
Deposits
Non-interest bearing demand.......... $ 7,553,754 $ 7,553,754 $ 6,043,599 $ 6,043,599
NOW and money market accounts........ 12,020,414 12,020,414 5,963,086 5,963,086
Savings.............................. 6,052,584 6,052,584 7,154,307 7,154,307
Certificates of deposit.............. 16,619,980 16,639,498 11,739,832 11,748,371
-------------- -------------- -------------- --------------
Total deposits .................... $ 42,246,732 $ 42,266,250 $ 30,900,824 $ 30,909,363
============== ============== ============== ==============
Short term borrowings................ $ 2,254,783 $ 2,254,783 $ 1,222,959 $ 1,222,959
============== ============== ============== ==============
Accrued interest payable............. $ 236,667 $ 236,667 $ 133,815 $ 133,815
============== ============== ============== ==============
</TABLE>

Note 10 - OFF-BALANCE SHEET FINANCIAL INSTRUMENTS AND CONCENTRATIONS OF CREDIT
RISK

The Bank is party to financial instruments with off-balance-sheet
risk in the normal course of business to meet the financing needs of
its customers. These financial instruments include commitments to
extend credit. These instruments involve, to varying degrees,
elements of credit risk in excess of the amount recognized in the
consolidated balance sheets.

The Bank's exposure to credit loss in the event of nonperformance by
the other party to the financial instrument for commitments to extend
credit is represented by the contractual amount of these instruments.
The Bank uses the same credit policies in making commitments as for
on-balance sheet instruments. At December 31, 1997, the Bank had
commitments to extend credit of $6,823,651.

Commitments to extend credit are agreements to lend to a customer as
long as there is no violation of any condition established in the
contract. Commitments generally have fixed expiration dates or other
termination clauses and may require a payment of a fee. Since
commitments may expire without being drawn upon, the total
commitments do not necessarily represent future cash requirements.
The Bank evaluates each customer's creditworthiness on a case-by-case
basis. The amount of collateral obtained, if deemed necessary by the
Bank upon extension of credit, is based on

F-14
<PAGE> 70

management's credit evaluation of the party. Collateral held varies
but may include inventory, property and equipment, residential real
estate and income producing commercial properties.

The primary market area served by the Bank is Lexington and Richland
Counties within the Midlands of South Carolina. Management closely
monitors its credit concentrations and attempts to diversify the
portfolio within its primary market area. At December 31, 1997,
management does not consider there to be any significant credit
concentration within the portfolio. Although, the Bank's loan
portfolio as well as existing commitments reflect the diversity of
its primary market area, a substantial portion of its debtors'
ability to honor their contracts is dependent upon the economic
stability of the area.

Note 11 - OTHER AND PRE-OPENING EXPENSES

A summary of the components of other non-interest expense is as
follows:

<TABLE>
<CAPTION>
December 31,
-------------------------------------------
1997 1996 1995
---------- ---------- ------------
<S> <C> <C> <C>
Data processing.................... $ 96,143 $ 93,712 $ 32,617
Supplies........................... 52,063 43,940 27,519
Telephone.......................... 22,385 22,630 7,735
Correspondent services............. 38,097 29,854 6,660
Insurance.......................... 32,380 22,100 7,803
Postage............................ 21,863 13,051 1,817
Professional fees.................. 35,585 35,942 13,791
Other.............................. 96,743 62,864 30,717
----------- ----------- -----------
$ 395,259 $ 324,093 $ 128,659
=========== =========== ===========
</TABLE>

A summary of the components of pre-opening expenses for the period
ended December 31, 1995 is as follows:

<TABLE>
<S> <C>
Salaries and employee benefits..................... $ 155,706
Consultant fees.................................... 13,125
Occupancy cost..................................... 10,046
Marketing.......................................... 23,819
Supplies........................................... 19,334
Other.............................................. 28,796
-----------
$ 250,826
===========
</TABLE>

Note 12 - STOCK OPTIONS

The Company has adopted the First Community Corporation 1996 Stock
Option Plan under which an aggregate of 110,000 shares have been
reserved for issuance by the Company upon the grant of stock options
or restricted stock awards. The plan provides for the grant of
options to key employees and Directors as determined by a Stock
Option Committee made up of at least two members of the Board of
Directors. During the year ended December 31, 1996, 88,000 shares
were granted, at an option price of $10.00 per share, which are
exercisable for a period of ten years from the date of grant.

