##### Table of Contents

---

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



---



FORM 10-QSB



(Mark One)

|x | Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ---------------------------------------------------------------------------------



For the quarterly period ended September 30, 2003



| ̈ | Transition report under Section 13 or 15(d) of the Exchange Act
|- | ---------------------------------------------------------------



For the transition period from  to



Commission file number 333-103907



---



OLD FLORIDA BANKSHARES, INC.

(Exact Name of Small Business Issuer as Specified in Its Charter)



|Florida                                                        |  | 65-1113601                          
|-------------------------------------------------------------- |  | ------------------------------------
|(State or Other Jurisdiction of Incorporation or Organization) |  | (I.R.S. Employer Identification No.)



6321 Daniels Parkway

Fort Myers, Florida 33912

(Address of Principal Executive Offices)



(239) 561-6222

(Issuers Telephone Number, Including Area Code)



(Former Name, Former Address and Former Fiscal Year, if Changed

Since Last Report)



---



Check whether the issuer: (1) filed all
reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act 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 ̈



State the number of shares outstanding of each of the issuers classes
of common equity, as of the latest practicable date;



|Common stock, par value $.01 per share |  | 1,929,595 shares               
|-------------------------------------- |  | -------------------------------
|(class)                                |  | Outstanding at October 15, 2003



Transitional Small
Business Format (Check One):    YES ̈NO  x



---



---

##### Table of Contents

OLD FLORIDA BANKSHARES, INC. AND SUBSIDIARIES



INDEX



|                                                                                                                                |  | Page 
|------------------------------------------------------------------------------------------------------------------------------- |  | -----
|PART I. FINANCIAL INFORMATION                                                                                                   |  |      
|                                                                                                                                | 
|Item 1. Interim Financial Statements                                                                                            |  |      
|                                                                                                                                | 
|Condensed Consolidated Balance Sheets -At September 30, 2003 (unaudited) and At December 31, 2002                               |  | 2    
|                                                                                                                                | 
|Condensed Consolidated Statements of Earnings -Three and Nine Months Ended September 30, 2003 and 2002 (unaudited)              |  | 3    
|                                                                                                                               
|                                                                                                                                | 
|Condensed Consolidated Statements of Changes in Stockholders Equity -Nine Months Ended September 30, 2003 and 2002 (unaudited) |  | 4    
|                                                                                                                               
|                                                                                                                                | 
|Condensed Consolidated Statements of Cash Flows -Nine Months Ended September 30, 2003 and 2002 (unaudited)                      |  | 5-6  
|                                                                                                                               
|                                                                                                                                | 
|Notes to Condensed Consolidated Financial Statements (unaudited)                                                                |  | 7-13 
|                                                                                                                                | 
|Review by Independent Certified Public Accountants                                                                              |  | 14   
|                                                                                                                                | 
|Independent Accountants Report                                                                                                 |  | 15   
|                                                                                                                                | 
|Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations                                   |  | 16-21
|                                                                                                                                | 
|Item 3. Controls and Procedures                                                                                                 |  | 22   
|                                                                                                                                | 
|PART II. OTHER INFORMATION                                                                                                      |  |      
|                                                                                                                                | 
|Item 1. Legal Proceedings                                                                                                       |  | 22   
|                                                                                                                                | 
|Item 6. Exhibits and Reports on Form 8-K                                                                                        |  | 23-24
|                                                                                                                                | 
|SIGNATURES                                                                                                                      |  | 25   



1



---

##### Table of Contents

OLD FLORIDA BANKSHARES, INC. AND SUBSIDIARIES



PART I. FINANCIAL INFORMATION



Item 1. Financial Statements



Condensed
Consolidated Balance Sheets

($ in thousands, except per share amounts)



|                                                                                                                                                |  | September 30,2003 |         |   | December 31,2002 |        
|----------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------- | - | ---------------- | -------
|                                                                                                                                                |  | (Unaudited)       |         |   |                  |        
|Assets                                                                                                                                          |  |                   |         |   |                  |        
|Cash and due from banks                                                                                                                         |  | $                 | 3,072   |   |                  | 2,804  
|Interest-bearing deposits with banks                                                                                                            |  |                   | 195     |   |                  | 2,472  
|Federal funds sold                                                                                                                              |  |                   | 4,464   |   |                  | 1,337  
|                                                                                                                                                |  |                   |         |   |                  |        
|Total cash and cash equivalents                                                                                                                 |  |                   | 7,731   |   |                  | 6,613  
|                                                                                                                                                |  |                  
|Securities available for sale                                                                                                                   |  |                   | 16,781  |   |                  | 8,934  
|Securities held to maturity                                                                                                                     |  |                   | 983     |   |                  |       
|Loans, net of allowance for loan losses of $1,527 in 2003 and $965 in 2002                                                                      |  |                   | 116,448 |   |                  | 87,272 
|Premises and equipment, net                                                                                                                     |  |                   | 9,296   |   |                  | 4,131  
|Federal Home Loan Bank stock, at cost                                                                                                           |  |                   | 608     |   |                  | 169    
|Accrued interest receivable                                                                                                                     |  |                   | 520     |   |                  | 372    
|Deferred income taxes                                                                                                                           |  |                   | 46      |   |                  | 262    
|Goodwill                                                                                                                                        |  |                   | 3,329   |   |                  |       
|Core deposit intangible                                                                                                                         |  |                   | 401     |   |                  |       
|Other assets                                                                                                                                    |  |                   | 537     |   |                  | 395    
|                                                                                                                                                |  |                   |         |   |                  |        
|Total assets                                                                                                                                    |  | $                 | 156,680 |   |                  | 108,148
|                                                                                                                                                |  |                   |         |   |                  |        
|Liabilities and Stockholders Equity                                                                                                            |  |                   |         |   |                  |        
|                                                                                                                                                |  |                  
|Liabilities:                                                                                                                                    |  |                   |         |   |                  |        
|Noninterest-bearing demand deposits                                                                                                             |  |                   | 11,702  |   |                  | 7,206  
|Savings, NOW and money-market deposits                                                                                                          |  |                   | 51,463  |   |                  | 38,839 
|Time deposits                                                                                                                                   |  |                   | 57,687  |   |                  | 45,882 
|                                                                                                                                                |  |                   |         |   |                  |        
|Total deposits                                                                                                                                  |  |                   | 120,852 |   |                  | 91,927 
|                                                                                                                                                |  |                  
|Official checks                                                                                                                                 |  |                   | 1,394   |   |                  | 566    
|Federal Home Loan Bank advances                                                                                                                 |  |                   | 12,204  |   |                  | 3,360  
|Accrued interest payable and other liabilities                                                                                                  |  |                   | 864     |   |                  | 321    
|                                                                                                                                                |  |                   |         |   |                  |        
|Total liabilities                                                                                                                               |  |                   | 135,314 |   |                  | 96,174 
|                                                                                                                                                |  |                   |         |   |                  |        
|Stockholders equity:                                                                                                                           |  |                   |         |   |                  |        
|Preferred stock, $.01 par value; 1,000,000 shares authorized, none issued or outstanding                                                        |  |                   |        |   |                  |       
|Common stock, $.01 par value; 5,000,000 shares authorized, 1,929,595 and 1,216,595 shares issued and outstanding in 2003 and 2002,
respectively |  |                   | 19      |   |                  | 12     
|Additional paid-in capital                                                                                                                      |  |                   | 21,469  |   |                  | 12,426 
|Accumulated deficit                                                                                                                             |  |                   | (141    | ) |                  | (577   
|Accumulated other comprehensive income                                                                                                          |  |                   | 19      |   |                  | 113    
|                                                                                                                                                |  |                   |         |   |                  |        
|Total stockholders equity                                                                                                                      |  |                   | 21,366  |   |                  | 11,974 
|                                                                                                                                                |  |                   |         |   |                  |        
|Total liabilities and stockholders equity                                                                                                      |  | $                 | 156,680 |   |                  | 108,148
|                                                                                                                                                |  |                   |         |   |                  |        



See
Accompanying Notes to Condensed Consolidated Financial Statements.



