---

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

# Form 10-KSB

| | (Mark One)
| | ----------

|[X] | Annual Report under Section 13 or 15(d) of the Securities Exchange Act of 1934
|--- | ------------------------------------------------------------------------------

| | For the fiscal year ended December 31, 2003
| | -------------------------------------------

| | or
| | --

| | Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934
| | ----------------------------------------------------------------------------------
| | For the transition period from __________ to ________                             

Commission file no.
000-22503

BEACH FIRST NATIONAL BANCSHARES, INC.
(Name of Small Business Issuer in Its Charter)

|South Carolina                    |  | 58-1030117         
|--------------------------------- |  | -------------------
|(State or Other Jurisdiction      |  | (I.R.S. Employer   
|of Incorporation or Organization) |  | Identification No.)

|1550 Oak Street                          |  |           
|---------------------------------------- |  | ----------
|Myrtle Beach, South Carolina             |  | 29577     
|(Address of Principal Executive Offices) |  | (Zip Code)

(843) 626-2265Issuers Telephone Number, Including Area Code

Securities registered pursuant to Section 12(b) of the Act:   None
Securities registered pursuant to Section 12(g) of the Act:   Common Stock

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

Check
if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B
in this form, and no disclosure will be contained, to the best of registrants
knowledge, in definitive proxy or information statements incorporated by reference in Part
III of this Form 10-KSB or any amendment to this Form 10-KSB. [X]

The issuers revenue for the year ended December 31, 2003 was
$ 9,483,095.

The aggregate market value of the voting stock held by non-affiliates (shareholders holding less than 5%
of an outstanding class of stock, excluding directors and executive officers), as of March 3, 2004 was
approximately $21,921,142.  This calculation was based on the closing price of such common equity on March 3,
2004 of $21.50.

The number of shares outstanding of the issuers common stock was 1,323,768 at March 3, 2004.

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

DOCUMENTS INCORPORATED
BY REFERENCE

The Companys  Annual Report to  Shareholders  for the year ended December 31, 2003 is incorporated by reference in
this Form 10-KSB in Part II, Items 6 and 7. The Companys  Proxy  Statement for the Annual Meeting of  Shareholders
to be held on April 23, 2004 is  incorporated  by reference in this Form 10-KSB in Part III, Items 9 through 12 and
14.

---

---

# Part I Item 1.  Business

# General Overview

We
conduct a general commercial and retail banking business, emphasizing the needs of
individual and small- to medium-sized businesses. We operate our banking business through
our bank, Beach First National Bank. Our main office is located at the corner of Oak
Street and Sixteenth Avenue in Myrtle Beach, South Carolina. In June 2001, we opened our
first branch office, which is located at the northwest corner of the intersection of S.C.
Highway 544 and U.S. Highway 17 in Surfside Beach, SC. In November 2002, we opened our
second branch office located in the Gator Hole Shopping Center in North Myrtle Beach, SC,
and in February 2003, we opened our third office on Hilton Head Island, SC. We primarily
serve the Grand Strand area of Myrtle Beach, South Carolina, although plans include
expanding our operations to serve the other coastal areas of South Carolina.

# Marketing Focus

Most
of the banks in the Grand Strand are now local branches of regional, super-regional, and
large national banks. Although size gives the larger banks certain advantages in competing
for business from large corporations, including higher lending limits and the ability to
offer services in other areas of South Carolina and the Southeast, we believe that there
has been a void in the community banking market in the Myrtle Beach area which we can
successfully fill by adding additional branches. As a result, we generally do not attempt
to compete for the banking relationships of large corporations, but concentrate our
efforts on individuals and small-to medium-sized businesses.

# Operating and Growth
Strategy

Our
goals are to be the leading community bank in Myrtle Beach and, ultimately, on the Grand
Strand. We intend to achieve these goals by locating new branches in growing communities
in our market area, increasing asset size through internal growth, providing personalized
service with a community focus, hiring and retaining high caliber and motivated employees,
maintaining high asset quality, and offering our customers a variety of competitive
products and services. These goals are intended to build long-term shareholder value.

# Deposit Products

We
offer a full range of deposit products that are typically available in most banks and
savings and loan associations, including checking accounts, interest bearing checking
accounts, savings accounts, and other time deposits of various types, ranging from daily
money market accounts to longer-term certificates of deposit. The transaction accounts and
time certificates are offered at rates competitive to those offered by other financial
institutions in the Myrtle Beach and Hilton Head Island areas. In addition, we offer
retirement account services, such as Individual Retirement Accounts (IRAs). All deposit
accounts are insured by the FDIC up to the maximum amount allowed by law.

# Lending Activities

General.  
          We emphasize a range of lending services, including real estate, commercial and
          consumer loans, to individuals and small-to medium-sized businesses that are
          located, or conduct a substantial portion of their business, in Myrtle Beach and
          the Grand Strand.

The
characteristics of our loan portfolio and our underwriting procedures, collateral types,
risks, approval process and lending limits are discussed below. See also
Managements Discussion and Analysis of Financial Condition and Results of
Operations  Provision and Allowance for Loan Losses in the Companys
Annual Report to Shareholders, incorporated herein by reference.

2

---

Real
Estate Loans. The primary component of our loan portfolio is real estate mortgage
loans, which make up approximately 66% of our loan portfolio. These loans are secured
generally by first or second mortgages on residential or commercial property. The major
category of this component is commercial real estate loans primarily secured by
owner-occupied real estate. The borrowers are predominantly service and professional
businesses, such as PAs, medical and service providers for consumer and commercial
customers along the Grand Strand.

Commercial
Loans.Approximately 22% of our loan portfolio consists of commercial loans.
Commercial loans consist of secured and unsecured loans, lines of credit, and working
capital loans. We make these loans to various types of businesses. Included in this
category are loans to purchase equipment, finance accounts receivable or inventory, and
loans made for working capital purposes.

