UNITED STATES SECURITITES AND EXCHANGE COMMISSION
                             Washington, D.C. 29549

                                   FORM 10-QSB
                                   (Mark One)
[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURTIES EXCHANGE
     ACT OF 1934

For the quarterly period ended March 31, 2005

[_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from                       to
                               --------------------       --------------------

                        Commission File Number: 000-30515

                     Weststar Financial Services Corporation
             (Exact name of registrant as specified in its charter)

              North Carolina                                  56-2181423
(State or other jurisdiction of incorporation               (IRS Employer
 or organization)                                            Identification No.)

                      79 Woodfin Place, Asheville NC 28801
                    (Address of principal executive offices)

                                  828.252.1735
              (Registrant's telephone number, including area code)
--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes  X    No
                                       ---      ---

                      APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

Common stock, $1.00 par value - 1,400,266 shares outstanding as of May 11, 2005.


                                                                               1
<PAGE>

INDEX                                                                      Page

Part I - FINANCIAL INFORMATION

Financial Statements:
         Consolidated Balance Sheets
           March 31, 2005 and December 31, 2004                             3

         Consolidated Statements of Operations
           Three Months Ended March 31, 2005 and 2004                       4

         Consolidated Statements of Comprehensive Income
           Three Months Ended March 31, 2005 and 2004                       5

         Consolidated Statements of Changes in Shareholders' Equity
           Three Months Ended March 31, 2005 and 2004                       6

         Consolidated Statements of Cash Flows
           Three Months Ended March 31, 2005 and 2004                       7

         Notes to Consolidated Financial Statements                         8

Item 2 - Management's Discussion and Analysis
           Financial Condition and Results of Operations                   10

Item 3 - Controls and Procedures                                           18

Part II - OTHER INFORMATION

Exhibit Index                                                              19

Signatures                                                                 20



                                                                               2
<PAGE>

Part I.  FINANCIAL INFORMATION

Item I.  Financial Statements

<TABLE>
<CAPTION>

Weststar Financial Services Corporation & Subsidiary
Consolidated Balance Sheets                                                     (unaudited)
                                                                                  March 31,        December 31,
                                                                                    2005               2004*
                                                                               -------------      -------------
<S>                                                                            <C>                <C>
ASSETS:
Cash and cash equivalents:
  Cash and due from banks                                                      $   5,941,933      $   3,729,987
  Interest-bearing deposits                                                          315,820            321,280
  Federal funds sold                                                               9,349,000         15,570,000
                                                                               -------------      -------------
      Total cash and cash equivalents                                             15,606,753         19,621,267
Investment securities -
  Available for sale, at fair value (amortized cost of
  $22,898,926 and $23,301,098, respectively)                                      22,392,349         23,106,660
Loans                                                                             87,317,004         84,852,070
Allowance for loan losses                                                         (1,655,160)        (1,608,366)
                                                                               -------------      -------------
Net loans                                                                         85,661,844         83,243,704
Premises and equipment, net                                                        2,626,386          2,650,156
Accrued interest receivable                                                          596,219            564,816
Federal Home Loan Bank stock, at cost                                                531,500            307,900
Deferred income taxes                                                                544,385            390,140
Foreclosed properties                                                                145,780            443,586
Other assets                                                                         757,193            678,478
                                                                               -------------      -------------
TOTAL                                                                          $ 128,862,409      $ 131,006,707
                                                                               =============      =============

LIABILITIES AND SHAREHOLDERS' EQUITY:
Deposits:
  Demand                                                                       $  22,362,405      $  19,572,549
  NOW accounts                                                                    20,473,543         22,603,723
  Money market accounts                                                           29,112,260         41,332,780
  Savings                                                                          2,304,258          2,164,015
  Time deposits of $100,000 or more                                               11,760,545          6,380,898
  Other time deposits                                                             22,260,446         22,387,783
                                                                               -------------      -------------
        Total deposits                                                           108,273,457        114,441,748
Short-term borrowings                                                              2,000,000          2,000,000
Accrued interest payable                                                             169,896            138,362
Other liabilities                                                                    576,641            492,410
Long-term debt                                                                     8,124,000          4,124,000
                                                                               -------------      -------------
      Total liabilities                                                          119,143,994        121,196,520
                                                                               -------------      -------------

SHAREHOLDERS' EQUITY:
Preferred stock; authorized $1,000,000; issued and outstanding - none                     --                 --
Common stock, $1 par value, authorized - 9,000,000
    shares; issued and outstanding - 1,400,266 and 1,166,208, respectively         1,400,266          1,166,208
Additional paid-in capital                                                         6,801,431          7,030,589
Retained earnings                                                                  1,828,010          1,732,872
Accumulated other comprehensive loss                                                (311,292)          (119,482)
                                                                               -------------      -------------
      Total shareholders' equity                                                   9,718,415          9,810,187
                                                                               -------------      -------------
TOTAL                                                                          $ 128,862,409      $ 131,006,707
                                                                               =============      =============
</TABLE>

*Derived from audited consolidated financial statements.

See notes to consolidated financial statements.


