# 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:   March 31, 2005                                          

|[   ] | 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           |  | 58-1030117                          
|------------------------ |  | ------------------------------------
|(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 April 30, 2005, 2,018,408 shares of the issuer's common stock, par value $1.00 per
share, were issued and outstanding.

Transitional Small Business Disclosure Format (check one):              
Yes         No   X

---

# PART IFINANCIAL INFORMATION
Item 1.   Financial Statements.

# Beach First National Bancshares, Inc. and Subsidiaries
Myrtle Beach, South CarolinaConsolidated Condensed Balance Sheets

|                                                | March 31, | 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 of life insurance                    |           |             
|Other assets                                    |           |             
|                                                |           |             
|Total assets                                    |           |             
|                                                |           |             
|LIABILITIES AND SHAREHOLDERS' EQUITY            |           |             
|LIABILITIES:                                    |           |             
|Deposits                                        |           |             
|Noninterest bearing deposits                    |           |             
|Interest bearing deposits                       |           |             
|                                                |           |             
|Total deposits                                  |           |             
|Advances from Federal Home Loan Bank            |           |             
|Junior subordinated debentures                  |           |             
|Other liabilities                               |           |             
|                                                |           |             
|Total liabilities                               |           |             
|                                                |           |             
|SHAREHOLDERS' EQUITY:                           |           |             
|Common stock, $1 par value; 10,000,000 shares   |           |             
|authorized; 2,016,158 issued and outstanding at |           |             
|March 31, 2005 and 2,013,027 at March 31, 2004  |           |             
|and 2,013,508 at December 31, 2004              |           |             
|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 condensed financial
statements.

2

---

# Beach First National
Bancshares, Inc, and Subsidiaries Myrtle Beach, South Carolina Consolidated Condensed
Statements of Income (unaudited)

|                                                     | Three Months Ended
|---------------------------------------------------- | ------------------
|
|
|INTEREST INCOME                                      |                   
|Interest and fees on loans                           |                   
|Investment securities                                |                   
|Federal funds sold                                   |                   
|                                                     |                   
|Total interest income                                |                   
|                                                     |                   
|INTEREST EXPENSE                                     |                   
|Deposits                                             |                   
|Advances from the FHLB and federal funds purchased   |                   
|Junior subordinated debentures                       |                   
|                                                     |                   
|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 on sale of loan                                 |                   
|Loss on sale of investment securities                |                   
|Income from cash value life insurance                |                   
|Mortgage loan referral fees                          |                   
|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                  |                   
|                                                     |                   
|Weighted average common shares outstanding - basic   |                   
|Weighted average common shares outstanding - diluted |                   

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

3

---

# Beach First National
Bancshares, Inc. and SubsidiariesConsolidated Condensed Statements of Changes in
Shareholders Equity and Comprehensive Income (Unaudited)

|                                              |  |  |  |           | Accumulated |  
|--------------------------------------------- |  |  |  | --------- | ----------- | -
|
|
|
|
|BALANCE, DECEMBER 31, 2003                    |  |  |  | 1,323,768 |             | $
|Net income                                    |  |  |  | -         |             |  
|Other comprehensive income, net of taxes:     |  |  |  |           |             |  
|Unrealized gain on investment securities      |  |  |  | -         |             |  
|                                              |  |  |  |           |             |  
|Comprehensive income                          |  |  |  | -         |             |  
|Exercise of stock options                     |  |  |  | 18,250    |             |  
|Declaration of 3 for 2 stock split payable on |  |  |  |           |             |  
|June 2, 2004                                  |  |  |  | 671,009   |             |  
|                                              |  |  |  |           |             |  
|BALANCE, MARCH 31, 2004                       |  |  |  | 2,013,027 |             | $
|                                              |  |  |  |           |             |  

|                                            |  |  |  |           | Accumulated |  
|------------------------------------------- |  |  |  | --------- | ----------- | -
|
|
|
|
|BALANCE, DECEMBER 31, 2004                  |  |  |  | 2,013,508 |             | $
|Net income                                  |  |  |  | -         |             |  
|Other comprehensive income, net of taxes:   |  |  |  |           |             |  
|Unrealized loss on investment securities    |  |  |  | -         |             |  
|Plus Reclassification adjustments for gains |  |  |  |           |             |  
|included in net income                      |  |  |  | -         |             |  
|                                            |  |  |  |           |             |  
|Comprehensive loss                          |  |  |  | -         |             |  
|Exercise of stock options                   |  |  |  | 2,650     |             |  
|                                            |  |  |  |           |             |  
|BALANCE, MARCH 31, 2005                     |  |  |  | 2,016,158 |             | $
|                                            |  |  |  |           |             |  

