[LETTERHEAD OF KPMG LLP]




January 12, 2005


Securities and Exchange Commission

Washington, D.C.  20549


Ladies and Gentlemen:

We were previously principal accountants for 1st State Bancorp, Inc. and, under
the date of November 17, 2004, we reported on the consolidated financial
statements of 1st State Bancorp, Inc. as of and for the years ended September
30, 2004 and 2003. On January 7, 2005, our appointment as principal accountants
was terminated. We have read 1st State Bancorp, Inc.'s statements included under
Item 4 of its Form 8-K dated January 7, 2005, and we agree with such statements,
except that we are not in a position to agree or disagree with the description
of the appointment by the Audit Committee of McGladrey & Pullen, LLP.

Very truly yours,

/s/ KPMG LLP