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U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 FORM 10-Q (Mark One) þ
    

QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended March 31, 2005ORo
    

TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934For the transition period from  to
 Commission file number UNITED HERITAGE BANKSHARES OF FLORIDA, INC. (Exact Name of Registrant as Specified in Its Charter)
  Florida
    
    04-3691059(State or Other Jurisdiction
    
    (I.R.S. Employerof Incorporation or Organization)
    
    Identification No.)1411 Edgewater Drive, Suite 100, Orlando, Florida
    
    32804(Address of Principal Executive Offices)
    
    (Zip Code)Registrants Telephone Number, Including Area Code (407) 712-6151United Community Bankshares of Florida, Inc.Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report.
 Check whether the Registrant (1) filed all reports required to be filed by Section 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 þ No o Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule
12b-2 of the Exchange Act): Yes o No þ Indicate the number of shares outstanding of each of the issuers classes of common
stock, as of the latest practicable date:  Common stock, par value $.01 per share
    
    4,800,628 shares outstanding at April 29, 2005
 CONFORMED COPY




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UNITED HERITAGE BANKSHARES OF FLORIDA, INC. INDEX PagePart I. FINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Consolidated Balance Sheets (Unaudited) -
at March 31, 2005 and at December 31, 2004
    
    
    2Condensed Consolidated Statements of Income (Unaudited) -
Three months ended March 31, 2005 and 2004
    
    
    3Condensed Consolidated Statements of Shareholders Equity (Unaudited) -
Three months ended March 31, 2005 and 2004
    
    
    4Condensed Consolidated Statements of Cash Flows (Unaudited) -
Three months ended March 31, 2005 and 2004
    
    
    5Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    
    6-9Item 2. Managements Discussion and Analysis
    
    
    10-14Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    15Item 4. Controls and Procedures
    
    
    15Part II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    15Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer
Purchases of Equity Securities
    
    
    15Item 3. Defaults upon Senior Securities
    
    
    16Item 4. Submission of Matters to a Vote of Security Holders
    
    
    16Item 5. Other Information
    
    
    17Item 6. Exhibits
    
    
    17SIGNATURES
    
    
    18EX-10.5: AMENDMENT TO DIRECTORS STOCK OPTION PLANEX-10.6: AMENDMENT TO EMPLOYEES STOCK OPTION PLANEX-31.1: SECTION 302 CERTIFICATION OF CEOEX-31.2: SECTION 302 CERTIFICATION OF CFOEX-32.1: SECTION 906 CERTIFICATION OF CEOEX-32.2: SECTION 906 CERTIFICATION OF CFO
  1




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UNITED HERITAGE BANKSHARES OF FLORIDA, INC. 
 Part I. FINANCIAL INFORMATION 
 Item 1. Financial Statements 
 Condensed Consolidated Balance Sheets (Unaudited) ($ in thousands, except per share amounts)
 At
    
    
    AtMarch 31,
    
    
    December 31,2005
    
    
    2004AssetsCash and due from banks
    
    $
    17,940
    
    
    $
    12,283Interest-earning demand deposits in other banks
    
    
    11,719
    
    
    
    9,857Federal funds sold
    
    
    95,289
    
    
    
    63,831Total cash and cash equivalents
    
    
    124,948
    
    
    
    85,971Securities available for sale
    
    
    104,425
    
    
    
    68,640Loans, net of allowance for loan losses of $3,253 and $3,077
    
    
    253,967
    
    
    
    241,214Property and equipment, net
    
    
    6,933
    
    
    
    6,863Net deferred tax asset
    
    
    1,851
    
    
    
    1,180Goodwill
    
    
    950
    
    
    
    950Core deposit intangible, net
    
    
    250
    
    
    
    267Other assets
    
    
    1,645
    
    
    
    1,382Total assets
    
    $
    494,969
    
    
    $
    406,467Liabilities and Shareholders EquityLiabilities:Deposits:Noninterest-bearing demand deposits
    
    $
    66,444
    
    
    $
    52,472Savings, NOW and money-market deposits
    
    
    185,485
    
    
    
    166,751Time deposits
    
    
    183,724
    
    
    
    146,419Total deposits
    
    
    435,653
    
    
    
    365,642Borrowings
    
    
    3,336
    
    
    
    6,009Other liabilities
    
    
    1,175
    
    
    
    1,026Total liabilities
    
    
    440,164
    
    
    
    372,677Shareholders Equity:Common stock, $.01 par value, 20 million shares authorized,
4,800,628 and 3,263,406 shares issued and outstanding
    
    
    48
    
    
    
    33Additional paid-in capital
    
    
    53,484
    
    
    
    32,021Retained earnings
    
    
    2,529
    
    
    
    2,003Accumulated other comprehensive loss
    
    
    (1,256
    )
    
    
    (267
    )Total shareholders equity
    
    
    54,805
    
    
    
    33,790Total liabilities and shareholders equity
    
    $
    494,969
    
    
    $
    406,467
 See accompanying Notes to Condensed Consolidated Financial Statements. 2




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UNITED HERITAGE BANKSHARES OF FLORIDA, INC. 
 Condensed Consolidated Statements of Income (Unaudited) ($ in thousands, except per share amounts)
 Three Months EndedMarch 31,2005
    
