##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2005
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number: 333-119800
 FIRST STATE FINANCIAL CORPORATION
  Florida
    
    65-07714145(State or other jurisdiction or incorporation or organization)
    
    (I.R.S. Employer Identification No.)22 S. Links Avenue, Sarasota, FL
    
    34236(Address of principal executive offices)
    
    (Zip code)
 941-929-9000
 N/A
  Yes þ           No o
  the Exchange Act.)
    
    Yes o           No þ




---



TABLE OF CONTENTS
 PART I  FINANCIAL INFORMATION
    
    PAGEItem 1

    
    Financial StatementsConsolidated Balance Sheets
    
    
    1Consolidated Statements of Income
    
    
    2Consolidated Statements of Changes in Stockholders Equity
    
    
    3Consolidated Statements of Cash Flows
    
    
    4Notes to Consolidated Financial Statements
    
    
    5Item 2 
    
    Managements Discussion and Analysis
    
    
    6Item 3

    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    11Item 4

    
    Controls and Procedures
    
    
    11PART II  OTHER INFORMATIONItem 1

    
    Legal Proceedings
    
    
    12Item 2

    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    12Item 3

    
    Defaults Upon Senior Securities
    
    
    12Item 4

    
    Submission of Matters to Vote of Securities Holders
    
    
    12Item 5

    
    Other Information
    
    
    12Item 6

    
    Exhibits
    
    
    12Signatures
    
    
    
    
    13EX-31.1: SECTION 302 CERTIFICATIONEX-31.2: SECTION 302 CERTIFICATIONEX-32.1: SECTION 906 CERTIFICATIONEX-32.2: SECTION 906 CERTIFICAION




---



##### Table of Contents



Part I Financial Information 
 Item 1 Financial Statements FIRST STATE FINANCIAL CORPORATION
 
 CONSOLIDATED BALANCE SHEETS
 June 30, 2005 (unaudited) and December 31, 2004
  June 30, 2005
    
    
    December 31, 2004ASSETSCash and due from financial institutions
    
    $
    6,065
    
    
    $
    4,901Federal funds sold
    
    
    3,469
    
    
    
    19,951Cash and cash equivalents
    
    
    9,534
    
    
    
    24,852Interest bearing deposits in other financial institutions
    
    
    150
    
    
    
    150Securities, available for sale
    
    
    17,935
    
    
    
    16,577Loans, net of allowance of $2,974 and $2,727
    
    
    279,159
    
    
    
    224,395Federal Home Loan Bank stock
    
    
    683
    
    
    
    1,234Premise and equipment, net
    
    
    4,410
    
    
    
    4,283Accrued interest and other assets
    
    
    2,443
    
    
    
    2,513Total Assets
    
    $
    314,314
    
    
    $
    274,004LIABILITIES and STOCKHOLDERS EQUITYDepositsNon-interest bearing
    
    $
    35,020
    
    
    $
    28,386Interest bearing
    
    
    231,750
    
    
    
    183,998Total deposits
    
    
    266,770
    
    
    
    212,384Accrued interest payable and other liabilities
    
    
    1,434
    
    
    
    1,466Federal Home Loan Bank advances
    
    
    3,000
    
    
    
    18,000Other borrowings
    
    
    1
    
    
    
    1Total Liabilities
    
    
    271,205
    
    
    
    231,851Stockholders EquityCommon stock, $1 par value; 25,000,000 shares authorized;
5,863,265 shares issued at June 30, 2005 and
5,856,265 shares issued at December 31, 2004
    
    
    5,863
    
    
    
    5,856Additional paid-in capital
    
    
    31,763
    
    
    
    31,860Retained earnings
    
    
    5,631
    
    
    
    4,566Accumulated other comprehensive income (loss)
    
    
    (148
    )
    
    
    (129
    )Total Stockholders Equity
    
    
    43,109
    
    
    
    42,153Total Liabilities and Stockholders Equity
    
    $
    314,314
    
    
    $
    274,004
  1




---



##### Table of Contents



FIRST STATE FINANCIAL CORPORATION
 
 CONSOLIDATED STATEMENTS OF INCOME
   Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Interest and Dividend IncomeLoans, including fees
    