Consumer
Loans. Consumer loans make up approximately 5% of our loan portfolio. These are loans
made to individuals for personal and household purposes, such as secured and unsecured
installment and term loans and revolving lines of credit such as overdraft protection.
Automobiles and small recreational vehicles are pledged as security for their purchase.

Construction
and Development Loans. The remaining 6% of our loan portfolio, or approximately
$8,000,000, is composed of consumer and commercial real estate construction and commercial
development loans. These loans are secured by the real estate for which construction is
planned and, in many cases, by supplementary collateral.

Underwriting
Procedures, Collateral, and Risk.We use our established credit policies and
procedures when underwriting each type of loan. Although there are minor variances in the
characteristics and criteria for each loan type, which variances may require additional
underwriting procedures, we generally evaluate borrowers using the following defined
criteria:

| | o | Character  we determine that the borrower has sound character and integrity by
examining the borrowers history.
| | - | -----------------------------------------------------------------------------------------------------------------

| | o | Capital  we evaluate the borrowers overall financial strength, as well as the
equity investment in the asset being financed.
| | - | ------------------------------------------------------------------------------------------------------------------------------

| | o | Collateral  we determine that the collateral is adequate from the standpoint of
quality, marketability, value and income potential.
| | - | ------------------------------------------------------------------------------------------------------------------------------------

| | o | Capacity  we evaluate the borrowers ability to service the debt.
| | - | ------------------------------------------------------------------

| | o | Conditions  we underwrite the credit in light of the effects of external factors,
such as economic conditions and industry trends.
| | - | -----------------------------------------------------------------------------------------------------------------------------------

It
is our practice to obtain collateral for most loans to help mitigate the risk associated
with lending. We generally limit our loan-to-value ratio to 80%. We obtain a security
interest in real estate for loans secured by real estate, including construction and
development loans, and other commercial loans. For commercial loans, we obtain security
interests in equipment and other company assets. For consumer loans used to purchase
vehicles, we obtain appropriate title documentation. For secured loans that are not
associated with real estate, or for which the mortgaged real estate does not provide an
acceptable loan-to-value ratio, we obtain other available collateral such as stocks and
bonds.

Each
type of loan carries a credit risk, simply defined as the potential that the borrower will
not be willing or able to repay the debt. While real estate loans have various risks
common to all types of loans, certain types of real estate loans have specific risk
characteristics that vary according to the collateral type securing the loan and the terms
and repayment sources for the loan. Real estate loans are all sensitive to fluctuations in
the value of the real estate securing the loan. In addition, commercial real estate loans
have risk that the primary source of repayment will be insufficient to service the debt.
Construction and development real estate loans generally carry a higher degree of risk
than long term financing of existing properties. These projects are usually dependent on
the completion of the project on schedule and within cost estimates and on the timely sale
of the property. Inferior or improper construction techniques, changes in economic
conditions during the construction

3

---

and marketing period, and rising
interest rates which may slow the sale of the property are all risks unique to this type
of loan. Residential mortgage loans, in contrast to commercial real estate loans,
generally have longer terms and may have fixed or adjustable interest rates. Commercial
loans primarily have risk that the primary source of repayment will be insufficient to
service the debt. Often this occurs as the result of changes in local economic conditions
or in the industry in which the borrower operates which impact cash flow or collateral
value. Consumer loans, other than home equity loan products, are generally considered to
have more risk than loans to individuals secured by first or second mortgages on real
estate due to dependence on the borrowers employment status as the sole source of
repayment. By following defined underwriting criteria as noted above, we seek to reduce
these risks. Additionally, we help to reduce the risk that the underlying collateral may
not be sufficient to pay the outstanding balance by using appraisals or taking other steps
to determine that the value of the collateral is adequate, and lending amounts based upon
lower loan-to-value ratios. We control risks by reducing concentration of our loan
portfolio in any one type of loan. A concentration of credit report based upon SIC codes
and other factors are reviewed on a quarterly basis by the Board of Directors.

Loan
Approval and Review. Our loan approval policies provide for various levels of officer
lending authority. When the amount of aggregate loans to a single borrower exceeds that
individual officers lending authority, the loan request is considered by an officer
with a higher lending limit. Any loan in excess of this lending limit is approved by the
directors loan committee. We do not make any loans to any of our directors or
executive officers unless the loan is reviewed by the board of directors of the bank and
is made on terms not more favorable to such person than would be available to a person not
affiliated with us. We take steps to protect against losses due to hurricanes and weather
phenomena by requiring customers to carry appropriate insurance.

Lending
Limits. Our lending activities are subject to a variety of lending limits imposed by
federal law. While differing limits apply to certain loan types or borrowers, in general
we are subject to a loan-to-one-borrower limit. These limits increase or decrease as our
capital increases or decreases. Unless we sell participations in loans to other financial
institutions, we are not able to meet all of the lending needs of loan customers requiring
aggregate extensions of credit above these limits.

# Competition

The
Myrtle Beach market is a highly competitive market in which all of the largest banks in
the state, as well as super regional banks, are represented. The competition among the
various financial institutions is based upon a variety of factors, including interest
rates offered on deposit accounts, interest rates charged on loans, credit and service
charges, the quality of services rendered, the convenience of banking facilities and, in
the case of loans to large commercial borrowers, relative lending limits. In addition to
banks and savings associations, we compete with other financial institutions including
securities firms, insurance companies, credit unions, leasing companies and finance
companies. Size gives larger banks certain advantages in competing for business from large
corporations. These advantages include higher lending limits and the ability to offers
services in other areas of South Carolina. As a result, we do not generally attempt to
compete for the banking relationships of large corporations, but concentrate our efforts
on small- to medium-sized businesses and individuals. We believe we have competed
effectively in this market by offering quality and personal service.