                                                                               3
<PAGE>

Weststar Financial Services Corporation & Subsidiary
Consolidated Statements of Operations (unaudited)    Three Months
                                                    Ended March 31,
                                                  2005           2004
                                              ----------       ----------
INTEREST INCOME:
Interest and fees on loans                    $1,436,064       $1,314,336
Federal funds sold                                44,116            8,109
Interest-bearing deposits                          6,899              615
Investments:
  Taxable interest income                        174,253          128,972
  Nontaxable interest income                      13,429           14,553
  Corporate dividends                              2,619            1,547
                                              ----------       ----------
       Total interest income                   1,677,380        1,468,132
                                              ----------       ----------
INTEREST EXPENSE:
Time deposits of $100,000 or more                 56,126           26,852
Other time and savings deposits                  353,666          246,842
Short-term borrowings                              8,138            1,358
Long-term debt                                    64,369           51,403
                                              ----------       ----------
     Total interest expense                      482,299          326,455
                                              ----------       ----------
NET INTEREST INCOME                            1,195,081        1,141,677
PROVISION FOR LOAN LOSSES                        240,505          322,800
                                              ----------       ----------
NET INTEREST INCOME AFTER PROVISION
 FOR LOAN LOSSES                                 954,576          818,877
                                              ----------       ----------
OTHER INCOME:
Service charges on deposit accounts              269,701          300,659
Other service fees and commissions                85,834           83,345
Securities gains                                      --           31,613
Other                                              8,112           10,080
                                              ----------       ----------
       Total other income                        363,647          425,697
                                              ----------       ----------
OTHER EXPENSES:
Salaries and wages                               436,411          405,738
Employee benefits                                 83,047           78,254
Occupancy expense, net                            85,538           77,734
Equipment rentals, depreciation and
  Maintenance                                     87,639           80,130
Supplies                                          62,684           61,666
Professional fees                                 81,878           71,022
Data processing fees                             119,032          116,688
Marketing                                         47,103           35,448
Net expenses from foreclosed properties           75,513           28,625
Other                                             85,788           55,070
                                              ----------       ----------
        Total other expenses                   1,164,633        1,010,375
                                              ----------       ----------
INCOME BEFORE INCOME TAXES                       153,590          234,199
INCOME TAX PROVISION                              56,065           82,010
                                              ----------       ----------
NET INCOME                                    $   97,525       $  152,189
                                              ==========       ==========

EARNINGS PER SHARE:
Basic                                         $     0.07       $     0.11
                                              ==========       ==========
Diluted                                       $     0.07       $     0.10
                                              ==========       ==========

See notes to consolidated financial statements


                                                                               4
<PAGE>


Weststar Financial Services Corporation & Subsidiary
Consolidated Statements of Comprehensive Income (unaudited)
                                                           Three   Months
                                                           Ended March 31,
                                                         2005           2004
                                                      ---------      ---------

NET INCOME                                            $  97,525      $ 152,189
OTHER COMPREHENSIVE INCOME (LOSS)
  Unrealized holding gains (losses) on securities
    available for sale                                 (312,141)       170,730
  Tax effect                                            120,331        (65,849)
                                                      ---------      ---------
  Unrealized holding gains (losses) on securities
  available for sale, net of tax                       (191,810)       104,881

  Reclassification adjustment for realized gains             --        (31,613)
     Tax effect
  Reclassification adjustment for realized gains,            --         12,193
                                                      ---------      ---------
     Net of tax                                              --        (19,420)

OTHER COMPREHENSIVE INCOME (LOSS), NET  OF TAX         (191,810)        85,461
                                                      ---------      ---------

COMPREHENSIVE INCOME (LOSS)                           $ (94,285)     $ 237,650
                                                      =========      =========

See notes to consolidated financial statements.


                                                                               5
<PAGE>

Weststar Financial Services Corporation & Subsidiary
Consolidated Statements of Changes in Shareholders' Equity (unaudited)
For the Three Months Ended March 31, 2005 and 2004

<TABLE>
<CAPTION>
                                                                                                   Accumulated
                                                                       Additional                     Other           Total
                                               Common Stock             Paid-In       Retained     Comprehensive  Shareholders'
                                           Shares         Amount        Capital       Earnings     Income/(Loss)     Equity
<S>                                      <C>          <C>            <C>            <C>             <C>          <C>
Balance December 31, 2003                 1,166,208    $ 1,166,208    $ 7,030,589    $ 1,074,747     ($ 80,596)   $ 9,190,948
  Net change in unrealized
     gain on securities held for sale                                                                   85,461         85,461
  Net income                                                                             152,189                      152,189
                                          -----------------------------------------------------------------------------------
Balance March 31, 2004                    1,166,208    $ 1,166,208    $ 7,030,589    $ 1,226,936      $  4,865    $ 9,428,598
                                          ===================================================================================

Balance December 31, 2004                 1,166,208    $ 1,166,208    $ 7,030,589    $ 1,732,872     ($119,482)   $ 9,810,187
 Stock split                                233,058        233,058       (233,058)
  Net change in unrealized
     loss on securities held for sale                                                                 (191,810)      (191,810)
  Issuance of common stock                    1,000          1,000          3,900                                       4,900
 Cash dividend paid in lieu of                                                            (2,387)                      (2,387)
fractional shares
  Net income                                                                              97,525                       97,525
                                          -----------------------------------------------------------------------------------
Balance March 31, 2005                    1,400,266    $ 1,400,266    $ 6,801,431    $ 1,828,010     ($311,292)   $ 9,718,415
                                          ===================================================================================
</TABLE>

See notes to consolidated financial statements.


                                                                               6
<PAGE>
<TABLE>
<CAPTION>

Weststar Financial Services Corporation & Subsidiary
Consolidated Statements of Cash Flows (unaudited)
For the Three Months Ended March 31,                                                  2005          2004
                                                                                ------------    ------------
<S>                                                                                   <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                                      $     97,525    $    152,189
Adjustments to reconcile net income to net cash used by operating activities:
  Depreciation                                                                        93,541          97,229
  Provision for loan losses                                                          240,505         322,800
  Premium amortization and discount accretion, net                                    20,915          23,463
  Deferred income tax provision                                                      (33,915)        (15,100)
  Net expenses from foreclosed properties                                             69,428          21,783
  Gain on sales of securities                                                             --         (31,613)
  (Increase) decrease in accrued interest receivable                                 (31,403)          6,002
  (Increase) decrease in other assets                                                 (3,715)         44,709
  Increase in accrued interest payable                                                31,534          24,132
  Increase in other liabilities                                                       84,231          95,543
                                                                                ------------    ------------
    Net cash provided by operating activities                                        568,646         741,137
                                                                                ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of securities available for sale                                          (500,000)             --
Maturities of securities available for sale                                          881,256       1,501,593
Net increase in loans                                                             (2,658,645)     (4,301,516)
Proceeds from sales of foreclosed properties                                         153,378           7,100
Proceeds from sales of securities                                                         --         553,600
Proceeds from sales of premises and equipment                                          1,947              --
FHLB stock purchase                                                                 (223,600)        (96,600)
Additions to premises and equipment                                                  (71,718)        (52,188)
                                                                                ------------    ------------
    Net cash used in investing activities                                         (2,417,382)     (2,388,011)
                                                                                ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in demand deposits, NOW accounts, MMDA and savings accounts         (11,420,601)     (4,125,614)
Net increase in time deposits                                                      5,252,310       8,501,519
Cash paid for fractional shares                                                       (2,387)             --
Issuance of common stock                                                               4,900              --
Proceeds from FHLB advances                                                        4,000,000              --
                                                                                ------------    ------------
Net cash (used in) provided by financing activities                               (2,165,778)      4,375,905
                                                                                ------------    ------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                              (4,014,514)      2,729,031
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                  19,621,267      11,990,677
                                                                                ------------    ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                      $ 15,606,753    $ 14,719,708
                                                                                ============    ============
</TABLE>

