UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2005.

or

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from              to             

Commission file number 001-12487

FIRST STATE BANCORPORATION

(Exact name of registrant as specified in its charter)

NEW MEXICO	85-0366665
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

7900 JEFFERSON NE ALBUQUERQUE, NEW MEXICO	87109
(Address of principal executive offices)	(Zip Code)

(505) 241-7500

(Registrant’s telephone number, including area code)

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 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 Rule 12b-2 of the Securities Exchange Act of 1934).    Yes  x    No  ¨

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 15,358,565 shares of common stock, no par value, outstanding as of August 2, 2005.

FIRST STATE BANCORPORATION AND SUBSIDIARY

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	2
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	9
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	13
Item 4.	Controls and Procedures	16
PART II. OTHER INFORMATION
Item 4.	Submission of Matters to a Vote of Security Holders	17
Item 6.	Exhibits	17
	SIGNATURES	18

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

First State Bancorporation and Subsidiary

Consolidated Condensed Balance Sheets

(unaudited)

(Dollars in thousands, except share and per share amounts)

	June 30, 2005			December 31, 2004
Assets
Cash and due from banks	$	45,923		$	42,514
Interest-bearing deposits with other banks		1,453			1,501
Federal funds sold		41,000			1,250
Total cash and cash equivalents		88,376			45,265
Investment securities:
Available for sale (at market, amortized cost of $206,504 at June 30, 2005, and $204,672 at December 31, 2004)		203,565			203,174
Held to maturity (at amortized cost, market value of $76,009 at June 30, 2005, and $75,236 at December 31, 2004)		76,443			75,407
Federal Home Loan Bank stock and Federal Reserve Bank stock, at cost		18,322			12,344
Total investment securities		298,330			290,925
Mortgage loans available for sale		27,287			18,965
Loans held for investment net of unearned interest		1,481,524			1,358,830
Less allowance for loan losses		(17,109	)		(15,331	)
Net loans		1,491,702			1,362,464
Premises and equipment, net		28,266			29,310
Accrued interest receivable		8,731			6,947
Other real estate owned		894			1,255
Goodwill		43,223			43,223
Cash surrender value of bank owned life insurance		30,419			19,910
Deferred tax asset, net		3,860			2,866
Other assets, net		13,841			13,345
Total assets	$	2,007,642		$	1,815,510
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest-bearing	$	349,354		$	317,729
Interest-bearing		1,116,299			1,083,574
Total deposits		1,465,653			1,401,303
Securities sold under agreements to repurchase		48,167			69,723
Federal Home Loan Bank advances and other		285,835			153,852
Junior subordinated debentures		48,971			38,661
Other liabilities		8,015			7,662
Total liabilities		1,856,641			1,671,201
Stockholders’ equity:
Preferred stock, no par value, 1,000,000 shares authorized; none issued or outstanding		—			—
Common stock, no par value, 20,000,000 shares authorized; issued 16,175,308 at June 30, 2005 and 16,141,232 at December 31, 2004; outstanding 15,358,565 at June 30, 2005 and 15,324,728 at December 31, 2004		89,202			88,634
Treasury stock, at cost (816,743 shares at June 30, 2005 and 816,504 shares at December 31, 2004)		(6,345	)		(6,340	)
Retained earnings		70,249			63,166
Unearned compensation		(223	)		(192	)
Accumulated other comprehensive income (loss)-     Unrealized loss on investment securities, net of tax		(1,882	)		(959	)
Total stockholders’ equity		151,001			144,309
Total liabilities and stockholders’ equity	$	2,007,642		$	1,815,510
Book value per share	$	9.83		$	9.42
Tangible book value per share	$	6.98		$	6.55

See accompanying notes to unaudited consolidated condensed financial statements.

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First State Bancorporation and Subsidiary

Consolidated Condensed Statements of Operations

For the three and six months ended June 30, 2005 and 2004

(unaudited)

(Dollars in thousands, except per share amounts)

	Three months ended June 30, 2005			Three months ended June 30, 2004			Six months ended June 30, 2005			Six months ended June 30, 2004
Interest:
Interest and fees on loans	$	26,486		$	19,951		$	50,313		$	40,049
Interest on marketable securities:
Taxable		2,487			2,149			5,007			4,283
Non-taxable		446			104			812			204
Federal funds sold		35			—			51			—
Interest-bearing deposits with other banks		28			14			53			28
Total interest income		29,482			22,218			56,236			44,564
Interest expense:
Deposits		5,970			4,602			11,386			9,065
Short-term borrowings		1,251			266			2,057			572
Long-term debt		1,075			439			1,704			980
Junior subordinated debentures		641			392			1,203			783
Total interest expense		8,937			5,699			16,350			11,400
Net interest income		20,545			16,519			39,886			33,164
Provision for loan losses		(1,725	)		(830	)		(2,800	)		(2,270	)
Net interest income after provision for loan losses		18,820			15,689			37,086			30,894
Non-interest income:
Service charges on deposit accounts		1,549			1,111			2,637			2,185
Other banking service fees		206			196			387			379
Credit and debit card transaction fees		540			1,188			1,025			2,157
Gain (loss) on sale or call of investment securities		(87	)		—			(87	)		236
Check imprint income		134			143			284			279
Gain on sale of mortgage loans		1,179			529			2,103			1,095
Other		639			328			1,055			650
Total non-interest income		4,160			3,495			7,404			6,981
Non-interest expenses:
Salaries and employee benefits		7,827			5,728			15,431			11,341
Occupancy		1,963			1,968			3,927			3,783
Data processing		802			720			1,618			1,397
Credit and debit card interchange		—			522			—			928
Equipment		1,141			1,075			2,189			2,107
Legal, accounting, and consulting		387			309			808			639
Marketing		609			656			1,174			1,208
Telephone		292			337			581			624
Supplies		200			219			418			413
Delivery		224			253			440			503
Other real estate owned		104			147			134			257
FDIC insurance premiums		49			45			98			89
Amortization of intangibles		27			28			54			56
Check imprint expense		154			142			318			272
Loss on sale of loans		—			—			—			435
Other		1,521			1,770			2,886			2,939
Total non-interest expenses		15,300			13,919			30,076			26,991
Income before income taxes		7,680			5,265			14,414			10,884
Income tax expense		2,750			1,944			5,178			3,989
Net income	$	4,930		$	3,321		$	9,236		$	6,895
Earnings per share:
Basic earnings per share	$	0.32		$	0.22		$	0.60		$	0.45
Diluted earnings per share	$	0.32		$	0.22		$	0.59		$	0.45
Dividends per common share	$	0.07		$	0.06		$	0.14		$	0.12

See accompanying notes to unaudited consolidated condensed financial statements.

