##### 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 March 31, 2004 [  ]
    
    Transition report under Section 13 or 15(d) of the Exchange Act
 For the transition period from  to Commission file number 333- UNITED COMMUNITY BANKSHARES OF FLORIDA, INC.  Florida
    
    04-3691059(State or Other Jurisdiction
of Incorporation or Organization)
    
    (I.R.S. Employer
(Identification No.
 1411 Edgewater Drive, Suite 100
Orlando, Florida 32804
(Address of Principal Executive Offices)
(407) 447-0386
(Issuers Telephone Number, Including Area Code)
    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
    
    3,256,888 Shares(class)
    
    Outstanding at May 7, 2004




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##### Table of Contents



UNITED COMMUNITY BANKSHARES OF FLORIDA, INC. INDEX PagePART I. FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Balance Sheets (unaudited) at March 31, 2004
and December 31, 2003
    
    
    2Consolidated Statements of Operations (unaudited) for the
Three Months ended March 31, 2004 and 2003
    
    
    3Consolidated Statements of Changes in Shareholders Equity
(unaudited) for the Three Months Ended March 31, 2004
and 2003
    
    
    4Consolidated Statements of Cash Flows (unaudited) for the
Three Months Ended March 31, 2004 and 2003
    
    
    5Notes to Consolidated Financial Statements (unaudited)
    
    
    6-7Item 2. Managements Discussion and Analysis of Financial Condition
And Results of Operations
    
    
    8-11Item 3. Controls and Procedures
    
    
    11PART II. OTHER INFORMATIONItem 4. Submission of Matters to a Vote of Security Holders
    
    
    12Item 6. Exhibits and Reports on Form 8-K
    
    
    12SIGNATURES
    
    
    13EX-10.1 Employment Agreement with David G. PowersEX-10.2 Employment Agreement with Shirley L. TylerEX-31.1 302 Certification of CEOEX-31.2 302 Certification of CFOEX-32.1 906 Certification of CEOEX-32.2 906 Certification of CFO
 1




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##### Table of Contents



PART 1. Financial Information 
 Item 1. Financial Statements UNITED COMMUNITY BANKSHARES OF FLORIDA, INC. 
 Consolidated Balance Sheets (Unaudited)
 March 31,
    
    December 31,2004
    
    2003($ in thousands, except share amounts)AssetsCash and due from banks
    
    $
    17,635
    
    
    $
    11,009Interest-bearing demand deposits in other banks
    
    
    9,755
    
    
    
    9,694Federal funds sold
    
    
    57,358
    
    
    
    39,926Total cash and cash equivalents
    
    
    84,748
    
    
    
    60,629Securities available for sale
    
    
    52,598
    
    
    
    56,386Loans, net of allowance for loan losses of $2,621 in 2004 and
$2,526 in 2003
    
    
    205,811
    
    
    
    198,480Premises and equipment, net
    
    
    5,451
    
    
    
    5,410Federal Home Loan Bank stock, at cost
    
    
    106
    
    
    
    106Accrued interest receivable
    
    
    1,010
    
    
    
    991Deferred tax asset
    
    
    717
    
    
    
    974Other Assets
    
    
    1,470
    
    
    
    1,348Total Assets
    
    $
    351,911
    
    
    $
    324,324Liabilities and Shareholders EquityLiabilities:Noninterest-bearing demand deposits
    
    $
    45,755
    
    
    $
    42,348Savings and NOW deposits
    
    
    36,285
    
    
    
    30,033Money-market deposits
    
    
    107,852
    
    
    
    89,970Time deposits
    
    
    125,037
    
    
    
    124,221Total Deposits
    
    
    314,929
    
    
    
    286,572Other liabilities
    
    
    942
    
    
    
    902Other Borrowings
    
    
    3,611
    
    
    
    5,174Total Liabilities
    
    
    319,482
    
    
    
    292,648Shareholders Equity:Preferred stock
    
    
    
    
    
    
    Common stock, $.01 par value; 20 million shares authorized;
3,256,888 shares issued and outstanding
    
    
    33
    
    
    
    33Additional paid-in capital
    
    
    31,970
    
    
    
    31,970Retained Earnings (deficit)
    
    
    361
    
    
    
    (38
    )Accumulated other comprehensive income (loss)
    
    
    65
    
    
    
    (289
    )Total Shareholders equity
    
    
    32,429
    
    
    
