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U. S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q

For the quarterly period ended June 30, 2004

For the transition period from              to             

COMMISSION FILE NUMBER 0-26551

INTEGRITY FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

Registrant’s Telephone number, including area code: (888) 894-2483

COMMON STOCK, $1.00 PAR VALUE

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 past 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).     Yes  x    No  ¨

Number of shares of Common Stock outstanding as of July 29, 2004; 4,849,533.

This report contains 17 pages.

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Part I. FINANCIAL INFORMATION

Item 1 - Financial Statements

Integrity Financial Corporation

Consolidated Balance Sheets

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Integrity Financial Corporation

Consolidated Statements of Operations (Unaudited)

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Integrity Financial Corporation

Consolidated Statements of Cash Flows (Unaudited)

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Integrity Financial Corporation

Notes to Consolidated Financial Statements (Unaudited)

NOTE A - BASIS OF PRESENTATION

In management’s opinion, the financial information, which is unaudited, reflects all adjustments (consisting solely of normal recurring adjustments) necessary for a fair presentation of the financial information as of June 30, 2004 and for the three and six month periods ended June 30, 2004 and 2003, in conformity with accounting principles generally accepted in the United States of America. The accompanying consolidated financial statements include the accounts of Integrity Financial Corporation and its wholly-owned subsidiaries: Catawba Valley Bank, First Gaston Bank, Integrity Securities, Inc., Community Mortgage Corporation, Catawba Valley Capital Trust I, and Catawba Valley Capital Trust II, collectively referred to as the “Company”. All significant intercompany transactions and balances have been eliminated. Operating results for the six month period ended June 30, 2004 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2004.

The organization and business of the Company, accounting policies followed by the Company and other information are contained in the notes to the consolidated financial statements filed as part of the Company’s 2003 annual report on Form 10-K. This quarterly report should be read in conjunction with such annual report.

NOTE B - NET INCOME PER SHARE

Basic and diluted net income per common share is computed based on the weighted average number of shares outstanding during each period after retroactively adjusting for stock dividends. Diluted net income per common share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the net income of the Company. For the three and six month periods ended June 30, 2004 there were 11,997 options that were antidilutive since the exercise price exceeded the average market price for the period. There were no antidilutive options outstanding during the three and six month periods ended June 30, 2003.

Basic and diluted net income per common share has been computed based upon net income as presented in the accompanying consolidated statements of operations divided by the weighted average number of common shares outstanding or assumed to be outstanding as summarized below:

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NOTE C - COMPREHENSIVE INCOME

For the three months ended June 30, 2004 and 2003, total comprehensive income (loss), consisting of net income and unrealized gains and losses on available for sale securities, net of taxes, was ($724,997) and $1,639,248, respectively.

For the six months ended June 30, 2004 and 2003, total comprehensive income, consisting of net income and unrealized gains and losses on available for sale securities, net of taxes, was $723,616 and $2,919,982 respectively.

NOTE D - STOCK COMPENSATION PLANS

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

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NOTE E - GUARANTEES

The Company has issued guarantees under standby letters of credit, which require the Company to fund the guarantee in part or in entirety, in the event the customer fails to perform under an obligating agreement. These standby letters of credit typically have terms ranging from 4 to 156 months.

The maximum amount of the Company’s guarantees under these standby letters of credit are as follows (in thousands):

NOTE F - RECENT ACCOUNTING PRONOUNCEMENTS

On March 31, 2004, the Company adopted FIN 46R which resulted in the deconsolidation of the Company’s trust preferred subsidiaries, Catawba Valley Capital Trust I and Catawba Valley Capital Trust II. Upon deconsolidation, the junior subordinated debentures issued by the Company to the trusts were included in long-term debt (instead of the trust preferred securities) and the Company’s equity interests in the trusts were included in other assets. As a result, other assets and long-term debt increased by $310,000. Except for accounting treatment, the relationship between the Company and Catawba Valley Capital Trust I and Catawba Valley Capital Trust II has not changed. Catawba Valley Capital Trust I and Catawba Valley Capital Trust II continue to be wholly owned trust preferred subsidiaries of the Company, and the full and unconditional guarantee of the Company for the repayment of the trust preferred securities remains in effect.