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First State Bancorporation and Subsidiary

Consolidated Condensed Statements of Comprehensive Income

For the three and six months ended June 30, 2005 and 2004

(unaudited)

(Dollars in thousands)

	Three months ended June 30, 2005		Three months ended June 30, 2004			Six months ended June 30, 2005			Six months ended June 30, 2004
Net Income	$	4,930	$	3,321		$	9,236		$	6,895
Other comprehensive income (loss) net of tax-
Unrealized holding gains (losses) on securities available for sale arising during period		940		(3,250	)		(979	)		(2,624	)
Reclassification adjustment for (gains) losses included in net income		56		—			56			(151	)
Total comprehensive income	$	5,926	$	71		$	8,313		$	4,120

See accompanying notes to unaudited consolidated condensed financial statements.

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First State Bancorporation and Subsidiary

Consolidated Condensed Statements of Cash Flows

For the six months ended June 30, 2005 and 2004

(unaudited)

(Dollars in thousands)

	Six months ended June 30, 2005			Six months ended June 30, 2004
Operating activities:
Net Income	$	9,236		$	6,895
Adjustments to reconcile net income to net cash (used) provided by operating activities:
Provision for loan losses		2,800			2,270
Provision for decline in value of other real estate owned		—			56
Net gain on sale of other real estate owned		(47	)		(122	)
Depreciation and amortization		2,605			2,361
Stock-based compensation expense		80			115
(Gain) loss on sale of investment securities available for sale		87			(236	)
(Gain) loss on disposal of fixed assets		(86	)		163
Loss on sale of loans		—			435
Income tax benefit of stock options exercised		24			267
Increase in bank owned life insurance cash surrender value		(509	)		(430	)
Amortization of securities, net		709			422
Mortgage loans originated for sale		(144,773	)		(72,925	)
Proceeds from sale of mortgage loans available for sale, net		138,394			72,928
Deferred tax asset		(475	)		479
Decrease (increase) in accrued interest receivable		(1,784	)		(301	)
Decrease (increase) in other assets, net		(1,056	)		682
Increase in other liabilities, net		348			72
Total adjustments		(3,683	)		6,236
Net cash provided by operating activities		5,553			13,131
Cash flows from investing activities:
Net increase in loans		(126,473	)		(79,893	)
Purchases of investment securities carried at amortized cost		(7,410	)		(995	)
Maturities of investment securities carried at amortized cost		6,243			10,497
Purchases of investment securities carried at market		(19,499	)		(100,532	)
Maturities of investment securities carried at market		4,088			30,407
Sale of investment securities available for sale		6,935			17,261
Proceeds from the sale of loans		—			37,649
Purchases of premises and equipment		(1,195	)		(7,638	)
Proceeds from sales of premises and equipment		280			—
Proceeds from sales of and payments on other real estate owned		1,222			1,643
Purchase of bank owned life insurance		(10,000	)		—
Net cash used in investing activities		(145,809	)		(91,601	)
Cash flows from financing activities:
Net increase in interest-bearing deposits		32,725			78,334
Net increase (decrease) in non-interest-bearing deposits		31,625			(1,858	)
Net increase (decrease) in securities sold under agreements to repurchase		(21,556	)		(11,697	)
Proceeds from Federal Home Loan Bank advances		275,000			95,000
Payments on Federal Home Loan Bank advances		(143,017	)		(111,970	)
Proceeds from junior subordinated debentures		10,310			—
Proceeds from common stock issued		433			672
Dividends paid		(2,153	)		(1,757	)
Net cash provided by financing activities		183,367			46,724
Increase (decrease) in cash and cash equivalents		43,111			(31,746	)
Cash and cash equivalents at beginning of period		45,265			86,150
Cash and cash equivalents at end of period	$	88,376		$	54,404
Supplemental disclosure of noncash investing and financing activities:
Additions to other real estate owned in settlement of loans	$	814		$	1,343
Additions to loans in settlement of other real estate owned		—			—
Supplemental disclosure of cash flow information:
Cash paid for interest	$	15,752		$	11,477
Cash paid for income taxes	$	5,703		$	3,691

See accompanying notes to unaudited consolidated condensed financial statements.

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First State Bancorporation and Subsidiary

Notes to Consolidated Condensed Financial Statements

(unaudited)

1. Consolidated Condensed Financial Statements

The accompanying consolidated condensed financial statements of First State Bancorporation and subsidiary (the “Company”) are unaudited and include our accounts and those of our wholly owned subsidiary, First State Bank N.M. (the “Bank”). All significant intercompany accounts and transactions have been eliminated. Information contained in our consolidated condensed financial statements and notes thereto should be read in conjunction with our consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2004.

Our consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and instructions to Form 10-Q. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. In our opinion, all adjustments (consisting only of normally recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six month periods ended June 30, 2005, are not necessarily indicative of the results that may be expected for the year ending December 31, 2005.

2. New Accounting Standards

On March 1, 2005, the Federal Reserve Board released a final rule (FR) incorporating two substantive changes in the capital treatment of trust preferred securities that would impact bank holding companies and a number of clarifications of existing policies and guidelines. The substantive changes included in the FR that affect bank holding companies provide that: (1) As of March 31, 2009, the amount of trust preferred securities that a bank holding company may include as Tier 1 capital will be limited to 25% of the sum of all core capital elements including trust preferred securities, net of goodwill less any associated deferred tax liability, and (2) After March 31, 2009, amounts of trust preferred securities in excess of the 25% limit will be included in Tier 2 capital, limited to 50% of Tier 1 capital. Based on our current amount of trust preferred securities, the FR will not impact our capital calculations.

