| ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURTIES EXCHANGE ACT OF 1934 |
|--------|----------------------------------------------------------------------------------------|

|   | For the quarterly period ended June 30, 2009 |
|--------|----------------------------------------------|

| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT |
|---|-----------------------------------------------------------------------|

|   | For the transition period from _____________________ to __________________________ |
|--------|------------------------------------------------------------------------------------|

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

----

----

| INDEX                                                                                                        | Page   |
|--------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                         |   |
| Part I – FINANCIAL INFORMATION                                                                         |   |
|                                                                                                         |   |
| Financial Statements:                                                                                        |   |
| Consolidated Balance SheetsJune 30, 2009 and December 31, 2008                                               | 2      |
|                                                                                                         |   |
| Consolidated Statements of OperationsThree and Six Months Ended June 30, 2009 and 2008                       | 3      |
|                                                                                                         |   |
| Consolidated Statements of Comprehensive Income (Loss)Three and Six Months Ended June 30, 2009 and 2008      | 4      |
|                                                                                                         |   |
| Consolidated Statements of Changes in Shareholders’ EquitySix Months Ended June 30, 2009 and 2008      | 5      |
|                                                                                                         |   |
| Consolidated Statements of Cash FlowsSix Months Ended June 30, 2009 and 2008                                 | 6      |
|                                                                                                         |   |
| Notes to Consolidated Financial Statements                                                                   | 7      |
|                                                                                                         |   |
| Item 2 -   Management’s Discussion and AnalysisFinancial Condition and Results of Operations | 14     |
|                                                                                                         |   |
| Item 4T – Controls and Procedures                                                                      | 25     |
|                                                                                                         |   |
| Part II – OTHER INFORMATION                                                                            |   |
|                                                                                                         |   |
| Item 4 – Submission of Matters to a Vote of Security Holders                                           | 26     |
|                                                                                                         |   |
| Item 5 – Other Information                                                                             | 26     |
|                                                                                                         |   |
| Item 6 –Exhibits                                                                                       | 26     |
|                                                                                                         |   |
| Signatures                                                                                                   | 27     |
|                                                                                                         |   |

----

Index

| PartI. | FINANCIAL INFORMATION |
|--------|-----------------------|

| Item I. | Financial Statements |
|---------|----------------------|

| Weststar Financial Services Corporation & Subsidiary                         |   |        |        |   |        |   |
|----------------------------------------------------------------------------------|--------|-------------|-------------|--------|-------------|--------|
| Consolidated Balance Sheets                                                      |   | (unaudited) |        |   |        |   |
|                                                                             |   | June 30     |        |   | December 31 |   |
|                                                                             |   | 2009        |        |   |        | 2008   | * |
| ASSETS:                                                                          |   |        |        |   |        |   |   |
| Cash and cash equivalents:                                                       |   |        |        |   |        |   |   |
| Cash and due from banks                                                          |   | $           | 4,930,563   |   |        | $      | 4,200,866 |   |
| Interest-bearing deposits                                                        |   |        | 11,780,364  |   |        |   | 218,912 |   |
|      Total cash and cash equivalents                    |   |        | 16,710,927  |   |        |   | 4,419,778 |   |
| Investment securities- available for sale, at fair value                         |   |        |        |   |        |   |   |   |
|      (amortized cost of $22,726,225 and $23,750,009, at |   |        |        |   |        |   |   |   |
|      June 30, 2009 and December 31, 2008, respectively) |   |        | 22,998,342  |   |        |   | 23,778,449 |   |
| Loans                                                                            |   |        | 180,614,075 |   |        |   | 171,239,692 |   |
| Allowance for loan losses                                                        |   |        | (2,847,508  | )      |        |   | (2,529,981 | ) |
| Net loans                                                                        |   |        | 177,766,567 |   |        |   | 168,709,711 |   |
| Premises and equipment, net                                                      |   |        | 2,538,516   |   |        |   | 2,652,007 |   |
| Accrued interest receivable                                                      |   |        | 1,037,103   |   |        |   | 1,030,460 |   |
| Federal Home Loan Bank stock, at cost                                            |   |        | 592,300     |   |        |   | 585,600 |   |
| Deferred income taxes                                                            |   |        | 919,408     |   |        |   | 810,921 |   |
| Foreclosed properties                                                            |   |        | 243,006     |   |        |   | 205,006 |   |
| Other assets                                                                     |   |        | 717,950     |   |        |   | 667,040 |   |
|                                                                             |   |        |        |   |        |   |   |   |
| TOTAL                                                                            |   | $           | 223,524,119 |   |        | $      | 202,858,972 |   |
|                                                                             |   |        |        |   |        |   |   |   |
| LIABILITIES AND SHAREHOLDERS’ EQUITY                                       |   |        |        |   |        |   |   |   |
| Liabilities:                                                                     |   |        |        |   |        |   |   |   |
| Deposits:                                                                        |   |        |        |   |        |   |   |   |
| Demand                                                                           |   | $           | 28,132,451  |   |        | $      | 22,251,288 |   |
| NOW accounts                                                                     |   |        | 31,220,375  |   |        |   | 18,319,836 |   |
| Money market accounts                                                            |   |        | 29,217,039  |   |        |   | 31,416,333 |   |
| Savings                                                                          |   |        | 2,600,623   |   |        |   | 2,207,173 |   |
| Time deposits of $100,000 or more                                                |   |        | 26,796,346  |   |        |   | 26,799,682 |   |
| Other time deposits                                                              |   |        | 77,482,512  |   |        |   | 69,819,794 |   |
|      Total deposits                                     |   |        | 195,449,346 |   |        |   | 170,814,106 |   |
| Short-term borrowings                                                            |   |        | 4,816,087   |   |        |   | 5,919,140 |   |
| Accrued interest payable                                                         |   |        | 564,453     |   |        |   | 565,105 |   |
| Other liabilities                                                                |   |        | 1,169,074   |   |        |   | 926,050 |   |
| Long-term debt                                                                   |   |        | 4,124,000   |   |        |   | 8,124,000 |   |
|      Total liabilities                                  |   |        | 206,122,960 |   |        |   | 186,348,401 |   |
|                                                                             |   |        |        |   |        |   |   |   |
| SHAREHOLDERS’ EQUITY:                                                      |   |        |        |   |        |   |   |   |
| Preferred stock, authorized $1,000,000 shares;                                   |   |        |        |   |        |   |   |   |
|      No shares issued and outstanding                   |   |        | -           |   |        |   | - |   |
| Common stock, $1 par value, authorized- 9,000,000 shares;                        |   |        |        |   |        |   |   |   |
|      outstanding shares- and 2,146,132 at June 30, 2009 |   |        |        |   |        |   |   |   |
|      and 2,125,747 at December 31, 2008, respectively   |   |        | 2,146,132   |   |        |   | 2,125,747 |   |
| Additional paid-in capital                                                       |   |        | 6,215,519   |   |        |   | 6,152,868 |   |
| Retained earnings                                                                |   |        | 8,872,292   |   |        |   | 8,214,480 |   |
| Accumulated other comprehensive income                                           |   |        | 167,216     |   |        |   | 17,476 |   |
| Total shareholders’ equity                                                 |   |        | 17,401,159  |   |        |   | 16,510,571 |   |
| Total                                                                            |   | $           | 223,524,119 |   |        | $      | 202,858,972 |   |

