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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-QSB



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|x | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------



For the quarterly period ended March 31, 2005



| ̈ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
|- | ---------------------------------------------------------------



For the transition period from  to



COMMISSION FILE NUMBER 0000-50313



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SURREY BANCORP

(Exact name of small business issuer as specified in its charter)



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|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|North Carolina                                                 |  | 59-3772016                       
|(State or other jurisdiction of incorporation or organization) |  | (IRS Employer Identification No.)



145 North Renfro
Street, Mount Airy NC 27030

(Address of principal executive offices)



(336) 783-3900

(Issuers telephone number)



Not Applicable

(Former name, former address and former fiscal year, if changed since last report)



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Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No ̈



State the number of shares outstanding of each of the issuers classes of common equity, as of the latest practical date:



On April 30, 2005, there were 1,211,642 common shares issued and
outstanding



Transitional Small Business Disclosure Format
(Check one):    Yes ̈No  x



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##### Table of Contents



|                                                                                              |  |                                                                                                                    |  |      
|--------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------ |  | -----
|PART I  FINANCIAL INFORMATION                                                               
|                                                                                              | 
|Item 1. Consolidated Financial Statements                                                     |  |                                                                                                                   
|                                                                                              |  |                                                                                                                   
|                                                                                              |  | Consolidated Balance Sheets March 31, 2005 (Unaudited) and December 31, 2004                                       |  | 3    
|                                                                                              |  |                                                                                                                   
|                                                                                              |  | Consolidated Statements of Income, Three Months Ended March 31, 2005 and 2004 (Unaudited)                          |  | 4    
|                                                                                              |  |                                                                                                                   
|                                                                                              |  | Consolidated Statements of Cash Flows, Three Months Ended March 31, 2005 and 2004 (Unaudited)                      |  | 5    
|                                                                                              |  |                                                                                                                   
|                                                                                              |  | Consolidated Statements of Changes in Shareholders Equity, Three Months Ended March 31, 2005 and 2004 (Unaudited) |  | 6    
|                                                                                              |  |                                                                                                                   
|                                                                                              |  | Notes to Consolidated Financial Statements                                                                         |  | 7-11 
|                                                                                              | 
|Item 2.
Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 12-15                                                                                                             
|                                                                                              | 
|Item 3.
Controls and Procedures                                                               |  | 16                                                                                                                
|                                                                                              | 
|PART II  OTHER INFORMATION                                                                   |  | 17                                                                                                                
|                                                                                              |  |                                                                                                                   
|                                                                                              |  | SIGNATURES                                                                                                         |  | 18-21



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##### Table of Contents



|                                                                                                                                                                                                                         |  |            |             |   |               |   |             |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---------- | ----------- | - | ------------- | - | ----------- | -
|Consolidated Balance Sheets March 31, 2005 and December 31, 2004                                                                                                                                                         |  |            | Unaudited   |   |               |   | Audited     |  
|                                                                                                                                                                                                                         |  |           
|                                                                                                                                                                                                                         |  | March 2005 |             |   | December 2004 |  
|Assets                                                                                                                                                                                                                   |  |            |             |   |               |   |             |  
|                                                                                                                                                                                                                         |  |           
|Cash and due from banks                                                                                                                                                                                                  |  | $          | 2,333,243   |   |               | $ | 1,810,543   |  
|Interest-bearing deposits with banks                                                                                                                                                                                     |  |            | 12,860,978  |   |               |   | 12,759,356  |  
|Federal funds sold                                                                                                                                                                                                       |  |            | 501,000     |   |               |   | 301,000     |  
|Investment securities available for sale                                                                                                                                                                                 |  |            | 3,162,465   |   |               |   | 2,692,151   |  
|Restricted equity securities                                                                                                                                                                                             |  |            | 908,130     |   |               |   | 790,660     |  
|Loans, net of allowance of loan losses of $2,342,023 in 2005 and $2,294,131 in 2004                                                                                                                                      |  |            | 138,453,515 |   |               |   | 133,046,165 |  
|Property and equipment, net                                                                                                                                                                                              |  |            | 4,306,066   |   |               |   | 4,232,424   |  
|Accrued income                                                                                                                                                                                                           |  |            | 722,583     |   |               |   | 583,365     |  
|Goodwill                                                                                                                                                                                                                 |  |            | 120,000     |   |               |   | 120,000     |  
|Bank owned life insurance                                                                                                                                                                                                |  |            | 2,659,149   |   |               |   |            |  
|Other assets                                                                                                                                                                                                             |  |            | 898,347     |   |               |   | 957,276     |  
|                                                                                                                                                                                                                         |  |            |             |   |               |   |             |  
|                                                                                                                                                                                                                         |  | $          | 166,925,476 |   |               | $ | 157,292,940 |  
|                                                                                                                                                                                                                         |  |            |             |   |               |   |             |  
|Liabilities and Shareholders Equity                                                                                                                                                                                     |  |            |             |   |               |   |             |  
|                                                                                                                                                                                                                         |  |           
|Liabilities:                                                                                                                                                                                                             |  |            |             |   |               |   |             |  
|Deposits:                                                                                                                                                                                                                |  |            |             |   |               |   |             |  
|Noninterest-bearing                                                                                                                                                                                                      |  | $          | 21,665,752  |   |               | $ | 18,201,595  |  
|Interest-bearing                                                                                                                                                                                                         |  |            | 116,205,352 |   |               |   | 108,752,371 |  
|                                                                                                                                                                                                                         |  |            |             |   |               |   |             |  
|Total deposits                                                                                                                                                                                                           |  |            | 137,871,104 |   |               |   | 126,953,966 |  
|                                                                                                                                                                                                                         |  |           
|Federal funds purchased and securities sold under agreements to repurchase                                                                                                                                               |  |            | 596,059     |   |               |   | 3,447,823   |  
|Long-term debt                                                                                                                                                                                                           |  |            | 12,297,845  |   |               |   | 11,298,952  |  
|Dividends payable on preferred stock                                                                                                                                                                                     |  |            | 29,415      |   |               |   | 29,987      |  
|Accrued interest payable                                                                                                                                                                                                 |  |            | 252,281     |   |               |   | 161,103     |  
|Other liabilities                                                                                                                                                                                                        |  |            | 469,071     |   |               |   | 355,688     |  
|                                                                                                                                                                                                                         |  |            |             |   |               |   |             |  
|                                                                                                                                                                                                                         |  |            | 151,515,775 |   |               |   | 142,247,519 |  
|                                                                                                                                                                                                                         |  |            |             |   |               |   |             |  
|Commitments and contingencies                                                                                                                                                                                            |  |            |            |   |               |   |            |  
|                                                                                                                                                                                                                         |  |           
|Shareholders equity:                                                                                                                                                                                                    |  |            |             |   |               |   |             |  
|Preferred stock, 1,000,000 shares authorized, 189,356 shares of Series A, issued and outstanding with no par value, 4.5% convertible
non-cumulative, perpetual; with liquidation value of $14 per share in 2005 and 2004 |  |            | 2,620,325   |   |               |   | 2,620,325   |  
|Common stock, 5,000,000 shares authorized at no par value 1,211,642 shares issued in 2005 and 1,211,008 shares issued in 2004.                                                                                           |  |            | 8,104,161   |   |               |   | 8,100,261   |  
|Retained earnings                                                                                                                                                                                                        |  |            | 4,703,818   |   |               |   | 4,337,224   |  
|Accumulated other comprehensive income (loss)                                                                                                                                                                            |  |            | (18,603     | ) |               |   | (12,389     | )
|                                                                                                                                                                                                                         |  |            |             |   |               |   |             |  
|                                                                                                                                                                                                                         |  |            | 15,409,701  |   |               |   | 15,045,421  |  
|                                                                                                                                                                                                                         |  |            |             |   |               |   |             |  
|                                                                                                                                                                                                                         |  | $          | 166,925,476 |   |               | $ | 157,292,940 |  
|                                                                                                                                                                                                                         |  |            |             |   |               |   |             |  