    31,676Total liabilities and Shareholders equity
    
    $
    351,911
    
    
    $
    324,324
 2




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##### Table of Contents



UNITED COMMUNITY BANKSHARES OF FLORIDA, INC. 
 Consolidated Statements of Operations
 (Unaudited)
 Three Months EndedMarch 31,2004
    
    2003($ in thousands, except share amounts)Interest income:Loans
    
    $
    3,323
    
    
    $
    2,595Securities
    
    
    392
    
    
    
    356Other interest-earning assets
    
    
    109
    
    
    
    151Total interest income
    
    
    3,824
    
    
    
    3,102Interest expense:Deposits
    
    
    1,316
    
    
    
    1,340Other borrowings
    
    
    3
    
    
    
    1Total interest expense
    
    
    1,319
    
    
    
    1,341Net interest income
    
    
    2,505
    
    
    
    1,761Provision for loan losses
    
    
    160
    
    
    
    120Net interest income after provision for loan losses
    
    
    2,345
    
    
    
    1,641Noninterest income:Service charges and fees
    
    
    122
    
    
    
    116Gain on sale of Other Real Estate
    
    
    5
    
    
    
    27Gain on sale of securities available for sale
    
    
    
    
    
    
    5Total noninterest income
    
    
    127
    
    
    
    148Noninterest expense:Salaries and employee benefits
    
    
    792
    
    
    
    721Occupancy expense
    
    
    357
    
    
    
    161Other
    
    
    654
    
    
    
    695Total noninterest expense
    
    
    1,803
    
    
    
    1,577Income before income tax
    
    
    669
    
    
    
    212Income tax
    
    
    270
    
    
    
    93Net income
    
    $
    399
    
    
    $
    119Earnings per share, basic and fully diluted
    
    $
    0.12
    
    
    $
    0.04Weighted average number of common shares outstanding
    
    
    3,256,888
    
    
    
    2,914,921Dividends per share
    
    
    
    
    
    
    
 3




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UNITED COMMUNITY BANKSHARES OF FLORIDA, INC. 
 Consolidated Statements of Changes in Shareholders Equity
 (Unaudited)
 (In thousands)
 AccumulatedAdditional
    
    
    
    
    
    Other
    
    TotalCommon
    
    Paid-in
    
    Retained Earnings
    
    Comprehensive
    
    ShareholdersStock
    
    Capital
    
    (Deficit)
    
    Income (Loss)
    
    EquityBalance December 31, 2002
    
    $
    20
    
    
    $
    19,980
    
    
    $
    (919
    )
    
    $
    387
    
    
    $
    19,468Comprehensive Income:Net income
    
    
    
    
    
    
    
    
    
    
    119
    
    
    
    
    
    
    
    119Net change in unrealized
gain on securities
available
for sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (87
    )
    
    
    (87
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32Issuance of common shares
in acquisition
    
    
    11
    
    
    
    9,742
    
    
    
    
    
    
    
    
    
    
    
    9,753Balance at March 31, 2003
    
    $
    31
    
    
    $
    29,722
    
    
    $
    (800
    )
    
    $
    300
    
    
    $
    29,253Balance December 31, 2003
    
    $
    33
    
    
    $
    31,970
    
    
    $
    (38
    )
    
    $
    (289
    )
    
    $
    31,676Comprehensive Income:Net income
    
    
    
    
    
    
    
    
    
    
    399
    
    
    
    
    
    
    
    399Net change in unrealized
loss on securities
available
for sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    354
    
    
    
    354Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    753Balance at March 31, 2004
    
    $
    33
    
    
    $
    31,970
    
    
    $
    361
    
    
    $
    65
    
    
    $
    32,429
 4




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UNITED COMMUNITY BANKSHARES OF FLORIDA, INC. 
 Consolidated Statements of Cash Flows
 (Unaudited)
 Three Months EndedMarch 31,2004
    
    2003($ in thousands)Cash flows from operating activities:Net Income
    
    $
    399
    
    
    $
    881Adjustments to reconcile net income or loss to net
cash provided by
operating activities:Depreciation and amortization
    
    
    154
    
    
    
    450Provision for loan loss
    
    
    160
    
    
    
    784Net amortization of securities available for sale
    
    
    190
    
    
    
    1,171Deferred income taxes
    
    
    71
    
    
    
    (207
    )Gain on sale of securities available for sale
    
    
    
    
    
    
    (5
    )Changes in balances of:Interest Receivable
    
    
    (31
    )
    
    
    (78
    )Interest Payable
    
    
    82
    
    
    
    (202
    )Other accounts  net
    
    
    (50
    )
    
