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Filed with Securities and Exchange Commission on March 30, 2005
 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
 FORM 10-K
 ANNUAL REPORT UNDER SECTION 13 OF THE SECURITIES
EXCHANGE ACT OF 1934
 FOR THE FISCAL YEAR ENDED
DECEMBER 31, 2004 Commission File Number (333-60283) FIRST NATIONAL BANCSHARES, INC.
 
 State of Florida
    
    06-1522028(Jurisdiction of Incorporation)
    
    (I.R.S. Employer Identification No.)5817 Manatee Avenue West, Bradenton, Florida 34209(Address of principal office including Zip Code)Registrants telephone number, including area code (941) 794-6969Securities registered under Section 12(b) of the Act:
 Name of each exchangeTitle of each Class
    
    on which registeredCommon
    
    NoneSecurities registered under Section 12(g) of the Act:Common Stock, $.10 par value(Title of Class)
 The number of shares of Common Stock in the Company outstanding on March 14, 2005 was
3,300,593. Indicate by check mark whether the Company (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (
or for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. þ o
 Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrants knowledge, in definitive proxy or information statements incorporated by reference
 in Part III of this Form 10-K or any amendment to this Form 10-K. þ Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). YES o   NO þ State the aggregate market value of the voting and non-voting common equity held by non-affiliates
computed by reference to the price at which the common equity was last sold, or the average bid and
asked price of such common equity, as of the last business day of the registrants most recently
completed second fiscal quarter. The aggregate market value of the voting stock held by
non-affiliates of the company at June 30, 2004, was $49,891,000. DOCUMENTS INCORPORATED BY REFERENCE
    
    Part of Form 10-K intoin this Form 10-K
    
    which incorporatedPortions of the Companys definitive Proxy Statementfor its Annual Meeting of Shareholders to be held May 19, 2005
    
    Part III




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TABLE OF CONTENTS  PART IITEM 1. BUSINESSITEM 2. PROPERTIESITEM 3. LEGAL PROCEEDINGSITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSPART IIITEM 5. MARKET FOR THE COMMON STOCK AND RELATED SECURITY HOLDER MATTERSItem 6. SELECTED FINANCIAL DATAITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSUREITEM 9A. CONTROLS AND PROCEDURESITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANYITEM 11. EXECUTIVE COMPENSATIONITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONSITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICESITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-KSIGNATURESEXHIBIT INDEXEx-10.1 F.I. duPont, III Employment AgreementEx-10.2 Glen W. Fausset Employment AgreementEx-21 Company Subsidiaries- 1st National Bank & TrustEx-31.1 Section 302 CEO CertificationEx-31.2 Section 302 CFO CertificationEx-32.1 Section 906 CEO CertificationEx-32.2 Section 906 CFO CertificationEx-99 Audited Financial Statements    Table of Contents  
 PART I 
 ITEM 1. BUSINESS A. General Development of Business First National Bancshares, Inc. (the Company) is a Bank Holding Company formed in 1998 and
incorporated in the State of Florida. Effective January 1, 1999, the Company merged First National
Bank of Manatee (the Bank) with and into an interim national bank that was a wholly owned
subsidiary of the Company. As a result of that transaction, the Bank became and continues to be a
wholly owned subsidiary of the Company. In April 1999, the Bank changed its name to 1st
National Bank & Trust. The Company has no other subsidiaries. Accordingly, the discussion of the
Companys business and operations will refer solely to the Bank. The Bank is a national banking association opened for business on July 18, 1986. The Bank
engages primarily in the business of attracting deposits from the general public, and originating
real estate, commercial, and consumer loans and managing trust assets. The Banks principal market
area is Manatee County, Florida, located on the western coast of Florida. As a national bank, the Bank is subject to the rules and regulations of the Office of the
Comptroller of the Currency (the Comptroller) and is a member of the Federal Reserve System, with
the primary supervisory authority therein being the Board of Governors. The Banks deposits are
insured by the Federal Deposit Insurance Corporation (FDIC) up to applicable limits, and thus it
is subject to the rules and regulations of the FDIC. The Banks principal office is located at 5817 Manatee Avenue West, Bradenton, Florida 34209,
and its telephone number is (941) 794-6969. B. Financial Information See the Companys audited, consolidated financial statements, attached hereto, for information
for each of the last three fiscal years regarding revenues from external customers, the measure of
profit and loss and total assets. C. Narrative Description of Business (1) Banking Services The Bank offers a wide range of consumer and commercial banking services traditionally offered
by commercial banks, such as personal and commercial checking accounts, negotiable order of
withdrawal (NOW) accounts, certificates of deposit, money market accounts, savings accounts, IRA
accounts, and automatic transfers. These depository services are further complemented by direct
deposit capabilities, night depository services, and bank by mail. The Bank participates in three
national automatic teller machine systems. The Bank also originates a variety of loans, including, but not limited to, commercial and
consumer loans, as well as loans secured by deposit accounts and other marketable collateral. Loans
are also made to enable borrowers to purchase, refinance, construct or improve residential or other
real estate and usually are secured by mortgages on such real estate. All loans are made in
compliance with applicable Federal and State regulations. In December 1994, the Bank received permission from the Office of the Comptroller of the
Currency to open a Trust Department. The Bank hired an experienced trust officer and after a period
of organization began operations and opened the department for solicitation of trust business in
March of 1995. The department showed a profit in 1996, its first full year of operation, and has
been profitable in each subsequent year. In October of 2003, the bank entered into an agreement to
acquire The Trust Company of Florida, a trust bank through merger. In February, 2004, the
shareholders of Trust Company approved the acquisition and the merger was consummated on March 15,
2004. At the time of merger, The Trust Company of Florida had in excess of $84,000,000 in customer
assets and 1st National had more than $108,000,000 in customer assets. At year-end 2004,
the trust department had over $198,000,000 in customer assets which includes assets acquired
through the merger with The Trust Company of Florida effective March 1, 2004. The Bank opened its first branch office in October 1994 at 5324 Gulf Drive, Holmes Beach. The
Bank opened its second branch at the corner of State Road 64 and 48th St. Ct. E. in May 1996. The
branch was also large enough to accommodate the Banks accounting, deposit and loan operations
departments. The Bank purchased a branch location on State Road 70 at the entrance to Braden Woods
Subdivision, which it opened in January 1997. In 1999, the Bank purchased a branch location in
Ellenton at the corner of Highway 301 and Old Tampa Road, which it opened in November 2000. In December 2001, the Bank acquired a future branch location at the corner of 53rd
Avenue West and 36th Street West. The growth of the Bank has been such that in January
of 2000, the Bank moved its operations department to a rented facility adjacent to the State Road
64 branch. In April of 2003, the bank opened a Loan Production Office in downtown Sarasota in an effort
to increase loan volume in the Sarasota market. 1




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(2) Operating Strategy The principal business of the Bank is to attract deposits from the general public and to
invest those funds in various types of loans and other interest-earning assets. Other funds are
provided for the operations of the Bank by proceeds from the sale of investments and loans, from
amortization and repayment of outstanding loans, from borrowings, and from working capital.
Earnings of the Bank depend primarily upon the difference between (1) the interest received by the
Bank from loans, the securities held in its investment portfolio, and other investments and (2)
expenses incurred by the Bank in connection with obtaining funds for lending (including interest
paid on deposits and other borrowings) and expenses relating to day-to-day operations. The primary sources of the Banks funds for lending and for other general business purposes
are the Banks capital, deposits, loan repayments, borrowings and funds provided from operations.
The Bank expects that loan repayments and funds provided from operations will be a relatively
stable sources of funds, while deposit inflows and outflows will be significantly influenced by
prevailing interest rates, money market and general economic conditions. Generally, short-term
borrowings are used to compensate for reductions in normal sources of funds while long-term
borrowings are used to support expanded lending activities. The Banks customers are primarily individuals, professionals, and small and medium size
businesses located in Manatee County. The Banks business is not dominated by any large customer.
The Bank attempts to tailor its services to the needs of its customers. The Banks main office is
at a major intersection in the center of one of Manatee Countys more established residential
areas. Its branch offices are located on Anna Maria Island, a close knit island community, and
along the I-75 corridor in the center of major new residential development. The Bank continually seeks to develop new business through an ongoing program of personal
calls on both current and potential customers; and utilizes traditional local advertising media as
well as direct mailings, telephone contacts, and brochures to promote the Bank and develop loans
and deposits. In addition, the Banks directors have worked and/or lived in Manatee County for many
years and are involved in various local community activities which further promote the Banks image
as a locally-oriented independent institution. In 1994, the Bank decided to add trust services to its list of products. The Banks focus is
on personal trusts and investments although it provides a full range of trust products. In November 1998, the Bank began selling mutual funds, annuities and other life insurance
products. This service is provided to customers seeking investments not available through
traditional bank deposits or Trust Department services. (3) Market Area Manatee County, located on the western coast of Florida, is 41 miles south of Tampa, 26 miles
south of St. Petersburg and 10 miles north of Sarasota. According to the Manatee County Chamber of
Commerce, Manatee County had a residential population of approximately 258,000 in 2000 and many
more seasonal residents. The Bank draws most of its deposit business from within Manatee County and
estimates that more than 90% of its business comes from customers whose businesses or residences
are located within the county. However, the Bank solicits and accepts business from outside of
Manatee County with a meaningful portion of its loan & trust business coming from within Sarasota
County and a lesser portion of its trust business coming from Lake County (Leesburg). For purposes of the Community Reinvestment Act, the Banks Primary Market Area comprises all
of Manatee County. Sarasota County and southern Hillsborough County represent a secondary lending
area. Both the primary and the secondary lending areas meet the purposes of the Comptrollers
Community Reinvestment Act Regulations and do not exclude low and moderate income neighborhoods.
The Bank plans to prudently offer the full range of its services to all residents within its market
area. (4) Competition The banking business in Florida in general, and in Manatee County in particular, is highly
competitive. The Bank competes with other commercial banks in Manatee County and the surrounding
area for all services customarily provided by commercial banks. In addition, the Bank faces
significant competition from non-bank institutions, including savings and loan associations,
finance companies, insurance companies, mortgage companies, mutual funds, credit unions, and other
types of financial institutions. According to the most recent market data, there are approximately
23 deposit taking/lending institutions operating in Manatee County. The Bank currently ranks
fourth in deposits in the market with 6.0% market share. Bank of America, NA ranks first, with a
market share of 28.8%. No other deposit taking/lending institution in Manatee County possesses a
market share over 10%. Competition for deposits may have the effect of increasing rates of
interest the Bank will pay on deposits, which would increase the Banks cost of money and possibly
reduce its net earnings. Competition for loans may have the effect of lowering the rate of
interest the Bank will receive on its loans, which would lower the Banks return on invested assets
and possibly reduce its net earnings. The Banks main office is located adjacent to the Palma Sola Shopping Center at the southeast
corner of 59th Street and Manatee Avenue West. Republic Bank (a Pinellas County community bank),
Gold Bank, and Provident Bank have branches within one block of the Banks principal office. The Banks island office is located on a highly visible corner on
Anna Maria Island. There are two commercial banks located on the island. The Braden River Branch
on highway 64 is 1/2 mile east of a Bank of America branch across from an AmSouth office. The Highway
70 branch is about 1/2 mile east of Bank of America. The Banks Ellenton branch is east of a
Southtrust branch and a Gold Bank branch. 2




