**UNITED        STATES**

**SECURITIES        AND EXCHANGE COMMISSION **

**Washington,        D.C. 20549 **

**FORM        10-QSB **

**[X]        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) **

**OF        THE SECURITIES EXCHANGE ACT OF 1934 **

**OR        **

**[        **
**]        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) **

**OF        THE SECURITIES EXCHANGE ACT OF 1934 **

**First        Security Bancorp, Inc. **

|                                                                                                                      |                                                                            |
|---------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------|
| Kentucky(State                  of jurisdiction of incorporation or organization)                                         | 61-1364206(I.R.S.                  EmployerIdentification                  No.) |
| 318                  East Main Street, Lexington, Kentucky 40507(Address                  of principal executive offices) |
| (859)                  367-3700(Issuer’s                  telephone number)                                         |

----

----

**PART        I - FINANCIAL INFORMATION**

**Item        1. Financial Statements**

----

|                                                                                                                                                                                                                                                                  |   | (Unaudited)June                  30,2005 |    |  December                  31,2004 |   | (Unaudited)June                  30,2004 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------|---------|-----------------------------------------|--------|------------------------------------------|--------|
|                                                                                                                                                                                                                                                                  |   |                                     |    |                                    |   |                                     |   |
| ASSETS                                                                                                                                                                                                                                                                |   |                                     |    |                                    |   |                                     |   |
| Cash                  and due from banks                                                                                                                                                                                                                              |   | $                                        | 6,635   |                                    | $      | 4,446                                    |   | $ | 5,506 |   |
| Federal                  funds sold                                                                                                                                                                                                                                   |   |                                     | 8,230   |                                    |   | 18,568                                   |   |   | 1,570 |   |
| Total                  cash and cash equivalent                                                                                                                                                                                                                       |   |                                     | 14,865  |                                    |   | 23,014                                   |   |   | 7,076 |   |
| Securities                  available-for-sale                                                                                                                                                                                                                        |   |                                     | 37,424  |                                    |   | 33,748                                   |   |   | 42,041 |   |
| Loans                  held for sale                                                                                                                                                                                                                                  |   |                                     | -       |                                    |   | -                                        |   |   | 750 |   |
| Loans,                  net of allowance of $1,458, $1,720 and $2,298                                                                                                                                                                                                 |   |                                     | 149,707 |                                    |   | 150,856                                  |   |   | 156,503 |   |
| Federal                  Home Loan Bank stock                                                                                                                                                                                                                         |   |                                     | 825     |                                    |   | 806                                      |   |   | 790 |   |
| Foreclosed                  assets                                                                                                                                                                                                                                    |   |                                     | 135     |                                    |   | 110                                      |   |   | 110 |   |
| Premises                  and equipment, net                                                                                                                                                                                                                          |   |                                     | 7,022   |                                    |   | 7,141                                    |   |   | 7,405 |   |
| Goodwill                                                                                                                                                                                                                                                              |   |                                     | -       |                                    |   | -                                        |   |   | 106 |   |
| Other                  intangible assets                                                                                                                                                                                                                              |   |                                     | -       |                                    |   | -                                        |   |   | 36 |   |
| Accrued                  interest receivable and other assets                                                                                                                                                                                                         |   |                                     | 1,820   |                                    |   | 1,759                                    |   |   | 2,391 |   |
|                                                                                                                                                                                                                                                                  |   |                                     |    |                                    |   |                                     |   |   |   |   |
|                                                                                                                                                                                                                                                                  |   | $                                        | 211,798 |                                    | $      | 217,434                                  |   | $ | 217,208 |   |
|                                                                                                                                                                                                                                                                  |   |                                     |    |                                    |   |                                     |   |   |   |   |
| LIABILITIES                  AND SHAREHOLDERS’ EQUITY                                                                                                                                                                                                           |   |                                     |    |                                    |   |                                     |   |   |   |   |
| Liabilities                                                                                                                                                                                                                                                           |   |                                     |    |                                    |   |                                     |   |   |   |   |
| Deposits                                                                                                                                                                                                                                                              |   |                                     |    |                                    |   |                                     |   |   |   |   |
| Noninterest                  bearing                                                                                                                                                                                                                                  |   | $                                        | 25,504  |                                    | $      | 22,670                                   |   | $ | 23,031 |   |
| Interest                  bearing                                                                                                                                                                                                                                     |   |                                     | 150,731 |                                    |   | 156,192                                  |   |   | 150,452 |   |
| Total                  deposits                                                                                                                                                                                                                                       |   |                                     | 176,235 |                                    |   | 178,862                                  |   |   | 173,483 |   |
| Federal                  funds purchased and repurchase agreements                                                                                                                                                                                                    |   |                                     | 3,153   |                                    |   | 5,857                                    |   |   | 8,291 |   |
| Note                  Payable                                                                                                                                                                                                                                         |   |                                     | 3,000   |                                    |   | 3,000                                    |   |   | 5,000 |   |
| Federal                  Home Loan Bank advances                                                                                                                                                                                                                      |   |                                     | 7,082   |                                    |   | 8,246                                    |   |   | 9,389 |   |
| Accrued                  interest payable and other liabilities                                                                                                                                                                                                       |   |                                     | 1,029   |                                    |   | 861                                      |   |   | 1,154 |   |
| Total                  liabilities                                                                                                                                                                                                                                    |   |                                     | 190,499 |                                    |   | 196,826                                  |   |   | 197,317 |   |
|                                                                                                                                                                                                                                                                  |   |                                     |    |                                    |   |                                     |   |   |   |   |
| Commitments                  and contingent liabilities                                                                                                                                                                                                               |   |                                     |    |                                    |   |                                     |   |   |   |   |
|                                                                                                                                                                                                                                                                  |   |                                     |    |                                    |   |                                     |   |   |   |   |
| Shareholders’                  equity                                                                                                                                                                                                                           |   |                                     |    |                                    |   |                                     |   |   |   |   |
| Common                  stock, no par value: 5,000,000 shares authorized; June 30, 2005                  -                  1,560,290 shares issued, authorized; December 31, 2004 and                  June 30,                  2004 - 1,558,690 shares issued |   |                                     | 8,938   |                                    |   | 8,926                                    |   |   | 8,926 |   |
| Additional                  paid-in capital                                                                                                                                                                                                                           |   |                                     | 8,956   |                                    |   | 8,944                                    |   |   | 8,926 |   |
| Retained                  earnings                                                                                                                                                                                                                                    |   |                                     | 3,570   |                                    |   | 2,736                                    |   |   | 2,456 |   |
| Accumulated                  other comprehensive income (loss)                                                                                                                                                                                                        |   |                                     | (165    | )                                       |   | 2                                        |   |   | (417 | ) |
| Total                  shareholders’ equity                                                                                                                                                                                                                     |   |                                     | 21,299  |                                    |   | 20,608                                   |   |   | 19,891 |   |
|                                                                                                                                                                                                                                                                  |   | $                                        | 211,798 |                                    | $      | 217,434                                  |   | $ | 217,208 |   |