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

4

---

# Beach First National
Bancshares, Inc. and Subsidiaries Myrtle Beach, South Carolina Consolidated Condensed
Statements of Cash Flows (Unaudited)

|                                                            | Three Months Ended
|----------------------------------------------------------- | ------------------
|
|
|OPERATING ACTIVITIES                                        |                   
|Net income                                                  |                   
|Adjustments to reconcile net income to net cash provided by |                   
|(used in) operating activities:                             |                   
|Deferred income taxes                                       |                   
|Provisions for loan losses                                  |                   
|Depreciation and amortization                               |                   
|Accretion of deferred loan fees                             |                   
|Loss (Gain) on sale of investment securities                |                   
|Discount accretion and premium amortization                 |                   
|(Increase) decrease in other assets                         |                   
|Increase in other liabilities                               |                   
|                                                            |                   
|Net cash provided by operating activities                   |                   
|                                                            |                   
|INVESTING ACTIVITIES                                        |                   
|Purchase of investment securities                           |                   
|Purchase of FHLB stock                                      |                   
|Proceeds from sale of investment securities                 |                   
|Decrease (increase) in Federal funds sold                   |                   
|Increase in loans, net                                      |                   
|Purchase of premises and equipment                          |                   
|Purchase of life insurance contracts                        |                   
|                                                            |                   
|Net cash used in investing activities                       |                   
|                                                            |                   
|FINANCING ACTIVITIES                                        |                   
|Advances from Federal Home Loan Bank                        |                   
|Net increase (decrease) in deposits                         |                   
|Advances from junior subordinated debentures                |                   
|Exercise of stock options                                   |                   
|                                                            |                   
|Net cash provided by financing activities                   |                   
|                                                            |                   
|Net increase (decrease) in cash and cash equivalents        |                   
|                                                            |                   
|CASH AND DUE FROM BANKS, BEGINNING                          |                   
|OF PERIOD                                                   |                   
|                                                            |                   
|CASH AND DUE FROM BANKS, END OF                             |                   
|PERIOD                                                      |                   
|                                                            |                   
|CASH PAID FOR                                               |                   
|Income taxes                                                |                   
|                                                            |                   
|Interest                                                    |                   
|                                                            |                   

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

5

---

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

# 1.   Basis of Presentation

The accompanying unaudited
consolidated condensed 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 three month period ended March 31, 2005 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, 2004.

# 2.   Principles of
Consolidation

The accompanying unaudited
consolidated condensed financial statements include the accounts of the Company and its
subsidiary, Beach First National Bank. The company also owns two grantor trusts, Beach
First National Trust I and Beach First National Trust II. All significant inter-company
items and transactions have been eliminated in consolidation. In accordance with current
accounting guidance, the financial statements of Trust I and Trust II have not been
included in the Companys financial statements.

# 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.

In 2004, the board of directors
declared a 3 for 2 stock split on the companys common stock in the form of a 50%
stock dividend. The stock dividend was paid June 2, 2004 to shareholders of record as of
May 12, 2004. Shareholders of record received one additional share for every two shares
held as of the close of business on the record date. Fractional shares resulting from the
stock split were paid in cash based on the closing price as of the record date of May 12,
2004. As a result of the common stock dividend, earnings per share were retroactively
restated for all previous periods.

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

---

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

# For the Three Months
Ended March 31, 2005

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

# For the Three Months Ended March 31, 2004

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

# Note 4 
Stock-Based Compensation

The Company has a stock-based
employee compensation plan which is 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 stock-based employee
compensation cost is reflected in net income, as all stock 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 as if we had applied the fair value recognition provisions of Financial
Accounting Standards Board (FASB) SFAS No. 123, Accounting for Stock-Based
Compensation, to stock-based employee compensation.

|                                                  | Three Months ended March 31
|------------------------------------------------- | ---------------------------
|
|
|Net income, as reported                           |                            
|Deduct: Total stock-based employee compensation   |                            
|expense determined under fair value based         |                            
|method for all awards, net of related tax effects |                            
|                                                  |                            
|Pro forma net income                              |                            
|                                                  |                            
|Earnings per share:                               |                            
|Basic - as reported                               |                            
|                                                  |                            
|Basic - pro forma                                 |                            
|                                                  |                            
|Diluted - as reported                             |                            
|                                                  |                            
|Diluted - pro forma                               |                            
|                                                  |                            

7

---

# Item 2.   Managements Discussion and Analysis.

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.
| | - | --------------------------------------------------------------------------------------------------------------------

# Critical Accounting
Policies

We
have adopted various accounting policies that govern the application of accounting
principles generally accepted in the United States and with general practices within the
banking industry in the preparation of our consolidated financial statements. Our
significant accounting policies are described in the footnotes to our audited consolidated
financial statements as of December 31, 2004 as filed on our Form 10-KSB.