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” SFAS 150 establishes standards for how a business enterprise classifies, measures, and discloses in its financial statements certain financial instruments with characteristics of both liabilities and equity. SFAS 150 requires that a business enterprise classify financial instruments that are within its scope as liabilities (or as assets in some circumstances). SFAS 150 is effective for contracts entered into or modified after May 31, 2003, and is otherwise effective at the beginning of the first interim period beginning after June 15, 2003. The FASB has proposed to defer provisions related to mandatorily redeemable financial instruments to periods beginning after December 15, 2004. The adoption of SFAS 150 on July 1, 2003, did not have a material impact on our consolidated financial statements, and the adoption of the deferred provisions on January 1, 2005, did not have a material impact on our consolidated financial statements.

In December 2004, the FASB issued SFAS No. 123R, “Share-Based Payment.” SFAS 123R is a revision of SFAS No. 123, “Accounting for Stock-Based Compensation”, and supersedes APB 25. Among other provisions, SFAS 123R eliminates the use of APB 25 and the intrinsic value method of accounting, and requires companies to recognize the cost of employee services received in exchange for awards of equity instruments, based on the grant date fair value of those awards, in the financial statements. The effective date of SFAS 123R is the first reporting period beginning after June 15, 2005, although early adoption is allowed. However, on April 14, 2005, the Securities and Exchange Commission announced that the compliance date of SFAS 123R will be suspended until January 1, 2006, for calendar year companies.

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SFAS 123R permits companies to adopt its requirements using either a “modified prospective” method or a “modified retrospective” method. Under the “modified prospective” method, compensation cost is recognized in the financial statements beginning with the effective date, based on the requirements of SFAS 123R for all share-based payments granted after that date, and based on the requirements of SFAS 123 for all unvested awards granted prior to the effective date of SFAS 123R. Under the “modified retrospective” method, the requirements are the same as under the “modified prospective” method, but also permits entities to restate financial statements of previous periods based on proforma disclosures made in accordance with SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure.”

SFAS 123R also requires that the benefits associated with the tax deductions in excess of recognized compensation cost be reported as a financing cash flow, rather than as an operating cash flow as required under current literature. This requirement will reduce net operating cash flows and increase net financing cash flows in periods after the effective date. These future amounts cannot be estimated, because they depend on, among other things, when employees exercise stock options.

We currently expect to adopt SFAS 123R, effective January 1, 2006, based on the new compliance date announced by the Securities and Exchange Commission; however, we have not yet determined which of the aforementioned adoption methods we will use. Subject to a complete review of the requirements of SFAS 123R, based on stock options granted to date using our current pricing model (Black-Scholes), the adoption of SFAS 123R on January 1, 2006, is expected to reduce 2006 earnings by approximately $800,000.

In March 2004, the FASB’s Emerging Issues Task Force (“EITF”) reached a consensus on Issue No. 03-1, “The Meaning of Other-Than-Temporary Impairments and Its Application to Certain Investments” (EITF 03-1). EITF 03-1 provides accounting guidance regarding the determination of when an impairment (i.e., fair value is less than amortized cost) of debt and marketable equity securities and investments accounted for under the cost method should be considered other-than-temporary and recognized in earnings. EITF 03-1 also requires annual disclosures of certain quantitative and qualitative factors of debt and marketable equity securities classified as available-for-sale or held-to-maturity that are in an unrealized loss position at the balance sheet date, but for which an other-than-temporary impairment has not been recognized. The Financial Accounting Standards Board has decided to delay the effective date for the measurement and recognition guidance until new implementation guidance can be issued. The Proposed Staff Position EITF 03-1-a is expected to be issued in final form in 2005.

In December 2004, the AICPA issued Statement of Position (“SOP”) No. 03-3, “Accounting for Certain Loans or Debt Securities Acquired in a Transfer.” SOP 03-3 addresses accounting for differences between contractual cash flows and cash flows expected to be collected from an investor’s initial investment in loans or loans accounted for as debt securities acquired in a transfer if those differences are attributable, at least in part, to credit quality. SOP 03-3 requires that the excess of contractual cash flows over cash flows expected to be collected not be recognized as an adjustment of yield, loss accrual, or valuation allowance. It includes loans with evidence of deterioration of credit quality since origination, acquired by completion of a transfer, including such loans acquired in purchase business combinations. SOP 03-3 does not apply to loans originated by the entity or acquired loans that have not deteriorated in credit quality since origination. SOP 03-3 is effective for loans acquired in fiscal years beginning after December 15, 2004. The adoption of SOP 03-3 on January 1, 2005, did not have a material impact on our consolidated financial statements.

3. Stock Based Compensation

We apply the intrinsic value-based method of accounting prescribed by Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees” and related interpretations in accounting for our fixed plan stock options. As such, compensation expense is recorded on the date of grant only if the current market price of the underlying stock exceeds the exercise price. SFAS 123 established accounting and disclosure requirements using a fair value-based method of accounting for stock-based employee compensation plans. As allowed by SFAS 123, we have elected to continue to apply the intrinsic value-based method and have included the disclosure required by SFAS 148.

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Had compensation costs been determined consistent with the fair value method of SFAS 123 at the grant dates for awards, net income and earnings per common share would have changed to the pro forma amounts indicated below.

	Three months ended June 30,						Six months ended June 30,
	2005			2004			2005			2004
	(Dollars in thousands, except per share amounts)
Net income as reported:	$	4,930		$	3,321		$	9,236		$	6,895
Add: Stock-based employee compensation expense included in reported net income, net of related tax effects		27			36			51			73
Deduct: Total stock-based employee compensation expense determined under fair value-based method for awards, net of related tax effects		(263	)		(339	)		(583	)		(477	)
Pro forma net income	$	4,694		$	3,018		$	8,704		$	6,491
Earnings per share:
Basic – as reported	$	0.32		$	0.22		$	0.60		$	0.45
Basic – pro forma	$	0.31		$	0.20		$	0.57		$	0.42
Diluted – as reported	$	0.32		$	0.22		$	0.59		$	0.45
Diluted – pro forma	$	0.30		$	0.20		$	0.56		$	0.42

See Note 2. New Accounting Standards for further discussion regarding the impact SFAS 123R is expected to have on our operations.

4. Earnings per Common Share

Basic earnings per share are computed by dividing net income (the numerator) by the weighted-average number of common shares outstanding during the period (the denominator). Diluted earnings per share are calculated by increasing the basic earnings per share denominator by the number of additional common shares that would have been outstanding if dilutive potential common shares for options had been issued.

