##### Table of Contents



U.S. SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2006
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
 For the transition period from  to
 Commission file number
 UNITED HERITAGE BANKSHARES OF FLORIDA, INC.
 (Exact Name of Registrant as Specified in Its Charter)
 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)
    
    (Zip Code)
 Registrants Telephone Number, Including Area Code (407) 712-6151
 Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report.
 þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
 o þ
  Common stock, par value $.01 per share
    
    4,925,835 shares outstanding at April 24, 2006




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##### 



UNITED HERITAGE BANKSHARES OF FLORIDA, INC.
  PagePart I. FINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Consolidated Balance Sheets-
at March 31, 2006 (Unaudited) and at December 31, 2005
    
    
    2Condensed Consolidated Statements of Income (Unaudited) -
Three months ended March 31, 2006 and 2005
    
    
    3Condensed Consolidated Statements of Shareholders Equity (Unaudited) -
Three months ended March 31, 2006 and 2005
    
    
    4Condensed Consolidated Statements of Cash Flows (Unaudited) -
Three months ended March 31, 2006 and 2005
    
    
    5Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    
    6-9Item 2. Managements Discussion and Analysis
    
    
    10-15Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    16Item 4. Controls and Procedures
    
    
    16Part II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    17Item 1A. Risk Factors
    
    
    17Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    17Item 3. Defaults upon Senior Securities
    
    
    17Item 4. Submission of Matters to a Vote of Security Holders
    
    
    17Item 5. Other Information
    
    
    17Item 6. Exhibits
    
    
    18SIGNATURES
    
    
    19SubsidiariesEx-31.1 Section 302 CertificationEx-31.2 Section 302 CertificationEx-31.1 Section 906 CertificationEx-31.2 Section 906 Certification
  1




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##### Table of Contents



UNITED HERITAGE BANKSHARES OF FLORIDA, INC.
 
 Part I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 
 Condensed Consolidated Balance Sheets
($ in thousands, except per share amounts)
 At
    
    
    AtMarch 31,
    
    
    December 31,2006
    
    
    2005(Unaudited)AssetsCash and due from banks
    
    $
    21,206
    
    
    $
    21,604Federal funds sold
    
    
    133,732
    
    
    
    126,119Total cash and cash equivalents
    
    
    154,938
    
    
    
    147,723Securities available for sale
    
    
    155,016
    
    
    
    164,050Securities held to maturity
    
    
    22,506
    
    
    
    21,119Loans, net of allowance for loan losses of $4,878 and $4,580
    
    
    382,696
    
    
    
    360,425Accrued interest receivable
    
    
    2,391
    
    
    
    2,599Property and equipment, net
    
    
    7,435
    
    
    
    7,527Net deferred tax asset
    
    
    3,368
    
    
    
    2,771Goodwill
    
    
    950
    
    
    
    950Core deposit intangible, net
    
    
    183
    
    
    
    200Other assets
    
    
    762
    
    
    
    530Total assets
    
    $
    730,245
    
    
    $
    707,894Liabilities and Shareholders EquityLiabilities:Deposits:Noninterest-bearing demand deposits
    
    $
    113,030
    
    
    $
    98,082Savings, NOW and money-market deposits
    
    
    256,475
    
    
    
    272,895Time deposits
    
    
    262,582
    
    
    
    245,559Total deposits
    
    
    632,087
    
    
    
    616,536Borrowings
    
    
    37,037
    
    
    
    31,884Other liabilities
    
    
    2,128
    
    
    
    1,687Total liabilities
    
    
    671,252
    
    
    
    650,107Shareholders equity:Common stock, $.01 par value, 20 million shares authorized,
4,885,835 and 4,871,908 shares issued and outstanding
    
    
    49
    
    
    
    49Additional paid-in capital
    
    
    54,611
    
    
    
    54,361Retained earnings
    
    
    7,052
    
    
    
    5,338Accumulated other comprehensive loss
    
    
    (2,719
    )
    
    
    (1,961
    )Total shareholders equity
    
    
    58,993
    
    
    
    57,787Total liabilities and shareholders equity
    
    $
    730,245
    
    
    $
    707,894
 
 2




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##### Table of Contents



UNITED HERITAGE BANKSHARES OF FLORIDA, INC.
 