# Employees

At
December 31, 2003, we employed a total of 41 full-time and 6 part-time employees. The
company believes that the relations with its employees are good.

4

---

# SUPERVISION AND
REGULATION

We
are subject to extensive state and federal banking laws and regulations which impose
specific requirements or restrictions on, and provide for general regulatory oversight of,
virtually all aspects of our operations. These laws and regulations are generally intended
to protect depositors, not shareholders. The following summary is qualified by reference
to the statutory and regulatory provisions discussed. Changes in applicable laws or
regulations may have a material effect on our business and prospects. Our operations may
be affected by legislative changes and the policies of various regulatory authorities. We
cannot predict the effect that fiscal or monetary policies, economic control, or new
federal or state legislation may have on our business and earnings in the future.

The
following discussion is not intended to be a complete list of all the activities regulated
by the banking laws or of the impact of such laws and regulations on our operations. It is
intended only to briefly summarize some material provisions.

# Recent Legislation

# USA Patriot Act of 2001

In
October 2001, the USA Patriot Act of 2001 was enacted in response to the terrorist attacks
in New York, Pennsylvania and Washington D.C. which occurred on September 11, 2001. The
Patriot Act is intended to strengthen U.S. law enforcements and the intelligence
communities abilities to work cohesively to combat terrorism on a variety of fronts.
The potential impact of the Patriot Act on financial institutions of all kinds is
significant and wide ranging. The Patriot Act contains sweeping anti-money laundering and
financial transparency laws and imposes various regulations, including standards for
verifying client identification at account opening, and rules to promote cooperation among
financial institutions, regulators and law enforcement entities in identifying parties
that may be involved in terrorism or money laundering.

# Check 21

On
October 28, 2003, President Bush signed into law the Check Clearing for the 21st Century
Act, also known as Check 21. The new law, which is not effective until October 28, 2004,
gives substitute checks, such as a digital image of a check and copies made
from that image, the same legal standing as the original paper check. Some of the major
provisions include:

| | o | Allows check truncation without making it mandatory;
| | - | ----------------------------------------------------

| | o | Demands that every financial institution communicate to accountholders in writing a
description of its substitute check processing program and their rights under the law;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | Legalizes substitutions for and
replacements of paper checks without agreement from consumers;
| | - | ----------------------------------------------------------------------------------------------

| | o | Keeps in place the
previously mandated electronic collection and return of checks between financial institutions
only when individual agreements are in place;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | Cautions that when accountholders request verification, financial institutions must
produce the original check (or a copy that accurately represents the original) and
demonstrate that the account debit was accurate and valid; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | Requires recrediting of funds to an individuals account on the next business day
after a consumer proves the financial institution has erred.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------

This
new legislation will likely have a dramatic impact on bank capital spending as many
financial institutes assess whether technological or operational changes are
necessary to stay competitive and take advantage of the new opportunities presented by
Check 21.

5

---

# Beach First National
Bancshares, Inc.

Because
our holding company, Beach First National Bancshares, Inc., owns the outstanding capital
stock of our bank, our holding company is a bank holding company under the federal Bank
Holding Company Act of 1956 and the South Carolina Banking and Branching Efficiency Act.

The
Bank Holding Company Act. Under the Bank Holding Company Act (BHCA), our holding
company is subject to periodic examination by the Federal Reserve and required to file
periodic reports of its operations and any additional information that the Federal Reserve
may require. Our activities at the holding company level are limited to:

| | o | banking and managing or controlling banks;
| | - | ------------------------------------------

| | o | furnishing services to or performing services for our subsidiaries; and
| | - | -----------------------------------------------------------------------

| | o | engaging in other activities that the Federal Reserve determines to be so closely related
to banking and managing or controlling banks as to be a proper incident thereto.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Investments,
Control, and Activities. With certain limited exceptions, the BHCA requires every bank
holding company to obtain the prior approval of the Federal Reserve before:

| | o | acquiring substantially all the assets of any bank;
| | - | ---------------------------------------------------

| | o | acquiring direct or indirect ownership or control of any voting shares of any bank if
after the acquisition it would own or control more than 5% of the voting shares of such
bank (unless it already owns or controls the majority of such shares); or
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | merging or consolidating with another bank holding company.
| | - | -----------------------------------------------------------

In
addition, and subject to certain exceptions, the BHCA and the Change in Bank Control Act
require Federal Reserve approval prior to any person or company acquiring
control of a bank holding company. Control is conclusively presumed to exist
if an individual or company acquires 25% or more of any class of voting securities of a
bank holding company. Control is rebuttably presumed to exist if a person acquires 10% or
more, but less than 25%, of any class of voting securities and either the company has
registered securities under Section 12 of the Securities Exchange Act of 1934 or no other
person owns a greater percentage of that class of voting securities immediately after the
transaction. Our common stock is registered under the Securities Exchange Act of 1934. The
regulations provide a procedure for challenge of the rebuttable control presumption.

Under
the Bank Holding Company Act, a bank holding company is generally prohibited from engaging
in, or acquiring direct or indirect control of more than 5% of the voting shares of any
company engaged in, nonbanking activities unless the Federal Reserve Board has found those
activities to be so closely related to banking or managing or controlling banks as to be a
proper incident thereto. Some of the activities that the Federal Reserve Board has
determined by regulation to be proper incidents to the business of a bank holding company
include:

| | o | making or servicing loans and certain types of leases;
| | - | ------------------------------------------------------

| | o | engaging in certain insurance and discount brokerage activities;
| | - | ----------------------------------------------------------------

| | o | performing certain data processing services;
| | - | --------------------------------------------

| | o | acting in certain circumstances as a fiduciary or investment or financial adviser;
| | - | ----------------------------------------------------------------------------------

| | o | owning savings associations; and
| | - | --------------------------------

| | o | making investments in certain corporations or projects designed
primarily to promote community welfare.
| | - | -------------------------------------------------------------------------------------------------------

6

---

The
Federal Reserve Board imposes certain capital requirements on our holding company under
the Bank Holding Company Act, including a minimum leverage ratio and a minimum ratio of
qualifying capital to risk-weighted assets. These requirements are described
below under Capital Regulations. Subject to capital requirements and certain
other restrictions, our holding company is able to borrow money to make a capital
contribution to our bank, and these loans may be repaid from dividends paid from our bank
to our company. Our ability to pay dividends is subject to regulatory restrictions as
described below in Beach First National Bank  Dividends. Our holding
company is also able to raise capital for contribution to our bank by issuing securities
without having to receive regulatory approval, subject to compliance with federal and
state securities laws.

