UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-K/A
                                 Amendment No. 1

/X/ Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act
    of 1934
                 For the fiscal year ended December 31, 2004; or
/ / Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
    Act of 1934

                        Commission file number 000-29829

                          PACIFIC FINANCIAL CORPORATION
             (Exact Name of Registrant as specified in its Charter)


        Washington                                       91-1815009
(State or Other Jurisdiction of                (IRS Employer Identification No.)
Incorporation or Organization)

                             300 East Market Street
                         Aberdeen, Washington 98520-5244
               (Address of Principal Executive Offices) (Zip Code)

       Registrant's telephone number, including area code: (360) 533-8870

        Securities Registered Pursuant to Section 12(b) of the Act: None

           Securities Registered Pursuant to Section 12(g) of the Act:
                     Common Stock, par value $1.00 per share

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

Indicate  by check mark  whether  the  Registrant  is an  accelerated  filer (as
defined by Exchange Act Rule 12b-2). Yes [ X] No [ ]

The  aggregate  market value of the common stock held by  non-affiliates  of the
registrant at June 30, 2004, was $109,163,732

The number of shares outstanding of the registrant's common stock, $1.00 par
value as of February 28, 2005, was 3,210,698 shares.

                       DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Proxy Statement filed in connection with its annual
meeting of shareholders to be held April 20, 2005 are  incorporated by reference
into Part III of this Form 10-K.


<PAGE>

================================================================================
                                Explanatory Note

This  amendment  to the 2004  Annual  Report on Form 10-K of  Pacific  Financial
Corporation  (the  "Company")  is  being  filed  for the  purpose  of  including
"Management's  Report on Internal  Control  Over  Financial  Reporting"  and the
"Report of Independent  Registered  Public  Accounting Firm on Internal  Control
Over  Financial  Reporting"  in Item 9A.  These  reports  were  omitted from the
registrant's  2004  Annual  Report on Form 10-K  filed with the  Securities  and
Exchange Commission on March 16, 2005 (the "Original  Filing"),  as permitted by
Order  under  Section 36 of the  Securities  Exchange  Act of 1934  Granting  an
Exemption from Specified Provisions of Exchange Act Rules 13a-1 and 15d-1 (which
provided  certain  registrants up to 45 additional days from the due date of the
Form 10-K in which to file these  reports).  Conforming  changes  are also being
made to other  disclosures  included under Item 9A and to Exhibits 31.1 and 31.2
of the Original Filing. A consent of independent auditors is also being filed as
Exhibit 23.


<PAGE>



ITEM 9A.  Controls and Procedures

Disclosure Controls And Procedures.

The Company's  disclosure  controls and  procedures  are designed to ensure that
information  the Company must disclose in its reports  filed or submitted  under
the Securities Exchange Act of 1934 (the "Exchange Act") is recorded, processed,
summarized,  and reported on a timely basis. Our management has evaluated,  with
the participation and under the supervision of our chief executive officer (CEO)
and chief financial officer (CFO), the effectiveness of our disclosure  controls
and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act)
as of the end of the period  covered by this report.  Based on this  evaluation,
our CEO and CFO  concluded  that,  as of such  date,  the  Company's  disclosure
controls and procedures are effective in ensuring that  information  relating to
the Company, including its consolidated  subsidiaries,  required to be disclosed
in reports  that it files under the  Exchange  Act is (1)  recorded,  processed,
summarized and reported within the time periods specified in the SEC's rules and
forms, and (2) accumulated and communicated to our management, including our CEO
and  CFO,  as  appropriate  to  allow  timely   decisions   regarding   required
disclosures.

Management's Report on Internal Control Over Financial Reporting.

The  Company's  management  is  responsible  for  establishing  and  maintaining
adequate  internal  control over  financial  reporting,  and for  performing  an
assessment of the effectiveness of internal control over financial  reporting as
of December 31, 2004. The Company's internal control over financial reporting is
a process designed under the supervision of the Company's management,  including
the CEO and CFO, to provide  reasonable  assurance  regarding the reliability of
financial  reporting and the  preparation  of financial  statements for external
purposes in accordance  with  accounting  principles  generally  accepted in the
United States of America.