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(5) Loan Commitments At December 31, 2004 and 2003, the Bank had commitments to originate and disperse on loans of
approximately $36,347,000 and $34,586,000 respectively. Substantially all of both years figures
include commitments to originate construction real estate loans and pre-approved commercial lines
of credit. The Bank expects that all of the commitments at December 31, 2004 will be exercised
within the current year. In addition, at December 31, 2004 and 2003, the Bank had in place letters
of credit of approximately $1,690,000 and $1,895,000, respectively. The Bank does not expect that
any of the standby letters of credit in place at December 31, 2004 will be exercised within the
current year. The Bank had no commitments to purchase loans at December 31, 2004 and 2003. (6) Financial History The Bank first opened to the public on July 18, 1986. As of December 31, 2004, the Company had
total assets of $317,607,000 compared with total assets of $277,232,000 at December 31, 2003 and
$222,161,000 of total assets at December 31, 2002. At year-end 2004, the Company had total deposits
of $268,782,000, compared with Bank deposits of $233,327,000 at year end 2003 and $180,511,000 of
total deposits at year end 2002. In addition, the Company had loans of $236,180,000 at the end of
2004, compared with $206,742,000 of loans in the Bank at the end of 2003 and $158,530,000 of loans
at the end of 2002. For more detailed financial information see Managements Discussion and
Analysis of Financial Condition and Results of Operations and the financial statements and related
notes thereto appearing elsewhere in this Annual Report. (7) Employees At December 31, 2004, the Company had no direct employees. The Bank employed 91 people, of
which three were executive officers, and six were part-time employees. The Companys employees are
not represented by a collective bargaining group, and the Company considers its relations with its
employees to be excellent. The Company provides employee benefits customary in the banking
industry, which include major medical insurance, group term life insurance, a defined benefit
pension plan, a 401-K plan, and vacation and sick leave. (8)Supervision and Regulation General First National Bancshares, Inc. is a corporation organized under the laws of the State of Florida.
The business in which the Company and its subsidiary are engaged is subject to extensive
supervision, regulation and examination by various bank regulatory authorities. The supervision,
regulation and examination to which the Company and its subsidiary are subject are intended
primarily for the protection of depositors and the deposit insurance funds that insure the deposits
of banks, rather than for the protection of shareholders. Several of the more significant regulatory provisions applicable to banks and bank holding
companies to which the Company and its subsidiary are subject are discussed below, along with
certain regulatory matters concerning the Company and its subsidiary. To the extent that the
following information describes statutory or regulatory provisions, it is qualified in its entirety
by reference to the particular statutory provisions. Any change in applicable law or regulation
may have a material effect on the business and prospects of the Company and its subsidiary. Regulatory Agencies The Company, upon approval from the Board of Governors of the Federal Reserve System (the Federal
Reserve Board), is a registered bank holding company subject to regulation under the Bank Holding
Company Act of 1956 (the BHCA) and to inspection, examination and supervision by the Federal
Reserve Board. The Bank is a national banking association chartered under the laws of the United States of
America. It is subject to regulation and examination primarily by the Office of the Comptroller of
the Currency (the OCC) and secondarily by the Federal Reserve Board and the FDIC. The Holding Company 3




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Investments and Activities. Under the BHCA, a bank holding company must obtain Federal
Reserve Board approval before acquiring substantially all the assets of any bank or bank holding
company or ownership or control of any voting shares of any bank or bank holding company if, after
such acquisition, it would own or control, directly or indirectly, more than five percent (5%) of
the voting shares of such bank or bank holding company. The BHCA also prohibits the Company, with
certain limited exceptions, from acquiring direct or indirect ownership or control of more than 5%
of the voting shares of any company which is not a bank or bank holding company, and from engaging
in any business other than that of banking, managing and controlling banks or furnishing services
to banks and their subsidiaries. The principal exception to this prohibition allows bank holding
companies to engage in, and to own shares of companies engaged in, certain businesses found by the
Federal Reserve Board to be so closely related to banking as to be a proper incident thereto. Affiliate Transactions. Various governmental requirements, including Sections 23A
and 23B of the Federal Reserve Act, limit borrowings by holding companies and other non-bank
subsidiaries from affiliated insured depository institutions, and also limit other transactions
between holding companies and their non-bank subsidiaries and their affiliated insured depository
institutions. Section 23A of the Federal Reserve Act generally requires that an insured depository
institutions loan to its non-bank affiliates be secured, and Section 23B of the Federal Reserve
Act generally requires that an insured depository institutions transactions with its non-bank
affiliates be on arms-length terms. Control Acquisitions. The Change in Bank Control Act prohibits a person or group of
persons from acquiring control of a bank holding company unless the Federal Reserve Board has
been notified and has not objected to the transaction. Under the rebuttable presumption
established by the Federal Reserve Board, the acquisition of 10% or more of a class of voting stock
of a bank holding company with a class of securities registered under Section 12 of the Exchange
Act, such as the Company, would, under the circumstances set forth in the presumption, constitute
acquisition of control of the bank holding company. Gramm-Leach-Bliley Act. The Financial Services Modernization Act of 1999, better known as
the Gramm-Leach-Bliley Act (the GLB), permits bank holding companies to become financial holding
companies and thereby affiliate with securities firms and insurance companies and engage in other
activities that are financial in nature. A bank holding company may become a financial holding
company if each of its subsidiary banks is well capitalized, well managed, and has at least a
satisfactory rating under the Community Reinvestment Act. No regulatory approval will be required
for a financial holding company to acquire a company, other than a bank or savings association,
engaged in activities that are financial in nature or incidental to activities that are financial
in nature, as determined by the Federal Reserve Board. The GLB defines financial in nature to
include securities underwriting, dealing and market making; sponsoring mutual funds and investment
companies; insurance underwriting and agency; merchant banking activities; and activities that the
Federal Reserve Board has determined to be closely related to banking. The Company has not elected
to become a financial holding company under this new regulatory framework. The Sarbanes-Oxley Act of 2002. The Sarbanes-Oxley Act of 2002 contains important new
requirements for public companies in the area of financial disclosure and corporate governance. In
accordance with section 302(a) of the Sarbanes-Oxley Act, written certifications by the Companys
chief executive officer and chief financial officer are now required which attest that the
Companys quarterly and annual reports filed with the SEC do not contain any untrue statement of a
material fact. Additionally, the Chief Executive Officer and Chief Financial Officer are now
required to certify that the Company has effective disclosure controls and procedures, and, in
accordance with Section 404 of the Sarbanes-Oxley Act, the Company is also in the process of
implementing a new program designed to monitor the Companys internal control over financial
reporting. This new program will include the identification of significant processes and accounts,
documentation of the design of control effectiveness over process and entity level controls, and
testing of the operating effectiveness of key controls over financial reporting. This program must
be fully implemented for the preparation of the Companys annual report for its fiscal year ended
December 31, 2006. See Item 8A of the Companys annual report on Form 10-K for more information
regarding managements evaluation of the Companys disclosure controls and procedures, and the
Companys internal control over financial reporting. The Bank Interstate Banking and Branching. Under the Riegle-Neal Interstate Banking and
Branching Efficiency Act (Riegle-Neal), subject to certain concentration limits and other
requirements, bank holding companies such as the Company are permitted to acquire banks and bank holding companies located in any state. Any bank that is a subsidiary of a
bank holding company is permitted to receive deposits, renew time deposits, close loans, service
loans and receive loan payments as an agent for any other bank subsidiary of that bank holding
company. Banks are permitted to acquire branch offices outside their home states by merging with
out-of-state banks, purchasing branches in other states and establishing de novo branch offices in
other states. The ability of banks to acquire branch offices or merge with a bank located in
another state is contingent, however, on the host state having adopted legislation opting in to
the provisions of Riegle-Neal. 4




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Control Acquisitions. The Change in Bank Control Act prohibits a person or group of
persons from acquiring control of a bank holding company, unless the Federal Reserve Board has
been notified and has not objected to the transaction. Under the rebuttable presumption
established by the Federal Reserve Board, the acquisition of 10% or more of a class of voting stock
of a bank holding company with a class of securities registered under Section 12 of the Exchange
Act, such as the Company, would, under the circumstances set forth in the presumption, constitute
acquisition of control of the bank holding company. In addition, a company is required to obtain
the approval of the Federal Reserve Board under the Bank Holding Company Act before acquiring 25%
(5% in the case of an acquiror that is a bank holding company) or more of any class of outstanding
voting stock of a bank holding company, or otherwise obtaining control or a controlling influence
over that bank holding company. Liability for Banking Subsidiaries. Under the current Federal Reserve Board policy, a
bank holding company is expected to act as a source of financial and managerial strength to each of
its subsidiary banks and to maintain resources adequate to support each subsidiary bank. This
support may be required at times when the bank holding company may not have the resources to
provide it. In the event of a bank holding companys bankruptcy, any commitment by the bank
holding company to a U.S. federal bank regulatory agency to maintain the capital of a subsidiary
bank would be assumed by the bankruptcy trustee and entitled to priority of payment. Capital Requirements.The OCC, Federal Reserve Board and FDIC require banks and
holding companies to maintain minimum capital ratios. The risk-adjusted capital guidelines for
the Bank and the Company involve a mathematical process of assigning various risk weights to
different classes of assets, then evaluating the sum of the risk-weighted balance sheet structure
against the Banks and Companys capital base. The rules set the minimum guidelines for the ratio
of capital to risk-weighted assets (including certain off-balance sheet activities, such as standby
letters of credit) at 8%. Tier 1 Capital is comprised of common equity, retained earnings, and a
limited amount of perpetual preferred stock less certain intangible items. At least half of the
total capital is to be Tier 1 Capital. The remainder may consist of a limited amount of
subordinated debt, other preferred stock, and a portion of the loan loss reserves (not to exceed
1.25% of risk-weighted assets). The Bank anticipates maintaining capital at a level sufficient to
be classified as well capitalized pursuant to the Federal Reserve guidelines. In addition, the
federal banking regulatory agencies have adopted leverage capital guidelines for banks and bank
holding companies. Under these guidelines, banks and bank holding companies must maintain a
minimum ratio of three percent (3%) Tier 1 Capital to total assets. However, most banking
organizations are expected to maintain capital ratios well in excess of the minimum level and
generally must keep their Tier 1 ratio at or above 5%. The Bank intends to maintain capital well
above the regulatory minimum. The capital requirements described above are minimum requirements. Higher capital levels will
be required if warranted by the particular circumstances or risk profiles of individual
institutions. For example, the regulations provide that additional capital may be required to take
adequate account of, among other things, interest rate risk or the risks posed by concentrations of
credit, nontraditional activities or securities trading activities. In addition to the minimum regulatory capital requirements discussed above, provisions
contained in the Federal Deposit Insurance Corporation Improvement Act (FDICIA) expressly provide
for certain supervisory actions which are directly keyed to the capital levels of an insured
depository institution. These prompt corrective action provisions impose progressively more
restrictive constraints on operations, management and capital distributions of a particular
institution as its regulatory capital decreases. Using Tier 1 risk-based, total risk-based, and
Tier 1 leverage capital ratios as the relevant measures, FDIC insured depository institutions are
grouped into one of the following five prompt corrective action capital categories: well
capitalized, adequately capitalized; undercapitalized; significantly undercapitalized; and
critically undercapitalized. An institution is considered well capitalized if it has a total
risk-based capital ratio of at least 10%, a Tier 1 risk-based capital ratio of at least 6% and a
Tier 1 leverage capital ratio of at least 5%, provided, however, such institution is not subject to
a written advisement, order or capital directive to meet and maintain a specific capital level for
any particular capital measure. An adequately capitalized institution must have a total risk-based
capital ratio of at least 8%, a Tier 1 risk-based capital ratio of at least 4% and a Tier 1
leverage capital ratio of at least 4% (3% if the institution has achieved the highest composite
rating in its most recent examination). The required capital levels and the Companys capital position at December 31, 2004 are
summarized in the table included in Note 14 to the consolidated financial statements. Dividend Restrictions. The ability of the Company to obtain funds for the payment of
dividends and for other cash requirements will be largely dependent on the amount of dividends
which may be declared by its banking subsidiary. Various U.S. federal statutory 5