Certain
accounting policies involve significant judgments and assumptions by management which have
a material impact on the carrying value of certain assets and liabilities. We consider
such accounting policies to be critical accounting policies. The judgments and assumptions
we use are based on historical experience and other factors, which are believed to be
reasonable under the circumstances. Because of the nature of the judgments and assumptions
we make, actual results could differ from these judgments and estimates. These differences
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 the critical accounting policy that requires the
most significant judgment 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

8

---

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.

# Results of Operations

# Income Statement Review

Overview

Our
net income was $481,852, or $0.24 basic net income per common share, for the three months
ended March 31, 2005 as compared to $307,649, or $0.15 basic net income per common share,
for the same period in 2004. The increase in net income reflects our continued growth,
with average earning assets increasing to $249.0 million during the first three months of
2005 from $162.7 million during the same period of 2004. The return on average assets for
the three month period ended March 31, 2005 was 0.73% as compared to 0.78% for the same
period in 2004. The return on average equity was 11.5% for the three month period ended
March 31, 2005 versus 8.2% for the same period in 2004.

Net Interest Income

Our
primary source of revenue is net interest income, which represents the difference between
the income on interest-earning assets and expense on interest-bearing liabilities. During
the first three months of 2005, net interest income increased 60.9% to $2,785,430 from
$1,731,458 for the same period of 2004. The growth in net interest income resulted from an
increase of $1,665,392 in interest income, partially offset by an increase in interest
expense of $611,420. 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. Average total
loans increased from $140.7 million in the first three months of 2004 to $206.9 million in
the same period in 2005. In addition, average securities increased to $37.3 million in the
first three months of 2005 compared to $15.0 million for the first three months of 2004.
Net interest spread, the difference between the rate we earn on interest-earning assets
and the rate we pay on interest-bearing liabilities, was 4.21% in the first three months
of 2005 compared to 3.96% during the same period of 2004. The net interest margin was
4.54% for the three month period ended March 31, 2005 compared to 4.31% for the same
period of 2004.

Provision for Loan Losses

We
have established an allowance for loan losses through a provision for loan losses charged
as an expense on our statement of income. We review our loan portfolio periodically to
evaluate our outstanding loans and to measure both the performance of the portfolio and
the adequacy of the allowance for loan losses. The provision for loan losses was $500,000
for the first three months of 2005 and $215,000 for the same period of 2004. The increase
in the provision was the result of increased loan growth and managements assessment
of the adequacy of the reserve for possible loan losses given the size, mix, and quality
of the current loan portfolio. Please see the discussion below under Allowance for
Loan Losses for a description of the factors we consider in determining the amount
of the provision we expense each period to maintain this allowance.

Noninterest Income

Noninterest
income increased to $263,180 for the three months ended 2005, up 15.5% from $227,768 for
the same period in 2004. Service fees on deposit accounts, the largest component of
noninterest income, increased 7.1% to $140,461 for the three months ended 2005 from
$131,091 for the same period in 2004. Service fees on deposit accounts increased due to
growth in the number of deposit accounts as well as increased fee-related activities of
customers. Income from cash value life insurance was $25,338 for the first three months of
2005 compared to $40,386 for the same period in 2004. Mortgage loan referral fees
increased to $39,821 during the three months ended March 31, 2005 compared to $26,884 for
the same period in 2004. This increase is primarily due to the increased mortgage activity
in all of our markets. Other income increased 47.8% to $43,479 for the three months ended
March 31, 2005 from $29,410 for the same period in 2004. Other income is primarily made up
of debit card and ATM fee income in addition to charges on check sales.

9

---

Noninterest Expense

Total
noninterest expense increased 43.3% to $1,787,638 for the three month period ended March
31, 2005 from $1,255,895 for the same period in 2004. As an annualized percentage of
average total assets, our total noninterest expenses decreased from 2.9% in 2004 to 2.7%
in 2005. While our total assets have grown at a 46.6% growth rate over year-end 2004
compared to year-end 2003 and 55.5 %for the first three months of 2005 compared to the
same period in 2004, we have been able to manage our expenses while accommodating our
growth. Salary and wages and employee benefits expense increased $288,104 to $965,672
during the three month period ended March 31, 2005 compared to the same period in 2004.
These increases are the results of personnel additions, normal compensation adjustments,
higher costs associated with group insurance coverage, and certain incentive awards.