    
    2004Interest income:Loans
    
    $
    4,059
    
    
    $
    3,323Securities
    
    
    740
    
    
    
    392Other
    
    
    508
    
    
    
    109Total interest income
    
    
    5,307
    
    
    
    3,824Interest expense:Deposits
    
    
    2,074
    
    
    
    1,316Borrowings
    
    
    12
    
    
    
    3Total interest expense
    
    
    2,086
    
    
    
    1,319Net interest income
    
    
    3,221
    
    
    
    2,505Provision for loan losses
    
    
    186
    
    
    
    160Net interest income after provision for loan losses
    
    
    3,035
    
    
    
    2,345Noninterest income:Service charges and fees on deposit accounts
    
    
    123
    
    
    
    93Other
    
    
    34
    
    
    
    34Total noninterest income
    
    
    157
    
    
    
    127Noninterest expense:Salaries and employee benefits
    
    
    1,211
    
    
    
    792Occupancy and equipment
    
    
    467
    
    
    
    357Other
    
    
    656
    
    
    
    654Total noninterest expense
    
    
    2,334
    
    
    
    1,803Income before income taxes
    
    
    858
    
    
    
    669Income taxes
    
    
    332
    
    
    
    270Net income
    
    $
    526
    
    
    $
    399Earnings per share:Basic
    
    $
    .15
    
    
    $
    .12Diluted
    
    $
    .15
    
    
    $
    .12Dividends per share
    
    $
    
    
    
    $
    
 See accompanying Notes to Condensed Consolidated Financial Statements. 3




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UNITED HERITAGE BANKSHARES OF FLORIDA, INC. 
 Condensed Consolidated Statements of Shareholders Equity (Unaudited) Three Months Ended March 31, 2005 and 2004
($ in thousands) AccumulatedOtherRetained
    
    
    Compre-Common Stock
    
    
    Additional
    
    
    Earnings
    
    
    hensive
    
    
    TotalNumber of
    
    
    Par
    
    
    Paid-In
    
    
    (Accumulated
    
    
    Income
    
    
    ShareholdersShares
    
    
    Value
    
    
    Capital
    
    
    Deficit)
    
    
    (Loss)
    
    
    EquityBalance at December 31, 2003
    
    
    3,256,888
    
    
    $
    33
    
    
    $
    31,970
    
    
    $
    (38
    )
    
    $
    (289
    )
    
    $
    31,676Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    399
    
    
    
    
    
    
    
    399Other comprehensive income-change in
unrealized loss on securities available
for sale, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    354
    
    
    
    354Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    753Balance at March 31, 2004
    
    
    3,256,888
    
    
    $
    33
    
    
    $
    31,970
    
    
    $
    361
    
    
    $
    65
    
    
    $
    32,429Balance at December 31, 2004
    
    
    3,263,406
    
    
    $
    33
    
    
    $
    32,021
    
    
    $
    2,003
    
    
    $
    (267
    )
    
    $
    33,790Comprehensive income (loss):Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    526
    
    
    
    
    
    
    
    526Other comprehensive loss-change in
unrealized loss on securities available
for sale, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (989
    )
    
    
    (989
    )Comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (463
    )Net proceeds from the sale of common stock
under a private placement offering
    
    
    1,537,222
    
    
    
    15
    
    
    
    21,463
    
    
    
    
    
    
    
    
    
    
    
    21,478Balance at March 31, 2005
    
    
    4,800,628
    
    
    $
    48
    
    
    $
    53,484
    
    
    $
    2,529
    
    
    $
    (1,256
    )
    
    $
    54,805
 See accompanying Notes to Condensed Consolidated Financial Statements. 4




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UNITED HERITAGE BANKSHARES OF FLORIDA, INC. 
 Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands)
 Three Months EndedMarch 31,2005
    
    
    2004Cash flows from operating activities:Net income
    
    $
    526
    
    
    $
    399Adjustments to reconcile net income
to net cash provided by operating activities:Provision for loan losses
    
    
    186
    
    
    
    160Depreciation and amortization
    
    
    150
    
    
    
    154Deferred income tax (benefit)
    
    
    (75
    )
    
    
    71Net amortization of premiums and discounts on securities
    
    
    168
    
    
    
    190Amortization of core deposit intangible
    
    
    17
    
    
    
    Net change in period-end balances of:Other assets
    
    
    (263
    )
    
    
    (31
    )Other liabilities
    
    
    149
    
    
    
    32Net cash provided by operating activities
    
    
    858
    
    
    
    975Cash flows from investing activities:Purchase of securities available for sale
    
    
    (43,994
    )
    
    
    Principal collections, calls and maturities of securities available for sale
    
    
    6,456
    
    
    
    4,035Net funding of loans
    
    
    (12,939
    )
    
    
    (7,490
    )Purchase of premises and equipment
    
    
    (220
    )
    
    
    (195
    )Net cash used in investing activities
    
    
    (50,697
    )
    
    
    (3,650
    )Cash flows from financing activities:Net increase in deposits
    
    
    70,011
    
    
    