See notes to consolidated financial statements.


                                                                               7
<PAGE>

WESTSTAR FINANCIAL SERVICES CORPORTION & SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    Weststar  Financial  Services  Corporation  (the  "Company")  is a holding
      company with one subsidiary,  The Bank of Asheville (the "Bank"). The Bank
      is a state  chartered  commercial  bank  which was  incorporated  in North
      Carolina on October 29, 1997.  The Bank provides  consumer and  commercial
      banking services in Buncombe County and surrounding area. Common shares of
      The Bank of  Asheville  were  exchanged  for  common  shares  of  Weststar
      Financial  Services  Corporation  on April 29,  2000.  Weststar  Financial
      Services Corporation formed Weststar Financial Services Corporation I (the
      "Trust")  during October 2003 in order to facilitate the issuance of trust
      preferred securities. The Trust is a statutory business trust formed under
      the laws of the state of  Delaware,  of which all  common  securities  are
      owned  by  Weststar  Financial  Services  Corporation.  Bank of  Asheville
      Mortgage  Company,  LLC  (the  "Mortgage  Company")  is a state  chartered
      mortgage bank which was incorporated in North Carolina on October 19, 2004
      of which  Weststar  Financial  Services  Corporation  is a 50% owner.  The
      Mortgage Company originates conventional mortgage loans.

      In the opinion of  management,  the  accompanying  consolidated  financial
      statements  contain  all  adjustments  necessary  to  present  fairly  the
      consolidated  financial  position  of the Company as of March 31, 2005 and
      December 31, 2004, and the  consolidated  results of their  operations and
      their cash flows for the  three-month  periods  ended  March 31,  2005 and
      2004.  Operating  results for the three-month  period ended March 31, 2005
      are not necessarily indicative of the results that may be expected for the
      fiscal year ending December 31, 2005.

      The  accounting  policies  followed  are set  forth  in Note 1 to the 2004
      Annual Report to  Shareholders  (Form 10-KSB) on file with the  Securities
      and Exchange Commission.

2.    Loans at March 31, 2005 and  December 31, 2004  classified  by type are as
      follows:

                                                 March 31,     December 31,
                                                   2005            2004
                                                   ----            ----
      Real Estate:
        Construction                           $ 12,154,242    $ 11,470,223
        Mortgage                                 54,121,494      51,633,458
      Commercial, financial and agricultural     19,646,345      20,162,307
      Consumer                                    1,573,449       1,747,694
                                               ------------    ------------
      Subtotal                                   87,495,530      85,013,682
      Net deferred loan origination fees           (178,526)       (161,612)
                                               ------------    ------------
      Total                                    $ 87,317,004    $ 84,852,070
                                               ============    ============


3.    In the  normal  course of  business  there  are  various  commitments  and
      contingent liabilities such as commitments to extend credit, which are not
      reflected on the financial statements.  The unused portions of commitments
      to extend credit were  $19,540,576  and  $19,683,801 at March 31, 2005 and
      December 31, 2004, respectively.

4.    Basic  earnings per share have been  computed  using the weighted  average
      number of shares of common stock  outstanding  of 1,399,577  and 1,399,266
      for the  quarters  ended  March 31, 2005 and 2004,  respectively.  Diluted
      earnings per share have been computed  using common stock and common stock
      equivalents  of 1,494,493 and  1,472,034.  Prior period  amounts have been


                                                                               8
<PAGE>

      adjusted to reflect a 6-for-5  stock split paid in the form of a 20% stock
      dividend during January 2005.

5.    Statement of Financial  Accounting  Standards ("SFAS") No. 123, Accounting
      for  Stock-Based  Compensation,  encourages  all  entities to adopt a fair
      value based method of accounting  for employee stock  compensation  plans,
      whereby compensation cost is measured at the grant date based on the value
      of the award and is recognized over the service  period,  which is usually
      the  vesting  period.  However,  it also  allows an entity to  continue to
      measure  compensation cost for those plans using the intrinsic value based
      method of accounting prescribed by Accounting Principles Board Opinion No.
      25, Accounting for Stock Issued to Employees, whereby compensation cost is
      the excess,  if any, of the quoted  market price of the stock at the grant
      date (or other  measurement  date) over the amount an employee must pay to
      acquire the stock. The Company has elected to continue with the accounting
      methodology in Opinion No. 25 and, as a result, has provided the below pro
      forma  disclosures  of  net  income  and  earnings  per  share  and  other
      disclosures  as if the fair  value  based  method of  accounting  had been
      applied.