The following is a reconciliation of the numerators and denominators of basic and diluted earnings per share for the three and six months ended June 30:

	Three months ended June 30,
	2005					2004
	Income (Numerator)		Shares (Denominator)	Per Share Amount		Income (Numerator)		Shares (Denominator)	Per Share Amount
	(Dollars in thousands, except share and per share amounts)
Basic EPS:
Net income	$	4,930	15,386,087	$	0.32	$	3,321	15,303,746	$	0.22
Effect of dilutive securities:
Options			220,002					124,998
Diluted EPS:
Net income	$	4,930	15,606,089	$	0.32	$	3,321	15,428,744	$	0.22

	Six months ended June 30,
	2005					2004
	Income (Numerator)		Shares (Denominator)	Per Share Amount		Income (Numerator)		Shares (Denominator)	Per Share Amount
	(Dollars in thousands, except share and per share amounts)
Basic EPS:
Net income	$	9,236	15,378,413	$	0.60	$	6,895	15,286,720	$	0.45
Effect of dilutive securities:
Options			216,197					131,198
Diluted EPS:
Net income	$	9,236	15,594,610	$	0.59	$	6,895	15,417,918	$	0.45

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On February 9, 2005, we effected a two-for-one split of our common stock. All references to number of shares and per share computations in the consolidated condensed financial statements and notes have been retroactively adjusted to reflect the increased number of shares due to the effect of the common stock split.

For the three and six months ended June 30, 2005 no options were excluded from the calculation as the exercise prices of the stock options were less than the average share price of the common shares. For the three months ended June 30, 2004 approximately 378,000 stock options outstanding and 305,000 for the six months ended June 30, 2004 were excluded from the calculation of diluted earnings per share because the exercise prices of the stock options were equal to or greater than the average share price of the common shares, and therefore their inclusion would have been anti-dilutive.

5. Treasury Stock

Our Board of Directors has authorized us to purchase up to 1,050,000 shares of our common stock in the open market. As of June 30, 2005, we have purchased 784,100 shares. We did not purchase any additional shares during the six months ended June 30, 2005. We may purchase additional shares, the amount of which will be determined by market conditions. We sponsor a deferred compensation plan, which is included in the consolidated financial statements. At June 30, 2005, the assets of the deferred compensation plan included 32,643 shares of Company common stock.

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

Forward-Looking Statements

Certain statements in this Form 10-Q are forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). The discussions regarding our growth strategy, expansion of operations in our markets, competition, loan and deposit growth, timing of new branch openings, expansion opportunities including expanding our mortgage division market share, and response to consolidation in the banking industry include forward-looking statements. Other forward-looking statements can be identified by the use of forward-looking words such as “believe,” “expect,” “may,” “will,” “should,” “seek,” “approximately,” “intend,” “plan,” “estimate,” or “anticipate” or the negative of those words or other comparable terminology. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those in the forward-looking statement. Some factors include changes in interest rates, local business conditions, government regulations, loss of key personnel or inability to hire suitable personnel, faster or slower than anticipated growth, economic conditions, our competitors’ responses to our marketing strategy or new competitive conditions, and competition in the geographic and business areas in which we conduct our operations. We are not undertaking any obligation to update these risks to reflect events or circumstances after the date of this report to reflect the occurrence of unanticipated events.

Consolidated Condensed Balance Sheets

Our total assets increased by $192.1 million from $1.816 billion as of December 31, 2004, to $2.008 billion as of June 30, 2005. The increase was primarily made up of a $43.1 million increase in cash and cash equivalents, a $7.4 million increase in investment securities, a $129.2 million increase in loans, and a $10.5 million increase in cash surrender value of bank owned life insurance.

The following table presents the amounts of our loans, by category, at the dates indicated.

	June 30, 2005				December 31, 2004				June 30, 2004
	Amount		%		Amount		%		Amount		%
	(Dollars in thousands)
Commercial	$	193,049	12.8	%	$	174,293	12.6	%	$	171,879	13.5	%
Real estate-commercial		734,411	48.7	%		687,213	49.9	%		618,369	48.7	%
Real estate-one - to - four family		197,926	13.1	%		198,420	14.4	%		201,786	15.9	%
Real estate-construction		327,902	21.7	%		270,303	19.6	%		239,467	18.8	%
Consumer and other		28,236	1.9	%		28,601	2.1	%		29,715	2.4	%
Mortgage loans available for sale		27,287	1.8	%		18,965	1.4	%		8,896	0.7	%
Total	$	1,508,811	100.0	%	$	1,377,795	100.0	%	$	1,270,112	100.0	%

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We utilize deposits and Federal Home Loan Bank advances as our main source of funding for loans and investments. Deposits increased by $64.4 million from $1.401 billion as of December 31, 2004, to $1.466 billion as of June 30, 2005. Securities sold under agreements to repurchase decreased $21.6 million from $69.7 million at December 31, 2004 to $48.2 million at June 30, 2005. Federal Home Loan Bank advances and other increased $132.0 million from $153.9 million at December 31, 2004 to $285.8 million at June 30, 2005.

The following table represents customer deposits, by category, at the dates indicated.

	June 30, 2005				December 31, 2004				June 30, 2004
	Amount		%		Amount		%		Amount		%
	(Dollars in thousands)
Non-interest-bearing	$	349,353	23.8	%	$	317,729	22.7	%	$	267,711	21.0	%
Interest-bearing demand		268,156	18.3	%		254,140	18.0	%		236,942	18.6	%
Money market savings accounts		203,679	13.9	%		216,769	15.5	%		171,670	13.5	%
Regular savings		73,247	5.0	%		68,671	4.9	%		67,754	5.3	%
Certificates of deposit less than $100,000		214,322	14.6	%		223,893	16.0	%		231,129	18.2	%
Certificates of deposit greater than $100,000		356,896	24.4	%		320,101	22.9	%		297,145	23.4	%
Total	$	1,465,653	100.0	%	$	1,401,303	100.0	%	$	1,272,351	100.0	%

Consolidated Results of Operations For the Three Months Ended June 30, 2005

Our net income for the three months ended June 30, 2005, was $4.9 million, an increase of $1.6 million or 48% from $3.3 million for the same period of 2004. The increase in net income resulted from an increase in net interest income of $4.0 million and an increase in non-interest income of $665,000, partially offset by an increase in non-interest expenses of $1.4 million, an increase in the provision for loan losses of $895,000, and an increase in income taxes of $806,000. Our annualized return on average assets was 1.01% for the three months ended June 30, 2005, compared to 0.80% for the same period of 2004.