2



---

##### Table of Contents

OLD FLORIDA BANKSHARES, INC. AND SUBSIDIARIES



Condensed Consolidated Statements of Earnings (Unaudited)

($ in thousands, except per share
amounts)



|                                                          |  | Three Months EndedSeptember 30, |           | Nine Months EndedSeptember 30,
|--------------------------------------------------------- |  | ------------------------------- | --------- | ------------------------------
|                                                          |  | 2003                            |           | 2002                          
|Interest income:                                          |  |                                 |           |                               
|Loans                                                     |  | $                               | 1,709     |                               
|Securities                                                |  |                                 | 134       |                               
|Other interest-earning assets                             |  |                                 | 14        |                               
|                                                          |  |                                 |           |                               
|Total interest income                                     |  |                                 | 1,857     |                               
|                                                          |  |                                 |           |                               
|Interest expense:                                         |  |                                 |           |                               
|Deposits                                                  |  |                                 | 598       |                               
|Other borrowings                                          |  |                                 | 26        |                               
|                                                          |  |                                 |           |                               
|Total interest expense                                    |  |                                 | 624       |                               
|                                                          |  |                                 |           |                               
|Net interest income                                       |  |                                 | 1,233     |                               
|Provision for loan losses                                 |  |                                 |          |                               
|                                                          |  |                                 |           |                               
|Net interest income after provision for loan losses       |  |                                 | 1,233     |                               
|                                                          |  |                                 |           |                               
|Noninterest income:                                       |  |                                 |           |                               
|Service charges on deposit accounts                       |  |                                 | 44        |                               
|Other service charges and fees                            |  |                                 | 16        |                               
|Gain on sale of securities available for sale             |  |                                 | 1         |                               
|Gain on sale of loans held for sale                       |  |                                 | 75        |                               
|Gain on sale of land                                      |  |                                 | 298       |                               
|                                                          |  |                                 |           |                               
|Total noninterest income                                  |  |                                 | 434       |                               
|                                                          |  |                                 |           |                               
|Noninterest expenses:                                     |  |                                 |           |                               
|Salaries and employee benefits                            |  |                                 | 687       |                               
|Occupancy and equipment                                   |  |                                 | 251       |                               
|Advertising                                               |  |                                 | 15        |                               
|Insurance                                                 |  |                                 | 13        |                               
|Data processing                                           |  |                                 | 75        |                               
|Telephone                                                 |  |                                 | 39        |                               
|Professional fees                                         |  |                                 | 28        |                               
|Other                                                     |  |                                 | 159       |                               
|                                                          |  |                                 |           |                               
|Total noninterest expenses                                |  |                                 | 1,267     |                               
|                                                          |  |                                 |           |                               
|Earnings before income taxes                              |  |                                 | 400       |                               
|Income taxes                                              |  |                                 | 153       |                               
|                                                          |  |                                 |           |                               
|Net earnings                                              |  | $                               | 247       |                               
|                                                          |  |                                 |           |                               
|Basic earnings per share                                  |  | $                               | .16       |                               
|                                                          |  |                                 |           |                               
|Weighted-average number of shares outstanding for basic   |  |                                 | 1,573,095 |                               
|                                                          |  |                                 |           |                               
|Diluted earnings per share                                |  | $                               | .15       |                               
|                                                          |  |                                 |           |                               
|Weighted-average number of shares outstanding for diluted |  |                                 | 1,606,331 |                               
|                                                          |  |                                 |           |                               
|Dividends per share                                       |  | $                               |          |                               
|                                                          |  |                                 |           |                               



See
Accompanying Notes to Condensed Consolidated Financial Statements.



3



---

##### Table of Contents

OLD FLORIDA BANKSHARES, INC. AND SUBSIDIARIES



Condensed Consolidated Statements of Changes in Stockholders Equity



For the Nine Months Ended September 30, 2003 and 2002

(In thousands)



|                                                                                       |  | CommonStock |    | Additional Paid-InCapital |        | AccumulatedDeficit |      |   | AccumulatedOtherComprehensiveIncome |     |   | TotalStockholdersEquity |       
|-------------------------------------------------------------------------------------- |  | ----------- | -- | ------------------------- | ------ | ------------------ | ---- | - | ----------------------------------- | --- | - | ------------------------ | ------
|Balance at December 31, 2001                                                           |  | $           | 12 |                           | 12,426 |                    | (966 | ) |                                     | 42  |   |                          | 11,514
|                                                                                       |  |             |    |                           |        |                    |      |   |                                     |     |   |                          |       
|Comprehensive income:                                                                  |  |             |    |                           |        |                    |      |   |                                     |     |   |                          |       
|                                                                                       |  |             |    |                           |       
|Net earnings (unaudited)                                                               |  |             |   |                           |       |                    | 266  |   |                                     |    |   |                          | 266   
|Net change in unrealized gain on securities available for sale, net of tax (unaudited) |  |             |   |                           |       |                    |     |   |                                     | 101 |   |                          | 101   
|                                                                                       |  |             |    |                           |        |                    |      |   |                                     |     |   |                          |       
|Comprehensive income (unaudited)                                                       |  |             |    |                           |        |                    |      |   |                                     |     |   |                          | 367   
|                                                                                       |  |             |    |                           |        |                    |      |   |                                     |     |   |                          |       
|Balance at September 30, 2002 (unaudited)                                              |  |             | 12 |                           | 12,426 |                    | (700 | ) |                                     | 143 |   |                          | 11,881
|                                                                                       |  |             |    |                           |        |                    |      |   |                                     |     |   |                          |       
|Balance at December 31, 2002                                                           |  |             | 12 |                           | 12,426 |                    | (577 | ) |                                     | 113 |   |                          | 11,974
|                                                                                       |  |             |    |                           |        |                    |      |   |                                     |     |   |                          |       
|Comprehensive income:                                                                  |  |             |    |                           |        |                    |      |   |                                     |     |   |                          |       
|                                                                                       |  |             |    |                           |       
|Net earnings (unaudited)                                                               |  |             |   |                           |       |                    | 436  |   |                                     |    |   |                          | 436   
|Net change in unrealized gain on securities available for sale, net of tax (unaudited) |  |             |   |                           |       |                    |     |   |                                     | (94 | ) |                          | (94   
|                                                                                       |  |             |    |                           |        |                    |      |   |                                     |     |   |                          |       
|Comprehensive income (unaudited)                                                       |  |             |    |                           |        |                    |      |   |                                     |     |   |                          | 342   
|                                                                                       |  |             |    |                           |        |                    |      |   |                                     |     |   |                          |       
|Stock options issued in bank acquisition (unaudited)                                   |  |             |   |                           | 138    |                    |     |   |                                     |    |   |                          | 138   
|                                                                                       |  |             |    |                           |       
|Issuance of common stock (713,000 shares) in acquisition of bank (unaudited)           |  |             | 7  |                           | 8,905  |                    |     |   |                                     |    |   |                          | 8,912 
|                                                                                       |  |             |    |                           |        |                    |      |   |                                     |     |   |                          |       
|Balance at September 30, 2003 (unaudited)                                              |  | $           | 19 |                           | 21,469 |                    | (141 | ) |                                     | 19  |   |                          | 21,366
|                                                                                       |  |             |    |                           |        |                    |      |   |                                     |     |   |                          |       



See
Accompanying Notes to Condensed Consolidated Financial Statements.