See Notes to Consolidated
Financial Statements.



3



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##### Table of Contents

|                                                                             |  |                              |           |   |      |   |           |  
|---------------------------------------------------------------------------- |  | ---------------------------- | --------- | - | ---- | - | --------- | -
|Consolidated Statements of Income Three months ended March 31, 2005 and 2004 |  |                              |           |   |      |   | Unaudited |  
|                                                                             | 
|                                                                             |  | Three months ended March 31, |          
|                                                                             |  | 2005                         |           |   | 2004 |  
|Interest income:                                                             |  |                              |           |   |      |   |           |  
|Loans and fees on loans                                                      |  | $                            | 2,254,317 |   |      | $ | 1,960,933 |  
|Federal funds sold                                                           |  |                              | 2,179     |   |      |   |          |  
|Investment securities, taxable                                               |  |                              | 26,387    |   |      |   | 22,604    |  
|Investment securities, non taxable                                           |  |                              |          |   |      |   | 456       |  
|Deposits with banks                                                          |  |                              | 60,117    |   |      |   | 3,977     |  
|                                                                             |  |                              |           |   |      |   |           |  
|                                                                             |  |                              | 2,343,000 |   |      |   | 1,987,970 |  
|                                                                             |  |                              |           |   |      |   |           |  
|Interest expense:                                                            |  |                              |           |   |      |   |           |  
|Deposits                                                                     |  |                              | 650,262   |   |      |   | 459,723   |  
|Federal funds purchased                                                      |  |                              | 664       |   |      |   | 1,697     |  
|Securities sold under agreements to repurchase                               |  |                              | 2,110     |   |      |   | 762       |  
|Short-term borrowings                                                        |  |                              |          |   |      |   | 4,035     |  
|Long-term borrowings                                                         |  |                              | 109,346   |   |      |   | 50,401    |  
|                                                                             |  |                              |           |   |      |   |           |  
|                                                                             |  |                              | 762,382   |   |      |   | 516,618   |  
|                                                                             |  |                              |           |   |      |   |           |  
|Net interest income                                                          |  |                              | 1,580,618 |   |      |   | 1,471,352 |  
|                                                                             |  |                             
|Provision for loan losses                                                    |  |                              | 120,006   |   |      |   | 85,159    |  
|                                                                             |  |                              |           |   |      |   |           |  
|Net interest income after provision for loan losses                          |  |                              | 1,460,612 |   |      |   | 1,386,193 |  
|                                                                             |  |                              |           |   |      |   |           |  
|Noninterest income:                                                          |  |                              |           |   |      |   |           |  
|Service charges on deposit accounts                                          |  |                              | 224,527   |   |      |   | 216,345   |  
|Other service charges and fees                                               |  |                              | 83,992    |   |      |   | 129,143   |  
|Other operating income                                                       |  |                              | 153,890   |   |      |   | 147,274   |  
|                                                                             |  |                              |           |   |      |   |           |  
|                                                                             |  |                              | 462,409   |   |      |   | 492,762   |  
|                                                                             |  |                              |           |   |      |   |           |  
|Noninterest expense:                                                         |  |                              |           |   |      |   |           |  
|Salaries and employee benefits                                               |  |                              | 636,449   |   |      |   | 636,879   |  
|Occupancy expense                                                            |  |                              | 85,763    |   |      |   | 80,164    |  
|Equipment expense                                                            |  |                              | 89,961    |   |      |   | 113,517   |  
|Data processing                                                              |  |                              | 87,633    |   |      |   | 91,435    |  
|Other expense                                                                |  |                              | 379,182   |   |      |   | 286,375   |  
|                                                                             |  |                              |           |   |      |   |           |  
|                                                                             |  |                              | 1,278,988 |   |      |   | 1,208,370 |  
|                                                                             |  |                              |           |   |      |   |           |  
|Net income before income taxes                                               |  |                              | 644,033   |   |      |   | 670,585   |  
|                                                                             |  |                             
|Income tax expense                                                           |  |                              | 248,024   |   |      |   | 258,300   |  
|                                                                             |  |                              |           |   |      |   |           |  
|Net income                                                                   |  |                              | 396,009   |   |      |   | 412,285   |  
|                                                                             |  |                             
|Preferred stock dividend declared                                            |  |                              | (29,415   | ) |      |   | (29,652   | )
|                                                                             |  |                              |           |   |      |   |           |  
|Net income available for common shareholders                                 |  | $                            | 366,594   |   |      | $ | 382,633   |  
|                                                                             |  |                              |           |   |      |   |           |  
|Basic earnings per share                                                     |  | $                            | 0.30      |   |      | $ | 0.32      |  
|                                                                             |  |                              |           |   |      |   |           |  
|Diluted earnings per share                                                   |  | $                            | 0.27      |   |      | $ | 0.29      |  
|                                                                             |  |                              |           |   |      |   |           |  
|Basic weighted average shares outstanding                                    |  |                              | 1,211,135 |   |      |   | 1,181,010 |  
|                                                                             |  |                              |           |   |      |   |           |  
|Diluted weighted average shares outstanding                                  |  |                              | 1,474,733 |   |      |   | 1,441,147 |  
|                                                                             |  |                              |           |   |      |   |           |  



See Notes to Consolidated
Financial Statements.



