# U.S. SECURITIES AND EXCHANGE COMMISSION 
Washington, D.C. 20549

# FORM 10-QSB

|[X] | QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- | ---------------------------------------------------------------------------------
|    | For the quarter ended:   September 30, 2004                                      

|[   ] | TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
|----- | ----------------------------------------------------------------------------------
|      | For the transition period from ___________ to _____________                       

Commission file number:  
000-22503

BEACH FIRST NATIONAL BANCSHARES, INC.(Exact name of registrant as specified in its charter)

|South Carolina           |  | 57-1030117                          
|------------------------ |  | ------------------------------------
|(State of Incorporation) |  | (I.R.S. Employer Identification No.)

1550 Oak Street, Myrtle Beach, South Carolina 29577
(Address of principal executive offices)

(843) 626-2265(Issuer's telephone number)

Not Applicable(Former Name, former address and former fiscal year, if changed since last report)

Check  whether  the  issuer:  (1) has  filed  all  reports  required  to be filed by  Section  13 or 15(d) of the
Securities  Exchange  Act of 1934  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 practicable date:

On
November 1, 2004, 2,013,008 shares of the issuers common stock, par value $1.00 per
share, were issued and outstanding.

---

# PART IFINANCIAL INFORMATION 
Item 1.   Financial Statements.

# Beach First National
Bancshares, Inc. and SubsidiaryMyrtle Beach, South CarolinaConsolidated Balance
Sheets

|                                                           | September 30, | December 31,
|---------------------------------------------------------- | ------------- | ------------
|
|
|ASSETS                                                     |               |             
|Cash and due from banks                                    |               |             
|Federal funds sold and short term investments              |               |             
|Investment securities available for sale                   |               |             
|Loans, net                                                 |               |             
|Federal Reserve Bank stock                                 |               |             
|Federal Home Loan Bank stock                               |               |             
|Premises and equipment, net                                |               |             
|Cash value life insurance                                  |               |             
|Investment in BFNB Trust                                   |               |             
|Other assets                                               |               |             
|                                                           |               |             
|Total assets                                               |               |             
|                                                           |               |             
|LIABILITIES AND SHAREHOLDERS EQUITY                       |               |             
|LIABILITIES:                                               |               |             
|Deposits                                                   |               |             
|Noninterest bearing deposits                               |               |             
|Interest bearing deposits                                  |               |             
|                                                           |               |             
|Total deposits                                             |               |             
|Other borrowings                                           |               |             
|Junior subordinated debentures                             |               |             
|Other liabilities                                          |               |             
|                                                           |               |             
|Total liabilities                                          |               |             
|                                                           |               |             
|SHAREHOLDERS EQUITY:                                      |               |             
|Common stock, $1 par value; 10,000,000 shares authorized;  |               |             
|shares issued and outstanding - 2,013,008 at September 30, |               |             
|2004, 1,318,368 at September 30, 2003 and 1,323,768 at     |               |             
|December 31, 2003                                          |               |             
|Paid-in capital                                            |               |             
|Retained earnings                                          |               |             
|Accumulated other comprehensive income (loss)              |               |             
|                                                           |               |             
|Total shareholders' equity                                 |               |             
|                                                           |               |             
|Total liabilities and shareholders' equity                 |               |             
|                                                           |               |             

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

2

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Beach First National
Bancshares, Inc. and SubsidiaryMyrtle Beach, South CarolinaConsolidated
Statements of Operations(Unaudited)

|                                              | Nine Months Ended | Three Months Ended
|--------------------------------------------- | ----------------- | ------------------
|
|
|INTEREST INCOME                               |                   |                   
|Interest and fees on loans                    |                   |                   
|Investment securities                         |                   |                   
|Fed funds sold and short term investments     |                   |                   
|Dividends on long-term investments            |                   |                   
|                                              |                   |                   
|Total interest income                         |                   |                   
|                                              |                   |                   
|INTEREST EXPENSE                              |                   |                   
|Deposits                                      |                   |                   
|Short-term borrowings                         |                   |                   
|Long-term borrowings-junior subordinated debt |                   |                   
|                                              |                   |                   
|Total interest expense                        |                   |                   
|                                              |                   |                   
|Net interest income                           |                   |                   
|                                              |                   |                   
|PROVISION FOR POSSIBLE LOAN                   |                   |                   
|LOSSES                                        |                   |                   
|                                              |                   |                   
|Net interest income after provision           |                   |                   
|for possible loan losses                      |                   |                   
|                                              |                   |                   
|NONINTEREST INCOME                            |                   |                   
|Service fees on deposit accounts              |                   |                   
|Gain (loss) on sale of investment securities  |                   |                   
|Income from cash value life insurance         |                   |                   
|Other income                                  |                   |                   
|                                              |                   |                   
|Total noninterest income                      |                   |                   
|                                              |                   |                   
|NONINTEREST EXPENSES                          |                   |                   
|Salaries and wages                            |                   |                   
|Employee benefits                             |                   |                   
|Supplies and printing                         |                   |                   
|Advertising and public relations              |                   |                   
|Professional fees                             |                   |                   
|Depreciation and amortization                 |                   |                   
|Occupancy                                     |                   |                   
|Data processing fees                          |                   |                   
|Other operating expenses                      |                   |                   
|                                              |                   |                   
|Total noninterest expenses                    |                   |                   
|                                              |                   |                   
|Income before income taxes                    |                   |                   
|                                              |                   |                   
|INCOME TAX EXPENSE                            |                   |                   
|                                              |                   |                   
|Net income                                    |                   |                   
|                                              |                   |                   
|BASIC NET INCOME PER COMMON SHARE             |                   |                   
|                                              |                   |                   
|DILUTED NET INCOME PER COMMON SHARE           |                   |                   
|                                              |                   |                   