    28,357Net decrease in borrowings
    
    
    (2,673
    )
    
    
    (1,563
    )Net proceeds from sale of common stock
    
    
    21,478
    
    
    
    Net cash provided by financing activities
    
    
    88,816
    
    
    
    26,794Net increase in cash and cash equivalents
    
    
    38,977
    
    
    
    24,119Cash and cash equivalents at beginning of period
    
    
    85,971
    
    
    
    60,629Cash and cash equivalents at end of period
    
    $
    124,948
    
    
    $
    84,748Supplemental disclosures of cash flow information:Cash paid during the period for:Interest
    
    $
    2,132
    
    
    $
    1,237Income taxes
    
    $
    140
    
    
    $
    165Noncash transaction-Accumulated other comprehensive income (loss), net change in
unrealized loss on securities available for sale, net of tax
    
    $
    (989
    )
    
    $
    354
 See accompanying Notes to Condensed Consolidated Financial Statements. 5




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UNITED HERITAGE BANKSHARES OF FLORIDA, INC. 
 Notes to Condensed Consolidated Financial Statements (Unaudited) 1.General and Basis of Presentation.United Heritage Bankshares of Florida, Inc. (the Holding
Company) owns 100% of the common stock of United Heritage Bank (the Bank) (together, the
Company), a full service, FDIC-insured commercial-banking institution. The Company provides
a variety of financial services to individuals and commercial customers through its ten
banking offices located in Orange and Seminole Counties, Florida. In the opinion of the management of the Company, the accompanying condensed consolidated
financial statements contain all adjustments (consisting of normal recurring accruals)
necessary to present fairly the financial position at March 31, 2005 and the results of
operations and cash flows for the three-month periods ended March 31, 2005 and 2004. The
results of operations for the three-month period ended March 31, 2005, are not necessarily
indicative of results that may be expected for the year ending December 31, 2005. The condensed consolidated financial statements include the accounts of the Holding Company
and Bank. All significant intercompany accounts and transactions have been eliminated in
consolidation. 2.Loans.The components of loans are summarized as follows (in thousands): At
    
    
    AtMarch 31,
    
    
    December 31,2005
    
    
    2004Real estate  mortgage
    
    $
    140,296
    
    
    $
    133,257Construction and land development
    
    
    65,437
    
    
    
    60,675Commercial, financial and agricultural
    
    
    46,964
    
    
    
    44,720Installment and consumer lines
    
    
    4,935
    
    
    
    5,998Total loans
    
    
    257,632
    
    
    
    244,650Allowance for loan losses
    
    
    (3,253
    )
    
    
    (3,077
    )Deferred loan fees, net
    
    
    (412
    )
    
    
    (359
    )Loans, net
    
    $
    253,967
    
    
    $
    241,214
 (continued) 6




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UNITED HERITAGE BANKSHARES OF FLORIDA, INC. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued 3.Loan Impairment and Loan Losses.An analysis of the change in the allowance for loan losses
follows (in thousands): Three Months EndedMarch 31,2005
    
    
    2004Balance at January 1
    
    $
    3,077
    
    
    $
    2,526Provision for loan losses
    
    
    186
    
    
    
    160Loan charge-offs, net of recoveries
    
    
    (10
    )
    
    
    (65
    )Balance at March 31
    
    $
    3,253
    
    
    $
    2,621
 The following summarizes impaired loans (in thousands): AtMarch 31,
    
    December 31,2005
    
    2004Impaired loans with a valuation allowance
    
    $
    
    44

    
    $

    83Impaired loans without a valuation allowance
    
    
    
    

    
    
    
    Less: Valuation allowance on impaired loans
    
    
    
    (4
    )

    

    (5
    )Total net impaired loans
    
    $
    
    40

    
    $
    
    78
 The average net investment in impaired loans and interest income recognized and received on impaired loans was as follows (in
thousands): Three Months EndedMarch 31,2005
    
    
    2004Average net investment in impaired loans
    
    $
    59
    
    
    $
    349Interest income recognized on impaired loans
    
    $
    
    
    
    $
    1Interest income received on impaired loans
    
    $
    
    
    
    $
    1
 Nonaccrual and accruing loans past due 90 days or more follows (in thousands): AtMarch 31,
    
    
    December 31,2005
    
    
    2004Nonaccrual loans
    
    $
    44
    
    
    $
    50Accruing loans past due 90 days or more
    
    
    
    
    
    
    44Total
    
    $
    44
    
    
    $
    94
 (continued) 7




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UNITED HERITAGE BANKSHARES OF FLORIDA, INC. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued 4.Earnings Per Share.Basic earnings per share is computed by dividing net income by the
weighted average number of common shares outstanding during the period. Diluted earnings per
share is computed by adding the dilutive effect of any unexercised stock options, using the
treasury stock method to determine dilution. Three Months EndedMarch 31,2005
    
    
    2004Weighted-average common shares outstanding
    
    
    3,502,529
    
    
    
    3,256,888Dilutive shares issuable under stock option plans
    
    
    101,037
    
    
    
    38,580Weighted-average common shares on a diluted basis
    
    
    3,603,566
    
    
    