----

----

|                                                                 |   |  Three                  Months EndedJune                  30 |   |  Six                  Months EndedJune                  30 |   |
|----------------------------------------------------------------------|--------|-------------------------------------------------------------------|--------|-----------------------------------------------------------------|--------|
|                                                                 |   | 2005                                                              |   | 2004                                                            |   | 2005 |   | 2004 |   |
| Interest                  Income                                     |   |                                                              |   |                                                            |   |   |   |   |   |
| Loans,                  excluding fees                               | $      | 2,520                                                             |   | $                                                               | 2,344  |   | $ | 4,916 |   | $ | 4,625 |   |
| Taxable                  securities                                  |   | 367                                                               |   |                                                            | 378    |   |   | 726 |   |   | 694 |   |
| Tax                  exempt securities                               |   | 9                                                                 |   |                                                            | 8      |   |   | 18 |   |   | 24 |   |
| Federal                  funds sold and other                        |   | 65                                                                |   |                                                            | 27     |   |   | 112 |   |   | 75 |   |
|                                                                 |   | 2,961                                                             |   |                                                            | 2,757  |   |   | 5,772 |   |   | 5,418 |   |
| Interest                  expense                                    |   |                                                              |   |                                                            |   |   |   |   |   |   |   |   |
| Deposits                                                             |   | 1,049                                                             |   |                                                            | 933    |   |   | 2,021 |   |   | 1,961 |   |
| Federal                  funds purchased and repurchase agreements   |   | 19                                                                |   |                                                            | 13     |   |   | 36 |   |   | 25 |   |
| Federal                  Home Loan Bank advances                     |   | 81                                                                |   |                                                            | 115    |   |   | 169 |   |   | 241 |   |
| Note                  payable and other debt                         |   | 43                                                                |   |                                                            | 47     |   |   | 81 |   |   | 95 |   |
|                                                                 |   | 1,192                                                             |   |                                                            | 1,108  |   |   | 2,307 |   |   | 2,322 |   |
|                                                                 |   |                                                              |   |                                                            |   |   |   |   |   |   |   |   |
| Net                  interest income                                 |   | 1,769                                                             |   |                                                            | 1,649  |   |   | 3,465 |   |   | 3,096 |   |
|                                                                 |   |                                                              |   |                                                            |   |   |   |   |   |   |   |   |
| Provision                  for loan losses                           |   | -                                                                 |   |                                                            | 50     |   |   | - |   |   | 75 |   |
|                                                                 |   |                                                              |   |                                                            |   |   |   |   |   |   |   |   |
| Net                  interest income after provision for loan losses |   | 1,769                                                             |   |                                                            | 1,599  |   |   | 3,465 |   |   | 3,021 |   |
|                                                                 |   |                                                              |   |                                                            |   |   |   |   |   |   |   |   |
| Noninterest                  income                                  |   |                                                              |   |                                                            |   |   |   |   |   |   |   |   |
| Service                  charges on deposit accounts                 |   | 199                                                               |   |                                                            | 166    |   |   | 366 |   |   | 314 |   |
| Net                  gains on sales of loans                         |   | 3                                                                 |   |                                                            | 162    |   |   | 3 |   |   | 241 |   |
| Net                  gains on sales of securities                    |   | -                                                                 |   |                                                            | -      |   |   | - |   |   | 243 |   |
| Other                                                                |   | 23                                                                |   |                                                            | 55     |   |   | 64 |   |   | 94 |   |
|                                                                 |   | 225                                                               |   |                                                            | 383    |   |   | 433 |   |   | 892 |   |
| Noninterest                  expense                                 |   |                                                              |   |                                                            |   |   |   |   |   |   |   |   |
| Salaries                  and employee benefits                      |   | 617                                                               |   |                                                            | 816    |   |   | 1,219 |   |   | 1,603 |   |
| Occupancy                  and equipment                             |   | 249                                                               |   |                                                            | 296    |   |   | 513 |   |   | 606 |   |
| Data                  processing                                     |   | 116                                                               |   |                                                            | 145    |   |   | 274 |   |   | 269 |   |
| Legal                  and professional fees                         |   | 66                                                                |   |                                                            | 79     |   |   | 124 |   |   | 189 |   |
| Advertising                                                          |   | 50                                                                |   |                                                            | 75     |   |   | 65 |   |   | 109 |   |
| Bankshares                  Tax                                      |   | 46                                                                |   |                                                            | 46     |   |   | 92 |   |   | 83 |   |
| Other                                                                |   | 197                                                               |   |                                                            | 229    |   |   | 375 |   |   | 469 |   |
|                                                                 |   | 1,341                                                             |   |                                                            | 1,686  |   |   | 2,662 |   |   | 3,328 |   |
|                                                                 |   |                                                              |   |                                                            |   |   |   |   |   |   |   |   |
| Income                  before income taxes                          |   | 653                                                               |   |                                                            | 296    |   |   | 1,236 |   |   | 585 |   |
| Income                  tax expense                                  |   | 214                                                               |   |                                                            | 93     |   |   | 402 |   |   | 181 |   |
|                                                                 |   |                                                              |   |                                                            |   |   |   |   |   |   |   |   |
| Net                  income                                          | $      | 439                                                               |   | $                                                               | 203    |   | $ | 834 |   | $ | 404 |   |
|                                                                 |   |                                                              |   |                                                            |   |   |   |   |   |   |   |   |
| Weighted                  average common shares outstanding:         |   |                                                              |   |                                                            |   |   |   |   |   |   |   |   |
| Basic                                                                |   | 1,560                                                             |   |                                                            | 1,559  |   |   | 1,560 |   |   | 1,559 |   |
| Diluted                                                              |   | 1,563                                                             |   |                                                            | 1,561  |   |   | 1,564 |   |   | 1,561 |   |
|                                                                 |   |                                                              |   |                                                            |   |   |   |   |   |   |   |   |
| Earnings                  per share                                  |   |                                                              |   |                                                            |   |   |   |   |   |   |   |   |
| Basic                                                                | $      | .28                                                               |   | $                                                               | .14    |   | $ | .53 |   | $ | .26 |   |
| Diluted                                                              | $      | .28                                                               |   | $                                                               | .13    |   | $ | .53 |   | $ | .26 |   |