      At March 31, 2005, the Company had two stock-based compensation plans. The
      Company  accounts for  compensation  costs related to the Company's  stock
      option plans using the intrinsic value method.  Therefore, no compensation
      costs has been  recognized for stock option awards because the options are
      granted at  exercise  prices  based on the market  value of the  Company's
      stock on the date of grant. Had compensation costs for the Company's stock
      option plans been  determined  using the fair value method,  the Company's
      pro forma net income would have been as follows:

      For the Periods Ended March 31,                   2005           2004
                                                        ----           ----

      Net income as reported                        $     97,525   $   152,189
      Less:  Total stock-based employee
      compensation expense determined
      under fair value method for all awards, net
      of related tax effects                              25,147        25,358
                                                    ------------   -----------
      Pro forma net income                          $     72,378   $   126,831
                                                    ============   ===========

      Net income per share:
        As reported:

          Basic                                     $       0.07   $      0.11
                                                    ============   ===========
          Diluted                                   $       0.07   $      0.10
                                                    ============   ===========

        Pro forma:

          Basic                                     $       0.05   $      0.09
                                                    ============   ===========

          Diluted                                   $       0.05   $      0.08
                                                    ============   ===========


                                                                               9
<PAGE>


Item 2. Management's Discussion and Analysis
        Financial Condition and Results of Operations

Weststar Financial Services Corporation & Subsidiaries
Management's Discussion and Analysis

EXECUTIVE OVERVIEW

During 2005, the Company  continued its focus on improving asset quality,  asset
growth and expansion.  Management  emphasized  prudent  underwriting  standards,
increased  periodic  reviews of loans of $100,000 or more, and expanded its loan
quality monitoring systems. During the period asset quality began to demonstrate
signs  of  improvement.  Non-performing  assets  decreased  from  $3,011,402  at
December 31, 2004 to  $2,969,649  at March 31,  2005.  Net  charge-offs  for the
period totaled $193,712 compared to $241,088 for the period ended Mach 31, 2004.
Loans  outstanding  grew by 3% to  $87,317,004  from  December 31,  2004,  which
reflected improved economic conditions and increased market share.

Deposits  decreased 6% to  $108,273,457.  The decrease was  attributable  to the
outflow  of  approximately  $13,400,000  in money  market  accounts,  which were
temporary  funds from one of the Company's  largest real estate trust  accounts.
Excluding these funds,  deposits  increased  approximately  7% over December 31,
2004.

The Company increased its net interest income by 5% as due to growth in net
earning assets. As a result of charge-offs and loan growth, the Company added
$240,505 to the loan loss reserve compared to $322,800 during the comparable
period in 2004. Non-interest income decreased 14% to $363,647. The decrease was
primarily attributable to $35,383 decreased fees from overdraft charges, which
is based on activity volume, and $31,613 in gains from the sale of investment
securities during 2004 compared to none during 2005. Non-interest expenses
increased 15% primarily as a result of growth in loans, deposits and the
addition of a new permanent facility for the Leicester banking office and
increased expenses from foreclosed properties. Management monitors expenses
closely and reviews each expense relative to the benefit provided.

Net income totaled $97,525 and $152,189 for the periods ended March 31, 2005 and
2004, respectively - a decrease of 36%.

CHANGES IN FINANCIAL CONDITION
MARCH 31, 2005 COMPARED TO DECEMBER 31, 2004

During the  period  from  December  31,  2004 to March 31,  2005,  total  assets
decreased  $2,144,298 or 2%. This decrease,  reflected primarily in the cash and
cash equivalents, resulted from a decrease in deposits.

Securities,   federal  funds  sold  and  interest-bearing  balances  with  other
financial  institutions  at March  31,  2005  totaled  $32,057,169  compared  to
$38,997,940 at December 31, 2004. Through an investment in the Federal Home Loan
Bank,  the Company  gained  access to the federal  Home Loan Bank  system.  This
access  grants  the  Company   sources  of  funds  for  lending  and  liquidity.
Investments in Federal Home Loan Bank stock to date total $531,500.

At March 31, 2005, the loan  portfolio  constituted  68% of the Company's  total
assets.  Loans  increased  $2,464,934  from December 31, 2004 to March 31, 2005.


                                                                              10
<PAGE>

Improved  economic  conditions  resulted  in the 3%  increase  in  loan  growth.
Management  places a strong emphasis on loan quality.  At March 31, 2005,  there
were no loans that (i)  represented  or resulted  from  trends or  uncertainties
which  management  reasonably  expects to  materially  impact  future  operating
results,  liquidity,  or capital resources, or (ii) represented material credits
about which management was aware of any information  which caused  management to
have serious  doubts as to the ability of such borrowers to comply with the loan
repayment terms.

The  recorded  investment  in  loans  that  are  considered  to be  impaired  in
accordance  with  criteria  set  forth  in  Statement  of  Financial  Accounting
Standards No. 114 of the Financial  Accounting  Standards  Board was $1,598,956,
$1,709,452,  and  $1,869,920 at March 31, 2005 and 2004,  and December 31, 2004,
respectively.  The average  recorded  balance of impaired  loans during 2005 and
2004 was not significantly different from the balance at March 31, 2005 and 2004
and December 31,  2004.  The related  allowance  for loan losses  determined  in
accordance  with SFAS No. 114 for  impaired  loans was $184,202 and $166,732 and
$219,846 at March 31, 2005 and 2004, and December 31, 2004 respectively. For the
three-month  periods ended March 31, 2005 and 2004, Weststar recognized interest
income from  impaired  loans of  approximately  $24,393 and $12,484.  See "Asset
Quality" for discussion for an analysis of loan loss reserves.

Deposits decreased  $6,168,291 during the three months ended March 31, 2005. The
decrease in deposits was  attributable to the outflow in excess of $13.4 million
in money market  accounts,  which were temporary funds from one of the Company's
largest real estate trust accounts.  Excluding these funds,  deposits  increased
approximately  7% over December 31, 2004. Time deposits of $100,000 or more grew
by  $5,379,647;  the increase was  primarily  the result of a 45-day  deposit in
excess of $5 million.  The investor had not yet indicated whether or not he will
renew the deposit.  Total demand  deposits and NOW accounts  grew by $659,676 to
$42,835,948 due to continued market penetration.

Short-term  borrowings  consisted  of one advance from the FHLB,  which  totaled
$2,000,000  at March 31, 2004.  The interest  rate on this advance was 1.65% and
matures on June 27, 2005. Long-term borrowings consisted of one advance from the
FHLB, which totaled $4,000,000 and trust preferred securities of $4,124,000. The
interest rate on this advance was 5.01% and matures on March 23, 2010.  Advances
from the FHLB are secured by a blanket  lien on 1-4 family real estate loans and
certain commercial real estate loans. The trust preferred securities bear a rate
of LIBOR plus 315 basis point and pay dividends  quarterly.  The rate is subject
to quarterly resets. The trust preferred  securities mature October 7, 2033, and
are  callable  on or after  October  7, 2008.  Approximately  $3.3  million  was
eligible for  inclusion as Tier I capital.  The Company plans to use the capital
to support growth and branch expansion.