    3,295,468
 5.Private Placement Offering.On March 2, 2005, the Company sold 1,537,222 shares of its common
stock in a private placement transaction at $14.00 per share. The Company raised $21.5
million after deducting related offering costs. 6.Stock Option Plans.The Company has two stock option plans permitting the granting of stock
options for up to 915,956 shares (after amendment in 2005) of the Companys common stock to
selected officers, employees and directors of the Company. The following is a summary of stock option transactions during the three-month periods
ended March 31, 2005 and 2004: AverageNumber of
    
    
    ExerciseOptions
    
    
    PriceOutstanding, December 31, 2003
    
    
    335,992
    
    
    $
    10.62Granted
    
    
    141,912
    
    
    
    12.00Outstanding, March 31, 2004
    
    
    477,904
    
    
    $
    11.03Outstanding, December 31, 2004
    
    
    546,716
    
    
    $
    11.41Granted
    
    
    12,500
    
    
    
    14.00Outstanding, March 31, 2005
    
    
    559,216
    
    
    $
    11.47
 (continued) 8




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UNITED HERITAGE BANKSHARES OF FLORIDA, INC. Notes to Condensed Consolidated Financial Statements (Unaudited), Continued 6.Stock Option Plans, Continued.Statement of Financial Accounting Standards (SFAS) No. 123,
Accounting for Stock-Based Compensation,as amended by SFAS No. 148, Accounting for
Stock-Based Compensation Transition and Disclosure(collectively, SFAS 123) encourages all
entities to adopt a fair value based method of accounting for employee stock compensation
plans, whereby compensation cost is measured at the grant date based on the value of the award
and is recognized over the service period, which is usually the vesting period. However, it
also allows an entity to continue to measure compensation cost for those plans using the
intrinsic value based method of accounting prescribed by Accounting Principles Board Opinion
No. 25, Accounting for Stock Issued to Employees(APB No. 25), whereby compensation cost is
the excess, if any, of the quoted market price of the stock at the grant date (or other
measurement date) over the amount an employee must pay to acquire the stock. The Company
accounts for its stock option plans under the recognition and measurement principles of APB
No. 25. No stock-based employee compensation cost is reflected in net income as all options

granted under those plans had an exercise price equal to the market value of the underlying
common stock on the date of grant. The following table illustrates the effect on net income
and income per share if the Company had applied the fair value recognition provisions of SFAS
123 to stock-based employee compensation ($ in thousands, except per share data). Three Months EndedMarch 31,2005
    
    
    2004Weighted-average grant-date fair value per option of stock options
issued during the period
    
    $
    4.82
    
    
    $
    3.83Net income, as reported
    
    $
    526
    
    
    $
    399Deduct: Total stock-based employee compensation
determined under the fair value based method for
all awards, net of related tax effect
    
    
    (32
    )
    
    
    (150
    )Proforma net income
    
    $
    494
    
    
    $
    249Basic income per share, as reported
    
    $
    .15
    
    
    $
    .12Proforma basic income per share
    
    $
    .14
    
    
    $
    .08Diluted income per share, as reported
    
    $
    .15
    
    
    $
    .12Proforma diluted income per share
    
    $
    .14
    
    
    $
    .08
 In December 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 123
(revised 2004), Share-Based Payment. This Statement requires a public entity to measure
the cost of employee services received in exchange for an award of equity instruments,
which includes stock options and warrants, based on the grant-date fair value of the award.
That cost will be recognized over the period during which an employee is required to
provide service in exchange for the award. Public entities will adopt this Statement using
a modified version of prospective application. Under this application, this Statement will
apply to new awards and to awards modified, repurchased, or cancelled after the required
effective date and to awards not yet vested that exist as of the effective date. This
Statement is effective as of the beginning of the first interim or annual reporting period
that begins after December 15, 2005. Management has not yet determined what effect this
Statement will have on the Companys future consolidated financial statements. 7.Reclassifications.Certain amounts in the 2004 condensed consolidated financial statements
have been reclassified to conform to the 2005 presentation. 9




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UNITED HERITAGE BANKSHARES OF FLORIDA, INC. 
 Managements Discussion and Analysis Capital Resources and Commitments  The Companys principal sources of funds are those generated by the Bank, including net
increases in deposits and borrowings, principal and interest payments on loans, and proceeds
from maturities of investment securities.The Company uses its capital resources principally to fund existing and continuing loan
commitments and to purchase investment securities. Off-balance sheet commitments to extend
credit represent legally binding agreements to lend to customers with fixed expiration dates or
other termination clauses. Since many commitments are expected to expire without being funded,
committed amounts do not necessarily represent future cash requirements.The following summarizes the Companys contractual obligations, including certain on-balance
sheet and off-balance sheet obligations, at March 31, 2005 (in thousands): Contractual Obligations
    