For
the three months ended March 31, 2005, advertising and public relations costs increased
$23,483 to $72,971. This increase was due primarily to the promotion of the
Litchfield/Pawleys Island office that opened in July 2004 and the Wexford office on Hilton
Head Island that opened in January 2005, as well as special promotions, such as newspaper
advertisements, to attract deposits in all markets. Professional fees increased $29,264 to
$72,707 for the three month period ended March 31, 2005 compared to the same period in
2004. These fees continue to increase due to our growth, the regulatory fees associated
with such growth, and the escalating cost of accounting, auditing, and legal services for
a public company.

Occupancy
expenses increased $76,469 to $183,815 during the three months ended March 31, 2005
compared to the same period in 2004. Increases in occupancy costs are the result of
opening the Litchfield/Pawleys Island and Wexford offices and increases in operating lease
payments for most locations. As we continue to expand, we expect that occupancy costs will
continue to increase.

Data
processing fees increased during the three months ended March 31, 2005 to $109,688 from
$84,011 during the same period in 2003. Data processing costs are primarily related to the
volume of loan and deposit accounts and associated transaction activity. We believe our
data processing costs are consistent with our expansion.

Other
operating expenses increased 37.5% to $229,985 during the three months ended March 31,
2005 compared to $167,258 during the same period in 2004, primarily as a result of an
increase in operating expenses related to the new branch offices in Litchfield/Pawleys
Island and Hilton Head, along with other expenses associated with the expansion of loans
and deposits. Specifically, credit and collection expenses increased $5,271, furniture and
equipment increased $16,231, postage and freight increased $7,378, armored car services
increased $6,936, and travel increased $15,401, collectively totaling $51,217 of the total
increase of $62,727.

# Balance Sheet Review

General

We
had total assets of $287.6 million at March 31, 2005, an increase of 55.5% from $184.9
million at March 31, 2004. Total assets consisted primarily of $218.6 million in net
loans, $34.7 million in investments, $16.7 million in federal funds sold and short-term
investments, and $4.5 million in cash and due from banks. Our liabilities at March 31,
2005 totaled $271.2 million, consisting primarily of $240.7 million in deposits, $19.0
million in FHLB advances, and $10.3 million of junior subordinated debentures. Our total
deposits increased to $240.7 million at March 31, 2005, up 58.2% from $152.2 million at
March 31, 2004.

Investment Securities

Total
investment securities averaged $37.3 million during the first three months of 2005 and
totaled $36.4 million at March 31, 2005. Total investment securities averaged $15.0
million during the first three months of 2004 and totaled $18.2 million at March 31, 2004.
At March 31, 2005, our total investment securities portfolio had a book value of $37.4
million and a fair market value of $36.4 million for an unrealized net loss of $992,368.
We primarily invest in U.S. Government Agency and U. S. Agency mortgage backed securities.

At
March 31, 2005, short-term investments totaled $16.7 million, compared to $12.2 million at
March 31, 2004. 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.

10

---

Loans

Since
loans typically provide higher yields than other types of earning assets, a substantial
percentage of our earning assets are invested in our loan portfolio. As of March 31, 2005,
loans represented 83.1% of average earning assets as compared to 86.4% at March 31, 2004.
At March 31, 2005, net loans (gross loans less the allowance for loan losses and deferred
loan fees) totaled $218.6 million, an increase of $76.3 million, or 53.6%, from March 31,
2004. Average gross loans increased from $140.7 million with a yield of 6.39% during the
first three months of 2004 to $206.9 million with a yield of 7.13% during the same period
in 2005. The increase in yield on loans during these periods is due to the increasing
interest rate environment in 2004 and 2005. 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.

The
following table summarizes the composition of our loan portfolio at March 31, 2005 and
2004.

|                           | At March 31,
|-------------------------- | ------------
|
|
|
|
|Commercial                 |             
|Real estate - construction |             
|Real estate - mortgage     |             
|Consumer                   |             
|                           |             
|Loans, gross               |             
|                           |             
|Deferred loan fees         |             
|Allowance for loan losses  |             
|                           |             
|Loans, net                 |             
|                           |             

Mortgage
loans constitute the principal component of our loan portfolio. Mortgage loans represented
72.92% and 66.73% of our portfolio at March 31, 2005 and 2004, 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%.