 Condensed Consolidated Statements of Income (Unaudited)
($ in thousands, except per share amounts)
 Three Months EndedMarch 31,2006
    
    
    2005Interest income:Loans
    
    $
    7,420
    
    
    $
    4,059Securities
    
    
    1,852
    
    
    
    740Other
    
    
    1,059
    
    
    
    508Total interest income
    
    
    10,331
    
    
    
    5,307Interest expense:Deposits
    
    
    4,141
    
    
    
    2,074Borrowings
    
    
    215
    
    
    
    12Total interest expense
    
    
    4,356
    
    
    
    2,086Net interest income
    
    
    5,975
    
    
    
    3,221Provision for loan losses
    
    
    299
    
    
    
    186Net interest income after provision for loan losses
    
    
    5,676
    
    
    
    3,035Noninterest income:Service charges and fees on deposit accounts
    
    
    186
    
    
    
    123Other
    
    
    47
    
    
    
    34Total noninterest income
    
    
    233
    
    
    
    157Noninterest expense:Salaries and employee benefits
    
    
    1,673
    
    
    
    1,211Occupancy and equipment
    
    
    659
    
    
    
    467Other
    
    
    883
    
    
    
    656Total noninterest expense
    
    
    3,215
    
    
    
    2,334Income before income taxes
    
    
    2,694
    
    
    
    858Income taxes
    
    
    980
    
    
    
    332Net income
    
    $
    1,714
    
    
    $
    526Earnings per share:Basic
    
    $
    .35
    
    
    $
    .15Diluted
    
    $
    .34
    
    
    $
    .15Dividends per share
    
    $
    
    
    
    $
    
  3




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##### Table of Contents



UNITED HERITAGE BANKSHARES OF FLORIDA, INC.
 
 Condensed Consolidated Statements of Shareholders Equity (Unaudited)
 Three Months Ended March 31, 2006 and 2005
($ in thousands)
 AccumulatedOtherCommon Stock
    
    
    Additional
    
    
    
    
    
    
    Compre-
    
    
    TotalNumber of
    
    
    Par
    
    
    Paid-In
    
    
    Retained
    
    
    hensive
    
    
    ShareholdersShares
    
    
    Value
    
    
    Capital
    
    
    Earnings
    
    
    Loss
    
    
    EquityBalance 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
    )
    
    $
    54,805Balance at December 31, 2005
    
    
    4,871,908
    
    
    
    49
    
    
    
    54,361
    
    
    
    5,338
    
    
    
    (1,961
    )
    
    
    57,787Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,714
    
    
    
    
    
    
    
    1,714Other comprehensive loss-change in
unrealized loss on securities available
for sale, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (758
    )
    
    
    (758
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    956Proceeds from stock options exercised
    
    
    13,927
    
    
    
    
    
    
    
    167
    
    
    
    
    
    
    
    
    
    
    
    167Share-based compensation
    
    
    
    
    
    
    
    
    
    
    67
    
    
    
    
    
    
    
    
    
    
    
    67Tax benefit from stock options exercised
    
    
    
    
    
    
    
    
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    16Balance at March 31, 2006
    
    
    4,885,835
    
    
    $
    49
    
    
    $
    54,611
    
    
    $
    7,052
    
    
    $
    (2,719
    )
    
    $
    58,993
 
 4




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##### Table of Contents



UNITED HERITAGE BANKSHARES OF FLORIDA, INC.
 
 Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
 Three Months EndedMarch 31,2006
    
    
    2005Cash flows from operating activities:Net income
    
    $
    1,714
    
    
    $
    526Adjustments to reconcile net income
to net cash provided by operating activities:Provision for loan losses
    
    
    299
    
    
    
    186Depreciation and amortization
    
    
    218
    
    
    
    150Deferred income tax benefit
    
    
    (140
    )
    
    
    (75
    )Net amortization of premiums and discounts on securities
    
    
    127
    
    
    
    168Share-based compensation
    
    
    67
    
    
    
    Amortization of core deposit intangible
    
    
    17
    
    
    
    17Net change in period-end balances of:Other assets
    
    
    (24
    )
    
    
    (263
    )Other liabilities
    
    
    457
    
    
    
    149Net cash provided by operating activities
    
    
    2,734
    
    
    
    858Cash flows from investing activities:Purchase of securities held to maturity
    
    
    (1,389
    )
    
    
    Purchase of securities available for sale
    
    
    
    
    
    
    (43,994
    )Principal collections, calls and maturities of securities available for sale
    