4



---

##### Table of Contents

OLD FLORIDA BANKSHARES, INC. AND SUBSIDIARIES



Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)



|                                                                                              |  | Nine Months Ended September 30, |        
|--------------------------------------------------------------------------------------------- |  | ------------------------------- | -------
|                                                                                              |  | 2003                            |        
|Cash flows from operating activities:                                                         |  |                                 |        
|Net earnings                                                                                  |  | $                               | 436    
|Adjustments to reconcile net earnings to net cash (used in) provided by operating activities: |  |                                 |        
|Depreciation and amortization                                                                 |  |                                 | 259    
|Provision for loan losses                                                                     |  |                                 |       
|Provision for deferred income taxes                                                           |  |                                 | 264    
|Amortization of loan fees, costs, premiums and discounts                                      |  |                                 | (197   
|Gain on sale of securities available for sale                                                 |  |                                 | (16    
|Gain on sale of loans held for sale                                                           |  |                                 | (176   
|Proceeds from sale of loans held for sale                                                     |  |                                 | 6,213  
|Originations of loans held for sale                                                           |  |                                 | (6,037 
|Gain on sale of land                                                                          |  |                                 | (298   
|Increase in accrued interest receivable                                                       |  |                                 | (74    
|Decrease (increase) in other assets                                                           |  |                                 | 98     
|(Decrease) increase in official checks, accrued interest payable and other liabilities        |  |                                 | (563   
|                                                                                              |  |                                 |        
|Net cash (used in) provided by operating activities                                           |  |                                 | (91    
|                                                                                              |  |                                 |        
|Cash flows from investing activities:                                                         |  |                                 |        
|Purchase of securities available for sale                                                     |  |                                 | (10,034
|Purchase of securities held to maturity                                                       |  |                                 | (987   
|Principal collected on securities available for sale                                          |  |                                 | 5,236  
|Call of securities available for sale                                                         |  |                                 | 4,000  
|Sale of securities available for sale                                                         |  |                                 | 4,038  
|Net decrease (increase) in loans                                                              |  |                                 | 6,052  
|Purchase of Federal Home Loan Bank stock                                                      |  |                                 | (199   
|Sale of Federal Reserve Bank stock                                                            |  |                                 | 197    
|Purchase of premises and equipment                                                            |  |                                 | (1,587 
|Cash received in acquisition of deposit accounts                                              |  |                                 |       
|Cash received in acquisition of bank                                                          |  |                                 | 1,376  
|Proceeds from sale of land                                                                    |  |                                 | 725    
|                                                                                              |  |                                 |        
|Net cash provided by (used in) investing activities                                           |  |                                 | 8,817  
|                                                                                              |  |                                 |        
|Cash flows from financing activities:                                                         |  |                                 |        
|Net (decrease) increase in deposits                                                           |  |                                 | (9,199 
|Repayment of Federal Home Loan Bank advances                                                  |  |                                 | (3,009 
|Repayment of Federal Funds purchased                                                          |  |                                 | (2,400 
|Proceeds from Federal Home Loan Bank advances                                                 |  |                                 | 7,000  
|                                                                                              |  |                                 |        
|Net cash used in financing activities                                                         |  |                                 | (7,608 
|                                                                                              |  |                                 |        
|Net increase (decrease) in cash and cash equivalents                                          |  |                                 | 1,118  
|Cash and cash equivalents at beginning of period                                              |  |                                 | 6,613  
|                                                                                              |  |                                 |        
|Cash and cash equivalents at end of period                                                    |  | $                               | 7,731  
|                                                                                              |  |                                 |        



(continued)



5



---

##### Table of Contents

OLD FLORIDA BANKSHARES, INC. AND SUBSIDIARIES



Condensed Consolidated Statements of Cash Flows (Unaudited), Continued

(In thousands)



|                                                                                                           |  | Nine Months Ended September 30,
|---------------------------------------------------------------------------------------------------------- |  | -------------------------------
|                                                                                                           |  | 2003                           
|Supplemental disclosure of cash flow information:                                                          |  |                                
|Cash paid during the period for:                                                                           |  |                                
|Interest                                                                                                   |  | $                              
|                                                                                                           |  |                                
|Income taxes                                                                                               |  | $                              
|                                                                                                           |  |                                
|Noncash transaction:                                                                                       |  |                                
|Accumulated other comprehensive income, change in unrealized gain on securities available for sale         |  | $                              
|                                                                                                           |  |                                
|In connection with the acquisition of the Bank the following assets were acquired and liabilities assumed: |  |                                
|Securities available for sale                                                                              |  | $                              
|                                                                                                           |  |                                
|Loans                                                                                                      |  | $                              
|                                                                                                           |  |                                
|Premises and equipment                                                                                     |  | $                              
|                                                                                                           |  |                                
|Federal Home Loan Bank stock                                                                               |  | $                              
|                                                                                                           |  |                                
|Federal Reserve Bank stock                                                                                 |  | $                              
|                                                                                                           |  |                                
|Accrued interest receivable and other assets                                                               |  | $                              
|                                                                                                           |  |                                
|Goodwill                                                                                                   |  | $                              
|                                                                                                           |  |                                
|Core deposit intangible                                                                                    |  | $                              
|                                                                                                           |  |                                
|Deposits                                                                                                   |  | $                              
|                                                                                                           |  |                                
|Federal Home Loan Bank advances                                                                            |  | $                              
|                                                                                                           |  |                                
|Federal funds purchased                                                                                    |  | $                              
|                                                                                                           |  |                                
|Other liabilities                                                                                          |  | $                              
|                                                                                                           |  |                                



See
Accompanying Notes to Condensed Consolidated Financial Statements.



6



---

##### Table of Contents

OLD FLORIDA BANKSHARES, INC. AND SUBSIDIARIES



Notes to Condensed Consolidated Financial Statements (Unaudited)



(1) Description of Business and Basis of Presentation



In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments (consisting principally of normal recurring accruals) necessary to present fairly the financial
position at September 30, 2003, the results of operations for the three- and nine-month periods ended September 30, 2003 and 2002 and cash flows for the nine month periods ended September 30, 2003 and 2002. The results of operations for the three-
and nine-month periods ended September 30, 2003 are not necessarily indicative of the results to be expected for the year ending December 31, 2003.



General. Old Florida Bankshares, Inc. (the Holding Company) owns 100% of the outstanding common stock of Old Florida Bank (the
Bank) and Old Florida Capital, Inc. (OFC) (collectively the Company).



The Holding Companys only business activities are those of its subsidiaries. The Bank is a state (Florida) chartered commercial bank. The Bank offers a variety of community banking services to individual and
corporate customers through its three banking offices located in Ft. Myers, Bonita Springs and Naples, Florida. The deposits of the Bank are insured by the Federal Deposit Insurance Corporation. In 2002, the Holding Company established OFC which
began brokering commercial mortgage loans in 2003.



In February 2002, the
Company acquired deposits from another financial institution in South Fort Myers, Florida. The deposits were transferred to the Fort Myers branch. The excess of the fair value of liabilities assumed over the fair value of tangible assets acquired in
this transaction is being amortized on the straight-line basis over ten years. The intangible asset at September 30, 2003 was approximately $178,000 and is included in other assets on the condensed consolidated balance sheet.



Basis of Presentation.The accompanying condensed consolidated
financial statements include the accounts of the Holding Company, the Bank and OFC. All significant intercompany accounts and transactions have been eliminated in consolidation.



Core Deposit Intangible.The core deposit intangible resulted from the bank acquisition (see Note 2) by the
Company on August 15, 2003. This amount is being amortized using an accelerated method over eight years, the estimated remaining life of the related deposits.



Goodwill.Goodwill resulted from the bank acquisition (see Note 2) by the Company on August 15, 2003. In July 2001, the Financial
Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets (SFAS 142). SFAS 142 requires goodwill to be tested for impairment on an annual
basis and between annual tests in certain circumstances, and written down when impaired. Based on the impairment tests performed, there was no impairment of goodwill during the period ended September 30, 2003. There can be no assurance that future
goodwill impairment tests will not result in a charge to earnings.