----

Index

| Weststar Financial Services Corporation & Subsidiary                          |   |           |      |   |           |   |      |   |   |   |      |   |
|-----------------------------------------------------------------------------------|--------|----------------|-----------|--------|----------------|--------|-----------|--------|--------|--------|-----------|--------|
| Consolidated Statements of Operations (unaudited)                                 |   | Three Months   |      |   | Six Months     |   |
|                                                                              |   | Ended June 30, |      |   | Ended June 30, |   |
|                                                                              |   | 2009           |      |   | 2008           |   |      | 2009   |   |   | 2008      |   |
| INTEREST INCOME:                                                                  |   |           |      |   |           |   |      |   |   |   |      |   |
| Interest and fees on loans                                                        |   | $              | 2,968,095 |   |           | $      | 2,574,013 |   |   | $      | 5,759,201 |   |   | $ | 5,315,518 |   |
| Federal funds sold                                                                |   |           | 160       |   |           |   | 14,172    |   |   |   | 1,132     |   |   |   | 41,176 |   |
| Interest-bearing deposits                                                         |   |           | 3,939     |   |           |   | 333       |   |   |   | 4,005     |   |   |   | 1,216 |   |
| Investments:                                                                      |   |           |      |   |           |   |      |   |   |   |      |   |   |   |   |   |
|      Taxable interest income                             |   |           | 169,191   |   |           |   | 211,462   |   |   |   | 349,073   |   |   |   | 428,939 |   |
|      Nontaxable interest income                          |   |           | 95,221    |   |           |   | 88,184    |   |   |   | 186,857   |   |   |   | 174,721 |   |
|      Corporate dividends                                 |   |           | -         |   |           |   | 7,214     |   |   |   | -         |   |   |   | 14,221 |   |
|           Total interest income |   |           | 3,236,606 |   |           |   | 2,895,378 |   |   |   | 6,300,268 |   |   |   | 5,975,791 |   |
| INTEREST EXPENSE:                                                                 |   |           |      |   |           |   |      |   |   |   |      |   |   |   |   |   |
| Time deposits of $100,000 or more                                                 |   |           | 220,283   |   |           |   | 309,269   |   |   |   | 448,812   |   |   |   | 659,594 |   |
| Other time and savings deposits                                                   |   |           | 837,982   |   |           |   | 759,155   |   |   |   | 1,701,763 |   |   |   | 1,620,992 |   |
| Short-term borrowings                                                             |   |           | 50,388    |   |           |   | 4,683     |   |   |   | 60,114    |   |   |   | 11,817 |   |
| Long-term debt                                                                    |   |           | 44,601    |   |           |   | 112,185   |   |   |   | 135,638   |   |   |   | 240,021 |   |
|      Total interest expense                              |   |           | 1,153,254 |   |           |   | 1,185,292 |   |   |   | 2,346,327 |   |   |   | 2,532,424 |   |
| NET INTEREST INCOME                                                               |   |           | 2,083,352 |   |           |   | 1,710,086 |   |   |   | 3,953,941 |   |   |   | 3,443,367 |   |
| PROVISION FOR LOAN LOSSES                                                         |   |           | 221,310   |   |           |   | 150,680   |   |   |   | 475,890   |   |   |   | 188,125 |   |
| NET INTEREST INCOME AFTER PROVISION                                               |   |           |      |   |           |   |      |   |   |   |      |   |   |   |   |   |
| FOR LOAN LOSSES                                                                   |   |           | 1,862,042 |   |           |   | 1,559,406 |   |   |   | 3,478,051 |   |   |   | 3,255,242 |   |
| OTHER INCOME:                                                                     |   |           |      |   |           |   |      |   |   |   |      |   |   |   |   |   |
| Services charges on deposit accounts                                              |   |           | 287,680   |   |           |   | 284,172   |   |   |   | 552,335   |   |   |   | 568,019 |   |
| Other service fees and commissions                                                |   |           | 166,932   |   |           |   | 118,568   |   |   |   | 300,612   |   |   |   | 204,804 |   |
| Equity in loss of Bank of Asheville Mortgage                                      |   |           |      |   |           |   |      |   |   |   |      |   |   |   |   |   |
|   Company, LLC                                                          |   |           | -         |   |           |   | (2,551    | )      |   |   | -         |   |   |   | (16,109 | ) |
| Other                                                                             |   |           | 9,979     |   |           |   | 15,660    |   |   |   | 19,851    |   |   |   | 34,169 |   |
|      Total other income                                  |   |           | 464,591   |   |           |   | 415,849   |   |   |   | 872,798   |   |   |   | 790,883 |   |
| OTHER EXPENSES:                                                                   |   |           |      |   |           |   |      |   |   |   |      |   |   |   |   |   |
| Salaries and wages                                                                |   |           | 709,874   |   |           |   | 661,919   |   |   |   | 1,391,271 |   |   |   | 1,286,303 |   |
| Employee benefits                                                                 |   |           | 82,860    |   |           |   | 120,259   |   |   |   | 214,135   |   |   |   | 236,771 |   |
| Occupancy expense, net                                                            |   |           | 122,076   |   |           |   | 125,051   |   |   |   | 307,129   |   |   |   | 249,739 |   |
| Equipment rentals, depreciation and                                               |   |           |      |   |           |   |      |   |   |   |      |   |   |   |   |   |
|      maintenance                                         |   |           | 102,653   |   |           |   | 119,658   |   |   |   | 201,375   |   |   |   | 233,336 |   |
| Supplies                                                                          |   |           | 67,585    |   |           |   | 65,039    |   |   |   | 131,858   |   |   |   | 138,502 |   |
| Professional fees                                                                 |   |           | 74,135    |   |           |   | 88,122    |   |   |   | 151,393   |   |   |   | 160,450 |   |
| Data processing fees                                                              |   |           | 156,960   |   |           |   | 135,404   |   |   |   | 310,948   |   |   |   | 277,745 |   |
| FDIC insurance premiums                                                           |   |           | 173,808   |   |           |   | 25,619    |   |   |   | 246,212   |   |   |   | 48,159 |   |
| Audit, tax and accounting                                                         |   |           | 24,458    |   |           |   | 12,147    |   |   |   | 79,622    |   |   |   | 61,871 |   |
| Marketing                                                                         |   |           | 80,435    |   |           |   | 70,608    |   |   |   | 173,122   |   |   |   | 132,986 |   |
| (Income) expenses from foreclosed properties                                      |   |           | 70        |   |           |   | 40,908    |   |   |   | 70        |   |   |   | 41,221 |   |
| Other                                                                             |   |           | 93,962    |   |           |   | 98,654    |   |   |   | 177,629   |   |   |   | 165,897 |   |
|      Total other expenses                                |   |           | 1,688,876 |   |           |   | 1,563,388 |   |   |   | 3,384,764 |   |   |   | 3,032,980 |   |
| INCOME BEFORE INCOME TAXES                                                        |   |           | 637,757   |   |           |   | 411,867   |   |   |   | 966,085   |   |   |   | 1,013,145 |   |
| INCOME TAX PROVISION                                                              |   |           | 203,888   |   |           |   | 129,384   |   |   |   | 308,273   |   |   |   | 342,525 |   |
| NET INCOME                                                                        |   | $              | 433,869   |   |           | $      | 282,483   |   |   |   | 657,812   |   |   |   | 670,620 |   |
|                                                                              |   |           |      |   |           |   |      |   |   |   |      |   |   |   |   |   |
| EARNINGS PER SHARE:                                 |   |           |      |   |           |   |      |   |   |   |      |   |   |   |   |   |
| Basic                                                                             |   | $              | .20       |   |           | $      | .13       |   |   | $      | .31       |   |   | $ | .32 |   |
| Diluted                                                                           |   | $              | .19       |   |           | $      | .12       |   |   | $      | .29       |   |   | $ | .29 |   |

