##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
  Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 Or 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year
    December 31, 2008.oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)  OF
    THE SECURITIES EXCHANGE ACT OF 1934For 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.)3751 Robert M. Grissom Pkwy., Suite 100
    Myrtle Beach, South Carolina

29577(Address of principal executive
    offices)

(Zip
    Code)   (843) 626-2265 (Telephone Number)
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Class

Name of Each Exchange on Which RegisteredCommon stock, $1.00 par value per share

The NASDAQ Global Market   Securities registered pursuant to Section 12(g) of the
    Act: 
    None
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer o
    Non-accelerated
    filer o
    Smaller
    reporting
    company þ  Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE
  Items 10-14)




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##### 





BEACH
    FIRST NATIONAL BANCSHARES, INC.
  TABLE OF
    CONTENTS
   
 Item



Page No.PART I1.


Business


11A.


Risk Factors


171B.


Unresolved Staff Comments


242.


Properties


243.


Legal Proceedings


254.


Submission of Matters to a Vote of Security
    Holders


25PART II5.


Market for Common Equity and Related Stockholder
    Matters


256.


Selected Financial Data


277.


Managements Discussion and Analysis of
    Financial Conditions and Results


277A.


Quantitative and Qualitative Disclosures About
    Market Risk


468.


Financial Statements and Supplementary Data


479.


Changes and Disagreements with Accountants on
    Accounting and Financial Disclosure


779A.


Controls and Procedures


779B.


Other Information


80PART III10.


Directors, Executive Officers and Corporate
    Governance


8011.


Executive Compensation


8012.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


8013.


Certain Relationships and Related Transactions
    and Director Independence


8014.


Principal Accounting Fees and Services


80PART IV15.


Exhibits


81Signatures


82EX-10.11EX-10.12EX-21.1EX-23.1EX-31.1EX-31.2EX-32




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Part I  Item 1.
    Business  Item 1A-
  
    significant increases in competitive pressure in the banking and
    financial services industries;
    changes in the interest rate environment which could reduce
    anticipated or actual margins;
    changes in political conditions or the legislative or regulatory
    environment;
    general economic conditions, either nationally or regionally and
    especially in our primary service area, continuing to be weak
    resulting in, among other things, a deterioration in credit
    quality;
    changes occurring in business conditions and inflation;
    changes in management;
    changes in technology;
    changes in deposit flows;
    the level of allowance for loan loss;
    the rate of delinquencies and amounts of charge-offs;
    the rates of loan growth and lack of seasoning in our loan
    portfolio;
    adverse changes in asset quality and resulting credit
    risk-related losses and expenses;
    slower growth, a decrease in reliance upon brokered deposits,
    increased capital requirements, and other changes in our
    business that may be required or necessary in order for us to
    comply with the agreement we have with the OCC;
    instability of the U.S. financial system. The
    U.S. government has responded to the ongoing financial
    crisis and economic slowdown by enacting new legislation and
    expanding or establishing a number of programs and initiatives.
    The U.S. Treasury, the FDIC, and the Federal Reserve Board
    each have developed programs and facilities, including, among
    others, the Troubled Asset Relief Programs (TARP) Capital
    Purchase Program, the temporary liquidity guarantee program, and
    other efforts, designed to increase lending, and restore
    consumer confidence in the banking sector;
    the nationalization of the banking industry;
    changes in the financial markets relating to the ability of
    financial institutions to obtain capital. Many financial
    institutions have limited options in terms of raising capital at
    reasonable rates in these current uncertain economic times. The
    various Treasury programs have also created uncertainty as to
    the ongoing viability of financial institutions who have not
    received government equity to date;
    higher than anticipated levels of defaults on loans;
    the amount of our real estate-based loans and the weakness in
    the commercial real estate market; 1




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
    misperceptions by depositors about the safety of their deposits;
    changes in monetary and tax policies;
    loss of consumer confidence and economic disruptions resulting
    from terrorist activities;
    changes in the securities markets;
    other risks and uncertainties detailed from time to time in our
    filings with the SEC; and
    natural disasters, such as a hurricane or flooding in our
    primary service area.      General
    Overview
  http://www.beachfirst.com
  Marketing
    Focus
    Operating
    and Growth Strategy
   2




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Deposit
    Products
    Other
    Financial Services
      Lending
    Activities
  General.
      Loans secured by real estate.
 3




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
    Commercial Real Estate Mortgages.  These loans
    are secured by commercial property. The Company reduces credit
    risk in the commercial real estate portfolio by emphasizing
    loans for owner-occupied properties where the loan-to-value
    ratio, established by independent appraisals, does not exceed
    80%. The underwriting of a loan includes evaluation of such
    factors as existing credit, cash flow analysis, value of any
    collateral, personal guaranties, and other factors. The Company
    typically reviews the personal financial statements and tax
    returns of the principal owners and requires personal
    guarantees. At December 31, 2008, commercial real estate
    loans (other than construction loans) amounted to
    $394.3 million, or approximately 70.6%, of our loan
    portfolio. This includes various types of business purpose loans
    secured by commercial real estate.
    Real Estate Construction Loans.  The Company
    offers primarily adjustable rates on residential and commercial
    construction loans to builders, developers, and consumers who
    wish to build their own homes. The duration of our construction
    loans are generally limited to no more than 18 months,
    although payments may be structured on a longer basis or
    amortized if necessary. Construction loans generally carry a
    higher degree of risk than long-term financing of existing
    properties, because repayment depends on the ultimate completion
    of the project or home and usually on the sale of the property
    or permanent financing. Specific risks include cost overruns,
    mismanaged construction, mismanaged draw requests, pre-sale
    commitment fall-out, inferior or improper construction
    techniques, economic changes or downturns during construction,
    rising interest rates which may prevent sale of the property,
    and failure to sell completed projects in a timely manner.    
    Consumer Real Estate Loans.  The Company
    originates traditional first and second mortgage residential
    real estate loans and home equity loans. Home equity lines of
    credit typically have terms of fifteen years or less and the
    Company generally limits the extension of credit to 90% of the
    available equity of each property. The Company typically sells a
    portion of its consumer retail mortgage loans to investors. The
    Company limits the loan-to-value ratio on residential real
    estate loans it keeps to 80%. At December 31, 2008, the
    total residential real estate loans (other than construction
    loans) amounted to $61.9 million, or 11.1% of our loan
    portfolio. Of this total amount, the Company had
    $7.2 million of mortgage loans held for sale, and
    $26.4 million of home equity loans at December 31,
    2008.  Commercial Business Loans.
    Consumer Loans.
 4




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Credit Administration and Loan Review.
  Underwriting Procedures, Collateral, and
    Risk.
  
    Character  the Company determines that the borrower
    has sound character and integrity by examining the
    borrowers history.
    Capital  the Company evaluates the borrowers
    overall financial strength, as well as the equity investment in
    the asset being financed.
    Collateral  the Company determines whether the
    collateral is adequate from the standpoint of quality,
    marketability, value and income potential.
    Capacity  the Company evaluates the borrowers
    ability to service the debt.
    Conditions  the Company underwrites the credit in
    light of the effects of external factors, such as economic
    conditions and industry trends.     5




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Loan Approval. follow-up
  Competition
    Employees
    SUPERVISION
    AND REGULATION
   6




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Beach
    First National Bancshares, Inc.
    Permitted Activities.
    
    factoring accounts receivable;
    making, acquiring, brokering or servicing loans and related
    activities;
    leasing personal or real property;
    operating a non-bank depository institution (such as a savings
    association, trust company functions, financial and investment
    advisory activities);
    conducting discount securities brokerage activities;
    underwriting and dealing in government obligations and money
    market instruments;
    providing specified management consulting and counseling
    activities;
    performing selected data processing services and support
    services; and
    acting as agent or broker in selling credit life insurance and
    other types of insurance in connection with credit transactions
    performing selected insurance underwriting activities.      Change in Control.
 7




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Source of Strength.
  Capital Requirements.
  South Carolina State Regulation.
  Beach
    First National Bank (Bank)
    
    security devices and procedures;
    adequacy of capitalization and loss reserves; 8




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
    loans;
    investments;
    borrowings;
    deposits;
    mergers;
    issuances of securities;
    payment of dividends;
    interest rates payable on deposits;
    interest rates or fees chargeable on loans;
    establishment of branches;
    corporate reorganizations;
    maintenance of books and records; and
    adequacy of staff training to carry on safe lending and deposit
    gathering practices.        Prompt Corrective Action.
 9




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
    Well Capitalized  The institution exceeds the
    required minimum level for each relevant capital measure. A well
    capitalized institution is one (i) having a total capital
    ratio of 10% or greater, (ii) having a tier 1 capital
    ratio of 6% or greater, (iii) having a leverage capital
    ratio of 5% or greater and (iv) that is not subject to any
    order or written directive to meet and maintain a specific
    capital level for any capital measure.
    Adequately Capitalized  The institution meets the
    required minimum level for each relevant capital measure. No
    capital distribution may be made that would result in the
    institution becoming undercapitalized. An adequately capitalized
    institution is one (i) having a total capital ratio of 8%
    or greater, (ii) having a tier 1 capital ratio of 4%
    or greater and (iii) having a leverage capital ratio of 4%
    or greater or a leverage capital ratio of 3% or greater if the
    institution is rated composite 1 under the CAMELS (Capital,
    Assets, Management, Earnings, Liquidity and Sensitivity to
    market risk) rating system.
    Undercapitalized  The institution fails to meet the
    required minimum level for any relevant capital measure. An
    undercapitalized institution is one (i) having a total
    capital ratio of less than 8% or (ii) having a tier 1
    capital ratio of less than 4% or (iii) having a leverage
    capital ratio of less than 4%, or if the institution is rated a
    composite 1 under the CAMELS rating system, a leverage capital
    ratio of less than 3%.
    Significantly Undercapitalized  The institution is
    significantly below the required minimum level for any relevant
    capital measure. A significantly undercapitalized institution is
    one (i) having a total capital ratio of less than 6% or
    (ii) having a tier 1 capital ratio of less than 3% or
    (iii) having a leverage capital ratio of less than 3%.
    Critically Undercapitalized  The institution fails to
    meet a critical capital level set by the appropriate federal
    banking agency. A critically undercapitalized institution is one
    having a ratio of tangible equity to total assets that is equal
    to or less than 2%.       10




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Standards for Safety and Soundness.
  Regulatory Examination.
  on-site
  
    internal controls;
    information systems and audit systems;
    loan documentation;
    credit underwriting;
    interest rate risk exposure; and
    asset quality.  Deposit Insurance and Assessments.
 11




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Transactions with Affiliates and Insiders.
   12