----

----

|                                                                                                                                                          |   |   Common                  Stock |   |   Paid-In |   |   Retained |   | AccumulatedOtherComprehensive |   |  TotalShareholders’ |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|--------|---------------------|--------|----------------------|--------|-------------------------------|--------|--------------------------------|--------|
|                                                                                                                                                          |   | Shares                                    |   | Amount              |   | Capital              |   | Earnings                      |   | Income                         |   | Equity |   |
| Balance,                  January 1, 2005                                                                                                                     |   |                                      | 1,559  |                | $      | 8,926                |   | $                             | 8,944  |                           | $      | 2,736 |   | $ | 2 |   | $ | 20,608 |   |
|                                                                                                                                                          |   |                                      |   |                |   |                 |   |                          |   |                           |   |   |   |   |   |   |   |   |   |
| Stock                  options exercised                                                                                                                      |   |                                      | 1      |                |   | 12                   |   |                          | 12     |                           |   | - |   |   | - |   |   | 24 |   |
|                                                                                                                                                          |   |                                      |   |                |   |                 |   |                          |   |                           |   |   |   |   |   |   |   |   |   |
| Comprehensive                  Income:                                                                                                                        |   |                                      |   |                |   |                 |   |                          |   |                           |   |   |   |   |   |   |   |   |   |
| Net                  income                                                                                                                                   |   |                                      | -      |                |   | -                    |   |                          | -      |                           |   | 834 |   |   | - |   |   | 834 |   |
| Change                  in unrealized gain (loss) on securities available for sale, net                  of                  reclassification and tax effects |   |                                      | -      |                |   | -                    |   |                          | -      |                           |   | - |   |   | (167 | ) |   | (167 | ) |
| Total                  comprehensive income                                                                                                                   |   |                                      |   |                |   |                 |   |                          |   |                           |   |   |   |   |   |   |   | 691 |   |
|                                                                                                                                                          |   |                                      |   |                |   |                 |   |                          |   |                           |   |   |   |   |   |   |   |   |   |
| Balance,                  June 30, 2005                                                                                                                       |   |                                      | 1,560  |                | $      | 8,938                |   | $                             | 8,956  |                           | $      | 3,570 |   | $ | (165 | ) | $ | 21,299 |   |

----

----

|                                                                           |   | 2005   |   | 2004   |   |
|--------------------------------------------------------------------------------|--------|--------|--------|--------|--------|
| Cash                  flows from operating activities                          |   |   |   |   |   |
| Net                  income                                                    |   | $      | 834    |   | $      | 404 |   |
| Adjustments                  to reconcile net income to net                    |   |   |   |   |   |   |   |
| cash                  from operating activities:                               |   |   |   |   |   |   |   |
| Provision                  for loan losses                                     |   |   | -      |   |   | 75 |   |
| Depreciation                  and amortization                                 |   |   | 208    |   |   | 247 |   |
| Net                  amortization of securities                                |   |   | 94     |   |   | 513 |   |
| Net                  realized gain on sale of securities                       |   |   | -      |   |   | (243 | ) |
| Federal                  Home Loan Bank stock dividends                        |   |   | (19    | )      |   | (16 | ) |
| Originations                  of loans held for sale                           |   |   | -      |   |   | (11,652 | ) |
| Proceeds                  from sale of loans                                   |   |   | -      |   |   | 11,309 |   |
| Net                  change in:                                                |   |   |   |   |   |   |   |
| Accrued                  interest receivable                                   |   |   | (71    | )      |   | 73 |   |
| Other                  assets                                                  |   |   | 10     |   |   | (616 | ) |
| Accrued                  interest payable                                      |   |   | 42     |   |   | (97 | ) |
| Other                  liabilities                                             |   |   | 213    |   |   | 131 |   |
| Net                  cash from operating activities                            |   |   | 1,311  |   |   | 128 |   |
|                                                                           |   |   |   |   |   |   |   |
| Cash                  flows from investing activities                          |   |   |   |   |   |   |   |
| Activity                  in available-for-sale securities:                    |   |   |   |   |   |   |   |
| Maturities                  and principal repayments                           |   |   | 3,563  |   |   | 7,689 |   |
| Sales                                                                          |   |   | -      |   |   | 5,741 |   |
| Purchases                                                                      |   |   | (7,587 | )      |   | (17,742 | ) |
| Net                  change in loans                                           |   |   | 1,124  |   |   | 2,164 |   |
| Purchases                  of Federal Home Loan Bank advances                  |   |   | -      |   |   | (2 | ) |
| Purchases                  of premises and equipment, net                      |   |   | (89    | )      |   | (52 | ) |
| Net                  cash from investing activities                            |   |   | (2,989 | )      |   | (2,202 | ) |
|                                                                           |   |   |   |   |   |   |   |
| Cash                  flows from financing activities                          |   |   |   |   |   |   |   |
| Net                  change in deposits                                        |   |   | (2,627 | )      |   | (17,157 | ) |
| Net                  change in repurchase agreements and short-term borrowings |   |   | (2,704 | )      |   | (583 | ) |
| Repayments                  of Federal Home Loan Bank advances                 |   |   | (1,164 | )      |   | (3,123 | ) |
| Proceeds                  from issuance of common stock                        |   |   | 24     |   |   | - |   |
| Net                  cash from financing activities                            |   |   | (6,471 | )      |   | (20,863 | ) |
|                                                                           |   |   |   |   |   |   |   |
| Net                  change in cash and cash equivalents                       |   | $      | (8,149 | )      | $      | (22,937 | ) |
|                                                                           |   |   |   |   |   |   |   |
| Cash                  and cash equivalents at beginning of period              |   |   | 23,014 |   |   | 30,013 |   |
|                                                                           |   |   |   |   |   |   |   |
| Cash                  and cash equivalents at end of period                    |   | $      | 14,865 |   | $      | 7,076 |   |
|                                                                           |   |   |   |   |   |   |   |
| Supplemental                  cash flow information:                           |   |   |   |   |   |   |   |
| Interest                  paid                                                 |   | $      | 2,270  |   | $      | 2,419 |   |
| Income                  tax paid                                               |   |   | 30     |   |   | 100 |   |
|                                                                           |   |   |   |   |   |   |   |
| Supplemental                  non-cash disclosure:                             |   |   |   |   |   |   |   |
| Transfers                  from loans to foreclosed assets                     |   |   | 25     |   |   | 9 |   |