Our net interest income increased $4.0 million to $20.5 million for the second quarter of 2005 compared to $16.5 million for the second quarter of 2004. This increase was composed primarily of a $7.3 million increase in total interest income offset by a $3.2 million increase in total interest expense. The increase in interest income was composed of an increase of $4.1 million due to increased average interest earning assets of $275.9 million, aided by a $3.2 million increase due to a 0.71% increase in the yield on average interest earning assets. The increase in average interest-earning assets primarily occurred in loans and investment securities. The increase in loans of $221.3 million was made possible by our successful efforts to attract new customers and the increase in our investment securities of $51.8 million was driven primarily by purchases of securities to satisfy collateral pledging requirements. The increase in total interest expense was composed of an increase of $846,000 due to increased average interest-bearing liabilities of $198.2 million, and an increase of $2.4 million due to a 0.64% increase in the cost of interest-bearing liabilities. The increase in average interest-bearing liabilities was due to an increase in average interest-bearing deposits of $100.1 million and an increase in average borrowings including FHLB advances and junior subordinated debentures of $104.3 million. The increase in interest-bearing deposits is a result of our success in increasing market share in New Mexico.

The increase in yield on interest earning assets of 0.71% reflects the impact of the Federal Reserve Bank’s increases in the discount rate beginning in the third quarter of 2004 and into 2005. The increase in the discount rate contributes to a corresponding increase in the prime rate. A substantial portion of our loan portfolio consists of adjustable rate loans whose rates are adjusted based upon the then prevailing prime rate. The increase in the prime rate has led to a corresponding increase in the yield on our loan portfolio. We expect that the Federal Reserve Bank rate increases in the first six months of 2005 will cause the yield on our loan portfolio to continue to increase slightly in the coming months as existing loans reprice.

The increase in our cost of interest bearing liabilities is a result of higher interest payments made to our deposit and repurchase agreement customers as well as higher interest rates paid on our borrowings. The interest rate that we pay to our deposit and repurchase agreement customers is influenced by the level of the discount rate and competitive market

- 10 -

conditions. As a result of the increases in the discount rate made by the Federal Reserve Bank since the third quarter of 2004, we increased the interest rates that we pay on our customers’ deposits and repurchase agreements and increased the corresponding interest payments to these customers. In addition, the increase in the discount rate has corresponded to an increase in interest expense related to our borrowings as the majority of our borrowings mature within one year and are being replaced with borrowings at the higher current rates. We continue to use a laddering approach to our borrowings with maturities of approximately one year or less.

We believe that the competitive environment for deposits will significantly determine the impact on the net interest margin of changes in interest rates. During the quarter ended June 30, 2005, the net interest margin increased by 0.22% over the quarter ended June 30, 2004, due primarily to Federal Reserve Bank rate increases. The extent of future increases in our net interest margin will depend on the amount and timing of any further Federal Reserve Bank increases, the level of borrowings required to fund loan growth, and our ability to manage the cost of interest-bearing liabilities and stay competitive in the markets we serve.

Our provision for loan losses was $1.7 million for the second quarter of 2005, compared to $830,000 for the second quarter of 2004. Net charge-offs for the second quarter of 2005 were $658,000 compared to $398,000 for the second quarter of 2004. The allowance for loan losses to total loans held for investment was 1.15% and the ratio of allowance for loan losses to non-performing loans was 337% at June 30, 2005, compared to the allowance for loan losses to total loans held for investment of 1.15% and the ratio of allowance for loan losses to non-performing loans of 171% at June 30, 2004. Total non-performing assets to total assets were 0.30% at June 30, 2005, compared to 0.58% at June 30, 2004. We provide for loan losses based upon our judgments concerning the adequacy of the allowance for loan losses considering such factors as loan growth, delinquency trends, previous charge-off experience, and local and national economic conditions.

Our total non-interest income increased by $665,000 to $4.2 million for the three months ended June 30, 2005, compared to $3.5 million for the same period of 2004. The increase was primarily composed of a $650,000 increase in gain on sale of mortgage loans, and a $438,000 increase in service charges on deposit accounts resulting from increased customer activity related to implementation of an overdraft privilege product in April 2005. These increases were partially offset by a $648,000 decrease in credit and debit card transaction fees due to the sale of the merchant card portfolio in the third quarter of 2004.

Our total non-interest expenses increased by $1.4 million to $15.3 million for the second quarter of 2005, compared to $13.9 million for the same period of 2004. This increase was due partially to a $2.1 million increase in salaries and employee benefits, offset by a $522,000 decrease in credit and debit card interchange expense due to the sale of the merchant card portfolio, and a $249,000 decrease in other non-interest expenses. Other non-interest expenses in the second quarter 2004 included a loss of $215,000 from a robbery, $98,000 from restructuring the bank’s mortgage operation, and $47,000 from the write off of abandoned lockbox software.

Consolidated Results of Operations For the Six Months Ended June 30, 2005

Our net income for the six months ended June 30, 2005, was $9.2 million, an increase of $2.3 million or 34% from $6.9 million for the same period of 2004. The increase in net income resulted from an increase in net interest income of $6.7 million, an increase in non-interest income of $423,000, partially offset by an increase in non-interest expenses of $3.1 million, an increase in the provision for loan losses of $530,000, and an increase in income taxes of $1.2 million. Our annualized return on average assets was 0.98% for the six months ended June 30, 2005, compared to 0.84% for the same period of 2004.

Our net interest income increased $6.7 million to $39.9 million for the six months ended June 30, 2005 compared to $33.2 million for the same period of 2004. This increase was composed of an $11.7 million increase in total interest income offset by a $5.0 million increase in total interest expense. The increase in interest income was composed of an increase of $6.7 million due to increased average interest earning assets of $239.9 million aided by a $5.0 million increase due to a 0.55% increase in the yield on average interest earning assets. The increase in average interest-earning assets primarily occurred in loans and investment securities. The increase in total interest expense was composed of an increase of $1.4 million due to increased average interest-bearing liabilities of $171.7 million, and an increase of $3.6 million due to a 0.49% increase in the cost of interest-bearing liabilities. The increase in average interest-bearing liabilities was due to an increase in average interest-bearing deposits of $117.2 million and an increase in average borrowings of $60.3 million. The increase in interest-bearing deposits is a result of our success in increasing market share.