    AmountTime deposit maturities
    
    $
    183,724Borrowings
    
    
    3,336Operating leases
    
    
    9,119Loan commitments and unused lines of credit
    
    
    34,856Standby letters of credit
    
    
    2,576Undisbursed construction loans in process
    
    
    37,105Total
    
    $
    270,716
  Management believes that the Company has adequate resources to fund all its commitments, that
substantially all of its existing commitments will be funded within 12 months and, if so
desired, that the Company can adjust the rates and terms on time deposits and other deposit
accounts to retain or obtain new deposits in a changing interest rate environment. Regulatory Capital Requirements  The Company (on a consolidated basis) and the Bank are subject to various regulatory capital
requirements administered by the federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory  and possibly additional discretionary  actions
by regulators that, if undertaken, could have a direct material effect on the Companys
consolidated financial statements. Under capital adequacy guidelines and the regulatory
framework for prompt corrective action, the Company and the Bank must meet specific capital
guidelines that involve quantitative measures of the Banks assets, liabilities, and certain
off-balance-sheet items as calculated under regulatory accounting practices. The capital
amounts and classification are also subject to qualitative judgments by the regulators about
components, risk weightings, and other factors. 10




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UNITED HERITAGE BANKSHARES OF FLORIDA, INC. Quantitative measures established by regulation to ensure capital adequacy require the Company
and the Bank to maintain minimum amounts and percentages of total and Tier 1 capital to
risk-weighted assets, and of Tier 1 capital to average assets. If such minimum amounts and
percentages are met, the Company and the Bank are considered adequately capitalized. If the
actual amounts exceed the requirements of adequately capitalized, and meet even more
stringent minimum standards, they are considered well capitalized. Management believes as of
March 31, 2005, the Company and the Bank meet all capital adequacy requirements to which they
are subject. The table below shows the total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios of
the Company and the Bank at March 31, 2005 and December 31, 2004, and the minimum required
amounts and percentages ($ in thousands). MinimumTo Be WellCapitalized UnderMinimum Capital
    
    
    Prompt CorrectiveActual
    
    
    Requirement
    
    
    Action ProvisionsAmount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %As of March 31, 2005:Total capital to Risk-
Weighted assets:Consolidated
    
    $
    56,263
    
    
    
    17.61
    %
    
    $
    25,566
    
    
    
    8.00
    %
    
    $
    31,957
    
    
    
    10.00
    %Bank
    
    $
    55,654
    
    
    
    17.31
    %
    
    $
    25,719
    
    
    
    8.00
    %
    
    $
    32,149
    
    
    
    10.00
    %Tier I Capital to Risk-
Weighted Assets:Consolidated
    
    $
    53,010
    
    
    
    16.59
    %
    
    $
    12,783
    
    
    
    4.00
    %
    
    $
    19,175
    
    
    
    6.00
    %Bank
    
    $
    52,401
    
    
    
    16.30
    %
    
    $
    12,859
    
    
    
    4.00
    %
    
    $
    19,289
    
    
    
    6.00
    %Tier I Capital
to Average Assets:Consolidated
    
    $
    53,010
    
    
    
    11.95
    %
    
    $
    17,751
    
    
    
    4.00
    %
    
    $
    22,188
    
    
    
    5.00
    %Bank
    
    $
    52,401
    
    
    
    11.81
    %
    
    $
    17,745
    
    
    
    4.00
    %
    
    $
    22,182
    
    
    
    5.00
    %As of December 31, 2004:Total capital to Risk-
Weighted assets:Consolidated
    
    $
    34,746
    
    
    
    12.00
    %
    
    $
    23,159
    
    
    
    8.00
    %
    
    $
    28,949
    
    
    
    10.00
    %Bank
    
    $
    34,393
    
    
    
    11.83
    %
    
    $
    23,258
    
    
    
    8.00
    %
    
    $
    29,072
    
    
    
    10.00
    %Tier I Capital to Risk-
Weighted Assets:Consolidated
    
    $
    31,669
    
    
    
    10.94
    %
    
    $
    11,580
    
    
    
    4.00
    %
    
    $
    17,369
    
    
    
    6.00
    %Bank
    
    $
    31,316
    
    
    
    10.77
    %
    
    $
    11,629
    
    
    
    4.00
    %
    
    $
    17,443
    
    
    
    6.00
    %Tier I Capital
to Average Assets:Consolidated
    
    $
    31,669
    
    
    
    8.12
    %
    
    $
    15,592
    
    
    
    4.00
    %
    
    $
    19,490
    
    
    
    5.00
    %Bank
    
    $
    31,316
    
    
    
    8.04
    %
    
    $
    15,586
    
    
    
    4.00
    %
    
    $
    19,482
    
    
    
    5.00
    %
 11




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##### Table of Contents



UNITED HERITAGE BANKSHARES OF FLORIDA, INC. The following table shows selected ratios for the periods ended or at the dates indicated: Three Months
    
    
    
    
    
    
    Three MonthsEnded
    
    
    Year Ended
    
    
    EndedMarch 31,
    
    
    December 31,
    
    
    March 31,2005
    
    
    2004
    
    
    2004Average equity as a percentage
of average assets
    
    
    8.56
    %
    
    
    8.81
    %
    
    
    9.58
    %Total equity to total assets at end of period
    
    
    11.07
    %
    
    
    8.31
    %
    
    
    9.22
    %Return on average assets (1)
    
    
    .48
    %
    
    
    .56
    %
    
    
    .49
    %Return on average equity (1)
    