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

3

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# Beach First National
Bancshares, Inc. and SubsidiaryConsolidated Statements of Changes in
Shareholders Equity (Unaudited)

|                                             |  |  |  |           | Accumulated |  
|-------------------------------------------- |  |  |  | --------- | ----------- | -
|
|
|
|
|BALANCE, DECEMBER 31, 2002                   |  |  |  | 1,318,368 |             | $
|Net income                                   |  |  |  | -         |             |  
|Other comprehensive income, net of taxes:    |  |  |  |           |             |  
|Unrealized loss on investment securities     |  |  |  | -         |             |  
|Less reclassification adjustments for losses |  |  |  |           |             |  
|included in net income                       |  |  |  | -         |             |  
|                                             |  |  |  |           |             |  
|Comprehensive income                         |  |  |  | -         |             |  
|                                             |  |  |  |           |             |  
|BALANCE, SEPTEMBER 30, 2003                  |  |  |  | 1,318,368 |             | $
|                                             |  |  |  |           |             |  

|                                            |  |  |  |           | Accumulated |  
|------------------------------------------- |  |  |  | --------- | ----------- | -
|
|
|
|
|BALANCE, DECEMBER 31, 2003                  |  |  |  | 1,323,768 |             | $
|Net income                                  |  |  |  | -         |             |  
|Other comprehensive income, net of taxes:   |  |  |  |           |             |  
|Unrealized loss on investment securities    |  |  |  | -         |             |  
|Less reclassification adjustments for gains |  |  |  |           |             |  
|included in net income                      |  |  |  | -         |             |  
|Comprehensive income                        |  |  |  |           |             |  
|                                            |  |  |  |           |             |  
|Exercise of stock options                   |  |  |  | 18,250    |             |  
|Stock dividend                              |  |  |  | 670,990   |             |  
|                                            |  |  |  |           |             |  
|BALANCE, SEPTEMBER 30, 2004                 |  |  |  | 2,013,008 |             | $
|                                            |  |  |  |           |             |  

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

4

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Beach First National
Bancshares, Inc. and SubsidiaryMyrtle Beach, South Carolina Consolidated
Statements of Cash Flows(Unaudited)

|                                                                   | Nine Months Ended
|------------------------------------------------------------------ | -----------------
|
|
|OPERATING ACTIVITIES                                               |                  
|Net income                                                         |                  
|Adjustments to reconcile net income to                             |                  
|net cash provided by operating activities:                         |                  
|Deferred income taxes                                              |                  
|Provisions for loan losses                                         |                  
|Accretion of deferred loan fees                                    |                  
|Depreciation and amortization                                      |                  
|Gain (Loss) on sale of investment securities                       |                  
|Discount accretion and premium amortization                        |                  
|Increase (decrease) in other assets                                |                  
|Increase (decrease) in other liabilities                           |                  
|                                                                   |                  
|Net cash provided (used) by operating activities                   |                  
|                                                                   |                  
|INVESTING ACTIVITIES                                               |                  
|Purchase of investment securities                                  |                  
|Proceeds from sale or call of investment securities                |                  
|Purchase of FHLB Stock                                             |                  
|Purchase of Federal Reserve Bank Stock                             |                  
|Purchase of BFNB Trust Stock                                       |                  
|Decrease (increase) in Federal funds sold & short term investments |                  
|Increase in loans, net                                             |                  
|Purchase of life insurance contracts                               |                  
|Purchase of premises and equipment                                 |                  
|                                                                   |                  
|Net cash used in investing activities                              |                  
|                                                                   |                  
|FINANCING ACTIVITIES                                               |                  
|Increase in Federal funds purchased & borrowings                   |                  
|Investment in BFNB Trust                                           |                  
|Exercise of stock options                                          |                  
|Net increase in deposits                                           |                  
|                                                                   |                  
|Net cash provided by financing activities                          |                  
|                                                                   |                  
|Net decrease in cash and cash equivalents                          |                  
|                                                                   |                  
|CASH AND CASH EQUIVALENTS, BEGINNING                               |                  
|OF PERIOD                                                          |                  
|                                                                   |                  
|CASH AND CASH EQUIVALENTS, END OF                                  |                  
|PERIOD                                                             |                  
|                                                                   |                  
|CASH PAID FOR                                                      |                  
|Income taxes                                                       |                  
|                                                                   |                  
|Interest                                                           |                  
|                                                                   |                  

The
accompanying notes are an integral part of these consol idated financial statements.

5

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# Beach First National
Bancshares, Inc.Notes to Consolidated Financial Statements (Unaudited)

# 1.   Basis of Presentation

| | The
accompanying unaudited consolidated financial statements for Beach First National
Bancshares, Inc. (Company) were prepared in accordance with instructions for
Form 10-QSB and, therefore, do not include all disclosures necessary for a complete
presentation of financial condition, results of operations, and cash flows in conformity
with generally accepted accounting principles. All adjustments, consisting only of normal
recurring accruals, which are, in the opinion of management, necessary for fair
presentation of the interim consolidated financial statements have been included. The
results of operations for the nine month periods ended September 30, 2004 and 2003 are not
necessarily indicative of the results that may be expected for the entire year. These
consolidated financial statements do not include all disclosures required by generally
accepted accounting principles and should be read in conjunction with the Companys
audited consolidated financial statements and related notes for the year ended December
31, 2003.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# 2.   Principles of
Consolidation

| | The accompanying unaudited consolidated financial statements include the accounts of the
Company and its subsidiary, Beach First National Bank. All significant inter-company items
and transactions have been eliminated in consolidation.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# 3.   Earnings Per Share

| | The Company calculates earnings per share in accordance with SFAS No. 128, Earnings Per
Share. SFAS No. 128 specifies the computation, presentation and disclosure
requirements for earnings per share (EPS) for entities with publicly held common stock or
potential common stock such as options, warrants, convertible securities or contingent
stock agreements if those securities trade in a public market.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | This
standard specifies computation and presentation requirements for both basic EPS and, for
entities with complex capital structures, diluted EPS. Basic earnings per share are
computed by dividing net income by the weighted average common shares outstanding. 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 the dilutive potential common shares had been issued. The
dilutive effect of options outstanding under the Companys stock option plan is
reflected in diluted earnings per share by application of the treasury stock method.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

6

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# RECONCILIATION
OF THE NUMERATORS AND DENOMINATORS OF THE BASIC AND DILUTED EPS COMPUTATIONS:

# For the Nine Months Ended September 30, 2004

|                              | Income | Shares | Per Share
|----------------------------- | ------ | ------ | ---------
|
|Basic EPS                     |        |        | $        
|Effect of Diluted Securities: |        |        |          
|Stock options                 |        |        |          
|                              |        |        |          
|Diluted EPS                   |        |        | $        

# For the Nine Months Ended September 30, 2003

|                              | Income | Shares | Per Share
|----------------------------- | ------ | ------ | ---------
|
|Basic EPS                     |        |        | $        
|Effect of Diluted Securities: |        |        |          
|Stock options                 |        |        |          
|                              |        |        |          
|Diluted EPS                   |        |        | $        

# For the Three Months Ended September 30, 2004

|                              | Income | Shares | Per Share
|----------------------------- | ------ | ------ | ---------
|
|Basic EPS                     |        |        | $        
|Effect of Diluted Securities: |        |        |          
|Stock options                 |        |        |          
|                              |        |        |          
|Diluted EPS                   |        |        | $        

# For the Three Months Ended September 30, 2003

|                              | Income | Shares | Per Share
|----------------------------- | ------ | ------ | ---------
|
|Basic EPS                     |        |        | $        
|Effect of Diluted Securities: |        |        |          
|Stock options                 |        |        |          
|                              |        |        |          
|Diluted EPS                   |        |        | $        

7

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4.   
          Stock-Based Compensation  Our stock-based employee compensation plans are
          accounted for under the recognition and measurement principles of Accounting
          Principles Board (APB) Opinion No. 25, Accounting for Stock
          Issued to Employees, and related Interpretations. No
          compensation cost is reflected in net income, as all options granted under these
          plans had an exercise price equal to the market value of the underlying common
          stock on the date of grant. The following table illustrates the effect on net
          income and earnings per share if the fair value recognition provisions of
          Financial Accounting Standards Board (FASB) Statement of Financial
          Accounting Standards (SFAS) No. 123, Accounting for Stock-Based
          Compensation, had been applied to the option plans.

| |  | Nine Months Ended September 30,
| |  | -------------------------------
|
| |  |                                
| |  |                                
| |  |                                
| |  |                                
| |  |                                
| |  |                                
| |  |                                
| |  |                                
| |  |                                
| |  |                                
| |  |                                
| |  |                                
| |  |                                
| |  |                                
| |  |                                
| |  |                                

| |  | Three Months Ended September 30,
| |  | --------------------------------
|
| |  |                                 
| |  |                                 
| |  |                                 
| |  |                                 
| |  |                                 
| |  |                                 
| |  |                                 
| |  |                                 
| |  |                                 
| |  |                                 
| |  |                                 
| |  |                                 
| |  |                                 
| |  |                                 
| |  |                                 
| |  |                                 

# 5.   Stock Split

In
April 2004, we announced a 3-for-2 stock split on our common stock in the form of a 50%
stock dividend. On June 2, 2004, shareholders of record as of May 12, 2004 received one
additional share of stock for every two shares of stock owned prior to the 3-for-2 stock
split. All factional shares were paid in cash. The earnings per share amounts for all
periods shown have been adjusted to reflect the 3-for-2 split.

8

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# Item 2.   
Managements Discussion and Analysis or Plan of Operation.

The
following is our discussion and analysis of certain significant factors that have affected
our financial position and operating results and those of our subsidiary, Beach First
National Bank, during the periods included in the accompanying financial statements. This
commentary should be read in conjunction with the financial statements and the related
notes and the other statistical information included in this report.

This
report 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
management, as well as assumptions made by and information currently available to
management. The words may, will, anticipate,
should, would, believe, contemplate,
expect, estimate, continue, may, and
intend, as well as other similar words and expressions of the future, are
intended to identify forward-looking statements. Our actual results may differ materially
from the results discussed in the forward-looking statements, and our operating
performance each quarter is subject to various risks and uncertainties that are discussed
in detail in our filings with the Securities and Exchange Commission, including, without
limitation:

| | o | significant increases in competitive pressure in the banking and financial services industries;
| | - | -----------------------------------------------------------------------------------------------

| | o | changes in the
interest rate environment which could reduce anticipated or actual margins;
| | - | ------------------------------------------------------------------------------------------

| | o | changes in
political conditions or the legislative or regulatory environment;
| | - | -----------------------------------------------------------------------------

| | o | general economic
conditions, either nationally or regionally and especially in our primary service area, becoming
less favorable than expected resulting in, among other things, a deterioration in credit
quality;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | changes occurring in business conditions and inflation;
| | - | -------------------------------------------------------

| | o | changes in technology;
| | - | ----------------------

| | o | the level of allowance for loan loss;
| | - | -------------------------------------

| | o | the rate of delinquencies and amounts of charge-offs;
| | - | -----------------------------------------------------

| | o | the rates of loan growth;
| | - | -------------------------

| | o | adverse changes in asset quality and resulting credit risk-related losses and expenses;
| | - | ---------------------------------------------------------------------------------------

| | o | changes in monetary and tax policies;
| | - | -------------------------------------

| | o | loss of consumer confidence and economic disruptions resulting from terrorist
activities;
| | - | -----------------------------------------------------------------------------------------

| | o | changes in the securities markets; and
| | - | --------------------------------------

| | o | other risks and uncertainties detailed from time to time in our filings with the Securities and Exchange
Commission.
| | - | --------------------------------------------------------------------------------------------------------------------

# Overview

The
following discussion describes our results of operations for the quarter ended September
30, 2004 as compared to the quarter ended September 30, 2003 as well as results for the
nine months ended September 30, 2004 and 2003, and also analyzes our financial condition
as of September 30, 2004 as compared to December 31, 2003. Like most community banks, we
derive most of our income from interest we receive on our loans and investments. Our
primary source of funds for making these loans and investments is our deposits, on which
we pay interest. Consequently, one of the key measures of our success is our amount of net
interest income, or the difference between the income on our interest-earning assets, such
as loans and investments, and the expense on our interest-bearing liabilities, such as
deposits. Another key measure is the spread between the yield we earn on these
interest-earning assets and the rate we pay on our interest-bearing liabilities.