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

This Quarterly Report on Form 10-Q may contain certain forward-looking statements consisting of estimates with respect to the financial condition, results of operations and business of the Company that are subject to various factors which could cause actual results to differ materially from these estimates. These factors include, but are not limited to, general economic conditions, changes in interest rates, deposit flows, loan demand, real estate values, and competition; changes in accounting principles, policies, or guidelines; changes in legislation or regulation; and other economic, competitive, governmental, regulatory, and technological factors affecting the Company’s operations, pricing, products and services.

Comparison of Financial Condition at June 30, 2004 and December 31, 2003

During the six months ended June 30, 2004, total assets increased $25.3 million or 3.9% from $629.7 million to $655.0 million. This increase in the Company’s assets resulted primarily from an increase in our net loans outstanding of $20.2 million or 4.4% during the period. In addition, our liquid assets, consisting of cash and cash equivalents and investment securities, increased $3.0 million. This growth in the Company’s assets was partially funded by a $21.6 million or 4.3% increase in customer deposits during the period.

Cash and cash equivalents increased $6.9 million or 42.1% during the period. This increase resulted primarily from an increase in non-interest deposits in banks of $5.6 million or 112.9%. Depository institutions are required to maintain reserves for the purpose of facilitating the implementation of monetary policy by the Federal Reserve System. The increase in non-interest deposits in banks is related to an increase in the Bank’s reserve requirements. Interest earning deposits in banks increased $1.2 million or 10.2%, while vault cash decreased $466,000 or 11.0%.

Investment securities decreased $3.8 million during the period. The Company sold $17.3 million in securities realizing a net gain on sale of securities of $117,000 and in turn purchased $30.0 million in new securities. The Company had pay downs and maturities totaling $13.7 million during the period. The Company’s mark to market on investments and available for sale securities decreased $2.7 million for the period. Mortgage back securities, CMO’s and municipals increased $5.8 million while Government Agency Bonds and Corporate Bonds decreased $6.8 million.

Net loans receivable increased $20.2 million or 4.4% from $457.3 million to $477.5 during the period. The growth was largely due to the $10.0 million increase in our commercial loan portfolio. Residential home equity loans increased $6.5 million. The allowance for loan losses was $6.3 million at June 30, 2004, which represented 1.29% of the loan portfolio.

Federal Home Loan Bank stock increased $500,000 or 22.1% during the period, increasing from $2.3 million at December 31, 2003 to $2.8 million at June 30, 2004. FHLB stock ownership is a requirement for member banks that utilize the bank for borrowing funds. The percentage of stock owned by each member bank is based on the amount of outstanding borrowings.

Other assets increased $1.4 million or 27.9% during the period. This increase was primarily due to an increase in deferred tax of $935,000 caused by the change in our unrealized gains on securities. Prepaid assets increased by $174,000. This change is represented mostly by broker fees paid on deposits bought for funding purposes and an increase in prepaid maintenance agreements due to additional branches.

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Customer deposits continued to be our principal funding source during the first six months of 2004 allowing us to fund the aforementioned growth in our assets. At June 30, 2004, deposits from our customers totaled $519.6 million, an increase of $21.6 million or 4.3% from $498.0 at December 31, 2003. Savings and demand deposit accounts increased by $31.4 million while time deposits decreased by $9.8 million during the period. Management is continuing to make a conscious effort to attract lower cost core deposits and reduce the dependency on higher cost time deposits.

The liquidity provided by the increased level of our customer deposits also enabled the Company to reduce our short-term borrowings and long-term debt during the period by $2.6 million, to $70.1 million at June 30, 2004. Federal funds purchased, a form of short-term borrowings, decreased by $11.5 million while Federal Home Loan Bank advances increased by $13.0 million for the period.