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Dividends.
  Branching.
  Anti-Tying Restrictions.
  Community Reinvestment Act.
  Finance Subsidiaries.
 13




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Consumer Protection Regulations.
  
    the Federal
    Truth-In-Lending
    Act, governing disclosures of credit terms to consumer borrowers;
    the Home Mortgage Disclosure Act of 1975, requiring financial
    institutions to provide information to enable the public and
    public officials to determine whether a financial institution is
    fulfilling its obligation to help meet the housing needs of the
    community it serves;
    the Equal Credit Opportunity Act, prohibiting discrimination on
    the basis of race, creed or other prohibited factors in
    extending credit;
    the Fair Credit Reporting Act of 1978, governing the use and
    provision of information to credit reporting agencies;
    the Fair and Accurate Credit Transactions Act requiring all
    financial institutions to develop, implement and maintain a
    written identity theft prevention program and to comply with the
    Red Flag regulations;
    the Fair Debt Collection Act, governing the manner in which
    consumer debts may be collected by collection agencies; and
    the rules and regulations of the various federal agencies
    charged with the responsibility of implementing such federal
    laws.    
    the Right to Financial Privacy Act, which imposes a duty to
    maintain confidentiality of consumer financial records and
    prescribes procedures for complying with administrative
    subpoenas of financial records; and
    the Electronic Funds Transfer Act and Regulation E issued
    by the Federal Reserve Board to implement that Act, which
    governs automatic deposits to and withdrawals from deposit
    accounts and customers rights and liabilities arising from
    the use of automated teller machines and other electronic
    banking services.  Enforcement Powers. cease-and-desist
  Anti-Money Laundering.
 14




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USA PATRIOT Act/Bank Secrecy Act. non-U.S. persons.
      Privacy and Credit Reporting.
 15




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Check 21.
  
    allowing check truncation without making it mandatory;
    demanding that every financial institution communicate to
    accountholders in writing a description of its substitute check
    processing program and their rights under the law;
    legalizing substitutions for and replacements of paper checks
    without agreement from consumers;
    retaining in place the previously mandated electronic collection
    and return of checks between financial institutions only when
    individual agreements are in place;
    requiring that when accountholders request verification,
    financial institutions produce the original check (or a copy
    that accurately represents the original) and demonstrate that
    the account debit was accurate and valid; and
    requiring the re-crediting of funds to an individuals
    account on the next business day after a consumer proves that
    the financial institution has erred.  Effect of Governmental Monetary Policies.
  Recent Legislative and Regulatory Initiatives to Address
    Financial and Economic Crises.
       16




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Item 1A.
    Risk
    Factors  Form 10-K Form 10-K,
  The
    Companys recent operating results may not be indicative of
    future operating results.
    The
    Companys decisions regarding credit risk and reserves for
    loan losses may materially and adversely affect its
    business.
     17




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Lack
    of seasoning of a portion of the Companys loan portfolio
    may increase the risk of credit defaults in the
    future.
    Recent
    negative developments in the financial industry and the domestic
    and international credit markets may adversely affect our
    operations and results.
    There
    can be no assurance that recently enacted legislation will help
    stabilize the U.S. financial system.
   18




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Continuation
    of the economic downturn could reduce our customer base, our
    level of deposits, and demand for financial products such as
    loans.
   19




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Our
    small- to medium-sized business target markets may have fewer
    financial resources to weather a downturn in the
    economy.
    We
    depend on the accuracy and completeness of information about
    clients and counterparties and our financial condition could be
    adversely affected if it relies on misleading
    information.
    Changes
    in prevailing interest rates may reduce
    profitability.
    The
    Company is dependent on key individuals and the loss of one or
    more of these key individuals could curtail growth and adversely
    affect its prospects.
    The
    Company is subject to extensive regulation that could limit or
    restrict its activities.
     20




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Risk Factors: Recent
    negative developments in the financial industry and the domestic
    and international credit markets may adversely affect our
    operations and results.
        We
    have entered into a formal written agreement with the OCC that
    requires us to take certain actions.
      We are
    required to maintain high capital levels.
    The
    FDIC Deposit Insurance assessments that we are required to pay
    may materially increase in the future, which would have an
    adverse effect on our earnings and our ability to pay our
    liabilities as they come due.
   21




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The
    Company may need to raise additional capital in the future, but
    that capital may not be available.
    Liquidity
    needs could adversely affect our financial condition and results
    of operation.
      The
    Company faces strong competition for customers, which could
    prevent it from obtaining customers and may cause it to pay
    higher interest rates to attract customers.
   22




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The
    Company will face risks with respect to future expansion and
    acquisitions or mergers.
    
    the use of estimates and judgments to evaluate credit,
    operations, management, and market risks with respect to
    expansion into a new market;
    the time and costs of evaluating new markets, hiring or
    retaining experienced local management, opening new offices, and
    the expenses until these activities generate sufficient volume
    to support the costs of the expansion;
    the incurrence and possible impairment of goodwill associated
    with an acquisition and possible adverse effects on our results
    of operations; and
    the risk of loss of key employees and customers.  A
    significant portion of the Companys loan portfolio is
    secured by real estate, and the recent weakening of the local
    real estate market could continue to adversely affect the
    business.
    A
    percentage of the loans in our portfolio currently include
    exceptions to the Companys loan policies and supervisory
    guidelines.
     23




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We are
    exposed to the possibility of technology failure.
    Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties    Type of Office

Location

Leased or OwnedMain office

3751 Grissom Parkway, Myrtle Beach, South Carolina 29577

Owned(1)Branch

Highway 544 in the Sayebrook Village Shopping Center in Surfside
    Beach, South Carolina 29588, which is south of Myrtle Beach

Leased(2)Branch

Gator Hole Shopping Center at 710 Highway 17 North, North Myrtle
    Beach, South Carolina 29582, which is in the northern end of the
    Grand Strand

Leased(2)Branch

Litchfield Market Village in Pawleys Island, South Carolina
    29585, which is in Georgetown County at the southern end of the
    Grand Strand

LeasedBranch

Pineland Station Office Building at 430 William Hilton Parkway,
    Hilton Head Island, South Carolina 29926

LeasedBranch

The Village at Wexford Shopping Center at 1000 William Hilton
    Parkway, Hilton Head Island, South Carolina 29928

LeasedBranch

7202 North Kings Highway, Suite A, Myrtle Beach, South Carolina
    29572

LeasedBank operation facility

1509 North Kings Highway, Myrtle Beach, South Carolina, 29577

LeasedLoan Production Office

Mortgage Operations Center at 1384 Highway 17, Little River,
    South Carolina 29566

LeasedLoan Production Office

1005 Bullard Court, Raleigh, North Carolina 27615

LeasedLoan Production Office

10500 Wakeman Drive, Suite 300, Fredericksburg, Virginia 22407

LeasedLoan Production Office

Burke Town Shopping Plaza at 9554-F Old Keene Mill Road, Burke,
    Virginia 22015

LeasedLoan Production Office

2125 Ridgetop Circle, Sterling, Virginia 20166

Leased     (1)
    
    The Company owns two-thirds of the company that owns the
    building, and the bank leases space from the Company.(2)
    
    The Company owns the building but leases the land.   24




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Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    of Matters to a Vote of Security Holders    Part II  Item 5.
    Market
    for Common Equity and Related Stockholder Matters    High


LowYear end 2008:First Quarter


16.34



12.61Second Quarter


13.24



7.40Third Quarter


11.01



5.91Fourth Quarter


6.50



2.70Year end 2007:First Quarter


24.45



19.30Second Quarter


23.50



21.94Third Quarter


22.48



17.01Fourth Quarter


18.92



15.75      25




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Total
    Return Performance
  
 26




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Item 6.
    Selected
    Financial Data  Years Ended December 31,2008


2007


2006


2005


2004(Dollars and shares in thousands, except share amountsSummary Balance Sheet Data:Assets

$
668,816


$
605,988


$
520,201


$
397,389


$
242,091Federal funds sold and short term investments


6,580



566



14,011



25,521



463Investment securities


70,595



65,678



68,475



43,976



36,183Total loans, net of unearned, including HFS


558,367



509,908



410,515



307,424



189,060Allowance for loan losses


(8,643
)


(6,936
)


(5,888
)


(4,364
)


(2,422
)Deposits


533,359



464,198



416,357



310,894



203,169Federal funds purchased & other borrowings


16,165



18,288











Other borrowings (FHLB)


55,000



55,000



44,710



35,504



16,500Junior subordinated debt


10,310



10,310



10,310



10,310



5,155Shareholders equity


49,718



52,578



45,460



39,125



16,333Summary Results of Operations Data:Interest income

$
41,362


$
45,107


$
36,487


$
20,921


$
11,597Interest expense


22,160



22,482



16,029



7,189



3,331Net interest income


19,202



22,625



20,458



13,732



8,266Provision for loan losses


10,491



2,046



2,174



2,184



1,340Net interest income after provision for loan losses


8,711



20,579



18,284



11,548



6,926Noninterest income


5,231



7,578



3,937



1,118



1,037Noninterest expense


19,681



18,933



12,523



7,545



5,682Income (loss) before taxes


(5,739
)


9,224



9,698



5,121



2,281Income tax expense (benefit)


(2,030
)


3,347



3,502



1,761



845Net income (loss)

$
(3,709
)

$
5,877


$
6,196


$
3,360


$
1,436Share Data:Net income per share, basic

$
(0.77
)

$
1.22


$
1.30


$
0.85


$
0.48Net Income per share, diluted

$
(0.77
)

$
1.18


$
1.27


$
0.83


$
0.46Book value per share

$
10.26


$
10.85


$
9.53


$
8.23


$
5.41Weighted average number of shares outstanding:Basic


4,845



4,818



4,764



3,976



3,016Diluted


4,845



4,977



4,875



4,060



3,134Performance Ratios:Return on average assets


(0.56
)%


1.04
%


1.33
%


1.08
%


0.70
%Return on average equity


(6.94
)%


12.01
%


14.53
%


11.37
%


9.10
%Net interest margin


2.60
%


4.20
%


4.62
%


4.60
%


4.30
%End of period loan to deposit ratio


104.69
%


109.85
%


98.77
%


95.25
%


93.83
%Efficiency ratio


80.55
%


62.73
%


51.33
%


50.81
%


56.86
%Asset Quality Ratios:Nonperforming assets, past due and restructured loans to total
    loans