Allowance for Possible
Loan Losses

We
have established an allowance for loan losses through a provision for loan losses charged
to expense on our statement of income. The allowance for loan losses represents an amount
which we believe will be adequate to absorb probable losses on existing loans that may
become uncollectible. Our judgment as to the adequacy of the allowance for loan losses is
based on a number of assumptions about future events, which we believe to be reasonable,
but which may or may not prove to be accurate. The evaluation of the allowance is
segregated into general allocations and specific allocations. For general allocations, the
portfolio is segregated into risk-similar segments for which historical loss ratios are
calculated and adjusted for identified trends or changes in current portfolio
characteristics. Historical loss ratios are calculated by product type for consumer loans
(installment and revolving), mortgage loans, and commercial loans and may be adjusted for
other risk factors. To allow for modeling error, a range of probable loss ratios is then
derived for each segment. The resulting percentages are then applied to the dollar amounts
of the loans in each segment to arrive at each segments range of probable loss
levels. Certain nonperforming loans are individually assessed for impairment

11

---

under SFAS No. 114 and assigned
specific allocations. Other identified high-risk loans or credit relationships based on
internal risk ratings are also individually assessed and assigned specific allocations.

The
general allocation also includes a component for probable losses inherent in the
portfolio, based on managements analysis that is not fully captured elsewhere in the
allowance. This component serves to address the inherent estimation and imprecision risk
in the methodology as well as address managements evaluation of various factors or
conditions not otherwise directly measured in the evaluation of the general and specific
allocations. Such factors include the current general economic and business conditions;
geographic, collateral, or other concentrations of credit; system, procedural, policy, or
underwriting changes; experience of the lending staff; entry into new markets or new
product offerings; and results from internal and external portfolio examinations.

Periodically,
we adjust the amount of the allowance based on changing circumstances. We charge
recognized losses to the allowance and add subsequent recoveries back to the allowance for
loan losses. There can be no assurance that charge-offs of loans in future periods will
not exceed the allowance for loan losses as estimated at any point in time or that
provisions for loan losses will not be significant to a particular accounting period.

The
allocation of the allowance to the respective loan segments is an approximation and not
necessarily indicative of future losses or future allocations. The entire allowance is
available to absorb losses occurring in the overall loan portfolio. In addition, the
allowance is subject to examination and adequacy testing by regulatory agencies, which may
consider such factors as the methodology used to determine adequacy and the size of the
allowance relative to that of peer institutions, and other adequacy tests. Such regulatory
agencies could require us to adjust the allowance based on information available to them
at the time of their examination.

At
March 31, 2005, the allowance for loan losses was $2.9 million, or 1.32% of total
outstanding loans, compared to an allowance for loan losses of $2.0 million, or 1.37% of
total outstanding loans, at March 31, 2004. During the first three months of 2005, we had
three charge-offs totaling $7,900. During the same period in 2004 we had one charge-off
totaling $3,462. We had non-performing loans totaling $299,172 and $808,271 at March 31,
2005 and March 31, 2004, respectively. While there can be no assurances, we do not expect
significant losses relating to these nonperforming loans because we believe that the
collateral supporting these loans is largely sufficient to cover the outstanding loan
balance. 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 three months
ended March 31, 2005 and 2004.

|                                                   | Three Months Ended March 31,
|-------------------------------------------------- | ----------------------------
|
|Average loans outstanding                          |                             
|Total loans outstanding at period end              |                             
|Total nonperforming loans                          |                             
|                                                   |                             
|Beginning balance of allowance                     |                             
|                                                   |                             
|Total 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 percentage of total loans           |                             
|Allowance for loan losses to nonperforming loans   |                             
|Nonperforming loans as a percentage of total loans |                             

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 gross loans as of March 31, 2005. 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.

12

---

| |  | As of March 31, 2005
| |  | --------------------
|
| |  |                     
| |  |                     
| |  |                     
| |  |                     
| |  |                     
| |  |                     
| |  |                     
| |  |                     
| |  |                     

Nonperforming Assets

We discontinue accrual of
interest on a loan when we conclude it is doubtful that we will be able to collect
interest from the borrower. We reach this conclusion by taking into account factors such
as the borrowers financial condition, economic and business conditions, and the
results of our previous collection efforts. Generally, we will place a delinquent loan in
nonaccrual status when the loan becomes 90 days or more past due. When we place a loan in
nonaccrual status, we reverse all interest which has been accrued on the loan but remains
unpaid and we deduct this interest from earnings as a reduction of reported interest
income. We do not accrue any additional interest on the loan balance until we conclude the
collection of both principal and interest is reasonably certain. At March 31, 2005, there
were no loans accruing interest which were 90 days or more past due and we had no
restructured loans.

Deposits

Average total deposits were
$218.3 million for the three months ended March 31, 2005, up 51.7% from $143.9 million
during the same period in 2004. Average interest-bearing deposits were $187.9 million for
three months ended March 31, 2005, up 51.9% from $123.7 million during the same period of
2004.