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provisions limit the amount of dividends the Companys banking subsidiaries can pay to the Company without
regulatory approval. Dividend payments by national banks are limited to the lesser of (1) the
level of undivided profits; (2) the amount in excess of which the bank ceases to be at least
adequately capitalized; and (3) absent regulatory approval, an amount not in excess of net income
for the current year combined with retained net income for the preceding two years. In addition,
U.S. federal bank regulatory authorities have authority to prohibit the Companys banking
subsidiary from engaging in an unsafe or unsound practice in conducting their business. The
payment of dividends, depending upon the financial condition of the bank in question, could be
deemed to constitute an unsafe or unsound practice. The ability of the Companys banking
subsidiary to pay dividends in the future is currently, and could be further, influenced by bank
regulatory policies and capital guidelines. Deposit Insurance Assessments. The deposits of the Companys banking subsidiary are
insured up to regulatory limits by the FDIC, and, accordingly, are subject to deposit insurance
assessments to maintain the Bank Insurance Fund (the BIF) and/or the Savings Association
Insurance Fund (the SAIF) administered by the FDIC. Depositor Preference. The Federal Deposit Insurance Act provides that, in the event
of the liquidation or other resolution of an insured depository institution, the claims of
depositors of the institution, including the claims of the FDIC as subrogee of insured depositors,
and certain claims for administrative expenses of the FDIC as a receiver, will have priority over
other general unsecured claims against the institution. If an insured depository institution fails,
insured and uninsured depositors, along with the FDIC, will have priority in payment ahead of
unsecured, non deposit creditors and shareholders of the institution. Privacy Provisions of Gramm-Leach-Bliley Act. Under GLB, federal banking regulators
adopted rules that limit the ability of banks and other financial institutions to disclose
non-public information about consumers to non-affiliated third parties. These limitations require
disclosure of privacy policies to consumers and, in some circumstances, allow consumers to prevent
disclosure of certain personal information to non-affiliated third parties. The privacy provisions
of GLB affect how consumer information is transmitted through diversified financial companies and
conveyed to outside vendors. Anti-Money Laundering Provisions of the USA Patriot Act of 2001. On October 26, 2001,
the USA Patriot Act of 2001 (the Patriot Act) was signed into law. The Patriot Act is intended to
strengthen U.S. law enforcements and the intelligence communitys ability to work cohesively to
combat terrorism on a variety of fronts. The potential impact of the Patriot Act on financial
institutions of all kinds is significant and wide-ranging. The Patriot Act contains sweeping
anti-money laundering and financial transparency laws and requires various regulations, including:
(a) due diligence requirements for financial institutions that administer, maintain, or manage
private bank accounts or correspondent accounts for non-U.S. persons; (b) standards for verifying
customer identification at account opening; and (c) rules to promote cooperation among financial
institutions, regulators and law enforcement entities in identifying parties that may be involved
in terrorism or money laundering. Fiscal and Monetary Policies. The Banks business and earnings are affected
significantly by the fiscal and monetary policies of the federal government and its agencies. The
Bank is particularly affected by the policies of the FRB, which regulates the supply of money and
credit in the United States. Among the instruments of monetary policy available to the Federal
Reserve are (a) conducting open market operations in United States government securities, (b)
changing the discount rates of borrowings of depository institutions, (c) imposing or changing
reserve requirements against depository institutions deposits, and (d) imposing or changing
reserve requirements against certain borrowing by banks and their affiliates. These methods are
used in varying degrees and combinations to affect directly the availability of bank loans and
deposits, as well as the interest rates charged on loans and paid on deposits. For that reason
alone, the policies of the FRB have a material effect on the earnings of the Bank. Additional Regulation. The Bank is also subject to federal regulation as to such matters
as required reserves, limitation as to the nature and amount of its loans and investments,
regulatory approval of any merger or consolidation, issuance or retirement of their own
securities, limitations upon the payment of dividends and other aspects of banking
operations. In addition, the activities and operations of the Bank are subject to a number
of additional detailed, complex and sometimes overlapping laws and regulations. These
include state usury and consumer credit laws, state laws relating to fiduciaries, the Federal
Truth-in-Lending Act and Regulation Z, the Federal Equal Credit Opportunity Act and Regulation B, the Fair Credit Reporting Act, the
Truth in Savings Act, the Community Reinvestment Act, anti-redlining legislation and
antitrust laws. Future Legislation. Changes to the laws and regulations, both at the federal level
and in the states where the Company and its subsidiary do business, can affect the operating
environment of the Company and its subsidiary in substantial and unpredictable ways. The 6




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##### Table of Contents



Company cannot accurately predict whether those changes in laws and regulations will occur, and, if those
changes occur, the ultimate effect they would have upon the financial condition or results of
operations of the Company or its subsidiary. 
 ITEM 2. PROPERTIES First National Bancshares, Inc.s corporate office is located in the main office of the Bank
at 5817 Manatee Avenue West. This facility is a two story building of approximately 6,000 square
feet, which is adjacent to the Palma Sola Shopping Center. The Bank moved into the building on
August 17, 1987 under a lease agreement and purchased the building in January of 2002. In addition to its main office, the Bank has branch offices in the following locations: 4770
State Road 64 East; 9000 State Road 70 East; 8425 US 301 North, Parrish; 5324 Gulf Drive, Holmes
Beach. The Bank has owned all of these branch locations since their respective openings. The Bank
believes that over time, this will reduce the banks operating expenses by eliminating the
financing costs of the landlord and the CPI increases that are incorporated into long term leases.
In addition, the bank occupies leased space in downtown Sarasota for a loan production office. All of the Banks branches are growing in their respective markets. The branch facilities
have proven to be suitable, adequate and effective as banking facilities and the Bank expects to
continue to utilize them fully. 
 ITEM 3. LEGAL PROCEEDINGS There are no material pending legal proceedings, other than ordinary routine proceedings
incidental to the business of the Bank or the Company, to which we are a party or of which any of
our properties are the subject. 7




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##### Table of Contents



ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matter was submitted for approval by the Companys shareholders during the fourth quarter
of the fiscal year ended December 31, 2004. 
 PART II 
 ITEM 5. MARKET FOR THE COMMON STOCK AND RELATED SECURITY HOLDER MATTERS As a result of the acquisition of the Bank by First National Bancshares, Inc. on January 1,
1999 the then shareholders of the Bank now own 2 shares of Company stock for each share of Bank
stock previously held. Upon the consummation of the acquisition, all Bank Common Stock was held by
the Company and all previous shareholders of the Bank became shareholders in the Company.
Effective October 1, 2002, the Company stock began trading on the NASDAQ small Cap Market under the
symbol FBMT. The following table shows the high and low bid prices for each quarter of 2003 and
2004 after adjusting for the 5% stock dividends in each year and the three for two split in 2004. Years Ended December 31,2004
    
    
    2003Fourth
    
    
    Third
    
    
    Second
    
    
    First
    
    
    Fourth
    
    
    Third
    
    
    Second
    
    
    FirstQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    QuarterMarket Price RangeHigh
    
    $
    26.40
    
    
    $
    28.20
    
    
    $
    22.54
    
    
    $
    23.49
    
    
    $
    14.86
    
    
    $
    13.90
    
    
    $
    14.00
    
    
    $
    14.81Low
    
    $
    24.00
    
    
    $
    19.40
    
    
    $
    16.51
    
    
    $
    14.33
    
    
    $
    12.91
    
    
    $
    11.85
    
    
    $
    12.81
    
    
    $
    12.08
 As of March 21, 2005, there were 938 holders of record of the Common Stock of the Company. The Bank paid its first and only cash dividend of $.15 per share in 1991. In 1994 through
1998, the Bank paid annual stock dividends equal to 5% of the shares outstanding each time. On
January 1, 1999, the Banks stock was exchanged two for one for Company stock. On June 30, 2004,
the Company had a 3 for 2 stock split. The Company also paid 5% stock dividends in 1999 thru 2004.
Future dividends, if any, will be paid to the Company. Future dividend payments to the holders of
Common Stock of the Company will be at the discretion of the Board of Directors of the Company and
will depend upon factors such as results of operations, capital requirements, regulatory
restrictions, tax considerations and general economic conditions. The Banks capital requirements
to open branches or acquire other institutions may also impact the Banks ability to make dividend
distributions to the Company thus affecting the Companys ability to pay dividends. Additionally,
under certain circumstances, approval of the Comptroller may be required prior to the payment of
any dividends by the Bank, which would in turn affect the Companys ability to pay dividends to its
shareholders. Future payment of dividends by the Bank to the Company and the Company to its
shareholders cannot be guaranteed. A description of certain restrictions imposed upon the Banking
Industry by the Comptroller with respect to the declaration and payment of dividends to the Company
is included in notes to the audited financial statements attached hereto. During the 4th Quarter of 2004, the Company did not repurchase any of its outstanding
common shares. 8




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##### Table of Contents



Equity Compensation Plan Information In 1995, the shareholders of the Bank approved an Incentive Stock Option Plan for key officers and
employees of the Bank to be administered by the Board of Directors of the Bank. In 2000, the
shareholders approved a renewal of that plan. Under the plan, and at the discretion of the Board,
deserving officers and employees of the Bank are awarded stock options at the current fair market
value of the stock. When the Company, as a bank holding company acquired the Bank, it assumed the
duties and responsibilities of the plan from the Bank. The following table summarizes the shares
outstanding under the plan and the shares remaining in the plan. Number of securitiesremaining available forNumber of securities to be
    
    
    
    
    
    
    future issuance under equityissued upon exercise of
    
    
    Weighted-average exercise
    
    
    compensation plansoutstanding options,
    
    
    price of outstanding options,
    
    
    (excluding securitieswarrants and rights
    
    
    warrants and rights
    
    
    reflected in column (a)Plan Category
    
    (a)
    
    
    (b)
    
    
    (c)Equity compensation
plans approved by
security holders
    
    
    205,073
    
    
    $
    11.48
    
    
    
    255,483Equity compensation
plans not approved
by security holders
    
    
    0
    
    
    
    0
    
    
    
    0Total
    
    
    205,073
    
    
    $
    11.48
    
    
    
    255,483
 The shares reserved for issuance pursuant to options granted under the plan have not been
registered under the Federal securities laws in reliance upon an exemption from the registration
requirements provided by Section 3(a)(11) of the Securities Act of 1933 for intra-state offerings.
In 2004, the Company issued options for the purchase of 27,000 common shares, which grants had a
weighted average exercise price of $25.05 per common share. Additionally, options for the purchase
of 30,000 common shares were exercised in 2004 for the aggregate cash consideration of $378,600. 9




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##### Table of Contents



Item 6. SELECTED FINANCIAL DATA SELECTED INCOME DATAYears Ended December 31,
(000s except per share & dividend data) 2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000Interest income
    
    $
    15,760
    
    
    $
    12,617
    
    
    $
    13,026
    
    
    $
    14,164
    
    
    $
    13,812Interest expense
    
    
    4,305
    
    
    
    3,144
    
    
    
    3,796
    
    
    
    6,699
    
    
    
    7,334Net interest income
    
    
    11,455
    
    
    
    9,473
    
    
    
    9,230
    
    
    
    7,465
    
    
    
    6,477Provision for loan losses
    
    
    314
    
    
    
    448
    
    
    
    321
    
    
    
    250
    
    
    
    152Net interest income after
Provision for loan losses
    
    
    11,141
    
    
    
    9,025
    
    
    
    8,909
    
    
    
    7,215
    
    
    
    6,325Other non-interest income
    
    
    2,315
    
    
    
    1,867
    
    
    
    1,645
    
    
    
    1,847
    
    
    
    1,342Other non-interest expenses
    
    
    8,511
    
    
    
    7,621
    
    
    
    6,672
    
    
    
    6,209
    
    
    
    5,522Income before income taxes
    
    
    4,945
    
    
    
    3,271
    
    
    
    3,882
    
    
    
    2,852
    
    
    
    2,146Provision for income taxes
    
    
    1,764
    
    
    
    1,120
    
    
    
    1,348
    
    
    
    975
    
    
    
    666Net income (loss)
    
    $
    3,181
    
    
    $
    2,151
    
    
    $
    2,534
    
    
    $
    1,877
    
    
    $
    1,480Earnings per share *
    
    $
    0.98
    
    
    $
    0.69
    
    
    $
    0.83
    
    
    $
    0.62
    
    
    $
    0.49Diluted Earnings per share*
    
    $
    0.92
    
    
    $
    0.64
    
    
    $
    0.77
    
    
    $
    0.58
    
    
    $
    0.46Cash dividends declared
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/AStock dividends declared
    
    
    5
    %
    
    
    5
    %
    
    
    5
    %
    
    
    5
    %
    
    
    5
    %
 SELECTED BALANCE SHEET DATAYEAR ENDED DECEMBER 31
(000s except per share & outstanding share data) 2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000Total assets
    
    $
    317,607
    
    
    $
    277,232
    
    
    $
    222,161
    
    
    $
    212,471
    
    
    $
    197,043Average total assets
    
    
    300,333
    
    
    
    236,581
    
    
    
    214,652
    
    
    
    203,218
    
    
    
    185,789Net investment securities
    
    
    59,497
    
    
    
    47,113
    
    
    
    41,781
    
    
    
    37,903
    
    
    
    41,061Net loans
    
    
    233,395
    
    
    
    204,314
    
    
    
    156,590
    
    
    
    144,302
    
    
    
    135,932Total deposits
    
    
    268,782
    
    
    
    233,327
    
    
    
    180,512
    
    
    
    175,849
    
    
    
    170,271Repurchase agreements &
other borrowed money
    
    
    20,593
    
    
    
    20,801
    
    
    
    20,311
    
    
    
    17,966
    
    
    
    9,918Capital lease obligation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    414
    

    
    
    462Total stockholders equity
    
    
    26,855
    
    
    