    
    5.58
    %
    
    
    6.38
    %
    
    
    5.10
    %Noninterest expense to average assets (1)
    
    
    2.12
    %
    
    
    2.02
    %
    
    
    2.20
    %Nonperforming loans and foreclosed assets to
total assets at end of period
    
    
    .01
    %
    
    
    .02
    %
    
    
    .13
    %
   (1)
    
    Annualized for the three months ended March 31, 2005 and 2004. Three
    
    
    
    
    
    
    ThreeMonths Ended
    
    
    Year Ended
    
    
    Month EndedMarch 31,
    
    
    December 31,
    
    
    March 31,2005
    
    
    2004
    
    
    2004Loans
    
    
    6.65
    %
    
    
    6.46
    %
    
    
    6.63
    %Investment securities
    
    
    3.48
    %
    
    
    3.01
    %
    
    
    2.88
    %Other interest-earning assets
    
    
    2.42
    %
    
    
    1.28
    %
    
    
    .87
    %All interest-earning assets
    
    
    5.14
    %
    
    
    4.92
    %
    
    
    5.01
    %Savings, NOW and money-market deposits
    
    
    1.87
    %
    
    
    1.61
    %
    
    
    1.51
    %Time deposits
    
    
    3.10
    %
    
    
    2.75
    %
    
    
    2.74
    %All interest-bearing liabilities
    
    
    2.46
    %
    
    
    2.11
    %
    
    
    2.09
    %Interest-rate spread
    
    
    2.68
    %
    
    
    2.81
    %
    
    
    2.92
    %
 Changes in Financial Condition Total assets increased $88.5 million or 21.8%, from $406.5 million at December 31, 2004 to $495.0
million at March 31, 2005, primarily as a result of a $12.8 million increase in net loans, a $35.8
million increase in securities available for sale and an increase in cash and cash equivalents of
$39.0 million. Deposits increased $70.0 million from $365.6 million at December 31, 2004 to $435.7
million at March 31, 2005. The $21.0 million net increase in stockholders equity during the three
months ended March 31, 2005 resulted primarily from net proceeds of $21.5 million from the sale of
common stock under a private placement offering and net income of $526,000, partially offset by a
decrease in accumulated other comprehensive income (loss) of $989,000. 12




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##### Table of Contents



UNITED HERITAGE BANKSHARES OF FLORIDA, INC. 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 costs; (iii) net interest/dividend income; (iv) interest-rate
spread; and (v) net interest margin. Yields and costs were derived by dividing annualized income or
expense by the average balance of assets or liabilities, respectively, for the periods shown. The
average balance of loans includes loans on which the Company has discontinued accruing interest.
The yields and costs include certain fees which are considered to constitute adjustments to yields. Three Months Ended March 31,2005
    
    
    2004Interest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    AverageAverage
    
    
    and
    
    
    Yield/
    
    
    Average
    
    
    and
    
    
    Yield/Balance
    
    
    Dividends
    
    
    Cost
    
    
    Balance
    
    
    Dividends
    
    
    Cost($in thousands)Interest-earning assets:Loans
    
    $
    247,449
    
    
    $
    4,059
    
    
    
    6.65
    %
    
    $
    201,584
    
    
    $
    3,323
    
    
    
    6.63
    %Securities
    
    
    86,151
    
    
    
    740
    
    
    
    3.48
    %
    
    
    54,719
    
    
    
    392
    
    
    
    2.88
    %Other (1)
    
    
    84,939
    
    
    
    508
    
    
    
    2.43
    %
    
    
    50,421
    
    
    
    109
    
    
    
    .87
    %Total interest-earning assets
    
    
    418,539
    
    
    
    5,307
    
    
    
    5.14
    %
    
    
    306,724
    
    
    
    3,824
    
    
    
    5.01
    %Noninterest-earning assets
    
    
    28,457
    
    
    
    
    
    
    
    
    
    
    
    21,676Total assets
    
    $
    446,996
    
    
    
    
    
    
    
    
    
    
    $
    328,400Interest-bearing liabilities:Savings, NOW and money-market accounts
    
    
    175,714
    
    
    
    811
    
    
    
    1.87
    %
    
    
    127,184
    
    
    
    477
    
    
    
    1.51
    %Time deposits
    
    
    165,166
    
    
    
    1,263
    
    
    
    3.10
    %
    
    
    123,205
    
    
    
    838
    
    
    
    2.74
    %Other borrowings (2)
    
    
    2,339
    
    
    
    12
    
    
    
    2.08
    %
    
    
    2,869
    
    
    
    4
    
    
    
    .56
    %Total interest-bearing liabilities
    
    
    343,219
    
    
    
    2,086
    
    
    
    2.46
    %
    
    
    253,258
    
    
    
    1,319
    
    
    
    2.09
    %Noninterest-bearing deposits
    
    
    65,267
    
    
    
    
    
    
    
    
    
    
    
    41,801Noninterest-bearing liabilities
    
    
    247
    
    
    
    
    
    
    
    
    
    
    
    1,884Stockholders equity
    
    
    38,263
    
    
    
    
    
    
    
    
    
    
    