4.13
%


0.57
%


0.40
%


0.36
%


0.04
%Nonperforming assets, past due and restructured loan to total
    assets


3.45
%


0.48
%


0.32
%


0.30
%


0.03
%Net charge-offs to average total loans


1.60
%


0.21
%


0.17
%


0.10
%


0.43
%Nonperforming loans to allowance for loan losses


231.05
%


41.86
%


27.59
%


25.46
%


3.18
%Allowance for loan losses to total loans at end of period


1.55
%


1.36
%


1.43
%


1.40
%


1.26
%Capital Ratios:Average equity to average assets


8.13
%


8.67
%


9.18
%


9.48
%


7.71
%Leverage ratio


8.95
%


11.20
%


12.20
%


13.80
%


10.10
%Tier 1 risk-based capital ratio


11.29
%


12.70
%


13.80
%


16.00
%


10.50
%Total risk-based capital ratio


12.54
%


14.00
%


15.20
%


17.40
%


12.20
%Growth Ratios and Other Data:Percentage change in net income


(163.10
)%


(5.50
)%


84.40
%


134.00
%


42.30
%Percentage change in diluted net income per share


(164.82
)%


(7.10
)%


53.60
%


80.60
%


37.30
%Percentage change in assets


10.37
%


16.50
%


30.90
%


64.10
%


46.60
%Percentage change in loans


9.50
%


24.00
%


31.90
%


62.80
%


41.20
%Percentage change in deposits


14.90
%


11.50
%


33.90
%


53.00
%


47.10
%Percentage change in equity


(5.44
)%


15.60
%


44.30
%


87.30
%


10.30
%   Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations   27




---



##### Table of Contents



Overview
    rd
      For the Years Ended December 31,2008

2007

2006

2005

2004Net Income

$
(3,708,116
)

$
5,876,630


$
6,195,728


$
3,359,643


$
1,435,922Total Assets

$
668,815,617


$
605,988,418


$
520,201,339


$
397,389,234


$
242,091,345Total Loans(1)

$
558,366,909


$
509,908,135


$
411,214,856


$
311,788,722


$
191,481,765Total Deposits

$
533,358,709


$
464,198,345


$
416,357,129


$
310,894,210


$
203,168,958Total Capital

$
49,718,089


$
52,578,050


$
45,459,579


$
39,125,413


$
14,732,893     (1)
    
    Includes mortgage loans held for sale and deferred fees.     28




---



##### Table of Contents



Critical
    Accounting Policies
        Analysis
    of the Fiscal Years Ended December 31, 2008 and 2007 and
    2006
  Earnings
    Review
  Overview. 3-for-2
 29




---



##### Table of Contents



Net
    Interest Income
  General.
   30




---



##### Table of Contents



Average Balances, Income and Expenses and
    Rates.
  Average
    Balances, Income and Expenses, and Rates
  For the Years Ended December 31,2008


2007


2006Average


Income/


Yield/


Average


Income/


Yield/


Average


Income/


Yield/Balance


Expense


Rate


Balance


Expense


Rate


Balance


Expense


RateFederal funds sold, short term investments and trust preferred
    securities

$
5,091,769


$
117,346



2.30
%

$
6,290,203


$
319,985



5.09
%

$
10,246,774


$
485,515



4.74
%Investment securities


73,314,410



3,603,968



4.92
%


73,409,038



3,722,477



5.07
%


60,213,573



2,909,457



4.83
%Loans(1)


549,953,836



37,640,681



6.84
%


458,703,105



41,064,557



8.95
%


372,791,961



33,091,838



8.88
%Total earning assets

$
628,360,015


$
41,361,995



6.58
%

$
538,402,346


$
45,107,019



8.38
%

$
443,252,308


$
36,486,810



8.23
%Cash & due from banks


6,038,639











6,320,502











5,947,556Other assets


22,228,441











19,474,074











15,399,446Total assets

$
656,627,095










$
564,196,922










$
464,599,310Interest-bearing depositsIBCA


16,468,363



80,672



0.49
%


19,486,521



117,264



0.60
%


21,514,975



233,353



1.08
%MMA


108,381,578



3,087,904



2.85
%


106,912,339



4,320,864



4.04
%


85,981,147



2,980,274



3.47
%Savings


3,141,369



32,573



1.04
%


2,829,492



38,711



1.37
%


3,265,767



45,840



1.40
%CDs < $100,000


121,603,964



5,969,879



4.91
%


115,414,208



6,045,644



5.24
%


93,095,247



4,367,921



4.69
%CDs > $100,000


139,990,796



5,240,628



3.74
%


111,858,527



5,886,342



5.26
%


92,326,041



4,324,574



4.68
%IRA


10,491,037



465,959



4.44
%


9,256,635



456,461



4.93
%


7,614,029



330,483



4.34
%CDARS


8,982,754



315,482



3.51
%






















Brokered CDs


73,172,254



3,457,722



4.73
%


38,316,447



1,936,770



5.05
%


29,833,796



1,428,767



4.79
%Total interest- bearing deposits

$
482,232,115


$
18,650,819



3.87
%

$
404,074,169


$
18,802,056



4.65
%

$
333,631,002


$
13,711,212



4.11
%Other borrowings


82,390,940



3,509,086



4.26
%


69,671,556



3,679,917



5.28
%


50,490,882



2,318,026



4.59
%Total interest- bearing liabilities

$
564,623,055


$
22,159,905



3.92
%

$
473,745,725


$
22,481,973



4.75
%

$
384,121,884


$
16,029,238



4.17
%Demand deposits


33,431,721











36,102,497











33,421,935Other liabilities


5,171,544











5,416,265











4,402,565Total liabilities

$
603,226,320










$
515,264,487










$
421,946,384Equity capital


53,400,775











48,932,435











42,652,928Total liabilities and equity

$
656,627,095










$
564,196,922










$
464,599,312Net interest spread










2.66
%










3.63
%










4.06
%Net interest income/margin





$
19,202,090



3.06
%





$
22,625,046



4.20
%





$
20,457,572



4.62
%     (1)
    
    In 2008, the effect of loans in nonaccrual status is significant
    to the computations. See Note 4  Loans for
    additional information. All loans and deposits are domestic.
    Includes mortgage loans held for sale. 31




---



##### Table of Contents



Analysis of Changes in Net Interest
    Income.
  Analysis
    of Changes in Net Interest Income
  For the Years Ended December 30,2008 Versus 2007


2007 Versus 2006Volume


Rate


Net Change


Volume


Rate


Net ChangeFederal funds sold and short term investments and trust
    preferred securities

$
(27,619
)

$
(175,020
)

$
(202,639
)

$
(201,272
)

$
28,509


$
(172,763
)Investment securities


(4,652
)


(113,857
)


(118,509
)


669,125



155,633



824,758Loans


6,245,505



(9,669,381
)


(3,423,876
)


7,691,038



277,176



7,968,214Total earning assets


6,213,234



(9,958,258
)


(3,745,024
)


8,158,891



461,318



8,620,209Interest-bearing deposits


3,022,838



(3,174,075
)


(151,237
)


3,277,805



1,813,039



5,090,844Other borrowings


502,977



(712,557
)


(151,237
)


1,013,086



348,805



(151,237
)Total interest-bearing liabilities


3,525,815



(3,886,632
)


(302,474
)


4,290,891



2,161,844



4,939,607Net interest income

$
2,687,419


$
(6,071,626
)

$
(3,442,550
)

$
3,868,000


$
(1,700,526
)

$
3,680,602     (1)
    
    Volume-rate changes have been allocated to each category
    proportionately based on the percentage of the total change.  Interest Rate Sensitivity.
   32




---



##### Table of Contents



Interest
    Sensitivity Analysis
  December 31, 2008After Three


After OneWithin


but within


but within


AfterThree Months


Twelve Months


Five Years


Five Years


TotalAssetsEarning assets:Federal funds sold and short term investments

$
6,374,845


$



$



$
310,000


$
6,684,845Investments, including FHLB,FRB, & Trust










10,851,788



64,302,123



75,153,911Gross loans(1)


337,344,234



66,796,968



144,533,937



9,694,524



558,369,663Total earning assets

$
343,719,079


$
66,796,968


$
155,385,725


$
74,306,647


$
640,208,419LiabilitiesInterest-bearing liabilitiesMoney market and interest checking


106,625,525















106,625,525Regular savings deposits


3,491,913















3,491,913Time deposits


90,325,697



183,745,900



27,684,554



107,239



301,863,390Brokered CDs and CDARS


9,614,010



65,896,239



21,239,000







96,749,249FHLB advances










32,500,000



22,500,000



55,000,000Other borrowings


9,670,067



260,947



1,611,818



4,622,190



16,165,022Junior subordinated debentures














10,310,000



10,310,000Total interest-bearing liabilities

$
219,727,212


$
249,903,086


$
83,035,372


$
37,539,429


$
590,205,099Period gap

$
123,991,867


$
(183,106,118
)

$
72,350,353


$
36,767,218


$
50,003,320Cumulative gap

$
123,991,867


$
(59,114,251
)

$
13,236,102


$
50,003,320


$
100,006,640Ratio of cumulative gap to total earning assets


36.07
%


(88.50
)%


8.52
%


67.29
%


15.62
%     (1)
    
    Unearned fees and unamortized loan origination costs totaling
    $294,921 are excluded from the above analysis. Mortgage loans
    held for sale are included. Of the $337 million of loans
    that reprice within three months, $215 million (63%) have
    already reached their floor interest rates as of
    December 31, 2008.  Allowance
    for Loan Losses
   33




---



##### Table of Contents



Provision
    for Loan Losses
   34




---



##### Table of Contents



Nonperforming
    Assets
    Nonperforming
    Assets
  For the Years Ended December 31,2008


2007


2006


2005


2004(Dollars in thousands)Nonaccrual loansCommercial

$
819


$
110


$



$
85


$
Real estate  construction


8,805



1,460



938



193



Real estate  mortgage


8,534



1,321



661



795



70Consumer


27



12



26



38



7Total

$
18,185


$
2,903


$
1,625


$
1,111


$
77Accruing loans which are contractually past due 90 days
    or moreCommercial