The Company's  capital at March 31, 2005 to risk weighted assets totaled 16.35%.
Current  regulations  require a minimum  ratio of total capital to risk weighted
assets of 8%,  with at least 4% being in the form of Tier 1 capital,  as defined
in the  regulation.  As of March 31, 2005,  the Company's  capital  exceeded the
current regulatory capital requirements.

RESULTS OF OPERATIONS
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2005 AND 2004

Net interest  income,  the principal  source of the Company's  earnings,  is the
amount of income  generated by earning  assets  (primarily  loans and investment
securities)  less the total  interest  cost of the funds  obtained to carry them
(primarily  deposits  and other  borrowings).  The volume,  rate and mix of both
earning assets and related funding sources determine net interest income.


                                                                              11
<PAGE>

COMPARATIVE THREE MONTHS

Net  interest  income for the quarter  ended March 31, 2005  totaled  $1,195,081
compared to $1,141,677 in 2004. This increase was  attributable to growth in net
earning  assets.  The Company's net interest margin was  approximately  3.9% and
4.3% for the quarters ended March 31, 2005 and 2004, respectively.

Weststar  recorded a provision  for loan losses of $240,505 and $322,800 for the
quarters  ended March 31, 2005 and 2004,  respectively.  The  provision for loan
losses is  charged  to  operations  to bring  the  allowance  to a level  deemed
appropriate by management based on the factors  discussed under "Asset Quality."
Despite improved  performance in credits, the allowance for loan losses remained
relatively high due to charge-off experience during the past three years.

Other  non-interest  income  for the March 31,  2005 and 2004  quarters  totaled
$363,647  and  $425,697,  respectively.  The decrease in service  charge  income
primarily  reflects a decrease in overdraft charge income of $35,383 and $31,613
from securities  gains. The decrease in overdraft  charges was based on activity
during the period.  Other service fees and commission  remained  relatively flat
principally due to an increase in master card fees of $9,709, brokerage fees and
commissions  of $1,776 and wire fees of $2,990,  which were offset by a decrease
of $25,474 in mortgage  loan income.  The Company  recorded  $12,468 and $37,942
from the  origination  of mortgage  loans  during  2005 and 2004,  respectively.
Mortgage income, which is reflected in "Other service fees and commissions," was
generated from the Company's fully owned subsidiary,  The Bank of Asheville. Fee
income  earned  during  2005,  reflects  income  from  mortgage  loans that were
in-process prior to the formation of Bank of Asheville Mortgage Company,  LLC, a
50% owned  subsidiary  of the Company.  Securities  gains  generated  $31,613 in
additional  income in 2004.  Other income  decreased  $1,968  primarily due to a
decrease in sales of checks and deposit slips.

Other non-interest  expense totaled  $1,164,633  compared to $1,010,375 in 2004.
This  increase  was  primarily   attributable  to  overall  company  growth  and
additional  overhead  associated  with  building a  permanent  location  for the
Leicester branch office and expenses associated with foreclosed properties.  The
Mortgage Company produced a net operating loss of $27,172,  which is included in
other operating  expenses.  Income before income tax provision  totaled $153,590
and  $234,199  for the  quarters  ended March 31,  2005 and 2004,  respectively.
Income tax provision  totaled  $56,065 and $82,010 for the quarters  ended March
31,  2005 and 2004,  respectively,  which  equated to an  effective  tax rate of
36.50% and 35.02%.  Net income  totaled  $97,525 and  $152,189  for the quarters
ended March 31, 2005 and 2004, respectively.

Other  comprehensive  income (loss)  totaled  ($191,810) and $85,461 in 2005 and
2004,  respectively.  Comprehensive  income  (loss),  which  is  the  change  in
shareholders' equity excluding transactions with shareholders, totaled ($94,285)
and $237,650 for the quarters ended March 31, 2005 and 2004, respectively.

                           ASSET/LIABILITY MANAGEMENT

The Company's  asset/liability  management,  or interest  rate risk  management,
program is focused  primarily on evaluating and managing the  composition of its
assets and  liabilities  in view of various  interest  rate  scenarios.  Factors
beyond the Company's control, such as market interest rates and competition, may
also have an impact on the Company's interest income and interest expense.


                                                                              12
<PAGE>

In the  absence  of other  factors,  the  yield or  return  associated  with the
Company's  earning  assets  generally  will increase  from existing  levels when
interest rates rise over an extended  period of time and,  conversely,  interest
income will decrease when interest rates decline.  In general,  interest expense
will  increase  when  interest  rates rise over an extended  period of time and,
conversely, interest expense will decrease when interest rates decline.

Interest  Rate Gap  Analysis.  As a part of its  interest  rate risk  management
policy,  the Company  calculates  an interest  rate "gap."  Interest  rate "gap"
analysis is a common,  though  imperfect,  measure of interest rate risk,  which
measures   the  relative   dollar   amounts  of   interest-earning   assets  and
interest-bearing liabilities which reprice within a specific time period, either
through  maturity or rate  adjustment.  The "gap" is the difference  between the
amounts  of such  assets  and  liabilities  that are  subject  to  repricing.  A
"positive"  gap for a given  period  means that the  amount of  interest-earning
assets maturing or otherwise  repricing within that period exceeds the amount of
interest-bearing  liabilities  maturing or otherwise  repricing  within the same
period.  Accordingly,  in a declining interest rate environment,  an institution
with a positive gap would  generally  be  expected,  absent the effects of other
factors,  to  experience a decrease in the yield on its assets  greater than the
decrease  in the cost of its  liabilities  and its income  should be  negatively
affected.  Conversely,  the cost of funds for an institution with a positive gap
would generally be expected to increase more slowly than the yield on its assets
in a rising  interest  rate  environment,  and such  institution's  net interest
income generally would be expected to be positively  affected by rising interest
rates.  Changes in  interest  rates  generally  have the  opposite  effect on an
institution with a "negative gap."