    31,457Total liabilities and stockholders equity
    
    $
    446,996
    
    
    
    
    
    
    
    
    
    
    $
    328,400Net interest income
    
    
    
    
    
    $
    3,221
    
    
    
    
    
    
    
    
    
    
    $
    2,505Interest-rate spread (3)
    
    
    
    
    
    
    
    
    
    
    2.68
    %
    
    
    
    
    
    
    
    
    
    
    2.92
    %Net interest margin (4)
    
    
    
    
    
    
    
    
    
    
    3.12
    %
    
    
    
    
    
    
    
    
    
    
    3.28
    %Ratio of interest-earning assets to
interest-bearing liabilities
    
    
    1.22
    
    
    
    
    
    
    
    
    
    
    
    1.21
   (1)
    
    Includes interest-earning demand deposits, federal funds sold and Federal Home Loan Bank
stock.(2)
    
    Includes securities sold under agreements to repurchase and federal funds purchased lines of
credit.(3)
    
    Interest-rate spread represents the difference between the average yield on interest-earning
assets and the average cost of interest-bearing liabilities.(4)
    
    Net interest margin is annualized net interest income divided by average interest-earning
assets. 13




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##### Table of Contents



UNITED HERITAGE BANKSHARES OF FLORIDA, INC. Comparison of the Three-Month Periods Ended March 31, 2005 and 2004 General Operating Results.Net income for the three-month period ended March 31, 2005 was
$526,000, or $.15 per basic and diluted share, compared to $399,000, or $.12 per basic and
diluted share, for the comparable period in 2004. The increase in net income resulted
primarily from an increase in net interest income, partially offset by an increase in
noninterest expense. Interest Income.Interest income increased $1.5 million or 38.8% to $5.3 million for the
three-month period ended March 31, 2005, when compared to the three-month period ended March
31, 2004. The increase was due to an increase in the average balance of interest-earning
assets from $306.7 million for the three months ended March 31, 2004 to $418.5 million for the
three months ended March 31, 2005 and an increase in the weighted-average yield from 5.01%
during the 2004 period to 5.14% during the 2005 period. Interest Expense.Interest expense increased $767,000 or 58.2%, from $1.3 million for the
three-month period ended March 31, 2004 to $2.1 million for the three-month period ended March
31, 2005. The increase was primarily due to an increase in the average cost of
interest-bearing liabilities from 2.09% for the three months ended March 31, 2004 to 2.46% for
the comparable 2005 period and an increase of $90.0 million or 35.5% in average
interest-bearing liabilities outstanding. Average interest-bearing deposits increased from
$250.4 million outstanding during the three months ended March 31, 2004 to $340.9 million
outstanding during the comparable period for 2005. Average borrowings decreased from $2.9
million during the three months ended March 31, 2004 to $2.3 million for the comparable 2005
period. Provision for Loan Losses.The provision for loan losses is charged to income to increase the
total loan loss allowance to a level deemed appropriate by management. The provision is based
upon the volume and type of lending conducted by the Company, the Companys charge-off
experience, industry standards, the amount of nonperforming loans, general economic
conditions, particularly as they relate to the Companys market area, and other factors
related to the collectibility of the Companys loan portfolio. The Company recorded provisions
for loan losses for the three-month periods ended March 31, 2005 and 2004 of $186,000 and
$160,000, respectively. Net loans charged off for the three-month periods ended March 31, 2005
and 2004 were $10,000 and $65,000, respectively. Management believes that the allowance for
loan losses, which was $3.3 million or 1.26% of gross loans at March 31, 2005 is adequate. Noninterest Income.Noninterest income increased $30,000 or 23.6% from $127,000 during the 2004
period to $157,000 during the 2005 period. The increase was due to a $30,000 increase in
service charges and fees on deposit accounts. Noninterest Expense.Noninterest expense increased by $531,000 or 29.5% from $1.8 million for the
three-month period ended March 31, 2004 to $2.3 million for the three-month period ended March
31, 2005. The increase was primarily due to increases of $419,000 in salaries and employee
benefits and $110,000 in occupancy and equipment expense all related to the overall growth of
the Company. Income Taxes.Income taxes were $270,000 for the three-month period ended March 31, 2004 (an
effective tax rate of 40.4%) and $332,000 (an effective tax rate of 38.7%) for the
corresponding period in 2005. The effective rate includes the state income tax rate of 5.5%. 14




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##### Table of Contents



UNITED HERITAGE BANKSHARES OF FLORIDA, INC. 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk  Market risk is the risk of loss from adverse changes in market prices and rates. The Companys
market risk arises primarily from interest-rate risk inherent in its lending, investment and
deposit taking activities. The Company has little or no risk related to trading accounts,
commodities or foreign exchange.Management actively monitors and manages its interest rate risk exposure. The primary objective
in managing interest-rate risk is to limit, within established guidelines, the adverse impact of
changes in interest rates on the Companys net interest income and capital, while adjusting the
Companys asset-liability structure to obtain the maximum yield-cost spread on that structure.
Management relies primarily on its asset-liability structure to control interest rate risk.
However, a sudden and substantial increase in interest rates could adversely impact the Companys
earnings, to the extent that the interest rates borne by assets and liabilities do not change at
the same speed, to the same extent, or on the same basis. There has been no significant change
in the Companys market risk exposure since December 31, 2004. 
 Item 4. 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 United Heritage Bankshares of Florida,
Inc. or any of its subsidiaries is a party or to which any of their property is subject. 
  Item 2.
    Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities  Not applicable. 15