    
    7,694
    
    
    
    6,456Net funding of loans
    
    
    (22,570
    )
    
    
    (12,939
    )Purchase of premises and equipment
    
    
    (126
    )
    
    
    (220
    )Net cash used in investing activities
    
    
    (16,390
    )
    
    
    (50,697
    )Cash flows from financing activities:Net increase in deposits
    
    
    15,551
    
    
    
    70,011Net increase (decrease) in borrowings
    
    
    5,153
    
    
    
    (2,673
    )Net proceeds from sale of common stock
    
    
    
    
    
    
    21,478Exercise of stock options
    
    
    167
    
    
    
    Net cash provided by financing activities
    
    
    20,871
    
    
    
    88,816Net increase in cash and cash equivalents
    
    
    7,215
    
    
    
    38,977Cash and cash equivalents at beginning of period
    
    
    147,723
    
    
    
    85,971Cash and cash equivalents at end of period
    
    $
    154,938
    
    
    $
    124,948Supplemental disclosures of cash flow information:Cash paid during the period for:Interest
    
    $
    4,195
    
    
    $
    2,132Income taxes
    
    $
    2,250
    
    
    $
    140Noncash transactions:Accumulated other comprehensive loss: net change in
unrealized loss on securities available for sale, net of tax
    
    $
    (758
    )
    
    $
    (989
    )Reduction of other liabilities from tax benefit from stock
options exercised
    
    $
    (16
    )
    
    $
    
  5




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##### Table of Contents



UNITED HERITAGE BANKSHARES OF FLORIDA, INC.
 
 Notes to Condensed Consolidated Financial Statements (Unaudited)
 1. General and Basis of Presentation.
   2. Loans .
 At
    
    
    AtMarch 31,
    
    
    December 31,2006
    
    
    2005Real estate  mortgage
    
    $
    189,515
    
    
    $
    179,323Construction and land development
    
    
    124,385
    
    
    
    111,698Commercial, financial and agricultural
    
    
    68,503
    
    
    
    69,266Installment and consumer lines
    
    
    5,809
    
    
    
    5,349Total loans
    
    
    388,212
    
    
    
    365,636Allowance for loan losses
    
    
    (4,878
    )
    
    
    (4,580
    )Deferred loan fees, net
    
    
    (638
    )
    
    
    (631
    )Loans, net
    
    $
    382,696
    
    
    $
    360,425
  6




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##### Table of Contents



UNITED HERITAGE BANKSHARES OF FLORIDA, INC.
 Notes to Condensed Consolidated Financial Statements (Unaudited), Continued
 3. Loan Impairment and Loan Losses .
 Three Months EndedMarch 31,2006
    
    
    2005Balance at January 1
    
    $
    4,580
    
    
    $
    3,077Provision for loan losses
    
    
    299
    
    
    
    186Loan charge-offs, net of recoveries
    
    
    (1
    )
    
    
    (10
    )Balance at March 31
    
    $
    4,878
    
    
    $
    3,253
  AtMarch 31,
    
    
    December 31,2006
    
    
    2005Impaired loans with a valuation allowance
    
    $
    41
    
    
    $
    44Impaired loans without a valuation allowance
    
    
    
    
    
    
    Less: Valuation allowance on impaired loans
    
    
    (4
    )
    
    
    (4
    )Total net impaired loans
    
    $
    37
    
    
    $
    40
  Three Months EndedMarch 31,2006
    
    
    2005Average net investment in impaired loans
    
    $
    39
    
    
    $
    59Interest income recognized on impaired loans
    
    $
    
    
    
    $
    Interest income received on impaired loans
    
    $
    
    
    
    $
    
  AtMarch 31,
    
    
    December 31,2006
    
    
    2005Nonaccrual loans
    
    $
    41
    
    
    $
    44Accruing loans past due 90 days or more
    
    
    
    
    
    
    Total
    
    $
    41
    
    
    $
    44
  7




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##### Table of Contents



UNITED HERITAGE BANKSHARES OF FLORIDA, INC.
 Notes to Condensed Consolidated Financial Statements (Unaudited), Continued
 4. Earnings Per Share.
 Three Months EndedMarch 31,2006
    
    
    2005Weighted-average common shares outstanding
    
    
    4,877,479
    
    
    
    3,502,529Dilutive shares issuable under stock option plans
    
    
    126,954
    
    
    