Of
course, there are risks inherent in all loans, so we maintain an allowance for loan losses
to absorb probable losses on existing loans that may become uncollectible. We establish
and maintain this allowance by charging a provision for loan losses against our operating
earnings. In the following section we have included a detailed discussion of this process.

In
addition to earning interest on our loans and investments, we earn income through fees and
other expenses we charge to our customers. We describe the various components of this
noninterest income, as well as our noninterest expense, in the following discussion.

9

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The
following discussion and analysis also identifies significant factors that have affected
our financial position and operating results during the periods included in the
accompanying financial statements. We encourage you to read this discussion and analysis
in conjunction with the financial statements and the related notes and the other
statistical information also included in this report.

# Results of Operations
EARNINGS REVIEW

Our net income was $1,022,009, or
$.51 per common share, for the nine months ended September 30, 2004 as compared to a net
income of $683,962, or $.35 per common share, for the nine months ended September 30,
2003. Our net income was $383,777, or $.19 per common share, for the three months ended
September 30, 2004 as compared to net income of $270,479, or $.14 per common share, for
the same period of 2003. The improvement in net income reflects the banks continued
growth, as average earning assets increased to $181.7 million during the first nine months
of 2004 from $142.7 million during the same period of 2003. We had a gain on the sale of
securities of $37,395 during the first nine months of 2004, compared to $134,703 during
the first nine months of 2003. The return on average assets for the nine month period
ended September 30 was .70% in 2004 compared to .59% in 2003. The return on average equity
was 8.74% in 2004 versus 6.44% in 2003.

# Net Interest Income

During the first nine months of 2004,
net interest income increased to $5,838,186, from $4,300,622 in the same period of 2003.
Our level of net interest income is determined by the level of our earning assets and the
management of our net interest margin. The continued growth of our loan portfolio is the
primary driver of the increase in net interest income. The growth in net interest income
resulted from an increase of $1,937,389 in interest income, offset by an increase in
interest expense of $399,825. For the three months ended September 30, 2004, net interest
income increased to $2,171,392 from $1,648,786 during the comparable period of 2003. The
net interest spread was 4.02% in the nine months of 2004 compared to 3.59% during the same
period of 2003. The net interest margin was 4.34% for the nine month period ended
September 30, 2004 compared to 4.03% for the same period of 2003.

# Provision for Loan Losses

The provision for loan losses was
$838,000 for the first nine months of 2004 and $566,000 for the same period of 2003. For
the three month period ending September 30, 2004 and 2003, the provision was $330,000 and
$275,000, respectively. The increase in the provision for the nine month period ending
September 30, 2004 was the result of increased charge offs during this period combined
with 34% loan growth compared to 2003. The increase for the three month period was due to
increased charge offs and increased loan growth, in addition to our managements
assessment of the adequacy of the reserve for possible loan losses given the size, mix and
quality of the current loan portfolio. Our management anticipates our loan portfolio will
continue to grow in 2004 and that we will continue to increase the amount of the provision
for loan losses as the portfolio grows. See also Allowance for Possible Loan
Losses below.

# Noninterest Income

Total noninterest income was
virtually unchanged during the first nine months of 2004 compared to the same period of
2003, increasing to $769,637 from $768,205. However, all categories of noninterest income
except gain on the sale of investment securities increased during the first nine months of
2004. Service fees on deposit accounts, the largest component of noninterest income,
increased from $364,145 for the first nine months of 2003 to $392,118 during the same
period of 2004. This category of noninterest income increased due to growth in the number
of deposit accounts as well as increased fee-related activities of our customers. Other
income increased to $218,966 for the first nine months of 2004 compared to $148,199 for
the same period of 2003. The reason the total noninterest income increased so slightly
during the nine-month period is that our net gain on the sale of investment securities
declined from $134,703 for the nine month period ended September 30, 2003 to $37,395 for
the nine-month period ended September 30, 2004. The reason for this decrease was due to
the mix of our securities portfolio and the reduced market value. For the three months
ended September 30, 2004, noninterest income was $295,085 as compared to $186,794 for the
same period in 2003. For the three months ended September 30, 2004, other income was
$89,118 compared to $29,269 in 2003. Other income increased primarily due to the
banks mortgage activities and fees related to mortgage loans.

10

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# Noninterest Expense

Noninterest expenses totaled
$4,136,481 for the nine months ended September 30, 2004, an increase of $712,095 over the
$3,424,386 reported for the nine months ended September 30, 2003, and totaled $1,523,690
for the three months ended September 30, 2004 compared to $1,138,271 in the same period of
2003. As an annualized percentage of average total assets, our total noninterest expenses
decreased from 2.97% in 2003 to 2.84% in 2004. While our total assets have grown at a 37%
rate over year-end 2003, we have been able to manage our expenses while accommodating our
growth. Salary, wages and employee benefits increased by $396,518 during the nine months
ended September 30, 2004 and $170,947 during the three months ended September 30, 2004
compared to the same periods in 2003. These increases are the results of personnel
additions made to our productive capacity, normal compensation adjustments, higher costs
associated with group insurance coverage, and certain incentive awards.

Advertising and public relations
expense increased to $188,719 for the nine months ended September 30, 2004 compared to
$118,141 for the same period in 2003 and totaled $72,655 for the three months ended
September 30, 2004 compared to $40,826 in the same period in 2003. This increase is due
primarily to the promotion of our new Litchfield office that opened in July of 2004, as
well as special promotions in all markets. Professional fees increased $55,778 for the
nine months ended September 30, 2004 compared to the same period in 2003, and $23,980 for
the three months ended September 30, 2004 compared to the same period in 2003. This
increase is due to the escalating cost of accounting, auditing and legal services in
addition to increased regulatory fees.

Occupancy expense increased by
$84,105 during the nine months ended September 30, 2004 compared to 2003 and $45,778 for
the three months ended September 30, 2004 compared to the same period in 2003. This
increase is the result of the opening of the Litchfield office in July 2004 and increases
on lease payments for most locations. Overall, we are satisfied with the control of our
noninterest expenses, though we can give no assurances that they will not increase in
future periods.