Stock option transactions for the year ended December 31, 1997 and
1996 are summarized as follows:

F-15
<PAGE> 71

<TABLE>
<CAPTION>
1997 1996
------------------------------ --------------------------
Weighted Average Weighted Average
Shares Exercise Price Shares Exercise Price
------ -------------- ------ --------------
<S> <C> <C> <C> <C>
Outstanding at the beginning of year...... 88,000 $ 10.00
Granted............................... -- -- 88,000 10.00
Exercised............................. (1,600) 10.00 -- $ --
Forfeited............................. (2,400) 10.00 -- $ --
---------- -------- -------- --------
Outstanding at end of year................ 84,000 $ 10.00 88,000 $ 10.00
========== ======== ======== ========
Option exercisable at end of year......... 47,200 $ 10.00 32,000 $ 10.00
========== ======== ======== ========
</TABLE>

In October 1995, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 123,
"Accounting for Stock Based Compensation" (SFAS 123). The statement
defines a fair value based method of accounting for employee stock
options granted after December 31, 1994. However, SFAS 123 allows an
entity to account for these plans according to Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees"
("APB 25"), provided pro forma disclosure of net income and earnings
per share are made as if SFAS 123 had been applied. The Company has
elected to use APB 25 and provide the required pro-forma disclosures.
Accordingly, no compensation cost has been recognized in the
financial statements for the Company's stock option plan.

The following summarizes pro-forma data in accordance with SFAS 123:

<TABLE>
<CAPTION>
Year ended December 31,
------------------------
1997 1996
-------- ----------
<S> <C> <C>
Net income (loss), pro-forma....................................... $228,712 $(321,951)
Basic earnings (loss) per common share, pro-forma.................. $ 0.33 $ (0.47)
Diluted earnings (loss) per common share, pro-forma................ $ 0.33 $ (0.47)
</TABLE>

The assumptions used in estimating compensation cost on a pro-forma
basis were: dividend yield of 0.6%, expected life of six years,
volatility of near 0% and risk free interest rate of 6.36%.

Note 13 - EMPLOYEE BENEFIT PLAN

The Company maintains a 401 (k) plan which covers substantially all
employees. Participants may contribute up to the maximum allowed by
the regulation. During 1997, the Company made a discretionary profit
sharing contribution to the plan in the amount of $15,350. Beginning
in 1998 the Company will match 50% of an employees contribution up to
4.00% of the participants contribution.

F-16
<PAGE> 72

Note 14 - EARNINGS PER SHARE

The following reconciles the numerator and denominator of the basic
and diluted earnings per share computation:

<TABLE>
<CAPTION>
Year ended December 31,
----------------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Numerator (Included in basic and
diluted earnings per share)....... $ 251,176 $ (281,631) $ (557,834)
============ ============ ============

Denominator for
Weighted average common shares
outstanding for:
Basic earnings per share.......... 689,015 688,077 350,641
Dilutive securities:
Stock options - Treasury
stock method............ 14,276 3,615 --
------------ ------------ ------------
Diluted earnings per share........ 703,291 691,692 350,641
============ ============ ============
</TABLE>

The average market price used in calculating the assumed number of
shares issued for the years ended December 31, 1997 and 1996 was
$12.00 and $10.50, respectively.