    101,037Weighted-average common shares on a diluted basis
    
    
    5,004,433
    
    
    
    3,603,566
 5. Private Placement Offering.
 6. Stock Option Plans.
  AverageNumber of
    
    
    ExerciseOptions
    
    
    PriceOutstanding, December 31, 2004
    
    
    546,716
    
    
    $
    11.41Granted
    
    
    12,500
    
    
    
    14.00Outstanding, March 31, 2005
    
    
    559,216
    
    
    $
    11.47Outstanding, December 31, 2005
    
    
    700,810
    
    
    $
    12.22Granted
    
    
    20,200
    
    
    
    15.00Exercised
    
    
    (13,927
    )
    
    
    12.00Outstanding, March 31, 2006
    
    
    707,083
    
    
    $
    12.30
  8




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##### Table of Contents



UNITED HERITAGE BANKSHARES OF FLORIDA, INC.
 Notes to Condensed Consolidated Financial Statements (Unaudited), Continued
 6. Stock Option Plans, Continued. Accounting for Stock Issued to Employees Accounting for Stock-Based Compensation Accounting for Stock-Based Compensation Transition and Disclosure Share-Based Payment ,
   9




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##### Table of Contents



UNITED HERITAGE BANKSHARES OF FLORIDA, INC.
 Notes to Condensed Consolidated Financial Statements (Unaudited), Continued
 6. Stock Option Plans, Continued.
 Three Months EndedMarch 31,2005Net income, as reported
    
    $
    526Deduct: Total stock-based employee compensation expense
determined under fair value based method for all awards
    
    
    (32
    )Proforma net income
    
    $
    494Basic earnings per share:As reported
    
    $
    .15Proforma
    
    $
    .14Diluted earnings per share:As reported
    
    $
    .15Proforma
    
    $
    .14
  Three Months EndedMarch 31,2006
    
    2005$
    4.79
    
    
    $
    4.82
  Three Months EndedMarch 31,2006
    
    2005Risk free rate
    
    
    4.43
    %
    
    
    4.23
    %Expected life (years)
    
    
    7.5
    
    
    
    10Dividend yield
    
    
    
    
    
    
    Estimated volatility
    
    
    14.64
    %
    
    
    
    %
 7. Reclassifications .
 10




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##### Table of Contents



UNITED HERITAGE BANKSHARES OF FLORIDA, INC.
 
 Item 2. Managements Discussion and Analysis
 Capital Resources and Commitments
    Contractual Obligations
    
    AmountTime deposit maturities
    
    $
    262,582Borrowings
    
    
    37,037Operating leases
    
    
    7,098Loan commitments and unused lines of credit
    
    
    71,787Standby letters of credit
    
    
    5,832Undisbursed construction loans in process
    
    
    64,445Total
    
    $
    448,781
  Regulatory Capital Requirements
 discretionary 
 11




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##### Table of Contents



UNITED HERITAGE BANKSHARES OF FLORIDA, INC.
   MinimumTo Be WellCapitalized UnderMinimum Capital
    
    Prompt CorrectiveActual

    
    Requirement
    
    Action ProvisionsAmount
    
    %
    
    Amount
    
    %
    
    Amount
    
    %As of March 31, 2006:Total capital to Risk-
Weighted assets:Consolidated
    
    $
    65,457
    
    
    
    13.71
    %
    
    $
    38,189
    
    
    
    8.00
    %
    
    $
    47,736
    
    
    
    10.00
    %Bank
    
    $
    63,973
    
    
    
    13.31
    %
    
    $
    38,462
    
    
    
    8.00
    %
    
    $
    48,078
    
    
    
    10.00
    %Tier I Capital to Risk-
Weighted Assets:Consolidated
    
    $
    60,579
    
    
    
    12.69
    %
    
    $
    19,095
    
    
    
    4.00
    %
    
    $
    28,642
    
    
    
    6.00
    %Bank
    
    $
    59,086
    
    
    
    12.29
    %
    
    $
    19,231
    
    
    
    4.00
    %
    
    $
    28,847
    
    
    
    6.00
    %Tier I Capital
to Average Assets:Consolidated
    
    $
    60,579
    
    
    
    8.91
    %
    
    $
    27,182
    
    
    
    4.00
    %
    
    $
    33,978
    
    
    
    5.00
    %Bank
    
    $
    59,086
    
    
    