# BALANCE SHEET REVIEW

# Loans

At September 30, 2004, net loans
(gross loans less unearned fees and the allowance for loan losses) totaled $171.9 million,
an increase of $43.4 million from September 30, 2003. Average total loans increased from
$126.4 million with a yield of 6.08% in the first nine months of 2003 to $151.7 million
with a yield of 6.55% in 2004. The interest rates charged on loans vary with the degree of
risk and the maturity and amount of the loan. Competitive pressures, money market rates,
availability of funds and government regulations also influence interest rates.

Because loans typically provide
higher yields than other types of earning assets, one of our goals is for loans to
represent the largest category of earning assets. At September 30, 2004, total loans were
80.6% of earning assets compared to 88.8% at September 30, 2003. The decline is due
primarily to a money market special during this quarter that grew deposits at a greater
pace than we were able to deploy them into loans. Normally, we should maintain this ratio
between 85% and 90%.

11

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The
following table shows the composition of the loan portfolio by category at September 30,
2004 and 2003.

# Composition of Loan Portfolio

|                                   | September 30, 2004 | September 30, 2003
|---------------------------------- | ------------------ | ------------------
|
|
|
|Commercial                         |                    |                   
|Real estate - construction         |                    |                   
|Real estate - mortgage             |                    |                   
|Consumer                           |                    |                   
|                                   |                    |                   
|Loans, gross                       |                    |                   
|                                   |                    |                   
|Unearned income                    |                    |                   
|Allowance for possible loan losses |                    |                   
|                                   |                    |                   
|Loans, net                         |                    |                   
|                                   |                    |                   

The principal component of our loan
portfolio at September 30, 2004 and 2003 was mortgage loans, which represented 71.2% and
62.6% of the portfolio, respectively. 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. We follow the
common practice of financial institutions in our market area of obtaining a security
interest in real estate whenever possible, in addition to any other available collateral.
The 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, we limit the loan-to-value ratio to 80%. Due to the relatively short time our
portfolio has existed, the current mix may not be indicative of the ongoing portfolio mix.
We attempt to maintain a relatively diversified loan portfolio to help reduce the risk
inherent in concentrations of collateral.

# Off Balance Sheet Risk

Through the operations of our bank,
we have made contractual commitments to extend credit in the ordinary course of our
business activities. These commitments are legally binding agreements to lend money to our
customers at predetermined interest rates for a specified period of time. We evaluate each
customers credit worthiness on a case-by-case basis. The amount of collateral
obtained, if deemed necessary by us upon extension of credit, is based on our credit
evaluation of the borrower. Collateral varies but may include accounts receivable,
inventory, property, plant and equipment, commercial and residential real estate. We
manage the credit risk on these commitments by subjecting them to normal underwriting and
risk management processes.

At September 30, 2004, the bank had
issued commitments to extend credit of $9.3 million through various types of lending
arrangements. The commitments expire over the next 36 months. Past experience indicates
that many of these commitments to extend credit will expire unused. We believe that we
have adequate sources of liquidity to fund commitments that are drawn upon by the
borrower.

In addition to commitments to extend
credit, we also issue standby letters of credit which are assurances to a third party that
they will not suffer a loss if our customer fails to meet its contractual obligation to
the third party. Standby letters of credit totaled $4.1 million at September 30, 2004.
Past experience indicates that many of these standby letters of credit will expire unused.
However, through our various sources of liquidity, we believe that we will have the
necessary resources to meet these obligations should the need arise.

# Allowance for Possible
Loan Losses

There are 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

12

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borrowers, and, in the case of a
collateralized loan, risks resulting from uncertainties about the future value of the
collateral. To address these risks, we have developed policies and procedures to evaluate
the overall quality of our credit portfolio and the timely identification of potential
problem loans. We maintain an allowance for possible loan losses which we establish
through charges in the form of a provision for loan losses. We charge loan losses and
credit recoveries directly to this allowance.

We attempt to maintain the allowance
at a level that will be adequate to provide for potential losses in our loan portfolio. To
maintain the allowance at an adequate level, we periodically make additions to the
allowance by charging an expense to the provision for loan losses on our statement of
income. We evaluate the allowance for loan losses on an overall portfolio basis, as well
as allocating the allowance to loan categories. We consider a number of factors in
determining the level of this allowance, including our total amount of outstanding loans,
our amount of past due loans, our historic loan loss experience, general economic
conditions, and our assessment of potential losses, classified and criticized loans,
concentrations of credit and internal credit risk ratings. Due to the rapid growth of our
bank over the past several years and our relatively short operating history, a large
portion of the loans in our loan portfolio and of our lending relationships are of
relatively recent origin. In general, loans do not begin to show signs of credit
deterioration or default until they have been outstanding for some period of time, a
process we refer to as seasoning. As a result, a portfolio of older loans will
usually behave more predictably than a newer portfolio. Because our loan portfolio is
relatively new, the current level of delinquencies and defaults may not be representative
of the level that will prevail when the portfolio becomes more seasoned, which may be
higher than current levels. If delinquencies and defaults increase, we may be required to
increase our provision for loan losses, which would adversely affect our results of
operations and financial condition. Our evaluation of the allowance for loan losses is
inherently subjective as it requires estimates that are susceptible to significant change.
In addition, regulatory agencies periodically review our allowance for loan losses as part
of their examination process, and they may require us to record additions to the allowance
based on their judgment about information available to them at the time of their
examinations. Our losses will undoubtedly vary from our estimates, and there is a
possibility that charge-offs in future periods will exceed the allowance for loan losses
as estimated at any point in time.

The following table sets forth
certain information with respect to our allowance for loan losses and the composition of
charge-offs and recoveries for the nine months ended September 30, 2004 and 2003.