----

Index

|                                                                           |   | Three Months   |    |   | Six Months     |   |
|--------------------------------------------------------------------------------|--------|----------------|---------|--------|----------------|--------|
|                                                                           |   | Ended June 30, |    |   | Ended June 30, |   |
|                                                                           |   | 2009           |    |   | 2008           |   |   | 2009 |   |   | 2008 |   |
| NET INCOME                                                                     |   | $              | 433,869 |   |           | $      | 282,483 |   |   | $ | 657,812 |   |   | $ | 670,620 |   |
| OTHER COMPREHENSIVE INCOME                                                     |   |           |    |   |           |   |   |   |   |   |   |   |   |   |   |   |
|      Unrealized holding income (losses) on securities |   |           |    |   |           |   |   |   |   |   |   |   |   |   |   |   |
|       available for sale                         |   |           | (6,986  | )      |           |   | (479,560 | ) |   |   | 243,677 |   |   |   | (117,493 | ) |
| Tax effect                                                                     |   |           | 2,693   |   |           |   | 184,871 |   |   |   | (93,937 | ) |   |   | 45,294 |   |
|                                                                           |   |           |    |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Unrealized holding gains (losses) on securities                                |   |           |    |   |           |   |   |   |   |   |   |   |   |   |   |   |
| available for sale, net of tax                                                 |   |           | (4,293  | )      |           |   | (294,689 | ) |   |   | 149,740 |   |   |   | (72,199 | ) |
|                                                                           |   |           |    |   |           |   |   |   |   |   |   |   |   |   |   |   |
| OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX                                  |   |           | (4,293  | )      |           |   | (294,689 | ) |   |   | 149,740 |   |   |   | (72,199 | ) |
|                                                                           |   |           |    |   |           |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE INCOME (LOSS)                                                    |   | $              | 429,576 |   |           | $      | (12,206 | ) |   | $ | 807,552 |   |   | $ | 598,421 |   |