    
    164Net cash provided by operating activities
    
    
    975
    
    
    
    2,958Cash flows from investing activities:Purchase of securities available for sale
    
    
    
    
    
    
    (55,698
    )Sales and calls of securities available for sale
    
    
    
    
    
    
    243Repayment of securities available for sale
    
    
    4,035
    
    
    
    37,699Net increase in loans
    
    
    (7,490
    )
    
    
    (42,096
    )Purchase of premises and equipment
    
    
    (195
    )
    
    
    (143
    )Proceeds from sale of other realestate
    
    
    
    
    
    
    611Net cash used in investing activities
    
    
    (3,650
    )
    
    
    (59,384
    )Cash flows from financing activities:Net increase in deposits
    
    
    28,357
    
    
    
    60,309Net decrease in other borrowings
    
    
    (1,563
    )
    
    
    4,337Sale of Common Stock
    
    
    
    
    
    
    2,250Net cash provided by financing activities
    
    
    26,794
    
    
    
    66,896Net increase in cash and cash equivalents
    
    
    24,119
    
    
    
    10,470Cash and cash equivalents at beginning of period
    
    
    60,629
    
    
    
    50,159Cash and cash equivalents at end of period
    
    $
    84,748
    
    
    $
    60,629Supplemental disclosure of cash flow information:Cash paid during the period for interest
    
    $
    1,237
    
    
    $
    1,438Cash paid during the period for income tax
    
    $
    165
    
    
    $
    
 5




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UNITED COMMUNITY BANKSHARES OF FLORIDA, INC. 
 Notes to Consolidated Financial Statements (unaudited)  (1)
    
    Description of Business and Basis of Presentation.  United Community Bankshares of Florida, Inc. (the Holding Company) was
incorporated as a
Florida Corporation on April 15, 2002. On January 13, 2003, the Holding
Company acquired
100% of the outstanding shares of United Heritage Bank and Community
United Bank (the
Banks) (collectively, the Company) pursuant to approval by the Federal
Reserve to acquire the
Banks through an exchange of Holding Company common shares for the
outstanding shares in
the Banks. This transaction has been accounted for as a combination
of interests under common
control as it relates to the acquisition of United Heritage Bank,
and as a purchase transaction as it
relates to Community United Bank. On March 26, 2004, Community United
Bank was merged into United Heritage Bank, creating a one-bank holding
company.  The Holding Companys only business is the ownership and operation
of the Bank. The Bank
is incorporated under the laws of the State of Florida and is a
Florida Banking Corporation. The
Bank provides a variety of community banking services to businesses
and individuals through
its seven banking offices throughout Central Florida. The Banks
deposits are insured by the
FDIC to the extent provided by law.  The accompanying consolidated financial statements include the
accounts of the
Holding Company and the Bank. All significant intercompany accounts
have been eliminated in
consolidation. The income and expense of Community United Bank from
January 13, 2003 through March 31, 2003 are included in the accompanying
consolidated statement of operations for the three months ending March
31, 2003. Earnings during the 13 days of January 2003 before the purchase
are considered to be insignificant when preparing a comparison analysis.
The consolidated financial statements at December 31, 2003 include the
accounts of the Holding Company and United Heritage Bank for the entire
period, and of Community United Bank (except for the first 13 days of
January 2003).  (2)
    
    Earnings per Share  Basic earnings per share have been computed on the basis of the
weighted average
number of shares of common stock outstanding during the periods.
Additional shares issuable under the stock option plan bring the weighted
average shares for fully diluted per share purposes to 3,295,468 and
2,951,737 for the first quarter of 2004 and 2003, respectively.
Additional shares issuable within the stock option plan do not result in
any difference between basic and fully diluted earnings per share for
either quarterly period. 6




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UNITED COMMUNITY BANKSHARES OF FLORIDA, INC. Notes to Consolidated Financial Statements (unaudited), Continued  (3)
    
    Pro forma effect of Stock Options  As permitted by applicable accounting principles, management has elected
to disclose rather
than to record the compensatory effect of stock options granted to
employee and directors. The pro forma effect has been determined by use
of the Black  Scholes option pricing model, assuming no volatility,
minimal dividends and average lives and exercise probability by option
class. At March 31, 2004 employees and directors held 335,992 options for
            shares of common stock, compared to 194,080 options at March 31, 2003. No
options for shares were granted, exercised or forfeited during the three
months ending March 31, 2004. However, on April 1, 2004, options for
141,912 shares were granted to certain of the Companys directors under
the stock option plan approved by the shareholders. The estimated impact
of these options on compensation and net income is approximately $544,000
for the entire 2004 year. For purposes of this pro forma disclosure, 25%
of this amount, or $136,000 has been assigned to the first quarter of
2004 as though the options were granted in the first quarter of 2004. The
options were granted at $12.00 each, are immediately exercisable, and
expire ten years after the date of grant. This brings the number of
options outstanding as April 1, 2004 to 477,904.  Had the effect of the above options been recorded, the estimated effect
on compensation and income would have been as follows: March2004
    