At June 30, 2004, total stockholder’s equity was $63.0 million an increase of $232,000 from December 31, 2003. Net income was $2.4 million for the period and the Company received $690,000 from the exercise of stock options. The Company purchased 45,000 shares of Treasury stock pursuant to a stock repurchase program, while unrealized gains on our investment securities, net of tax decreased $1.7 million or 247.0%.

Comparison of Results of Operations for the Three Months Ended June 30, 2004 and 2003

Net Income. Net Income for the quarter ended June 30, 2004 was approximately $1.3 million, or $.28 per diluted share, as compared with net income of approximately $1.3 million, or $.28 per diluted share, for the three months ended June 30, 2003, a decrease of $13,000.

Net Interest Income. Like most financial institutions, the primary component of earnings for our banks, Catawba Valley and First Gaston, is net interest income. Net interest income is the difference between interest income, principally from loan and investment securities portfolios, and interest expense, principally on customer deposits and borrowings. Changes in net interest income result from changes in volume, spread and margin. For this purpose, volume refers to the average dollar level of interest-earning assets and interest-bearing liabilities, spread refers to the difference between the average yield on interest-earnings assets and the average cost of interest-bearing liabilities and margin refers to net interest income divided by average interest-earnings assets. Margin is influenced by the level and relative mix of interest-earning assets and interest-bearing liabilities, as well as by levels of noninterest-bearing liabilities and capital.

Net interest income for the quarter ended June 30, 2004 was $4.7 million as compared with $4.4 million during the quarter ended June 30, 2004, an increase of $349,000. This increase resulted from the increased levels of interest earning assets during the current period and the Company’s continued efforts to lower their cost of funds. The Company’s net interest margin actually decreased. The Federal Reserve lowered interest rates late in the second quarter of 2003. This decrease coupled with the increasing pressure from local competition to lower rates, negatively impacted the net interest margin. The Company’s net interest margin decreased from 3.36% for the quarter ended June 30, 2003 to 3.24% for the quarter ended June 30, 2004.

Provision for Loan Losses. Our allowance for loan losses is established through charges to earnings in the form of a provision for loan losses. We increase our allowance for loan losses by provisions charged to operations and by recoveries of amounts previously charged off, and we reduce our allowance by loans charged off. We evaluate the adequacy of the allowance at least quarterly. In evaluating the adequacy of the allowance, we consider the growth, composition and industry diversification of the portfolio, historical loan loss experience, current delinquency levels, adverse situations that may affect a borrower’s ability to repay, estimated value of any underlying collateral, prevailing economic conditions and other relevant factors derived from our history of operations.

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We follow a loan review program designed to evaluate the credit risk in our loan portfolio. Through this loan review process, we maintain an internally classified watch list that helps management assess the overall quality of the loan portfolio and the adequacy of the allowance for loan losses. In establishing the appropriate classification for specific assets, management considers, among other factors, the estimated value of the underlying collateral, the borrower’s ability to repay, the borrower’s payment history and the current delinquent status. As a result of this process, certain loans are categorized as substandard, doubtful or loss and reserves are allocated based on management’s judgment and historical experience. Testing by our internal auditors and by other independent third parties contracted with to perform reviews of our loans helps to validate this process. In addition, regulatory agencies, as an integral part of their examination process, periodically review our allowance for loan losses and may require us to make adjustments based upon information available to them at the time of their examination.

The provision for loan losses was $331,000 and $203,000 for the quarters ended June 30, 2004 and 2003, respectively, resulting in an increase of $128,000. Net loan charge-offs were $168,000 or .04% of average loans outstanding for the quarter ended June 30, 2004, compared to $157,000 or .04% of average loans outstanding for the same period in 2003. The level of our non-performing loans during the 2004 quarter was more favorable than that during the 2003 quarter. During the quarter ended June 30, 2003, our total non-performing loans were $5.9 million, whereas during the current year quarter, total non-performing loans were $5.5 million.