    22,015
    
    
    
    19,996
    
    
    
    17,047
    
    
    
    14,635Book value per share *
    
    
    8.17
    
    
    
    7.01
    
    
    
    6.55
    
    
    
    5.62
    
    
    
    4.84Average total equity
    
    
    24,850
    
    
    
    21,185
    
    
    
    18,571
    
    
    
    16,022
    
    
    
    14,293Average common shares
Outstanding *
    
    
    3,254
    
    
    
    3,132
    
    
    
    3,043
    
    
    
    3,029
    
    
    
    3,021
   *
    Retroactively adjusted for 5% stock dividends paid in 2000 thru 2004 and a three for two stock split
in 2004. 10




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##### Table of Contents



Distribution of Assets, Liabilities and Stockholders Equity; Interest Rates and Interest
Differential: DECEMBER 31(000s)2004
    
    
    2003
    
    
    2002AVERAGE
    
    
    
    
    
    
    YIELD/
    
    
    AVERAGE
    
    
    
    
    
    
    YIELD/
    
    
    AVERAGE
    
    
    
    
    
    
    YIELD/BALANCE
    
    
    INTEREST
    
    
    RATE
    
    
    BALANCE
    
    
    INTEREST
    
    
    RATE
    
    
    BALANCE
    
    
    INTEREST
    
    
    RATEInterest-earning assets:Loans*
    
    $
    223,633
    
    
    $
    13,785
    
    
    
    6.16
    %
    
    $
    169,677
    
    
    $
    10,933
    
    
    
    6.44
    %
    
    $
    154,238
    
    
    $
    10,987
    
    
    
    7.12
    %Taxable investment
Securities
    
    $
    42,507
    
    
    $
    1,494
    
    
    
    3.51
    %
    
    $
    32,650
    
    
    $
    1,210
    
    
    
    3.71
    %
    
    $
    31,102
    
    
    $
    1,550
    
    
    
    4.98
    %Tax-exempt investment
Securities
    
    $
    9,206
    
    
    $
    341
    
    
    
    3.70
    %
    
    $
    10,122
    
    
    $
    377
    
    
    
    3.72
    %
    
    $
    8,627
    
    
    $
    387
    
    
    
    4.49
    %Other Securities
    
    $
    1,238
    
    
    $
    51
    
    
    
    4.12
    %Federal funds sold &
Interest bearing bank
Balances
    
    $
    7,348
    
    
    $
    89
    
    
    
    1.21
    %
    
    $
    8,866
    
    
    $
    96
    
    
    
    1.08
    %
    
    $
    6,612
    
    
    $
    102
    
    
    
    1.54
    %Total interest-earning assets
    
    $
    283,932
    
    
    $
    15,760
    
    
    
    5.55
    %
    
    $
    221,315
    
    
    $
    12,616
    
    
    
    5.70
    %
    
    $
    200,579
    
    
    $
    13,026
    
    
    
    6.49
    %Non-interest-earning assets:Cash and due from banks
    
    $
    8,293
    
    
    
    
    
    
    
    
    
    
    $
    6,985
    
    
    
    
    
    
    
    
    
    
    $
    5,813Premises and equipment (net)
    
    $
    7,583
    
    
    
    
    
    
    
    
    
    
    $
    7,884
    
    
    
    
    
    
    
    
    
    
    $
    8,101Other assets
    
    $
    3,046
    
    
    
    
    
    
    
    
    
    
    $
    2,450
    
    
    
    
    
    
    
    
    
    
    $
    1,989Less allowance for loan
losses, deferred fees &
securities market valuation
    
    $
    (2,521
    )
    
    
    
    
    
    
    
    
    (
    $
    2,053
    )
    
    
    
    
    
    
    
    
    (
    $
    1,830
    )TOTAL
    
    $
    300,333
    
    
    
    
    
    
    
    
    
    
    $
    236,581
    
    
    
    
    
    
    
    
    
    
    $
    214,652
 11




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##### Table of Contents



DECEMBER 31(000s)2004
    
    
    2003
    
    
    2002AVERAGE
    
    
    
    
    
    
    YIELD/
    
    
    AVERAGE
    
    
    
    
    
    
    YIELD/
    
    
    AVERAGE
    
    
    
    
    
    
    YIELD/BALANCE
    
    
    INTEREST
    
    
    RATE
    
    
    BALANCE
    
    
    INTEREST
    
    
    RATE
    
    
    BALANCE
    
    
    INTEREST
    
    
    RATELIABILITIES AND STOCKHOLDERS EQUITYInterest-bearing liabilities:Demand deposits
    
    $
    45,120
    
    
    $
    252
    
    
    
    0.56
    %
    
    $
    36,960
    
    
    $
    194
    
    
    
    0.52
    %
    
    $
    29,505
    
    
    $
    164
    
    
    
    0.56
    %Savings deposits
    
    $
    85,809
    
    
    $
    946
    
    
    
    1.10
    %
    
    $
    63,031
    
    
    $
    579
    
    
    
    0.92
    %
    
    $
    55,207
    
    
    $
    753
    
    
    
    1.36
    %Time deposits
    
    $
    92,213
    
    
    $
    2,516
    
    
    
    2.73
    %
    
    $
    67,207
    
    
    $
    1,988
    
    
    
    2.96
    %
    
    $
    63,272
    
    
    $
    2,315
    
    
    
    3.66
    %Federal funds purchased &
other borrowed money
    
    $
    15,331
    
    
    $
    504
    
    
    
    3.29
    %
    
    $
    5,984
    
    
    $
    226
    
    
    
    3.78
    %
    
    $
    6,340
    
    
    $
    310
    
    
    
    4.89
    %Repurchase agreements
    
    $
    5,174
    
    
    $
    87
    
    
    
    1.68
    %
    
    $
    15,985
    
    
    $
    157
    
    
    
    0.98
    %
    
    $
    17,131
    
    
    $
    252
    
    
    
    1.47
    %Other
    
    $
    0
    
    
    $
    0
    
    
    
    N/A
    
    
    $
    0
    
    
    $
    0
    
    
    
    N/A
    
    
    $
    6
    
    
    $
    1
    
    
    
    16.67
    %Total interest-bearing
Liabilities
    
    $
    243,647
    
    
    $
    4,305
    
    
    
    1.77
    %
    
    $
    189,167
    
    
    $
    3,144
    
    
    
    1.66
    %
    
    $
    171,461
    
    
    $
    3,795
    
    
    
    2.21
    %Non-interest-bearing liabilities:Demand deposits
    
    $
    30,133
    
    
    
    
    
    
    
    
    
    
    $
    24,760
    
    
    
    
    
    
    
    
    
    
    $
    22,994Other liabilities
    
    $
    1,704
    
    
    
    
    
    
    
    
    
    
    $
    1,469
    
    
    
    
    
    
    
    
    
    
    $
    1,446Total Liabilities
    
    $
    275,483
    
    
    
    
    
    
    
    
    
    
    $
    215,396
    
    
    
    
    
    
    
    
    
    
    $
    195,901Shareholders equity
    
    $
    24,850
    
    
    
    
    
    
    
    
    
    
    $
    21,185
    
    
    
    
    
    
    
    
    
    
    $
    18,751Total
    
    $
    300,333
    
    
    
    
    
    
    
    
    
    
    $
    236,581
    
    
    
    
    
    
    
    
    
    
    $
    214,652Net interest on earnings
    
    
    
    
    
    $
    11,455
    
    
    
    
    
    
    
    
    
    
    $
    9,472
    
    
    
    
    
    
    
    
    
    
    $
    9,231Net yield on interest earning assets
    
    
    
    
    
    
    
    
    
    
    4.03
    %
    
    
    
    
    
    
    
    
    
    
    4.28
    %
    
    
    
    
    
    
    
    
    
    
    4.60
    %
   *
    For the purpose of these computations, non-accruing loans are included in the daily average loan
amounts outstanding 12




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##### Table of Contents



The following table sets forth a summary of the changes in interest and fees earned and interest
paid resulting from changes in volume and changes in rates. 2004 Compared to 2003
    
    
    2003 Compared to 2002Increase (Decrease) Due to *
    
    
    Increase (Decrease) Due to *Volume
    
    
    Rate
    
    
    Net
    
    
    Volume
    
    
    Rate
    
    
    Net(thousands of dollars)Interest earned on:Loans (domestic)
    
    
    3,324
    
    
    
    (472
    )
    
    
    2,852
    
    
    
    1,100
    
    
    
    (1,154
    )
    
    
    (54
    )Taxable investment securities
    
    
    346
    
    
    
    (62
    )
    
    
    284
    
    
    
    77
    
    
    
    (417
    )
    
    
    (340
    )Tax-exempt investment securities
    
    
    (34
    )
    
    
    (2
    )
    
    
    (36
    )
    
    
    67
    
    
    
    (77
    )
    
    
    (10
    )Other Securities
    
    
    50
    
    
    
    0
    
    
    
    50Federal funds sold &
interest bearing balances
    
    
    (18
    )
    
    
    11
    
    
    
    (7
    )
    
    
    35
    
    
    
    (41
    )
    
    
    (6
    )Total interest earning assets
    
    
    3,667
    
    
    
    (524
    )
    
    
    3,143
    
    
    
    1,279
    
    
    
    (1,689
    )
    
    
    (410
    )Interest paid on:Demand deposits
    
    
    (46
    )
    
    
    (12
    )
    
    
    (58
    )
    
    
    41
    
    
    
    (11
    )
    
    
    30Savings deposits
    
    
    (251
    )
    
    
    (116
    )
    
    
    (367
    )
    
    
    107
    
    
    
    (281
    )
    
    
    (174
    )Time deposits
    
    
    (683
    )
    
    
    155
    
    
    
    (528
    )
    
    
    144
    
    
    
    (471
    )
    
    
    (327
    )Federal funds purchased
    
    
    (308
    )
    
    
    30
    
    
    
    (278
    )
    
    
    (17
    )
    
    
    (67
    )
    
    
    (84
    )Repurchase Agreements
    
    
    182
    
    
    
    (112
    )
    
    
    70
    
    
    
    (17
    )
    
    
    (78
    )
    
    
    (95
    )Other
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (1
    )
    
    
    0
    
    
    
    (1
    )Total interest bearing liabilities
    
    
    (1,105
    )
    
    
    (56
    )
    
    
    (1,161
    )
    
    
    257
    
    
    
    (908
    )
    
    
    (651
    )
   * The change in interest due to both volume and rate has been allocated to volume and rate changes
in proportion to the relationship of the absolute dollar amounts of the change in each Investment Portfolio The following table sets forth the carrying amount (book value) of investment securities at the
dates indicated: December 31(thousands of dollars)2004
    
    
    2003
    
    
    2002U.S. Treasury and other U.S.
Government agencies
    
    $
    47,471
    
    
    $
    37,360
    
    
    $
    31,437States and political subdivisions
    
    $
    10,292
    
    
    $
    8,568
    
    
    $
    9,285Other
    
    $
    1,734
    
    
    $
    941
    
    
    $
    1,059TOTAL
    
    $
    59,497
    
    
    $
    46,869
    
    
    $
    41,781




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##### Table of Contents



The following table sets forth the maturities of investment securities at book value on December
31, 2004 and the weighted average yields of such securities calculated on the basis of the cost and
effective yields weighted for the projected life of each security. Tax equivalent adjustments have
not been made in calculating yields on obligations of state and political subdivisions. Mortgage
backed securities are categorized by average life. Callable bonds are categorized by their
projected call date under current market conditions. ----------------Maturing----------------(thousands of dollars)After One But Within
    
    
    After Five But WithinWithin One Year
    
    
    Five Years
    
    
    Ten Years
    
    
    After Ten Years
    
    
    TotalAmount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    Yield
    
    
    Amount
    
    
    YieldU.S. Treasury & Government AgenciesFixed rate
    
    $
    2,000
    
    
    
    2.75
    %
    
    $
    5,491
    
    
    
    3.59
    %
    
    $
    0
    
    
    
    
    
    
    $
    0
    
    
    
    
    
    
    $
    7,491
    
    
    
    3.37
    %Floating Rate
    
    $
    2,000
    
    
    
    8.40
    %
    
    $
    0
    
    
    
    
    
    
    $
    0
    
    
    
    
    
    
    $
    0
    
    
    
    
    
    
    $
    2,000
    
    
    
    8.40
    %U.S. government agencies,
MBSs and CMOsFixed rate
    
    $
    2,374
    
    
    
    3.62
    %
    
    $
    30,197
    
    
    