----

Index

s

|                                                  |   |         |      |   |    |   |      |       |   |   |          |   |   | Accumulated         |      |   |   |   |
|-------------------------------------------------------|--------|--------------|-----------|--------|---------|--------|-----------|------------|--------|--------|---------------|--------|--------|---------------------|-----------|--------|--------|--------|
|                                                  |   |         |      |   |    |   |      | Additional |   |   |          |   |   | Other               |      |   | Total  |   |
|                                                  |   | Common Stock |      |   | Paid-In |   |      | Retained   |   |   | Comprehensive |   |   | Shareholders’ |      |
|                                                  |   | Shares       |      |   | Amount  |   |      | Capital    |   |   | Earnings      |   |   | Income (Loss)       |      |   | Equity |   |
| Balance December 31, 2007                             |   |         | 2,118,437 |   |    | $      | 2,118,437 |       |   | $      | 6,133,773     |   |   | $                   | 6,913,168 |   |   | $      | 13,861 |   |   | $ | 15,179,239 |   |
| Net change in unrealized                              |   |         |      |   |    |   |      |       |   |   |          |   |   |                |      |   |   |   |   |   |   |   |   |   |
|    losses on securities held for sale  |   |         |      |   |    |   |      |       |   |   |          |   |   |                |      |   |   |   | (72,199 | ) |   |   | (72,199 | ) |
| Issuance of common stock pursuant                     |   |         |      |   |    |   |      |       |   |   |          |   |   |                |      |   |   |   |   |   |   |   |   |   |
|    to the exercise of stock options    |   |         | 1,210     |   |    |   | 1,210     |       |   |   | (1,199        | )      |   |                |      |   |   |   |   |   |   |   | 11 |   |
| Tax benefit on exercise of non-                       |   |         |      |   |    |   |      |       |   |   |          |   |   |                |      |   |   |   |   |   |   |   |   |   |
|      qualified stock options |   |         |      |   |    |   |      |       |   |   | 4,628         |   |   |                |      |   |   |   |   |   |   |   | 4,628 |   |
| Net Income                   |   |         |      |   |    |   |      |       |   |   |          |   |   |                | 670,620   |   |   |   |   |   |   |   | 670,620 |   |
| Balance June 30, 2008                                 |   |         | 2,119,647 |   |    | $      | 2,119,647 |       |   | $      | 6,137,202     |   |   | $                   | 7,583,788 |   |   | $      | (58,338 | ) |   | $ | 15,782,299 |   |
|                                                  |   |         |      |   |    |   |      |       |   |   |          |   |   |                |      |   |   |   |   |   |   |   |   |   |
| Balance December 31, 2008                             |   |         | 2,125,747 |   |    | $      | 2,125,747 |       |   | $      | 6,152,868     |   |   | $                   | 8,214,480 |   |   | $      | 17,476 |   |   | $ | 16,510,571 |   |
| Net change in unrealized                              |   |         |      |   |    |   |      |       |   |   |          |   |   |                |      |   |   |   |   |   |   |   |   |   |
|    gains on securities held for sale   |   |         |      |   |    |   |      |       |   |   |          |   |   |                |      |   |   |   | 149,740 |   |   |   | 149,740 |   |
| Issuance of common stock pursuant                     |   |         |      |   |    |   |      |       |   |   |          |   |   |                |      |   |   |   |   |   |   |   |   |   |
|    to the exercise of stock options    |   |         | 20,385    |   |    |   | 20,385    |       |   |   | 46,070        |   |   |                |      |   |   |   |   |   |   |   | 66,455 |   |
| Tax benefit on exercise of non-                       |   |         |      |   |    |   |      |       |   |   |          |   |   |                |      |   |   |   |   |   |   |   |   |   |
|      qualified stock options |   |         |      |   |    |   |      |       |   |   | 16,581        |   |   |                |      |   |   |   |   |   |   |   | 16,581 |   |
| Net Income                                            |   |         |      |   |    |   |      |       |   |   |          |   |   |                | 657,812   |   |   |   |   |   |   |   | 657,812 |   |
| Balance June 30, 2009                                 |   |         | 2,146,132 |   |    | $      | 2,146,132 |       |   | $      | 6,215,519     |   |   | $                   | 8,872,292 |   |   | $      | 167,216 |   |   | $ | 17,401,159 |   |

----

Index

| Weststar Financial Services Corporation & Subsidiary                      |   |   |       |   |   |   |
|-------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Consolidated Statements of Cash Flows (unaudited)                             |   |   |       |   |   |   |
| For the Six Months Ended June 30,                                             |   | 2009   |       |   | 2008   |   |
|                                                                          |   |   |       |   |   |   |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                         |   |   |       |   |   |   |
| Net Income                                                                    |   | $      | 657,812    |   |   | $      | 670,620 |   |
| Adjustments to reconcile net income to net cash used by operating activities: |   |   |       |   |   |   |   |   |
| Depreciation                                                                  |   |   | 175,464    |   |   |   | 205,656 |   |
| Provision for loan losses                                                     |   |   | 475,890    |   |   |   | 188,125 |   |
| Premium amortization and discount accretion, net                              |   |   | (15,834    | )      |   |   | (13,343 | ) |
| Deferred income tax provision                                                 |   |   | (202,424   | )      |   |   | (59,551 | ) |
| Expense from foreclosed properties                                            |   |   | -          |   |   |   | 36,781 |   |
| (Increase) decrease in accrued interest receivable                            |   |   | (6,643     | )      |   |   | 99,053 |   |
| (Increase) decrease in other assets                                           |   |   | (50,910    | )      |   |   | 22,213 |   |
| Decrease in accrued interest payable                                          |   |   | (652       | )      |   |   | (8,969 | ) |
| Increase in other liabilities                                                 |   |   | 243,024    |   |   |   | 16,835 |   |
|      Net cash provided by operating activities       |   |   | 1,275,727  |   |   |   | 1,157,420 |   |
|                                                                          |   |   |       |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                         |   |   |       |   |   |   |   |   |
| Purchases of securities available for sale                                    |   |   | (1,499,005 | )      |   |   | (1,530,893 | ) |
| Maturities of securities available for sale                                   |   |   | 2,538,623  |   |   |   | 2,463,588 |   |
| Net increase in loans                                                         |   |   | (9,570,746 | )      |   |   | (12,629,811 | ) |
| FHLB stock purchase                                                           |   |   | (54,200    | )      |   |   | (122,300 | ) |
| FHLB stock redemption                                                         |   |   | 47,500     |   |   |   | - |   |
| Additions to premises and equipment                                           |   |   | (61,973    | )      |   |   | (24,615 | ) |
|      Net cash used in investing activities           |   |   | (8,599,801 | )      |   |   | (11,844,031 | ) |
|                                                                          |   |   |       |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                         |   |   |       |   |   |   |   |   |
| Net increase (decrease) in demand deposits, NOW Accounts, MMDA                |   |   |       |   |   |   |   |   |
|   and savings accounts                                              |   |   | 16,975,858 |   |   |   | (1,953,472 | ) |
| Net increase in time deposits                                                 |   |   | 7,659,382  |   |   |   | 7,974,644 |   |
| Issuance of common stock                                                      |   |   | 66,455     |   |   |   | 11 |   |
| Proceeds of FHLB advances                                                     |   |   | 1,110,000  |   |   |   | 2,550,000 |   |
| Repayment of FHLB advances                                                    |   |   | (2,110,000 | )      |   |   | (500,000 | ) |
| Tax benefit from exercise of non-qualified stock options                      |   |   | 16,581     |   |   |   | 4,628 |   |
| Net decrease in short-term borrowing                                          |   |   | (4,103,053 | )      |   |   | (16,409 | ) |
|      Net cash provided by financing activities       |   |   | 19,615,223 |   |   |   | 8,059,402 |   |
|                                                                          |   |   |       |   |   |   |   |   |
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                          |   |   | 12,291,149 |   |   |   | (2,627,209 | ) |
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                              |   |   | 4,419,778  |   |   |   | 8,527,456 |   |
| CASH AND CASH EQUIVALENTS AT END OF PERIOD                                    |   | $      | 16,710,927 |   |   | $      | 5,900,247 |   |