Note 15 - CAPITAL REQUIREMENTS AND OTHER RESTRICTIONS

The Bank is subject to various federal and state regulatory
requirements, including regulatory capital requirements. Failure to
meet minimum capital requirements can initiate certain mandatory, and
possibly additional discretionary, actions that, if undertaken, could
have a direct material effect on the Bank's financial statements.
Under capital adequacy guidelines and the regulatory framework for
prompt corrective action, the Bank must meet specific capital
guidelines that involve quantitative measures of the Bank's assets,
liabilities, and certain off-balance sheet items as calculated under
regulatory accounting practices. The Bank's capital amounts and
classification are also subject to qualitative judgments by the
regulators about components, risk weighting, and other factors. The
Bank is required to maintain minimum Tier 1 capital, total risked
based capital and Tier 1 leverage ratios of 4%, 8% and 3%,
respectively.

At December 31, 1997, the most recent notification from the
Comptroller of the Currency categorized the Bank as well capitalized
under the regulatory framework for prompt corrective action. To be
well capitalized the Bank must maintain minimum Tier 1 capital, Total
risk- based capital and Tier 1 leverage ratios of 6%, 10% and 5%,
respectively. There are no conditions or events since that
notification that management believes have changed the Bank's well
capitalized status. The Company will be required by the Federal
Reserve to meet the same guidelines once its consolidated assets
exceed $150 million.

The actual capital amounts and ratios for the Bank and the Company
are as follows:

<TABLE>
<CAPTION>
1997 1996
-------------------- -------------------
Amount Ratio Amount Ratio
------ ----- ------ -----
<S> <C> <C> <C> <C>
First Community Corporation
Tier 1 Capital...................... $6,098,008 17.41% $5,823,834 27.37%
Total Risked Based Capital.......... 6,478,008 18.49% 6,024,834 28.31%
Tier 1 Leverage..................... 6,098,000 12.50% 5,823,834 17.29%
First Community Bank, NA
Tier 1 Capital...................... $5,232,345 14.93% $4,982,000 23.41%
Total Risked Based Capital.......... 5,612,345 16.02% 5,183,000 24.35%
Tier 1 Leverage..................... 5,232,345 10.73% 4,092,000 14.79%
</TABLE>

The Company's dividend payments (when available) will be made
primarily from dividends received from the Bank. Under applicable
federal law, the Comptroller of the Currency restricts national bank
total dividend payments in any

F-17
<PAGE> 73

calendar year to net profits of that year combined with retained net
profits for the two preceding years. At December 31, 1997, there were
no retained net profits free of such restriction.

The Federal Reserve Board requires that banks maintain cash on hand
and reserves in the form of average deposit balances at the Federal
Reserve Bank based on their average deposits. The Bank's reserve
requirements at December 31, 1997 and 1996 were $212,000 and $154,000
respectively.

Note 16 - PARENT COMPANY FINANCIAL INFORMATION

The balance sheets, statements of operations and cash flows for
First Community Corporation (Parent Only) follow:

Condensed Balance Sheets
<TABLE>
<CAPTION>
At December 31,
---------------------------------
1997 1996
------------- -------------
<S> <C> <C>
Assets:
Cash on deposit......................................... $ 852 $ 3,302
Interest-bearing deposits with the Bank................. 878,486 857,173
Investment in Bank subsidiary........................... 5,246,346 4,931,231
Other................................................... 480 350
------------- -------------
Total assets............................................ $ 6,126,164 $ 5,792,056
============= =============

Liabilities:
Other................................................... 14,154 9,950
------------- -------------

Shareholders' equity........................................ 6,112,010 5,782,106
------------- -------------
Total liabilities and shareholders' equity.............. $ 6,126,164 $ 5,792,056
============= =============
</TABLE>

Consolidated Statements of Operations
<TABLE>
<CAPTION>
Year ended December 31,
------------------------------------------
1997 1996 1995
---------- ---------- -----------
<S> <C> <C> <C>
Income:
Interest income................................................... $ 39,445 $ 40,582 $ 16,983
----------- ----------- -----------
Expenses:
Other............................................................. 40,655 22,446 13,158
----------- ----------- -----------
Equity in undistributed earnings (loss) of subsidiary................ 252,386 (299,767) (561,659)
----------- ----------- -----------
Net Income (loss).................................................... $ 251,176 $ (281,631) $ (557,834)
=========== =========== ===========
</TABLE>