----

----

**NOTE        1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

*Accounting        for Stock-Based Compensation.*

|                                                                                                                |   | Three                  Months EndedJune                  30 |   | Six                  Months EndedJune                  30 |   |
|---------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------|--------|-----------------------------------------------------------|--------|
|                                                                                                                |   | 2005                                                        |   | 2004                                                      |   | 2005 |   | 2004 |   |
|                                                                                                                |   |                                                        |   |                                                      |   |   |   |   |   |
| Net                  income as reported                                                                             |   | $                                                           | 439    |                                                      | $      | 203 |   | $ | 834 |   | $ | 404 |   |
| Deduct:                  Stock-based compensation expense determined                  under fair value based method |   |                                                        | (12    | )                                                         |   | (7 | ) |   | (124 | ) |   | (49 | ) |
| Pro                  forma net income                                                                               |   | $                                                           | 427    |                                                      | $      | 196 |   | $ | 710 |   | $ | 355 |   |
| Basic                  earnings per share as reported                                                               |   | $                                                           | .28    |                                                      | $      | .14 |   | $ | .53 |   | $ | .26 |   |
| Pro                  forma basic earnings per share                                                                 |   | $                                                           | .27    |                                                      | $      | .13 |   | $ | .46 |   | $ | .23 |   |
| Diluted                  earnings per share as reported                                                             |   | $                                                           | .28    |                                                      | $      | .13 |   | $ | .53 |   | $ | .26 |   |
| Pro                  forma diluted earnings per share                                                               |   | $                                                           | .27    |                                                      | $      | .13 |   | $ | .46 |   | $ | .23 |   |

----

----

**NOTE        1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**

|                                             | 2005                       |   | 2004                       |
|--------------------------------------------------|----------------------------|--------|----------------------------|
| Risk-free                  interest rate         | 4.25%                      |   | 3.50%                      |
| Expected                  option life            | 5.0                  years |   | 5.0                  years |
| Expected                  stock price volatility | 25%                        |   | 33%                        |
| Dividend                  yield                  | -                          |   | -                          |

**NOTE        2 - SECURITIES**

|                                                |   |  FairValue |   | Gross                  Unrealized Gains |   | Gross                  Unrealized(Losses) |   |
|-----------------------------------------------------|--------|-----------------|--------|-----------------------------------------|--------|-------------------------------------------|--------|
|                                                |   |            |   |                                    |   |                                      |   |
| June                  30, 2005                      |   |            |   |                                    |   |                                      |   |
| U.S.                  Government and federal agency |   | $               | 12,369 |                                    | $      | -                                         |   | $ | (143 | ) |
| State                  and municipal                |   |            | 1,173  |                                    |   | 3                                         |   |   | - |   |
| Mortgage-backed                                     |   |            | 23,882 |                                    |   | 28                                        |   |   | (138 | ) |
| Total                                               |   | $               | 37,424 |                                    | $      | 31                                        |   | $ | (281 | ) |
|                                                |   |            |   |                                    |   |                                      |   |   |   |   |
| December                  31, 2004                  |   |            |   |                                    |   |                                      |   |   |   |   |
| U.S.                  Government and federal agency |   | $               | 13,448 |                                    | $      | 2                                         |   | $ | (71 | ) |
| State                  and municipal                |   |            | 882    |                                    |   | 7                                         |   |   | - |   |
| Mortgage-backed                                     |   |            | 19,418 |                                    |   | 116                                       |   |   | (51 | ) |
| Total                                               |   | $               | 33,748 |                                    | $      | 125                                       |   | $ | (122 | ) |
|                                                |   |            |   |                                    |   |                                      |   |   |   |   |
| June                  30, 2004                      |   |            |   |                                    |   |                                      |   |   |   |   |
| U.S.                  Government and federal agency |   | $               | 14,800 |                                    | $      | -                                         |   | $ | 262 |   |
| State                  and municipal                |   |            | 885    |                                    |   | 5                                         |   |   | 1 |   |
| Mortgage-backed                                     |   |            | 26,356 |                                    |   | 40                                        |   |   | 415 |   |
| Total                                               |   | $               | 42,041 |                                    | $      | 45                                        |   |   | 678 |   |

----

----

**NOTE        2 - SECURITIES **

|                                        |   | 12                  Months or Less |   | More                  than 12 Months |   | Total  |   |
|---------------------------------------------|--------|------------------------------------|--------|--------------------------------------|--------|--------|--------|
|                                        |   | Fair                               |   | Unrealized                           |   | Fair   |   | Unrealized |   | Fair |   | Unrealized |   |
|                                        |   | Value                              |   | (Loss)                               |   | Value  |   | (Loss) |   | Value |   | (Loss) |   |
| Description                  of Securities  |   |                               |   |                                 |   |   |   |   |   |   |   |   |   |
| U.S.                  Government and        |   |                               |   |                                 |   |   |   |   |   |   |   |   |   |
|   federal                  agency |   | $                                  | 5,972  |                                 | $      | (54    | )      | $ | 6,397 |   | $ | (89 | ) | $ | 12,369 |   | $ | (143 | ) |
| State                  and municipal        |   |                               | 643    |                                 |   | -      |   |   | - |   |   | - |   |   | 643 |   |   | - |   |
| Mortgage-backed                             |   |                               | 15,158 |                                 |   | (76    | )      |   | 2,848 |   |   | (62 | ) |   | 18,006 |   |   | (138 | ) |
|                                        |   |                               |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  temporarily          |   |                               |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  impaired                  with stated |   |                               |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   maturities                      |   | $                                  | 21,773 |                                 | $      | (130   | )      | $ | 9,245 |   | $ | (151 | ) | $ | 31,018 |   | $ | (281 | ) |

|                          |   | June                  30,2005 |   | December                  31,2004 |   | June                  30,2004 |   |
|-------------------------------|--------|-------------------------------|--------|-----------------------------------|--------|-------------------------------|--------|
| Proceeds                      |   | $                             | -      |                              | $      | 11,164                        |   | $ | 5,741 |   |
| Gross                  gains  |   |                          | -      |                              |   | 318                           |   |   | 243 |   |
| Gross                  losses |   |                          | -      |                              |   | -                             |   |   | - |   |

|                                                            |   | FairValue |   |
|-----------------------------------------------------------------|--------|-----------|--------|
| Due                  in one year or less                        |   | $         | 1,995  |   |
| Due                  from one to five years                     |   |      | 10,692 |   |
| Due                  from five to ten years                     |   |      | 607    |   |
| Due                  after ten years                            |   |      | 248    |   |
| Total                  securities due at a single maturity date |   |      | 13,542 |   |
| Mortgage-backed                                                 |   |      | 23,882 |   |
|                                                            |   |      |   |   |
| Total                                                           |   | $         | 37,424 |   |