(continued)

|
|





7



---

##### Table of Contents

OLD FLORIDA BANKSHARES, INC. AND SUBSIDIARIES



Notes to Condensed Consolidated Financial Statements (Unaudited),
Continued



(2) Bank Acquisition



On August 15, 2003, the Company acquired 100% of Marine Bancshares, Inc. (Marine) through an Agreement and Plan of Merger (the
Agreement). Marine was a bank holding company and parent company of Marine National Bank which offered a variety of community banking services to individuals and corporate customers through its one banking office located in Naples,
Florida. In accordance with the Agreement, each share of Marine common stock was exchanged for .62 shares of the Companys common stock. Therefore, all outstanding common shares of Marine were exchanged for 713,000 shares of the Companys
common stock at a market value of $12.50 per share or $8,912,500. In addition, in connection with the acquisition, the Company agreed to assume 153,024 outstanding stock options and warrants to purchase Marine common stock, which became exercisable
for 94,875 shares of the Companys common stock following the merger after giving effect to the same exchange ratio provided for in the Agreement. Of the total new options and warrants issued, 31,000 stock options have an exercise price of
$8.06 and the difference between this exercise price and the market value of the Companys common stock of $12.50 totaled approximately $138,000 and was recorded as additional paid in capital and goodwill. The remaining 63,875 new warrants have
an exercise price of $16.13 which exceeds the market value of the Companys common stock. At the date of acquisition, Marine was merged into the Holding Company and Marine National Bank was merged into the Bank. The Company acquired Marine to
expand into the Naples, Florida market and to increase its capital base which is expected to increase the overall profitability of the Company. The consolidated financial statements include the operating results of Marine from the date of
acquisition.



The acquisition was accounted for as a purchase
in accordance with Statement of Financial Accounting Standards No. 141, Business Combinations,and the Company has accordingly allocated the purchase price of Marine based upon the fair values of the net assets acquired and liabilities
assumed. The estimated fair values of the assets acquired and liabilities assumed at the date of acquisition is as follows (in thousands):



|Assets:                                      |  |   |        |    
|-------------------------------------------- |  | - | ------ | ---
|Cash and cash equivalents                    |  | $ | 1,376  |    
|Securities available for sale                |  |   | 11,309 |    
|Loans                                        |  |   | 34,915 |    
|Premises and equipment                       |  |   | 4,264  |    
|Federal Home Loan Bank stock                 |  |   | 240    |    
|Federal Reserve Bank stock                   |  |   | 197    |    
|Accrued interest receivable and other assets |  |   | 330    |    
|Goodwill                                     |  |   | 3,329  |    
|Core deposit intangible                      |  |   | 401    |    
|                                             |  |   |        |    
|Total assets acquired                        |  |   | 56,361 |    
|                                             |  |   |        |    
|Liabilities:                                 |  |   |        |    
|Deposits                                     |  |   | 38,124 |    
|Federal Home Loan Bank advances              |  |   | 4,853  |    
|Federal funds purchased                      |  |   | 2,400  |    
|Other liabilities                            |  |   | 1,934  |    
|                                             |  |   |        |    
|Total liabilities assumed                    |  |   | 47,311 |    
|                                             |  |   |        |    
|Net assets acquired                          |  | $ | 9,050  | (1)
|                                             |  |   |        |    

---

|(1) | Includes $8,912,000 for stock issued and $138,000 recorded on additional paid-in capital for stock options issued.
|--- | ------------------------------------------------------------------------------------------------------------------



(continued)



8



---

##### Table of Contents

OLD FLORIDA BANKSHARES, INC. AND SUBSIDIARIES



Notes to Condensed Consolidated Financial Statements (Unaudited),
Continued



(2) Bank Acquisition, Continued



The core deposit intangible of $401,000 is being amortized over 8 years, the estimated remaining life of the related
deposits. The goodwill of approximately $3.3 million is not deductible for income tax purposes. A valuation allowance has been recorded on the deferred tax asset relating to the net operating loss carryforward of Marine.



The following unaudited proforma financial information assumes that Marine
was acquired by the Company on January 1, 2002 and includes the effect of depreciation, amortization and accretion of fair value adjustments and the amortization of the core deposit intangible. The proforma financial information is presented for
informational purposes only and is not necessarily indicative of the results of operations that would have been achieved had the acquisition taken place on January 1, 2002. Proforma information follows (in thousands, except per share amounts):



|                           |  | Three Months Ended September 30, |       | Nine Months Ended September 30,
|-------------------------- |  | -------------------------------- | ----- | -------------------------------
|                           |  | 2003                             |       | 2002                           
|Interest income            |  | $                                | 2,155 |                                
|                           |  |                                  |       |                                
|Interest expense           |  | $                                | 747   |                                
|                           |  |                                  |       |                                
|Net earnings               |  | $                                | 239   |                                
|                           |  |                                  |       |                                
|Basic earnings per share   |  | $                                | .12   |                                
|                           |  |                                  |       |                                
|Diluted earnings per share |  | $                                | .12   |                                
|                           |  |                                  |       |                                



Included in net
earnings for 2003 are termination benefits of approximately $304,000, net of related tax effect, paid to certain employees of Marine that would not have been paid if the acquisition had not occurred.



(3) Loans



The activity in the allowance for loan losses follows (in thousands):



|                                                         |  | Three Months Ended September 30, |       | Nine Months Ended September 30,
|-------------------------------------------------------- |  | -------------------------------- | ----- | -------------------------------
|                                                         |  | 2003                             |       |                                
|Beginning balance                                        |  | $                                | 968   |                                
|Allowance recorded in connection with Marine acquisition |  |                                  | 566   |                                
|Provision for loan losses                                |  |                                  |      |                                
|(Charge-offs) net of recoveries                          |  |                                  | (7    | )                              
|                                                         |  |                                  |       |                                
|Ending balance                                           |  | $                                | 1,527 |                                
|                                                         |  |                                  |       |                                



The Company had no
loans held for sale at September 30, 2003 or December 31, 2002.



(continued)



9



---

##### Table of Contents

OLD FLORIDA BANKSHARES, INC. AND SUBSIDIARIES



Notes to Condensed Consolidated Financial Statements (Unaudited),
Continued



(3) Loans, Continued



The Company identifies impaired loans in accordance with Statement of Financial Accounting Standards No. 114 and 118. No loans were identified as
impaired during the nine months ended September 30, 2002. The following summarizes the amount of impaired loans at September 30, 2003, all of which were collateral dependent (in thousands):



|                                                       |  | At September 30,2003 |      
|------------------------------------------------------ |  | -------------------- | -----
|Loans identified as impaired:                          |  |                      |      
|Gross loans with no related allowance for losses       |  | $                    |     
|Gross loans with related allowance for losses recorded |  |                      | 1,031
|Less: Allowances on these loans                        |  |                      | (155 
|                                                       |  |                      |      
|Net investment in impaired loans                       |  | $                    | 876  
|                                                       |  |                      |      



The average net
investment in impaired loans and interest income recognized and received on impaired loans during the three and nine months ended September 30, 2003 was as follows (in thousands):



|                                             |  | Three Months EndedSeptember 30, 2003 |     | Nine Months EndedSeptember 30, 2003
|-------------------------------------------- |  | ------------------------------------ | --- | -----------------------------------
|Average net investment in impaired loans     |  | $                                    | 261 |                                    
|                                             |  |                                      |     |                                    
|Interest income recognized on impaired loans |  | $                                    |    |                                    
|                                             |  |                                      |     |                                    
|Interest income received on impaired loans   |  | $                                    |    |                                    
|                                             |  |                                      |     |                                    



Nonaccrual and past
due loans were as follows (in thousands):



|                                            |  | September 30,2003 |       | AtDecember 31,2002
|------------------------------------------- |  | ----------------- | ----- | ------------------
|Nonaccrual loans                            |  | $                 | 1,031 |                   
|Accruing loans past due ninety days or more |  |                   |      |                   
|                                            |  |                   |       |                   
|Total                                       |  | $                 | 1,031 |                   
|                                            |  |                   |       |                   



(continued)



10



---

##### Table of Contents

OLD FLORIDA BANKSHARES, INC. AND SUBSIDIARIES



Notes to Condensed Consolidated Financial Statements (Unaudited),
Continued



(4) Earnings Per Share



Earnings per share (EPS) of common stock has been computed on the basis of the weighted-average number of shares
of common stock outstanding. For the three and nine months ended September 30, 2003 and 2002, outstanding stock options are considered dilutive securities for purposes of calculating diluted EPS which is computed using the treasury stock method. The
following tables present the calculations of EPS (dollars in thousands, except per share amounts).