131















Real estate  construction


68















Real estate  mortgage


1,545















Consumer


39















1Total


1,783















1Total nonperforming loans

$
19,968


$
2,903


$
1,625


$
1,111


$
78Other real estate owned & repossessed assets


3,112



15



15



63



Total nonperforming assets

$
23,080


$
2,918


$
1,640


$
1,174


$
78Total nonperforming loans to total loans


3.58
%


0.57
%


0.40
%


0.36
%


0.04
%Total nonperforming loans to total assets


2.99
%


0.48
%


0.31
%


0.28
%


0.03
%Total nonperforming assets to total assets


3.45
%


0.48
%


0.32
%


0.30
%


0.03
%      35




---



##### Table of Contents



Allowance
    for Loan Losses
  For the Years Ended December 31,2008


2007


2006


2005


2004(Dollars in thousands)Average total loans outstanding

$
549,954


$
458,703


$
372,792


$
251,306


$
159,321Total loans outstanding at period end

$
558,367


$
509,908


$
411,215


$
311,789


$
191,482Total nonperforming loans

$
19,968


$
2,903


$
1,625


$
1,111


$
77Above includes mortgage loans held for saleBeginning balance of allowance

$
6,936


$
5,888


$
4,364


$
2,422


$
1,760Loans charged-off:Real Estate


7,570



294



307



16



126Commercial


1,189



577



384



200



530Consumer


99



114



101



64



27Total loans charged-off


8,858



985



792



280



683Recoveries:Real Estate


7



9



128







Commercial


60



7



5



28



Consumer


7



21



9



10



Total recoveries


74



37



142



38



5Net loans charged-off


8,784



948



650



242



678Transfer to mortgage recourse reserve






50Provision for loan losses


10,491



2,046



2,174



2,184



1,340Balance at period end

$
8,643


$
6,936


$
5,888


$
4,364


$
2,422Net charge-offs to average loans


1.60
%


0.21
%


0.17
%


0.10
%


0.43
%Allowance as a percent of total loans


1.55
%


1.36
%


1.43
%


1.40
%


1.26
%Nonperforming loans as a percentage of ALL


231.04
%


41.86
%


27.60
%


25.46
%


3.18
%  36




---



##### Table of Contents



Allocation
    of the Allowance for Loan Losses
  For the Years Ended December 31,2008


2007


2006


2005


2004% of





% of





% of





% of





% ofAmount


Loans


Amount


Loans


Amount


Loans


Amount


Loans


Amount


Loans(Dollars in thousands)Commercial

$
1,089



10.57
%

$
1,228



11.80
%

$
947



10.70
%

$
596



13.50
%

$
437



17.30
%Real estate construction


987



6.04
%


1,175



12.50
%


761



10.70
%


194



8.30
%


200



8.50
%Real estate mortgage


6,413



81.66
%


4,335



74.00
%


3,832



76.70
%


2,023



75.80
%


1,041



70.50
%Consumer


140



1.73
%


167



1.70
%


146



1.90
%


102



2.40
%


128



3.70
%Unallocated


14







31







202







1449







616



Total allowance for loan losses

$
8,643



100.00
%

$
6,936



100.00
%

$
5,888



100.00
%

$
4,364



100.00
%

$
2,422



100.00
%   Noninterest
    Income and Expense
  Noninterest Income.
    Noninterest Expense.
   37




---



##### Table of Contents



start-up
              Other Operating ExpensesFor the Years Ended December 31,2008


2007


2006Telephone

$
167,264


$
144,924


$
84,081Postage and freight


139,471



99,733



73,884Armored car


59,440



91,508



86,482Credit and collection-bank


499,769



146,073



187,741Dues and subscriptions


162,814



136,788



117,976Employee travel, conferences, meals, and lodging


133,474



259,456



189,603Business development and donations


379,362



362,261



106,137FDIC insurance


354,669



166,240



41,037Other insurance


60,632



50,932



44,898Debit/ATM


123,163



96,721



77,871Credit card processing fees


67,233



49,794



63,043Software maintenance


285,824



127,579



61,610Director BOLI


132,101



118,972



137,289Mortgage recourse expense


230,000



205,000



50,000Mortgage foreclosure expense


123,008



47,167



6,031Director and advisory fees


293,749



106,850



3,500Furniture and equipment


291,601



297,781



427,015Other operating expenses


297,997



192,055



150,587Total

$
3,801,571


$
2,699,834


$
1,908,785  38




---



##### Table of Contents



Income Taxes.
  Financial
    Condition
  General.
  Investment Securities.
  Investment
    Securities
  For the Years Ended December 31,2008


2007


2006Government sponsored enterprises

$
12,635,436


$
28,077,051


$
65,594,517Mortgage backed securities


56,162,780



36,043,362



1,064,014Other


1,796,595



1,557,580



816,000Total investment securities


70,594,811



65,677,993



67,474,531Other


4,559,100



4,379,300



3,459,600Total investments

$
75,153,911


$
70,057,293


$
70,934,131       Investment
    Securities Maturity Distribution and Yields
  December 31, 2008After One Year through


After Five Years throughLess than One Year


Five Years


Ten Years


After Ten YearsAmount


Yield


Amount


Yield


Amount


Yield


Amount


YieldGovernment sponsored enterprises

$







$
7,083,936



3.81
%

$
5,551,500



5.24
%

$




Mortgage backed securities










3,767,851



3.70
%


18,829,808



4.54
%


33,565,121



4.85
%Other


























1,796,595



4.67
%Total

$







$
10,851,787



3.87
%

$
24,381,308



4.70
%

$
35,361,716



4.77
%  39




---



##### Table of Contents



Loans.
      Composition
    of Loan Portfolio
  For the Years Ended December 31,2008


2007


2006


2005


2004% of





% of





% of





% of





% ofAmount


Total


Amount


Total


Amount


Total


Amount


Total


Amount


Total(Dollars in thousands)Commercial

$
59,040



10.7
%

$
60,376



12.0
%

$
43,975



11.0
%

$
42,183



13.5
%

$
33,031



17.2
%Real estate  construction


33,742



6.1
%


63,988



12.7
%


44,033



11.0
%


25,846



8.3
%


16,255



8.5
%Real estate  mortgage


448,970



81.4
%


370,989



73.6
%


303,211



76.0
%


236,539



75.8
%


134,978



70.4
%Consumer


9,700



1.8
%


8,505



1.7
%


7,784



2.0
%


7,488



2.4
%


7,554



3.9
%Portfolio loans, gross

$
551,452



100.0
%

$
503,858



100.0
%

$
399,003



100.0
%

$
312,056



100.0
%

$
191,818



100.0
%Unearned loan fees and costs, net


(295
)






(425
)






(266
)






(268
)






(336
)Allowance for possible loan losses


(8,643
)






(6,936
)






(5,888
)






(4,364
)






(2,422
)Portfolio loans, net


542,514







496,497







392,849







307,424







189,060Mortgage loans held for sale


7,210







6,476







12,478















Loans, net

$
549,724






$
502,973






$
405,327






$
307,424






$
189,060  40




---



##### Table of Contents



Loan
    Maturity Schedule and Sensitivity to Changes in Interest
    Rates
    (Includes mortgage loans held for sale)
  December 31, 2008After One butOne Year or Less


within Five Years


After Five Years


TotalCommercial

$
28,411,079


$
22,683,602


$
7,945,388


$
59,040,069Real estate mortgage


214,735,551



189,982,411



50,974,875



455,692,837Real estate construction


26,714,530



6,900,216



126,720



33,741,466Consumer


5,197,752



4,339,111



146,875



9,683,738Total from maturity schedules

$
275,058,912


$
223,905,340


$
59,193,858


$
558,158,110Loans in process


208,799











208,799Total

$
275,267,711


$
223,905,340


$
59,193,858


$
558,366,909     Funding
    Sources
  Deposits and Other Interest-Bearing
    Liabilities.
     41




---



##### Table of Contents



Deposits
    by Category
  For the Years Ended December 31,2008


2007


2006


2005


2004% of





% of





% of





% of





% ofAmount


Deposits


Amount


Deposits


Amount


Deposits


Amount


Deposits


Amount


DepositsNoninterest bearing demand

$
24,628,632



4.62
%

$
33,138,936



7.14
%

$
37,194,469



8.93
%

$
31,152,603



10.02
%

$
32,540,139



16.02
%Interest bearing demand


15,916,904



2.98
%


20,377,754



4.39
%


21,336,836



5.12
%


22,235,452



7.15
%


7,770,363



3.82
%Money market accounts


90,708,621



17.01
%


103,821,154



22.37
%


103,056,865



24.75
%


70,090,021



22.54
%


65,912,428



32.44
%Savings accounts


3,491,913



0.65
%


2,988,881



0.64
%


3,303,763



0.79
%


3,639,178



1.17
%


3,003,904



1.48
%Time deposits < $100,000


150,533,893



28.22
%


114,903,254



24.75
%


119,547,756



28.71
%


76,642,285



24.65
%


42,794,575



21.06
%Time deposits > $100,000


151,329,497



28.37
%


142,833,366



30.77
%


97,273,441



23.36
%


83,386,672



26.82
%


47,190,549



23.23
%CDARS


21,964,249



4.12
%






























Brokered deposits


74,785,000



14.02
%


46,135,000



9.94
%


34,644,000



8.32
%


23,748,000



7.64
%


3,957,000



1.95
%Total deposits

$
533,358,709



100.00
%

$
464,198,345



100.00
%

$
416,357,130



100.00
%

$
310,894,211



100.00
%

$
203,168,958



100.00
%     Average
    Balances and Rates
  For the Years Ended December 31,2008


2007


2006


2005


2004Amount


Rate


Amount


Rate


Amount


Rate


Amount


Rate


Amount


Rate(Dollars in thousands)Noninterest bearing demand

$
33,432






$
36,102






$
33,422






$
31,114






$
27,060



Interest bearing demand


16,468



0.49
%


19,487



0.60
%


21,515



1.08
%


17,236



0.55
%


6,182



0.35
%Money market accounts


108,382



2.85
%


106,912



4.04
%


85,981



3.47
%


75,684



2.43
%


38,956



1.76
%Savings accounts


3,141



1.04
%


2,829



1.37
%


3,266



1.40
%


3,587



1.09
%


3,169



0.80
%Time deposits


272,086



4.29
%


236,530



5.24
%


193,035



4.67
%


110,964



3.25
%


87,439



2.23
%Brokered CDs


73,172



4.73
%


38,317



5.05
%


29,834



4.79
%


9,378



3.56
%


3,957



2.93
%CDARS


8,983



3.51
%






























Total

$
515,664






$
440,177






$
367,053






$
247,963






$
166,763       Borrowings.
 42




---



##### Table of Contents



Junior
    Subordinated Debt
        Capital
    Standards and Regulatory Matters
       43




---



##### Table of Contents



Liquidity
    Management
     44




---



##### Table of Contents



Interest
    Rate Sensitivity
        Off-Balance
    Sheet Risk
  case-by-case
     45




---



##### Table of Contents



Impact of
    Inflation
      Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk.   46




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  Beach
    First National Bancshares, Inc. and Subsidiaries
  Consolidated
    Balance Sheets
  2008


2007ASSETSCash and due from banks

$
4,830,112


$
4,992,634Federal funds sold and short-term investments


6,580,273



566,044Total cash and cash equivalents


11,410,385



5,558,678Investment securities


70,594,811



65,677,993Portfolio loans, net of unearned


551,156,821



503,432,516Allowance for loan losses (ALL)