The
following table sets forth our deposits by category as of March 31, 2005 and March 31,
2004.

|                                  | As of March 31
|--------------------------------- | --------------
|
|
|
|
|Noninterest bearing demand        |               
|Interest bearing demand           |               
|Money market                      |               
|Savings                           |               
|Time deposits less than $100,000  |               
|Time deposits of $100,000 or over |               
|                                  |               
|Total                             |               
|                                  |               

Deposit
growth was attributable to internal growth and the generation of new deposit accounts due
primarily to special promotions and increased advertising. Demand deposit accounts
increased as a result of an expanded focus on demand deposit accounts in addition to the
opening of new branch offices in 2004 and 2005. Interest bearing checking accounts
increased primarily due to a change mandated by the South Carolina Bar Association
requiring that all lawyer trust accounts be interest bearing. This created a shift from
demand deposit accounts to interest bearing checking accounts.

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 $188.1 million at March 31, 2005, an increase of 65.7% compared to $113.5 million at
March 31, 2004. 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 78.2% at March 31, 2005 and 74.6% at March 31, 2004. Our
loan-to-deposit ratio was 92.0% at

13

---

March 31, 2005 versus 93.5% at March
31, 2004. The average loan-to-deposit ratio was 94.7% during the first three months of
2005 and 94.8% during the same period of 2004.

# Advances from Federal
Home Loan Bank

In
addition to deposits, we obtained funds from the FHLB to help fund our loan growth.
Average borrowings from the FHLB were $20.1 million during the first quarter of 2005 and
totaled $19.0 million at March 31, 2005. The following table reflects the current
borrowing terms.

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

# Junior Subordinated
Debentures

On
May 27, 2004 we raised $5.0 million and on March 30, 2005 we raised an additional $5.0
million through the issuance and sale of floating rate trust preferred securities through
BFNB Trust I and BFNB Trust II (the Trusts). These trust preferred securities
are reported on our consolidated balance sheet as junior subordinated debentures. The
Trusts loaned these proceeds to our holding company to use for general corporate purposes.
Trust preferred securities currently qualify as Tier 1 capital under Federal Reserve Board
guidelines.

Debt
issuance costs, net of accumulated amortization, from the junior subordinated debentures
totaled $69,000 at March 31, 2005 and are included in other assets on our consolidated
balance sheet. Amortization of debt issuance costs from trust preferred debt totaled $625
for the three month period ended March 31, 2005 and is reported in other noninterest
expense on the consolidated statement of income.

The
trust preferred securities accrue and pay distributions annually at a rate per annum equal
to the three month LIBOR plus 270 and 190 basis points, respectively, which was 5.393% and
4.593% at March 31, 2005. The distribution rate payable on these securities is cumulative
and payable quarterly in arrears. We have the right, subject to events of default, to
defer payments of interest on the trust preferred securities for a period not to exceed 20
consecutive quarterly periods, provided that no extension period may extend beyond the
maturity dates of May 27, 2034 and March 30, 2035, respectively. We have no current
intention to exercise our right to defer payments of interest on the trust preferred
securities. We have the right to redeem the trust preferred securities, in whole or in
part, on or after May 27, 2009 and March 30, 2010, respectively. We may also redeem the
trust preferred securities prior to such dates upon occurrence of specified conditions and
the payment of a redemption premium.

# Capital Resources

The
Federal Reserve Board and bank regulatory agencies require bank holding companies and
financial institutions to maintain capital at adequate levels based on a percentage of
assets and off-balance sheet exposures, adjusted for risk weights ranging from 0% to 100%.
Under the capital adequacy guidelines, regulatory capital is classified into two tiers.
These guidelines require an institution to maintain a certain level of Tier 1 and Tier 2
capital to risk-weighted assets. Tier 1 capital consists of common shareholders
equity, excluding the unrealized gain or loss on securities available for sale, minus
certain intangible assets. In determining the amount of risk-weighted assets, all assets,
including certain off-balance sheet assets, are multiplied by a risk-weight factor of 0%
to 100% based on the risks believed to be inherent in the type of asset. Tier 2 capital
consists of Tier 1 capital plus the general reserve for loan losses, subject to certain
limitations. We are also required to maintain capital at a minimum level based on total
average assets, which is known as the Tier 1 leverage ratio. At both the holding company
and bank level, we are subject to various regulatory capital requirements administered by
the federal banking agencies. To be considered well-capitalized, we must
maintain total risk-based capital of at least 10%, Tier 1 capital of at least 6%, and a
leverage ratio of at least 5%.