4



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##### Table of Contents

|                                                                                       |  |                              |            |   |      |   |            |  
|-------------------------------------------------------------------------------------- |  | ---------------------------- | ---------- | - | ---- | - | ---------- | -
|Consolidated Statements of Cash Flows Three months ended March 31, 2005 and
2004       |  |                              |            |   |      |   | Unaudited  |  
|                                                                                       | 
|                                                                                       |  | Three months ended March 31, |           
|                                                                                       |  | 2005                         |            |   | 2004 |  
|Cash flows from operating activities:                                                  |  |                              |            |   |      |   |            |  
|Net income                                                                             |  | $                            | 396,009    |   |      | $ | 412,285    |  
|Adjustments to reconcile net income to net cash provided (used) by operations:         |  |                              |            |   |      |   |            |  
|Depreciation and amortization                                                          |  |                              | 83,276     |   |      |   | 97,547     |  
|Provision for loan losses                                                              |  |                              | 120,006    |   |      |   | 85,159     |  
|Deferred income taxes                                                                  |  |                              | (2,576     | ) |      |   |           |  
|Accretion of discount on securities, net of amortization of premiums                   |  |                              | (7,119     | ) |      |   | (2,866     | )
|Increase in cash surrender value of life insurance                                     |  |                              | (9,149     | ) |      |   |           |  
|Changes in assets and liabilities:                                                     |  |                              |            |   |      |   |            |  
|Accrued income                                                                         |  |                              | (139,218   | ) |      |   | (418       | )
|Other assets                                                                           |  |                              | 65,403     |   |      |   | 13,444     |  
|Accrued interest payable                                                               |  |                              | 91,178     |   |      |   | 36,352     |  
|Other liabilities                                                                      |  |                              | 113,384    |   |      |   | 73,235     |  
|                                                                                       |  |                              |            |   |      |   |            |  
|Net cash provided (used) by operating activities                                       |  |                              | 711,194    |   |      |   | 714,738    |  
|                                                                                       |  |                              |            |   |      |   |            |  
|Cash flows from investing activities:                                                  |  |                              |            |   |      |   |            |  
|Net increase in interest-bearing deposits with banks                                   |  |                              | (101,622   | ) |      |   | (5,830,904 | )
|Net increase in federal funds sold                                                     |  |                              | (200,000   | ) |      |   |           |  
|Purchase of investment securities                                                      |  |                              | (1,989,666 | ) |      |   | (1,497,376 | )
|Sales and maturities of investment securities                                          |  |                              | 1,516,359  |   |      |   | 3,120,996  |  
|(Purchase) redemption of restricted equity securities                                  |  |                              | (117,470   | ) |      |   | 37,500     |  
|Net increase in loans                                                                  |  |                              | (5,527,356 | ) |      |   | (5,750,367 | )
|Purchases of property and equipment                                                    |  |                              | (156,918   | ) |      |   | (29,327    | )
|Purchase of bank owned life insurance                                                  |  |                              | (2,650,000 | ) |      |   |           |  
|                                                                                       |  |                              |            |   |      |   |            |  
|Net cash used in investing activities                                                  |  |                              | (9,226,673 | ) |      |   | (9,949,478 | )
|                                                                                       |  |                              |            |   |      |   |            |  
|Cash flows from financing activities:                                                  |  |                              |            |   |      |   |            |  
|Net increase in deposits                                                               |  |                              | 10,917,138 |   |      |   | 9,543,680  |  
|Net increase in fed funds purchased and securities sold under agreements to repurchase |  |                              | (2,851,765 | ) |      |   | (2,165,783 | )
|Net (decrease) increase in long-term debt                                              |  |                              | 998,893    |   |      |   | 1,607,956  |  
|Dividends paid on preferred stock                                                      |  |                              | (29,987    | ) |      |   | (30,070    | )
|Common stock options exercised                                                         |  |                              | 3,900      |   |      |   | 152,178    |  
|                                                                                       |  |                              |            |   |      |   |            |  
|Net cash provided by financing activities                                              |  |                              | 9,038,179  |   |      |   | 9,107,961  |  
|                                                                                       |  |                              |            |   |      |   |            |  
|Net increase in cash and cash equivalents                                              |  |                              | 522,700    |   |      |   | (126,779   | )
|                                                                                       |  |                             
|Cash and cash equivalents, beginning                                                   |  |                              | 1,810,543  |   |      |   | 1,956,473  |  
|                                                                                       |  |                              |            |   |      |   |            |  
|Cash and cash equivalents, ending                                                      |  | $                            | 2,333,243  |   |      | $ | 1,829,694  |  
|                                                                                       |  |                              |            |   |      |   |            |  
|Supplemental disclosure of cash flow information:                                      |  |                              |            |   |      |   |            |  
|Interest paid                                                                          |  | $                            | 671,204    |   |      | $ | 480,266    |  
|                                                                                       |  |                              |            |   |      |   |            |  
|Taxes paid                                                                             |  | $                            | 32,074     |   |      | $ | 27,832     |  
|                                                                                       |  |                              |            |   |      |   |            |  



See Notes to Consolidated
Financial Statements.