    2003(in thousands)Compensation as recorded
    
    $
    792
    
    
    $
    721Pro forma effect of options (a)
    
    
    150
    
    
    
    14Pro forma compensation
    
    $
    942
    
    
    $
    735Net Income as reported
    
    $
    399
    
    
    $
    119Pro forma effect of options (a)
    
    
    150
    
    
    
    (14
    )Pro forma net income
    
    $
    249
    
    
    $
    105Earnings per share as reported
    
    $
    .12
    
    
    $
    .04Pro forma effect of earnings per share
    
    
    (.04
    )
    
    
    Pro forma earnings per share
    
    $
    .08
    
    
    $
    .04
  (4)
    
    Management Opinion  In the opinion of management, the accompanying consolidated financial
statements contain all adjustments (consisting of normal recurring
accruals) necessary to present fairly the financial position at March 31,
2004 and the results of operations and cash flows for the three month
periods ended March 31, 2004 and 2003. The results of operations for the
three months ended March 31, 2004 are not necessarily indicative of the
results to be expected for the year ending December 31, 2004, due to,
among other things, the initial expenses associated with the merger of
Community United Bank into United Heritage Bank. Management anticipates
cost savings which will exceed the initial merger expenses during the
next 12 months. However, there can be no assurance that such cost
savings will materialize. 7




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##### Table of Contents



UNITED COMMUNITY BANKSHARES OF FLORIDA, INC. 
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations Financial Conditions Liquidity The Companys primary sources of cash during the three months ended March 31,
2004 were
from net deposit inflows of $28 million and principal and interest payments on
mortgage-backed securities. Cash was primarily used to originate loans, net of
principal repayments, totaling $7 million and to increase liquidity reserves by
$17 million. At March 31, 2004, the Company had unused commitments with an
original maturity exceeding one year of $37 million. At March 31, 2004, the
Bank exceeded its regulatory liquidity requirements. Capital Resources The Bank is required to maintain certain regulatory capital requirements. The
following is a summary at March 31, 2004 and 2003 of the consolidated
regulatory capital requirements for the entities to remain well capitalized,
compared to actual capital on a percentage basis: RegulatoryRequirement forMarch
    
    December
    
    March
    
    Well capitalized2004
    
    2003
    
    2003
    
    EntitiesConsolidatedTotal capital to risk-weighted assets
    
    
    13.05
    %
    
    
    13.95
    %
    
    
    14.90
    %
    
    
    10.00
    %Tier I capital to risk-weighted assets
    
    
    12.01
    %
    
    
    12.86
    %
    
    
    13.88
    %
    
    
    6.00
    %Tier I capital to total assets  leverage ratio
    
    
    9.37
    %
    
    
    9.32
    %
    
    
    10.19
    %
    
    
    5.00
    %
 Selected Ratios The following ratios are presented for the dates and periods indicated: Three Months
    
    Year Ended
    
    Three MonthsEnded March
    
    December 31,
    
    Ended March31, 2004
    
    2003
    
    31, 2003Average equity as a percentage of Average Assets
    
    
    9.58
    %
    
    
    10.34
    %
    
    
    10.40
    %Equity to total assets at end of period
    
    
    9.22
    %
    
    
    9.77
    %
    
    
    9.62
    %Return on average assets (1)
    
    
    0.49
    %
    
    
    0.29
    %
    
    
    0.17
    %Return on average equity (1)
    
    
    5.10
    %
    
    
    2.85
    %
    
    
    1.72
    %Nonperforming loans and foreclosed real estate as
a percentage of total assets at end of period
    
    
    0.13
    %
    
    
    0.15
    %
    
    
    0.14
    %
  (1)
    