    8.90
    %
    
    $
    27,175
    
    
    
    4.00
    %
    
    $
    33,969
    
    
    
    5.00
    %As of December 31, 2005:Total capital to Risk-
Weighted assets:Consolidated
    
    $
    63,178
    
    
    
    13.96
    %
    
    $
    36,200
    
    
    
    8.00
    %
    
    $
    45,250
    
    
    
    10.00
    %Bank
    
    $
    61,852
    
    
    
    13.59
    %
    
    $
    36,416
    
    
    
    8.00
    %
    
    $
    45,520
    
    
    
    10.00
    %Tier I Capital to Risk-
Weighted Assets:Consolidated
    
    $
    58,598
    
    
    
    12.95
    %
    
    $
    18,100
    
    
    
    4.00
    %
    
    $
    27,150
    
    
    
    6.00
    %Bank
    
    $
    57,272
    
    
    
    12.58
    %
    
    $
    18,208
    
    
    
    4.00
    %
    
    $
    27,312
    
    
    
    6.00
    %Tier I Capital
to Average Assets:Consolidated
    
    $
    58,598
    
    
    
    8.97
    %
    
    $
    26,140
    
    
    
    4.00
    %
    
    $
    32,676
    
    
    
    5.00
    %Bank
    
    $
    57,272
    
    
    
    8.77
    %
    
    $
    26,134
    
    
    
    4.00
    %
    
    $
    32,668
    
    
    
    5.00
    %
 12




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##### Table of Contents



UNITED HERITAGE BANKSHARES OF FLORIDA, INC.
 Results of Operation
  Three Months
    
    
    
    
    
    Three MonthsEnded
    
    Year Ended
    
    EndedMarch 31,
    
    December 31,
    
    March 31,2006
    
    2005
    
    2005Average equity as a percentage
of average assets
    
    
    8.62
    %
    
    
    9.19
    %
    
    
    8.56
    %Total equity to total assets at end of period
    
    
    8.08
    %
    
    
    8.16
    %
    
    
    11.07
    %Return on average assets (1)
    
    
    1.01
    %
    
    
    .59
    %
    
    
    .48
    %Return on average equity (1)
    
    
    11.69
    %
    
    
    6.45
    %
    
    
    5.58
    %Noninterest expense to average assets (1)
    
    
    1.89
    %
    
    
    1.97
    %
    
    
    2.12
    %Nonperforming loans and foreclosed assets to
total assets at end of period
    
    
    .01
    %
    
    
    NIL
    
    
    
    .01
    %
 
 (1)
    
    Annualized for the three months ended March 31, 2006 and 2005.  Three
    
    
    
    
    
    ThreeMonths Ended
    
    Year Ended
    
    Months EndedMarch 31,
    
    December 31,
    
    March 31,2006
    
    2005
    
    2005Loans
    
    
    7.94
    %
    
    
    7.10
    %
    
    
    6.65
    %Investment securities
    
    
    4.08
    %
    
    
    3.75
    %
    
    
    3.48
    %Other interest-earning assets
    
    
    4.48
    %
    
    
    3.29
    %
    
    
    2.42
    %All interest-earning assets
    
    
    6.36
    %
    
    
    5.54
    %
    
    
    5.14
    %Savings, NOW and money-market deposits
    
    
    2.59
    %
    
    
    2.21
    %
    
    
    1.87
    %Time deposits
    
    
    4.03
    %
    
    
    3.49
    %
    
    
    3.10
    %All interest-bearing liabilities
    
    
    3.36
    %
    
    
    2.84
    %
    
    
    2.46
    %Interest-rate spread
    
    
    3.00
    %
    
    
    2.68
    %
    
    
    2.68
    %
 Changes in Financial Condition
 
 13




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##### Table of Contents



UNITED HERITAGE BANKSHARES OF FLORIDA, INC.
  Three Months Ended March 31,2006
    
    
    2005InterestAverage
    
    
    
    
    
    
    InterestAverageAverage
    
    
    andYield/
    
    
    Average
    
    
    andYield/Balance
    
    
    DividendsCost
    
    
    Balance
    
    
    DividendsCost($in thousands)Interest-earning assets:Loans
    
    $
    373,816
    
    
    
    7,4207.94
    %
    
    $
    247,449
    
    
    $
    4,0596.65
    %Securities
    
    
    181,378
    
    
    
    1,8524.08
    %
    
    
    86,151
    
    
    