5



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##### Table of Contents

|                                                                                                                        |  |                             |  |              |           |                   |           |        |                                                     |           |  |       |           |   |  |           |         |   |  |   |            |  
|----------------------------------------------------------------------------------------------------------------------- |  | --------------------------- |  | ------------ | --------- | ----------------- | --------- | ------ | --------------------------------------------------- | --------- |  | ----- | --------- | - |  | --------- | ------- | - |  | - | ---------- | -
|Consolidated Statements of Changes in Shareholders Equity Three months ended March
31, 2005 and 2004                   |  |                             |  |              |           |                   |           |        |                                                     |           |  |       |           |   |  | Unaudited |        
|                                                                                                                        |  |                             |  |              |          
|                                                                                                                        |  | Convertible Preferred Stock |  | Common Stock |           | Retained Earnings |           |        | Unrealized Appreciation (Depreciation)on Securities |           |  | Total |          
|                                                                                                                        |  | Shares                      |  | Amount       |           | Shares            |           | Amount |                                                     |           | 
|Balance January 1, 2004                                                                                                 |  | 189,356                     |  | $            | 2,620,325 |                   | 1,170,189 |        | $                                                   | 7,822,387 |  | $     | 2,627,529 |   |  | $         | 3,225   |   |  | $ | 13,073,466 |  
|                                                                                                                        |  |                             |  |              |           |                   |          
|Comprehensive income                                                                                                    |  |                             |  |              |           |                   |           |        |                                                     |           |  |       |           |   |  |           |         |   |  |   |            |  
|Net income                                                                                                              |  |                             |  |              |           |                   |           |        |                                                     |           |  |       | 412,285   |   |  |           |         |   |  |   | 412,285    |  
|Net change in unrealized appreciation on investment securities available for sale, net of income taxes of $2,639        |  |                             |  |              |           |                   |           |        |                                                     |           |  |       |           |   |  |           | 4,207   |   |  |   | 4,207      |  
|                                                                                                                        |  |                             |  |              |           |                   |           |        |                                                     |           |  |       |           |   |  |           |         |   |  |   |            |  
|Total comprehensive income                                                                                              |  |                             |  |              |           |                   |           |        |                                                     |           |  |       |           |   |  |           |         |   |  |   | 416,492    |  
|                                                                                                                        |  |                             |  |              |           |                   |          
|Common stock issued                                                                                                     |  |                             |  |              |           |                   |           |        |                                                     |           |  |       |           |   |  |           |         |   |  |   |            |  
|Common stock options exercised                                                                                          |  |                             |  |              |           |                   | 26,218    |        |                                                     | 152,178   |  |       |           |   |  |           |         |   |  |   | 152,178    |  
|                                                                                                                        |  |                             |  |              |           |                   |          
|Dividends declared on convertible preferred stock                                                                       |  |                             |  |              |           |                   |           |        |                                                     |           |  |       | (29,652   | ) |  |           |         |   |  |   | (29,652    | )
|                                                                                                                        |  |                             |  |              |           |                   |           |        |                                                     |           |  |       |           |   |  |           |         |   |  |   |            |  
|Balance, March 31, 2004                                                                                                 |  | 189,356                     |  | $            | 2,620,325 |                   | 1,196,407 |        | $                                                   | 7,974,565 |  | $     | 3,010,162 |   |  | $         | 7,432   |   |  | $ | 13,612,484 |  
|                                                                                                                        |  |                             |  |              |           |                   |           |        |                                                     |           |  |       |           |   |  |           |         |   |  |   |            |  
|Balance January 1, 2005                                                                                                 |  | 189,356                     |  |              | 2,620,325 |                   | 1,211,008 |        | $                                                   | 8,100,261 |  | $     | 4,337,224 |   |  | $         | (12,389 | ) |  | $ | 15,045,421 |  
|                                                                                                                        |  |                             |  |              |           |                   |          
|Comprehensive income                                                                                                    |  |                             |  |              |           |                   |           |        |                                                     |           |  |       |           |   |  |           |         |   |  |   |            |  
|Net income                                                                                                              |  |                             |  |              |           |                   |           |        |                                                     |           |  |       | 396,009   |   |  |           |         |   |  |   | 396,009    |  
|Net change in unrealized appreciation on investment securities available for sale, net of income tax benefits of $3,898 |  |                             |  |              |           |                   |           |        |                                                     |           |  |       |           |   |  |           | (6,214  | ) |  |   | (6,214     | )
|                                                                                                                        |  |                             |  |              |           |                   |           |        |                                                     |           |  |       |           |   |  |           |         |   |  |   |            |  
|Total comprehensive income                                                                                              |  |                             |  |              |           |                   |           |        |                                                     |           |  |       |           |   |  |           |         |   |  |   | 389,795    |  
|                                                                                                                        |  |                             |  |              |           |                   |          
|Common stock issued                                                                                                     |  |                             |  |              |           |                   |           |        |                                                     |           |  |       |           |   |  |           |         |   |  |   |            |  
|Common stock options exercised                                                                                          |  |                             |  |              |           |                   | 634       |        |                                                     | 3,900     |  |       |           |   |  |           |         |   |  |   | 3,900      |  
|                                                                                                                        |  |                             |  |              |           |                   |          
|Dividends declared on convertible preferred stock                                                                       |  |                             |  |              |           |                   |           |        |                                                     |           |  |       | (29,415   | ) |  |           |         |   |  |   | (29,415    | )
|                                                                                                                        |  |                             |  |              |           |                   |           |        |                                                     |           |  |       |           |   |  |           |         |   |  |   |            |  
|Balance, March 31, 2005                                                                                                 |  | 189,356                     |  | $            | 2,620,325 |                   | 1,211,642 |        | $                                                   | 8,104,161 |  | $     | 4,703,818 |   |  | $         | (18,603 | ) |  | $ | 15,409,701 |  
|                                                                                                                        |  |                             |  |              |           |                   |           |        |                                                     |           |  |       |           |   |  |           |         |   |  |   |            |  



See Notes to Consolidated
Financial Statements.



6



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##### Table of Contents

SURREY BANCORP

NOTES TO FINANCIAL STATEMENTS



NOTE 1. BASIS OF PRESENTATION



The accompanying unaudited financial statements were prepared in accordance with
instructions for Form 10-QSB and therefore, do not include all disclosures required by generally accepted accounting principles for a complete presentation of financial statements. In the opinion of management, the financial statements contain all
adjustments necessary to present fairly the financial condition of Surrey Bancorp as of March 31, 2005 and December 31, 2004, the results of operations for the three months ended March 31, 2005 and 2004, and its changes in stockholders equity
and cash flows for the three months ended March 31, 2005 and 2004. All adjustments are of a normal and recurring nature. The results of operations for the three months ended March 31, 2005 are not necessarily indicative of the results expected for
the full year. These financial statements should be read in conjunction with the Companys audited financial statements and related disclosures for the year ended December 31, 2004 included in the Companys Form 10-KSB.