----

----

**NOTE        3 - LOANS**

|                                            |   | June                  30,2005 |    | December                  31,2004 |   | June                  30,2004 |   |
|-------------------------------------------------|--------|-------------------------------|---------|-----------------------------------|--------|-------------------------------|--------|
|                                            |   |                          |    |                              |   |                          |   |
| Commercial                                      |   | $                             | 50,727  |                              | $      | 58,125                        |   | $ | 53,375 |   |
| Mortgage                  loans on real estate: |   |                          |    |                              |   |                          |   |   |   |   |
| Commercial                                      |   |                          | 46,495  |                              |   | 40,087                        |   |   | 55,753 |   |
| Residential                                     |   |                          | 8,732   |                              |   | 10,069                        |   |   | 12,120 |   |
| Construction                                    |   |                          | 27,010  |                              |   | 26,299                        |   |   | 20,720 |   |
| Home                  equity                    |   |                          | 11,875  |                              |   | 11,637                        |   |   | 11,410 |   |
| Consumer                  Credit Card           |   |                          | 812     |                              |   | 828                           |   |   | 814 |   |
| Consumer                                        |   |                          | 5,514   |                              |   | 5,531                         |   |   | 4,609 |   |
| Subtotal                                        |   |                          | 151,165 |                              |   | 152,576                       |   |   | 158,801 |   |
| Less                  allowance for loan losses |   |                          | (1,458  | )                                 |   | (1,720                        | )      |   | (2,298 | ) |
| Loans,                  net                     |   | $                             | 149,707 |                              | $      | 150,856                       |   | $ | 156,503 |   |

|                                       |   | June                  30,2005 |   | December                  31,2004 |   | June                  30,2004 |   |
|--------------------------------------------|--------|-------------------------------|--------|-----------------------------------|--------|-------------------------------|--------|
|                                       |   |                          |   |                              |   |                          |   |
| Beginning                  balance         |   | $                             | 1,720  |                              | $      | 2,379                         |   | $ | 2,379 |   |
| Loans                  charged-off         |   |                          | (282   | )                                 |   | (962                          | )      |   | (156 | ) |
| Recoveries                                 |   |                          | 18     |                              |   | 6                             |   |   | - |   |
| Provision                  for loan losses |   |                          | -      |                              |   | 297                           |   |   | 75 |   |
| Ending                  balance            |   | $                             | 1,458  |                              | $      | 1,720                         |   | $ | 2,298 |   |

**NOTE        4 - STOCK OPTIONS **

----

----

**NOTE        4 - STOCK OPTIONS (Continued)**

|                                                                                        |   | 2005   |    | 2004                                            |   |
|---------------------------------------------------------------------------------------------|--------|--------|---------|-------------------------------------------------|--------|
|                                                                                        |   | Shares |    | Weighted                  Average ExercisePrice |   | Shares |   | Weighted                  Average ExercisePrice |   |
|                                                                                        |   |   |    |                                            |   |   |   |   |   |
| Outstanding                  at beginning of year                                           |   |   | 119,650 |                                            | $      | 18.23 |   |   | 87,750 |   | $ | 18.91 |   |
| Granted                                                                                     |   |   | 30,000  |                                            |   | 16.40 |   |   | 45,350 |   |   | 17.15 |   |
| Exercised                                                                                   |   |   | (1,600  | )                                               |   | 15.50 |   |   | - |   |   | - |   |
| Forfeited                                                                                   |   |   | (12,300 | )                                               |   | 16.40 |   |   | (5,850 | ) |   | 19.63 |   |
|                                                                                        |   |   |    |                                            |   |   |   |   |   |   |   |   |   |
| Outstanding                  at end of period                                               |   |   | 135,750 |                                            | $      | 18.02 |   |   | 127,250 |   | $ | 18.25 |   |
|                                                                                        |   |   |    |                                            |   |   |   |   |   |   |   |   |   |
| Options                  exercisable at end of period                                       |   |   | 125,200 |                                            | $      | 18.07 |   |   | 97,800 |   | $ | 18.46 |   |
| Weighted                  average fair value of optionsgranted                  during year |   | $      | 5.06    |                                            |   |   |   | $ | 6.04 |   |   |   |   |

|                                       |   | Outstanding |                         | Exercisable |
|--------------------------------------------|--------|-------------|------------------------------|-------------|
| Range                  ofExercisePrices    |   | Number      | WeightedAverageExercisePrice |        | Number | WeightedAverageExercisePrice |
|                                       |   |        |                         |        |   |   |
| $13.75-$15.50                              |   | 12,250      | $15.50                       |        | 11,800 | $15.50 |
| $16.00-$22.00                              |   | 123,500     | 18.27                        |        | 113,400 | 18.34 |
|                                       |   |        |                         |        |   |   |
| Outstanding                  at period-end |   | 135,750     | $18.02                       |        | 125,200 | $18.09 |

----

----

**NOTE        5 -**
**EARNINGS        PER SHARE**

|                                                                                                                                                                                                                                                  |   | Three                  Months EndedJune                  30 |    | Six                  Months EndedJune                  30 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------|---------|-----------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                  |   | 2005                                                        |    | 2004                                                      |   | 2005 |   | 2004 |   |
| Basic                                                                                                                                                                                                                                                 |   |                                                        |    |                                                      |   |   |   |   |   |
| Net                  Income                                                                                                                                                                                                                           |   | $                                                           | 439     |                                                      | $      | 203 |   | $ | 834 |   | $ | 404 |   |
| Weighted                  average common shares outstanding                                                                                                                                                                                           |   |                                                        | 1,560   |                                                      |   | 1,559 |   |   | 1,560 |   |   | 1,559 |   |
|                                                                                                                                                                                                                                                  |   |                                                        |    |                                                      |   |   |   |   |   |   |   |   |   |
| Basic                  earnings per common share                                                                                                                                                                                                      |   | $                                                           | .28     |                                                      | $      | .14 |   | $ | .53 |   | $ | .26 |   |
|                                                                                                                                                                                                                                                  |   |                                                        |    |                                                      |   |   |   |   |   |   |   |   |   |
| Diluted                                                                                                                                                                                                                                               |   |                                                        |    |                                                      |   |   |   |   |   |   |   |   |   |
| Net                  Income                                                                                                                                                                                                                           |   | $                                                           | 439     |                                                      | $      | 203 |   | $ | 834 |   | $ | 404 |   |
| Weighted                  average common shares outstanding                                                                                                                                                                                           |   |                                                        | 1,560   |                                                      |   | 1,559 |   |   | 1,560 |   |   | 1,559 |   |
| Add:                  Dilutive effects of assumed exercises ofstock                  warrants and options                                                                                                                                             |   |                                                        | 3       |                                                      |   | 2 |   |   | 4 |   |   | 2 |   |
|                                                                                                                                                                                                                                                  |   |                                                        |    |                                                      |   |   |   |   |   |   |   |   |   |
| Average                  shares and dilutive potential common shares                                                                                                                                                                                  |   |                                                        | 1,563   |                                                      |   | 1,561 |   |   | 1,564 |   |   | 1,561 |   |
|                                                                                                                                                                                                                                                  |   |                                                        |    |                                                      |   |   |   |   |   |   |   |   |   |
| Diluted                  earnings per common share                                                                                                                                                                                                    |   | $                                                           | .28     |                                                      | $      | .13 |   | $ | .53 |   | $ | .26 |   |
|                                                                                                                                                                                                                                                  |   |                                                        |    |                                                      |   |   |   |   |   |   |   |   |   |
| Stock                  options for shares of common stock that were not considered in                  computing                  diluted earnings per common share because they were anti-dilutive                  are as                  follows: |   |                                                        | 126,200 |                                                      |   | 61,000 |   |   | 96,800 |   |   | 109,850 |   |