    7403.48
    %Other (1)
    
    
    94,456
    
    
    
    1,0594.48
    %
    
    
    84,939
    
    
    
    5082.43
    %Total interest-earning assets
    
    
    649,650
    
    
    
    10,3316.36
    %
    
    
    418,539
    
    
    
    5,3075.14
    %Noninterest-earning assets
    
    
    30,945
    
    
    
    
    
    
    
    28,457Total assets
    
    $
    680,595
    
    
    
    
    
    
    $
    446,996Interest-bearing liabilities:Savings, NOW and money-market accounts
    
    
    241,034
    
    
    
    1,5622.59
    %
    
    
    175,714
    
    
    
    8111.87
    %Time deposits
    
    
    256,032
    
    
    
    2,5794.03
    %
    
    
    165,166
    
    
    
    1,2633.10
    %Other borrowings (2)
    
    
    21,895
    
    
    
    2153.93
    %
    
    
    2,339
    
    
    
    122.08
    %Total interest-bearing liabilities
    
    
    518,961
    
    
    
    4,3563.36
    %
    
    
    343,219
    
    
    
    2,0862.46
    %Noninterest-bearing deposits
    
    
    100,954
    
    
    
    
    
    
    
    65,267Noninterest-bearing liabilities
    
    
    2,015
    
    
    
    
    
    
    
    247Shareholders equity
    
    
    58,665
    
    
    
    
    
    38,263Total liabilities and shareholders equity
    
    $
    680,595
    
    
    
    
    
    
    $
    446,996Net interest income
    
    
    
    
    
    $
    5,975
    
    
    
    
    
    
    $
    3,221Interest-rate spread (3)
    
    
    
    
    
    
    3.00
    %
    
    
    
    
    
    
    2.68
    %Net interest margin (4)
    
    
    
    
    
    
    3.68
    %
    
    
    
    
    
    
    3.12
    %Ratio of interest-earning assets to
interest-bearing liabilities
    
    
    1.25
    
    
    
    
    
    
    
    1.22
 
 (1)
    
    Includes interest-earning demand deposits and federal funds sold.(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. 14




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##### Table of Contents



UNITED HERITAGE BANKSHARES OF FLORIDA, INC.
 Comparison of the Three-Month Periods Ended March 31, 2006 and 2005
 General Operating Results.
 Interest Income.
 Interest Expense.
 Provision for Loan Losses.
 Noninterest Income.
 Noninterest Expense.
 Income Taxes.
 15




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##### Table of Contents



UNITED HERITAGE BANKSHARES OF FLORIDA, INC.
 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
   
 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.
 16




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##### Table of Contents



UNITED HERITAGE BANKSHARES OF FLORIDA, INC.
 
 Part II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1(A). Risk Factors
  
 Item 2.
    
    Unregistered Sales of Equity Securities, Use of Proceeds and
Issuer Purchases of Equity Securities
  
 Item 3. Defaults upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  17




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##### Table of Contents



UNITED HERITAGE BANKSHARES OF FLORIDA, INC.
 
 Item 6. Exhibits
  3.1
    
    -
    
    Articles of Incorporation of United Community Bankshares of Florida, Inc. **3.2
    
    -
    
    Bylaws of United Heritage Bankshares of Florida, Inc. ****4.1
    
    -
    
    Specimen Stock Certificate of United Heritage 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 Heritage Bankshares of Florida, Inc. Directors Stock Option Plan *10.3
    
    -
    
    United Heritage 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 ***14.1
    
    -
    
    Code of Ethics *21.1
    
    -
    
    List of subsidiaries of United Heritage Bankshares of Florida, Inc.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 September 30, 2004. 18




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##### Table of Contents



UNITED HERITAGE BANKSHARES OF FLORIDA, INC.
 
 SIGNATURES
   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
 19




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNo.
    
    Exhibit21.1
    
    Subsidiaries of the Registrant31.1
    
    Certification of President and Chief Executive Officer under §302 of the Sarbanes-Oxley Act
of 200231.2
    
    Certification of Executive Vice President and Treasurer under §302 of the Sarbanes-Oxley Act
of 200232.1
    
    Certification of President and Chief Executive Officer under §906 of the Sarbanes-Oxley Act
of 200232.2
    
    Certification of Executive Vice President and Treasurer under §906 of the Sarbanes-Oxley Act
of 2002