14

---

At
March 31, 2005, our total shareholders equity was $16.3 million ($20.9 million at
the bank level). At March 31, 2005, our Tier 1 capital ratio was 10.1% (9.7% at the bank
level), our total risk-based capital ratio was 13.3% (10.9% at the bank level), and our
Tier 1 leverage ratio was 8.6% (8.3% at the bank level). The bank was considered
well capitalized and the holding company met or exceeded its applicable
regulatory capital requirements.

# Liquidity Management

Liquidity
represents the ability of a company to convert assets into cash or cash equivalents
without significant loss, and the ability to raise additional funds by increasing
liabilities. Liquidity management involves monitoring our sources and uses of funds in
order to meet our day-to-day cash flow requirements while maximizing profits. Liquidity
management is made more complicated because different balance sheet components are subject
to varying degrees of management control. For example, the timing of maturities of our
investment portfolio is fairly predictable and subject to a high degree of control at the
time investment decisions are made. However, net deposit inflows and outflows are far less
predictable and are not subject to the same degree of control.

Our
primary sources of liquidity are deposits, scheduled repayments on our loans, and interest
on and maturities of our investments. We plan to meet our future cash needs through the
liquidation of temporary investments, the generation of deposits, and by raising
additional capital. 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 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 $16.4
million. We also have a line of credit with the FHLB to borrow up to 80% of our 1 to 4
family loans, resulting in an availability of funds of $19.5 million at March 31, 2005.
The FHLB has approved borrowings up to 15% of the banks total assets less advances
outstanding. The borrowings are available by pledging additional collateral and purchasing
FHLB stock. At March 31, 2005, we had borrowed $19.0 million on this line. We believe that
our existing stable base of core deposits, our bond portfolio, borrowings from the FHLB,
and short-term federal funds lines will enable us to successfully meet our liquidity needs
for the next 12 months.

# Interest Rate Sensitivity

A
significant portion of our assets and liabilities are monetary in nature, and consequently
they are very sensitive to changes in interest rates. This interest rate risk is our
primary market risk exposure, and it can have a significant effect on our net interest
income and cash flows. We review our exposure to market risk on a regular basis, and we
manage the pricing and maturity of our assets and liabilities to diminish the potential
adverse impact that changes in interest rates could have on our net interest income.

We
actively monitor and manage our interest rate risk exposure principally by measuring our
interest sensitivity gap, which is the positive or negative dollar difference
between assets and liabilities that are subject to interest rate repricing within a given
period of time. A gap is considered positive when the amount of interest-rate sensitive
assets exceeds the amount of interest-rate sensitive liabilities, and it is considered
negative when the amount of interest-rate sensitive liabilities exceeds the amount of
interest-rate sensitive assets. We generally would benefit from increasing market interest
rates when we have an asset-sensitive, or a positive, interest rate gap and we would
generally benefit from decreasing market interest rates when we have liability-sensitive,
or a negative, interest rate gap. When measured on a gap basis, we are
liability-sensitive over the cumulative one-year time frame and asset-sensitive after one
year as of March 31, 2005. However, our gap analysis is not a precise indicator of our
interest sensitivity position. The analysis presents only a static view of the timing of
maturities and repricing opportunities, without taking into consideration that changes in
interest rates do not affect all assets and liabilities equally. For example, rates paid
on a substantial portion of core deposits may change contractually within a relatively
short time frame, but we believe those rates are significantly less interest-sensitive
than market-based rates such as those paid on noncore deposits.

Net
interest income is also affected by other significant factors, including changes in the
volume and mix of interest-earning assets and interest-bearing liabilities. We perform
asset/liability modeling to assess the impact of varying interest rates and the impact
that balance sheet mix assumptions will have on net interest income. We attempt to manage
interest rate sensitivity by repricing assets or liabilities, selling securities
available-for-sale, replacing an asset or liability at maturity, or adjusting the interest
rate during the life of an asset or liability. Managing the amount of assets

15

---

and liabilities that reprice in the
same time interval helps us to hedge risks and minimize the impact on net interest income
of rising or falling interest rates. We evaluate interest sensitivity risk and then
formulate guidelines regarding asset generation and repricing, funding sources and
pricing, and off-balance sheet commitments in order to decrease interest rate sensitivity
risk.

# 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
March 31, 2005, the bank had issued commitments to extend credit of $18.0 million through
various types of lending arrangements, of which $11.6 million was at variable rates. 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 borrowers.

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 $4.9
million at March 31, 2005. 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.

# Impact of Inflation

The
effect of relative purchasing power over time due to inflation has not been taken into
account in our consolidated financial statements. Rather, our financial statements have
been prepared on an historical cost basis in accordance with generally accepted accounting
principles.