----

Index

V

| 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 ofThe 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. |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2. | 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 $30,856,230 and $31,886,835 at June 30, 2009 and December 31, 2008, respectively. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3. | Basic earnings per common share represents income available to common stockholders divided by the weighted average number of common shares outstanding during the period.  Diluted earnings per common share reflect additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustments to income that would result from the assumed issuance.  Potentialcommon shares that may be issued by the Company relate solely to outstanding stock options and are determined using the treasury stock method.  During 2009 and 2008, there were no shares excluded due to antidultion. |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Index

|                             |   | Three Months   |      |   | Six Months     |   |
|----------------------------------|--------|----------------|-----------|--------|----------------|--------|
|                             |   | Ended June 30, |      |   | Ended June 30, |   |
|                             |   | 2009           |      |   | 2008           |   |   | 2009 |   |   | 2008 |   |
| Weighted average number of       |   |           |      |   |           |   |   |   |   |   |   |   |
| common shares used in            |   |           |      |   |           |   |   |   |   |   |   |   |
| computing basic net income       |   |           |      |   |           |   |   |   |   |   |   |   |
| per share                        |   |           | 2,146,132 |   |           |   | 2,119,461 |   |   |   | 2,140,937 |   |   |   | 2,119,209 |   |
| Effect of dilutive stock options |   |           | 111,231   |   |           |   | 160,423 |   |   |   | 100,807 |   |   |   | 160,514 |   |
| Weighted average number of       |   |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |
| common shares and dilutive       |   |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |
| potential common shares          |   |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |
| used in computing diluted net    |   |           |      |   |           |   |   |   |   |   |   |   |   |   |   |   |
| income per common share          |   |           | 2,257,363 |   |           |   | 2,279,884 |   |   |   | 2,241,744 |   |   |   | 2,279,723 |   |

| 4. | Under SFAS 157, the Company groups assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair values.  These levels are: |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Index

|                                                                         |   | Fair Value Measurements at June 30, 2009     |   |
|------------------------------------------------------------------------------|--------|----------------------------------------------|--------|
|                                                                         |   | Quoted Prices                                |   |   |   |   |   |   |   |   |   |   |
|                                                                         |   | in Active                                    |   |   | Significant |   |   |   |   |   |   |   |
|                                                                         |   | Markets for                                  |   |   | Other |   |   | Significant |   |   |   |   |
|                                                                         |   | Identical                                    |   |   | Observable |   |   | Unobservable |   |   | Assets/ |   |
|                                                                         |   | Assets                                       |   |   | Inputs |   |   | Inputs |   |   | Liabilities |   |
| Description                                                                  |   | (Level 1)                                    |   |   | (Level 2) |   |   | (Level 3) |   |   | at Fair Value |   |
|                                                                         |   |                                         |   |   |   |   |   |   |   |   |   |   |
| Available-for-sale                                                           |   |                                         |   |   |   |   |   |   |   |   |   |   |
|   securities                                                       |   |                                         | -      |   |   | $ | 22,998,342 |   |   |   | - |   |   | $ | 22,998,342 |   |
|                                                                         |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                         |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                         |   | Fair Value Measurements at December 31, 2008 |   |
| Available-for-sale                                                           |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   securities                                                       |   |                                         | -      |   |   | $ | 23,778,449 |   |   |   | - |   |   | $ | 23,778,449 |   |
|                                                                         |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Assets measured at fair value on a non-recurring basis are summarized below: |   |
|                                                                         |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                         |   | Fair Value Measurements at June 30, 2009     |   |
|                                                                         |   | Quoted Prices                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                         |   | in Active                                    |   |   | Significant |   |   |   |   |   |   |   |   |   |
|                                                                         |   | Markets for                                  |   |   | Other |   |   | Significant |   |   |   |   |   |
|                                                                         |   | Identical                                    |   |   | Observable |   |   | Unobservable |   |   | Assets/ |   |
|                                                                         |   | Assets                                       |   |   | Inputs |   |   | Inputs |   |   | Liabilities |   |
| Description                                                                  |   | (Level 1)                                    |   |   | (Level 2) |   |   | (Level 3) |   |   | at Fair Value |   |
|                                                                         |   |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Impaired loans(1)                                                            |   |                                         | -      |   |   | $ | 547,166 |   |   | $ | 186,053 |   |   | $ | 733,219 |   |

----

Index

|                                                   |   | June 30, 2009  |    |   | December 31, 2008 |   |
|--------------------------------------------------------|--------|----------------|---------|--------|-------------------|--------|
|                                                   |   | Carrying       |    |   | Estimated         |   |   | Carrying |   |   | Estimated |   |
|                                                   |   | amount         |    |   | fair value        |   |   | amount |   |   | fair value |   |
|                                                   |   | (In thousands) |    |
| Assets:                                                |   |           |    |   |              |   |   |   |   |   |   |   |
|   Cash and cash equivalents                  |   | $              | 16,711  |   |              | $      | 16,711 |   |   | $ | 4,420 |   |   | $ | 4,420 |   |
|   Investment securities                      |   |           | 22,998  |   |              |   | 22,998 |   |   |   | 23,778 |   |   |   | 23,778 |   |
|   Federal Home Loan Bank stock               |   |           | 592     |   |              |   | 592 |   |   |   | 586 |   |   |   | 586 |   |
|   Loans, net                                 |   |           | 177,767 |   |              |   | 180,108 |   |   |   | 168,710 |   |   |   | 171,856 |   |
|   Interest receivable                        |   |           | 1,037   |   |              |   | 1,037 |   |   |   | 1,030 |   |   |   | 1,030 |   |
|   Bank owned life insurance                  |   |           | 273     |   |              |   | 273 |   |   |   | 225 |   |   |   | 225 |   |
|                                                   |   |           |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                                           |   |           |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
|   Demand deposits, NOW accounts,             |   |           |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
|     money market accounts, savings |   |           | 91,170  |   |              |   | 91,170 |   |   |   | 74,195 |   |   |   | 74,195 |   |
|   Time deposits                              |   |           | 104,279 |   |              |   | 104,699 |   |   |   | 96,619 |   |   |   | 97,039 |   |
|   Short-term borrowings                      |   |           | 4,816   |   |              |   | 4,937 |   |   |   | 5,919 |   |   |   | 5,919 |   |
|   Interest payable                           |   |           | 564     |   |              |   | 564 |   |   |   | 565 |   |   |   | 565 |   |
|   Long-term debt                             |   |           | 4,124   |   |              |   | 4,124 |   |   |   | 8,124 |   |   |   | 8,297 |   |