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Our provision for loan losses was $2.8 million for the first six months of 2005, compared to $2.3 million for the first six months of 2004. Net charge-offs for the six months ended June 30, 2005 were $1.0 million compared to $1.8 million for the six months ended June 30, 2004.

Our total non-interest income increased by $423,000 to $7.4 million for the six months ended June 30, 2005, compared to $7.0 million for the same period of 2004. For the first six months of 2005 compared to the first six months of 2004, service charges on deposit accounts increased $452,000 to $2.6 million compared to $2.2 million in 2004. Additionally, the gains on sales of mortgage loans increased $1.0 million reflecting a higher level of loan origination and sales activity. Credit and debit card transaction fees decreased $1.1 million directly related to the sale of the merchant card portfolio in the third quarter of 2004, offset by other non-interest income that increased $405,000. In addition, non-interest income for the first six months of 2005 includes the loss on sale of securities of $87,000 during the first six months of 2005 compared to a gain of $236,000 for the same period in 2004.

Our total non-interest expenses increased by $3.1 million to $30.1 million for the six months ended June 30, 2005, compared to $27.0 million for the same period of 2004. This increase was due partially to a $4.1 million increase in salaries and employee benefits, a $144,000 increase in occupancy expense, a $221,000 increase in data processing expense, and a $169,000 increase in legal, accounting, and consulting. The increases in salary, occupancy, and data processing expense are due primarily to overall expansion of our infrastructure to better serve the needs of our customers. Credit and debit card interchange expenses decreased by $928,000 from the first six months of 2004 due to the sale of the merchant card portfolio.

Allowance for Loan Losses

We use a systematic methodology, which is applied monthly to determine the amount of allowance for loan losses and the resultant provisions for loan losses we consider adequate to provide for anticipated loan losses. The allowance is increased by provisions charged to operations, and reduced by loan charge-offs, net of recoveries. The following table sets forth information regarding changes in our allowance for loan losses for the periods indicated. The principal factors affecting the amount of the provision in each of the periods presented was growth in the loan portfolio and net charge-offs.

ALLOWANCE FOR LOAN LOSSES:

	Six months ended June 30, 2005			Twelve months ended December 31, 2004			Six months ended June 30, 2004
				(Dollars in thousands)
Balance beginning of period	$	15,331		$	14,121		$	14,121
Provision for loan losses		2,800			4,500			2,270
Net charge-offs		(1,022	)		(3,290	)		(1,836	)
Balance end of period	$	17,109		$	15,331		$	14,555
Allowance for loan losses to total loans held for investment		1.15	%		1.11	%		1.15	%
Allowance for loan losses to non-performing loans		337	%		192	%		171	%
NON-PERFORMING ASSETS:
	June 30, 2005			December 31, 2004			June 30, 2004
				(Dollars in thousands)
Accruing loans – 90 days past due	$	—		$	4		$	9
Non-accrual loans		5,077			7,969			8,478
Total non-performing loans		5,077			7,973			8,487
Other real estate owned		894			1,255			1,323
Total non-performing assets	$	5,971		$	9,228		$	9,810
Potential problem loans	$	28,088		$	22,174		$	20,854
Total non-performing assets to total assets		0.30	%		0.51	%		0.58	%

Potential problem loans are loans not included in non-performing loans that we have doubts as to the ability of the borrowers to comply with present loan repayment terms.

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Liquidity and Capital Expenditures

Our primary sources of funds are customer deposits, loan repayments, and maturities of investment securities. We have additional sources of liquidity in the form of borrowings. Borrowings include federal funds purchased, securities sold under repurchase agreements, and borrowings from the Federal Home Loan Bank.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The following tables set forth, for the periods indicated, information with respect to average balances of assets and liabilities, as well as the total dollar amounts of interest income from interest-earning assets and interest expense from interest-bearing liabilities, resultant yields or costs, net interest income, net interest spread, net interest margin, and our ratio of average interest-earning assets to average interest-bearing liabilities. No tax equivalent adjustments were made and all average balances are daily average balance. Non-accruing loans have been included in the table as loans carrying a zero yield.

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	Three Months Ended June 30,
	2005							2004
	Average Balance			Interest Income or Expense		Average Yield or Cost		Average Balance			Interest Income or Expense		Average Yield or Cost
	(Dollars in thousands)
Assets
Loans:
Commercial	$	183,040		$	3,091	6.77	%	$	162,441		$	2,264	5.61	%
Real estate—mortgage		1,014,242			17,754	7.02	%		915,354			14,478	6.36	%
Real estate—construction		227,595			4,619	8.14	%		142,653			2,446	6.90	%
Consumer		28,404			678	9.57	%		30,176			692	9.22	%
Mortgage		23,430			344	5.89	%		5,145			71	5.55	%
Other		1,008			—	—			619			—	—
Total loans		1,477,719			26,486	7.19	%		1,256,388			19,951	6.39	%
Allowance for loan losses		(16,653	)						(14,587	)
Securities:
U.S. government and mortgage-backed		254,068			2,321	3.66	%		226,250			2,061	3.66	%
State and political subdivisions:
Non-taxable		32,661			446	5.48	%		11,232			104	3.72	%
Other		17,363			166	3.83	%		14,791			88	2.39	%
Total securities		304,092			2,933	3.87	%		252,273			2,253	3.59	%
Interest-bearing deposits with other banks		3,724			28	3.02	%		5,746			14	0.98	%
Federal funds sold		4,726			35	2.97	%		—			—	—
Total interest-earning assets		1,790,261			29,482	6.61	%		1,514,407			22,218	5.90	%
Non-interest-earning assets:
Cash and due from banks		47,088							51,154
Other		128,495							113,915
Total non-interest-earning assets		175,583							165,069
Total assets		1,949,191							1,664,889
Liabilities and Stockholders’ Equity
Deposits:
Interest-bearing demand accounts	$	261,754		$	520	0.80	%	$	238,120		$	274	0.46	%
Certificates of deposit < $100,000		216,589			1,591	2.95	%		233,268			1,514	2.61	%
Certificates of deposit > $100,000		332,808			2,729	3.29	%		293,142			2,110	2.89	%
Money market savings accounts		219,769			970	1.77	%		171,127			559	1.31	%
Regular savings accounts		72,572			160	0.88	%		67,732			145	0.86	%
Total interest-bearing deposits		1,103,492			5,970	2.17	%		1,003,389			4,602	1.84	%
Federal funds purchased and securities sold under agreements to repurchase		50,858			143	1.13	%		57,051			41	0.29	%
Short-term borrowings		132,927			1,108	3.34	%		76,900			225	1.18	%
Long-term debt		126,563			1,075	3.41	%		85,305			439	2.07	%
Junior subordinated debentures		40,474			641	6.35	%		33,506			392	4.71	%
Total interest-bearing liabilities		1,454,314			8,937	2.46	%		1,256,151			5,699	1.82	%
Non-interest-bearing demand accounts		337,596							266,748
Other non-interest-bearing liabilities		7,312							5,187
Total liabilities		1,799,222							1,528,086
Stockholders’ equity		149,969							136,803
Total liabilities and stockholders’ equity	$	1,949,191						$	1,664,889
Net interest income				$	20,545						$	16,519
Net interest spread						4.15	%						4.08	%
Net interest margin						4.60	%						4.39	%
Ratio of average interest-earning assets to average interest-bearing liabilities						123.10	%						120.56	%