ORGANIZATION



Surrey Bancorp (the Company) began operation on May 1, 2003 and was created for the purpose of acquiring all the outstanding
shares of common stock of Surrey Bank & Trust. Shareholders of the bank received six shares of Surrey Bancorp common stock for every five shares of Surrey Bank & Trust common stock owned.



Surrey Bank & Trust (the Bank) was organized and incorporated under the laws
of the State of North Carolina on July 15 and commenced operations on July 22, 1996. The Bank currently serves Surry County, North Carolina and Patrick County, Virginia and surrounding areas through five banking offices. As a state chartered bank
which is not a member of the Federal Reserve, the Bank is subject to regulation by the State of North Carolina Banking Commission and the Federal Deposit Insurance Corporation.



Surrey Investment Services, Inc. (Subsidiary) was organized and incorporated under the laws of the State of North Carolina on
February 10, 1998. The Subsidiary provides insurance services through SB&T Insurance and investment advice and brokerage services through U-VEST.



On July 31, 2000, Surrey Bank & Trust formed Friendly Finance, LLC., a subsidiary operation specializing in the purchase of sales finance contracts from local
automobile dealers. The Bank originally had a 60% majority interest in the company. On March 1, 2003 the Bank acquired the minority interest in Friendly Finance, LLC in exchange for the satisfaction of other commitments of the holder of the minority
interest. On January 1, 2005, Friendly Finance LLCs name was changed to Freedom Finance, LLC.



The accounting and reporting policies of the Company and subsidiaries follow generally accepted accounting principles and general practices within the financial services industry. Following is a summary of the more
significant policies.



7



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##### Table of Contents

CRITICAL ACCOUNTING POLICIES



The notes to our audited consolidated financial statements for the year ended December 31, 2004 contain a summary of our significant
accounting policies. We believe our policies with respect to the methodology for our determination of the allowance for loan losses, and asset impairment judgments, including the recoverability of intangible assets involve a higher degree of
complexity and require management to make difficult and subjective judgments with often require assumptions or estimates about highly uncertain matters. Changes in these judgments, assumption or estimates could cause reported results to differ
materially. These critical policies and their application are periodically reviewed with the audit Committee and our Board of Directors. See our Annual Report for full details on critical accounting policies.



PRINCIPLES OF CONSOLIDATION



The consolidated financial statements include the accounts of the Company, the Bank and the
Subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.



BUSINESS SEGMENTS



The Company reports
its activities in two business segments. In determining the appropriateness of segment definition, the Company considers the materiality of potential business segments and components of the business about which financial information is available and
regularly evaluated relative to resource allocation and performance assessment.



PRESENTATION OF CASH FLOWS



For purposes of reporting cash
flows, cash and due from banks includes cash and amounts due from depository institutions (including cash items in process of collection). Overnight interest bearing deposits, and federal funds sold are shown separately. Cash flows from demand
deposits, NOW accounts and savings accounts are reported net since their original maturities are less than three months. Loans and time deposits are reported net per FASB Statement No. 104. Federal Funds purchased are shown separately.



Investment Securities



Investments classified as available for sale are intended to be held for indefinite periods
of time and include those securities that management may employ as part of asset/liability strategy or that may be sold in response to changes in interest rates, prepayments, regulatory capital requirements or similar factors. These securities are
carried at fair value and 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.



Investment securities classified as held to maturity are those debt securities that the Bank
has the ability and intent to hold to maturity. Accordingly, these securities are carried at cost adjusted for amortization of premiums and accretion of discount, computed by the interest-method over their contractual lives. At March 31, 2005 and
December 31, 2004, the Bank had no investments classified as held to maturity.



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##### Table of Contents

Loans Held for Sale



Mortgage loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated market value in the aggregate. Net unrealized losses
are recognized through a valuation allowance by charges to income. At March 31, 2005 and December 31, 2004, the Bank had no loans classified as available for sale.



Loans Receivable



Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at their outstanding principal
amount adjusted for any charge-offs, the allowance for loan losses, and any deferred fees or cost on originated loans and unamortized premiums or discounts on purchased loans.



The allowance for loan losses is maintained at a level considered adequate to provide for losses that can be reasonably anticipated. The
allowance is increased by provisions charged to operating expense and reduced by net charge-offs. The Bank makes continuous credit reviews of the loan portfolio and considers economic conditions, historical loan loss experience, review of specific
problem loans and other factors in determining the adequacy of the allowance balance.



Activity in the allowance for loan losses for the three months ended March 31, 2005 and 2004 follows:



|                                 |  |           |           |   |      |   |           |  
|-------------------------------- |  | --------- | --------- | - | ---- | - | --------- | -
|                                 |  | March 31, |          
|                                 |  | 2005      |           |   | 2004 |  
|Balance at beginning of year     |  | $         | 2,294,131 |   |      | $ | 2,109,820 |  
|Add provision charged to expense |  |           | 120,006   |   |      |   | 85,159    |  
|Less net charge-offs             |  |           | (72,114   | ) |      |   | (72,911   | )
|                                 |  |           |           |   |      |   |           |  
|                                 |  | $         | 2,342,023 |   |      | $ | 2,122,068 |  
|                                 |  |           |           |   |      |   |           |  



Interest on all loans is accrued daily
on the outstanding balance. Accrual of interest is discontinued on a loan when management believes, after considering collection efforts and other factors that the borrowers financial condition is such that collection of interest is doubtful.



Stock-based Compensation



The Company accounts for its stock-based compensation plans using the accounting prescribed
by Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees.The Company is not required to adopt the fair value based recognition provisions prescribed under SFAS No. 123, Accounting for Stock Based
Compensation, but complies with the disclosure requirements set forth in the Statement (as amended by SFAS No. 148), which include disclosing pro forma net income as if the fair value based method of accounting had been applied.



NOTE 2. EARNINGS PER SHARE



Basic earnings per share for the three months ended March 31, 2005 and 2004 were calculated
by dividing net income available to common shareholders by the weighted average number of shares outstanding during the period.