----

Index

|                             |   |      |       |   | Gross      |   |    | Gross      |   |   |     |   |
|----------------------------------|--------|-----------|------------|--------|------------|--------|---------|------------|--------|--------|----------|--------|
|                             |   | Amortized |       |   | unrealized |   |    | unrealized |   |   | Fair     |   |
|                             |   | cost      |       |   | gains      |   |    | losses     |   |   | value    |   |
| Type and Maturity Group          |   |      |       |   |       |   |    |       |   |   |     |   |
|                             |   |      |       |   |       |   |    |       |   |   |     |   |
| Mortgage-backed securities -     |   |      |       |   |       |   |    |       |   |   |     |   |
| Within 1 year                    |   | $         | 622,787    |   |       | $      | 49      |       |   | $      | (991     | )      |   | $ | 621,845 |   |
|                             |   |      |       |   |       |   |    |       |   |   |     |   |   |   |   |   |
| Mortgage-backed securities due - |   |      |       |   |       |   |    |       |   |   |     |   |   |   |   |   |
| Within 1 to 5 years              |   |      | 1,477,809  |   |       |   | 25,785  |       |   |   | -        |   |   |   | 1,503,594 |   |
| Municipal bonds due -            |   |      |       |   |       |   |    |       |   |   |     |   |   |   |   |   |
| Within 1 to 5 years              |   |      | 1,554,445  |   |       |   | 56,789  |       |   |   | -        |   |   |   | 1,611,234 |   |
| Total due within 1 to 5 years    |   |      | 3,032,254  |   |       |   | 82,574  |       |   |   | -        |   |   |   | 3,114,828 |   |
|                             |   |      |       |   |       |   |    |       |   |   |     |   |   |   |   |   |
| U.S. Government agencies due -   |   |      |       |   |       |   |    |       |   |   |     |   |   |   |   |   |
| Within 5 to 10 years             |   |      | 2,503,749  |   |       |   | 83,941  |       |   |   | -        |   |   |   | 2,587,690 |   |
| Mortgage-backed securities due - |   |      |       |   |       |   |    |       |   |   |     |   |   |   |   |   |
| Within 5 to 10 years             |   |      | 833,471    |   |       |   | 30,889  |       |   |   | -        |   |   |   | 864,360 |   |
| Municipal bonds due -            |   |      |       |   |       |   |    |       |   |   |     |   |   |   |   |   |
| Within 5 to 10 years             |   |      | 513,210    |   |       |   | 3,936   |       |   |   | -        |   |   |   | 517,146 |   |
| Total due within 5 to 10 years   |   |      | 3,850,430  |   |       |   | 118,766 |       |   |   | -        |   |   |   | 3,969,196 |   |
|                             |   |      |       |   |       |   |    |       |   |   |     |   |   |   |   |   |
| Mortgage-backed securities due - |   |      |       |   |       |   |    |       |   |   |     |   |   |   |   |   |
| after 10 years                   |   |      | 7,713,109  |   |       |   | 292,222 |       |   |   | -        |   |   |   | 8,005,331 |   |
| Municipal bonds due -            |   |      |       |   |       |   |    |       |   |   |     |   |   |   |   |   |
| after 10 years                   |   |      | 7,507,645  |   |       |   | 23,401  |       |   |   | (243,904 | )      |   |   | 7,287,142 |   |
| Total due after years            |   |      | 15,220,754 |   |       |   | 315,623 |       |   |   | (243,904 | )      |   |   | 15,292,473 |   |
|                             |   |      |       |   |       |   |    |       |   |   |     |   |   |   |   |   |
| Total at June 30, 2009           |   | $         | 22,726,225 |   |       | $      | 517,012 |       |   | $      | (244,895 | )      |   | $ | 22,998,342 |   |

----

Index

|                                                                             |   | Less Than 12 Months |      |   | 12 Months or More |   |    | Total  |   |
|------------------------------------------------------------------------------------------------------|--------|---------------------|-----------|--------|-------------------|--------|---------|--------|--------|
|                                                                                                 |   | Fair                |      |   | Unrealized        |   |    | Fair   |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
|                                                                                                 |   | value               |      |   | losses            |   |    | value  |   |   | losses |   |   | value |   |   | losses |   |
| Securities available for sale:                                                                       |   |                |      |   |              |   |    |   |   |   |   |   |   |   |   |   |   |   |
|           Mortgage-backed securities               |   | $                   | 396,063   |   |              | $      | (991    | )      |   | $ | - |   |   | $ | - |   |   | $ | 396,063 |   |   | $ | (991 | ) |
|           Municipal bonds                          |   |                | 3,082,203 |   |              |   | (73,820 | )      |   |   | 2,401,805 |   |   |   | (170,084 | ) |   |   | 5,484,008 |   |   |   | (243,904 | ) |
|                                                                                                 |   |                |      |   |              |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|           Total temporarily impaired               |   |                |      |   |              |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                securities |   | $                   | 3,478,266 |   |              | $      | (74,811 | )      |   | $ | 2,401,805 |   |   | $ | (170,084 | ) |   | $ | 5,880,071 |   |   | $ | (244,895 | ) |

| 5. | In preparing these financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through August 11, 2009, the date the financial statements were issued. |
|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6. | In April 2009, FASB issued FASB Staff Position (“FSP”) No. FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly.” Effective for interim and annual reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15,2009, FSP FAS 157-4 provides guidelines for making fair value measurements more consistent with the principles presented in SFAS 157, “Fair Value Measurements,” when the volume and level of activity for assets or liabilities have significantly decreased. FSP FAS 157-4 relates to determining fair values when there is no active market or where the price inputs being used represent distressed sales. It reaffirms what SFAS 157 states is the objective of fair value measurement – to reflect how muchan asset would be sold for in an orderly transaction (as opposed to a distressed or forced transaction) at the date of the financial statements under current market conditions. Specifically, it reaffirms the need to use judgment to ascertain if a formerly active market has become inactive and in determining fair values when markets have become inactive. The adoption of this FSP did not have material effect on its financial position and results of operations. |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Index

----

Index

| Item 2. | Management’s Discussion and Analysis Financial Condition and Results of Operations |
|---------|------------------------------------------------------------------------------------------|