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

The
Company is subject to the obligations and restrictions described above. However,
management currently does not expect that any of these provisions will have any material
impact on our operations.

The
Gramm-Leach-Bliley Act. The Gramm-Leach-Bliley Act, previously known as the Financial
Services Modernization Act of 1999, was signed into law on November 12, 1999. Among other
things, the Act repeals the restrictions on banks affiliating with securities firms
contained in sections 20 and 32 of the Glass-Steagall Act. The Act also permits bank
holding companies that become financial holding companies to engage in a statutorily
provided list of financial activities, including insurance and securities underwriting and
agency activities, merchant banking, and insurance company portfolio investment
activities. The Act also authorizes activities that are complementary to
financial activities.

The
Act is intended, in part, to grant to community banks certain powers as a matter of right
that larger institutions have accumulated on an ad hoc basis. Nevertheless, the Act may
have the result of increasing the amount of competition that we face from larger
institutions and other types of companies. In fact, it is not possible to predict the full
effect that the Act will have on us.

South
Carolina State Regulation. As a South Carolina bank holding company under the South
Carolina Banking and Branching Efficiency Act, we are subject to limitations on sale or
merger and to regulation by the South Carolina Board of Financial Institutions. Prior to
acquiring the capital stock of a national bank, we are not required to obtain the approval
of the Board, but we must notify them at least 15 days prior to doing so. We must receive
the Boards approval prior to engaging in the acquisition of a South Carolina state
chartered bank or another South Carolina bank holding company.

Beach
First National Bank. Our bank, Beach First National Bank, operates as a national
banking association incorporated under the laws of the United States and subject to
examination by the Office of the Comptroller of the Currency. Deposits in the bank are
insured by the FDIC up to a maximum amount, which is generally $100,000 per depositor
subject to aggregation rules.

The
Office of the Comptroller of the Currency and the FDIC regulate or monitor virtually all
areas of our banks operations, including:

| | o | security devices and procedures;
| | - | --------------------------------

| | o | adequacy of capitalization and loss reserves;
| | - | ---------------------------------------------

| | o | loans;
| | - | ------

| | o | investments;
| | - | ------------

7

---

| | o | borrowings;
| | - | -----------

| | o | deposits;
| | - | ---------

| | o | mergers;
| | - | --------

| | o | issuances of securities;
| | - | ------------------------

| | o | payment of dividends;
| | - | ---------------------

| | o | interest rates payable on deposits;
| | - | -----------------------------------

| | o | interest rates or fees chargeable on loans;
| | - | -------------------------------------------

| | o | establishment of branches;
| | - | --------------------------

| | o | corporate reorganizations;
| | - | --------------------------

| | o | maintenance of books and records; and
| | - | -------------------------------------

| | o | adequacy of staff training to carry on safe lending and deposit gathering practices.
| | - | ------------------------------------------------------------------------------------

The
Office of the Comptroller of the Currency requires banks to maintain specified capital
ratios and imposes limitations on banks aggregate investment in real estate, bank
premises, and furniture and fixtures. The Office of the Comptroller of the Currency also
requires banks to prepare quarterly reports on their financial condition and to conduct
annual audits of their financial affairs in compliance with its minimum standards and
procedures.

Under
the FDIC Improvement Act, all insured institutions must undergo regular on-site
examinations by their appropriate banking agency. The cost of examinations of insured
depository institutions and any affiliates may be assessed by the appropriate agency
against each institution or affiliate as it deems necessary or appropriate. Insured
institutions are required to submit annual reports to the FDIC, their federal regulatory
agency, and their state supervisor when applicable. The FDIC Improvement Act directs the
FDIC to develop a method for insured depository institutions to provide supplemental
disclosure of the estimated fair market value of assets and liabilities, to the extent
feasible and practicable, in any balance sheet, financial statement, report of condition
or any other report of any insured depository institution. The FDIC Improvement Act also
requires the federal banking regulatory agencies to prescribe, by regulation, standards
for all insured depository institutions and depository institution holding companies
relating, among other things, to the following:

| | o | internal controls;
| | - | ------------------

| | o | information systems and audit systems;
| | - | --------------------------------------

| | o | loan documentation;
| | - | -------------------

| | o | credit underwriting;
| | - | --------------------

| | o | interest rate risk exposure; and
| | - | --------------------------------

| | o | asset quality.
| | - | --------------

National
banks and their holding companies which have been chartered or registered or have
undergone a change in control within the past two years or which have been deemed by the
Office of the Comptroller of the Currency or the Federal Reserve Board to be troubled
institutions must give the Office of the Comptroller of the Currency or the Federal
Reserve Board 30 days prior notice of the appointment of any senior executive
officer or director. Within the 30 day period, the Office of the Comptroller of the
Currency or the Federal Reserve Board, as the case may be, may approve or disapprove any
such appointment.