    3.78
    %
    
    $
    5,136
    
    
    
    4.23
    %
    
    $
    0
    
    
    
    
    
    
    $
    37,707
    
    
    
    3.83
    %Floating rate
    
    $
    0
    
    
    
    
    
    
    $
    273
    
    
    
    2.68
    %
    
    $
    0
    
    
    
    
    
    
    $
    0
    
    
    
    
    
    
    $
    273
    
    
    
    2.68
    %States and political
subdivisions
    
    $
    160
    
    
    
    6.51
    %
    
    $
    6,234
    
    
    
    5.53
    %
    
    $
    3,898
    
    
    
    5.50
    %
    
    $
    0
    
    
    
    
    
    
    $
    10,292
    
    
    
    5.53
    %TOTAL
    
    $
    6,534
    
    
    
    4.89
    %
    
    $
    42,195
    
    
    
    4.01
    %
    
    $
    9,034
    
    
    
    4.78
    %
    
    $
    0
    
    
    
    
    
    
    $
    57,763
    
    
    
    4.23
    %




---



##### Table of Contents



Loan Portfolio The following table shows the maturity of fixed rate loans outstanding as of December 31, 2004.
Also provided are the amounts with maturities beyond one year classified according to the
sensitivity changes in interest rates. These numbers exclude loans on non-accrual. Maturing or Repricing OpportunitiesWithin One
    
    
    After One But
    
    
    After Five YearsYear
    
    
    Within Five
    
    
    Years
    
    
    TotalLoans with:1-4 Family 1st
Mortgages
    
    $
    23,461
    
    
    $
    39,550
    
    
    $
    2,208
    
    
    $
    65,219All Other Loans
    
    $
    55,347
    
    
    $
    99,159
    
    
    $
    16,454
    
    
    $
    170,960Total
    
    $
    78,808
    
    
    $
    138,709
    
    
    $
    18,662
    
    
    $
    236,179
 Non-accrual, Past Due and Restructured Loans The following table summarizes the Banks non-accrual, past due and restructured loans: December 31,(thousands of dollars)2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000Non-accrual loans:
    
    $
    0
    
    
    $
    1,317
    
    
    $
    1,611
    
    
    $
    0
    
    
    $
    0Accruing loans past
due 90 days or more:
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0Restructured loans:
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0Total
    
    $
    0
    
    
    $
    1,317
    
    
    $
    1,611
    
    
    $
    0
    
    
    $
    0Interest Income not collected that would
have been collected under original terms:
    
    $
    0
    
    
    $
    9
    
    
    $
    14
    
    
    $
    0
    
    
    $
    0Commitments to lend additional funds:
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
 Potential Problem Loans At December 31, 2004 the Bank had identified no loans for which payments presently are current but
the borrowers are experiencing or have recently experienced financial difficulties other than the
non-accrual loans. Foreign Outstandings- None. Certain International Developments- None. Loan Concentrations -Loan concentrations are considered to exist when there are amounts lent to a
multiple number of borrowers engaged in similar activities that exceed 10% of total loans and would
cause them to be similarly impacted by economic or other conditions. The Bank currently has no
concentrations of credit. 15




---



##### Table of Contents



Summary of Loan Loss Experience This table summarizes the Banks loan loss experience for the years ended December 31, 2000 thru
2004. 2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000(thousands of dollars)Loan Loss ReserveBalance at January 1
    
    $
    2,067
    
    
    $
    1,704
    
    
    $
    1,551
    
    
    $
    1,373
    
    
    $
    1,254Charge-offs:Commercial and other loans
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Real estate
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    10
    
    
    
    0Installment/consumer
    
    
    23
    
    
    
    101
    
    
    
    182
    
    
    
    73
    
    
    
    34Total Charge-offs
    
    $
    23
    
    
    $
    101
    
    
    $
    182
    
    
    $
    83
    
    
    $
    34Recoveries:Commercial and other loans
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    11
    
    
    
    0Real estate
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Installment/consumer
    
    
    4
    
    
    
    16
    
    
    
    14
    
    
    
    0
    
    
    
    1Total Recoveries
    
    $
    4
    
    
    $
    16
    
    
    $
    14
    
    
    $
    11
    
    
    $
    1Net charge-offs (recoveries)
    
    
    19
    
    
    
    85
    
    
    
    168
    
    
    
    72
    
    
    
    33Additions charged to operations *
    
    
    314
    
    
    
    448
    
    
    
    321
    
    
    
    250
    
    
    
    152Loan Loss ReserveBalance at December 31
    
    $
    2,362
    
    
    $
    2,067
    
    
    $
    1,704
    
    
    $
    1,551
    
    
    $
    1,373Ratio of net charge-offs
to average loans outstanding:
    
    
    0.01
    %
    
    
    0.05
    %
    
    
    0.11
    %
    
    
    0.05
    %
    
    
    0.04
    %
   * The amount charged to operations and the related balance in the allowance for loan losses is based
upon periodic evaluations of the loan portfolio by management. These evaluations consider several
factors including, but not limited to, general economic conditions, loan portfolio composition,
prior loan loss experience, amounts and timing of future cash flows, and managements estimate of
future potential losses. Deposits The average daily amount of deposits and rates paid on such deposits is summarized for the periods
indicated in the following table: AveragesYear Ended December 31(thousands of dollars)2004
    
    
    2003
    
    
    2002Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    RateDomestic bank offices:Non-interest-bearing
demand deposits
    
    $
    30,133
    
    
    
    0
    %
    
    $
    24,760
    
    
    
    0
    %
    
    $
    22,994
    
    
    
    0
    %Interest-bearing demand
Deposits
    
    $
    45,120
    
    
    
    0.56
    %
    
    $
    36,960
    
    
    
    0.52
    %
    
    $
    29,505
    
    
    
    0.56
    %Savings deposits
    
    
    85,809
    
    
    
    1.10
    %
    
    
    63,031
    
    
    
    0.92
    %
    
    
    55,207
    
    
    
    1.36
    %Time deposits
    
    
    92,213
    
    
    
    2.73
    %
    
    
    67,207
    
    
    
    2.96
    %
    
    
    63,272
    
    
    
    3.66
    %Total
    
    $
    253,275
    
    
    
    1.47
    %
    
    $
    191,958
    
    
    
    1.44
    %
    
    $
    170,978
    
    
    
    1.89
    %
 16




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##### Table of Contents



Return on Average Equity and Average Assets The following table shows operating and capital ratios of the Bank for each of the last three
years. Year Ended December 312004
    
    
    2003
    
    
    2002Return on average assets
    
    
    1.06
    %
    
    
    0.91
    %
    
    
    1.18
    %Return on average equity
    
    
    12.80
    %
    
    
    10.20
    %
    
    
    13.60
    %Dividend pay out ratio
    
    
    0.00
    %
    
    
    0.00
    %
    
    
    0.00
    %Average equity to average assets ratio
    
    
    8.27
    %
    
    
    8.95
    %
    
    
    8.74
    %
 Short-Term Borrowings The following table shows the distribution of the Banks short-term borrowings and the weighted
average interest rates thereon at the end of each of the last three years. Also provided are the
maximum amount of borrowings and the average amounts outstanding as well as weighted average
interest rates for the last three years. Overnight FundsPurchased &Securities Sold
    
    
    
    
    
    
    Other ShortUnder Agreements
    
    
    Commercial
    
    
    Termto Repurchase
    
    
    Paper
    
    
    Borrowings(thousands of dollars)Balance at December 31:2004
    
    
    $
    3,343
    
    
    $
    0
    
    
    $
    17,2502003
    
    
    $
    11,301
    
    
    $
    0
    
    
    $
    9,5002002
    
    
    $
    15,811
    
    
    $
    0
    
    
    $
    4,500Weighted average interest rate at year end2004
    
    
    
    2.10
    %
    
    
    0.00
    %
    
    
    3.33
    %2003
    
    
    
    0.94
    %
    
    
    0.00
    %
    
    
    3.49
    %2002
    
    
    
    1.07
    %
    
    
    0.00
    %
    
    
    4.19
    %Maximum amount outstanding at any months end2004
    
    
    $
    11,942
    
    
    
    
    
    
    $
    18,3502003
    
    
    $
    19,730
    
    
    $
    0
    
    
    $
    10,0002002
    
    
    $
    21,295
    
    
    $
    0
    
    
    $
    13,750Average amount outstanding during the year2004
    
    
    $
    5,174
    
    
    $
    0
    
    
    $
    15,3312003
    
    
    $
    16,235
    
    
    $
    0
    
    
    $
    5,7342002
    
    
    $
    17,117
    
    
    $
    0
    
    
    $
    6,334Weighted average interest rate during the year2004
    
    
    
    1.68
    %
    
    
    0.00
    %
    
    
    3.29
    %2003
    
    
    
    0.97
    %
    
    
    0.00
    %
    
    
    3.87
    %2002
    
    
    
    1.47
    %
    
    
    0.00
    %
    
    
    4.89
    %
    17




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##### Table of Contents



ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The purpose of this discussion is to focus on information about the Company and its Bank
subsidiarys financial condition and results of operations which is not otherwise apparent from the
financial statements included in this annual report. Reference should be made to those statements
and the selected financial data presented elsewhere in this report for an understanding of the
following discussion and analysis. FORWARD LOOKING STATEMENTS Statements contained in this portion of the Companys annual report may be forward-looking
statements, as that term is defined in the Private Securities Litigation Reform Act of 1995.
Forward-looking statements may be identified by the use of such words as intend, believe,
expect, anticipate, should, planned, estimated, and potential. Such forward-looking
statements are based on current expectations, but may differ materially from those currently
anticipated due to a number of factors, which include, but are not limited to, factors discussed in
documents filed by the Company with the Securities and Exchange Commission from time to time.
Other factors which could have a material adverse effect on the operations of the Company and its
subsidiaries which include, but are not limited to, changes in interest rates, general economic
conditions, legislative and regulatory changes, monetary and fiscal policies of the U.S.
Government, including policies of the U.S. Treasury and the Federal Reserve Board, the quality and
composition of the loan or investment portfolios, demand for loan products, deposit flows,
competition, demand for financial services in the Banks market area, changes in relevant
accounting principles and guidelines and other factors over which management has no control. The
forward-looking statements are made as of the date of this report, and the Company assumes no
obligation to update the forward-looking statements or to update the reasons why actual results
could differ from those projected in the forward-looking statements. Critical Accounting Policy and Estimates The Companys consolidated financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America, and the Company follows general
practices within the industries in which it operates. At times, the application of these principles
requires Management to make assumptions, estimates and judgments that affect the amounts reported
in the financial statements and accompanying notes. These assumptions, estimates and judgments are
based on information available as of the date of the financial statements. As this information
changes, the financial statements could reflect different assumptions, estimates and judgments.
Certain policies inherently have a greater reliance on assumptions, estimates and judgments and as
such have a greater possibility of producing results that could be materially different than
originally reported. Examples of critical assumptions, estimates and judgments are when assets and
liabilities are required to be recorded at fair value, when a decline in the value of an asset not
required to be recorded at fair value warrants an impairment write-down or valuation reserve to be
established, or when an asset or liability must be recorded contingent upon a future event. All significant accounting policies followed by the Company are presented in Note 1 to the
consolidated financial statements. These policies, along with the disclosures presented in the
notes to the consolidated financial statements and in the management discussion and analysis of
financial condition and results of operations, provide information on how significant assets and
liabilities are valued and how those values are determined for the financial statements. Based on
the valuation techniques used and the sensitivity of financial statement amounts to assumptions,
estimates and judgments underlying those amounts, management has identified the determination of
the Allowance for Loan and Lease Losses (ALLL) as the accounting area that requires the most
subjective or complex judgments, and as such could be the most subject to revision as new
information becomes available. The ALLL represents managements estimate of credit losses inherent in the Banks loan
portfolio at the report date. The estimate is a composite of a variety of factors including past
experience, collateral value, and the general economy. ALLL includes a specific portion, a formula
driven portion, and a general nonspecific portion. The collection and ultimate recovery of the book
value of the collateral, in most cases, is beyond our control. 18




---



##### Table of Contents



For more information regarding the estimates and calculations used to establish the ALLL and
the value of Mortgage Servicing Rights, please see Note 1 to the consolidated financial statements
provided herewith. Financial Condition The Bank (the Companys only subsidiary) functions as a financial intermediary, and as such,
its financial condition should be examined in terms of trends in its sources and uses of funds. The
following comparison of average balances indicates how the Bank has managed its sources and uses of
Sources and Uses of Funds. Comments in this section relate to annual average amounts, not year-end amounts. Average
balances are the average of the monthly averages: Sources and Uses of Funds Trends (thousands of dollars)2004
    