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##### Table of Contents



UNITED HERITAGE BANKSHARES OF FLORIDA, INC. 
 Item 3. Defaults upon Senior Securities  Not applicable 
 Item 4. Submission of Matters to a Vote of Security Holders  The Annual Meeting of Shareholders (the Annual Meeting) of United Heritage Bankshares of
Florida, Inc. was held on March 31, 2005, to consider: (i) the election of all directors each for
a term of one year (ii) approving an amendment to the Holding Companys Article of Incorporation
to change the name, (iii) approving an amendment to the Companys Employee Stock Option Plan to
increase the number of shares of common stock reserved for issuance, and (iv) approving an
amendment to the Companys Director Stock Option Plan to increase the number of shares of common
stock reserved for issuance.At the Annual Meeting, 2,174,691 shares were present in person or by proxy. The following is a
summary and tabulation of the matters that were voted upon at the Annual Meeting:Proposal I.The election of directors, each for a term of one year: For
    
    
    Against
    
    
    AbstainJ. Michael Hattway
    
    
    2,174,691
    
    
    
    
    
    
    
    James L. Hewitt
    
    
    2,174,691
    
    
    
    
    
    
    
    Vincent S. Hughes
    
    
    2,174,691
    
    
    
    
    
    
    
    David G. Powers
    
    
    2,174,691
    
    
    
    
    
    
    
    
  Proposal II:To approve an amendment to the Holding Companys Articles of Incorporation to change the name to
United Heritage Bankshares of Florida, Inc.: For
    
    Against
    
    
    Abstain2,151,984
    
    
    20,607
    
    
    
    2,100
  Proposal III:To approve an amendment to the Companys Employee Stock
Option Plan to increase the number of  shares of common stock reserved for issuance by 150,000 shares: For
    
    Against
    
    
    Abstain2,054,854
    
    
    105,347
    
    
    
    14,490
  Proposal IV:To approve an amendment to the Companys Director Stock
Option Plan to increase the number of  shares of common stock reserved for issuance by 150,000 shares: For
    
    Against
    
    
    Abstain2,011,067
    
    
    138,383
    
    
    
    25,241
 16




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##### Table of Contents



UNITED HERITAGE BANKSHARES OF FLORIDA, INC. 
 Item 5. Other Information Not applicable 
 Item 6. Exhibits (a) The following exhibits are filed as part of this report. 3.1
    
    -
    
    Articles of Incorporation of United Community Bankshares of
Florida, Inc. **3.2
    
    -
    
    Bylaws of United Community Bankshares of Florida, Inc. ****4.1
    
    -
    
    Specimen Stock Certificate of United Community Bankshares of
Florida, Inc. **10.1
    
    -
    
    Employment Agreement, dated as of March 15, 2004, between
United Heritage Bank and David G. Powers ***10.2
    
    -
    
    United Community Bankshares of Florida, Inc. Directors
Stock Option Plan *10.3
    
    -
    
    United Community Bankshares of Florida, Inc.s Officers and
Employees Stock Option Plan *10.4
    
    -
    
    Employment Agreement, dated as of March 15, 2004, between
United Heritage Bank and Shirley L. Tyler ***10.5
    
    -
    
    Amendment to United Community Bankshares of Florida, Inc.
Directors Stock Option Plan10.6
    
    -
    
    Amendment to United Community Bankshares of Florida, Inc.
Officers and Employees Stock Option Plan14.1
    
    -
    
    Code of Ethics *31.1
    
    -
    
    Certification of Chief Executive Officer required by Rule
13a-14(a)/15d-14(a) under the Exchange Act31.2
    
    -
    
    Certification of Chief Financial Officer required by Rule
13a-14(a)/15d-14(a) under the Exchange Act32.1
    
    -
    
    Certification of Chief Executive Officer, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.32.2
    
    -
    
    Certification of Chief Financial Officer, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
   *
    
    Incorporated by reference to the corresponding exhibit number in the Companys Form 10-KSB
filed for the year ended December 31, 2003.**
    
    Incorporated by reference to the corresponding exhibit number in the Companys Form 10-QSB
filed for the quarter ended March 31, 2003.***
    
    Incorporated by reference to the corresponding exhibit number in the Companys Form 10-QSB
filed for the quarter ended March 31, 2004.****
    
    Incorporated by reference to the corresponding exhibit number in the Companys Form 10-QSB
filed for the quarter ended June 30, 2004. 17




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##### Table of Contents



UNITED HERITAGE 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 hereunto duly authorized. Date: May 6, 2005 United Heritage Bankshares of Florida, Inc.By:
    
    /s/ David G. PowersName:
    
    David G. Powers, President andChief Executive OfficerBy:
    
    /s/ Shirley L. TylerName:
    
    Shirley L. Tyler, Executive VicePresident and Treasurer
 18