    $
    4,596
    
    
    $
    3,180
    
    
    $
    8,531
    
    
    $
    6,182Taxable securities
    
    
    162
    
    
    
    127
    
    
    
    315
    
    
    
    288Tax exempt securities
    
    
    9
    
    
    
    
    
    
    
    12
    
    
    
    Federal funds sold and other
    
    
    115
    
    
    
    25
    
    
    
    245
    
    
    
    384,882
    
    
    
    3,332
    
    
    
    9,103
    
    
    
    6,508Interest expenseDeposits
    
    
    1,660
    
    
    
    1,128
    
    
    
    2,929
    
    
    
    2,198Federal Home Loan Bank advances and other borrowings
    
    
    55
    
    
    
    52
    
    
    
    189
    
    
    
    1401,715
    
    
    
    1,180
    
    
    
    3,118
    
    
    
    2,338Net Interest Income
    
    
    3,167
    
    
    
    2,152
    
    
    
    5,985
    
    
    
    4,170Provision for loan losses
    
    
    225
    
    
    
    174
    
    
    
    225
    
    
    
    319Net interest income after provision for loan losses
    
    
    2,942
    
    
    
    1,978
    
    
    
    5,760
    
    
    
    3,851Non-interest incomeService charges and other fees
    
    
    246
    
    
    
    220
    
    
    
    475
    
    
    
    433Mortgage banking fees
    
    
    253
    
    
    
    171
    
    
    
    506
    
    
    
    303Other
    
    
    10
    
    
    
    13
    
    
    
    17
    
    
    
    17509
    
    
    
    404
    
    
    
    998
    
    
    
    753Non-interest expenseSalaries and employee benefits
    
    
    1,226
    
    
    
    936
    
    
    
    2,452
    
    
    
    1,818Occupancy and equipment
    
    
    289
    
    
    
    267
    
    
    
    555
    
    
    
    512Data processing
    
    
    126
    
    
    
    115
    
    
    
    248
    
    
    
    238Professional services
    
    
    60
    
    
    
    24
    
    
    
    96
    
    
    
    50Stationery and supplies
    
    
    36
    
    
    
    28
    
    
    
    73
    
    
    
    57Advertising and marketing
    
    
    43
    
    
    
    38
    
    
    
    119
    
    
    
    76Other
    
    
    318
    
    
    
    172
    
    
    
    568
    
    
    
    3562,098
    
    
    
    1,580
    
    
    
    4,111
    
    
    
    3,107Income before income taxes
    
    
    1,353
    
    
    
    802
    
    
    
    2,647
    
    
    
    1,497Income tax expense
    
    
    500
    
    
    
    305
    
    
    
    996
    
    
    
    579Net Income
    
    $
    853
    
    
    $
    497
    
    
    $
    1,651
    
    
    $
    918Earnings per shareBasic
    
    $
    0.14
    
    
    $
    0.15
    
    
    $
    0.28
    
    
    $
    0.28Diluted
    
    $
    0.14
    
    
    $
    0.15
    
    
    $
    0.28
    
    
    $
    0.28Average common shares outstandingBasic
    
    
    5,859,496
    
    
    
    3,396,367
    
    
    
    5,857,889
    
    
    
    3,286,051Diluted
    
    
    5,879,179
    
    
    
    3,410,514
    
    
    
    5,879,964
    
    
    
    3,302,006Dividends per share
    
    $
    0.05
    
    
    $
    0.00
    
    
    $
    0.10
    
    
    $
    0.00
  2




---



##### Table of Contents



FIRST STATE FINANCIAL CORPORATION
 
 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
   AccumulatedAdditional
    
    
    
    
    
    
    OtherCommon
    
    
    Paid-in
    
    
    Retained
    
    
    ComprehensiveShares
    
    
    Stock
    
    
    Capital
    
    
    Earnings
    
    

Income (Loss)
    