Unlike
most industrial companies, our assets and liabilities are primarily monetary in nature.
Therefore, the effect of changes in interest rates will have a more significant impact on
our performance than will the effect of changing prices and inflation in general. In
addition, interest rates may generally increase as the rate of inflation increases,
although not necessarily in the same magnitude. As discussed previously, we seek to manage
the relationships between interest sensitive assets and liabilities in order to protect
against wide rate fluctuations, including those resulting from inflation.

# Recently Issued
Accounting Standards

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

In
December 2004, the FASB issued SFAS No. 123 (revised 2004), Share-Based
Payment (SFAS No. 123(R)). SFAS No. 123(R) will require companies to
measure all employee stock-based compensation awards using a fair value method and record
such expense in its financial statements. In addition, the adoption of SFAS No. 123(R)
requires additional accounting and disclosure related to the income tax and cash flow
effects resulting from share-based payment arrangements. SFAS No. 123(R) is effective
beginning as of the first annual reporting period beginning after December 15, 2005. The
Company is currently evaluating the impact that the adoption of SFAS No. 123(R) will have
on its financial position, results of operations and cash flows. The cumulative effect of
adoption, if any, will be measured and recognized in the statement of operations on the
date of adoption.

In
April 2005, the Securities and Exchange Commissions Office of the Chief Accountant
and its Division of Corporation Finance has released Staff Accounting Bulletin (SAB)
No.107 to provide guidance regarding the application of FASB Statement No.123 (revised
2004), Share-Based Payment. Statement No.123(R) covers a wide range of share-

16

---

based compensation arrangements
including share options, restricted share plans, performance-based awards, share
appreciation rights, and employee share purchase plans. SAB 107 provides interpretive
guidance related to the interaction between Statement No.123R and certain SEC rules and
regulations, as well as the staffs views regarding the valuation of share-based
payment arrangements for public companies. SAB 107 also reminds public companies of the
importance of including disclosures within filings made with the SEC relating to the
accounting for share-based payment transactions, particularly during the transition to
Statement No.123R.

In
December 2003, the FASB issued FIN No. 46 (revised), Consolidation of Variable
Interest Entities (FIN No. 46(R)), which addresses consolidation by
business enterprises of variable interest entities. FIN No. 46(R) 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(R) 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(R) 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(R) applied immediately to variable interest entities created after
January 31, 2003. The consolidation requirements applied to the Companys
existing variable interest entities in the first reporting period ending after December
15, 2004.Certain of the disclosure requirements applied to all financial
statements issued after December 31, 2003, regardless of when the variable interest entity
was established. The adoption of FIN No. 46(R) did not have any material impact on the
Companys financial position or results of operations.

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 the 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 on quantitative and qualitative
disclosures. The disclosure requirements of EITF No. 03-1 are effective for annual
financial statements for fiscal years ending after June 15, 2004. The effective date for
the measurement and recognition guidance of EITF No. 03-1 has been delayed. The FASB staff
has issued a proposed Board-directed FASB Staff Position (FSP), FSP EITF
03-1-a, Implementation Guidance for the Application of Paragraph 16 of Issue No.
03-1. The proposed FSP would provide implementation guidance with respect to debt
securities that are impaired solely due to interest rates and/or sector spreads and
analyzed for other-than-temporary impairment under the measurement and recognition
requirements of EITF No. 03-1. The delay of the effective date for the measurement and
recognition requirements of EITF No. 03-1 will be superseded concurrent with the final
issuance of FSP EITF 03-1-a. Adopting the disclosure provisions of EITF No. 03-1 did not
have any impact on the Companys 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.

# 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 March 31, 2005. There have been no
significant changes in our internal controls over financial reporting during the fiscal
quarter ended March 31, 2005 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.

17

---

# PART II

# OTHER INFORMATION

# Item 1.   Legal
Proceedings.

There
are no material legal proceedings to which the company or any of its subsidiaries is a
party or of which any of their 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.

Exhibit          
   Description

3.1       
             Articles of Incorporation

3.2        
            Bylaws

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

18

---

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:May 9, 2005 |  | By:  /s/ Walter E. Standish, III
        Walter E. Standish, III        
President and Chief Executive Officer
|---------------- |  | --------------------------------------------------------------------------------------------------------------

|Date:May 9, 2005 |  | By:  /s/ Richard N. Burch
        Richard N. Burch       
Chief Financial and Principal Accounting Officer
|---------------- |  | ----------------------------------------------------------------------------------------------------------

19

---

INDEX TO EXHIBITS

ExhibitNumber        
   Description

3.1       
             Articles of Incorporation

3.2        
            Bylaws

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

20