F-18
<PAGE> 74
Condensed Statements of Cash Flows
<TABLE>
<CAPTION>
Year ended December 31,
--------------------------------------------
1997 1996 1995
----------- ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net Income (loss)................................................ $ 251,176 $ (281,631) $ (557,834)
Adjustments to reconcile net income/(loss) to net
cash used by operating activities
Increase in equity in undistributed (earnings) loss
of subsidiary -1997............................................. (252,386)
1996......................................................... 299,767
1995......................................................... 561,659
1994......................................................... 144,615
Other - net.......................................................... 4,073 11,618 (146,633)
----------- ----------- -----------
Net cash provided (used) by operating activities..................... 2,863 29,754 1,807
----------- ----------- -----------

Cash flows from investing activities:
Investment in subsidiary.......................................... -- -- (6,000,000)
(Purchase) maturity of investment security available-
for-sale..................................................... -- 749,688 (749,688)
----------- ----------- -----------
Net cash provided (used) by investing activities..................... -- 749,688 (6,749,688)
----------- ----------- ----------

Cash flows from financing activities:
Proceeds from issuance of common stock............................ 16,000 -- 6,828,814
----------- ----------- -----------
Increase in cash and deposits with Bank...................... 18,863 779,442 80,933
Cash and cash equivalent, beginning of period................ 860,475 81,033 100
----------- ----------- -----------
Cash and cash equivalent, end of period...................... $ 879,338 $ 860,475 $ 81,033
=========== =========== ===========
</TABLE>

Note 17 - ADOPTION OF RECENT ACCOUNTING PRONOUNCEMENT

In June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard ("SFAS") No. 130,
"Reporting Comprehensive Income." SFAS 130 established standards for
reporting and display of comprehensive income and its components
(revenues, expenses, gains, and losses) in a full set of general
purpose financial statements. SFAS 130 requires that all items that
are required to be recognized under accounting standards as
components of comprehensive income be reported in a financial
statement that is displayed with the same prominence as other
financial statements. SFAS 130 requires that companies (i) classify
items of other comprehensive income by their nature in a financial
statement and (ii) display the accumulated balance of other
comprehensive income separately from retained earnings and additional
paid-in capital in the equity section of the statement of financial
position at the end of an accounting period. SFAS 130 is effective
for fiscal years beginning after December 31, 1997, and the Company
began following the statement in the first quarter of 1998. As
required by the statement, reclassification of earlier periods has
been reflected in the financial statements.

F-19
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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER
THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION
WITH THE OFFER MADE HEREBY. IF GIVEN OR MADE, SUCH 450,000 SHARES
INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF AN
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER AT ANY TIME FIRST COMMUNITY CORPORATION
SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT
THE INFORMATION HEREIN IS CORRECT AT ANY TIME AFTER THE
DATE HEREOF.

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TABLE OF CONTENTS
PAGE
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Prospectus Summary................................... 3
Risk Factors......................................... 6
Use of Proceeds...................................... 10
Market for Common Stock.............................. 10
Dividend Policy...................................... 10 COMMON STOCK
Dilution............................................. 11
Capitalization....................................... 12
Selected Consolidated Financial Data................. 13
Management's Discussion and Analysis of
Financial Condition and Results of Operation......... 14 --------------------
Business............................................. 32
Supervision and Regulation........................... 37 PROSPECTUS
Management........................................... 43
Compensation of Directors and --------------------
Executive Officers................................... 46
Principal Shareholders............................... 49
Description of Securities............................ 50
Underwriting......................................... 53
Legal Matters........................................ 54
Experts.............................................. 54
Available Information................................ 54 EDGAR M. NORRIS & CO., INC.
Incorporation of Certain Documents
by Reference.................................... 55
Index to Consolidated Financial Statements........... F-1

June 29, 1998

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