The  following  table sets  forth the  amounts  of  interest-earning  assets and
interest-bearing  liabilities outstanding at March 31, 2005, which are projected
to reprice or mature in each of the future time periods shown.  Except as stated
below,  the  amounts of assets and  liabilities  shown  which  reprice or mature
within a particular  period were  determined in accordance  with the contractual
terms of the assets or  liabilities.  Loans with  adjustable  rates are shown as
being due at the end of the next upcoming  adjustment  period. The interest rate
sensitivity of the Company's assets and liabilities illustrated in the following
table would vary  substantially if different  assumptions were used or if actual
experience differs from that indicated by such assumptions.


                                                                              13
<PAGE>
<TABLE>
<CAPTION>

                                                              TERMS TO REPRICING AT MARCH 31, 2005
                                    1-90 Days      91-180 Days     181-365 Days    Total One Year   Non-Sensitive       Total
                                  ----------------------------------------------------------------------------------------------
<S>                                 <C>              <C>             <C>              <C>              <C>            <C>
Interest-earning assets:
Interest bearing deposits         $    315,820              --               --     $    315,820               --   $    315,820
Federal funds sold                   9,349,000              --               --        9,349,000               --      9,349,000
Investment securities                5,531,255    $  1,031,255     $  1,062,510        7,625,020     $ 15,273,906     22,898,926
Federal Home Loan Bank stock
                                            --              --               --               --          531,500        531,500
Loans (1)                           65,101,180       1,951,999        1,959,849       69,013,028       15,480,108     84,493,136
Total interest-earning assets       80,297,255       2,983,254        3,022,359       86,302,868       31,285,514    117,588,382

Interest-bearing liabilities:
Time deposits                       10,554,549       7,971,943       11,180,889       29,707,381        4,313,610     34,020,991
All other deposits                  51,890,061              --               --       51,890,061               --     51,890,061
Short-term borrowings                2,000,000              --               --        2,000,000               --      2,000,000
Long-term debt                              --              --               --               --        8,124,000      8,124,000
Total interest-bearing liabilities  64,444,610       7,971,943       11,180,889       83,597,442       12,437,610     96,035,052


Interest sensitivity gap          $ 15,852,645    ($ 4,988,689)    ($ 8,158,530)    ($ 2,705,426)    $ 18,847,904
Cumulative interest sensitivity
Gap                               $ 15,852,645    $ 10,863,956     $  2,705,426
Cumulative ratio of interest -
earning assets as a percent
of interest sensitive liabilities        124.6%           37.4%            27.0%           103.2%

</TABLE>

(1) Non-accrual loans have been excluded.
Weststar has established an acceptable range of 80% to 120% for interest-earning
assets as a percent of interest sensitive liabilities.

                                  ASSET QUALITY

Management  considers  Weststar's asset quality to be of primary importance.  We
maintain an allowance for loan losses to absorb  probable losses inherent in the
loan portfolio.  The loan portfolio is analyzed monthly in an effort to identify
potential  problems before they actually occur. The allowance for loan losses is
established  as losses are  estimated to have  occurred  through a provision for
loan losses  charged to earnings.  The  provision  for loan losses is based upon
management's  best  estimate of the amount  needed to maintain the allowance for
loan losses at an adequate level.  Loan losses are charged against the allowance
when management  believes the  uncollectibility  of a loan balance is confirmed.
Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management  and
is based upon management's periodic review of the collectibility of the loans in
light of the current status of the portfolio,  historical experience, the nature
and  volume  of the loan  portfolio,  adverse  situations  that may  affect  the
borrower's ability to repay, estimated value of any underlying  collateral,  and
prevailing economic  conditions.  Management segments the loan portfolio by loan
type in considering each of the aforementioned factors and their impact upon the
level of the allowance for loan losses.

This  evaluation is inherently  subjective,  as it requires  estimates  that are
susceptible  to  significant  revision as more  information  becomes  available.
Therefore,  while  management  uses  the  best  information  available  to  make


                                                                              14
<PAGE>

evaluations,  future adjustments to the allowance may be necessary if conditions
differ  substantially  from the assumptions used in making the  evaluations.  In
addition,  regulatory  examiners may require the Company to recognize changes to
the  allowance  for  loan  losses  based on their  judgments  about  information
available to them at the time of their examination.

A loan is considered  impaired when, based on current information and events, it
is probable that the Company will be unable to collect the scheduled payments of
principal or interest  when due according to the  contractual  terms of the loan
agreement.  Factors  considered by management in determining  impairment include
payment status,  collateral  value, and the probability of collecting  scheduled
principal and interest  payments when due. Loans that  experience  insignificant
payment delays and payment shortfalls  generally are not classified as impaired.
Management  determines the significance of payment delays and payment shortfalls
on a case-by-case  basis,  taking into  consideration  all of the  circumstances
surrounding  the loan and the borrower,  including the length of the delay,  the
reasons for the delay,  the borrower's  prior payment record,  and the amount of
the  shortfall in relation to the  principal  and interest  owed.  Impairment is
measured on a loan by loan basis for commercial and construction loans by either
the  present  value of  expected  future  cash  flows  discounted  at the loan's
effective  interest rate, the loan's  obtainable market price, or the fair value
of the collateral if the loan is collateral  dependent.  Large groups of smaller
balance   homogeneous   loans  are   collectively   evaluated  for   impairment.
Accordingly,  the Company does not separately  identify  individual consumer and
residential loans for impairment disclosures.