(8,642,651
)


(6,935,616
)Portfolio loans, net of ALL


542,514,170



496,496,900Mortgage loans held for sale


7,210,088



6,475,619Federal Reserve Bank stock


1,014,000



984,000Federal Home Loan Bank stock


3,545,100



3,395,300Premises and equipment, net


15,624,792



15,746,143Cash value of life insurance


3,674,106



3,554,807Investment in BFNB Trusts


310,000



310,000OREO and repossessed assets


3,111,741



15,000Other assets


9,806,424



7,773,978Total assets

$
668,815,617


$
605,988,418LIABILITIES AND SHAREHOLDERS EQUITYLiabilitiesDepositsNoninterest bearing deposits

$
24,628,632


$
33,138,936Interest bearing deposits


508,730,077



431,059,409Total deposits


533,358,709



464,198,345Advances from Federal Home Loan Bank


55,000,000



55,000,000Federal funds purchased






11,382,100Other borrowings


16,165,022



6,906,048Junior subordinated debentures


10,310,000



10,310,000Other liabilities


4,263,797



5,613,875Total liabilities

$
619,097,528


$
553,410,368Shareholders equityCommon stock, $1 par value; 10,000,000 shares
    authorized; 4,845,018 issued and outstanding at
    December 31, 2008, 4,845,018 at December 31, 2007


4,845,018



4,845,018Paid-in capital


29,513,166



29,494,912Retained earnings


14,875,309



18,583,425Accumulated other comprehensive income (loss)


484,596



(345,305
)Total shareholders equity


49,718,089



52,578,050Total liabilities and shareholders equity

$
668,815,617


$
605,988,418    47




---



##### Table of Contents



Beach
    First National Bancshares, Inc. and Subsidiaries
  Consolidated
    Statements of Income
  For the Years Ended December 31,2008


2007


2006Interest incomeInterest and fees on loans

$
37,640,681


$
41,064,557


$
33,091,838Investment securities


3,585,613



3,698,507



2,886,528Fed funds sold and short term investments


117,346



319,985



485,515Other


18,355



23,970



22,929Total interest income


41,361,995



45,107,019



36,486,810Interest expenseDeposits


18,650,819



18,802,056



13,711,212Advances from the FHLB, federal funds purchased and other
    borrowings


2,920,770



2,877,462



1,546,286Junior subordinated debentures


588,316



802,455



771,740Total interest expense


22,159,905



22,481,973



16,029,238Net interest income


19,202,090



22,625,046



20,457,572Provision for loan losses


10,491,000



2,045,600



2,174,400Net interest income after provision for loan losses


8,711,090



20,579,446



18,283,172Noninterest incomeService fees on deposit accounts


315,141



568,760



514,285Mortgage production related income


3,447,728



4,911,705



2,136,250Merchant income


892,113



665,811



164,229Gain (loss) on sale of investment securities


23,180



7,904



(57,276
)Income from cash value of life insurance


140,997



152,086



143,717Gain on sale of fixed asset


220



6,324



583,011Gain (loss) on sale of OREO (and writedowns)


(773,909
)


98,191



(73,678
)Other income


1,185,603



1,205,504



453,145Total noninterest income


5,231,073



7,616,285



3,863,683Noninterest expenseSalaries and wages


7,333,941



7,760,272



6,018,633Employee benefits


1,744,719



1,646,093



1,138,653Supplies and printing


204,474



199,977



126,705Advertising and public relations


521,099



615,552



387,056Professional fees


742,836



725,122



311,627Depreciation and amortization


1,124,250



1,060,255



518,551Occupancy


1,652,406



1,739,101



1,065,091Data processing fees


1,045,600



748,446



547,747Mortgage production related expenses


711,747



1,153,246



258,277Merchant Processing


798,061



623,947



167,866Other operating expenses


3,801,571



2,699,834



1,908,785Total noninterest expenses


19,680,704



18,971,845



12,448,991Income (loss) before income taxes


(5,738,541
)


9,223,886



9,697,864Income tax expense (benefit)


(2,030,425
)


3,347,256



3,502,136Net income (loss)

$
(3,708,116
)

$
5,876,630


$
6,195,728Basic net income (loss) per common share

$
(0.77
)

$
1.22


$
1.30Diluted net income (loss) per common share

$
(0.77
)

$
1.18


$
1.27Weighted average common shares outstandingBasic


4,845,018



4,817,911



4,764,072Diluted


4,845,018



4,977,097



4,874,562    48




---



##### Table of Contents



Beach
    First National Bancshares, Inc. and Subsidiaries
  Consolidated
    Statements of Changes in Shareholders Equity and
    Comprehensive Income (Loss)
  AccumulatedOther


TotalCommon stock


Paid-in


Retained


Comprehensive


ShareholdersShares


Amount


Capital


Earnings


Income (Loss)


EquityBalance, December 31, 2005


3,169,958


$
3,169,958


$
30,157,843


$
6,513,582


$
(715,970
)

$
39,125,413Net income














6,195,728







6,195,728Other comprehensive income, net of taxes:Unrealized gain on investment securities


















6,108



6,108Plus reclassification adjustments for losses included in net
    income


















36,657



36,657Comprehensive income






















6,238,493Stock based compensation expense






















Exercise of stock options


13,575



13,575



84,613











98,188Issuance of common stock


1,584,880



1,584,8803-for-2 split










(1,584,880
)


(2,515
)






(2,515
)Balance, December 31, 2006


4,768,413


$
4,768,413


$
28,657,576


$
12,706,795


$
(673,205
)

$
45,459,579Net income














5,876,630







5,876,630Other comprehensive income, net of taxes:






















Unrealized gain on investment securities


















386,592



386,592Plus reclassification adjustments for losses included in net
    income


















(5,375
)


(5,375
)Unrealized (loss) on interest rate swap


















(53,317
)


(53,317
)Comprehensive income






















6,204,530Stock based compensation expense










7,643











7,643Exercise of stock options


76,605



76,605



829,693











906,298Balance, December 31, 2007


4,845,018


$
4,845,018


$
29,494,912


$
18,583,425


$
(345,305
)

$
52,578,050Net income














(3,708,116
)






(3,708,116
)Other comprehensive income, net of taxes:






















Unrealized gain on investment securities


















1,013,199



1,013,199Plus reclassification adjustments for gain included in net income


















14,890



14,890Unrealized (loss) on interest rate swap


















(198,188
)


(198,188
)Comprehensive income (loss)






















(2,878,215
)Stock based compensation expense










18,254











18,254Balance, December 31, 2008


4,845,018


$
4,845,018


$
29,513,166


$
14,875,309


$
484,596


$
49,718,089    49




---



##### Table of Contents



Beach
    First National Bancshares, Inc. and Subsidiaries
  Consolidated
    Statements of Cash Flows
  For the Years Ended December 31,2008


2007


2006Operating activitiesNet income (loss)

$
(3,708,116
)

$
5,876,630


$
6,195,728Adjustments to reconcile net income to net cash provided by
    (used in) operating activities:Depreciation and amortization


1,124,250



1,060,255



518,551Write-down on real estate acquired in settlement of loans


420,000







Proceeds from sale of mortgages held for sale


116,079,020



231,970,200



93,107,365Disbursements for mortgages held for sale


(116,813,489
)


(225,967,597
)


(105,251,847
)Discount accretion and premium amortization


(217,959
)


(153,431
)


(79,569
)Deferred income taxes


(918,764
)


(673,024
)


(646,186
)Provisions for loan losses


10,491,000



2,045,600



2,174,400Recourse reserve provision


230,000



205,000



Loss (gain) on sale of fixed assets


(220
)


(6,324
)


(583,011
)(Gain) loss on sale of investment securities


(23,180
)


(7,904
)


57,276(Gain) loss on sale of other real estate owned


353,909



(99,267
)


6,031Stock based compensation expense


18,254



7,643



(Increase) decrease in other assets


(1,841,491
)


(1,713,779
)


(1,661,061
)Increase (decrease) in other liabilities


(1,580,078
)


1,994,064



1,809,209Net cash provided by (used in) operating activities


3,613,136



14,538,066



(4,353,114
)Investing activitiesProceeds from paydowns, calls and maturities of investment
    securities


9,052,822



4,988,852



4,180,510Proceeds from sale of investment securities


29,206,146



8,623,625



4,473,361Purchase of investment securities


(41,376,937
)


(10,077,003
)


(33,065,437
)Purchase of FHLB stock


(149,800
)


(919,700
)


(464,200
)Purchase of Federal Reserve Stock


(30,000
)






(450,000
)Increase in loans, net


(64,580,873
)


(107,223,880
)


(88,352,287
)Purchase of life insurance contracts


(119,299
)


(130,221
)


(123,169
)Purchase of property and equipment


(1,035,517
)


(2,462,068
)


(9,107,363
)Proceeds from sale of property and equipment


32,838



6,324



1,500,000Proceeds from sale of other real estate owned


4,201,953



1,679,229



400,969Net cash used in investing activities


(64,798,667
)


(105,514,842
)


(121,007,616
)Financing activitiesRepayment of advances from Federal Home Loan Bank






(5,000,000
)


(6,500,000
)Advances from Federal Home Loan Bank






22,500,000



10,000,000Increase (decrease) in federal funds purchased


(1,796,724
)


11,382,100Net increase in deposits


69,160,364



47,841,216



105,462,919Proceeds from exercise of stock options






520,733



98,188Cash paid in lieu of fractional shares










(2,515
)Tax benefit of stock options






385,565



Proceeds from other borrowings










5,730,991Repayments of other borrowings


(326,402
)


(303,772
)


(25,181
)Net cash provided by financing activities


67,037,238



77,325,842



114,764,402Net increase (decrease) in cash and cash equivalents


5,851,707



(13,650,934
)


(10,596,328
)Cash and cash equivalents beginning of period

$
5,558,678


$
19,209,612


$
29,805,940Cash and cash equivalents end of period

$
11,410,385


$
5,558,678


$
19,209,612Cash paid forIncome taxes

$
1,631,780


$
3,851,653


$
4,338,302Interest

$
22,469,561


$
16,577,634


$
15,639,905    50




---



##### Table of Contents



Notes
  NOTE 1 
    SUMMARY
    OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES      Basis of presentation
  Estimates
  Concentrations of credit risk
       51




---



##### Table of Contents



principal-amortizing
    Cash and cash equivalents
  Investment securities
  1. Available for sale:
  2. Held to maturity:
  3. Trading:
  Other investments
 52