Our allowance for loan losses increased slightly from $6.2 million at December 31, 2003 to $6.3 million at June 30, 2004, an increase of $91,000. The allowance expressed as a percentage of total loans decreased from 1.33% at December 31, 2003 to 1.29% at June 30, 2004. This decrease in the level of the allowance in relation to total loans resulted from management’s determination that the overall quality of the loan portfolio has continued to improve. Total non performing loans increased from $4.5 million or 0.96% of gross loans at December 31, 2003 to $5.5 million or 1.14% of gross loans at June 30, 2004. Nonaccrual loans represent $5 million of the total nonperforming loans. Seventy five percent of the nonaccrual balance is secured by real estate. With the Bank’s loan to value ratios on these loans, management expects losses, if any, to be minimal. In addition, $2.5 million of total nonaccruals are comprised of two relationships that are currently in the process of foreclosure. Management currently expects the problems associated with these two loan relationships to be resolved by yearend.

The following is a summary of the principal balances of loans on nonaccrual status and loans past due ninety days or more:

Non-interest income. Non-interest income was $1.5 million for the quarter ended June 30, 2004, a decrease of $373,000 from June 30, 2003. Service charges on deposit accounts decreased from $693,000 during the 2003 period to $597,000, a decrease of $96,000 due to management’s decision to tighten overdrafts policies. Income from our mortgage operations decreased $549,000 or 66.9%, from $821,000 during the 2003 period to $272,000 for the second quarter of 2004. This decrease in the income from our mortgage operations resulted from the decrease in the level of refinancing experienced in the current year period versus the prior year period. The Company also sold several investment securities resulting in realized losses of $18,000.

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These decreases were offset however, by increases in brokerage operations. During the third quarter of 2003, the Company opened a full service brokerage office. The income generated from this office contributed to the $247,000 increase in income from brokerage operations. Income from factoring operations increased 7.2% from $107,000 for the quarter ended June 30, 2003 to $115,000 for the comparable period in 2004. Other non-interest income increased from $172,000 to $249,000 for the quarters ended June 30, 2003 and 2004, respectively. During 2003 the Company increased its investment in bank owned life insurance. Income generated from bank owned life insurance increased $147,000 during the 2004 quarter in comparison to the 2003 quarter.

Non-interest expense. Non-interest expense decreased $12,000 compared to the period ended June 30, 2003. Compensation and employee benefits and occupancy and equipment, two of the major components of non-interest expense, when combined, increased 8.7% or $227,000 from $2.6 million for the quarter ended June 30, 2003 to $2.8 million for the quarter ended June 30, 2004. The Company completed a conversion of its data processing system in the third quarter of 2003. Whereas in the past the Company’s data processing costs were comprised largely of payments to a third party provider, as result of the conversion to an in-house system, our data processing costs are now comprised mainly of compensation and equipment costs and are accordingly classified in those categories. This change resulted in the decrease in the data processing costs presented in the statement of operations of $312,000.

Provision for Income taxes. The Company’s effective tax rate (income taxes as a percentage of income before income taxes) was 30.2% for the period ended June 30, 2004 as compared to 34.4% for the period ended June 30, 2003. This decrease resulted largely from an increase in non-taxable income related to the increase in the Bank’s investment in bank owned life insurance.

Comparison of Results of Operations for the Six Months Ended June 30, 2004 and 2003

Net Income. Net income for the six months ended June 30, 2004 was $2.4 million or $.52 per diluted share, as compared with net income of $2.5 million or $.54 per diluted share for the six months ended June 30, 2003, a decrease of $88,000.

Net Interest Income. Net interest income for the six months ended June 30, 2004 was $9.4 million as compared with $8.8 million during the quarter ended June 30, 2003, an increase of $596,000. The Company’s net interest margin decreased from 3.41% for the six months ended June 30, 2003 to 3.23% for the six months ended June 30, 2004.

Provision for Loan Losses. The provision for loan losses was $636,000 and $510,000 for the six months ended June 30, 2004 and 2003, respectively, resulting in an increase of $126,000. Net loan charge-offs increased to $545,000 or .12% of average loans outstanding for the six months ended June 30, 2004, compared to $179,000 or .04% of average loans outstanding for the same period in 2003.