The provision for loan losses  represents a charge  against  income in an amount
necessary  to  maintain  the  allowance  at an  appropriate  level.  The monthly
provision for loan losses may fluctuate  based on the results of this  analysis.
The allowance for loan losses at March 31, 2005 and 2004,  and December 31, 2004
and 2003 was $1,655,160,  $1,255,715, $1,608,366 and $1,174,003 or 1.90%, 1.60%,
1.90% and 1.57%,  respectively,  of gross  loans  outstanding.  The ratio of net
charge-offs to average loans  outstanding  was .22%,  .31%,  .72% and 1.82%,  at
March 31, 2005 and 2004,  and  December  2004 and 2003,  respectively.  Improved
asset quality and fewer  charge-offs  resulted in a lower  provision to the loan
loss reserve during 2005 compared to the same period in 2004.  Primarily because
of a  recessionary  economy,  charge-offs  for  the  years  ended  2003  totaled
$1,357,614.   As  the  economy  demonstrated  signs  of  recovery  during  2004,
charge-offs decreased to $697,612.

The  following  table  contains an analysis for the  allowance  for loan losses,
including  the  amount of  charge-offs  and  recoveries  by loan  type,  for the
three-months ended March 31, 2005 and 2004, and for the years ended December 31,
2004 and 2003.

Summary of Allowance for Loan Losses

<TABLE>
<CAPTION>
                                                For the three months           For the years ended
                                                  ended March 31,                  December 31,
                                               2005            2004            2004            2003
                                               ----            ----            ----            ----
<S>                                        <C>             <C>             <C>             <C>
Balance, beginning of period               $ 1,608,366     $ 1,174,003     $ 1,174,003     $ 1,020,198
  Charge-offs:
  Commercial, financial and agricultural      (148,471)       (235,134)       (579,930)
(1,075,792) Real estate:
    Construction                                    --              --              --              --
    Mortgage                                   (48,000)             --         (48,000)       (157,142)
  Consumer                                      (6,622)        (18,994)        (69,682)       (124,680)
                                           -----------     -----------     -----------     -----------
Total charge-offs                             (203,093)       (254,128)       (697,612)     (1,357,614)


                                                                              15
<PAGE>

Recoveries
  Commercial, financial and agricultural         1,740           2,948          73,054          71,942
  Real estate:
    Construction                                    --              --              --              --
    Mortgage                                        --              --          25,000              --
  Consumer                                       7,642          10,092          23,621          33,677
                                           -----------     -----------     -----------     -----------
Total recoveries                                 9,382          13,040         121,675         105,619
                                           -----------     -----------     -----------     -----------
Net (charge-offs) recoveries                  (193,711)       (241,088)       (575,937)     (1,251,995)
                                           -----------     -----------     -----------     -----------
Provision charged to operations                240,505         322,800       1,010,300       1,405,800
                                           -----------     -----------     -----------     -----------
Balance, end of period                     $ 1,655,160     $ 1,255,715     $ 1,608,366     $ 1,174,003
                                           ===========     ===========     ===========     ===========

Percentage of net charge-offs to
  average loans                                    .22%            .31%            .72%           1.82%
Percentage of allowance to
  period-end loans                                1.90%           1.60%           1.90%           1.57%

</TABLE>

The following  table allocates the allowance for loan losses by loan category at
the dates  indicated.  The  allocation  of the allowance to each category is not
necessarily  indicative  of future  losses and does not  restrict the use of the
allowance to absorb losses in any category.


                                 March 31, 2005           December 31, 2004
                            Amount of    Percent of    Amount of     Percent of
                            Allowance    Total Loans   Allowance     Total Loans

TYPE OF LOAN:
Real estate                 $1,231,118           76%   $1,139,769           74%
Commercial and industrial
  loans                        351,336           22%      388,559           24%
Consumer                        15,770            2%       54,528            2%
Unallocated                     56,936           --        25,510           --
                            ----------   ----------    ----------   ----------
Total allowance             $1,655,160          100%   $1,608,366          100%
                            ==========   ==========    ==========   ==========

The  Company  does not have any  significant  loan  concentrations.  During  the
period, loan quality  demonstrated  improvement over March 31, 2004 and December
31, 2004.

During 2005,  there were no changes in estimation  methods or  assumptions  that
affected our  methodology for assessing the  appropriateness  of the formula and
specific  allowance  for credit  losses.  Changes in estimates  and  assumptions
regarding the effect of economic and business conditions on borrowers affect the
assessment of the allowance.

                                CAPITAL RESOURCES

Banks and bank holding companies, as regulated institutions,  must meet required
levels of capital.  The Federal Deposit Insurance  Corporation  ("FDIC") and the
Federal Reserve,  the primary  regulators of The Bank of Asheville and Weststar,
respectively,  have adopted  minimum  capital  regulations  or  guidelines  that
categorize  components  and the level of risk  associated  with various types of
assets.  Financial  institutions  are  expected  to  maintain a level of capital
commensurate  with the risk profile  assigned to its assets in  accordance  with
these  guidelines.  As shown in the  following  table,  Weststar and The Bank of
Asheville both maintained  capital levels exceeding the minimum levels for "well
capitalized" banks and bank holding companies.


                                                                              16
<PAGE>
<TABLE>
<CAPTION>
                                            REGULATORY CAPITAL

                                                                                                      To Be Well
                                                                                                   Capitalized Under
                                                                             For Capital           Prompt Corrective
                                                       Actual             Adequacy Purposes        Action Provisions
                                                 Amount       Ratio       Amount       Ratio       Amount       Ratio
                                                 ------       -----       ------       -----       ------       -----
                                                                        (Dollars in Thousands)
<S>                                              <C>          <C>         <C>           <C>        <C>         <C>
As of March 31, 2005
Total Capital (to Risk Weighted Assets)
  Consolidated                                   $15,197      16.35%      $7,436        8.00%      $9,295      10.00%
  Bank                                           $14,608      15.76%      $7,413        8.00%      $9,267      10.00%

Tier 1 Capital (to Risk Weighted Assets)
  Consolidated                                   $13,372      14.39%      $3,718        4.00%      $5,577       6.00%
  Bank                                           $13,444      14.51%      $3,707        4.00%      $5,560       6.00%

Tier 1 Capital (to Average Assets)
  Consolidated                                   $13,372      10.59%      $5,051        4.00%      $6,314       5.00%
  Bank                                           $13,444      10.67%      $5,040        4.00%      $6,300       5.00%

</TABLE>

                                    LIQUIDITY

Maintaining  adequate liquidity while managing interest rate risk is the primary
goal of Weststar's  asset and liability  management  strategy.  Liquidity is the
ability  to fund the  needs  of the  Company's  borrowers  and  depositors,  pay
operating expenses, and meet regulatory liquidity requirements. Loan repayments,
deposit  growth,  federal funds  purchased and borrowings  from the Federal Home
Loan  Bank are  presently  the main  sources  of the  Company's  liquidity.  The
Company's primary uses of liquidity are to fund loans and to make investments.