8

---

Deposit
Insurance. The FDIC has adopted a risk-based assessment system for determining an
insured depository institutions insurance assessment rate. The system takes into
account the risks attributable to different categories and concentrations of assets and
liabilities. An institution is placed into one of three capital categories: (1) well
capitalized; (2) adequately capitalized; or (3) undercapitalized. The FDIC also assigns an
institution to one of three supervisory subgroups, based on the FDICs determination
of the institutions financial condition and the risk posed to the deposit insurance
funds. Assessments range from 0 to 27 cents per $100 of deposits, depending on the
institutions capital group and supervisory subgroup. In addition, the FDIC imposes
assessments to help pay off the $780 million in annual interest payments on the $8.1
billion Financing Corporation bonds issued in the late 1980s as part of the government
rescue of the thrift industry. The FDIC assessment rate on our bank deposits currently is
zero, but may change in the future. The FDIC may increase or decrease the assessment rate
schedule on a semiannual basis. An increase in the BIF assessment rate could have a
material adverse effect on our earnings, depending on the amount of the increase.

The
FDIC may terminate its insurance of deposits if it finds that the institution has engaged
in unsafe and unsound practices, is in an unsafe or unsound condition to continue
operations, or has violated any applicable law, regulation, rule, order, or condition
imposed by the FDIC.

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

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

The
Federal Reserve Board has recently issued Regulation W, which codifies prior regulations
under Sections 23A and 23B of the Federal Reserve Act and interpretative guidance with
respect to affiliate transactions. Regulation W incorporates the exemption from the
affiliate transaction rules but expands the exemption to cover the purchase of any type of
loan or extension of credit from an affiliate. In addition, under Regulation W:

| | o | a bank and its subsidiaries may not purchase a low-quality asset from an affiliate;
| | - | -----------------------------------------------------------------------------------

| | o | covered transactions and other specified transactions between a bank or its subsidiaries
and an affiliate must be on terms and conditions that are consistent with safe and sound
banking practices; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | with some exceptions, each loan or extension of credit by a bank to an affiliate must be
secured by collateral with a market value ranging from 100% to 130%, depending on the type
of collateral, of the amount of the loan or extension of credit.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Regulation
W generally excludes all non-bank and non-savings association subsidiaries of banks from
treatment as affiliates, except to the extent that the Federal Reserve Board decides to
treat these subsidiaries as affiliates. Concurrently with the adoption of Regulation W,
the Federal Reserve Board has proposed a regulation which would further limit the amount
of loans that could be purchased by a bank from an affiliate to not more than 100% of the
banks capital and surplus.

9

---

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

Branching.  National banks are required by the National Bank Act to adhere to branch office
          banking laws applicable to state banks in the states in which they are located.
          Under current South Carolina law, the bank may open branch offices throughout
          South Carolina with the prior approval of the Office of the Comptroller of the
          Currency. In addition, with prior regulatory approval, the bank will be able to
          acquire existing banking operations in South Carolina. Furthermore, federal
          legislation permits interstate branching, including out-of-state acquisitions by
          bank holding companies, interstate branching by banks if allowed by state law,
          and interstate merging by banks. South Carolina law, with limited exceptions,
          currently permits branching across state lines through interstate mergers.

Community
Reinvestment Act.  The Community Reinvestment Act requires that, in connection with
examinations of financial institutions within their respective jurisdictions, the Federal
Reserve, the FDIC, or the Office of the Comptroller of the Currency shall evaluate the
record of each financial institution in meeting the credit needs of its local community,
including low and moderate income neighborhoods. These factors are also considered in
evaluating mergers, acquisitions, and applications to open a branch or facility. Failure
to adequately meet these criteria could impose additional requirements and limitations on
our bank. Under the Gramm-Leach-Bliley Act, banks with aggregate assets of not more than
$250 million will be subject to a Community Reinvestment Act examination only once every
60 months if the bank receives an outstanding rating, once every 48 months if it receives
a satisfactory rating, and as needed if the rating is less than satisfactory.
Additionally, under the Gramm-Leach-Bliley Act, banks are required to publicly disclose
the terms of various Community Reinvestment Act-related agreements.

All
institutions receive one of four ratings based on their performance: Outstanding,
Satisfactory, Needs Improvement or Substantial Noncompliance. An institution that receives
a rating of Substantial Noncompliance would be subject to enforcement action. Beach First
National Bank is strongly committed to providing credit needs to individuals in the
communities that we serve. Beach First National Bank received a satisfactory
rating in the most recent evaluation.

The
Gramm-Leach-Bliley Act. Under the Gramm-Leach-Bliley Act, subject to certain
conditions imposed by their respective banking regulators, national and state-chartered
banks are permitted to form financial subsidiaries that may conduct financial
or incidental activities, thereby permitting bank subsidiaries to engage in certain
activities that previously were impermissible. The Gramm-Leach-Bliley Act imposes several
safeguards and restrictions on financial subsidiaries, including that the parent
banks equity investment in the financial subsidiary be deducted from the banks
assets and tangible equity for purposes of calculating the banks capital adequacy.
In addition, the Gramm-Leach-Bliley Act imposes new restrictions on transactions between a
bank and its financial subsidiaries similar to restrictions applicable to transactions
between banks and nonbank affiliates.

The
Gramm-Leach-Bliley Act also contains provisions regarding consumer privacy. These
provisions require financial institutions to disclose their policy for collecting and
protecting confidential information. Customers generally may prevent financial
institutions from sharing personal financial information with nonaffiliated third parties
except for third parties that market an institutions own products and services.
Additionally, financial institutions generally may not disclose consumer account numbers
to any nonaffiliated third party for use in telemarketing, direct mail marketing, or other
marketing to the consumer.