# Allowance for Loan
Losses

|                                       | Nine months ending September 30,
|-------------------------------------- | --------------------------------
|
|
|Average total loans outstanding        |                                 
|Total loans outstanding at period end  |                                 
|Total nonperforming loans              |                                 
|Beginning balance of allowance         |                                 
|Loans charged off                      |                                 
|Total recoveries                       |                                 
|                                       |                                 
|Net loans charged off                  |                                 
|Provision for loan losses              |                                 
|                                       |                                 
|Balance at period end                  |                                 
|                                       |                                 
|Net charge-offs to average total loans |                                 
|Allowance as a percent of total loans  |                                 
|Nonperforming loans as a               |                                 
|percentage of total loans              |                                 
|Nonperforming loans as a               |                                 
|percentage of allowance                |                                 

13

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Nonperforming loans are defined as
loans currently not accruing interest or past due greater than 90 days and still accruing
interest. At September 30, 2004, we had 12 loans totaling $804,595 listed as
nonperforming. Of the 12 loans, eight are secured by real estate and total $701,731. The
remaining balance is made up of two consumer loans and one home equity line of credit.

The following table sets forth the
breakdown of the allowance for loan losses by loan category and the percentage of loans in
each category to total loans for the periods indicated. We believe that the allowance can
be allocated by category only on an approximate basis. The allocation of the allowance to
each category is not necessarily indicative of further losses and does not restrict the
use of the allowance to absorb losses in any category.

# Allocation of the
Allowance for Loan Losses

| |  | As of September 30, 2004
| |  | ------------------------
|
| |  |                         
| |  |                         
| |  |                         
| |  |                         
| |  |                         
| |  |                         
| |  |                         
| |  |                         
| |  |                         
| |  |                         
| |  |                         
| |  |                         

14

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# Investment Securities

Total securities averaged $22.6
million in the first nine months of 2004 and totaled $37.6 million at September 30, 2004.
During the same period of 2003, total securities averaged $12.8 million and totaled $13.1
million at September 30, 2003. At September 30, 2004, our total investment securities
portfolio had a book value of $37,584,311 and a market value of $37,601,729 for an
unrealized net gain of $17,418. We primarily invest in U.S. Government Agencies and U.S.
Government Mortgage- backed securities. Our investment securities portfolio increased
during the first nine months of 2004 because deposits were growing at a faster pace than
we could deploy them into loans due to a money market special during this quarter.

At September 30, 2004, short-term
investments totaled $4,209,000 compared to $3,277,756 as of September 30, 2003. These
funds are one source of our banks liquidity and are generally invested in an earning
capacity on an overnight or short-term basis.

# Deposits and Other
Interest-Bearing Liabilities

Average
total deposits were $158.3 million and average interest-bearing deposits were $132.7
million in the first nine months of 2004. Average total deposits were $131.2 million and
average interest-bearing deposits were $107.2 million in the same period of 2003.

The
following table sets forth our deposits by category as of September 30, 2004 and September
30, 2003.

# Deposits

|                                   | September 30, 2004 | September 30, 2003
|---------------------------------- | ------------------ | ------------------
|
|
|
|Demand deposit accounts            |                    |                   
|Interest bearing checking accounts |                    |                   
|Money market accounts              |                    |                   
|Savings accounts                   |                    |                   
|Time deposits less than $100,000   |                    |                   
|Time deposits of $100,000 or over  |                    |                   
|                                   |                    |                   
|Total deposits                     |                    |                   
|                                   |                    |                   

Most of the growth in our deposits
was in money market accounts, which increased nearly 160% from the amount at September 30,
2003. This growth was primarily a result of special promotions and increased advertising.

Core deposits, which exclude
certificates of deposit of $100,000 or more, provide a relatively stable funding source
for our loan portfolio and other earning assets. Our core deposits were $148.5 million at
September 30, 2004 compared to $99.7 million at September 30, 2003. We expect a stable
base of deposits to be our primary source of funding to meet both our short-term and
long-term liquidity needs. Core deposits as a percentage of total deposits were
approximately 78.9% at September 30, 2004 and 76.0% at September 30, 2003. Our
loan-to-deposit ratio was 90.6% at September 30, 2004 versus 95.3% at September 30, 2003.
The average loan-to-deposit ratio was 88.6% during the first nine months of 2004 and 96.3%
during the same period of 2003.

15

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In addition to deposits, we obtained
funds from the Federal Home Loan Bank to help fund our loan growth. Average borrowings
from the Federal Home Loan Bank were $16.0 million during the first nine months of 2004
and totaled $16.5 million at September 30, 2004. The following table reflects the current
borrowing terms as of September 30, 2004.

| | FHLB Description | Balance | Current Rate      | Maturity Date
| | ---------------- | ------- | ----------------- | -------------
| |                  |         | CIP/EDP           |              
| |                  |         | CIP/EDP           |              
| |                  |         | Fixed Rate Credit |              
| |                  |         | Fixed Rate Credit |              
| |                  |         | Convertible       |              
| |                  |         |                   |              
| |                  |         |                   |              
| |                  |         |                   |              

# CAPITAL

Under the capital guidelines of the
Office of the Comptroller of the Currency and the Federal Reserve, we are required to
maintain a minimum total risk-based capital ratio of 8%, with at least 4% being Tier 1
capital, at both the bank and holding company levels.To be considered
well-capitalized, we must meet regulatory standards of 10% for total
risk-based capital and 6% for Tier 1 capital. Tier 1 capital consists of common
shareholders equity, qualifying perpetual preferred stock, and minority interest in
equity accounts of consolidated subsidiaries, less goodwill. In addition, we must maintain
a minimum Tier 1 leverage ratio (Tier 1 capital to total average assets) of at least 4%.
The well-capitalized standard for the Tier 1 leverage ratio is 5%. At
September 30, 2004, our total shareholders equity was $16.1 million ($16.1 million
at the bank level). We were considered to be well capitalized at both the
holding company and bank level for regulatory purposes at September 30, 2004, as our Tier
1 capital ratio was 11.2% (9.0% at the bank level), our total risk-based capital ratio was
12.9% (10.2% at the bank level), and our Tier 1 leverage ratio was 10.3% (7.4% at the bank
level).