    Annualized for the three months ended March 31. 8




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##### Table of Contents



UNITED COMMUNITY BANKSHARES OF FLORIDA, INC. Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations (Continued)  Results of Operations General.Net income for the three months ended March 31, 2004 was
$399,000 or $.12 per share compared to $119,000 or $.04 per share for the
three months ended March 31, 2003. The increase in the Companys
earnings was primarily due to an increase in net interest income,
partially offset by an increase in noninterest expenses and the loan loss
provision. The results of operations for the three months ended March
31, 2004 are not necessarily indicative of the results to be expected for
the year ending December 31, 2004. The merger of Community United Bank on March 26, 2004 into United
Heritage Bank accounted for non-reoccuring expenses of approximately
$123,000 in conversion and other merger related costs during the first
quarter of 2004. Other expenses also increased for the quarter ending
March 31, 2004 due to the normal growth of the Bank. Interest Income and Expense.Interest income increased by $722,000,
from $3,102,000 for the three months ended March 31, 2003 to $3,824,000
for the three months ended March 31, 2004. Interest income on loans
increased $728,000 primarily due to an increase in the average loan
portfolio balance from $149 million for the three months ended March 31,
2003 to $202 million for the comparable period in 2004. This was
partially offset by a decrease in the weighted-average yield on loans
from 7.05% in 2003 to 6.63% in 2004. Interest on securities increased
$36,000 primarily due to an increase in the average securities portfolio
balance from $43 million in 2003 to $55 million in 2004, partially offset
in a decrease in the weighted average
yield from 3.36 % in 2003 to 2.88% in 2004.  Interest expense on interest-bearing deposits decreased to $1,319,000 for
the three months ended March 31, 2004 from $1,341,000 for the three
months ended March 31, 2003. Interest expense on interest-bearing
deposits decreased due to a decrease in the weighted rate paid from 2.75%
in 2003 to 2.09% in 2004, partially offset by an increase in average
interest-bearing deposits of $55,516,000.  The following table sets forth, for the periods indicated, information
regarding (I) the total dollar amount of interest income for 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; (V) net
interest margin. 9




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UNITED COMMUNITY BANKSHARES OF FLORIDA, INC. Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations (Continued) Comparison of the Three-Month Periods Ended March 31, 2004 and 2003 Three Months Ended March 31,Results of Operations (Continued)
    
    2004
    
    2003Interest
    
    Average
    
    
    
    
    
    Interest
    
    AverageAverage
    
    and
    
    Yield/
    
    Average
    
    and
    
    Yield/Balance
    
    Dividends
    
    Rate
    
    Balance
    
    Dividends
    
    Rate(in thousands)
    
    
    
    
    
    (in thousands)Interest-earning assets;Loans
    
    $
    201,584
    
    
    
    3,323
    
    
    
    6.63
    %
    
    $
    149,178
    
    
    
    2,595
    
    
    
    7.05
    %Securities
    
    
    54,719
    
    
    
    392
    
    
    
    2.88
    %
    
    
    42,973
    
    
    
    356
    
    
    
    3.36
    %Other interest-earning assets (1)
    
    
    50,421
    
    
    
    109
    
    
    
    0.87
    %
    
    
    46,566
    
    
    
    151
    
    
    
    1.32
    %Total interest-earning assets
    
    
    306,724
    
    
    
    3,824
    
    
    
    5.01
    %
    
    
    238,717
    
    
    
    3,102
    
    
    
    5.27
    %Noninterest-earning assets
    
    
    21,676
    
    
    
    
    
    
    
    
    
    
    
    13,022Total Assets
    
    $
    328,400
    
    
    
    
    
    
    
    
    
    
    $
    251,739Interest-bearing liabilities:Savings, NOW, money market
deposit accounts
    
    
    127,184
    
    
    
    477
    
    
    
    1.51
    %
    
    
    97,870
    
    
    
    461
    
    
    
    1.91
    %Time deposits
    
    
    123,205
    
    
    
    838
    
    
    
    2.74
    %
    
    
    98,962
    
    
    
    879
    
    
    
    3.60
    %Other interest-bearing liabilities (2)
    
    
    2,869
    
    
    
    4
    
    
    
    0.56
    %
    
    
    910
    
    
    
    1
    
    
    
    0.45
    %Total interest-bearing liabilities
    
    
    253,258
    
    
    
    1,319
    
    
    
    2.09
    %
    
    
    197,742
    
    
    
    1,341
    
    
    
    2.75
    %Noninterest-bearing deposits
    
    
    41,801
    
    
    
    
    
    
    
    
    
    
    
    26,448Noninterest-bearing liabilities
    
    
    1,884
    
    
    
    
    
    
    
    
    
    
    