----

**PART        I - FINANCIAL INFORMATION**

**Item        2. - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF        OPERATIONS **

**Forward-Looking        Statements **

**General**

----

**Executive        Summary**

**Results        of Operations**

*Net        Interest Income. *

----

|                                                  |   | Three                  Months EndedJune                  30, |    | Six                  Months EndedJune                  30, |   |
|-------------------------------------------------------|--------|--------------------------------------------------------------|---------|------------------------------------------------------------|--------|
|                                                  |   | 2005                                                         |    | 2004                                                       |   | 2005 |   | 2004 |   |
| Net                  interest income (tax-equivalent) |   | $                                                            | 1,774   |                                                       | $      | 1,652 |   | $ | 3,474 |   | $ | 3,109 |   |
|                                                  |   |                                                         |    |                                                       |   |   |   |   |   |   |   |   |   |
| Average                  balances                     |   |                                                         |    |                                                       |   |   |   |   |   |   |   |   |   |
| Earning                  assets                       |   |                                                         | 196,233 |                                                       |   | 214,304 |   |   | 198,216 |   |   | 217,047 |   |
| Funding                  sources (1)                  |   |                                                         | 165,423 |                                                       |   | 206,106 |   |   | 167,902 |   |   | 209,002 |   |
|                                                  |   |                                                         |    |                                                       |   |   |   |   |   |   |   |   |   |
| Average                  yields or costs              |   |                                                         |    |                                                       |   |   |   |   |   |   |   |   |   |
| Loans                                                 |   |                                                         | 6.67    | %                                                          |   | 5.78 | % |   | 6.42 | % |   | 5.76 | % |
| Earning                  assets                       |   |                                                         | 6.04    | %                                                          |   | 5.16 | % |   | 5.83 | % |   | 5.03 | % |
| Deposits                  (2)                         |   |                                                         | 2.76    | %                                                          |   | 2.05 | % |   | 2.63 | % |   | 2.14 | % |
| Funding                  sources                      |   |                                                         | 2.88    | %                                                          |   | 2.16 | % |   | 2.75 | % |   | 2.24 | % |
|                                                  |   |                                                         |    |                                                       |   |   |   |   |   |   |   |   |   |
| Spread                  (3, 4)                        |   |                                                         | 3.16    | %                                                          |   | 2.71 | % |   | 3.09 | % |   | 2.50 | % |
| Margin                  (3, 5)                        |   |                                                         | 3.62    | %                                                          |   | 3.09 | % |   | 3.51 | % |   | 2.88 | % |

```

```

| 1. | Funding                      sources, as used in the above table, is composed of interest                      bearing                      liabilities in the form of deposits, repurchase agreements,                      advances from                      the Federal Home Loan Bank and notes payable. |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2. | Deposits,                      as used in the above table, are composed solely of interest                      bearing                      deposits.                                                                                                                                                        |
| 3. | The                      above calculations include the effects of tax-equivalent adjustments.                                                                                                                                                                                                                |
| 4. | Spread,                      as used in the above table, is the net interest spread, which                      is the                      difference between the average yield on earning assets and                      the average                      cost of interest bearing funding sources         |
| 5. | Margin,                      as used in the above table, is the net interest margin, which                      is a                      calculation of the ratio of net interest income to average                      earning                      assets.                                                |

|                                                                                                                                                                 |   | Three                  Months EndedJune                  30, |   | Six                  Months EndedJune                  30, |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------|--------|------------------------------------------------------------|--------|
|                                                                                                                                                                 |   | 2005                                                         |   | 2004                                                       |   | 2005 |   | 2004 |   |
| Net                  interest income (tax-equivalent)                                                                                                                |   | $                                                            | 1,774  |                                                       | $      | 1,652 |   | $ | 3,474 |   | $ | 3,109 |   |
| Tax-equivalent                  adjustment (1)                                                                                                                       |   |                                                         | (5     | )                                                          |   | (4 | ) |   | (9 | ) |   | (13 | ) |
| Net                  interest income as reported in the  financial                  statements                                                                  |   | $                                                            | 1,769  |                                                       | $      | 1,649 |   | $ | 3,465 |   | $ | 3,096 |   |
|                                                                                                                                                                 |   |                                                         |   |                                                       |   |   |   |   |   |   |   |   |   |
| 1. We                  computed income based on the carrying value of tax exempt instruments                  on a                  fully tax equivalent basis. |

|                                                    |   | June                  30, 2005 |    | December                  31, 2004 |   | June                  30, 2004 |   |
|---------------------------------------------------------|--------|--------------------------------|---------|------------------------------------|--------|--------------------------------|--------|
|                                                    |   | Amount                         |    | Percent                            |   | Amount                         |   | Percent |   | Amount |   | Percent |   |
| Daily                  floating rate                    |   | $                              | 97,488  |                               |   | 64.5                           | %      | $ | 97,922 |   |   | 64.2 | % | $ | 87,021 |   |   | 54.8 | % |
| Reprice                  within one year                |   |                           | 17,791  |                               |   | 11.8                           | %      |   | 19,427 |   |   | 12.7 | % |   | 19,920 |   |   | 12.6 | % |
| Reprice                  in one year through five years |   |                           | 31,270  |                               |   | 20.7                           | %      |   | 32,034 |   |   | 21.0 | % |   | 44,970 |   |   | 28.3 | % |
| Reprice                  after five years               |   |                           | 4,616   |                               |   | 3.0                            | %      |   | 3,193 |   |   | 2.1 | % |   | 6,890 |   |   | 4.3 | % |
| Totals                                                  |   | $                              | 151,165 |                               |   | 100.0                          | %      | $ | 152,576 |   |   | 100.0 | % | $ | 159,551 |   |   | 100.0 | % |