    
    2003
    
    
    2002Average Balance
    
    
    Amount Change
    
    
    % Change
    
    
    Average Balance
    
    
    Amount Change
    
    
    % Change
    
    
    Average BalanceFunding uses:Loans
    
    $
    223,633
    
    
    $
    53,956
    
    
    
    31.80
    %
    
    $
    169,677
    
    
    $
    15,439
    
    
    
    10.00
    %
    
    $
    154,238Taxable investment
Securities
    
    
    42,507
    
    
    
    9,857
    
    
    
    30.19
    %
    
    
    32,650
    
    
    
    1,548
    
    
    
    5.00
    %
    
    
    31,102Tax-exempt investment
Securities
    
    
    9,206
    
    
    
    (916
    )
    
    
    (9.05
    %)
    
    
    10,122
    
    
    
    1,495
    
    
    
    17.30
    %
    
    
    8,627Federal funds sold & Interest
bearing bank
balances
    
    
    7,348
    
    
    
    (1,518
    )
    
    
    (17.12
    %)
    
    
    8,866
    
    
    
    2,254
    
    
    
    34.10
    %
    
    
    6,612Total uses
    
    $
    282,694
    
    
    $
    61,379
    
    
    
    27.73
    %
    
    $
    221,315
    
    
    $
    20,736
    
    
    
    10.30
    %
    
    $
    200,579Funding sources:Demand deposits:Non-interest-bearing
    
    $
    30,133
    
    
    $
    5,373
    
    
    
    21.70
    %
    
    $
    24,760
    
    
    $
    1,766
    
    
    
    7.70
    %
    
    $
    22,994Interest-bearing
    
    
    45,120
    
    
    
    8,160
    
    
    
    22.08
    %
    
    
    36,960
    
    
    
    7,455
    
    
    
    25.30
    %
    
    
    29,505Savings Deposits
    
    
    85,809
    
    
    
    22,778
    
    
    
    36.14
    %
    
    
    63,031
    
    
    
    7,824
    
    
    
    14.20
    %
    
    
    55,207Time deposits
    
    
    92,213
    
    
    
    25,006
    
    
    
    37.21
    %
    
    
    67,207
    
    
    
    3,935
    
    
    
    6.20
    %
    
    
    63,272Federal funds purchased
and other borrowings
    
    
    15,331
    
    
    
    9,347
    
    
    
    156.20
    %
    
    
    5,984
    
    
    
    (362
    )
    
    
    (5.70
    %)
    
    
    6,346Repurchase agreements
    
    
    5,174
    
    
    
    (10,811
    )
    
    
    (67.63
    %)
    
    
    15,985
    
    
    
    (1,146
    )
    
    
    (6.70
    %)
    
    
    17,131Other
    
    
    8,914
    
    
    
    1,526
    
    
    
    20.66
    %
    
    
    7,388
    
    
    
    1,264
    
    
    
    20.60
    %
    
    
    6,124Total sources
    
    $
    282,694
    
    
    $
    61,379
    
    
    
    27.73
    %
    
    $
    221,315
    
    
    $
    20,736
    
    
    
    10.30
    %
    
    $
    200,579
 The Bank uses its funds primarily to support its lending activities. In 2004, the Bank and
consequently, the Company, benefited from the robust Florida economy driven both by low interest
rates and by the rapid population growth. Average loans increased by $53,956,000 or 31.8% in 2004
after increasing by $15,439,000 or 10.0% in 2003. The increase was largely the result of continued
emphasis on lending by Bank management and continued favorable economic conditions in the local
market. These favorable growth trends impacted the banks earnings discussed later under results of
operations. Average taxable bond investments, another use of funds, increased by $9,857,000 or 30.2% in
2004 and are used to provide liquidity for the Bank, while tax-exempt bond investments decreased by
$916,000 or 9.1% and provide enhanced yield due to their special income tax treatment.. The Banks increase in earning assets from 2003 to 2004 was funded by increased deposits. The
Bank sought to grow its loan portfolio in 2004, and to fund this growth, it sought deposits in the
local market place. The lagging stock market and low interest rates combined to make relatively
inexpensive deposits available to the bank. Although deposit growth was from all types of
deposits, the Bank showed the greatest average growth in Savings and Money Market Accounts. 19




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##### Table of Contents



Liquidity and Interest Rate Sensitivity Management The primary function of asset/liability management is to assure adequate liquidity and
maintain an appropriate balance between interest-sensitive earning assets and interest-bearing
liabilities. Liquidity management involves the ability to meet the cash flow requirements of
customers who may be either depositors wanting to withdraw funds or borrowers needing assurance
that sufficient funds will be available to meet their credit needs. Interest rate sensitivity
management seeks to avoid fluctuating net interest margins and to enhance consistent growth of net
interest income through periods of changing interest rates. Marketable investment securities, particularly those of shorter maturities, are a principal
source of asset liquidity. Securities maturing, amortizing or expected to be called within one year
or less amounted to $12,612,000 at December 31, 2004 representing 22% of the investment securities
portfolio, an increase from the 2003 amount of $4,945,000. This is due to the Bank making an effort
to shorten its average bond maturity while rates are low. Shortening the maturity of the portfolio
will have the effect of not locking in investment rates while rates are low. The Bank moderates its liquidity needs by maintaining short term borrowing lines with several
regional banks. At year-end, the Bank had lines of credit established with other banking
institutions totaling $89,200,000. Brokered deposits are deposit instruments, such as certificates of deposit, bank investment
contracts and certain municipal investment contracts that are issued through brokers who then offer
and/or sell these deposit instruments to one or more investors. The Bank does not currently
purchase or sell brokered deposits. Maturities of time certificates of deposit and other time deposits of $100,000 or more, outstanding
at December 31, 2004, are summarized as follows: Time Deposits(thousands of dollars)3 months or less
    
    $
    3,968Over 3 through 6 months
    
    
    9,367Over 6 through 12 months
    
    
    14,996Over 12 through 36 months
    
    
    8,149Over 36 months
    
    
    0Total
    
    $
    36,480
 Interest rate sensitivity varies with different types of interest earning assets and
interest-bearing liabilities. Overnight federal funds, on which rates change daily, and loans,
which are tied to the prime rate, differ considerably from long-term investment securities and
fixed-rate loans. Similarly, time deposits over $100,000 and money market accounts are much more
interest rate sensitive than passbook savings accounts. The shorter term interest rate
sensitivities are key to measuring the interest sensitivity gap, or excess interest-sensitive
earning assets over interest-bearing liabilities. The following table shows the interest sensitivity gaps for four different time intervals as
of December 31, 2004. For the first year, interest-sensitive assets exceed liabilities by
$50,577,000. Over the following two years, liabilities re-price faster than assets. The excess of
interest-bearing liabilities over interest-earning assets for the one-to-three year period is
primarily related to the longer maturities of CDs and NOW and MMA accounts that are regarded as
much less rate sensitive. As of December 31(thousands of dollars)0-90
    
    
    91-365
    
    
    1-3
    
    
    Over 3Days
    
    
    Days
    
    
    Years
    
    
    YearsInterest-sensitive assets
    
    $
    95,668
    
    
    $
    84,132
    
    
    $
    71,094
    
    
    $
    48,715Interest-sensitive liabilities
    
    $
    48,054
    
    
    $
    81,169
    
    
    $
    122,478
    
    
    $
    5,740Interest sensitivity gap
    
    $
    47,614
    
    
    $
    2,963
    
    
    $
    (51,384
    )
    
    $
    42,975Cumulative gap
    
    $
    47,614
    
    
    $
    50,577
    
    
    $
    (807
    )
    
    $
    42,168
 The primary interest sensitive assets and liabilities in the one-year maturity range are loans
and time deposits. Trying to minimize this gap while maintaining earnings is a continual challenge
in a changing interest rate environment and one of the objectives of the Banks asset/liability management strategy.
Management has adopted a philosophy of balancing assets and liabilities over a three-year period,
which it has accomplished. Management 20




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##### Table of Contents



feels that the rate rewards of being balanced over a three-year period more than offset the risk of being modestly unbalanced over the short term. Capital Resources The Bank maintains a strong capital base to take advantage of business opportunities while
ensuring that it has resources to absorb the risks inherent in the business. In January 1989, the Federal Reserve Board released new standards for measuring capital
adequacy for U.S. banking organizations. In general, the standards require banks and bank holding
companies to maintain capital based on risk-adjusted assets so that categories of assets with
potentially higher credit risk will require more capital backing than assets with lower risk. In
addition, banks are required to maintain capital to support, on a risk-adjusted basis, certain
off-balance-sheet activities such as loan commitments. The Federal Reserve Board standards classify capital into two tiers, referred to as Tier 1 and
Tier 2. For the Bank, Tier 1 capital consists of common shareholders equity. Tier 2 capital
consists of allowance for loan and lease losses. All banks must maintain a minimum leverage ratio
of Tier 1 capital to total assets of 3%. To be considered adequately capitalized, banks are
required to meet a minimum ratio of 8% of qualifying total Tier 1 and Tier 2 capital to
risk-adjusted total assets and at least 4% ratio of Tier 1 capital to total assets. The Bank had
corresponding ratios of 11.65% and 8.14% at year-end. Capital that qualifies as Tier 2 capital is
limited to 100% of Tier 1 capital. The table below illustrates the Banks regulatory capital ratios at December 31 2004
    
    
    2003(thousands of dollars)Tier 1 Capital
    
    $
    25,473
    
    
    $
    21,481Tier 2 Capital
    
    $
    2,362
    
    
    $
    2,067Total Qualifying Capital
    
    $
    27,835
    
    
    $
    23,548Risk Adjusted Total Assets
(including off-balance exposures)
    
    $
    238,898
    
    
    $
    204,529Average Total Assets for Leverage Purposes
    
    $
    312,868
    
    
    $
    258,954Tier 1 Risk-Based Capital Ratio
    
    
    10.66
    %
    
    
    10.50
    %Total Risk-Based Capital Ratio
    
    
    11.65
    %
    
    
    11.51
    %Leverage Ratio
    
    
    8.14
    %
    
    
    8.30
    %
 At December 31, 2004, there were no commitments for expenditures that would impact the capital of
the Bank or the Company. Relationship Between Significant Financial Ratios The following table illustrates this relationship where the percent return on equity times the
percent of earnings retained equals the internal capital growth percentage: 2004
    
    
    2003
    
    
    2002Return on average equity
    
    
    12.80
    %
    
    
    10.20
    %
    
    
    13.60
    %Earnings retained
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %Internal capital growth
    
    
    14.45
    %
    
    
    11.10
    %
    
    
    15.10
    %
 From a level of 12.8% in 2001, the rate of internal capital growth has increased to 15.1% in
2002, 11.1% in 2003 and 14.5% in 2004. This increased growth rate is directly related to the
increasing profitability of the Bank. To maintain adequate capital, the Bank and the Company will continue their efforts to maintain
its level of earnings and will give appropriate consideration to capital needs for expansion and
growth before determining annual dividend pay out to the Company or to shareholders. 21