    822Stockholders equity
    
    
    31,457
    
    
    
    
    
    
    
    
    
    
    
    26,727Total liabilities and
stockholders equity
    
    $
    328,400
    
    
    
    
    
    
    
    
    
    
    $
    251,739Net interest income
    
    
    
    
    
    $
    2,505
    
    
    
    
    
    
    
    
    
    
    $
    1,761Interest-rate spread (3)
    
    
    
    
    
    
    
    
    
    
    2.92
    %
    
    
    
    
    
    
    
    
    
    
    2.52
    %Net interest margin (4)
    
    
    
    
    
    
    
    
    
    
    3.28
    %
    
    
    
    
    
    
    
    
    
    
    2.99
    %Ratio of average interest-earning assets to
average interest-bearing liabilities
    
    
    1.21
    
    
    
    
    
    
    
    
    
    
    
    1.21
  (1)
    
    Includes Federal Home Loan Bank stock, Federal Reserve stock, Federal Funds sold and
interest-bearing deposits in other banks.  (2)
    
    Includes securities sold under agreements to repurchase.  (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. 10




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##### Table of Contents



UNITED COMMUNITY BANKSHARES OF FLORIDA, INC. Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations (Continued)  Results of Operations (Continued) 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. The provision was
$160,000 for the three months ended March 31, 2004 and $120,000 for the
comparable period in 2003. Management believes the approximate $2.6
million balance in the allowance for loan losses at March 31, 2004 is
adequate. Noninterest Income.The decrease of $21,000 during the three month
period ended March 31, 2004 relates primarily to a gain on the sale of
other real estate during the first quarter of 2003. Noninterest Expenses.Noninterest expenses increased $226,000
during the three month period ended March 31, 2004 compared to the same
period in 2003. Over one half of this increase is attributable to
expenses associated with the conversion of systems in connection with the
merger of the two banks. The balance of this increase is associated with
the growth of the Bank. Provision for Income Taxes.The income tax expense for the three
months ended March 31, 2004 was $270,000 compared to a $93,000 tax
expense for the comparable 2003 period. The Company uses the liability
method for accounting for deferred income taxes. The difference in the
actual income tax rates and those which might be expected by applying the
federal statutory rate of 34% to income before income taxes is primarily
attributable to state income taxes and expenses recorded for financial
reporting purposes that are not deductible for income tax purposes. 
 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 President and Chief Executive officer
and the Treasurer of the Company concluded that the Companys disclosure
controls and procedures are 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 President and Chief Executive officer and the Treasurer. 11




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##### Table of Contents



UNITED COMMUNITY BANKSHARES OF FLORIDA, INC. 
 PART II. OTHER INFORMATION 
 Item 4. Submission of Matters to a Vote of Security Holders No matters were submitted to shareholders during the quarter ended
March 31, 2004. 
 Item 6. Exhibits and Reports on Form 8-K  (a)
    
    Exhibits Exhibit No.
    
    Description of Exhibit10.1
    
    Form of Employment Agreement entered into between the Bank and
David G. Powers *10.2
    
    Form of Employment Agreement entered into between the Bank and
Shirley L. Tyler *31.1
    
    Certification of President and Chief Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Treasurer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 200232.1
    
    Certification of President and Chief Executive Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    Certification of Treasurer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
  *
    
    Represents a management contract to compensatory plan or
announcement required to be filed as an exhibit.(b)
    
    Reports onForm 8-K.There were no reports on Form 8-K filed
during the three months ended March 31, 2004. 12




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##### Table of Contents



UNITED COMMUNITY BANKSHARES OF FLORIDA, INC. 
 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 duly authorized. UNITED COMMUNITY BANKSHARES OF
FLORIDA, INC.(Registrant)Date: May 12, 2004
    
    By:
    
    /s/ David G. PowersDavid G. Powers, President and ChiefExecutive OfficerDate: May 12, 2004
    
    By:
    
    /s/ Shirley L. TylerShirley L. Tyler, Treasurer
 13




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##### Table of Contents



United Community Bankshares of Florida, Inc.
Form 10-QSB
For Period Ending March 31, 2004 
 EXHIBIT INDEX ExhibitNo.
    
    Exhibit10.1
    
    Form of Employment Agreement entered into between the Bank
and David G. Powers*10.2
    
    Form of Employment Agreement entered into between the Bank
and Shirley L.Tyler*31.1
    
    Certification of President & Chief Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification of Treasurer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certification of President & Chief Executive Officer Pursuant to
Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    Certification of Treasurer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
 14