As of March 31, 2005 liquid assets (cash due from banks,  interest-earning  bank
deposits  and  federal  funds  sold) were  approximately  $15.6  million,  which
represents 12.1% of total assets and 14.4% of total deposits. Supplementing this
liquidity,  Weststar has available lines of credit from  correspondent  banks of
approximately  $11.9  million.  At March 31, 2005,  outstanding  commitments  to
extend  credit and  available  lines of credit  were $19.5  million.  Management
believes  that the  combined  aggregate  liquidity  position  of the  Company is
sufficient  to  meet  the  funding  requirements  of  loan  demand  and  deposit
maturities and withdrawals in the near term.

Certificates  of deposit  represented  approximately  31.4% of Weststar's  total
deposits at March 31, 2005. The Company's  growth  strategy will include efforts
focused on increasing the relative volume of transaction  deposit  accounts,  as
the branch  network  is  expanded,  making it more  convenient  for our  banking
customers.  Certificates of deposit of $100,000 or more represented 10.9% of the
Company's  total  deposits  at March 31,  2005.  These  deposits  are  generally
considered   rate   sensitive,   but  management   believes  most  of  them  are
relationship-oriented.  While the Company will need to pay competitive  rates to
retain these deposits at maturity,  there are other subjective factors that will
determine the Company's continued retention of these deposits.


                                                                              17
<PAGE>

                              INVESTMENT ACTIVITIES

At March 31, 2005,  Weststar's  investments  consisted of U.S. Government agency
securities,  mortgage backed securities and North Carolina  municipal bonds. The
investments,  with aggregate amortized cost of $22.9 million,  are classified as
available for sale and are presented in the consolidated financial statements at
their market values of $22.4 million at March 31, 2005.  These  securities  have
tax equivalent  yields of 3.2%,  3.9% and 5.3%  respectively,  with an aggregate
remaining term of approximately 53.8 months.  The Company's  investment in stock
of the  Federal  Home  Loan  Bank,  which is  required  of every  member  and is
redeemable  only by the Federal  Home Loan Bank,  was  $531,500  with a yield of
4.25% at March 31,  2005.  Because  the  investment  is  redeemable  only by the
Federal Home Loan Bank, it is listed  separately  rather than a component of the
Company's investment portfolio.

                     IMPACT OF INFLATION AND CHANGING PRICES

A financial institution has assets and liabilities that are distinctly different
from those of a company  with  substantial  investments  in plant and  inventory
because the major  portion of its assets is monetary in nature.  As a result,  a
bank's performance may be significantly influenced by changes in interest rates.
Although the banking industry is more affected by changes in interest rates than
by inflation in the prices of goods and services,  inflation is a factor,  which
may influence interest rates.  However,  the frequency and magnitude of interest
rate  fluctuations  do not  necessarily  coincide  with  changes in the  general
inflation  rate.  Inflation  does affect  operating  expenses in that  personnel
expenses,  cost of supplies and outside  services  tend to increase  more during
periods of high inflation.

Item 3.  Controls and Procedures

The Company  carried out an  evaluation  as of the end of the period  covered by
this report under the  supervision and with the  participation  of the company's
management,  including the Company's Chief Executive Officer and Chief Financial
Officer,  of the  effectiveness  of the design and  operation  of the  Company's
disclosure  controls and procedures pursuant to Securities and Exchange Act Rule
13a-14.  Based  upon that  evaluation,  the Chief  Executive  Officer  and Chief
Financial  Officer  concluded  that  the  Company's   disclosure   controls  and
procedures  are  effective  in  timely  alerting  them to  material  information
relating to the Company  required to be included in the  Company's  periodic SEC
Filings. There were no significant changes in the Company's internal controls or
in other factors that could  significantly  affect the controls  during the most
recent quarter.


                                                                              18
<PAGE>

Part II. OTHER INFORMATION

Item 4.  Submission of Matters to a Vote of Security Holders
         None.

Item 6.  Exhibits

         (a) Exhibits.

             31.1 - Certification  of  the  Chief Executive  Officer pursuant to
                    Rule 13a-14(a) under the Securities  Exchange Act of 1934 as
                    adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
                    2002

             31.2 - Certification  of  the  Chief Financial  Officer pursuant to
                    Rule 13a-14(a) under the Securities  Exchange Act of 1934 as
                    adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
                    2002

             32.1 - Certification  by  the  Chief Executive  Officer pursuant to
                    18 U.S.C.  1350 as adopted  pursuant  to Section  906 of the
                    Sarbanes-Oxley Act of 2002

             32.2 - Certification  by  the  Chief Financial  Officer pursuant to
                    18 U.S.C.  1350 as adopted  pursuant  to Section  906 of the
                    Sarbanes-Oxley Act of 2002



                                                                              19
<PAGE>


SIGNATURES


Under the  requirements  of the Securities  Exchange Act of 1934, the registrant
has duly  caused  this  report  to be signed  on its  behalf by the  undersigned
thereunto duly authorized.



                                    WESTSTAR FINANCIAL SERVICES CORPORATION


Date: May 11, 2005              By: /s/   G. Gordon Greenwood
                                    --------------------------------------------

                                    G. Gordon Greenwood
                                    President and Chief Executive Officer



Date: May 11, 2005              By: /s/   Randall C. Hall
                                    --------------------------------------------

                                    Randall C. Hall
                                    Executive Vice President and Chief Financial
                                    and Principal Accounting Officer



                                                                              20