    
    TotalBalance at December 31, 2003
    
    
    3,086,240
    
    
    $
    3,086
    
    
    $
    5,651
    
    
    $
    2,494
    
    
    $
    (121
    )
    
    $
    11,110Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    918
    
    
    
    
    
    
    
    918Change in net unrealized gain (loss) on
investment securities available for sale,
net of tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (155
    )
    
    
    (155
    )Total Comprehensive Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    763Exercise of stock options
    
    
    12,800
    
    
    
    13
    
    
    
    21
    
    
    
    
    
    
    
    
    
    
    
    34Issuance of common stock
    
    
    300,000
    
    
    
    300
    
    
    
    1,550
    
    
    
    
    
    
    
    
    
    
    
    1,850Balance at June 30, 2004
    
    
    3,399,040
    
    
    $
    3,399
    
    
    $
    7,222
    
    
    $
    3,412
    
    
    $
    (276
    )
    
    $
    13,757Balance at December 31, 2004
    
    
    5,856,265
    
    
    $
    5,856
    
    
    $
    31,860
    
    
    $
    4,566
    
    
    $
    (129
    )
    
    $
    42,153Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,651
    
    
    
    
    
    
    
    1,651Change in net unrealized gain (loss) on
investment securities available for sale,
net of tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19
    )
    
    
    (19
    )Total Comprehensive Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,632Capitalization of offering costs
    
    
    
    
    
    
    
    
    
    
    (109
    )
    
    
    
    
    
    
    
    
    
    
    (109
    )Exercise of stock options
    
    
    7,000
    
    
    
    7
    
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    19Cash dividend declared, $.05
per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (586
    )
    
    
    
    
    
    
    (586
    )Balance at June 30, 2005
    
    
    5,863,265
    
    
    $
    5,863
    
    
    $
    31,763
    
    
    $
    5,631
    
    
    $
    (148
    )
    
    $
    43,109Balance at March 31, 2004
    
    
    3,386,240
    
    
    $
    3,386
    
    
    $
    7,201
    
    
    $
    2,915
    
    
    $
    (59
    )
    
    $
    13,443Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    497
    
    
    
    
    
    
    
    497Change in net unrealized gain (loss) on
investment securities available for sale,
net of tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (217
    )
    
    
    (217
    )Total Comprehensive Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    280Exercise of stock options
    
    
    12,800
    
    
    
    13
    
    
    
    21
    
    
    
    
    
    
    
    
    
    
    
    34Balance at June 30, 2004
    
    
    3.399.040
    
    
    $
    3,399
    
    
    $
    7,222
    
    
    $
    3,412
    
    
    $
    (276
    )
    
    $
    13,757Balance at March 31, 2005
    
    
    5,856,265
    
    
    $
    5,856
    
    
    $
    31,751
    
    
    $
    5,070
    
    
    $
    (310
    )
    
    $
    42,367Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    853
    
    
    
    
    
    
    
    853Change in net unrealized gain (loss) on
investment securities available for sale,
net of tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    163
    
    
    
    163Total Comprehensive Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,016Exercise of stock options
    
    
    7,000
    
    
    
    7
    
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    19Cash dividend declared, $.05
per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (293
    )
    
    
    
    
    
    
    (293
    )Balance at June 30, 2005
    
    
    5,863,265
    
    
    $
    5,863
    
    
    $
    31,763
    
    
    $
    5,631
    
    
    $
    (148
    )
    
    $
    43,109
  3




---



##### Table of Contents



FIRST STATE FINANCIAL CORPORATION
 
 CONSOLIDATED STATEMENTS OF CASH FLOW
 Six Months Ended June 30, 2005 and 2004
   2005
    
    
    2004Cash flows from operating activities:Net income
    
    $
    1,651
    
    
    $
    918Adjustments to reconcile net income to net cash from operating activitiesProvision for loan losses
    
    
    225
    
    
    
    319Depreciation
    
    
    182
    
    
    
    186Net amortization of securities
    
    
    44
    
    
    
    99Net change in:Other assets
    
    
    79
    
    
    