|                                                                                    |  | 2003     |     | 2002                 
|----------------------------------------------------------------------------------- |  | -------- | --- | ---------------------
|                                                                                    |  | Earnings |     | WeightedAverageShares
|Three months ended September 30:                                                    |  |          |     |                      
|                                                                                    |  |          |     |                      
|Basic EPS:                                                                          |  |          |     |                      
|Net earnings available to common stockholders                                       |  | $        | 247 |                      
|                                                                                    |  |          |     |                      
|Effect of dilutive securities-Incremental shares from assumed conversion of options |  |          |    |                      
|                                                                                    |  |          |     |                      
|Diluted EPS:                                                                        |  |          |     |                      
|Net earnings available to common stockholders and assumed conversions               |  | $        | 247 |                      
|                                                                                    |  |          |     |                      
|Nine months ended September 30:                                                     |  |          |     |                      
|                                                                                    |  |          |     |                      
|Basic EPS:                                                                          |  |          |     |                      
|Net earnings available to common stockholders                                       |  | $        | 436 |                      
|                                                                                    |  |          |     |                      
|Effect of dilutive securities-Incremental shares from assumed conversion of options |  |          |    |                      
|                                                                                    |  |          |     |                      
|Diluted EPS:                                                                        |  |          |     |                      
|Net earnings available to common stockholders and assumed conversions               |  | $        | 436 |                      
|                                                                                    |  |          |     |                      



(continued)



11



---

##### Table of Contents

OLD FLORIDA BANKSHARES, INC. AND SUBSIDIARIES



Notes to Condensed Consolidated Financial Statements (Unaudited),
Continued



(4) Earnings Per Share, Continued



The following warrants issued in connection with the acquisition of Marine were excluded from the calculation of EPS due to
the exercise price being above the average market price:



|                                                       |  | Number ofOutstandingWarrants |  | ExercisePrice |       | Expire
|------------------------------------------------------ |  | ---------------------------- |  | ------------- | ----- | ------
|For the three and nine months ended September 30, 2003 |  | 63,875                       |  | $             | 16.13 |       



(5) Stock Option Plans and Warrants



The Company has an incentive stock option plan for
officers and employees of the Company and has reserved 100,000 shares of common stock for the plan. The exercise price of the stock options is the greater of $10 or the fair market value of the common stock on the date of grant. The options vest 33%
during the second and third year, respectively, after grant and are fully exercisable during the fourth year after the grant date. The options must be exercised within 10 years from the date of grant. At September 30, 2003, 33,439 shares remain
available for grant.



The Company also has a nonqualified stock
option plan for directors of the Company and has reserved 131,000 (amended) shares of common stock for the plan. The exercise price of the stock options is the greater of $10 or the fair market value of the common stock on the date of grant and the
options vest 33% during the second and third year, respectively, after grant and are fully exercisable during the fourth year after the grant date, except for the stock options issued in connection with the acquisition of Marine which had a exercise
price of $8.06 and were fully vested when issued. The options must be exercised within 10 years from the date of grant. As of September 30, 2003, all available options had been granted.



A summary of stock option transactions follows ($ in thousands, except per share amounts):



|                                                        |  | Number ofShares |   |  | Range of Per Share Option Price |             | Weighted-AveragePer SharePrice |       | AggregateOptionPrice |  
|------------------------------------------------------- |  | --------------- | - |  | ------------------------------- | ----------- | ------------------------------ | ----- | -------------------- | -
|Outstanding at December 31, 2001 and September 30, 2002 |  | 151,561         |   |  | $                               | 10.00-11.50 |                                | 10.10 |                      | $
|                                                        |  |                 |   |  |                                 |             |                                |       |                      |  
|Outstanding at December 31, 2002                        |  | 166,561         |   |  |                                 | 10.00-12.50 |                                | 10.31 |                      |  
|                                                        |  |                 |   | 
|Options are from Marine acquisition                     |  | 31,000          |   |  |                                 | 8.06        |                                | 8.06  |                      |  
|Options forfeited                                       |  | (665            | ) |  |                                 | 12.50       |                                | 12.50 |                      |  
|                                                        |  |                 |   |  |                                 |             |                                |       |                      |  
|Outstanding at September 30, 2003                       |  | 196,896         |   |  | $                               | 8.06-12.50  |                                | 10.05 |                      | $
|                                                        |  |                 |   |  |                                 |             |                                |       |                      |  



(continued)



12



---

##### Table of Contents

OLD FLORIDA BANKSHARES, INC. AND SUBSIDIARIES



Notes to Condensed Consolidated Financial Statements (Unaudited),
Continued



(5) Stock Option Plans, Continued



The Company accounts their stock option plans under the recognition and measurement principles of APB No. 25. No stock-based
employee compensation cost is reflected in net earnings, as all options granted under these plans had an exercise price equal to the market value of the underlying common stock on the date of grant, except for the stock options issued in connection
with the acquisition of Marine (see Note 2). The following table illustrates the effect on net earnings and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123 to stock-based employee compensation ($
thousands, except per share data):



|                                                                                                                                       |  | Three Months EndedSeptember 30, |     |   | Nine Months EndedSeptember 30, |    
|-------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------- | --- | - | ------------------------------ | ---
|                                                                                                                                       |  | 2003                            |     |   | 2002                           |    
|Net earnings, as reported                                                                                                              |  | $                               | 247 |   |                                | 82 
|                                                                                                                                       |  |                                 |     |  
|Deduct: Total stock-based employee compensation determined under the fair value based method for all awards, net of related tax
effect |  |                                 | (12 | ) |                                | (11
|                                                                                                                                       |  |                                 |     |   |                                |    
|Proforma net earnings                                                                                                                  |  | $                               | 235 |   |                                | 71 
|                                                                                                                                       |  |                                 |     |   |                                |    
|Basic earnings per share                                                                                                               |  | $                               | .16 |   |                                | .07
|                                                                                                                                       |  |                                 |     |   |                                |    
|Proforma basic earnings per share                                                                                                      |  | $                               | .15 |   |                                | .06
|                                                                                                                                       |  |                                 |     |   |                                |    
|Diluted earnings per share                                                                                                             |  | $                               | .15 |   |                                | .07
|                                                                                                                                       |  |                                 |     |   |                                |    
|Proforma diluted earnings per share                                                                                                    |  | $                               | .15 |   |                                | .06
|                                                                                                                                       |  |                                 |     |   |                                |    



In connection with the
acquisition of Marine, former directors of Marine had 103,024 warrants outstanding which were converted into 63,875 warrants to purchase one share of the Companys common stock for each warrant issued at a price of $16.13. The warrants were
vested immediately and are exercisable through 2009.



(6) Regulatory Capital



The Bank is required to maintain certain minimum
regulatory capital requirements. The following is a summary at September 30, 2003 of the regulatory capital requirements for a well capitalized financial institution and the Banks actual capital on a percentage basis:



|                                                |  | Actual |   |  | RegulatoryRequirement |  
|----------------------------------------------- |  | ------ | - |  | --------------------- | -
|Total capital to risk-weighted assets           |  | 14.87  | % |  | 10.00                 | %
|Tier I capital to risk-weighted assets          |  | 13.67  | % |  | 6.00                  | %
|Tier I capital to total assets - leverage ratio |  | 13.97  | % |  | 5.00                  | %



13



---

##### Table of Contents

OLD FLORIDA BANKSHARES, INC. AND SUBSIDIARIES



Review by Independent Certified Public Accountants



Hacker, Johnson & Smith PA, independent certified public accountants, have made a limited review of the financial data as of September 30, 2003, and for the three- and nine- month periods ended September 30, 2003
and 2002 presented in this document, in accordance with standards established by the American Institute of Certified Public Accountants.



Their report furnished pursuant to Article 10 of Regulation S-X is included herein.





14



---

##### Table of Contents

Independent Accountants Report



The Board of
Directors

Old Florida Bankshares, Inc.