Non-interest income. Non interest income was $3.1 million for the six months ended June 30, 2004, a decrease of $338,000 or 9.9% from the comparable period in 2003. The primary factor for this decrease was a reduction in mortgage operations of $888,000. Income from mortgage operations was $546,000 for the six months ended June 30, 2004, compared to $1.4 million for the same period of 2003. This decrease in our mortgage operations income resulted from the decrease in the level of refinancing from the prior year to the current year. Service charges on deposit accounts also decreased $129,000, from $1.3 million for the six months ending June 30, 2003 to $1.2 million for the same period in 2004 due to management’s decision to tighten the Company’s overdraft policies.

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These decreases were offset by increases in income from brokerage operations of $383,000 and gains on sales of investment securities of $117,000. During the third quarter of 2003, the Company opened a full service brokerage office. Income from factoring operations increased 13.8% from $221,000 for the six months ended June 30, 2003 to $251,000 for the comparable period in 2004. Other non-interest income also increased 43.6% for the period. The primary factor related to this increase was the aforementioned bank owned life insurance purchase in 2003.

Non-interest expense. Non-interest expense increased $508,000 from $7.8 million for the six months ended June 30, 2003 to $8.3 million for the same period ended June 30, 2004. Compensation and employee benefits and occupancy and equipment, two of the major components of non-interest expense, when combined, increased 17.0% or $871,000 from $5.1 million for the six months ended June 30, 2003 to $6.0 million for the quarter ended June 30, 2004.

There are several factors contributing to the increase. The Company opened three new full service branches in 2003, one late in the second quarter and two more during the fourth quarter. The Company also opened a full service brokerage office, as previously discussed during the third quarter, while also acquiring and moving into a new headquarters building during the third quarter. The Company also completed a conversion of its data processing system in the third quarter of 2003. Whereas in the past the Company’s data processing costs were comprised largely of payments to a third party provider, as result of the conversion to an in-house system, our data processing costs are now comprised mainly of compensation and equipment costs and are accordingly classified in those categories. The data processing conversion resulted in the decrease in the data processing costs presented in the statement of operations of $608,000.

Provision for Income taxes. The Company’s effective tax rate (income taxes as a percentage of income before income taxes) was 30.6% for the period ended June 30, 2004 as compared to 35.1% for the period ended June 30, 2003. This decrease resulted largely from an increase in non-taxable income.

Liquidity and Capital Resources

Maintaining adequate liquidity while managing interest rate risk is the primary goal of the Company’s asset and liability management strategy. Liquidity is the ability to fund the needs of the Company’s borrowers and depositors, pay operating expenses, and meet regulatory liquidity requirements. Maturing investments, loan and mortgage-backed security principal repayments, deposit growth, and borrowings are presently the main sources of the Company’s liquidity. The Company’s primary uses of liquidity are to fund loans and to make investments.

As of June 30, 2004, liquid assets, consisting of cash and cash equivalents and investment securities were approximately $113.0 million, which represents 17.3% of total assets and 19.2% of total deposits and borrowings. Supplementing this liquidity, the Company, through its bank subsidiaries, had $64.6 million of credit available from the Federal Home Loan Bank and available lines of credit from correspondent banks totaling $22.5 million. At June 30, 2004, outstanding commitments to extend credit were $1.9 million and undisbursed line of credit balances totaled $117.8 million. Management believes that the combined aggregate liquidity position of the Company is sufficient to meet the funding requirements of loan demand and deposit maturities and withdrawals in the near term.

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Certificates of deposit represented 53.9% of the Company’s total deposits at June 30, 2004. The Company’s growth strategy will include efforts focused at increasing the relative volume of transaction deposit accounts. Certificates of deposit of $100,000 or more represented 24.4% of the Company’s total deposits at June 30, 2004. These deposits are generally considered rate sensitive, but management believes many of them are relationship-oriented. While the Company will need to pay competitive rates to retain these deposits at maturity, there are other subjective factors that will determine the Company’s continued retention of those deposits.