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##### Table of Contents

The computation of diluted earnings per share is similar to the computation of basic earnings per share except that the
denominator is increased to include the number of additional common shares that would have been outstanding if dilutive potential common shares had been issued. The numerator is adjusted for any changes in income or loss that would result from the
assumed conversion of those potential common shares. The potential dilutive shares are represented by common stock options and by the Series A convertible preferred stock which is convertible into .8695 shares of common stock.



NOTE 3. BALANCE SHEETS



The balance sheet at December 31, 2004, has been taken from the audited financial statements at that date.



NOTE 4. COMMITMENTS AND LETTERS OF CREDIT



At March 31, 2005, the Company had commitments to extend credit, including unused lines of
credit of approximately $27,974,000. Letters of credit totaling $1,263,576 were outstanding.



NOTE 5. STOCK OPTION PLANS



The Company
has adopted a qualified incentive stock option plan which reserves, as amended, 74,429 shares for purchase by eligible employees. Options granted under this plan vest at the rate of 20% per year, expire not more than ten years from the date of
grant, and are exercisable at not less than the fair market value of the stock at the date of the grant.



The Company also adopted a non-qualified stock option plan which reserves, as amended, 101,912 shares for purchase by non-employee directors. Options granted under this plan are exercisable after six months from the
date of the grant at not less than the fair market value of the stock at the date of the grant. The life of such options shall not extend more than ten years from the date of the grant.



Information related to pro forma net income for the periods presented is as follows:



|                                                                               |  |           |         |      |   |        
|------------------------------------------------------------------------------ |  | --------- | ------- | ---- | - | -------
|                                                                               |  | March 31,
|                                                                               |  | 2005      |         | 2004
|Compensation cost recognized in income for all stock-based compensation awards |  | $         |        |      | $ |       
|                                                                               |  |           |         |      |   |        
|Pro forma net income available to common shareholders, based on SFAS No. 123   |  | $         | 361,318 |      | $ | 378,120
|                                                                               |  |           |         |      |   |        
|Pro forma earnings per common share, based on SFAS No. 123                     |  | $         | 0.30    |      | $ | 0.32   
|                                                                               |  |           |         |      |   |        
|Pro forma earnings per fully dilutive common share, based on SFAS No. 123      |  | $         | 0.25    |      | $ | 0.26   
|                                                                               |  |           |         |      |   |        



NOTE 6. SEGMENT REPORTING



The Company has two reportable segments, the Bank and Freedom Finance,
LLC (subsidiary). The Bank provides mortgage, consumer and commercial loans. Freedom Finance, LLC specializes in the purchase of sales finance contracts from local automobile dealers. Information about reportable segments, and reconciliation of such
information to the consolidated financial statements as of and for the years ended March 31, 2005 and 2004 is as follows:



|                                   |  |      |             |                      |   |           |                          |  |   |                     |   |  |   |            
|---------------------------------- |  | ---- | ----------- | -------------------- | - | --------- | ------------------------ |  | - | ------------------- | - |  | - | -----------
|                                   |  | Bank |             | Freedom Finance, LLC |   |           | Intersegment Elimination |  |   | Consolidated Totals
|March 31, 2005                     |  |      |             |                      |   |           |                          |  |   |                     |   |  |   |            
|Net interest income                |  | $    | 1,521,117   |                      | $ | 59,501    |                          |  | $ |                    |   |  | $ | 1,580,618  
|Other revenue  external customers |  |      | 449,525     |                      |   | 12,884    |                          |  |   |                    |   |  |   | 462,409    
|Depreciation and amortization      |  |      | 82,625      |                      |   | 651       |                          |  |   |                    |   |  |   | 83,276     
|Provision for loan losses          |  |      | 120,006     |                      |   |          |                          |  |   |                    |   |  |   | 120,006    
|Net income                         |  |      | 386,827     |                      |   | 9,182     |                          |  |   |                    |   |  |   | 396,009    
|Assets                             |  |      | 167,321,690 |                      |   | 1,670,077 |                          |  |   | (2,103,190          | ) |  |   | 166,888,577
|                                   |  |      |             |                     
|March 31, 2004                     |  |      |             |                      |   |           |                          |  |   |                     |   |  |   |            
|Net interest income                |  | $    | 1,390,773   |                      | $ | 80,579    |                          |  | $ |                    |   |  | $ | 1,471,352  
|Other revenue  external customers |  |      | 479,426     |                      |   | 13,336    |                          |  |   |                    |   |  |   | 492,762    
|Depreciation and amortization      |  |      | 96,501      |                      |   | 1,046     |                          |  |   |                    |   |  |   | 97,547     
|Provision for loan losses          |  |      | 106,904     |                      |   | (21,745   | )                        |  |   |                    |   |  |   | 85,159     
|Net income                         |  |      | 343,940     |                      |   | 68,345    |                          |  |   |                    |   |  |   | 412,285    
|Assets                             |  |      | 145,046,584 |                      |   | 1,598,610 |                          |  |   | (1,976,776          | ) |  |   | 144,668,418



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##### Table of Contents

The accounting policies of the segments are the same as those described in the summary of significant accounting
policies. The Companys reportable segments are strategic business units that offer different products and services. They are managed separately because each segment appeals to different markets and, accordingly, requires different technology
and marketing strategies.



The Bank derives a majority of its revenue from
interest income and relies primarily on net interest income to assess the performance of the segments and make decisions about resources to be allocated to the segment. Therefore, the segments are reported using net interest income for the period
ended March 31, 2005. The Bank does allocate income taxes to the segments. Other revenue represents noninterest income which is also allocated to the segments. The Bank includes an insurance and investment agency in its Bank segment above. The Bank
does not have any single external customer from which is derives 10 percent or more of its revenues and operations in one geographical area.



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##### Table of Contents

ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



Introduction



This discussion, analysis and related financial information are presented to explain the significant factors which affected Surrey Bancorps financial condition and
results of operations for the three months ending March 31, 2005 and 2004. This discussion should be read in conjunction with the financial statements and related notes contained within this report.



Surrey Bancorp (Company) is a North Carolina corporation, located in Mount Airy,
North Carolina. The Company was incorporated on February 6, 2003 and began business on May 1, 2003.