Fort Myers, Florida:



We have reviewed the accompanying condensed consolidated
balance sheet of Old Florida Bankshares, Inc. and Subsidiaries (the Company) as of September 30, 2003, the related condensed consolidated statements of earnings for the three- and nine- month periods ended September 30, 2003 and 2002 and
the related condensed consolidated statements of changes in stockholders equity and cash flows for the nine-month periods ended September 30, 2003 and 2002. These financial statements are the responsibility of the Companys management.



We conducted our reviews in accordance with standards
established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.



Based on our reviews, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with accounting principles
generally accepted in the United States of America.



We have
previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet of the Company as of December 31, 2002, and the related consolidated statements of earnings, changes in
stockholders equity and cash flows for the year then ended (not presented herein); and in our report dated January 8, 2003 we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set
forth in the accompanying condensed consolidated balance sheet as of December 31, 2002, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.



/s/ Hacker, Johnson & Smith PA



HACKER, JOHNSON & SMITH PA

Tampa, Florida

October 17, 2003



15



---

##### Table of Contents

OLD FLORIDA BANKSHARES, INC. AND SUBSIDIARIES



Item 2. Managements Discussion and Analysis

of Financial Condition and Results of Operations



Comparison of September 30, 2003 and December 31, 2002



General



Old Florida Bankshares, Inc. (the Holding Company) owns 100% of
the outstanding common stock of Old Florida Bank (the Bank) and Old Florida Capital, Inc. (OFC) (collectively the Company). The Holding Companys only business activities are those of its subsidiaries. The
Bank is a state (Florida) chartered commercial bank. The Bank offers a variety of community banking services to businesses and individuals through its three banking offices located in Ft. Myers, Naples and Bonita Springs, Florida. The deposits of
the Bank are insured by the Federal Deposit Insurance Corporation. In 2002, the Holding Company established OFC which began brokering commercial mortgage loans in 2003. Also on August 15, 2003 the Company acquired Marine Bankshares, Inc. (see Note 2
to the condensed consolidated financial statements).



Liquidity and Capital
Resources



The Companys primary sources of cash
during the nine months ended September 30, 2003 were from principal collected, maturities of securities, and the sale of securities of $13.3 million, net loan repayments of $6.1 million and net proceeds from Federal Home Bank advances of $4.0
million. Cash was used primarily to fund deposit out flows of $9.2 million, to purchase securities of $10.0 million, and to purchase a building to be used as an operations center for $847,000.



The following rates are presented for the dates and periods indicated:



|                                                                                                |  | Nine MonthsEndedSeptember 30, 2003 |   |  | Year EndedDecember 31, 2002 |   |  | Nine MonthsEndedSeptember 30, 2002 |  
|----------------------------------------------------------------------------------------------- |  | ---------------------------------- | - |  | --------------------------- | - |  | ---------------------------------- | -
|Average equity as a percentage of average assets                                                |  | 11.25                              | % |  | 11.44                       | % |  | 11.41                              | %
|                                                                                                |  |                                    |  
|Equity to total assets at end of period                                                         |  | 13.64                              | % |  | 11.07                       | % |  | 11.59                              | %
|                                                                                                |  |                                    |  
|Return on average assets (1)                                                                    |  | .50                                | % |  | .38                         | % |  | .35                                | %
|                                                                                                |  |                                    |  
|Return on average equity (1)                                                                    |  | 4.48                               | % |  | 3.32                        | % |  | 3.05                               | %
|                                                                                                |  |                                    |  
|Noninterest expenses to average assets (1)                                                      |  | 3.86                               | % |  | 3.30                        | % |  | 3.26                               | %
|                                                                                                |  |                                    |  
|Nonperforming loans and foreclosed real estate as a percentage of total assets at end of period |  | .66                                | % |  | N/A                         |   |  | N/A                                |  

---

|(1) | Annualized for the nine months ended September 30.
|--- | --------------------------------------------------



16



---

##### Table of Contents

OLD FLORIDA BANKSHARES, INC. AND SUBSIDIARIES



Off-Balance Sheet Arrangements and Aggregate Contractual Obligations



The Company is a party to financial instruments with off-balance-sheet risk
in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, unused lines of credit and standby letters of credit. These instruments involve, to varying degrees,
elements of credit and interest-rate risk in excess of the amounts recognized in the condensed consolidated balance sheet. The contract amounts of those instruments reflect the extent of the Companys involvement in particular classes of
financial instruments.



The Companys exposure to credit
loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit, unused lines of credit and standby letters of credit is represented by the contractual amount of those instruments. The Company
uses the same credit policies in making commitments as it does for on-balance-sheet instruments.



Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total committed amounts do not necessarily represent
future cash requirements. The Company evaluates each customers credit worthiness on a case-by-case basis. The amount of collateral obtained, if it is deemed necessary by the Company upon extension of credit, is based on managements
credit evaluation of the counterparty.



Standby letters of
credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers.



Unused lines of credit and commitments to extend credit
typically result in loans with a market interest rate when funded.



A summary of the Companys financial instruments with off-balance sheet risk at September 30, 2003 follows (in thousands):



|                             |  | NotionalAmount |        | CarryingAmount |   | EstimatedFairValue
|---------------------------- |  | -------------- | ------ | -------------- | - | ------------------
|Commitments to extend credit |  | $              | 16,162 |                |  |                   
|                             |  |                |        |                |   |                   
|Unused lines of credit       |  | $              | 28,941 |                |  |                   
|                             |  |                |        |                |   |                   
|Standby letters of credit    |  | $              | 564    |                |  |                   
|                             |  |                |        |                |   |                   



Management believes
that the Company has adequate resources to fund all of its commitments and that substantially all its existing commitments will be funded in 2003.



(continued)



17



---

##### Table of Contents

OLD FLORIDA BANKSHARES, INC. AND SUBSIDIARIES



Results of Operations



The following table sets forth, for the periods indicated, information regarding (i) the total dollar amount of interest and
dividend income of the Company from interest-earning assets and the resultant average yields; (ii) the total dollar amount of interest expense on interest-bearing liabilities and the resultant average cost; (iii) net interest income; (iv)
interest-rate spread; and (v) net interest margin.



|                                                                                 |  | Three Months Ended September 30, |        
|-------------------------------------------------------------------------------- |  | -------------------------------- | -------
|                                                                                 |  | 2003                             |        
|                                                                                 |  | AverageBalance                   |        
|                                                                                 |  | (Dollars in thousands)           |        
|Assets                                                                           |  |                                  |        
|                                                                                 |  |                                  |        
|Loans                                                                            |  | $                                | 96,967 
|Securities                                                                       |  |                                  | 14,101 
|Other interest-earning assets (1)                                                |  |                                  | 8,992  
|                                                                                 |  |                                  |        
|Total interest-earning assets                                                    |  |                                  | 120,060
|                                                                                 |  |                                  |        
|Non-interest earning assets                                                      |  |                                  | 7,439  
|                                                                                 |  |                                  |        
|Total assets                                                                     |  | $                                | 127,499
|                                                                                 |  |                                  |        
|Liabilities and Stockholders Equity                                             |  |                                  |        
|                                                                                 |  |                                  |        
|Savings, NOW and money market deposit accounts                                   |  |                                  | 45,389 
|Time deposits                                                                    |  |                                  | 48,200 
|Other borrowings (2)                                                             |  |                                  | 6,445  
|                                                                                 |  |                                  |        
|Total interest-bearing liabilities                                               |  |                                  | 100,034
|                                                                                 |  |                                  |        
|Non-interest-bearing liabilities                                                 |  |                                  | 12,689 
|Stockholders equity                                                             |  |                                  | 14,776 
|                                                                                 |  |                                  |        
|Total liabilities and stockholders equity                                       |  | $                                | 127,499
|                                                                                 |  |                                  |        
|Interest-rate spread (3)                                                         |  |                                  |        
|                                                                                 |  |                                  |        
|Net interest income                                                              |  |                                  |        
|                                                                                 |  |                                  |        
|Net interest margin on average-earning assets (4)                                |  |                                  |        
|                                                                                 |  |                                  |        
|Ratio of average interest-earning assets to average interest-bearing liabilities |  |                                  | 1.20   
|                                                                                 |  |                                  |        