    (321
    )Accrued expenses and other liabilities
    
    
    (325
    )
    
    
    59Net cash from operating activities
    
    
    1,856
    
    
    
    1,260Cash flows from investing activities:Available-for-sale securities:Maturities, prepayments and calls
    
    
    2,438
    
    
    
    7,548Purchases
    
    
    (3,868
    )
    
    
    (2,999
    )Loan originations and payments, net
    
    
    (54,989
    )
    
    
    (16,537
    )Net (purchase) sale of FHLB stock
    
    
    551
    
    
    
    373Net change in premise and equipment
    
    
    (309
    )
    
    
    (282
    )Net cash from investing activities
    
    
    (56,177
    )
    
    
    (11,897
    )Cash flows from financing activities:Net change in deposits
    
    
    54,386
    
    
    
    25,022Repayment of short-term borrowing
    
    
    
    
    
    
    (8,456
    )Repayment of long-term borrowing
    
    
    (15,000
    )
    
    
    Proceeds from exercise of stock options
    
    
    19
    
    
    
    34Proceeds from issuance of common stock, net of capitalized costs
    
    
    (109
    )
    
    
    1,850Cash dividend paid
    
    
    (293
    )
    
    
    Net cash from financing activities
    
    
    39,003
    
    
    
    18,450Net change in cash and cash equivalents
    
    
    (15,318
    )
    
    
    7,813Beginning cash and cash equivalents
    
    
    24,852
    
    
    
    4,798Ending cash and cash equivalents
    
    $
    9,534
    
    
    $
    12,611Supplemental cash flow informationInterest paid
    
    $
    2,996
    
    
    $
    1,753Income taxes paid
    
    
    939
    
    
    
    372
  4




---



##### Table of Contents



FIRST STATE FINANCIAL CORPORATION
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2005
  NOTE 1  INTERIM FINANCIAL STATEMENTS
     NOTE 2  STOCK-BASED COMPENSATION
   Three months ended
    
    
    Six months ended(Dollar amounts in thousands except for per share data)
    
    June 30,
    
    
    June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net income, as reported
    
    $
    853
    
    
    $
    497
    
    
    $
    1,651
    
    
    $
    918Stock-based compensation expense determined under fair
value based method, net of tax
    
    
    21
    
    
    
    2
    
    
    
    22
    
    
    
    4Pro forma net income
    
    $
    832
    
    
    $
    495
    
    
    $
    1,629
    
    
    $
    914Basic earnings per share as reported
    
    $
    0.14
    
    
    $
    0.15
    
    
    $
    0.28
    
    
    $
    0.28Pro forma basic earnings per share
    
    
    0.14
    
    
    
    0.15
    
    
    
    0.28
    
    
    
    0.28Diluted earnings per share as reported
    
    
    0.14
    
    
    
    0.15
    
    
    
    0.28
    
    
    
    0.28Pro forma diluted earnings per share
    
    
    0.14
    
    
    
    0.15
    
    
    
    0.28
    
    
    
    0.28
 Share Based Payment
 5




---



##### Table of Contents



Item 2.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 FORWARD-LOOKING STATEMENTS
  OVERVIEW
   NET INTEREST INCOME
    6




---



##### Table of Contents



For the six months ended June 30,2005
    
    
    2004(Dollars in thousands)
    
    Average
    
    
    Income/
    
    
    Yields/
    
    
    Average
    
    
    Income/
    
    
    Yields/Balances
    
    
    Expense
    
    
    Rates
    
    
    Balances
    
    
    Expense
    
    
    RatesAssets:Earnings assets:Loans (a)
    
    $
    245,722
    
    
    $
    8,531
    
    
    
    7.00
    %
    
    $
    186,698
    
    
    $
    6,182
    
    
    
    6.66
    %Investment securities
    
    
    18,199
    
    
    
    327
    
    
    
    3.62
    %
    
    
    18,327
    
    
    
    288
    
    
    
    3.16
    %Other
    
    
    17,444
    
    
    
    245
    
    
    