----

Index

----

Index

----

Index

----

Index

----

Index

----

Index

|                               |   | TERMS TO REPRICING AT JUNE 30, 2009 |        |
|------------------------------------|--------|-------------------------------------|-------------|
|                               |   | 1-90 Days                           |        |   | 91-180 Days |   |   | 181-365 Days |   |   | Total One |   |   | Non- |   |   | Total |   |
|                               |   |                                |        |   |   |   |   |   |   |   | Year Sensitive |   |   |   |   |   |   |   |
| Interest-earning assets:           |   |                                |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest bearing deposits          |   | $                                   | 11,780,364  |   |   |   |   |   |   |   |   | $ | 11,780,364 |   |   |   |   |   | $ | 11,780,364 |   |
| Investment securities              |   |                                | 406,809     |   |   | $ | 410,732 |   |   | $ | 596,518 |   |   |   | 1,414,059 |   |   | $ | 21,312,166 |   |   |   | 22,726,225 |   |
| Federal Home Loan Bank             |   |                                |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| stock                              |   |                                | 592,300     |   |   |   | - |   |   |   | - |   |   |   | 592,300 |   |   |   | - |   |   |   | 592,300 |   |
| Loans (1)                          |   |                                | 132,853,812 |   |   |   | 7,118,096 |   |   |   | 11,839,030 |   |   |   | 151,810,938 |   |   |   | 28,803,137 |   |   |   | 180,614,075 |   |
| Total Interest-earning assets      |   |                                | 145,633,285 |   |   |   | 7,528,828 |   |   |   | 12,435,548 |   |   |   | 165,597,661 |   |   |   | 50,115,303 |   |   |   | 215,712,964 |   |
|                               |   |                                |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing liabilities:      |   |                                |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Time deposits                      |   |                                | 46,482,244  |   |   |   | 24,680,053 |   |   |   | 32,465,890 |   |   |   | 103,628,187 |   |   |   | 650,671 |   |   |   | 104,278,858 |   |
| All other deposits                 |   |                                | 63,038,037  |   |   |   | - |   |   |   | - |   |   |   | 63,038,037 |   |   |   | - |   |   |   | 63,038,037 |   |
| Short-term debt                    |   |                                | 816,087     |   |   |   | - |   |   |   | 4,000,000 |   |   |   | 4,816,087 |   |   |   | - |   |   |   | 4,816,087 |   |
| Long-term debt                     |   |                                | 4,124,000   |   |   |   | - |   |   |   | - |   |   |   | 4,124,000 |   |   |   | - |   |   |   | 4,124,000 |   |
| Total interest-bearing liabilities |   |                                | 114,460,368 |   |   |   | 24,680,053 |   |   |   | 36,465,890 |   |   |   | 175,606,311 |   |   |   | 650,671 |   |   |   | 176,256,982 |   |
|                               |   |                                |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                               |   |                                |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest sensitivity gap           |   | $                                   | 31,172,917  |   |   | $ | (17,151,225 | ) |   | $ | (24,030,342 | ) |   | $ | (10,008,650 | ) |   | $ | 49,464,632 |   |   |   |   |   |
| Cumulative interest sensitivity    |   |                                |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gap                                |   | $                                   | 31,172,917  |   |   | $ | 14,021,692 |   |   | $ | (10,008,650 | ) |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-earning assets as         |   |                                |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| A percent of interest sensitive    |   |                                |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| liabilities*                       |   |                                | 127.2       | % |   |   | 30.5 | % |   |   | 34.1 | % |   |   | 94.3 | % |   |   |   |   |   |   |   |   |

----

Index

|                                    |   | For the six months |      |   | For the year ended |   |
|-----------------------------------------|--------|--------------------|-----------|--------|--------------------|--------|
|                                    |   | Ended June 30,     |      |   | December 31,       |   |
|                                    |   | 2009               |      |   | 2008               |   |   | 2008 |   |
| Balance, beginning of period            |   | $                  | 2,529,981 |   |               | $      | 2,090,125 |   |   | $ | 2,090,125 |   |
| Charge-offs:                            |   |               |      |   |               |   |   |   |   |   |   |   |
| Commercial, financial and agricultural  |   |               | (117,754  | )      |               |   | - |   |   |   | (203,524 | ) |
| Real Estate:                            |   |               |      |   |               |   |   |   |   |   |   |   |
| Construction                            |   |               | -         |   |               |   | - |   |   |   | - |   |
| Mortgage                                |   |               | (30,000   | )      |               |   | - |   |   |   | - |   |
| Consumer                                |   |               | (31,242   | )      |               |   | (46,811 | ) |   |   | (116,409 | ) |
| Total charge-offs                       |   |               | (178,996  | )      |               |   | (46,811 | ) |   |   | (319,933 | ) |
| Recoveries                              |   |               |      |   |               |   |   |   |   |   |   |   |
| Commercial, financial, and agricultural |   |               | -         |   |               |   | 2,568 |   |   |   | 13,415 |   |
| Real Estate:                            |   |               |      |   |               |   |   |   |   |   |   |   |
| Construction                            |   |               | -         |   |               |   | - |   |   |   | - |   |
| Mortgage                                |   |               | -         |   |               |   | - |   |   |   | - |   |
| Consumer                                |   |               | 20,633    |   |               |   | 18,378 |   |   |   | 35,089 |   |
| Total Recoveries                        |   |               | 20,633    |   |               |   | 20,946 |   |   |   | 48,504 |   |
| Net (charge-offs) recoveries            |   |               | (158,363  | )      |               |   | (25,865 | ) |   |   | (271,429 | ) |
| Provision charged to operations         |   |               | 475,890   |   |               |   | 188,125 |   |   |   | 711,285 |   |
| Balance, end of period                  |   | $                  | 2,847,508 |   |               | $      | 2,252,385 |   |   | $ | 2,529,981 |   |
|                                    |   |               |      |   |               |   |   |   |   |   |   |   |
| Percentage of net charge-offs to        |   |               |      |   |               |   |   |   |   |   |   |   |
| Average loans                           |   |               | .18       | %      |               |   | .04 | % |   |   | .18 | % |
| Percentage of allowance to              |   |               |      |   |               |   |   |   |   |   |   |   |
| Period-end loans                        |   |               | 1.58      | %      |               |   | 1.52 | % |   |   | 1.48 | % |