Other
Regulations.  Interest and other charges collected or contracted for by the bank are
subject to state usury laws and federal laws concerning interest rates. The banks
loan operations are also subject to federal laws applicable to credit transactions, such
as:

10

---

| | o | the federal Truth-In-Lending Act, governing disclosures of credit terms to consumer
borrowers; o the Home Mortgage Disclosure Act of 1975, requiring financial institutions to
provide information
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | 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;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | the Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other
prohibited factors in extending credit;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------

| | o | the Fair Credit Reporting Act of 1978, governing the use and provision of information to credit
reporting agencies;
| | - | -------------------------------------------------------------------------------------------------------------------

| | o | the Fair Debt Collection Act, governing the manner in which consumer debts may be collected by
collection agencies; and
| | - | -----------------------------------------------------------------------------------------------------------------------

| | o | the rules and regulations of the various federal agencies charged with the responsibility
of implementing such federal laws.
| | - | ----------------------------------------------------------------------------------------------------------------------------

The deposit operations of the bank
also are subject to:

| | o | 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
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | the Electronic Funds Transfer Act and Regulation E issued by the Federal Reserve Board to
implement that act, which governs automatic deposits to and withdrawals from deposit
accounts and customers rights and liabilities arising from the use of automated
teller machines and other electronic banking services.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Capital
Regulations. The federal bank regulatory authorities have adopted risk-based capital
guidelines for banks and bank holding companies that are designed to make regulatory
capital requirements more sensitive to differences in risk profiles among banks and bank
holding companies and account for off-balance sheet items. The guidelines are minimums,
and the federal regulators have noted that banks and bank holding companies contemplating
significant expansion programs should not allow expansion to diminish their capital ratios
and should maintain ratios in excess of the minimums. We have not received any notice
indicating that either our holding company or our bank is subject to higher capital
requirements. The current guidelines require all bank holding companies and
federally-regulated banks to maintain a minimum risk-based total capital ratio equal to
8%, of which at least 4% must be Tier 1 capital. Tier 1 capital includes common
shareholders equity, qualifying perpetual preferred stock, and minority interests in
equity accounts of consolidated subsidiaries, but excludes goodwill and most other
intangibles and excludes the allowance for loan and lease losses. Tier 2 capital includes
the excess of any preferred stock not included in Tier 1 capital, mandatory convertible
securities, hybrid capital instruments, subordinated debt and intermediate term-preferred
stock, and general reserves for loan and lease losses up to 1.25% of risk-weighted assets.

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

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

11

---

The
FDIC Improvement Act established a new capital-based regulatory scheme designed to promote
early intervention for troubled banks which requires the FDIC to choose the least
expensive resolution of bank failures. The new capital-based regulatory framework contains
five categories of compliance with regulatory capital requirements, including well
capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized, and critically undercapitalized.
To qualify as a well capitalized institution, a bank must have a leverage
ratio of no less than 5%, a Tier 1 risk-based ratio of no less than 6%, and a total
risk-based capital ratio of no less than 10%, and the bank must not be under any order or
directive from the appropriate regulatory agency to meet and maintain a specific capital
level. Currently, we qualify as well capitalized.

Under
the FDIC Improvement Act regulations, the applicable agency can treat an institution as if
it were in the next lower category if the agency determines (after notice and an
opportunity for hearing) that the institution is in an unsafe or unsound condition or is
engaging in an unsafe or unsound practice. The degree of regulatory scrutiny of a
financial institution increases, and the permissible activity of the institution
decreases, as it moves downward through the capital categories. Institutions that fall
into one of the three undercapitalized categories may be required to do some or all of the
following:

| | o | submit a capital restoration plan;
| | - | ----------------------------------

| | o | raise additional capital;
| | - | -------------------------

| | o | restrict their growth, deposit interest rates, and other activities;
| | - | --------------------------------------------------------------------

| | o | improve their management;
| | - | -------------------------

| | o | eliminate management fees; or
| | - | -----------------------------

| | o | divest themselves of all or a part of their operations.
| | - | -------------------------------------------------------

These
capital guidelines can affect us in several ways. If we grow at a rapid pace, our capital
may be depleted too quickly, and a capital infusion from our holding company may be
necessary which could impact our ability to pay dividends. Our capital levels currently
are adequate; however, rapid growth, poor loan portfolio performance, poor earnings
performance, or a combination of these factors could change our capital position in a
relatively short period of time. If we fail to meet these capital requirements, our bank
would be required to develop and file a plan with the Office of the Comptroller of the
Currency describing the means and a schedule for achieving the minimum capital
requirements. In addition, our bank would generally not receive regulatory approval of any
application that requires the consideration of capital adequacy, such as a branch or
merger application, unless our bank could demonstrate a reasonable plan to meet the
capital requirement within a reasonable period of time. A bank that is not well
capitalized is also subject to certain limitations relating to so-called
brokered deposits. Bank holding companies controlling financial institutions
can be called upon to boost the institutions capital and to partially guarantee the
institutions performance under their capital restoration plans.

Enforcement
Powers. The Financial Institutions Reform, Recovery and Enforcement Act expanded and
increased civil and criminal penalties available for use by the federal regulatory
agencies against depository institutions and certain institution-affiliated
parties. Institution-affiliated parties primarily include management, employees, and
agents of a financial institution, as well as independent contractors and consultants such
as attorneys and accountants and others who participate in the conduct of the financial
institutions affairs. These practices can include the failure of an institution to
timely file required reports or the filing of false or misleading information or the
submission of inaccurate reports. Civil penalties may be as high as $1,000,000 a day for
such violations. Criminal penalties for some financial institution crimes have been
increased to 20 years. In addition, regulators are provided with greater flexibility to
commence enforcement actions against institutions and institution-affiliated parties.
Possible enforcement actions include the termination of deposit insurance. Furthermore,
banking agencies power to issue cease-and-desist orders were expanded. Such orders
may, among other things, require affirmative action to correct any harm resulting from a
violation or practice, including restitution, reimbursement, indemnification or guarantees
against loss. A financial institution may also be ordered to restrict its growth, dispose
of certain assets, rescind agreements or contracts, or take other actions as determined by
the ordering agency to be appropriate.