---

|(1) | Includes Federal Home Loan Bank stock, federal funds sold and interest- bearing deposits.
|--- | -----------------------------------------------------------------------------------------

|(2) | Includes Federal Home Loan Bank advances and federal funds purchased.
|--- | ---------------------------------------------------------------------

|(3) | Interest-rate spread represents the difference between the average yield on interest-earning assets and the average rate of interest-bearing liabilities.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Net interest margin is net interest income divided by average interest-earning assets.
|--- | --------------------------------------------------------------------------------------



18



---

##### Table of Contents

OLD FLORIDA BANKSHARES, INC. AND SUBSIDIARIES



The following table sets forth, for the periods indicated, information
regarding (i) the total dollar amount of interest and dividend income of the Company from interest-earning assets and the resultant average yields; (ii) the total dollar amount of interest expense on interest-bearing liabilities and the resultant
average cost; (iii) net interest income; (iv) interest-rate spread; and (v) net interest margin.



|                                                                                 |  | Nine Months Ended September 30, |        
|-------------------------------------------------------------------------------- |  | ------------------------------- | -------
|                                                                                 |  | 2003                            |        
|                                                                                 |  | AverageBalance                  |        
|                                                                                 |  | (Dollars in thousands)          |        
|Assets                                                                           |  |                                 |        
|                                                                                 |  |                                 |        
|Loans                                                                            |  | $                               | 88,258 
|Securities                                                                       |  |                                 | 12,032 
|Other interest-earning assets (1)                                                |  |                                 | 6,723  
|                                                                                 |  |                                 |        
|Total interest-earning assets                                                    |  |                                 | 107,013
|                                                                                 |  |                                 |        
|Non-interest earnings assets                                                     |  |                                 | 8,323  
|                                                                                 |  |                                 |        
|Total assets                                                                     |  | $                               | 115,336
|                                                                                 |  |                                 |        
|Liabilities and Stockholders Equity                                             |  |                                 |        
|                                                                                 |  |                                 |        
|Savings, NOW and money market deposit accounts                                   |  |                                 | 41,596 
|Time deposits                                                                    |  |                                 | 45,781 
|Other borrowings (2)                                                             |  |                                 | 4,095  
|                                                                                 |  |                                 |        
|Total interest-bearing liabilities                                               |  |                                 | 91,472 
|                                                                                 |  |                                 |        
|Noninterest-bearing liabilities                                                  |  |                                 | 10,889 
|Stockholders equity                                                             |  |                                 | 12,975 
|                                                                                 |  |                                 |        
|Total liabilities and stockholders equity                                       |  | $                               | 115,336
|                                                                                 |  |                                 |        
|Interest-rate spread (3)                                                         |  |                                 |        
|                                                                                 |  |                                 |        
|Net interest income                                                              |  |                                 |        
|                                                                                 |  |                                 |        
|Net interest margin on average-earning assets (4)                                |  |                                 |        
|                                                                                 |  |                                 |        
|Ratio of average interest-earning assets to average interest-bearing liabilities |  |                                 | 1.17   
|                                                                                 |  |                                 |        

---

|(1) | Includes Federal Home Loan Bank stock, federal funds sold and interest-bearing deposits.
|--- | ----------------------------------------------------------------------------------------

|(2) | Includes Federal Home Loan Bank advances and federal funds purchased.
|--- | ---------------------------------------------------------------------

|(3) | Interest-rate spread represents the difference between the average yield on interest-earning assets and the average rate of interest-bearing liabilities.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Net interest margin is net interest income divided by average interest-earning assets.
|--- | --------------------------------------------------------------------------------------



19



---

##### Table of Contents

OLD FLORIDA BANKSHARES, INC. AND SUBSIDIARIES



Comparison of the Three-Month Periods Ended September 30, 2003 and 2002



General. Net earnings for the three months
ended September 30, 2003 were $247,000 or $.16 basic and $.15 diluted earnings per share compared to net earnings of $82,000 or $.07 basic and diluted earnings per share for the three months ended September 30, 2002. The increase in the
Companys net earnings was primarily due to an increase in net interest income and noninterest income partially offset by a decrease in noninterest expenses.



Interest Income and Expense. Interest income increased by $175,000 from $1,682,000 for the three months ended
September 30, 2002 to $1,857,000 for the three months ended September 30, 2003. Interest income on loans increased $198,000 primarily due to an increase in the average loan portfolio balance from $77.9 million for the three months ended September
30, 2002 to $97.0 million for the comparable period in 2003, partially offset by a decrease in the weighted-average yield from 7.76% in 2002 to 7.05% in 2003. Interest on securities decreased $23,000 primarily due to a decrease in the weighted
average yield from 5.52% in 2002 to 3.80% in 2003.



Interest expense on
interest-bearing deposits decreased by $80,000 from $678,000 for the three months ended September 30, 2002 to $598,000 for the three months ended September 30, 2003. Interest expense on interest-bearing deposits decreased due to a decrease in the
weighted rate paid from 3.39% in 2002 to 2.56% in 2003, partially offset by an increase in the average balance from $79.9 million in 2002 to $93.6 million in 2003.



Provision for Loan Losses. The provision for loan losses is charged to operations to bring the total allowance
to a level deemed appropriate by management and is based upon historical experience, the volume and type of lending conducted by the Company, industry standards, the amount of nonperforming loans, general economic conditions, particularly as they
relate to the Companys market areas, and other factors related to the collectibility of the Companys loan portfolio. No provision for loan losses was recorded for the three months ended September 30, 2003 compared to $75,000 for a
comparative period in 2002. No provision was considered necessary in 2003 due to the decrease in the Companys loan portfolio in 2003 prior to the acquisition of Marine compared to the balance at December 31, 2002. Management believes the
balance in the allowance for loan losses of $1,527,000 at September 30, 2003 is adequate.



Noninterest Income.Noninterest income increased $376,000 during the three month period ended September 30, 2003 compared to the same period in 2002 primarily due to an increase of $75,000 from gains on
the sale of residential real estate loans held for sale and a $298,000 gain on the sale of land.



Noninterest Expenses. Noninterest expenses increased $413,000 during the three-month period ended September 30, 2003 compared to the same
period in 2002. Noninterest expenses increased primarily due to an increase in salaries and employee benefits, data processing and occupancy and equipment. Salaries and employee benefits increased as a result of the acquisition of Marine and an
increase in the number of employees in the residential lending department during 2003. Data processing increased due to a change in the data processor, and the conversion of data from Marine. Occupancy and equipment increased due to the opening of
the operations center in 2003 and the acquisition of Marine.



Income Taxes. The income tax provision for the three months ended September 30, 2003 was $153,000 (an effective rate of 38.3%) compared to $49,000 (an effective rate of 37.4%) for the comparable 2002 period.



20



---

##### Table of Contents

OLD FLORIDA BANKSHARES, INC. AND SUBSIDIARIES



Comparison of the Nine-Month Periods Ended September 30, 2003 and 2002



General. Net earnings for the nine months
ended September 30, 2003 was $436,000 or $.33 basic and $.32 diluted earnings per share compared to net earnings of $266,000 or $.22 basic and $.21 diluted earnings per share for the nine months ended September 30, 2002. The increase in the
Companys net earnings was primarily due to an increase in net interest income and noninterest income, partially offset by an increase in noninterest expenses.



Interest Income and Expense. Interest income increased by $210,000, from $4,999,000 for the nine months ended
September 30, 2002 to $5,209,000 for the nine months ended September 30, 2003. Interest income on loans increased $312,000 primarily due to an increase in the average loan portfolio balance from $75.2 million for the nine months ended September 30,
2002 to $88.3 million for the comparable period in 2003, partially offset by a decrease in the weighted-average yield from 7.92% in 2002 to 7.22% in 2003. Interest on securities decreased $72,000 primarily due to a decrease in the weighted average
yield from 5.64% in 2002 to 4.39% in 2003.