Management performed a comprehensive review,  evaluation,  and assessment of the
effectiveness of the Company's  internal control over financial  reporting as of
December  31,  2004,  based  upon  criteria  in  Internal  Control -  Integrated
Framework  issued by the Committee of Sponsoring  Organizations  of the Treadway
Commission ("COSO"). Based on the assessment, management has determined that, as
of December 31, 2004, the Company's internal control over financial reporting is
effective, based on the COSO criteria.

Management's  assessment  and  conclusions  regarding the  effectiveness  of the
Company's internal control as of December 31, 2004, did not include the internal
control of BNW  Bancorp,  Inc.  ("BNW"),  which was acquired by the Company in a
purchase combination on February 27, 2004, and is included in the Company's 2004
consolidated  financial  statements.   BNW  was  not  included  in  management's
assessment  because it was not possible for  management to conduct an assessment
of BNW's  internal  control in the period between the date the  acquisition  was
completed  and the date of  management's  assessment.  As of December  31, 2004,
BNW's total assets of approximately $150 million  represented  approximately 34%
of the Company's total assets reported on a consolidated basis.

The  Company's  assessment  of the  effectiveness  of its internal  control over
financial  reporting as of December  31,  2004,  has been audited by McGladrey &
Pullen,  LLP, an independent  registered  public  accounting  firm, as stated in
their report which is included below.



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Report of Independent Registered Public Accounting Firm on Internal Control Over
Financial Reporting.

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors
Pacific Financial Corporation
Aberdeen, Washington


We  have  audited   management's   assessment,   included  in  the  accompanying
Management's Report on Internal Controls over Financial Reporting,  that Pacific
Financial  Corporation  maintained  effective  internal  control over  financial
reporting  as of December 31, 2004,  based on criteria  established  in Internal
Control--Integrated   Framework   issued   by  the   Committee   of   Sponsoring
Organizations of the Treadway Commission (COSO). Pacific Financial Corporation's
management  is  responsible  for  maintaining  effective  internal  control over
financial  reporting  and for its  assessment of the  effectiveness  of internal
control over financial reporting. Our responsibility is to express an opinion on
management's  assessment  and an opinion on the  effectiveness  of the company's
internal control over financial reporting based on our audit.

We conducted  our audit in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain  reasonable  assurance  about whether  effective
internal  control  over  financial  reporting  was  maintained  in all  material
respects. Our audit included obtaining an understanding of internal control over
financial reporting,  evaluating management's assessment, testing and evaluating
the design and operating  effectiveness of internal control, and performing such
other  procedures as we considered  necessary in the  circumstances.  We believe
that our audit provides a reasonable basis for our opinion.

A company's  internal control over financial  reporting is a process designed to
provide reasonable  assurance  regarding the reliability of financial  reporting
and the preparation of financial  statements for external purposes in accordance
with generally accepted accounting principles. A company's internal control over
financial  reporting  includes those policies and procedures that (1) pertain to
the  maintenance  of records that, in reasonable  detail,  accurately and fairly
reflect the  transactions  and  dispositions  of the assets of the company;  (2)
provide  reasonable  assurance  that  transactions  are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting  principles,  and that receipts and  expenditures  of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of  unauthorized  acquisition,  use, or  disposition  of the company's
assets that could have a material effect on the financial statements.

Because of its inherent  limitations,  internal control over financial reporting
may not prevent or detect misstatements.  Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate  because of changes in  conditions,  or that the degree of compliance
with the policies or procedures may deteriorate.

As  described  in  Management's   Report  on  Internal  Control  over  Financial
Reporting,  management has excluded Bank Northwest  (BNW) from its assessment of
internal control over financial reporting as of December 31, 2004 because it was
acquired by the Corporation in a purchase business  combination  during 2004. We
have  also  excluded  BNW from our  audit of  internal  control  over  financial
reporting.  BNW's  total  assets  represent  approximately  $150  million of the
Corporation's total assets reported on the consolidated financial statements for
the year ended December 31, 2004.