---



##### Table of Contents



Loans, interest and fee income on loans
      Allowance for loan losses
        Residential mortgage loans held for sale
    (HFS)
 53




---



##### Table of Contents



Real estate acquired in settlement of loans
  Property and equipment
  Income taxes
    Advertising and public relations expense
 54




---



##### Table of Contents



Net income (loss) per share 3-for-2
  For the Years Ended December 31,2008


2007


2006Basic net income (loss) per share:Net income (loss)

$
(3,708,116
)

$
5,876,630


$
6,195,728Average common shares outstanding  basic


4,845,018



4,817,911



4,764,072Basic net income (loss) per share

$
(0.77
)

$
1.22


$
1.30Diluted net income (loss) per share:Net income (loss)

$
(3,708,116
)

$
5,876,630


$
6,195,728Average common shares outstanding  basic


4,845,018



4,817,911



4,764,072Incremental shares from assumed conversion of stock options






159,156



110,490Average common shares outstanding  diluted


4,845,018



4,977,067



4,874,562Diluted net income (loss) per share

($
0.77
)

$
1.18


$
1.27     Stock based compensation
          Reclassifications
 55




---



##### Table of Contents



Recently issued accounting pronouncements and/or
        No. 140-3, (FSP 140-3). FSP 140-3 FSP 140-3
 56




---



##### Table of Contents



No. 142-3, (FSP 142-3). FSP 142-3
    14-1, 14-1). 14-1
  No. EITF 03-6-1, EITF 03-6-1). EITF 03-6-1
  SFAS 133-1 FIN 45-4, SFAS 133-1 FIN 45-4) SFAS 133-1 FIN 45-4
    SFAS 133-1 FIN 45-4
 57




---



##### Table of Contents



2008-234
  SFAS 157-3, SFAS 157-3).
  SFAS 157-3
  SFAS 140-4 SFAS 140-4
  EITF 99-20-1, No. 99-20, EITF 99-20-1) No. 99-20, (EITF 99-20) EITF 99-20 EITF 99-20
    Other
    Developments
   58




---



##### Table of Contents



NOTE 2 
    RESTRICTIONS
    ON CASH AND DUE FROM BANKS    NOTE 3 
    INVESTMENT
    SECURITIES    December 31, 2008Amortized


Gross Unrealized


FairCost


Gains


Losses


ValueGovernment sponsored enterprises

$
12,456,243


$
179,193


$



$
12,635,436Mortgage backed securities


54,874,211



1,303,430



14,861


$
56,162,780Tax exempt securities


1,342,270







34,675


$
1,307,595Corporate


806,783







317,783


$
489,000Total securities

$
69,479,507


$
1,482,623


$
367,319


$
70,594,811   December 31, 2007Amortized


Gross Unrealized


FairCost


Gains


Losses


ValueGovernment sponsored enterprises

$
28,506,262


$
259,996


$
689,207


$
28,077,051Mortgage backed securities


36,043,363



480



481


$
36,043,362Tax exempt securities


760,046







12,786


$
747,260Corporate


810,728







408


$
810,320Total securities

$
66,120,399


$
260,476


$
702,882


$
65,677,993     AmortizedCost


Fair ValueDue within one year

$



$
Due after one year through five years


7,022,806



7,083,936Due after five through ten years


5,433,437



5,551,500Due after ten years


2,149,053



1,796,595Sub-total


14,605,296



14,432,031Mortgage backed securities


54,874,211



56,162,780Total securities

$
69,479,507


$
70,594,811  59




---



##### Table of Contents



December 31, 2008Less than 12 Months


12 Months or More


TotalFair


Unrealized


Fair


Unrealized


Fair


UnrealizedValue


Losses


Value


Losses


Value


LossesGovernment sponsored enterprises

$



$



$



$



$



$
Mortgage backed securities


3,166,604



14,861











3,166,604



14,861Tax exempt securities


1,307,595



34,675











1,307,595



34,675Corporate


489,000



317,783











489,000



317,783Total

$
4,963,199


$
367,319


$



$



$
4,963,199


$
367,319   December 31, 2007Less than 12 Months


12 Months or More


TotalFair


Unrealized


Fair


Unrealized


Fair


UnrealizedValue


Losses


Value


Losses


Value


LossesGovernment sponsored enterprises

$
1,992,600


$
653


$



$



$
1,992,600


$
653Mortgage backed securities


9,896,402



42,381



22,300,058



646,653



32,196,460



689,034Tax exempt securities


747,260



12,786











747,260



12,786Corporate


810,320



409











810,320



409Total

$
13,446,582


$
56,229


$
22,300,058


$
646,653


$
35,746,640


$
702,882        60




---



##### Table of Contents



NOTE 4 
    LOANS    December 31,2008


2007Commercial

$
59,040,069


$
60,376,105Real estate  construction


33,741,466



63,988,173Real estate  mortgage


448,970,087



370,989,308Consumer


9,700,120



8,504,685Portfolio loans


551,451,742



503,858,271Less:Allowance for loan losses (ALL)


8,642,651



6,935,616Deferred loan fees (unearned)


294,921



425,7558,937,572



7,361,371Portfolio loans, net of unearned and ALL


542,514,170



496,496,900Mortgage loans held for sale (HFS) loans


7,210,088



6,475,619Total loans, net of unearned and ALL

$
549,724,258


$
502,972,519       NOTE 5 
    ALLOWANCE
    FOR LOAN LOSSES      For the Years Ended December 31,2008


2007


2006Balance, beginning of year

$
6,935,616


$
5,888,052


$
4,364,287Mortgage recourse reserve






(50,000
)


Recoveries of loans previously charged against the allowance


74,389



36,394



141,553Provision for loan losses


10,491,000



2,045,600



2,174,400Loans charged against the allowance


(8,858,354
)


(984,430
)


(792,188
)Balance, end of year

$
8,642,651


$
6,935,616


$
5,888,052  61




---



##### Table of Contents



NOTE 6 
    PROPERTY
    AND EQUIPMENT    December 31,2008


2007Land

$
1,838,564


$
1,838,564Buildings and improvements


13,512,866



12,895,464Furniture and equipment


3,879,118



3,429,624Software


771,872



792,167Construction in progress






55,70820,002,420



19,011,527Accumulated depreciation


(4,377,628
)


(3,265,384
)Total property and equipment

$
15,624,792


$
15,746,143     Type of Asset

Life in Years

Depreciation MethodSoftware

3 to 5

Straight-lineFurniture and equipment

5 to 7

Straight-lineBuildings and improvements

5 to 40

Straight-line     2009

$
1,494,2052010


1,317,4752011


1,137,9902012


1,159,1282013


1,034,422Thereafter


5,724,698$
11,867,918    62




---



##### Table of Contents



NOTE 7 
    DEPOSITS    December 31,2008


2007Non-interest bearing

$
24,628,632


$
33,138,936Interest bearing:Interest bearing checking accounts


15,916,904



20,377,754Money market accounts


90,708,621



103,821,154Savings


3,491,913



2,988,881Time, less than $100,000


150,533,893



114,903,254Time, $100,000 and over


151,329,497



142,833,366Brokered CDs


74,785,000



46,135,000CDARS deposit program


21,964,249



Total deposits

$
533,358,709


$
464,198,345       2009

$
370,248,4852010


26,306,1622011


1,662,3612012


288,3892013


Thereafter


107,242$
398,612,639  63




---



##### Table of Contents



NOTE 8 
    ADVANCES
    FROM FEDERAL HOME LOAN BANK    Current


Maturity


Option


2008


2007FHLB Description

Rate


Date


Date


Balance


BalanceFixed rate advances:Fixed rate


5.36
%


06/04/10






$
10,000,000


$
10,000,000Fixed rate hybrid


4.76
%


10/21/10







5,000,000



5,000,000Convertible


4.51
%


11/23/10







7,500,000



7,500,000Convertible


3.68
%


07/13/15



01/13/09



5,000,000



5,000,000Convertible


4.06
%


09/29/15



09/29/09



5,000,000



5,000,000Convertible


4.16
%


03/13/17



03/13/09



5,000,000



5,000,000Convertible


4.39
%


04/13/17



04/13/09



7,500,000



7,500,000Variable rate advances:Prime based advance


0.41
%


9/19/2011







10,000,000



10,000,000$
55,000,000


$
55,000,000     NOTE 9 
    OTHER
    BORROWINGS      NOTE 10 
    JUNIOR
    SUBORDINATED DEBENTURES   64




---



##### Table of Contents



NOTE 11 
    UNUSED
    LINES OF CREDIT      NOTE 12 
    COMMITMENTS
    AND CONTINGENCIES     65




---



##### Table of Contents



NOTE 13 
    INCOME
    TAXES    2008


2007


2006Income taxes currently (refundable) payableFederal

$
(1,108,930
)

$
3,721,922


$
3,834,918State


(2,730
)


298,358



301,468(1,111,660
)


4,020,280



4,136,386Deferred taxesAllowance for loan losses


(638,736
)


(373,172
)


(537,502
)Non accrual loan income


(373,171
)


(3,641
)


Depreciation


92,677



60,520



51,238Loan origination fees


54,151



(63,973
)


43,164Deferred compensation


(54,209
)


(139,302
)


(76,916
)Other


523



(153,456
)


(114,234
)(918,765
)


(673,024
)


(634,250
)Income tax (benefit) expense

$
(2,030,425
)

$
3,347,256


$
3,502,136     Deferred Tax Asset (Liability)2008


2007Allowance for loan losses

$
2,860,933


$
2,222,365Unrealized loss on investment securities


(249,640
)


178,742Depreciation


(302,882
)


(210,205
)Loan origination fees


99,867



154,018Non accrual loan income


426,325



53,154Deferred compensation


373,542



331,222Other


134,975



123,441Net deferred tax asset

$
3,343,120


$
2,852,737      66




---



##### Table of Contents



2008


2007


2006Amount


%


Amount


%


Amount


%Tax expense at statutory rate

$
(1,951,104
)


34
%

$
3,136,121



34
%

$
3,297,274



34
%Increase (decrease) in taxes Resulting from:State bank tax (net of federal benefit)


(1,802
)






196,916



2
%


198,969



2
%Other


(77,519
)


1
%


14,219







5,893



Tax provision

$
(2,030,425
)


35
%

$
3,347,256



36
%

$
3,502,136



36
%   NOTE 14 
    RELATED
    PARTY TRANSACTIONS      For the Years Ended December 31,2008