Surrey Bank & Trust (Bank) is a North Carolina state Chartered Bank, located in Mount Airy, North Carolina. The Bank was chartered on July 15, 1996 and began operations on July 22, 1996.



Effective March 5, 1998 the Bank became a member of the Federal Home Loan Bank.



Highlights



Certain information contained in this discussion may include forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are generally identified by phrases such as the
Company expects, the Company believes or words of similar import. Such forward-looking statements involve known and unknown risks including, but not limited to, changes in general economic and business conditions, interest rate
fluctuations, competition within and from outside the banking industry, new products and services in the banking industry, risk inherent in making loans such as repayment risks and fluctuating collateral values, problems with technology utilized by
the Company, changing trends in customer profiles and changes in laws and regulations applicable to the Company. Although the Company believes that its expectations with respect to the forward-looking statements are based upon reliable assumptions
within the bounds of its knowledge of its business and operations, there can be no assurance that actual results, performance or achievements of the Company will not differ materially from any future results, performance or achievements expressed or
implied by such forward-looking statements



Net income available for common
shareholders for the three months ended March 31, 2005, was $366,594 or $.27 per diluted share outstanding compared to a $382,633 or $.29 per diluted share outstanding for the same period in 2004. Earnings for the period ended March 31, 2005 are
approximately 4.2% lower than for the same period in 2004. The decrease resulted from a reduction in the fee income earned from the mortgage lending operation and reduced incomes from the investment, insurance and sales finance subsidiaries. The
mortgage fee reduction is due to a general slowdown in the refinancing market and the absence of servicing fee income for which the rights were sold to another bank in the second quarter of 2004. The reduced income from subsidiary operations
primarily result from increased expenses incurred to strengthen the operations of those subsidiaries.



On March 31, 2005, Surrey Bancorps assets totaled $166,925,476 compared to $157,292,940 on December 31, 2004. Net loans were $138,453,515 compared to $133,046,165 on December 31, 2004. This growth was primarily
in the commercial loan area which increased 4.73% over December 2004 totals.



Total deposits on March 31, 2005, were $137,871,104 compared to $126,953,966 at the end of 2004. This increase is attributable to increases in demand deposit and time deposit accounts. Demand deposits increased 8.36% over 2004 totals.
Certificates of deposit increased 13.65% over December 31, 2004 totals, while savings deposits decreased 9.00%.



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##### Table of Contents

Common shareholders equity increased by $364,280 or 2.93% during the three months ended March 31, 2005 resulting in
a common stock book value of $10.56 per share, up from $10.26 on December 31, 2004.



Financial Condition, Liquidity and Capital Resources



Investments



The Bank maintains a
portfolio of securities as part of its asset/liability and liquidity management programs which emphasize effective yields and maturities to match its needs. The composition of the investment portfolio is examined periodically and appropriate
realignments are initiated to meet liquidity and interest rate sensitivity needs for the Bank.



Bonds, notes, and debentures for which the Bank has the positive intent and ability to hold to maturity are reported at cost, adjusted by premiums and discounts that are recognized in interest income using the
interest method over the period to maturity or to call dates. The Bank had no Held to Maturity securities at March 31, 2005 or December 31, 2004.



Available for sale securities are reported at fair value and consist of bonds, notes, debentures, and certain equity securities not classified as trading securities or as
held to maturity securities.



Unrealized holding gains and losses, net of tax,
on available for sale securities are reported as a net amount in a separate component of shareholders equity. Realized gains and losses on the sale of available for sale securities are determined using the specific-identification method.
Premiums and discounts are recognized in interest income using the interest method over the period to maturity or to call dates.



Declines in the fair value of individual held to maturity and available for sale securities below cost that are other than temporary are reflected as write-downs of the
individual securities to fair value. Related write-downs are included in earnings as realized losses.



Investments in available for sale securities of $3,162,465 consisted of U.S. Governmental Agency obligations with maturities ranging from one to fourteen months, and GNMA adjustable rate mortgage securities, which
adjust annually.



Loans



Net loans outstanding on March 31, 2005, were $138,453,515 compared to $133,046,165 on
December 31, 2004. The Bank maintains a loan portfolio dominated by real estate and commercial loans diversified among various industries. Approximately 38.9% of the Banks loans as of March 31, 2005 are fixed rate loans with 61.1% floating
with the Banks prime rate or other appropriate internal or external indices.



Deposits



Deposits on March 31,
2005, were $137,871,104, compared to $126,953,966 on December 31, 2004.



The
March total comes from a base of approximately 10,246 accounts compared to 9,845 accounts at December 31, 2004; a 4.07% increase. Interest-bearing accounts represented 84.29% of the 2005 period-end deposits versus 85.82% at December 31, 2004.



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##### Table of Contents

Shareholders Equity



Surrey Bancorp and Surrey Bank & Trust are subject to various regulatory capital requirements administered by federal banking agencies.
The Company and the Bank maintain strong capital positions which exceed all capital adequacy requirements of federal regulatory authorities.



The Companys and the Banks capital ratios are presented in the following table.



|                              |  |       |   |  |                                              |  
|----------------------------- |  | ----- | - |  | -------------------------------------------- | -
|                              |  | Ratio |   |  | Minimum RequiredFor Capital AdequacyPurposes |  
|March 31, 2005:               |  |       |   |  |                                              |  
|Total Capital                 |  |       |   |  |                                              |  
|(to Risk-Weighted Assets)     |  |       |   |  |                                              |  
|Surrey Bancorp (Consolidated) |  | 11.16 | % |  | 8.0                                          | %
|Surrey Bank & Trust           |  | 10.22 | % |  | 8.0                                          | %
|Tier I Capital                |  |       |   |  |                                              |  
|(to Risk-Weighted Assets)     |  |       |   |  |                                              |  
|Surrey Bancorp (Consolidated) |  | 9.91  | % |  | 4.0                                          | %
|Surrey Bank & Trust           |  | 8.96  | % |  | 4.0                                          | %
|Tier I Capital                |  |       |   |  |                                              |  
|(to Average Assets)           |  |       |   |  |                                              |  
|Surrey Bancorp (Consolidated) |  | 9.08  | % |  | 4.0                                          | %
|Surrey Bank & Trust           |  | 8.21  | % |  | 4.0                                          | %
|                              |  |      
|December 31, 2004:            |  |       |   |  |                                              |  
|Total Capital                 |  |       |   |  |                                              |  
|(to Risk-Weighted Assets)     |  |       |   |  |                                              |  
|Surrey Bancorp (Consolidated) |  | 11.61 | % |  | 8.0                                          | %
|Surrey Bank & Trust           |  | 10.52 | % |  | 8.0                                          | %
|Tier I Capital                |  |       |   |  |                                              |  
|(to Risk-Weighted Assets)     |  |       |   |  |                                              |  
|Surrey Bancorp (Consolidated) |  | 10.36 | % |  | 4.0                                          | %
|Surrey Bank & Trust           |  | 9.26  | % |  | 4.0                                          | %
|Tier I Capital                |  |       |   |  |                                              |  
|(to Average Assets)           |  |       |   |  |                                              |  
|Surrey Bancorp (Consolidated) |  | 8.98  | % |  | 4.0                                          | %
|Surrey Bank & Trust           |  | 8.08  | % |  | 4.0                                          | %