Interest expense on
interest-bearing deposits decreased by $367,000 from $2,164,000 for the nine months ended September 30, 2002 to $1,797,000 for the nine months ended September 30, 2003. Interest expense on interest-bearing deposits decreased due to a decrease in the
weighted rate paid from 3.61% in 2002 to 2.74% in 2003, partially offset by an increase in the average balance from $79.9 million in 2002 to $87.4 million in 2003.



Provision for Loan Losses. The provision for loan losses is charged to operations to bring the total allowance
to a level deemed appropriate by management and is based upon historical experience, the volume and type of lending conducted by the Company, industry standards, the amount of nonperforming loans, general economic conditions, particularly as they
relate to the Companys market areas, and other factors related to the collectibility of the Companys loan portfolio. No provision for loan losses was recorded for the nine months ended September 30, 2003 compared to $89,000 for the
comparable period in 2002. No provision was considered necessary in 2003 due to the decrease in the loan portfolio of the Company in 2003 prior to the acquisition of Marine compared to the balance at December 31, 2002. Management believes the
balance in the allowance for loan losses of $1,527,000 at September 30, 2003 is adequate.



Noninterest Income.Noninterest income increased $493,000 during the nine month period ended September 30, 2003 compared to the same period in 2002 primarily due to an increase of $176,000 from gains on
the sale of residential real estate loans held for sale and a $298,000 gain on the sale of land.



Noninterest Expenses. Noninterest expenses increased $848,000 during the nine-month period ended September 30, 2003 compared to the same
period in 2002. Noninterest expenses increased primarily due to an increase in salaries and employee benefits, data processing and occupancy and equipment. Salaries and employee benefits increased as a result of the acquisition of Marine and an
increase in number of employees in the residential lending department during 2003. Data processing increased due to a change in the data processor, and the conversion of data from Marine. Occupancy and equipment increased due to the opening of the
operations center in 2003 and the acquisition of Marine.



Income Taxes. The income tax provision for the nine months ended September 30, 2003 was $264,000 (an effective rate of 37.7%) compared to $160,000 (an effective rate of 37.6%) for the comparable 2002 period.



21



---

##### Table of Contents

OLD FLORIDA BANKSHARES, INC. AND SUBSIDIARIES



Item 3. Controls and Procedures



|a. | Evaluation of disclosure controls and procedures. The Company maintains controls and procedures designed to ensure that information required to be disclosed in the reports
that the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Based upon their
evaluation of those controls and procedures performed within 90 days of the filing date of this report, the Chief Executive and Chief Financial officers of the Company concluded that the Companys disclosure controls and procedures were
adequate.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|b. | Changes in internal controls. The Company made no significant changes in its internal controls or in other factors that could significantly affect these controls subsequent
to the date of the evaluation of those controls by the Chief Executive and Chief Financial officers.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



PART II. OTHER INFORMATION



Item 1. Legal Proceedings



There
are no material pending legal proceeding to which Old Florida Bankshares, Inc., or its subsidiaries is a party or to which any of their property is subject.



22



---

##### Table of Contents

OLD FLORIDA BANKSHARES, INC. AND SUBSIDIARIES



PART II. OTHER INFORMATION, CONTINUED



Item 6. Exhibits and Reports on Form 8-K



|(a) | Exhibits
|--- | --------



|Exhibit No. |  | Description of Exhibit                                                                                                                                                
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1         |  | Agreement and Plan of Merger, dated as of December 31, 2002, by and between Old Florida Bankshares, Inc. and Marine Bancshares, Inc. (1)                              
|            | 
|2.2         |  | Option Agreement, dated as of December 31, 2002, between Old Florida Bankshares, Inc. and Marine Bancshares, Inc. (2)                                                 
|            | 
|2.3         |  | Shareholder Agreement, dated as of December 31, 2002, among Old Florida Bankshares, Inc., Marine Bancshares, Inc. and certain directors of Marine Bancshares, Inc.
(3)
|            | 
|3.1         |  | Articles of Incorporation of Old Florida Bankshares, Inc. as filed with the Florida Department of State (4)                                                           
|            | 
|3.2         |  | Bylaws of Old Florida Bankshares, Inc. (4)                                                                                                                            
|            | 
|10.1        |  | Lease Agreement dated December 21, 1998, between Old Florida Bank and Colony Corporate Centre, Inc., together with Option Term and Addendum to Lease Agreement (4)    
|            | 
|10.2        |  | Old Florida Bank Directors Stock Option Plan (4)                                                                                                                     
|            | 
|10.3        |  | Assumption of Directors Stock Option Plan, dated July 1, 2001, between Old Florida Bankshares, Inc. and Old Florida Bank (4)                                         
|            | 
|10.4        |  | Form of Directors Stock Option Agreement used under Old Florida Bank Directors Stock Option Plan (4)                                                                
|            | 
|10.5        |  | Old Florida Bank Officers and Employees Stock Option Plan (4)                                                                                                       
|            | 
|10.6        |  | Assumption of Officers and Employees Stock Option Plan, dated July 1, 2001, between Old Florida Bankshares, Inc. and Old Florida Bank (4)                           
|            | 
|10.7        |  | Form of Incentive Stock Option Agreement used under Old Florida Bank Officers and Employees Stock Option Plan (4)                                                   
|            | 
|10.8        |  | Employment Agreement, dated as of January 17, 2000, between Old Florida Bank and Larry W. Johnson (4)                                                                 
|            | 
|10.9        |  | Employment Agreement, dated as of January 17, 2000, between Old Florida Bank and Nicholas J. Panicaro (4)                                                             
|            | 
|31.1        |  | Certification of Chief Executive Officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act                                                                  
|            | 
|31.2        |  | Certification of Chief Financial Officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act                                                                  
|            | 
|32.1        |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002                         
|            | 
|32.2        |  | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002                         



23



---

##### Table of Contents

OLD FLORIDA BANKSHARES, INC. AND SUBSIDIARIES



PART II. OTHER INFORMATION, CONTINUED



Item 6. Exhibits and Reports on Form 8-K, Continued



| | (1) | Incorporated by reference into this document from Appendix A to the Marine Bancshares, Inc. Proxy Statement and Old Florida Bankshares, Inc. Prospectus included in the Form S-4/A,
Amendment No. 3 to Registration Statement as filed by Old Florida Bankshares, Inc. with the Securities and Exchange Commission on June 18, 2003, Registration No. 333-103907.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Incorporated by reference into this document from Appendix B to the Marine Bancshares, Inc. Proxy Statement and Old Florida Bankshares, Inc. Prospectus included in the Form S-4/A,
Amendment No. 3 to Registration Statement as filed by Old Florida Bankshares, Inc. with the Securities and Exchange Commission on June 18, 2003, Registration No. 333-103907.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | Incorporated by reference into this document from Appendix C to the Marine Bancshares, Inc. Proxy Statement and Old Florida Bankshares, Inc. Prospectus included in the Form S-4/A,
Amendment No. 3 to Registration Statement as filed by Old Florida Bankshares, Inc. with the Securities and Exchange Commission on June 18, 2003, Registration No. 333-103907.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (4) | Incorporated by reference into this document from the Exhibits to the Form S-4, Registration Statement as filed by Old Florida Bankshares, Inc. with the Securities and Exchange
Commission on March 18, 2003, Registration No. 333-103907.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(b) | Reports on Form 8-K.There was one report on Form 8-K filed during the three months ended September 30, 2003 which announced the acquisition of Marine Bancshares, Inc.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



24



---

##### Table of Contents

OLD FLORIDA BANKSHARES, INC. AND SUBSIDIARIES



SIGNATURES



Pursuant to 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.



|                        |  | OLD FLORIDA BANKSHARES, INC.
|----------------------- |  | ----------------------------
|                        |  | (Registrant)                
|                        |  |                             
|Date:  October 30, 2003 |  | By:                         
|                        |  |                             
|                        |  |                             
|Date:  October 30, 2003 |  | By:                         
|                        |  |                             



25