----

*Provision        for Loan Losses. *

*Noninterest        Income. *

| ·   | Service                  charges on deposit accounts are composed of various fees assessed                  on                  customers’ account activity including overdraft fees and generally reflect                  FS Bank’s growth in its deposits and                  customers. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Net                  gains on the sale of loans includes income from origination fees                  and                  points on residential loans made with the expectation that they                  will be                  later sold into the secondary market, and from service release                  fees                  received on these loans from the purchasers. All loans are sold                  whereby                  servicing rights transfer to the buyer. Generally, mortgage origination                  fees increase in lower interest rate environments and decrease                  in rising                  interest rate environments. As a result, mortgage origination fees                  may                  fluctuate greatly in response to a changing rate environment. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Net                  gains on the sale of securities is the sum of gains and losses                  from the                  sale, prior to maturity, of securities held in our portfolio, and                  since                  the gains are directly related to the interest rate environment,                  are                  subject to wide fluctuations caused by changes in the interest                  rate                  environment. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                 |   | Three                  monthsended                  June 30, |   | Net                  Change |   |
|------------------------------------------------------|--------|--------------------------------------------------------------|--------|-----------------------------|--------|
|                                                 |   | 2005                                                         |   | 2004                        |   | Amount |   |
| Noninterest                  income:                 |   |                                                         |   |                        |   |   |   |
| Service                  charges on deposit accounts |   | $                                                            | 199    |                        | $      | 166 |   | $ | 33 |   |
| Net                  gains on the sale of loans      |   |                                                         | 3      |                        |   | 162 |   |   | (159 | ) |
| Net                  gains on the sale of securities |   |                                                         | -      |                        |   | - |   |   | - |   |
| Other                  noninterest income            |   |                                                         | 23     |                        |   | 55 |   |   | (32 | ) |
| Total                                                |   | $                                                            | 225    |                        | $      | 383 |   | $ | (158 | ) |

----

|                                                 |   | Six                  monthsended                  June 30, |   | Net                  Change |   |
|------------------------------------------------------|--------|------------------------------------------------------------|--------|-----------------------------|--------|
|                                                 |   | 2005                                                       |   | 2004                        |   | Amount |   |
| Noninterest                  income:                 |   |                                                       |   |                        |   |   |   |
| Service                  charges on deposit accounts |   | $                                                          | 366    |                        | $      | 314 |   | $ | 52 |   |
| Net                  gains on the sale of loans      |   |                                                       | 3      |                        |   | 241 |   |   | (238 | ) |
| Net                  gains on the sale of securities |   |                                                       | -      |                        |   | 243 |   |   | (243 | ) |
| Other                  noninterest income            |   |                                                       | 64     |                        |   | 94 |   |   | (30 | ) |
| Total                                                |   | $                                                          | 433    |                        | $      | 892 |   |   | (459 | ) |

*Noninterest        Expense. *

|                                            |   | Three                  monthsended                  June 30, |   | Net                  Change |   |
|-------------------------------------------------|--------|--------------------------------------------------------------|--------|-----------------------------|--------|
|                                            |   | 2005                                                         |   | 2004                        |   | Amount |   |
| Noninterest                  expense:           |   |                                                         |   |                        |   |   |   |
| Salaries                  and employee benefits |   | $                                                            | 617    |                        | $      | 816 |   | $ | (199 | ) |
| Occupancy                  and equipment        |   |                                                         | 249    |                        |   | 296 |   |   | (47 | ) |
| Data                  processing                |   |                                                         | 116    |                        |   | 145 |   |   | (29 | ) |
| Legal                  and professional fees    |   |                                                         | 66     |                        |   | 79 |   |   | (13 | ) |
| Advertising                                     |   |                                                         | 50     |                        |   | 75 |   |   | (25 | ) |
| Bankshares                  tax                 |   |                                                         | 46     |                        |   | 46 |   |   | - |   |
| Other                  noninterest expense      |   |                                                         | 197    |                        |   | 229 |   |   | (32 | ) |
| Total                                           |   | $                                                            | 1,341  |                        | $      | 1,686 |   | $ | (345 | ) |

|                                            |   | Six                  monthsended                  June 30, |   | Net                  Change |   |
|-------------------------------------------------|--------|------------------------------------------------------------|--------|-----------------------------|--------|
|                                            |   | 2005                                                       |   | 2004                        |   | Amount |   |
| Noninterest                  expense:           |   |                                                       |   |                        |   |   |   |
| Salaries                  and employee benefits |   | $                                                          | 1,219  |                        | $      | 1,603 |   | $ | (384 | ) |
| Occupancy                  and equipment        |   |                                                       | 513    |                        |   | 606 |   |   | (93 | ) |
| Data                  processing                |   |                                                       | 274    |                        |   | 269 |   |   | 5 |   |
| Legal                  and professional fees    |   |                                                       | 124    |                        |   | 189 |   |   | (65 | ) |
| Advertising                                     |   |                                                       | 65     |                        |   | 109 |   |   | (44 | ) |
| Bankshares                  tax                 |   |                                                       | 92     |                        |   | 83 |   |   | 9 |   |
| Other                  noninterest expense      |   |                                                       | 375    |                        |   | 469 |   |   | (94 | ) |
| Total                                           |   | $                                                          | 2,662  |                        | $      | 3,328 |   | $ | (666 | ) |

----

| ·   | Of                  the $384,000 decline in salaries and benefits expense in the first                  six                  months of 2005, approximately $107,000 is related to the sale of                  mortgage                  assets, with the balance of the decline reflecting one vacant lending                  officer position and the vacancy of the CFO position. In addition,                  the                  efforts to control the level of staffing through a more extensive                  use of                  part time employees, has reduced salaries and benefits. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Of                  the $93,000 decline in occupancy and equipment expense, approximately                  $44,000 is related to the sale of mortgage assets, with $49,000                  reflecting                  lowered equipment maintenance expenses. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Data                  processing expenses increased by $5,000 between the periods, reflecting                  increased costs for third party processing of debit and credit                  card                  transactions. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                  decline in legal and professional fees is primarily attributable                  to lower                  legal fees incurred in problem loan                  administration. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                  increase of $9,000 in Bankshares tax is related to the increased                  taxable                  capital employed in the Bank. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Of                  the $94,000 decline in other noninterest expense, approximately                  $28,000 is                  related to the sale of mortgage assets, with the balance attributable                  to a                  number of smaller expense                  categories. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Income        Taxes. *