12

---

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

Proposed
Legislation and Regulatory Action.New regulations and statutes are regularly proposed
that contain wide-ranging proposals for altering the structures, regulations, and
competitive relationships of the nations financial institutions. We cannot predict
whether or in what form any proposed regulation or statute will be adopted or the extent
to which our business may be affected by any new regulation or statute.

# Item 2.  Description of
Property

The
principal place of business of both the company and the bank and the main office of the
bank is located at the corner of Oak Street and Sixteenth Avenue in Myrtle Beach, South
Carolina. The banks main office is located on 0.8-acre plot of land, which was
purchased for $218,000. We constructed a permanent banking facility of 5,000 square feet
on the site at a cost of approximately $1,000,000, which was paid out of the proceeds of
our initial public offering. Furniture, fixtures, and equipment for the main office cost
approximately $534,000. There is one automated teller machine located at the banks
main office.

We
have a branch office located at the northwest corner of the intersection of S.C. Highway
544 and U.S. Highway 17 in Surfside Beach, which is just south of Myrtle Beach. We have a
20 year lease for the property on which the branch is located, which we may renew for two
five-year periods. The branch office opened in June of 2001 and was constructed at a cost
of approximately $850,000, which was paid out of the proceeds of our secondary offering.
Furniture, fixtures, and equipment for the branch office cost approximately $300,000.

We
have a second branch office located in the Gator Hole Shopping Center at 710 Highway 17
North, North Myrtle Beach, South Carolina. We have a 20 year lease for the property, which
we may renew for four successive separate periods of five years. The branch opened in
November 2002 and was constructed at a cost of approximately $500,000. Furniture, fixtures
and equipment for the branch office cost approximately $250,000.

Our
third branch office located in the Pineland Shopping Center at 430 William Hilton Parkway
Hilton Head Island, South Carolina was opened in February 2003. We have a ten year lease
with renewal options for two five year periods. We incurred leasehold improvements
totaling $150,000.

# Item 3.  Legal
Proceedings.

There
are no material legal proceedings.

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

No
matter was submitted to a vote of security holders during the fourth quarter of the fiscal
year covered by this report.

# Part II Item 5.  Market for
Common Equity and Related Stockholder Matters.

Our
common stock has been quoted on the OTC Bulletin Board under the symbol BFNB
since the third quarter of 2001. As of March 3, 2004, we had approximately 1,485
shareholders of record.

13

---

To
date, we have not paid cash dividends on our common stock. We currently intend to retain
earnings to support operations and finance expansion and therefore do not anticipate
paying cash dividends in the foreseeable future. All of our outstanding shares of common
stock are entitled to share equally in dividends from funds legally available when, and
if, declared by the board of directors.

The
following table sets forth the high and low bid stock prices published by OTC Bulletin
Board for each quarter during the last two fiscal years. The quotations reflect
inter-dealer prices, without retail mark-up, mark-down or commission, and may not
represent actual transactions. The company has paid or declared any cash or stock
dividends.

|               | High Bid | Low Bid | 
|-------------- | -------- | ------- | 
|Year end 2003: |          |         | 
|First Quarter  |          |         | 
|Second Quarter |          |         | 
|Third Quarter  |          |         | 
|Fourth Quarter |          |         | 
|               |          |        
|Year end 2002: |          |        
|First Quarter  |          |         | 
|Second Quarter |          |         | 
|Third Quarter  |          |         | 
|Fourth Quarter |          |         | 

# Item 6.  Management's Discussion and Analysis of
Financial Condition and Results of Operations

In
response to this Item, the information contained on pages 4 through 16 of the
Companys Annual Report to Shareholders for the year ended December 31, 2003 is
incorporated herein by reference.

# Item 7.  Financial
Statements

In
response to this Item, the information contained on pages 17 through 36 of the
companys Annual Report to Shareholders for the year ended December 31, 2003 is
incorporated herein by reference.

# Item 8.  Changes in and Disagreements With Accountants on Accounting and
 Financial Disclosure

None.

# Item 8A.  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 December 31, 2003.

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.

14

---

# Part III

# Item 9.  Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the
Exchange Act

In
response to this Item, additional information is contained on page 13 of the
companys Proxy Statement for the Annual Meeting of Shareholders to be held on April
21, 2004 is incorporated herein by reference.

We
have adopted a Code of Ethics that applies to senior financial officers in accordance with
the Sarbanes-Oxley Corporate Responsibility Act of 2002 that includes our principal
executive officer and principal financial officer and other executive officers of our
Company. The Code of Ethics is available without charge to shareholders upon request.
Shareholders should contact Dick Burch at the Company offices to obtain a copy.

# Item 10.  Executive
Compensation

In
response to this Item, the information contained on pages 6 through 8 of the
companys Proxy Statement for the Annual Meeting of Shareholders to be held on April
21, 2004 is incorporated herein by reference.

# Item 11.  Security
Ownership of Certain Beneficial Owners and Management

The
following table sets forth equity compensation plan information at December 31, 2003. The
company has not declared any cash or stock dividends.

Equity Compensation Plan Information

|                    |  |  | Number of securities
|------------------- |  |  | --------------------
|
|
|
|
|
|
|
|Equity compensation |  |  |                     
|plans approved by   |  | 
|security holders    |  | 
|                    |  | 
|Equity compensation |  |  |                     
|plans not approved  |  | 
|by security holders |  | 
|                    |  | 
|Total               |  |  |                     

In
response to this Item, additional information is contained on page 9 of the companys
Proxy Statement for the Annual Meeting of Shareholders to be held on April 21, 2004 is
incorporated herein by reference.

# Item 12.  Certain
Relationships and Related Transactions

In
response to this Item, the information contained on page 12 of the companys Proxy
Statement for the Annual Meeting of Shareholders to be held on April 21, 2004 is
incorporated herein by reference.