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	Six Months Ended June 30,
	2005							2004
	Average Balance			Interest Income or Expense		Average Yield or Cost		Average Balance			Interest Income or Expense		Average Yield or Cost
	(Dollars in thousands)
Assets
Loans:
Commercial	$	174,600		$	5,751	6.64	%	$	159,956		$	4,438	5.58	%
Real estate—mortgage		994,902			34,087	6.91	%		924,502			29,528	6.42	%
Real estate—construction		216,001			8,502	7.94	%		133,571			4,549	6.85	%
Consumer		28,550			1,386	9.79	%		30,398			1,399	9.26	%
Mortgage		19,997			587	5.92	%		4,867			135	5.58	%
Other		941			—	—			586			—	—
Total loans		1,434,991			50,313	7.07	%		1,253,880			40,049	6.42	%
Allowance for loan losses		(16,166	)						(14,460	)
Securities:
U.S. government and mortgage-backed		256,354			4,712	3.71	%		219,883			4,110	3.76	%
State and political subdivisions:
Non-taxable		30,333			812	5.40	%		11,046			204	3.71	%
Other		16,134			295	3.69	%		14,985			173	2.32	%
Total securities		302,821			5,819	3.88	%		245,914			4,487	3.67	%
Interest-bearing deposits with other banks		4,277			53	2.50	%		6,187			28	0.91	%
Federal funds sold		3,799			51	2.71	%		—			—	—
Total interest-earning assets		1,745,888			56,236	6.50	%		1,505,981			44,564	5.95	%
Non-interest-earning assets:
Cash and due from banks		52,325							48,409
Other		122,327							111,822
Total non-interest-earning assets		174,652							160,231
Total assets	$	1,904,374						$	1,651,752
Liabilities and Stockholders’ Equity
Deposits:
Interest-bearing demand accounts	$	261,425		$	965	0.74	%	$	229,553		$	521	0.46	%
Certificates of deposit < $100,000		219,931			3,131	2.87	%		235,556			3,091	2.64	%
Certificates of deposit > $100,000		324,820			5,176	3.21	%		282,940			4,081	2.90	%
Money market savings accounts		219,749			1,800	1.65	%		166,033			1,092	1.32	%
Regular savings accounts		71,569			314	0.88	%		66,236			280	0.85	%
Total interest-bearing deposits		1,097,494			11,386	2.09	%		980,318			9,065	1.86	%
Federal funds purchased and securities sold under agreements to repurchase		52,455			209	0.80	%		58,279			86	0.30	%
Short-term borrowings		121,863			1,848	3.06	%		84,438			486	1.16	%
Long-term debt		112,649			1,704	3.05	%		95,796			980	2.06	%
Junior subordinated debentures		39,572			1,203	6.04	%		33,506			783	4.70	%
Total interest-bearing liabilities		1,424,033			16,350	2.32	%		1,252,337			11,400	1.83	%
Non-interest-bearing demand accounts		324,602							258,221
Other non-interest-bearing liabilities		7,354							5,098
Total liabilities		1,755,989							1,515,656
Stockholders’ equity		148,385							136,096
Total liabilities and stockholders’ equity	$	1,904,374						$	1,651,752
Net interest income				$	39,886						$	33,164
Net interest spread						4.18	%						4.12	%
Net interest margin						4.61	%						4.43	%
Ratio of average interest-earning assets to average interest-bearing liabilities						122.60	%						120.25	%

To effectively measure and manage interest rate risk, we use gap analysis and simulation analysis to determine the impact on net interest income under various interest rate scenarios, balance sheet trends, and strategies. From these analyses, we quantify interest rate risk and we develop and implement appropriate strategies. Additionally, we utilize duration and market value sensitivity measures when these measures provide added value to the overall interest rate risk management process. The overall interest rate risk position and strategies are reviewed by management and the Board of Directors of First State Bank N.M. on an ongoing basis.

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Rising and falling interest rate environments can have various impacts on a bank’s net interest income, depending on the short-term interest rate gap that the bank maintains, the relative changes in interest rates that occur when the bank’s various assets and liabilities reprice, unscheduled repayments of loans, early withdrawals of deposits and other factors. As of June 30, 2005, our cumulative interest rate gap for the period up to three months was a positive $419.9 million and for the period up to one year was a positive $127.3 million. Based solely on our interest rate gap of twelve months or less, our net income could be unfavorably impacted by decreases in interest rates or favorably impacted by increases in interest rates.

The following table sets forth our estimate of maturity or repricing, and the resulting interest rate gap of our interest-earning assets and interest-bearing liabilities at June 30, 2005. The amounts are based upon regulatory reporting formats and, therefore, may not be consistent with financial information appearing elsewhere in this report that has been prepared in accordance with accounting principles generally accepted in the United States of America. The amounts could be significantly affected by external factors such as changes in prepayment assumptions, early withdrawals of deposits, and competition.