----

Index

| Impaired loans without a related allowance              |   | $      | 2,193,220 |   |
|---------------------------------------------------------|--------|--------|-----------|--------|
| Impaired loans with a related allowance for loan losses |   |   | 814,149   |   |
| Total impaired loans                                    |   | $      | 3,007,369 |   |
| Allowance for loan loss related to impaired loans       |   | $      | 80,930    |   |

|                                |   | June 30, 2009 |      |   | December 31, 2008 |   |
|-------------------------------------|--------|---------------|-----------|--------|-------------------|--------|
|                                |   | Amount of     |      |   | Percent of        |   |   | Amount of |   |   | Percent of |   |
|                                |   | Allowance     |      |   | Total Loans       |   |   | Allowance |   |   | Total Loans |   |
|                                |   |          |      |   |              |   |   |   |   |   |   |   |
| TYPE OF LOAN:                       |   |          |      |   |              |   |   |   |   |   |   |   |
| Real Estate                         |   | $             | 2,254,481 |   |              |   | 84 | % |   | $ | 2,001,660 |   |   |   | 82 | % |
| Commercial and industrial           |   |          |      |   |              |   |   |   |   |   |   |   |   |   |   |   |
|      loans |   |          | 514,256   |   |              |   | 15 | % |   |   | 465,388 |   |   |   | 16 | % |
| Consumer                            |   |          | 78,771    |   |              |   | 1 | % |   |   | 50,786 |   |   |   | 2 | % |
| Unallocated                         |   |          | -         |   |              |   | - |   |   |   | 12,147 |   |   |   | - |   |
| Total Allowance                     |   | $             | 2,847,508 |   |              |   | 100 | % |   | $ | 2,529,981 |   |   |   | 100 | % |

----

Index

|                               |   |                   |   |   |     |   |   |              |   |   |              |   |   | To Be Well |   |
|------------------------------------|--------|------------------------|--------|--------|----------|--------|--------|-------------------|--------|--------|-------------------|--------|--------|------------|--------|
|                               |   |                   |   |   |     |   |   | For Capital       |   |   | Capitalized Under |   |
|                               |   | Actual                 |   |   | Adequacy |   |   | Prompt Corrective |   |
|                               |   |                   |   |   |     |   |   | Purposes          |   |   | Action Provisions |   |
|                               |   |                   |   |   |     |   |   |              |   |   |              |   |   |       |   |   |   |   |
|                               |   | Amount                 |   |   | Ratio    |   |   | Amount            |   |   | Ratio             |   |   | Amount     |   |   | Ratio |   |
|                               |   | (Dollars in Thousands) |   |
| As of June 30, 2009                |   |                   |   |   |     |   |   |              |   |   |              |   |   |       |   |   |   |   |
| Total Capital (to Risk Weighted    |   |                   |   |   |     |   |   |              |   |   |              |   |   |       |   |   |   |   |
| Assets)                            |   |                   |   |   |     |   |   |              |   |   |              |   |   |       |   |   |   |   |
| Consolidated                       |   | $                      | 23,577 |   |     |   | 12.61  | %                 |   | $      | 14,956            |   |   |       | 8.00   | % |   | $ | 18,695 |   |   |   | 10.00 | % |
| Bank                               |   | $                      | 22,382 |   |     |   | 11.99  | %                 |   | $      | 14,936            |   |   |       | 8.00   | % |   | $ | 18,670 |   |   |   | 10.00 | % |
|                               |   |                   |   |   |     |   |   |              |   |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |
| Tier 1 Capital (to Risk Weighted   |   |                   |   |   |     |   |   |              |   |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |
| Assets)                            |   |                   |   |   |     |   |   |              |   |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |
| Consolidated                       |   | $                      | 21,234 |   |     |   | 11.36  | %                 |   | $      | 7,478             |   |   |       | 4.00   | % |   | $ | 11,217 |   |   |   | 6.00 | % |
| Bank                               |   | $                      | 20,042 |   |     |   | 10.73  | %                 |   | $      | 7,468             |   |   |       | 4.00   | % |   | $ | 11,202 |   |   |   | 6.00 | % |
|                               |   |                   |   |   |     |   |   |              |   |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |
| Tier 1 Capital (to Average Assets) |   |                   |   |   |     |   |   |              |   |   |              |   |   |       |   |   |   |   |   |   |   |   |   |   |
| Consolidated                       |   | $                      | 21,234 |   |     |   | 9.78   | %                 |   | $      | 8,688             |   |   |       | 4.00   | % |   | $ | 10,859 |   |   |   | 5.00 | % |
| Bank                               |   | $                      | 20,042 |   |     |   | 9.24   | %                 |   | $      | 8,678             |   |   |       | 4.00   | % |   | $ | 10,847 |   |   |   | 5.00 | % |

----

Index

----

Index

m

----

Index

a

e

| Proposal #1            | For       | Withheld |
|------------------------|-----------|----------|
| M. David Cogburn, M.D. | 1,871,843 | 14,447   |
| Steven D. Cogburn      | 1,738,729 | 147,561  |
| Stephen L. Pignatiello | 1,813,879 | 72,411   |
| Laura A. Webb          | 1,871,843 | 14,447   |

| Proposal #2       | For       | Against | Abstain | Broker Nonvote |
|-------------------|-----------|---------|---------|----------------|
| Dixon Hughes PLLC | 1,877,924 | 756     | 7,610   | 0              |

| Item 5. | Other Information |
|---------|-------------------|

|   | (a) | None. |
|--------|-----|-------|

|   | (b) | 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 |
|--------|-------------|----------------------------------------------------------------------------------------------------------------------------------------------|

----

Index

N

|                  | WESTSTAR FINANCIAL SERVICES CORPORATION |                                                 |
|-----------------------|-----------------------------------------|------------------------------------------------------|
|                  |                                    |                                                 |   |
|                  |                                    |                                                 |   |
| Date: August 11, 2009 | By:                                     | /s/     G. Gordon Greenwood |   |
|                  |                                    |                                                 |   |
|                  |                                    | G. Gordon Greenwood                                  |   |
|                  |                                    | President and Chief Executive Officer                |   |
|                  |                                    |                                                 |   |
|                  |                                    |                                                 |   |
|                  |                                    |                                                 |   |
| Date: August 11, 2009 | By:                                     | /s/     Randall C. Hall     |   |
|                  |                                    |                                                 |   |
|                  |                                    | Randall C. Hall                                      |   |
|                  |                                    | Executive Vice President and Chief Financial         |   |
|                  |                                    | and Principal Accounting Officer                     |   |