On May 27, 2004, we raised $5.0
million through the issuance and sale of floating rate capital securities of our
wholly-owned subsidiary, BFNB Trust. These capital securities are reported on our
consolidated balance sheet as junior subordinated debentures. BFNB Trust loaned these
proceeds to our holding company to use for general corporate purposes. The trust preferred
debt qualifies as Tier 1 capital under Federal Reserve Board guidelines.

Debt issuance costs, net of
accumulated amortization, from the junior subordinated debentures totaled $43,603 at
September 30, 2004 and is included in other assets on our consolidated balance sheet.
Amortization of debt issuance costs from trust preferred debt totaled $1,402 for the nine
month period ended September 30, 2004 and is reported in other noninterest expense on the
consolidated statement of income.

The capital securities accrue and pay
distributions annually at a rate per annum equal to the three-month LIBOR plus 270 basis
points, which was 4.350% at September 30, 2004. The distribution rate payable on the
capital securities is cumulative and payable quarterly in arrears. We have the right,
subject to events of default, to defer payments of interest on the capital securities for
a period not to exceed 20 consecutive quarterly periods, provided that no extension period
may extend beyond the maturity date of May 27, 2034.

We have no current intention to
exercise our right to defer payments of interest on the capital securities.

The capital securities mature or are
mandatorily redeemable upon maturity on May 27, 2034 and or upon earlier optional
redemption as provided in the indenture. We have the right to redeem the capital
securities, in whole or in part, on or after May 27, 2009. We may also redeem the capital
securities prior to such dates upon occurrence of specified conditions and the payment of
a redemption premium.

# LIQUIDITY AND INTEREST
RATE SENSITIVITY

Our primary sources of liquidity are
core deposits, scheduled repayments on our loans, advances from the Federal Home Loan
Bank, and interest on, pay downs and maturities of our investments. All of our securities
have been classified as available for sale. Occasionally, we might sell investment
securities in connection with the management of our interest sensitivity gap or to manage
cash availability. We may also utilize our cash and due from banks, security repurchase

16

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agreements, and federal funds sold to
meet liquidity requirements as needed. In addition, we have the ability, on a short-term
basis, to purchase federal funds from other financial institutions. Presently, we have
made arrangements with commercial banks for short-term unsecured advances of up to $9.5
million. We also have a line of credit with the Federal Home Loan Bank to borrow up to 75%
of our 1 to 4 family loans, resulting in an availability of funds of $4.6 million at
September 30, 2004. FHLB has approved borrowings up to 15% of the banks total assets
less advances outstanding. The borrowings are available by pledging and purchasing
additional collateral and FHLB stock. At September 30, 2004, we had borrowed $16.5 million
on this line. We believe that our liquidity and ability to manage assets will be
sufficient to meet our cash requirements over the near term.

# IMPACT OF INFLATION

Unlike most industrial companies, the
assets and liabilities of financial institutions such as the company and the bank are
primarily monetary in nature. Therefore, interest rates have a more significant impact on
our 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
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 rate fluctuations, including those resulting from inflation.

# CRITICAL ACCOUNTING
POLICIES

We have adopted various accounting
policies which govern the application of accounting principles generally accepted in the
United States in the preparation of our financial statements. Our significant accounting
policies are described in the footnotes to the consolidated financial statements at
December 31, 2003 as filed on our annual report on Form 10-KSB. Certain accounting
policies involve significant judgments and assumptions by us which have a material impact
on the carrying value of certain assets and liabilities. We consider these accounting
policies to be critical accounting policies. The judgments and assumptions we use are
based on historical experience and other factors, which we believe to be reasonable under
the circumstances. Because of the nature of the judgments and assumptions we make, actual
results could differ from these judgments and estimates which could have a material impact
on our carrying values of assets and liabilities and our results of operations.

We believe the allowance for loan
losses is a critical accounting policy that requires the most significant judgments and
estimates used in preparation of our consolidated financial statements. Some of the more
critical judgments supporting the amount of our allowance for loan losses include
judgments about the credit worthiness of borrowers, the estimated value of the underlying
collateral, the assumptions about cash flow, determination of loss factors for estimating
credit losses, the impact of current events, and conditions, and other factors impacting
the level of probable inherent losses. Under different conditions or using different
assumptions, the actual amount of credit losses incurred by us may be different from
managements estimates provided in our consolidated financial statements. Refer to
the portion of this discussion that addresses our allowance for loan losses for a more
complete discussion of our processes and methodology for determining our allowance for
loan losses.

# RECENTLY ISSUED
ACCOUNTING STANDARDS

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

In November 2003, the Emerging Issues
Task Force (EITF) reached a consensus that certain quantitative and
qualitative disclosures should be required for debt and marketable equity securities
classified as available for sale or held to maturity under SFAS No. 115 and SFAS No. 124
that are impaired at the balance sheet date but for which other-than-temporary impairment
has not been recognized. Accordingly EITF issued EITF No. 03-1, The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain Investments. This
issue addresses the meaning of other-than-temporary impairment and its application to
investments classified as either available for sale or held to maturity under SFAS No. 115
and provides guidance determining the amount of impairment and additional quantitative and
qualitative disclosures. The guidance for determining the amount of impairment was
scheduled to be effective for periods ending after June 15, 2004, but has been delayed
indefinitely pending implementation guidance by the FASB. The disclosure provisions of
EITF No. 03-1 were effective for fiscal years ending after December 15, 2003. Adopting the
disclosure provisions of EITF No. 03-1 did not have any impact on our financial position
or results of operations.

17

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In April 2003, the FASB issued SFAS
No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging
Activities, which amends and clarifies accounting and reporting for derivative
instruments, including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) and loan commitments that relate to the
origination of mortgage loans held for sale, and for hedging activities under SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities. SFAS No.
149 clarifies under what circumstances a contract with an initial net investment meets the
characteristics of a derivative, clarifies when a derivative contains a financing
component, amends the definition of an underlying to conform it to language used in FIN
45, and amends certain other existing pronouncements. The pronouncement was generally
effective for contracts entered into or modified after June 30, 2003. The adoption of SFAS
No. 149 did not have any impact on our financial condition or operating results.