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##### Table of Contents



Results of Operations The Companys net income for 2004 was $3,181,000, an increase of 48% from 2003 earnings of
$2,151,000 and up 26% from 2002 earnings of $2,534,000. On a per share basis, net income for the
similar periods were $.98, $.69 and $.83 after retroactively adjusting for annual 5% stock
dividends and a three for two split in 2004. Despite continued low rates causing the banks rate
margin to narrow slightly in 2004, the banks net interest income grew as a result of the growth in
loans and deposits resulting from the robust local economy. Income improved significantly from 2002 to 2004, despite the growth in overhead due to growth
of the Company and the acquisition of The Trust Company of Florida. In 2003 income was impacted by
low interest rates and the proliferation of refinancing in the real estate markets. The overhead
associated with the replacement of refinanced loans and with the growth of the bank impacted the
banks net profits. However, many of these expenses are non-recurring and the overhead associated
with the loan portfolio returned to more normal levels in 2004. In addition, average loans
outstanding increased significantly in 2004. As a result, net interest income after loan loss
reserve, was up by $2,116,000 for 2004 over 2003. These increased revenues included reduced loan
loss reserve expenses of $134,000 due to lower loan portfolio growth. The average outstanding
loans was up much more significantly than the actual growth because the loans were made late in
2003 and the expenses associated with those loans occurred in 2003 also. Most of this growth and
corresponding expense occurred in the fourth quarter of 2003 and accordingly was too late in that
year to significantly contribute to increased net interest income for 2003 but had significant
impact on the earnings in 2004. Net interest income is the major component of the Banks earning capacity. It represents the
difference or spread between interest income on earning assets (primarily loans, investment
securities and Federal funds sold) and interest expense on interest-bearing liabilities (primarily
deposits). The spread is considered positive when interest-earning assets exceed interest-paying
liabilities. Net interest income is also affected by changes in interest rates earned and interest
rates paid, and by changes in the volume of interest-earning assets and interest-bearing
liabilities. To the extent possible, the Bank follows a strategy intended to insulate the Banks interest
rate spread from adverse changes in interest rates by maintaining spreads through the adjustability
of its earning assets and interest-bearing liabilities. At December 31, 2004, approximately 64% of
the loan portfolio was repriceable or expected to repay within one year. Results of operations can be measured by various ratio analyses. Two widely recognized
performance indicators are return on equity and return on assets. The Banks return on average
equity was 12.8% in 2004, up from 10.2% in 2003, and below the 13.6% of 2002. The Banks returns
on average assets (ROAA) were 1.18% in 2002 and .91% in 2003 to 1.06% in 2004. In 1995, the Board
of Directors adopted a strategy of growth for the Bank knowing that the increased overhead would
impact the Banks earnings for several years. The strategy anticipated that increased revenues
would eventually offset the substantial increase in overhead resulting from branch openings. This
in fact happened in 1997 through 1999. With the slower growth in overhead expenses, earnings
improved during those years. With the opening of the new branch in 2000, some of the overhead
efficiencies were lost, but were regained in 2001 and 2002. Early in 2003, the bank increased
staffing in both the financial product sales staff and in the loan production area. By the fourth
quarter of 2003, both areas began showing significant increases in 2004 in income to the bank. In
addition, the banks acquisition of The Trust Company of Florida in March increased the Companys
trust assets by 78%. By June 30, the majority of the merger related expenses had been absorbed and
the acquisition was adding to the banks earnings. 22




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##### Table of Contents



LOANS Loan Portfolio The following table shows the Banks loans distribution at the end of each of the last five years. December 31,2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000(thousand of dollars)Domestic Loans:Commercial and Other
    
    $
    13,933
    
    
    $
    9,684
    
    
    $
    10,500
    
    
    $
    11,748
    
    
    $
    14,859Real estate-construction
    
    
    10,709
    
    
    
    10,815
    
    
    
    2,509
    
    
    
    5,053
    
    
    
    2,267Real estate - Residential
    
    
    74,241
    
    
    
    82,202
    
    
    
    59,303
    
    
    
    52,137
    
    
    
    48,702Real estate - Other
    
    
    134,644
    
    
    
    99,489
    
    
    
    80,454
    
    
    
    71,025
    
    
    
    63,839Installment/Consumer
    
    
    2,652
    
    
    
    3,236
    
    
    
    4,153
    
    
    
    5,981
    
    
    
    7,638Non-accrual
    
    
    0
    
    
    
    1,317
    
    
    
    1,611
    
    
    
    0
    
    
    
    0Total domestic loans
    
    $
    236,179
    
    
    $
    206,743
    
    
    $
    158,530
    
    
    $
    145,944
    
    
    $
    137,305
 Real estate mortgage loans at year-end 2004 and 2003 comprised the greatest percentage of
total loans. Commercial non-real estate and consumer loans were approximately 6% and 1%
respectively at the year-end 2004. The growth in loans outstanding at year-end 2003 was the result
of an initiative by management to grow the loan portfolio. Allowance for Loan Losses The allowance for loan losses is maintained at a level believed adequate by management to
absorb potential losses in the loan portfolio. Managements methodology to determine the adequacy
of the allowance considers specific credit reviews, past loan loss experience, current economic
conditions and trends, and the volume, growth and composition of the loan portfolio. Each credit on the Banks internal loan watch list is evaluated periodically to estimate
potential losses. In addition, minimum estimates for each category of watch list credits also are
provided based on managements judgment of past loan loss experience and other factors. The total
of reserves resulting from this analysis is allocated reserves. The amounts specifically provided
for individual loans and pools of loans are supplemented by an unallocated amount for loan losses.
This unallocated amount is determined based on judgments regarding risk of error in the specific
allocation, other potential exposure in the loan portfolio, economic conditions and trends, amounts
and timing of future cash flows, and other factors. 23




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##### Table of Contents



Composition of Allowance for Loan Losses This table shows an allocation of the allowance for loan losses as of the last two year-ends: December 31, 2004
    
    
    December 31, 2003Loans in each
    
    
    Loans in eachcategory to
    
    
    category toTotal Loans
    
    
    Total LoansAmount
    
    
    Percent
    
    
    Amount
    
    
    Percent(thousands of dollars)Commercial, Commercial RE,
Construction & Agricultural
    
    $
    1,033
    
    
    
    68
    %
    
    $
    753
    
    
    
    63
    %Real estate-residential
    
    $
    430
    
    
    
    31
    %
    
    $
    548
    
    
    
    32
    %Consumer
    
    $
    5
    
    
    
    1
    %
    
    $
    54
    
    
    
    4
    %Special allocations
    
    $
    10
    
    
    
    0
    %
    
    $
    7
    
    
    
    1
    %Unallocated
    
    $
    884
    
    
    
    0
    %
    
    $
    705
    
    
    
    0
    %Total
    
    $
    2,362
    
    
    
    100
    %
    
    $
    2,067
    
    
    
    100
    %
 The above allocation is based on estimates and subjective judgments and is not necessarily
indicative of the specific amounts or loan categories in which losses may ultimately occur. In 2004 the allowance for loan losses approximates 1.0% of loans, equal to the 1.0% in 2003.
The allowance for loan losses is changed when management determines that the prospects of recovery
of the principal or interest of a loan or lease are doubtful. Subsequent recoveries, if any, are
credited to the allowance. Real estate mortgage loans are written down to fair value upon the
earlier receipt of a deed in lieu of foreclosure, upon completion of foreclosure proceedings, or
upon in-substance foreclosure. Commercial and other loan charge-offs are made based on managements
on-going evaluation of non-performing loans. At year-end, the Bank had no impaired loans under
SFAS 114, which became effective on January 1, 1995. Non-performing Assets Non-performing assets include non-accrual, accruing loans past due 90 days or more, and other
real estate, which includes foreclosures, deeds in lieu of foreclosure and in-substance
foreclosures. A loan is classified as an in-substance foreclosure when the borrower has little or
no equity in the collateral and the Bank can reasonably expect proceeds for repayment only from the
operation or sale of the collateral. A loan generally is classified as non-accrual when full collection of principal or interest is
doubtful or a loan becomes 90 days past due as to principal or interest. Unless management
determines that the estimated net realizable value of the collateral is greater than the unpaid
principal and interest, interest accrual is discontinued. Unpaid interest previously credited to
income in the current year is reserved; and unpaid interest accrued in prior years is charged to
the allowance for loan losses. A non-performing loan is returned to performing status when the loan
is brought current and has performed in accordance with contract terms for a period of time. 24




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##### Table of Contents



Distribution of Non-performing Assets December 312004
    
    
    2003(thousands of Dollars)Commercial, Commercial RE,
& Construction
    
    $
    0
    
    
    $
    1,317Residential RE
    
    
    0
    
    
    
    0Installment/Consumer
    
    
    0
    
    
    
    0Total non-performing loans
    
    $
    0
    
    
    $
    1,317Other real estate owned
    
    $
    0
    
    
    $
    0Other Assets
    
    $
    0
    
    
    $
    0Debt Security
    
    $
    0
    
    
    $
    0Total non-performing assets
    
    $
    0
    
    
    $
    1,317Non-performing loans to
year-end loans
    
    
    0.00
    %
    
    
    0.64
    %Non-performing assets to year-end
loans and other real estate owned
    
    
    0.00

    %
    
    
    0.64
    %
 Management continually reviews any non-performing assets and any uncollectible portions of the
asset have been charged off. When the Bank has non-performing assets, management strives to assure
that the amounts reflected on the books fairly represent the net realizable value of that asset.
However, the time required to liquidate the asset is undeterminable due to the time required to
proceed through the court systems and the time required to market the collateral. At year-end 2004 the bank had no non-accrual loans, compared to $1,317,000 in 2003, and
consequently there was no additional interest income that would have been recorded on non-accruing
loans. At December 31, 2004, the Bank had no loans, which were not included in the 90 day past due or
non-accrual categories, where the borrowers are currently experiencing or have recently experienced
financial difficulties but are current on their payments. This is unchanged from 2003. At December 31, 2004, the Bank had no commitments to lend additional funds with respect to
non-performing loans. In evaluating loan portfolio risk, management believes that any significant future increases
in non-performing loans are dependent to a large extent on the economic environment. In a
deteriorating or uncertain economy, management applies more conservative assumptions when assessing
the future prospects of borrowers and when estimating collateral values. This may result in a
higher number of loans being classified as non-performing. Income Taxes The Companys effective tax rate was 36% in 2004 which is up from 34% in 2003. The effective
rate is lower than the statutory rate primarily due to certain tax-exempt interest income. Impact of Inflation and Changing Prices The majority of assets and liabilities of a financial institution are monetary in nature and
therefore differ greatly from most commercial and industrial companies that have significant
investments in fixed assets or inventories. However, inflation does have an important impact on the
growth of total assets in the banking industry and the resulting need to increase equity capital at
higher than normal rates in order to maintain an appropriate equity-to-assets ratio. Another
significant effect of inflation is on other expenses, which tend to rise during periods of general
inflation. Management believes the most significant impact on financial results is the Banks ability to
react to changes in interest rates. As discussed previously, management is attempting to maintain an
essentially balanced position between interest sensitive assets and liabilities in order to protect
against wide interest rate fluctuations. 25




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##### Table of Contents



Off Balance Sheet Arrangements At December 31, 2004 and 2003, the Bank had commitments to originate and disperse on loans of
approximately $36,347,000 and $34,586,000 respectively. Substantially all of both years figures
include commitments to originate construction real estate loans and pre-approved commercial lines
of credit. The Bank expects that all of the commitments at December 31, 2004 will be exercised
within the current year. In addition, at December 31, 2004 and 2003, the Bank had in place letters
of credit of approximately $1,690,000 and $1,895,000, respectively. The Bank does not expect that
any of the standby letters of credit in place at December 31, 2004 will be exercised within the
current year. The Bank had no commitments to purchase loans at December 31, 2004 and 2003. Contractual Obligations Table Payment due by period(thousand of dollars)Contractual Obligations
    
    Total
    
    Less than 1 year
    
    1-3 years
    
    3-5 years
    
    More than 5 yearsLong-Term Debt Obligations
    
    
    17,250
    
    
    
    4,300
    
    
    
    8,100
    
    
    
    4,850
    
    
    
    0Capital Lease Obligations
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Operating Lease Obligations
    
    
    856
    
    
    
    227
    
    
    
    375
    
    
    
    152
    
    
    
    102Purchase Obligations
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Other Long-Term Liabilities
Reflected on the Registrants
Balance Sheet under GAAP
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Total
    
    $
    18,106
    
    
    $
    4,527
    
    
    $
    8,475
    
    
    $
    5,002
    
    
    $
    102
 
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. The information required by this Item is incorporated herein by reference to the information set
forth under the following captions contained in this Form 10-K:  (i)
    Managements Discussion and Analysis of Financial Condition and Results of
OperationsLiquidity and Interest Rate Sensitivity Management.(ii)
    PART II  Item 6.  Selected Financial Data  Investment Portfolio(iii)
    PART II  Item 6.  Selected Financial Data  Loan Portfolio(iv)
    PART II  Item 8.  Financial Statements and Supplementary Data. 26




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##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The financial statements of the Company and the related notes thereto required by Subpart I
have been included immediately following Item 14 in Part IV of this Annual Report as Exhibit 99 to
this form 10-k. Selected quarterly results of operations for the four quarters ended December 31 are as
follows: Years Ended December 31,(thousands, except share amounts)2004
    
    
    2003Fourth
    
    
    Third
    
    
    Second
    
    
    First
    
    
    Fourth
    
    
    Third
    
    
    Second
    
    
    FirstQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter(in thousands, except per share data)Interest and dividend income
    