15

---

# Item 13. Exhibits, List
and Reports on Form 8-K

(a)     The
          following documents are filed as part of this report:

| | 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).
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------

| | 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 March 4, 2000
(incorporated by reference to Exhibit 10.9 of the Companys Form 10-KSB for the year
ended December 31, 2003).
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 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 | Employment Agreement of Walter E. Standish, III with the Company dated February 24, 2004.
| | ---- | -----------------------------------------------------------------------------------------

| | 13 | Annual Report to Shareholders for the year ended December 31, 2003.
| | -- | -------------------------------------------------------------------

| | 24 | Power of Attorney (contained on the signature page hereof).
| | -- | -----------------------------------------------------------

| | 21.1 | Subsidiaries of the Company
| | ---- | ---------------------------

| | 31.1 | Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
| | ---- | -------------------------------------------------------------------------------------------------------

| | 31.2 | Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
| | ---- | -------------------------------------------------------------------------------------------------------

| | 32 | Certifications of Chief Executive
Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of
2002. This exhibit is not filed for purposes of Section 18 of the Securities
Exchange Act of 1934 but is instead furnished as provided by applicable rules of the
Securities and Exchange Commission.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(b)    
          Reports on Form 8-K

The
following reports were filed on Form 8-K during the fourth quarter for the year ended
December 31, 2003.

The
company filed a Form 8-K on October 17, 2003 to announce the earnings for the third
quarter ending September 30, 2003.

16

---

# Item 14.  Principal
Accountant Fees and Services

The
information required by Item 14 is incorporated by reference from our proxy statement for
the 2004 annual meeting of shareholders under the heading Audit Fees.

17

---

# SIGNATURES

In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934 (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:  March 19, 2004 |  | By:  /s/ Walter E. Standish, III
        Walter E. Standish, III        
President and Chief Executive Officer
|--------------------- |  | --------------------------------------------------------------------------------------------------------------

KNOW
ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and
appoints Walter E. Standish, III, his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for him and in his name, place and stead,
in any and all capacities, to sign any and all amendments to this Annual Report on Form
10-KSB, and to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto attorney-in-fact and
agent full power and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that attorney-in-fact and
agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.

In
accordance with the Exchange Act, this report has been signed below by the following
persons on behalf of the registrant in the capacities and on the dates indicated.

|Signature | Title | Date
|--------- | ----- | ----

| |  | 
| |  | 

|/s/ Michael Bert Anderson
Michael Bert Anderson | Director | March 19, 2004
|----------------------------------------------- | -------- | --------------

|/s/ Orvis Bartlett Buie
Orvis Bartlett Buie | Director | March 19, 2004
|------------------------------------------- | -------- | --------------

|/s/ Raymond E. Cleary, III
Raymond E. Cleary, III | Chairman and Director | March 19, 2004
|------------------------------------------------- | --------------------- | --------------

|/s/ E.Thomas Fulmer
E.Thomas Fulmer | Director | March 19, 2004
|----------------------------------- | -------- | --------------

|/s/ Michael D. Harrington
Michael D. Harrington | Director | March 19, 2004
|----------------------------------------------- | -------- | --------------

|/s/ Joe N. Jarrett, Jr.
Joe N. Jarrett, Jr. | Director | March 19, 2004
|------------------------------------------- | -------- | --------------

|/s/ Richard E. Lester
Richard E. Lester | Director | March 19, 2004
|--------------------------------------- | -------- | --------------

18

---

|/s/ Leigh Ammons Meese
Leigh Ammons Meese | Director | March 19, 2004
|----------------------------------------- | -------- | --------------

|/s/ Rick H. Seagroves
Rick H. Seagroves | Director | March 19, 2004
|--------------------------------------- | -------- | --------------

|/s/ Don J. Smith
Don J. Smith | Director | March 19, 2004
|----------------------------- | -------- | --------------

|/s/ Samuel Robert Spann
Samuel Robert Spann | Director | March 19, 2004
|------------------------------------------- | -------- | --------------

|/s/ B. Larkin Spivey, Jr.
B. Larkin Spivey, Jr. | Director | March 19, 2004
|----------------------------------------------- | -------- | --------------

|/s/ Walter E. Standish, III
Walter E. Standish, III | President, CEO andDirector | March 19, 2004
|--------------------------------------------------- | -------------------------- | --------------

|/s/ James C. Yahnis
James C. Yahnis | Director | March 19, 2004
|----------------------------------- | -------- | --------------

|/s/ Richard N. Burch
Richard N. Burch | Chief Financial Officer andPrincipal
Accounting Officer | March 19, 2004
|------------------------------------- | ------------------------------------------------------- | --------------

19

---

# Exhibit List:

| | 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).
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------

| | 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 March 4, 2000
(incorporated by reference to Exhibit 10.9 of the Companys Form 10-KSB for the year
ended December 31, 2003).
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 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 | Employment Agreement of Walter E. Standish, III with the Company dated February 24, 2004.
| | ---- | -----------------------------------------------------------------------------------------

| | 13 | Annual Report to Shareholders for the year ended December 31, 2003.
| | -- | -------------------------------------------------------------------

| | 24 | Power of Attorney (contained on the signature page hereof).
| | -- | -----------------------------------------------------------

| | 21.1 | Subsidiaries of the Company
| | ---- | ---------------------------

| | 31.1 | Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
| | ---- | -------------------------------------------------------------------------------------------------------

| | 31.2 | Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
| | ---- | -------------------------------------------------------------------------------------------------------

| | 32 | Certifications of Chief Executive
Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of
2002. This exhibit is not filed for purposes of Section 18 of the Securities
Exchange Act of 1934 but is instead furnished as provided by applicable rules of the
Securities and Exchange Commission.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

20