In May 2003, the FASB issued SFAS No.
150, Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity, which establishes standards for how an issuer classifies and
measures certain financial instruments with characteristics of both liabilities and
equity. SFAS 150 requires an issuer to classify certain financial instruments that include
certain obligations, such as mandatory redemption, repurchase of the issuers equity,
or settlement by issuing equity, previously classified as equity, as liabilities or assets
in come circumstances. SFAS No. 150 was generally effective for financial instruments
entered into or modified after May 31, 2003, and otherwise was effective at the beginning
of the first interim period beginning after June 15, 2003. The adoption of SFAS No. 150
did not have any impact on our financial condition or operating results.

In November 2002, the FASB issued
FASB Interpretation No. 45 (FIN 45), Guarantors Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others. FIN 45 elaborates on the disclosure to be made by a guarantor in its interim
and annual financial statements about its obligations under certain guarantees and
warranties that it has issued. FIN 45 requires a company, at the time it issues a
guarantee, to recognize an initial liability for the fair value of obligations assumed
under the guarantee. The initial recognition requirements of FIN 45 were effective for
guarantees issued or modified after December 31, 2002. The disclosure requirements were
effective for financial statements for periods ending after December 15, 2002. The
adoption of FIN 45 did not have any impact on our financial position or results of
operations.

In January 2003, the FASB issued FIN
No. 46, Consolidation of Variable Interest Entities. FIN No. 46 requires
a variable interest entity to be consolidated by a company if that company is subject to a
majority of the risk of loss from the variable interest entitys activities or
entitled to receive a majority of the entitys residual returns, or both. FIN No. 46
also requires disclosures about variable interest entities that a company is not required
to consolidate, but in which it has a significant variable interest. FIN No. 46 provides
guidance for determining whether an entity qualifies as a variable interest entity by
considering, among other considerations, whether the entity lacks sufficient equity or its
equity holders lack adequate decision-making ability. The consolidation requirements of
FIN No. 46 apply immediately to variable interest entities created after January 31,
2003. The consolidation requirements apply to existing entities in the first fiscal year
or interim period beginning after June 15, 2003. Certain of the disclosure
requirements applied in all financial statements issued after January 31, 2003,
regardless of when the variable interest entity was established. The adoption of FIN No.
46 did not have any effect on our financial position or results of operations.

In March 2004, the FASB issued an
exposure draft on Share-Based Payment. The proposed Statement addresses the
accounting for transactions in which an enterprise receives employee services in exchange
for (a) equity instruments of the enterprise or (b) liabilities that are based on the fair
value of the enterprises equity instruments or that may be settled by the issuance
of such equity instruments. This proposed Statement would eliminate the ability to account
for share-based compensation transactions using APB Opinion No. 25, Accounting for
Stock Issued to Employees, and generally would require instead that such
transactions be accounted for using a fair-value-based method. This Statement, if
approved, was scheduled to be effective for awards that are granted, modified, or settled
in fiscal years beginning after a) December 15, 2004 for public entities and nonpublic
entities that used the fair-value-based method of accounting under the original provisions
of Statement 123 for recognition or pro forma disclosure purposes and b) December 15, 2005
for all other nonpublic entities.On October 16, 2004, the FASB delayed the
effective date of this proposal by six months and anticipates it will be effective for by
the third quarter of 2005. Retrospective application of this Statement is not permitted.
The adoption of this Statement, if approved, could have an impact on our financial
position or results of operations.

Other accounting standards that have
been issued or proposed by the FASB or other standards-setting bodies that do not require
adoption until a future date are not expected to have a material impact on the
consolidated financial statements upon adoption.

18

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# Item 3.   Controls and
Procedures

As of the end of the period covered
by this report, we carried out an evaluation, under the supervision and with the
participation of our management, including our Chief Executive Officer and Chief Financial
Officer, of the effectiveness of our disclosure controls and procedures as defined in
Exchange Act Rule 13a-15(e). Based upon that evaluation, our Chief Executive Officer and
Chief Financial Officer have concluded that our current disclosure controls and procedures
are effective as of September 30, 2004. There have been no significant changes in our
internal controls over financial reporting during the fiscal quarter ended September 30,
2004 that have materially affected, or are reasonably likely to materially affect, our
internal controls over financial reporting.

The design of any system of controls
and procedures is based in part upon certain assumptions about the likelihood of future
events. There can be no assurance that any design will succeed in achieving its stated
goals under all potential future conditions, regardless of how remote.

# PART II  OTHER
INFORMATION

# Item 1.   Legal
Proceedings.

There
are no material legal proceedings to which we or any of our subsidiaries is a party or of
which any of our property is the subject.

# Item 2.   Unregistered
Sales of Equity Securities and Use of Proceeds.

Not
applicable.

# Item 3.   Defaults Upon
Senior Securities.

Not
applicable.

# Item 4.   Submission of
Matters to a Vote of Security Holders.

Not
applicable.

# Item 5.   Other
Information.

Not
applicable.

# Item 6.   Exhibits.

31.1        Rule 13a-14(a) Certification of the Chief Executive Officer.

31.2        Rule 13a-14(a) Certification of the Chief Financial Officer.

32            Section 1350 Certifications.

19

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# SIGNATURES

In
accordance with the requirements of the Exchange Act, the registrant caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

| |  | BEACH FIRST NATIONAL BANCSHARES, INC.
| |  | -------------------------------------

|Date:  November 9, 2004 |  | By:  /s/ Walter E. Standish, III
        Walter E. Standish, III        
President and Chief Executive Officer
|----------------------- |  | --------------------------------------------------------------------------------------------------------------

|Date:   November 9, 2004 |  | By:  /s/ Richard N. Burch
        Richard N. Burch       
Chief Financial and Principal Accounting Officer
|------------------------ |  | ----------------------------------------------------------------------------------------------------------

20

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INDEX TO EXHIBITS

Exhibit Number           Description

31.1         
        Rule 13a-14(a) Certification of the Chief Executive Officer.

31.2         
        Rule 13a-14(a) Certification of the Chief Financial Officer.

32         
            Section 1350 Certifications.

21