    $
    4,281
    
    
    $
    4,050
    
    
    $
    3,751
    
    
    $
    3,678
    
    
    $
    3,354
    
    
    $
    3,058
    
    
    $
    3,102
    
    
    $
    3,102Interest expense
    
    
    (1,235
    )
    
    
    (1,074
    )
    
    
    (1,018
    )
    
    
    (978
    )
    
    
    (855
    )
    
    
    (731
    )
    
    
    (768
    )
    
    
    (790
    )Provision for loan losses
    
    
    (12
    )
    
    
    (102
    )
    
    
    (70
    )
    
    
    (130
    )
    
    
    (275
    )
    
    
    (108
    )
    
    
    (18
    )
    
    
    (46
    )Net interest income, after
provision for loan losses
    
    
    3,034
    
    
    
    2,874
    
    
    
    2,663
    
    
    
    2,570
    
    
    
    2,224
    
    
    
    2,219
    
    
    
    2,316
    
    
    
    2,266Non-interest income (charges)
    
    
    (593
    )
    
    
    583
    
    
    
    598
    
    
    
    542
    
    
    
    411
    
    
    
    445
    
    
    
    510
    
    
    
    501Non-interest expenses
    
    
    (2,089
    )
    
    
    (2,152
    )
    
    
    (2,185
    )
    
    
    (2,086
    )
    
    
    (1989
    )
    
    
    (1,905
    )
    
    
    (1,920
    )
    
    
    (1,807
    )Income before income taxes
    
    
    1,538
    
    
    
    1,305
    
    
    
    1,076
    
    
    
    1,026
    
    
    
    646
    
    
    
    759
    
    
    
    906
    
    
    
    960Provision for income taxes
    
    
    (553
    )
    
    
    (467
    )
    
    
    (383
    )
    
    
    (361
    )
    
    
    (217
    )
    
    
    (258
    )
    
    
    (308
    )
    
    
    (337
    )Net income
    
    $
    985
    
    
    $
    838
    
    
    $
    693
    
    
    $
    665
    
    
    $
    429
    
    
    $
    501
    
    
    $
    598
    
    
    $
    623Earnings per common share:Basic
    
    $
    0.30
    
    
    $
    0.26
    
    
    $
    0.21
    
    
    $
    0.20
    
    
    $
    0.14
    
    
    $
    0.16
    
    
    $
    0.19
    
    
    $
    0.20Diluted
    
    $
    0.28
    
    
    $
    0.24
    
    
    $
    0.20
    
    
    $
    0.19
    
    
    $
    0.13
    
    
    $
    0.15
    
    
    $
    0.18
    
    
    $
    0.18Market Price Range1High
    
    $
    26.40
    
    
    $
    28.20
    
    
    $
    22.54
    
    
    $
    23.49
    
    
    $
    14.86
    
    
    $
    13.90
    
    
    $
    14.00
    
    
    $
    14.81Low
    
    $
    24.00
    
    
    $
    19.40
    
    
    $
    16.51
    
    
    $
    14.33
    
    
    $
    12.91
    
    
    $
    11.85
    
    
    $
    12.81
    
    
    $
    12.08
   1.
    
    All per share information is presented to reflect the 5 % stock dividends declared for 2003
and 2004 and the three for two stock split declared in 2004. 
 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE Since July 18, 1986 (the date of inception of the Bank, the Companys subsidiary), neither the
Bank nor the Company have had any disagreements with its independent certified public accountants
regarding accounting and financial disclosure and there has been no change in accounting firms
since 1994. The accounting firm of Christopher, Smith, Leonard, Bristow, and Stanell, P.A. is
currently employed by the Company to perform its annual audit and its opinion on the financial
statement is included in this annual report. 27




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##### Table of Contents



ITEM 9A. CONTROLS AND PROCEDURES Pursuant to Exchange Act Rule 13a-15, the Company carried out an evaluation, under the supervision
and with the participation of the Companys management, including the Companys principal executive
officer and principal financial officer, of the effectiveness of the design and operation of the
Companys disclosure controls and procedures as of December 31, 2004. Based upon that evaluation,
the Chief Executive Officer and Chief Financial Officer concluded that the Companys disclosure
controls and procedures were effective as of December 31, 2004 in timely alerting them to material
information relating to the Company (including its consolidated subsidiaries) required to be
included in the Companys periodic SEC filings. There was no change in the Companys internal control over financial reporting that occurred during
the Companys fiscal quarter ended December 31, 2004, that has materially affected, or is
reasonably likely to materially affect, the Companys internal control over financial reporting. PART III 
 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY Directors The information required by Item 10 pertaining to directors of the Company is incorporated
herein by reference to the sections entitled Election of Directors, Committees of the Board of
Directors and Certain Meetings and Section 16(a) Beneficial Ownership Reporting Compliance in
the definitive proxy statement of the Company of the Bank for its 2004 Annual Meeting of
Shareholders, pages three through five. The Proxy Statement will be filed with the Securities and
Exchange Commission within 120 days of the end of the Companys fiscal year ended December 31, 2004
at the time it is mailed to the shareholders. Executive Officers With respect to Francis I. duPont, III, the Chairman of the Board and Chief Executive Officer
of the Company, and Glen W. Fausset, President of the Company, who are also directors of the
Company, and Thomas Moseley, Executive Vice President of the Bank, the information required by Item
10 pertaining to the Companys executive officers is incorporated herein by reference to the
section entitled Election of Directors in the definitive proxy statement of the Company of the
Bank for its 2004 Annual Meeting of Shareholders, pages three and four, which will be filed with
the Securities and Exchange Commission within 120 days of the end of the Banks fiscal year ended
December 31, 2004 at the time it is mailed to the shareholders. There are no other executive officers of the Company. The executive officers of the Company
are elected by the Board of Directors and serve at the pleasure of the Board. Governance The Companys audit committee is comprised of members of the Board of Directors excluding
officers and certain other board members, who by definition, could have conflicts of interest. The
members of the audit committee all have varying levels of financial expertise, but none meet the
regulatory definition of financial expert. The Company currently has no board member who qualifies
as a financial expert that is eligible to serve on the audit committee. As the holding company
for a community bank, the Company has chosen not to seek out board members solely for the purpose
of filling this role but rather sought board members who are leaders in the community and/or hold
significant investment in the Company. When the board considers the nomination of new members,
consideration will be given to filling the role of financial expert. During the 4th Quarter of 2003, the Board of Directors of the Company and the Bank
adopted a Code of Ethics and Business Conduct applicable to the members of the Board of Directors
and the officers of the Company and the Bank. The Chief Executive Officer, Chief Financial Officer
and other senior financial officers of the Company and the Bank, specifically are subject to the
Code. A copy of the Code may be obtained, at no cost, by contacting Angela OReilly, Corporate Secretary. 28




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ITEM 11. EXECUTIVE COMPENSATION The information required by Item 11 pertaining to executive compensation is incorporated
herein by reference to the sections entitled Executive Compensation, and Compensation Pursuant
to Plans in the definitive proxy statement of the Company of the Bank for its 2004 Annual Meeting
of Shareholders, pages seven through nine, which will be filed with the Securities and Exchange
Commission 120 days of the end of the Companys fiscal year ended December 31, 2004 at the time it
is mailed to the shareholders. Change of Control Agreements In 1997, the Board of Directors of the Bank entered into Agreements with Messrs. duPont and
Fausset providing for compensation to them in the event of a change of the controlling interest of
the Bank or dismissal without cause. This Company joined in these agreements in 2000. The
agreements provide for the payment of three times average base compensation upon a change of
control of the Bank or the Company or a dismissal without cause. 29




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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERSAND MANAGEMENT The information required by Item 12 pertaining to the security ownership of certain beneficial
owners and management is incorporated herein by reference to the sections entitled Election of
Directors and Stock Ownership of Certain Beneficial Owners and Management in the definitive
proxy statement of the Company for its 2004 Annual Meeting of Shareholders, pages two through four,
which will be filed with the Securities and Exchange Commission within 120 days of the end of the
Companys fiscal year ended December 31, 2004 at the time it is mailed to the shareholders. 
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by Item 13 pertaining to certain relationships and related
transactions is incorporated herein by reference to the section entitled Certain Relationships and
Related Transactions in the definitive proxy statement of the Company of the Bank for its 2004
Annual Meeting of Shareholders, pages six and seven, which will be filed with the Securities and
Exchange Commission within 120 days of the end of the Companys fiscal year ended December 31, 2004
at the time it is mailed to the shareholders. 
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The information required by Item 14 pertaining to Principal Accountant Fees and Services is
incorporated herein by reference to the section entitled Information Concerning Independent
Accountants in the definitive proxy statement of the Company of the Bank for its 2005 Annual
Meeting of Shareholders, which will be filed with the Securities and Exchange Commission 120 days
of the end of the Companys fiscal year ended December 31, 2004 at the time it is mailed to the
shareholders. 
 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) Documents filed as part of this Annual Report on Form 10-K: (1) Financial Statements and Schedules (i) Report of Independent Auditors Report
    
    F-1(ii) Balance Sheets
    
    F-2(iii) Statements of Income
    
    F-3(iv) Statements of Stockholders Equity
    
    F-4(v) Statements of Cash Flows
    
    F-5(vi) Notes to Financial Statements
    
    F-6
 (2) All Schedules have been included as an exhibit to this Annual Report on Form
10-K or the information is included elsewhere in the financial statements or notes
thereto. (3) The exhibits required to be filed herewith are listed on the Exhibits Index
on the following page (b) Reports on form 8-K During the last quarter of the fiscal year ended December 31, 2004, the Company filed one
Form 8-K as follows: October 6, 2004  Releasing the financial results for the Company for the Quarter ended September
30, 2004. 30




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SIGNATURES Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized. FIRST NATIONAL BANCSHARES, INC.March 17, 2005
    By:
    /s/ Glen W. Fausset(Date)
    
    Glen W. Fausset, President
 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Company and in the capacities and on the
dates indicated. Signature
    
    Title
    
    Date/s/ Francis I. duPont, III
    
    Chairman of the Board and
Chief Executive Officer
    
    March 17, 2005Francis I. duPont, III/s/ Glen W. Fausset
    
    President, Chief Financial Officer
and Director
    
    March 17, 2005Glen W. Fausset/s/ Robert C. Matejcek
    
    Treasurer
    
    March 17, 2005Robert C. Matejcek/s/ Beverly Beall
    
    Director
    
    March 17, 2005Beverly Beall/s/ Robert G. Blalock
    
    Director
    
    March 17, 2005Robert G. Blalock/s/ Allen J. Butler
    
    Director
    
    March 17, 2005Allen J. Butler/s/ Rosemary R. Carlson
    
    Director
    
    March 17, 2005Rosemary R. Carlson/s/
    
    DirectorSara Pappas, Ph. D./s/ Raymond A. Weigel, III
    
    Director
    
    March 17, 2005Raymond A. Weigel, III/s/ Irv Zamikoff, D.D.S.
    
    Director
    
    March 17, 2005Irv Zamikoff, D.D.S./s/ Dan C. Zoller
    
    Director
    
    March 17, 2005Dan C. Zoller
 31




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EXHIBIT INDEX Exhibit Number
    
    Description of Document3.11
    
    Amended and Restated Articles of Incorporation of First National
Bancshares, Inc.3.22
    
    Bylaws of First National Bancshares, Inc.103
    
    Companys Incentive Stock Option Plan10.1
    
    Employment Agreement of F. I. duPont, III10.2
    
    Employment Agreement of Glen W. Fausset114
    
    Statement regarding computation of per share earnings.21
    
    Company Subsidiaries  1st National Bank & Trust31.1
    
    302 Certifications31.232.1
    
    906 Certifications Pursuant to 18 U.S.C. § 135032.299
    
    Audited Financial Statements
   1.
    Incorporated by reference to the exhibits included in the Companys S-4
Registration Statement, as filed with the Securities and Exchange Commission on July
31, 1998 (Registration No. 333-60283).2.
    Incorporated by reference to the exhibits included in the Companys Form 10-k
, as filed with the Securities and Exchange Commission on March 22, 2004 (Registration
No. 333-60283).3.
    Incorporated by reference to the summary of principal terms included in the
Companys Proxy Statement for the 2000 Meeting of Shareholders, as filed with the
Securities and Exchange Commission on March 10, 2000.4.
    Incorporated by reference to the Income Statement on page F-3 of the
Consolidated Financial Statements of First National Bancshares, Inc., as contained in
this Annual Report on Form 10-K. 32