Asset Quality



The notes to the financial statements contained within this report provide
details of the activity in the allowance for possible loan losses.



The
provision for loan losses charged to operations was $120,006 in the first three months of 2005 compared to $85,159 for the same period in 2004. The reserve for loan losses on March 31, 2005 was $2,342,023 or 1.66% of period end loans. This
percentage is derived from total loans. Approximately $25,953,828 of loans at March 31, 2005 are government guaranteed loans which the Banks exposure ranges from 10% to 49% of the outstanding balance. When the guaranteed portions of the loans
are removed from the equation the loan loss reserve is approximately 1.85% of outstanding loans.



14



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##### Table of Contents

The level of reserve is established based upon managements evaluation of portfolio composition, current and
projected national and local economic conditions, and results of independent reviews of the loan portfolio by internal and external examination. Management recognizes the inherent risk associated with commercial and consumer lending, including
whether or not a borrowers actual results of operations will correspond to those projected by the borrower when the loan was funded; economic factors such as the number of housing starts and increases in interest rates, etc.; depression of
collateral values; and completion of projects within the original cost and time estimates. As a result, management continues to actively monitor the Banks asset quality and lending policies. Management believes that its loan portfolio is
diversified so that a downturn in a particular market or industry will not have a significant impact on the loan portfolio or the Banks financial condition. Management believes that its provision and reserve offer an adequate allowance for
loan losses and provide a sound reserve for the loan portfolio.



Unsecured
loans that are past due more than 90 days are placed into nonaccrual status. Secured loans reach nonaccrual status when they surpass 120 days past due. When facts and circumstances indicate the borrower has regained the ability to meet the required
payments, the loan is returned to accrual status.



At March 31, 2005, the Bank
had loans totaling approximately $1,127,226 in nonaccrual status.



Interest Rate Sensitivity and Liquidity



One of the
principal duties of the Banks Asset/Liability Management Committee is management of interest rate risk. The Bank utilitizes quarterly asset/liability reports prepared by a regional correspondent bank to project the impact on net interest
income that might occur with hypothetical interest rate changes. The committee monitors and manages asset and liability strategies and pricing.



Another function of the Asset/Liability Committee is maintaining adequate liquidity and planning for future liquidity needs. Having adequate liquidity means the ability
to meet current funding needs, including deposit withdrawals and commitments, in an orderly manner without sacrificing earnings. The Bank funds its investing activities, including making loans and purchasing investments, by attracting deposits and
utilizing short-term borrowings when necessary.



At March 31, 2005 the
liquidity position of the Company was good, with short-term liquid assets of $15,695,221. Deposit growth was approximately $5,462,000 greater than the growth in loans in the first three months of 2005 resulting in a slightly more liquid position
compared to December 31, 2004. During the period the Bank invested in Bank Owned Life Insurance (BOLI) which reduced the net funds growth produced by deposits and loans. To provide supplemental liquidity, the Bank has six lines of credit with
correspondent banks totaling $13,700,000. There were no outstanding advances against these lines at March 31, 2005. Additionally, the Bank has a secured borrowing arrangement with the Federal Home Loan Bank. The maximum credit available under this
agreement approximates $20,241,000 at March 31, 2005. Advances taken down against the Federal Home Loan Bank line amounted to $12,250,000 at March 31, 2005. In addition, Freedom Finance, LLC has a secured revolving line of credit with another
commercial bank in the amount of $1,200,000. At March 31, 2005 no balance was due on this line.



15



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##### Table of Contents

ITEM 3. CONTROLS & PROCEDURES



As of the end
of the period covered by the report, an evaluation was performed under the supervision and with the participation of the Companys management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design
and operation of the Companys disclosure controls and procedures pursuant to Exchange Act Rule 13a-15e. Based on the evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the design and operation of these
disclosure controls and procedures were effective. There have not been any changes in the Companys internal control over financial reporting that occurred during the Companys last quarter that has materially affected, or is reasonable
likely to materially affect, internal control over financial reporting.



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##### Table of Contents

PART II - OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------



No significant changes in legal proceedings occurred during the quarter.



|Item 2. | Changes in Securities
|------- | ---------------------



None



|Item 3. | Defaults Upon Senior Securities
|------- | -------------------------------



Not Applicable



|Item 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------



None



|Item 5. | Other Information
|------- | -----------------



None



|Item 6. | Exhibits and Reports on Form 8-K
|------- | --------------------------------



| | (a.) | Exhibits
| | ---- | --------



31.1 Certification

31.2 Certification

32.    Certification



| | (b.) | Reports on 8-K
| | ---- | --------------



Incorporated by Reference to 8-Ks filed February 3, 2005





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##### Table of Contents

SIGNATURES



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



|                   |  |  |  |                                               
|------------------ |  |  |  | ----------------------------------------------
|                   |  |  |  | Surrey Bancorp                                
|                   |  | 
|Date: May 12, 2005 |  |  |  | /s/ Edward C. Ashby, III                      
|                   |  |  |  | Edward C. Ashby, III                          
|                   |  |  |  | President and Chief Executive Officer         
|                   |  | 
|Date: May 12, 2005 |  |  |  | /s/ Mark H. Towe                              
|                   |  |  |  | Mark H. Towe                                  
|                   |  |  |  | Sr. Vice President and Chief Financial Officer





18