    2.83
    %
    
    
    6,133
    
    
    
    38
    
    
    
    1.25
    %Total interest earning assets
    
    
    281,365
    
    
    
    9,103
    
    
    
    6.52
    %
    
    
    211,158
    
    
    
    6,508
    
    
    
    6.20
    %Non-interest earning assets
    
    
    12,155
    
    
    
    
    
    
    
    
    
    
    
    10,210Total assets
    
    $
    293,520
    
    
    
    
    
    
    
    
    
    
    $
    221,368Liabilities:Interest bearing liabilities:NOW accounts
    
    $
    14,040
    
    
    $
    19
    
    
    
    0.27
    %
    
    $
    14,807
    
    
    $
    18
    
    
    
    0.24
    %Money market
    
    
    38,789
    
    
    
    378
    
    
    
    1.97
    %
    
    
    20,568
    
    
    
    103
    
    
    
    1.01
    %Savings
    
    
    8,952
    
    
    
    29
    
    
    
    0.65
    %
    
    
    8,355
    
    
    
    13
    
    
    
    0.31
    %Time deposits
    
    
    146,164
    
    
    
    2,503
    
    
    
    3.45
    %
    
    
    132,750
    
    
    
    2,064
    
    
    
    3.13
    %Borrowings
    
    
    8,967
    
    
    
    189
    
    
    
    4.25
    %
    
    
    8,583
    
    
    
    140
    
    
    
    3.28
    %Total interest bearing liabilities
    
    
    216,912
    
    
    
    3,118
    
    
    
    2.90
    %
    
    
    185,063
    
    
    
    2,338
    
    
    
    2.54
    %Demand deposits
    
    
    32,768
    
    
    
    
    
    
    
    
    
    
    
    22,696Other non-interest bearing liabilities
    
    
    1,148
    
    
    
    
    
    
    
    
    
    
    
    1,175Total non-interest bearing liabilities
    
    
    33,916
    
    
    
    
    
    
    
    
    
    
    
    23,871Stockholders equity
    
    
    42,692
    
    
    
    
    
    
    
    
    
    
    
    12,434Total liabilities & stockholders equity
    
    $
    293,520
    
    
    
    
    
    
    
    
    
    
    $
    221,368Net Interest Income
    
    
    
    
    
    $
    5,986
    
    
    
    
    
    
    
    
    
    
    $
    4,170Interest rate spread
    
    
    
    
    
    
    
    
    
    
    3.62
    %
    
    
    
    
    
    
    
    
    
    
    3.66
    %Net interest margin (b)
    
    
    
    
    
    
    
    
    
    
    4.29
    %
    
    
    
    
    
    
    
    
    
    
    3.97
    %
 
 (a)
    
    average loans include nonperforming loans(b)
    
    net interest margin is net interest income divided by average total interest earning
assets  (Dollars in thousands)
    
    
    
    
    
    
    
    
    
    NetAverage
    
    
    Average
    
    
    IncreaseVolume
    
    
    Rate
    
    
    (Decrease)Increase (decrease) in interest income:Loans
    
    $
    2,037
    
    
    $
    312
    
    
    $
    2,349Investment securities
    
    
    (2
    )
    
    
    41
    
    
    
    39Other
    
    
    123
    
    
    
    84
    
    
    
    207Total interest income
    
    
    2,158
    
    
    
    437
    
    
    
    2,595Increase (decrease) in interest expense:NOW accounts
    
    
    (1
    )
    
    
    2
    
    
    
    1Money market
    
    
    133
    
    
    
    142
    
    
    
    275Savings
    
    
    1
    
    
    
    15
    
    
    
    16Time deposits
    
    
    219
    
    
    
    220
    
    
    
    439Borrowings
    
    
    7
    
    
    
    42
    
    
    
    49Total interest expense
    
    
    359
    
    
    
    421
    
    
    