**Financial        Condition**

|                                                                                                   |   | Quarter                  EndedJune                  30, 2005 |    | Year                  EndedDecember                  31, 2004 |   | Quarter                  EndedJune                  30, 2004 |   |
|--------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------|---------|---------------------------------------------------------------|--------|--------------------------------------------------------------|--------|
|                                                                                                   |   |
| Average                  interest earning assets                                                       |   |                                                         |    |                                                          |   |                                                         |   |
| Loans                  (gross)                                                                         |   | $                                                            | 151,339 |                                                          | $      | 159,718                                                      |   | $ | 162,603 |   |
| Investment                  securities (1)                                                             |   |                                                         | 38,571  |                                                          |   | 39,524                                                       |   |   | 43,065 |   |
| Federal                  funds sold                                                                    |   |                                                         | 7,448   |                                                          |   | 9,201                                                        |   |   | 8,636 |   |
| Total                                                                                                  |   | $                                                            | 197,358 |                                                          | $      | 208,443                                                      |   | $ | 214,304 |   |
|                                                                                                   |   |                                                         |    |                                                          |   |                                                         |   |   |   |   |
| Total                  average assets                                                                  |   | $                                                            | 211,138 |                                                          | $      | 221,517                                                      |   | $ | 230,628 |   |
|                                                                                                   |   |                                                         |    |                                                          |   |                                                         |   |   |   |   |
| Percentage                  of earning assets to total assets                                          |   |                                                         | 93.5    | %                                                             |   | 94.1                                                         | %      |   | 94.7 | % |
|                                                                                                   |   |                                                         |    |                                                          |   |                                                         |   |   |   |   |
| 1. Includes                  available-for-sale securities and other                  securities. |

----

*Investment        Securities*

*Loans*

*Non-Performing        Assets. *

|                                               |   | June                  30, 2005 |   | December                  31, 2004 |   | June                  30, 2004 |   |
|----------------------------------------------------|--------|--------------------------------|--------|------------------------------------|--------|--------------------------------|--------|
| Non-accrual                  loans                 |   | $                              | 1,354  |                               | $      | 2,969                          |   | $ | 4,490 |   |
| Loans                  past due 90 days or greater |   |                           | 79     |                               |   | 10                             |   |   | 46 |   |
| Repossessed                  assets                |   |                           | 135    |                               |   | 110                            |   |   | 110 |   |
| Total                                              |   | $                              | 1,568  |                               | $      | 3,089                          |   | $ | 4,646 |   |
|                                               |   |                           |   |                               |   |                           |   |   |   |   |

----

*Allowance        for Loan Losses (ALL). *

|                                                                                                                                  |   | June                  30, 2005 |    | December                  31, 2004 |   | June                  30, 2004 |   |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------|---------|------------------------------------|--------|--------------------------------|--------|
|                                                                                                                                  |   |                           |    |                               |   |                           |   |
| Allowance                  for loan losses                                                                                            |   | $                              | 1,458   |                               | $      | 1,720                          |   | $ | 2,298 |   |
|                                                                                                                                  |   |                           |    |                               |   |                           |   |   |   |   |
| Total                  loans                                                                                                          |   | $                              | 151,165 |                               | $      | 152,576                        |   | $ | 158,801 |   |
| Percentage                  of allowance for loan lossesto                  total loans                                               |   |                           | 0.96    | %                                  |   | 1.13                           | %      |   | 1.45 | % |
|                                                                                                                                  |   |                           |    |                               |   |                           |   |   |   |   |
| Non-performing                  assets                                                                                                |   | $                              | 1,568   |                               | $      | 3,089                          |   | $ | 4,646 |   |
|                                                                                                                                  |   |                           |    |                               |   |                           |   |   |   |   |
| Ratio                  of non-performing assetsto                  allowance for loan losses at the endof                  the period |   |                           | 107.5   | %                                  |   | 179.6                          | %      |   | 202.2 | % |

*Deposits        and Other Borrowings. *

|                                              |   | June                  30, 2005 |    | December                  31, 2004 |   | June                  30, 2004 |   |
|---------------------------------------------------|--------|--------------------------------|---------|------------------------------------|--------|--------------------------------|--------|
|                                              |   |                           |    |                               |   |                           |   |
| Interest                  bearing demand          |   | $                              | 14,862  |                               | $      | 16,657                         |   | $ | 16,276 |   |
| Savings,                  money market and NOW    |   |                           | 30,674  |                               |   | 38,523                         |   |   | 25,413 |   |
| Time                  deposits less than $100,000 |   |                           | 62,212  |                               |   | 59,374                         |   |   | 60,610 |   |
| Time                  deposits $100,000 and over  |   |                           | 42,982  |                               |   | 41,638                         |   |   | 48,153 |   |
| Total                  interest bearing deposits  |   |                           | 150,730 |                               |   | 156,192                        |   |   | 150,452 |   |
| Noninterest                  bearing              |   |                           | 25,505  |                               |   | 22,670                         |   |   | 23,031 |   |
| Total                  deposits                   |   | $                              | 176,235 |                               | $      | 178,862                        |   | $ | 173,483 |   |

----

*Note        Payable*

*Liquidity.        *

*Capital        Resources. *

**Critical        Accounting Estimates **

*Allowance        for Loan Losses (ALL). *

----

**Impact        of Inflation **

**Recent        Accounting Pronouncements **

----

**PART        I. - FINANCIAL INFORMATION**

**Item        3. - CONTROLS AND PROCEDURES **

**Evaluation        of Disclosure Controls and Procedures **

**Changes        in Internal Controls **

----

**PART        II - Other Information**

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

|                                  | Votes                  Cast For |   | Votes                  Withheld |
|---------------------------------------|---------------------------------|--------|---------------------------------|
| Julian                  E. Beard      | 862,823                         |   | 291,453                         |
| A.F.                  Dawahare        | 1,153,876                       |   | 400                             |
| Robert                  J. Rosenstein | 1,152,176                       |   | 2,100                           |
| Kathy                  E. Walker      | 862,823                         |   | 291,453                         |

**Item        6. Exhibits**

----

|                                       |                                                   |                                            |
|--------------------------------------------|--------------------------------------------------------|-------------------------------------------------|
|                                       | **First                    Security Bancorp, Inc.**    |
|                                  |                                              |                                       |
| Date: August                  9, 2005 | By:                                          | /s/ R.                  Douglas Hutcherson |
|                                       | R.                  Douglas Hutcherson                 |
|                                       | President                  and Chief Executive Officer |

|                                       |                                     |                                        |
|--------------------------------------------|------------------------------------------|---------------------------------------------|
|                                       |                                     |
|                                  |                                |                                   |
| Date: August                  9, 2005 | By:                            | /s/ Kristie                  L. Eubank |
|                                       | Kristie L. Eubank                        |
|                                       | Chief                  Financial Officer |

----