	Less than three months		Three months to less than one year			One to five years		Over five years		Total
	(Dollars in thousands)
Interest-earning assets:
Interest-bearing deposits with other banks	$	1,453	$	—		$	—	$	—	$	1,453
Investment securities		7,222		21,961			201,019		68,128		298,330
Federal funds sold		41,000		—			—		—		41,000
Loans:
Commercial		136,160		19,042			34,468		3,379		193,049
Real estate		725,242		167,886			352,284		42,114		1,287,526
Consumer		8,120		7,377			12,194		545		28,236
Total interest-earning assets	$	919,197	$	216,266		$	599,965	$	114,166	$	1,849,594
Interest-bearing liabilities:
Savings and NOW accounts	$	109,016	$	129,384		$	238,400	$	68,282	$	545,082
Certificates of deposit greater than $100,000		140,750		115,527			97,250		3,369		356,896
Certificates of deposit less than $100,000		51,361		85,797			74,683		2,481		214,322
Securities sold under agreements to repurchase		48,167		—			—		—		48,167
FHLB advances and other		101,050		178,150			6,072		563		285,835
Junior subordinated debentures		48,971		—			—		—		48,971
Total interest-bearing liabilities	$	499,315	$	508,858		$	416,405	$	74,695	$	1,499,273
Interest rate gap	$	419,882	$	(292,592	)	$	183,560	$	39,471	$	350,321
Cumulative interest rate gap at June 30, 2005	$	419,882	$	127,290		$	310,850	$	350,321
Cumulative gap ratio at June 30, 2005		1.84		1.13			1.22		1.23

Item 4. Controls and Procedures.

As of the end of the period covered by this report, an evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of June 30, 2005, pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934. Based on their evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures and internal control over financial reporting are, to the best of their knowledge, effective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

Our Chief Executive Officer and Chief Financial Officer have also concluded that there were no changes in our internal control over financial reporting or in other factors that occurred during the registrant’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting or any corrective actions with regard to significant deficiencies and material weaknesses in internal control over financial reporting.

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PART II – OTHER INFORMATION

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

On June 2, 2005 we held our annual meeting of shareholders. At that meeting the following items were submitted to a vote of security holders:

1. The following two directors were elected:

		Shares Voted
Name	Term	For	Withheld
Douglas M. Smith, M.D.	3 years	14,721,500	45,366
Herman N. Wisenteiner	3 years	12,939,306	1,827,560

As a result of the election of the above listed directors, our Board of Directors will consist of those directors and the following directors: Michael R. Stanford, H. Patrick Dee, Leonard J. DeLayo, Bradford M. Johnson, A.J. Wells, Lowell A. Hare, and Nedra Matteucci.

2. Proposal to ratify the selection of KPMG LLP as our independent registered public accounting firm. Votes: For 14,579,140; Against 126,896; Abstain 60,829.

Item 6. Exhibits.

Exhibit No.	Description
3.1	Restated Articles of Incorporation of First State Bancorporation. (1)
3.2	Articles of Amendment to the Restated Articles of Incorporation of First State Bancorporation. (6)
3.3	Amended Bylaws of First State Bancorporation. (2)
4	Shareholder Protection Rights Agreement dated October 25, 1996. (3)
10.1	Executive Employment Agreement. (5)
10.2	First State Bancorporation 2003 Equity Incentive Plan. (4)
10.3	Deferred Compensation Agreement. (2) (Participation and contributions to this Plan have been frozen as of December 31, 2004)
10.4	First Amendment to Executive Employment Agreement. (7)
10.5	Officer Employment Agreement. (7)
10.6	First Amendment of Officer Employment Agreement. (7)
14	Code of Ethics for Executives. (2)
31.1	Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2	Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1	Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
32.2	Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

(1) Incorporated by reference from First State Bancorporation’s Registration Statement on Form S-2, Commission File No. 333-24417, declared effective April 25, 1997.

(2) Incorporated by reference from First State Bancorporation’s Form 10-Q for the quarter ended March 31, 2003.

(3) Incorporated by reference from First State Bancorporation’s Form 10-QSB for the quarter ended September 30, 1996.

(4) Incorporated by reference from First State Bancorporation’s Current Report on Form 8-K filed June 9, 2003.

(5) Incorporated by reference from First State Bancorporation’s 10-K for the year ended December 31, 2001.

(6) Incorporated by reference from First State Bancorporation’s 10-KSB for the year ended December 31, 1997.

(7) Incorporated by reference from First State Bancorporation’s Form 10-Q for the quarter ended March 31, 2005.

 * Filed herewith.

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SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	FIRST STATE BANCORPORATION
Date: August 8, 2005	By:	/s/ Michael R. Stanford
		Michael R. Stanford, President & Chief Executive Officer
Date: August 8, 2005	By:	/s/ Christopher C. Spencer
		Christopher C. Spencer, Senior Vice President and Chief Financial Officer

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EXHIBIT INDEX

Exhibit No.	Description
3.1	Restated Articles of Incorporation of First State Bancorporation. (1)
3.2	Articles of Amendment to the Restated Articles of Incorporation of First State Bancorporation. (6)
3.3	Amended Bylaws of First State Bancorporation. (2)
4	Shareholder Protection Rights Agreement dated October 25, 1996. (3)
10.1	Executive Employment Agreement. (5)
10.2	First State Bancorporation 2003 Equity Incentive Plan. (4)
10.3	Deferred Compensation Agreement. (2) (Participation and contributions to this Plan have been frozen as of December 31, 2004)
10.4	First Amendment to Executive Employment Agreement. (7)
10.5	Officer Employment Agreement. (7)
10.6	First Amendment of Officer Employment Agreement. (7)
14	Code of Ethics for Executives. (2)
31.1	Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2	Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1	Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
32.2	Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

(1) Incorporated by reference from First State Bancorporation’s Registration Statement on Form S-2, Commission File No. 333-24417, declared effective April 25, 1997.

(2) Incorporated by reference from First State Bancorporation’s Form 10-Q for the quarter ended March 31, 2003.

(3) Incorporated by reference from First State Bancorporation’s Form 10-QSB for the quarter ended September 30, 1996.

(4) Incorporated by reference from First State Bancorporation’s Current Report on Form 8-K filed June 9, 2003.

(5) Incorporated by reference from First State Bancorporation’s 10-K for the year ended December 31, 2001.

(6) Incorporated by reference from First State Bancorporation’s 10-KSB for the year ended December 31, 1997.

(7) Incorporated by reference from First State Bancorporation’s Form 10-Q for the quarter ended March 31, 2005.

 * Filed herewith.

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