2007Balance, beginning of year

$
28,266,541


$
18,976,915New loans


6,508,462



18,128,080Less loan payments


5,981,350



8,838,454Balance, end of year

$
28,793,653


$
28,266,541       NOTE 15 
    FINANCIAL
    INSTRUMENTS WITH OFF BALANCE SHEET RISK        case-by-case
 67




---



##### Table of Contents



NOTE 16 
    EMPLOYEE
    BENEFIT PLAN      NOTE 17 
    STOCK
    OPTION PLANS       68




---



##### Table of Contents



3-for-2
  2008

2007

2006Weighted



Weighted



WeightedAverage



Average



AverageExercise



Exercise



ExerciseShares

Price

Shares

Price

Shares

PriceOutstanding at beginning of year


434,951


$
12.11



503,479


$
11.19



517,054


$
11.06Granted


3,000



13.67



9,200



19.12







Exercised










(77,728
)


6.93



(13,575
)


7.25Forfeited or expired






















Outstanding at end of year


437,951



12.12



434,951



12.11



503,479



11.19Options exercisable at year-end


427,591



11.99



425,751



11.96



503,479



11.19Shares available for grant


122,458







125,458







23,434Weighted average fair value of options granted





$
5.77






$
8.35







         NOTE 18 
    SHAREHOLDERS
    EQUITY  Stock Dividend 3-for-2 3-for-2
  Stock Offering
  Cash Dividends
  Stock Repurchase Plan
 69




---



##### Table of Contents



NOTE 19 
    REGULATORY
    MATTERS  Capital
    Requirements Applicable to all Banks and Bank Holding
    Companies
        Capital
    Requirements for the Company
    To be Well CapitalizedFor Capital

Under Prompt CorrectiveAdequacy Purposes

Action ProvisionsActual

Minimum

MinimumAmount

Ratio

Amount

Ratio

Amount

Ratio(Amounts in $000)As of December 31, 2008Total Capital (to risk weighted assets)

$
66,167



12.54
%

$
42,190



8.00
%


N/A



N/ATier 1 Capital (to risk weighted assets)


59,543



11.29
%


21,095



4.00
%


N/A



N/ATier 1 Capital (to average assets)


59,543



8.95
%


26,613



4.00
%


N/A



N/AAs of December 31, 2007Total Capital (to risk weighted assets)

$
69,405



14.00
%

$
39,774



8.00
%


N/A



N/ATier 1 Capital (to risk weighted assets)


63,180



12.70
%


19,899



4.00
%


N/A



N/ATier 1 Capital (to average assets)


63,180



11.20
%


22,564



4.00
%


N/A



N/A   Capital
    Requirements and Other Regulatory Matters Applicable to the
    Bank
     70




---



##### Table of Contents



To be Well CapitalizedFor Capital

Under Prompt CorrectiveIndividual Minimum

Adequacy Purposes

Action ProvisionsActual

Capital Ratio

Minimum

MinimumAmount

Ratio

Amount

Ratio

Amount

Ratio

Amount

Ratio(Amounts in $000)As of December 31, 2008Total Capital (to risk weighted assets)

$
61,297



11.86
%

$
62,036



12.00
%

$
41,358



8.00
%

$
51,697



10.00
%Tier 1 Capital (to risk weighted assets)


54,808



10.60
%


54,282



10.50
%


20,679



4.00
%


31,018



6.00
%Tier 1 Capital (to average assets)


54,808



8.38
%


55,598



8.50
%


26,164



4.00
%


32,705



5.00
%As of December 31, 2007Total Capital (to risk weighted assets)

$
59,269



12.20
%


N/A



N/A


$
38,799



8.00
%

$
48,499



10.00
%Tier 1 Capital (to risk weighted assets)


53,179



10.90
%


N/A



N/A



19,478



4.00
%


29,217



6.00
%Tier 1 Capital (to average assets)


53,179



9.20
%


N/A



N/A



23,289



4.00
%


29,111



5.00
%     NOTE 20 
    FAIR
    VALUE OF FINANCIAL INSTRUMENTS     71




---



##### Table of Contents



December 31,2008

2007Carrying

Fair

Carrying

FairAmount

Value

Amount

ValueFinancial Assets:Cash and due from banks

$
4,830,112


$
4,830,112


$
4,992,634


$
4,992,634Federal funds sold and short term investments


6,580,273



6,580,273



566,044



566,044Investment securities


70,594,811



70,594,811



65,677,993



65,677,993Loans, net of ALL


542,514,170



544,810,170



496,496,900



499,389,381Mortgage loans held for sale


7,210,088



7,210,088



6,475,619



6,475,619Federal Reserve Bank stock


1,014,000



1,014,000



984,000



984,000Federal Home Bank Loan Bank stock


3,545,100



3,545,100



3,395,300



3,395,300Trust preferred securities


310,000



310,000



310,000



310,000Cash value of life insurance


3,674,106



3,674,106



3,554,807



3,554,807Financial Liabilities:Deposits


533,358,709



538,096,709



464,198,345



458,851,000Advances from Federal Home Loan Bank


55,000,000



57,834,000



55,000,000



57,636,000Federal funds purchased and other borrowings


16,165,022



16,165,022



18,288,148



18,288,148Junior subordinated debt


10,310,000



10,310,000



10,310,000



10,310,000       Level 1:
 72




---



##### Table of Contents



Level 2:
  Level 3:
    Quoted Market


Significant Other


SignificantPrice in Active


Observable


UnobservableMarkets


Inputs


Inputs(Level 1)


(Level 2)


(Level 3)Available-for-sale investment securities

$



$
70,594,811


$
Mortgage loans held for sale






7,210,904



Interest rate swap agreement (liability)






(864,805
)


Total

$



$
76,940,910


$
     Quoted Market


Significant Other


SignificantPrice in Active


Observable


UnobservableMarkets


Inputs


Inputs(Level 1)


(Level 2)


(Level 3)Other real estate owned

$



$
3,032,875


$
Impaired loans






29,578,284



Total

$



$
32,611,159


$
  73




---



##### Table of Contents



NOTE 21 
    PARENT
    COMPANY FINANCIAL INFORMATION    Condensed
    Balance Sheets
  December 31,2008


2007AssetsCash

$
1,273,476


$
6,443,711Investment in Bank subsidiary


55,543,744



52,887,079Investment in Beach First National Trusts


310,000



310,000Investment in BFNM, LLC


2,810,463



3,175,873Other assets


159,468



110,611Total assets

$
60,097,151


$
62,927,274Liabilities and shareholders equityAccounts payable

$
69,062


$
(187,877
)Due to Bank subsidiary






227,101Junior subordinated debentures


10,310,000



10,310,000Shareholders equity


49,718,089



52,578,050Total liabilities and shareholders equity

$
60,097,151


$
62,927,274   Condensed
    Statements of Income
  For the Years Ended December 31,2008


2007


2006Income

$
570,043


$
665,853


$
242,985ExpensesInterest


588,316



802,455



771,740Amortization


5,193



5,005



5,006Other expenses


753,277



612,253



Total expenses

$
1,346,786


$
1,419,713


$
776,746Income (loss) before equity in undistributed net income of
    subsidiaries


(776,743
)


(753,860
)


(533,761
)Equity in undistributed net income (loss) of subsidiaries


(2,931,373
)


6,630,490



6,729,489Net income (loss)

$
(3,708,116
)

$
5,876,630


$
6,195,728  74




---



##### Table of Contents



Condensed
    Statements of Cash Flows
  For the Years Ended December 31,2008


2007


2006Operating activitiesNet income (loss)

$
(3,708,116
)

$
5,876,630


$
6,195,728Adjustments to reconcile net income (loss) to net cash provided
    by (used in) operating activities:Equity in undistributed net income of subsidiaries


2,931,373



(6,630,490
)


(6,729,489
)Amortization


12,374



5,005



5,006Increase (decrease) in due to Bank






(1,936,961
)


2,010,879(Increase) decrease in other assets


4,247



14,009



(200
)Increase (decrease) in accounts payable


159,403



(376,713
)


(300,591
)Stock based compensation expense


18,254



7,643



Net cash provided by (used for) operating activities


(582,465
)


(3,040,877
)


1,181,333Investing activitiesAdditional investment in bank


(4,500,000
)






Additional investment in BFNM, LLC






(385,806
)


(958,663
)Investment in Beach First National Trusts


(22,292
)






Purchase of premises and equipment


(65,478
)


(79,795
)


Net cash used for investing activities


(4,587,770
)


(465,601
)


(958,663
)Financing activitiesProceeds from issuance of junior subordinated debentures










Proceeds from exercise of stock options






520,734



98,188Tax benefit of options in excess of compensation expense






385,565



Cash in lieu of stock dividend










(2,515
)Proceeds from stock issuance, net










Net cash provided by financing activities






906,299



95,673Net (decrease) increase in cash and cash equivalents


(5,170,235
)


(2,600,179
)


318,343CASH AND CASH EQUIVALENTS,
    BEGINNING OF YEAR


6,443,711



9,043,890



8,725,547CASH AND CASH EQUIVALENTS,
    END OF YEAR

$
1,273,476


$
6,443,711


$
9,043,890  75




---



##### Table of Contents



NOTE 22 
    QUARTERLY
    DATA (UNAUDITED)  2008


2007Fourth


Third


Second


First


Fourth


Third


Second


FirstQuarter


Quarter


Quarter


Quarter


Quarter


Quarter


Quarter


Quarter(Dollars in thousands except per share)Interest income

$
9,507


$
10,388


$
10,232


$
11,235


$
11,382


$
11,669


$
11,360


$
10,696Interest expense


5,344



5,392



5,409



6,014



5,829



5,842



5,596



5,214Net interest income


4,163



4,996



4,823



5,220



5,553



5,827



5,764



5,482Provision for loan losses


8,200



977



568



746



1,095



279



321



351Net interest income after provision for loan losses


(4,037
)


4,019



4,255



4,474



4,458



5,548



5,443



5,131Noninterest income


999



1,385



1,886



1,380



1,286



1,804



2,153



2,334Noninterest expenses


4,914



5,091



5,617



4,479



4,493



4,521



4,960



4,959Income before taxes


(7,952
)


313



524



1,375



1,251



2,831



2,636



2,506Income tax expense (benefit)


(2,822
)


112



187



492



507



1,009



937



894Net Income

$
(5,130
)

$
201


$
337


$
883


$
744


$
1,822


$
1,699


$
1,612Earnings per share:Basic

$
(1.06
)

$
0.04


$
0.07


$
0.18


$
0.15


$
0.38


$
0.35


$
0.34Diluted

$
(1.06
)

$
0.04


$
0.07


$
0.18


$
0.15


$
0.37


$
0.34


$
0.33  76




---



##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Disclosure
    Controls and Procedures
  Rules 13a-15(e) 15d-15(e) Form 10-K
    Report on
    Managements Assessment of Internal Control Over Financial
    Reporting
         77




---



##### Table of Contents



/s/  Walt
    StandishWalter
    E. Standish, III
    President and
    Chief Executive Officer

/s/  Gary
    S.
    AustinGary
    S. Austin
    Executive Vice President and 
    Chief Financial Officer   
 78




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
                
     79




---



##### Table of Contents



Item 9B.
    Other
    Information   Part III  Item 10.
    Directors,
    Executive Officers and Corporate Governance      Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    Equity
    Compensation Plan Information
  Number of SecuritiesNumber of Securities



Remaining Available forto be Issued

Weighted-Average

Future Issuance Underupon Exercise of

Exercise Price of

Equity CompensationOutstanding

Outstanding

Plans (c)Options, Warrants

Options, Warrants

(Excluding SecuritiesPlan Category

and Rights(a)

and Rights(b)

Reflected in Column(a))Equity compensation plans approved by security holders


437,951


$
12.12



122,458Equity compensation plans not approved by security holders










Total


437,951


$
12.12



122,458     Item 13.
    Certain
    Relationships and Related Transactions and Director
    Independence    Item 14.
    Principal
    Accounting Fees and Services   80




---



##### Table of Contents



Part IV  Item 15.
    Exhibits  Form 10-K Regulation S-K.
  3
.1

Articles of Incorporation (incorporated by reference to
    Exhibit 3.1 to the Companys Registration Statement
    No. 33-95562
    on
    Form S-1).3
.2.