<PAGE>


In our  opinion,  management's  assessment  that Pacific  Financial  Corporation
maintained  effective  internal control over financial  reporting as of December
31,  2004,  is  fairly  stated,  in all  material  respects,  based on  criteria
established in Internal Control--Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). Also in our opinion,
Pacific Financial Corporation  maintained,  in all material respects,  effective
internal  control over  financial  reporting  as of December 31, 2004,  based on
criteria  established in Internal  Control--Integrated  Framework  issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We have also  audited,  in accordance  with the standards of the Public  Company
Accounting   Oversight  Board  (United  States),   the  consolidated   financial
statements of Pacific Financial  Corporation and our report dated March 14, 2005
expressed an unqualified opinion.

McGladrey & Pullen, LLP

Tacoma, Washington
April 28, 2005


Changes in Internal  Control Over Financial  Reporting.  There have not been any
changes in the Company's internal control over financial reporting, as such term
is defined in Rules  13a-15(f) and  15d-15(f)  under the Exchange Act during the
Company's fiscal quarter ended December 31, 2004 that have materially  affected,
or are reasonable likely to materially  affect,  the Company's  internal control
over financial reporting.


                                     Part IV

ITEM 15.  Exhibits and Financial Statement Schedules

   (a) (3) Exhibits: See Exhibit Index immediately following the signature page.


<PAGE>


SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the registrant has duly caused this Amendment No. 1 to this report
to be signed on its behalf by the undersigned, thereunto duly authorized, on the
2d day of May, 2005.



                                         PACIFIC FINANCIAL CORPORATION
                                                   (Registrant)


                                         /s/ Dennis A. Long
                                         ---------------------------------------
                                         Dennis A. Long, President and CEO


                                         /s/ Denise Portmann
                                         ---------------------------------------
                                         Denise Portmann
                                         Treasurer



<PAGE>


                                  Exhibit Index

EXHIBIT NO.          EXHIBIT
-----------          -------

2.1                  Agreement  and Plan of Merger  between  the Company and BNW
                     Bancorp, Inc. dated as of October 22, 2003 (1)
3.1                  Restated Articles of Incorporation (2)
3.2                  Bylaws (3)
10                   Executive  Compensation  Plans and  Arrangements  and Other
                     Management Contracts
10.1                 Employment  Agreement with Dennis A. Long dated January 27,
                     2004 (4)
10.2                 Employment  Agreement  with John Van Dijk dated  January 2,
                     2003 (5)
10.3                 Employment   Agreement  with  Bruce  D.  MacNaughton  dated
                     January 2, 2003 (5)
10.4                 Bank of the Pacific Incentive Stock Option Plan (6)
10.5                 The Bank of Grays Harbor Incentive Stock Option Plan (6)
10.6                 2000 Stock Incentive Compensation Plan (7)
10.7                 Bonus Program for Officers (7)
10.8                 The Bank of Grays  Harbor  Employee  Deferred  Compensation
                     Plan (8)
21                   Subsidiaries of Registrant - Bank of the Pacific, organized
                     under Washington law
23                   Consent of McGladrey & Pullen, LLP, Independent Auditors*
31.1                 Certification  of Chief Executive  Officer Pursuant to Rule
                     13a-14(a)*
31.2                 Certification  of Chief Financial  Officer Pursuant to Rule
                     13a-14(a)*
32                   Certification Pursuant to 18 U.S.C. 1350**
99                   Description of common stock of the Company (9)

* Included with this Amendment No. 1.
** Previously filed.

(1) Incorporated by reference to Exhibit 99.1 to the Company's current report on
Form 8-K dated October 22, 2003.

(2)  Incorporated by reference to Exhibit 3.2 to the Company's  Quarterly Report
on Form 10-Q for the quarter ended June 30, 2000.

(3) Incorporated by reference to Exhibit 2b to Form 8-A filed by the Company and
declared effective on March 7, 2000 (Registration No. 000-29329)

(4)  Incorporated by reference to Exhibit 10.1 to the Company's Annual Report on
Form 10-K for the year ended December 31, 2003.

(5) Incorporated by reference to Exhibits 10.2, and 10.3 to the Company's Annual
Report on Form 10-K for the year ended December 31, 2002.

(6) Incorporated by reference to Exhibits 10.7 and 10.8 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1999.

(7)  Incorporated  by  reference  to  Exhibits  10.1 and  10.2 to the  Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 2000.

(8) Incorporated by reference to Exhibit 10.10 to the Company's Annual Report on
Form 10-K for the year ended December 31, 2000.

(9) Incorporated by reference to Exhibit 99 to the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 2000.