Banks and bank holding companies, as regulated institutions, must meet required levels of capital. The FDIC, the primary regulator of Catawba Valley Bank and First Gaston Bank, and the Federal Reserve, the primary regulator of Integrity Financial Corporation, have adopted minimum capital regulations or guidelines that categorize components and the level of risk associated with various types of assets. Financial institutions are expected to maintain a level of capital commensurate with the risk profile assigned to its assets in accordance with these guidelines.

At June 30, 2004, both Integrity Financial Corporation and each of its bank subsidiaries maintained capital levels exceeding the minimum levels for “well capitalized” bank holding companies and banks.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

The Company’s primary market risk is interest rate risk. Interest rate risk is the result of differing maturities or repricing intervals of interest earning assets and interest bearing liabilities and the fact that rates on these financial instruments do not change uniformly. These conditions may impact the earnings generated by the Company’s interest earning assets or the cost of its interest bearing liabilities, thus directly impacting the Company’s overall earnings. The Company’s management actively monitors and manages interest rate risk. One way this is accomplished is through the development of and adherence to the Company’s asset/liability policy. This policy sets forth management’s strategy for matching the risk characteristics of the Company’s interest earning assets and liabilities so as to mitigate the effect of changes in the rate environment.

The Company’s market risk profile has not changed significantly since December 31, 2003. See Item 7A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2003, as filed with the Securities and Exchange Commission on March 15, 2004, for additional analysis of the Company’s market risk.

Item 4. Controls and Procedures

As of the end of the period covered by this Report, the Company’s management carried out an evaluation, under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rule 13a-15 of the Securities and Exchange Commission (the “SEC”). Based upon that evaluation, the Company’s management, including its Chief Executive Officer and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company’s SEC filings.

There have been no significant changes in internal control over financial reporting during the period covered by this Report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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Part II. OTHER INFORMATION

Item 1. Legal Proceedings

None

Item 2. Changes in Securities, Use of Proceeds and Issuer Purchase of Equity Securities

e. Item 703 Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Issuer Purchases of Equity Securities

The stock was purchased under the Company’s repurchase plan, in which the Board of Directors authorized a total of 50,000 shares to be repurchased on January 21, 2004.

Item 3. Defaults Upon Senior Securities

None

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Item 4. Submission of Matters to a Vote of Security Holders

The Annual Meeting of Stockholders was held on April 27, 2004. Of the 4,573,240 shares entitled to vote at the meeting, 3,419,263 shares voted. The following matters were voted on at the meeting:

R. Steve Aaron, Loretta P. Dodgen and W. Steve Ikerd were all re-elected to three-year terms to the Board of Directors. Carl G. Yale, a new nominee for director, was elected to a two-year term. The following directors’ terms continued after the Annual Meeting: David E. Cline, W. Alex Hall, Jr., Robert P. Huntley, H. Ray McKenney, Jr., Dwight Pardue, Howard L. Pruitt and Ronald S. Shoemaker.

The directors elected at the Annual Meeting received the following votes for and withheld:

A proposal to approve an amendment to the Company’s 1996 Incentive Stock Option Plan increasing the number of options available for issuance under the plan by 250,000 shares was approved, with 2,159,609.956 shares voted in favor, 260,682.7424 shares voted against and 15,726.4419 shares abstaining.

A proposal to ratify the appointment of Dixon Hughes PLLC as the Company’s independent auditor for the year ending December 31, 2004 was approved with 3,439,136.3485 shares voted in favor, 11,003.5673 shares voted against and 7,618.2245 shares abstaining.

Item 5. Other Information

None

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Item 6. Exhibits and Reports on Form 8-K

A Form 8-K was filed on April 29, 2004, reporting first quarter earnings.

A Form 8-K was filed on April 20, 2004, reporting the Company’s semi-annual cash dividend payment.

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.