Bylaws (incorporated by reference to Exhibit 3.2 to the
    Companys Registration Statement
    No. 33-95562
    on
    Form S-1).3
.3

Amended and Restated Bylaws Adopted October 17, 2007
    (incorporated by reference to Exhibit 3.1 to the
    Companys
    Form 8-K
    filed October 22, 2007).4
.1.

Provisions in the Companys Articles of Incorporation and
    Bylaws defining the rights of holders of the Companys
    Common Stock (incorporated by reference to Exhibit 4.1 to
    the Companys Registration Statement
    No. 33-95562
    on
    Form S-1).4
.2.

Form of Certificate of Common Stock (incorporated by reference
    to Exhibit 4.2 to the Companys Registration Statement
    No. 33-95562
    on
    Form S-1).10
.1

Employment Agreement of Walter E. Standish, III with the
    Company dated February 27, 2007 (incorporated by reference
    to Exhibit 10.1 of the Companys
    Form 8-K
    filed March 2, 2007).*10
.2

Description of the Director Deferred Compensation Plan
    (incorporated to Exhibit 10.1 to the Companys
    Form 10-QSB
    filed with the SEC on November 14, 2002).*10
.3

Description of the Executive Deferred Compensation Plan
    (incorporated to Exhibit 10.2 to the Companys
    Form 10-QSB
    filed with the SEC on November 14, 2002).*10
.4

Description of the Split Dollar Life Insurance Plan
    (incorporated to Exhibit 10.3 to the Companys
    Form 10-QSB
    filed with the SEC on November 14, 2002).*10
.5

Beach First National Bancshares, Inc. 1997 Stock Option Plan and
    Form of Option Agreement (incorporated by reference to
    Exhibit 10.7 of the Companys
    Form 10-KSB
    for the fiscal year ended December 31, 1996).*10
.6

Form of First Amendment to the Beach First National Bank Amended
    and Restated Salary Continuation Agreement (incorporated by
    reference to Exhibit 10.1 of the Companys
    Form 8-K
    filed January 25, 2008).*10
.7

Form of First Amendment to the Beach First National Bank Amended
    and Restated Director Retirement Agreement (incorporated by
    reference to Exhibit 10.2 of the Companys
    Form 8-K
    filed January 25, 2008).*10
.8

Form of First Amendment to the Beach First National Bank Split
    Dollar Policy Endorsement of the Split Dollar Agreement
    (incorporated by reference to Exhibit 10.3 of the
    Companys
    Form 8-K
    filed January 25, 2008).*10
.9

Beach First National Bank Salary Continuation Agreement dated
    March 1, 2008 with Gary S. Austin (incorporated by
    reference to Exhibit 10.1 of the Companys
    Form 8-K
    filed March 5, 2008).*10
.10

Agreement by and between Beach First National Bank and the
    Office of the Comptroller of Currency dated September 30,
    2008 (incorporated by reference to Exhibit 99.1 of the
    Companys
    Form 8-K
    filed October 6, 2008).*10
.11

Amended Employment Agreement of Walter E. Standish, III
    with the Company dated December 15, 2008.*10
.12

Amendment No. 1 to the Beach First National Bancshares,
    Inc. 1997 Stock Option Plan and Form of Option
    Agreement  adopted November 24, 2008.*21
.1.

Subsidiaries of the Company23
.1

Consent of Independent Registered Public Accounting Firm.24


Power of Attorney (contained on the signature page hereof).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.     *
    
    Indicates Management contract or compensatory plan or
    arrangement required to be filed as an Exhibit to this Annual
    Report on
    Form 10-K. 81




---



##### Table of Contents



SIGNATURES      Date: March 31, 2009

By: /s/  Walter
    E. Standish, IIIWalter
    E. Standish, III
    President and Chief Executive Officer   Form 10-K,
    Signature

Title

Date/s/  Michael
    Bert AndersonMichael
    Bert Anderson

Director

March 31, 2009/s/  Orvis
    Bartlett BuieOrvis
    Bartlett Buie

Director

March 31, 2009/s/  Raymond
    E. Cleary, IIIRaymond
    E. Cleary, III

Chairman and Director

March 31, 2009/s/  E.
    Thomas FulmerE.
    Thomas Fulmer

Director

March 31, 2009/s/  Michael
    D. HarringtonMichael
    D. Harrington

Director

March 31, 2009/s/  Joe
    N. Jarrett, Jr.Joe
    N. Jarrett, Jr.

Director

March 31, 2009/s/  Richard
    E. LesterRichard
    E. Lester

Director

March 31, 2009/s/  Leigh
    Ammons MeeseLeigh
    Ammons Meese

Director

March 31, 2009 82




---



##### Table of Contents



Signature

Title

Date/s/  Rick
    H. SeagrovesRick
    H. Seagroves

Director

March 31, 2009/s/  Don
    J. SmithDon
    J. Smith

Director

March 31, 2009/s/  Samuel
    Robert Spann, Jr.Samuel
    Robert Spann, Jr.

Director

March 31, 2009/s/  B.
    Larkin Spivey, Jr.B.
    Larkin Spivey, Jr.

Director

March 31, 2009/s/  Walter
    E. Standish, IIIWalter
    E. Standish, III

President, CEO, and Director

March 31, 2009/s/  James
    C. YahnisJames
    C. Yahnis

Director

March 31, 2009/s/  Gary
    S. AustinGary
    S. Austin

Chief Financial Officer and Principal Accounting Officer

March 31, 2009  83




---



##### Table of Contents



Exhibit List:
  Form 10-K Regulation S-K.
  3
.1

Articles of Incorporation (incorporated by reference to
    Exhibit 3.1 to the Companys Registration Statement
    No. 33-95562
    on
    Form S-1).3
.2.

Bylaws (incorporated by reference to Exhibit 3.2 to the
    Companys Registration Statement
    No. 33-95562
    on
    Form S-1).3
.3

Amended and Restated Bylaws Adopted October 17, 2007
    (incorporated by reference to Exhibit 3.1 to the
    Companys
    Form 8-K
    filed October 22, 2007).4
.1.

Provisions in the Companys Articles of Incorporation and
    Bylaws defining the rights of holders of the Companys
    Common Stock (incorporated by reference to Exhibit 4.1 to
    the Companys Registration Statement
    No. 33-95562
    on
    Form S-1).4
.2.

Form of Certificate of Common Stock (incorporated by reference
    to Exhibit 4.2 to the Companys Registration Statement
    No. 33-95562
    on
    Form S-1).10
.1

Employment Agreement of Walter E. Standish, III with the
    Company dated February 27, 2007 (incorporated by reference
    to Exhibit 10.1 of the Companys
    Form 8-K
    filed March 2, 2007).*10
.2

Description of the Director Deferred Compensation Plan
    (incorporated to Exhibit 10.1 to the Companys
    Form 10-QSB
    filed with the SEC on November 14, 2002).*10
.3

Description of the Executive Deferred Compensation Plan
    (incorporated to Exhibit 10.2 to the Companys
    Form 10-QSB
    filed with the SEC on November 14, 2002).*10
.4

Description of the Split Dollar Life Insurance Plan
    (incorporated to Exhibit 10.3 to the Companys
    Form 10-QSB
    filed with the SEC on November 14, 2002).*10
.5

Beach First National Bancshares, Inc. 1997 Stock Option Plan and
    Form of Option Agreement (incorporated by reference to
    Exhibit 10.7 of the Companys
    Form 10-KSB
    for the fiscal year ended December 31, 1996).*10
.6

Form of First Amendment to the Beach First National Bank Amended
    and Restated Salary Continuation Agreement (incorporated by
    reference to Exhibit 10.1 of the Companys
    Form 8-K
    filed January 25, 2008).*10
.7

Form of First Amendment to the Beach First National Bank Amended
    and Restated Director Retirement Agreement (incorporated by
    reference to Exhibit 10.2 of the Companys
    Form 8-K
    filed January 25, 2008).*10
.8

Form of First Amendment to the Beach First National Bank Split
    Dollar Policy Endorsement of the Split Dollar Agreement
    (incorporated by reference to Exhibit 10.3 of the
    Companys
    Form 8-K
    filed January 25, 2008).*10
.9

Beach First National Bank Salary Continuation Agreement dated
    March 1, 2008 with Gary S. Austin (incorporated by
    reference to Exhibit 10.1 of the Companys
    Form 8-K
    filed March 5, 2008).*10
.10

Agreement by and between Beach First National Bank and the
    Office of the Comptroller of Currency dated September 30,
    2008 (incorporated by reference to Exhibit 99.1 of the
    Companys
    Form 8-K
    filed October 6, 2008).*10
.11

Amended Employment Agreement of Walter E. Standish, III
    with the Company dated December 15, 2008.*10
.12

Amendment No. 1 to the Beach First National Bancshares,
    Inc. 1997 Stock Option Plan and Form of Option
    Agreement  adopted November 24, 2008.*21
.1.

Subsidiaries of the Company23
.1

Consent of Independent Registered Public Accounting Firm.24


Power of Attorney (contained on the signature page hereof).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.     *
    
    Indicates Management contract or compensatory plan or
    arrangement required to be filed as an Exhibit to this Annual
    Report on
    Form 10-K.