    780Total change in net interest income
    
    $
    1,799
    
    
    $
    16
    
    
    $
    1,815
 7




---



##### Table of Contents



PROVISION FOR LOAN LOSSES
  NON-INTEREST INCOME
  NON-INTEREST EXPENSE
  INCOME TAXES
  FINANCIAL CONDITION
  LOANS
  INVESTMENT SECURITIES
  SHORT-TERM INVESTMENTS
  8




---



##### Table of Contents



DEPOSITS
  OTHER BORROWINGS
  STOCKHOLDERS EQUITY
 th th
 RESULTS OF OPERATIONS  THREE MONTHS ENDED JUNE 30, 2005 AND 2004
   ASSET QUALITY
 LOAN PORTFOLIO AND ADEQUACY OF THE ALLOWANCE FOR LOAN LOSSES
   9




---



##### Table of Contents



NONPERFORMING ASSETS
   LIQUIDITY AND CAPITAL RESOURCES
 LIQUIDITY
  CAPITAL RESOURCES
  June 30, 2005
    
    December 31, 2004(Dollars in thousands)
    
    Amount
    
    Ratio
    
    Amount
    
    RatioFirst State Financial CorporationTier 1 capital
    
    $
    43,257
    
    
    
    15.11
    %
    
    $
    42,282
    
    
    
    18.22
    %Total capital
    
    
    46,231
    
    
    
    16.15
    %
    
    
    45,009
    
    
    
    19.40
    %Tier 1 leverage
    
    
    
    
    
    
    14.07
    %
    
    
    
    
    
    
    16.72
    %First State BankTier 1 capital
    
    
    43,165
    
    
    
    15.08
    %
    
    
    41,732
    
    
    
    17.99
    %Total capital
    
    
    46,139
    
    
    
    16.12
    %
    
    
    44,459
    
    
    
    19.16
    %Tier 1 leverage
    
    
    
    
    
    
    14.04
    %
    
    
    
    
    
    
    16.51
    %
  10




---



##### Table of Contents



Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  (Dollars in thousands)
    
    Interest Rates Decrease
    
    
    Interest Rates
    
    
    Interest Rates Increase200 BP
    
    
    100 BP
    
    
    Remain Constant
    
    
    100 BP
    
    
    200 BPInterest Income
    
    $
    15,760
    
    
    $
    17,070
    
    
    $
    18,032
    
    
    $
    19,659
    
    
    $
    20,907Interest Expense
    
    
    4,844
    
    
    
    5,472
    
    
    
    6,099
    
    
    
    6,726
    
    
    
    7,354Net Interest Income
    
    $
    10,916
    
    
    $
    11,598
    
    
    $
    11,933
    
    
    $
    12,933
    
    
    $
    13,553Change in net income after
tax vs. constant rates
    
    $
    (635
    )
    
    $
    (209
    )
    
    
    
    
    
    $
    623
    
    
    $
    1,010
 
 Item 4. CONTROLS AND PROCEDURES
  11




---



##### Table of Contents



PART II
 
 Item 1.
    
    LEGAL PROCEEDINGS
  
 Item 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 Item 3.
    
    DEFAULTS UPON SENIOR SECURITIES
  
 Item 4.
    
    SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
  Director Nominee
    
    Votes Cast For
    
    Votes WithheldRobert Beymer
    
    
    4,818,727
    
    
    
    37,568Corey Coughlin
    
    
    4,850,129
    
    
    
    6,166Daniel Harrington
    
    
    4,847,112
    
    
    
    9,183Marshall Reynolds
    
    
    4,842,129
    
    
    
    14,166Neal Scaggs
    
    
    4,848,629
    
    
    
    7,666Robert Shell, Jr.
    
    
    4,848,612
    
    
    
    7,683Thomas Wright
    
    
    4,850,129
    
    
    
    6,166
 
 Item 5.
    
    OTHER INFORMATION
  
 Item 6.
    
    EXHIBITS
     12




---



##### Table of Contents



SIGNATURES
  Date:  August 5, 2005FIRST STATE FINANCIAL CORPORATION/s/ Corey J. CoughlinPresident and Chief Executive Officer/s/ Dennis GrinsteinerSenior Vice President and Chief Financial Officer 13